Ishit Kamleshbhai Sheth Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that mere filing of return in response to notice u/s. 148 does not ipso facto justify the invocation of section 270A(2)(b), unless there is a demonstrable act of under-reporting in substance. Thus, penalty deleted as failure to furnish return u/s. 139(1) doesn’t constitute under-reporting.
Facts- The assessee is an individual deriving income from salary and other sources, primarily from employment with M/s Tech Mahindra Ltd. for the relevant financial year. This appeal has been preferred by the assessee against the order dated 20.02.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi confirming the levy of penalty of Rs.2,23,277/- under section 270A of the Income-tax Act, 1961 for the Assessment Year 2018–19.
Conclusion- The mere fact that the return was filed in response to notice under section 148 does not ipso facto justify the invocation of section 270A(2)(b), unless there is a demonstrable act of under-reporting in substance. The statute does not intend to penalise delayed but truthful compliance, particularly where no tax loss arises and the income is fully traceable in departmental systems.
Held that the present case does not warrant the imposition of penalty under section 270A of the Act. The return filed in response to notice under section 148 was complete, truthful, and supported by verifiable evidence. The income was already subjected to tax through TDS, and the assessment was concluded without any addition or disallowance. The omission to file the return under section 139(1), though not condonable, does not constitute under-reporting or misreporting in the statutory sense. The Assessing Officer, in the facts of this case, ought to have exercised his discretion under section 270A(1) judicially, particularly in view of the complete tax compliance, absence of concealment, and voluntary disclosure. The penalty of Rs.2,23,277/- levied under section 270A is therefore directed to be deleted.
