Nirjeet Singh Vs ITO (ITAT Delhi)
Buy Peace, Pay Tax, Still Penalised?- Immunity u/s 270AA Cannot Be Denied by Labeling Genuine Dispute as ‘Misreporting’
Purchase Return Dispute ≠ Misreporting: ITAT Quashes 270A(9) Penalty & Grants Immunity
Delhi ITAT ‘E’ Bench in Nirjeet Singh vs ITO, Ward 52(1), Delhi (ITA No.5151/Del/2025, AY 2022-23, order dated 23-12-2025) deleted penalty of ₹10.69 lakh levied u/s 270A(9), holding that a mere purchase-return mismatch does not amount to “misreporting of income” and therefore immunity u/s 270AA could not be denied mechanically.
Assessee had filed ROI declaring income of ₹77.09 lakh. During scrutiny, AO disallowed ₹17.13 lakh on account of alleged excess purchases, treating it as under-reporting in consequence of misreporting. Penalty proceedings were initiated and despite assessee paying tax & interest and filing Form 68 seeking immunity u/s 270AA, AO rejected immunity on the ground that the case fell u/s 270A(9), and levied penalty. CIT(A), NFAC confirmed the levy.
ITAT examined the scope of section 270A(9) and noted that misreporting is confined to specific situations such as misrepresentation, suppression of facts, false entries, or unsubstantiated expenditure. On facts, assessee had fully disclosed purchase transactions, produced ledger accounts and supplier confirmation, and the dispute arose only because AO did not accept the explanation regarding purchase returns. There was no concealment, no false entry, and no suppression of facts.
Tribunal held that mere non-acceptance of an explanation or an addition made to “buy peace” cannot automatically be branded as misreporting. Since the case did not fall under any clause of section 270A(9), penalty was unsustainable. Accordingly, ITAT deleted the penalty in entirety, holding that the assessee was wrongly denied immunity and that the levy itself failed on merits.
Key takeaway: Every addition is not misreporting. Section 270A(9) has a narrow and specific scope, and Revenue cannot deny immunity or impose penalty merely by affixing the “misreporting” label to a routine accounting dispute.
FULL TEXT OF THE ORDER OF ITAT DELHI
