AMITA SURESH SHAH,MUMBAI vs. INCOME TAX OFFICER, WARD 27(1)(1), MUMBAI, NAVI MUMBAI

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ITA 1694/MUM/2026Status: DisposedITAT Mumbai18 September 2026AY 2018-199 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 271AAC(1) cannot be sustained. The primary reason is the explicit and repeated initiation of penalty proceedings under Section 270A in the assessment order, coupled with the specific recording of satisfaction for misreporting of income, which is terminology germane to Section 270A. The Tribunal found that this cannot be brushed aside as a mere typographical error, especially given the statutory exclusion under Section 271AAC(2) of imposing penalty under Section 270A for income referred to in Section 271AAC(1). Therefore, the AO's subsequent attempt to substitute Section 271AAC(1) by treating the conscious initiation under Section 270A as a clerical error was not accepted. Furthermore, the Tribunal noted that the assessee, a non-resident, was not registered on the e-filing portal during the relevant period, and the notices were uploaded there. The postal communication was returned, and service was effected by affixture. Considering these peculiar circumstances and the assessee's consistent explanation, which was accepted for condoning the delay in filing the appeal, the Tribunal was not persuaded that the assessee was effectively afforded a meaningful opportunity to respond to the penalty proceedings as mandated by Section 274. The Tribunal set aside the finding of the authorities below and deleted the penalty. The grounds raised by the assessee were allowed.

What were the facts?

The assessee, Amita Suresh Shah, a non-resident Indian, is in appeal against the order of the National Faceless Appeal Centre, Delhi, confirming a penalty of Rs. 2,76,825/- levied under Section 271AAC(1) of the Income-tax Act, 1961. The penalty arose from an addition of Rs. 35,83,500/- made under Section 69 of the Act during reassessment proceedings initiated under Section 147 for AY 2018-19. The assessee had not filed a return of income. The Assessing Officer (AO) completed the assessment ex parte under Section 144 r.w.s. 147, adding the property's stamp duty value as unexplained investment. Crucially, the assessment order explicitly recorded satisfaction for initiating penalty proceedings under Section 270A for misreporting of income, and this direction was repeated multiple times, with no mention of Section 271AAC(1). Subsequently, a penalty under Section 271AAC(1) was levied, with the AO stating the reference to Section 270A was a typographical error.

What were the issues?

1. Whether the penalty levied under Section 271AAC(1) is valid when the assessment order explicitly initiated penalty proceedings under Section 270A, naming the provision and the grounds for initiation (misreporting of income), and made no mention of Section 271AAC(1). - Assessee's contention: The AO consciously initiated proceedings under Section 270A. A subsequent levy under a different provision (Section 271AAC(1)) is unsustainable. The reference to Section 270A was not a mere typographical error but a deliberate recording of satisfaction. The assessee also raised an alternative contention regarding limitation under Section 275(1)(c). - Revenue's contention: Not recorded in the judgment. 2. Whether, in the peculiar facts of the case, the assessee was afforded a reasonable opportunity of being heard as required by Section 274, given her non-resident status, non-registration on the e-filing portal during the relevant period, and issues with service of notices. - Assessee's contention: As a non-resident, she was not registered on the e-filing portal and thus did not receive notices uploaded there. Postal communication was returned, and service by affixture was ineffective. The Ld. CIT(A) condoned the delay in filing the appeal based on this explanation. - Revenue's contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 271AAC(1),Section 69,Section 270A,Section 147,Section 148,Section 142(1),Section 144,Section 56(2)(x),Section 272A(1)(d),Section 274,Section 275(1)(c),Section 115BBE,Section 271AAC(2),Section 271AAC(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SMT. BEENA PILLAI, HON’BLE & SHRI JAGADISH, HON’BLE

आयकर अपीलीय अधिकरण, म ुंबई पीठें, म ुंबई INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI BENCH: A BEFORE SMT. BEENA PILLAI, HON’BLE JUDICIAL MEMBER AND SHRI JAGADISH, HON’BLE ACCOUNTANT MEMBER ITA 1694/MUM/2026 (निर्धारण वर्ा/Assessment Year: 2018-19) AMITA SURESH SHAH INCOME TAX OFFICER, WARD 27(1)(1), MUMBAI 4393 PROVINCE LINE ROAD, PRINCETON NJ 08540 USA VASHI RAILWAY STATION 609/610-6043, USA-854000, Vs. BUILDING, NAVI MUMBAI USA NAVI MUMBAI-400703, MAHARASHTRA अपीलधर्थी Appellant प्रत्यर्थी Respondent

Permanent Account Number of Assessee: AMIPS4955L

अपीलधर्थी द्वारा/Appellant represented by: Shri Nihar H. Mehta, CA प्रत्यर्थी द्वारा/Respondent represented by: Shri Surendra Mohan ( SR. DR. ) सुनवाई की तारीख / Date of conclusion of hearing: 25-Jun-2026 घोषणा की तारीख / Date of pronouncement: 18-09-2026 आदेश / ORDER PER SMT. BEENA PILLAI, JUDICIAL MEMBER: Present appeal is filed by the assessee against the order dated 30/01/2026 passed by the National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], for Assessment Year 2018-19, arising out of penalty levied u/s. 271AAC(1) of the Income-tax Act, 1961 (“the Act”) amounting to Rs.2,76,825/-.

2.

The solitary grievance of the assessee in the present appeal is against the confirmation of penalty of Rs.2,76,825/- levied by the Ld. AO u/s. 271AAC(1) of the Act. The assessee has, inter alia,

ITA 1694/MUM/2026 AMITA SURESH SHAH challenged the levy on the ground that, while passing the assessment order, the Ld. AO had specifically initiated penalty proceedings u/s. 270A of the Act and no proceedings u/s. 271AAC(1) were initiated.

2.1. Brief facts of the case are as under:-

Assessee is a non-resident Indian and had not filed return of income for the year under consideration. Information was received from the Sub-Registrar regarding an immovable property having stamp duty value of Rs.35,83,500/-. Based upon such information, proceedings u/s. 147 were initiated and notice u/s. 148 was issued on 13/04/2022.

2.2. During the reassessment proceedings, notices u/s. 142(1) dated 01/11/2023 and 11/12/2023 were issued. As there was no compliance, the assessment was completed ex parte u/s. 144 r.w.s. 147 of the Act vide order dated 09/02/2024 determining the total income at Rs.35,83,500/-. Though at the initial stage the Ld. AO referred to the provisions of section 56(2)(x) of the Act, while completing the assessment the amount of Rs.35,83,500/- was ultimately added as unexplained investment u/s. 69 of the Act.

2.3. It is relevant to note that while making the aforesaid addition, the Ld. AO recorded the following satisfaction in paragraph 7.1 of the assessment order:

“I am satisfied that the assessee has misreported her income to the tune of Rs. 35,83,500/- as the assessee has failed to record the receipt in the books of account having bearing on the total income of the assessee. Therefore, penalty proceedings under section 270A of the Act for mis-reporting of income to the extent of Rs. 35,83,500/- are being initiated separately.”

ITA 1694/MUM/2026 AMITA SURESH SHAH Thereafter, while concluding the assessment in paragraph 9, the Ld.AO once again specifically recorded that penalty proceedings u/s.270A were being initiated for misreporting of income. Penalty proceedings u/s.272A(1)(d) were also directed to be initiated for non-compliance with notices u/s.142(1).

2.4. Even the concluding direction contained in the assessment order reads as under:

“Issue Demand notice, computation sheet. Issue penalty notices u/s 270A and 272A(1)(d) of the Act.” Thus, admittedly, there is no direction in the assessment order for initiation of penalty proceedings u/s. 271AAC(1) of the Act.

3.

Subsequently, penalty proceedings u/s.271AAC(1) came to be proceeded with and penalty of Rs.2,76,825/- was levied. In the penalty order, the Ld.AO sought to explain that mention of section 270A in the assessment order was merely a typographical error and that the proceedings were actually intended to be initiated u/s. 271AAC(1). The Ld.AO accordingly computed penalty at 10% of the tax payable u/s. 115BBE on the addition of Rs.35,83,500/-.

Aggrieved by the penalty order, the assessee preferred appeal before the Ld. CIT(A).

4.

It was submitted that the assessee is a non-resident Indian and, there being no taxable income requiring filing of return, she did not register herself on the income-tax e-filing portal. It was submitted that the assessee registered herself on the portal only on 05/01/2025 and, therefore, the notices uploaded on the portal during reassessment proceedings never came to her knowledge.

ITA 1694/MUM/2026 AMITA SURESH SHAH 4.1. The assessee further challenged the penalty on the ground that the Ld.AO had consciously initiated proceedings u/s. 270A while passing the assessment order and, therefore, subsequent levy of penalty under a different provision, namely section 271AAC(1), could not be sustained. The assessee had also raised an alternative contention regarding limitation u/s. 275(1)(c) of the Act.

4.2. The Ld.CIT(A), however, rejected the aforesaid contentions. According to the Ld.CIT(A), reference to section 270A in the assessment order was merely clerical in nature and the subsequent notices issued u/s. 274 r.w.s. 271AAC(1) constituted valid initiation of penalty proceedings. The Ld. CIT(A) accordingly upheld the penalty of Rs.2,76,825/-.

We have perused the submissions advanced by both sides in light of the record placed before us.

5.

At the outset, we note that the controversy before us lies in a narrow compass. The addition of Rs.35,83,500/- was ultimately made u/s. 69 of the Act. We are presently concerned only with the validity of penalty levied u/s. 271AAC(1) of the Act.

5.1. Section 271AAC(1), insofar as relevant, empowers the Ld.AO to direct levy of penalty where the income determined includes income referred to, inter alia, in section 69 of the Act. Sub-section (2) of section 271AAC, however, specifically provides that no penalty u/s. 270A shall be imposed in respect of income referred to in section 271AAC(1).

5.2. In the present case, the assessment order assumes significance. The Ld.AO has not merely mentioned section 270A 4

ITA 1694/MUM/2026 AMITA SURESH SHAH once in passing. In paragraph 7.1, the Ld. AO consciously recorded satisfaction that the assessee had “misreported” her income and expressly directed initiation of penalty proceedings u/s. 270A. The same direction was repeated in paragraph 9 of the assessment order and again in the concluding direction to issue penalty notices. On the other hand, section 271AAC(1) does not find mention anywhere in the assessment order while recording satisfaction for initiation of penalty.

5.3. In our considered opinion, such repeated and specific reference to section 270A cannot, in the peculiar facts of the present case, be brushed aside as a mere typographical mistake. A typographical error ordinarily denotes an accidental error in transcription. In the present case, however, the Ld. AO has not merely written an incorrect section number; he has specifically recorded that the assessee had misreported her income, which is terminology germane to section 270A, and thereafter directed initiation under that very provision. The intention recorded contemporaneously in the assessment order is therefore clear and unambiguous.

5.4. This assumes further significance in view of section 271AAC(2), which expressly excludes levy of penalty u/s. 270A in respect of income falling within section 271AAC(1). Therefore, proceedings under the two provisions cannot simply be treated as interchangeable. Once the Ld.AO consciously recorded satisfaction under one penal provision, which the statute itself excludes in relation to the income in question, the same cannot subsequently be converted into an initiation under another provision merely by describing the former as a clerical error.

ITA 1694/MUM/2026 AMITA SURESH SHAH 5.5. We also find that the Ld.CIT(A) proceeded on the basis that penalty proceedings u/s. 271AAC(1) were subsequently initiated by issuance of a notice u/s. 274. This itself does not alter the fact that, at the stage of completion of assessment, the Ld.AO had consciously initiated proceedings only u/s. 270A. The subsequent proceedings cannot retrospectively rewrite the satisfaction recorded in the assessment order.

5.6. We further take note of the peculiar facts surrounding service of notices upon the assessee. The assessment order itself records that notices dated 13/04/2022, 01/11/2023 and 11/12/2023 were uploaded in the e-filing account of the assessee and remained uncomplied with. The assessee has consistently explained that she was a non-resident Indian and had not registered herself on the income-tax e-filing portal during the relevant period and that registration on the portal took place only on 05/01/2025. The Ld.CIT(A) himself accepted this explanation while condoning the delay in filing the first appeal.

5.7. It is also recorded in the impugned order that the postal communication sent during penalty proceedings was returned with remarks indicating that the assessee was not available at the address and thereafter service was stated to have been effected by affixture. In the circumstances peculiar to the present case, the fact that the assessee was not registered on the portal and was residing outside India cannot altogether be ignored while examining whether she had an effective opportunity to respond to the penalty proceedings.

5.8. Section 271AAC(3) makes sections 274 and 275 applicable to proceedings under section 271AAC. Section 274 mandates that no

ITA 1694/MUM/2026 AMITA SURESH SHAH penalty shall be imposed unless the assessee has been heard or has been afforded a reasonable opportunity of being heard. Having regard to the manner in which the proceedings were conducted and the explanation consistently furnished by the assessee regarding her non-registration on the portal, we are not persuaded that the mere uploading of notices, coupled with an unsuccessful postal communication followed by affixture, on the facts of the present case, effectively afforded the assessee a meaningful opportunity to explain her case.

5.9. We have also considered the reliance placed by the Ld. CIT(A) upon the decision of the Hon'ble Supreme Court in Union of India v. Dharmendra Textile Processors and the observations relating to mens rea. In our view, the said proposition does not address the controversy before us. We are not deleting the penalty on the ground that mens rea has not been established. The issue before us is whether, having consciously and repeatedly initiated proceedings under section 270A in the assessment order, the Ld. AO could subsequently treat the said initiation as a typographical error and proceed under section 271AAC(1), coupled with the peculiar circumstances relating to opportunity of hearing. Therefore, the discussion regarding strict civil liability does not resolve the defect arising in the present case.

5.10. Similarly, the observations of the Ld.CIT(A) regarding culpability on account of non-compliance do not alter our conclusion. The assessee's explanation regarding absence of registration on the e-filing portal has not been found to be false; on the contrary, the said explanation was accepted for the purpose of condoning the delay. In such circumstances, non-response to

ITA 1694/MUM/2026 AMITA SURESH SHAH electronically generated communications by itself cannot justify overlooking the fundamental inconsistency in initiation of penalty proceedings.

5.11. Considering the totality of the facts and circumstances, we are of the opinion that the penalty levied u/s. 271AAC(1) cannot be sustained. The assessment order specifically and repeatedly records initiation of penalty proceedings u/s. 270A for misreporting of income and contains no initiation whatsoever u/s. 271AAC(1). The subsequent attempt to substitute section 271AAC(1) by treating the conscious initiation u/s. 270A as a typographical error cannot be accepted in the peculiar facts before us. We set aside the finding of the authorities below and delete the penalty levied u/s. 271AAC(1) of the Act.

Accordingly, grounds raised by the assessee stands allowed.

In the result, the appeal filed by the assessee stands allowed.

Order pronounced in the open court on 18-09-2026.

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 18-09-2026 Shamik, Sr. P.S.

ITA 1694/MUM/2026 AMITA SURESH SHAH Copy to: AMITA SURESH SHAH, 4393 PROVINCE LINE ROAD, PRINCETON NJ 08540 USA 609/610- 1 6043, USA-854000, USA INCOME TAX OFFICER, WARD 27(1)(1), MUMBAI, VASHI RAILWAY STATION BUILDING , 2 NAVI MUMBAI, NAVI MUMBAI-400703, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY

ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI

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