Case Law Details
Sudarsan De Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi Bench, in a recent pronouncement on May 30, 2025, has set aside a penalty imposed under Section 270A of the Income Tax Act, 1961, against assessee Sudarsan De for Assessment Year 2018-19. The Tribunal ruled that no penalty for ‘under-reporting of income’ is warranted when the income declared in a belated return is fully accepted by the tax department without any additions.
The case originated from the assessee’s failure to file the Income Tax Return (ITR) by the due date. Subsequently, on April 11, 2022, a belated return was filed, declaring a total income of Rs. 1,02,88,060/-. This declared income comprised business and professional income, income from other sources, a claimed house property loss, and Chapter VIA deductions.
During the assessment process, the Assessing Officer (AO) accepted the income as declared in the belated return. However, the AO recorded satisfaction for ‘under-reporting the income’ and initiated penalty proceedings under Section 270A of the Act. Consequently, a penalty of Rs. 17,15,404/- was imposed on May 2, 2023.
Aggrieved by this penalty, Sudarsan De filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A), in an order dated April 10, 2024, upheld the penalty, leading the assessee to further appeal to the ITAT Delhi.
During the ITAT proceedings, the assessee’s counsel argued that since the return was filed voluntarily—even if belatedly—and the department accepted the declared income without making any additions to the quantum, there was no instance of ‘under-reporting’. The counsel highlighted that the essence of under-reporting lies in disclosing a smaller amount than the actual income, which was not the case here.
Conversely, the Departmental Representative contended that the assessee was a non-filer and filed the return only after the case was selected for scrutiny assessment under Section 147. It was also noted that there was no official condonation granted under Section 119(2) of the Act for the manual filing of the ITR. Therefore, the department maintained that the penalty was correctly imposed.
The ITAT, after reviewing the submissions and available records, acknowledged that while the return was indeed filed belatedly by a non-filer, the declared income of Rs. 1,02,88,060/- had been fully accepted by the department without any quantum additions. The Tribunal emphasized that ‘under-reporting income’ occurs when an assessee declares a smaller amount than their actual income. In this specific scenario, since the reported income was entirely accepted, the condition for invoking the ‘under-reporting’ limb of Section 270A was not met.
The ITAT’s order implicitly clarifies the scope of Section 270A in cases where belated returns are filed. It suggests that merely filing a belated return, without any subsequent undisclosed income or additions made by the tax authorities, does not automatically constitute ‘under-reporting’ for penalty purposes. No judicial precedents were explicitly cited in the provided text of the ITAT’s order to support this reasoning, indicating the Tribunal’s reliance on the direct interpretation of the statutory provision in the context of the facts presented.
In conclusion, the ITAT Delhi Bench set aside both the penalty order issued by the AO and the confirming order by the CIT(A), allowing the assessee’s appeal. This decision reinforces that the ‘under-reporting’ penalty under Section 270A is applicable when a discrepancy exists between the declared and assessed income due to concealment or inaccurate reporting, rather than merely for belated filing where the reported income is accepted without modification.
FULL TEXT OF THE ORDER OF ITAT DELHI
The Assessee has challenged the order of Ld. CIT (A) dated 10/04/2024 wherein the Ld. CIT(A) confirmed the order of penalty passed by the A.O. u/s 270A of the Act for Assessment Year 2018-19.
2. Brief facts of the case are that, the Assessee had not filed the Income Tax Return on time. However, filed return of income on 11/04/2022 declaring total income of Rs. 1,02,88,060/-. Consisting of income from business & profession of Rs.89,86,252/-, income from other sources of Rs. 16,86,810/- and claimed house property loss of Rs.2,00,000/- and Chapter VIA deduction at Rs.1,85,000/-.
3. The assessment in the case of the Assessee was completed at the return income. However, the Ld. A.O. recorded satisfaction for ‘under reporting the income’ and initiated of penalty u/s 270A of the Act. An order of penalty came to be passed u/s 270A of the Act vide order dated 02/05/2023 by imposing the penalty of Rs. 17,15,404/-. Aggrieved by the order of penalty dated 02/05/2023, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order impugned dismissed the Appeal of the Assessee. As against the order of the Ld. CIT(A) dated 10/09/2024, the Assessee preferred the present Appeal.
4. The Ld. Counsel for the Assessee submitted that the Assessee has voluntarily filed the return of income and the same has been accepted by the Department, there is no case of ‘under reporting the income’ as no addition has been made by the A.O. for the year under consideration. Further, submitted that the Ld. CIT(A) has committed error in dismissing the Appeal, thus, sought for allowing the Appeal.
5. Per contra, the Ld. Departmental Representative submitted that the Assessee is a non-filer of the Return of Income. The Return for the year under consideration has been filed only after the case of the Assessee was taken up for scrutiny assessment u/s 147 of the Act. Further submitted that the filing of ITR manually cannot be accepted as there is no record of any condonation granted u/s 119(2) of the Act. Thus submitted that the order of penalty u/s 270A has been rightly imposed for ‘under reporting the income’, accordingly, sought for dismissal of the Appeal.
6. We have heard both the parties and perused the material available on record. It is not in dispute that the Assessee is a non-filer and has filed return of income for the year under consideration belatedly declaring total income of Rs. 1,02,88,060/- and the assessment has been completed at the return income. While passing the assessment order a satisfaction has been recorded by the A.O. for ‘under reporting the income’. Consequent to the said satisfaction, penalty proceedings u/s 270A has been initiated for ‘under reporting the income’ and penalty has been imposed u/s 270A for ‘under reporting the income’. As observed earlier, though the Assessee is a non-filer, while filing Return suo-moto belatedly, declared the total income at Rs. 1,02,88,060/- which has been accepted by the Department and no addition has been made on the quantum. However, a penalty provision has been invoked u/s 270A for ‘under reporting income’. The ‘under Reporting income’ occurs when a person discloses smaller amount than their actual income. In the present case, whatever income reported/declared by the Assessee has been accepted by the Department, therefore, it is not the case of reporting smaller amount than their actual income, thus, the limb of ‘under reporting’ in Section 270A is not applicable and the said limb cannot to be invoked. Considering the above facts and circumstances, the penalty order and the order of the Ld. CIT(A) are hereby set aside.
7. In the result, the Appeal of the Assessee is allowed.
Order pronounced in the open court on 30thMay, 2025
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