Subbalakshmamma Pinnama Vs ITO (ITAT Hyderabad)
The Tribunal observed that although the assessee did not furnish a return u/s 139(1) for AY 2017-18, she had voluntarily remitted ₹16,00,000 as self-assessment tax well in advance of the notice issued u/s 148. Upon receipt of the notice, she promptly filed the return disclosing long-term capital gains of ₹1,50,68,940, which the Assessing Officer accepted in toto without any variation. The delay in filing the return was attributed to genuine uncertainty surrounding the taxability of gains arising from a Joint Development Agreement involving shared ownership with her son, ongoing disputes with the developer, and ambiguity relating to the application of Section 45(5A). ITAT held that these circumstances established a bona fide explanation, supported by full disclosure and prior tax payment, thereby negating any element of under-reporting. Consequently, the assessee’s case fell squarely within Section 270A(6), and the penalty of ₹17,55,303 sustained by NFAC was ordered to be deleted in entirety.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 26.08.2025 relating to the assessment year 2017-18.
2. The brief facts of the case are that, the assessee, an individual, did not file her return of income for A.Y. 2017-18 under Section 139(1) of the Income-tax Act, 1961. The Jurisdictional Assessing Officer received information that, the assessee had been allotted 27 flats in “Sri Sai Residency Apartment”, Thummalagunta, Tirupati, in lieu of land given to the developer, but the assessee had not offered any income relating to this transaction. Based on this information, the assessment was reopened under Section 147 of the Act, by issuing notice under Section 148 of the Act, on 10.02.2020. In response, the assessee filed her return of income on 27.03.2021 admitting total income of Rs.1,50,68,940/-. The Assessing Officer completed the assessment under Section 143(3) of the Act, accepting the returned income. Since the assessee had not filed the return voluntarily under Section 139(1) despite having taxable income, the A.O. held that, the income of Rs.1,50,68,940/- constituted under-reported income and initiated penalty proceedings under Section 270A of the Income-tax Act, 1961 by issuing notice under Section 274 r.w.s. 270A. During the penalty proceedings, the assessee submitted explanations and stated that, the delay in filing the return was due to disputes with the developer, uncertainty regarding her share of property, applicability of Section 45(5A), and other personal circumstances. The A.O. did not accept these explanations and held that, the assessee admitted the income only after issuance of notice under Section 148 of the Act, and that, had the case not been reopened, the income would have escaped assessment. Accordingly, the A.O. levied penalty of Rs.17,55,303/-under Section 270A of the Act, for under-reporting of income.
