POONAM,GURUGRAM vs. ITO WARD 3(1), GURUGRAM

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI Before Sh. Raj Kumar Chauhan, Judicial Member & Sh. Amitabh Shukla, Accountant Member ITA No. 5649/Del/2026 : Asstt. Year : 2018-19 Poonam, Vs Income Tax Officer, H. No. 403/12, Ward No. 1, Krishna Ward-3(1), Colony, Gurgaon, Haryana-122001 Gurgaon, Haryana-122001 (APPELLANT) (RESPONDENT) PAN No. DOLPP1652D Assessee by: Sh. Manjeet Anjna, CA Revenue by: Sh. Raghubir Singh, Sr. DR Date of Hearing: 09.09.2026 Date of Pronouncement: 16.09.2026 ORDER Per Raj Kumar Chauhan, Judicial Member: The appeal of the assessee is directed against the order dated 23.03.2026 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the ld. CIT(A) has confirmed the penalty of Rs.14,96,728/- imposed by the Assessing Officer u/s 270A of the Act for A.Y. 2018-19.

2 ITA No. 5649/Del/2026 Poonam property for a consideration of Rs.95,95,000/- during FY 2017- 18.In response to the reassessment proceedings, the assessee filed her return of income on 19.12.2022, declaring total income of Rs.38,92,835/-. The assessee also furnished the computation of income wherein long-term capital gain of Rs.36,98,952/- arising from sale of the property was disclosed. The assessee further furnished bank account details evidencing the sale consideration and details of TDS of Rs.95,950/-. Thereafter, the assessment proceeding was completed u/s 147 r.w.s. 144B of the Act. The assessee had also paid self-assessment tax along with interest amounting to Rs.13,96,470/- on 19.12.2022. The final assessed income was determined at Rs.38,92,835/-, with nil variation from the income declared in the return filed under section 148.Despite the above factual position, the AO initiated penalty proceedings u/s 270A of the Act and treated the entire income of Rs.38,92,835/- as “misreported income” andcomputed tax on the alleged misreported income at Rs.7,48,364/- and levied penalty at 200% thereof, amounting to Rs.14,96,728/-.

3 ITA No. 5649/Del/2026 Poonam establish reasonable cause for exemption from levy of penalty and consequently, the appeal was dismissed.

“1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. Commissioner of Income Tax (Appeals) confirming penalty levied under section 270A of the Income-tax Act, 1961 is illegal, arbitrary, contrary to facts on record and liable to be quashed. 2. That the Ld. CIT(A) grossly erred both on facts and in law in confirming penalty of Rs. 14,96,728/- levied by the Assessing Officer under section 270A(9) for “misreporting of income” despite the admitted and undisputed fact that the reassessment order passed under section 147 accepted the returned income in entirety without making any addition, disallowance or variation. The present case at best could only fall within the ambit of alleged “under- reporting” and not “misreporting”, and therefore levy of penalty at enhanced rate of 200% is wholly illegal and unsustainable. 3. That the Ld. AO erred in law in treating the case as one involving “misreporting of income” within the meaning of section 270A(9) without establishing fulfillment of any of the mandatory statutory conditions prescribed therein. 4. That the Ld. AO grossly erred in deliberately ignored the true tenor, context and substance of the reply filed and selectively reproducing, distorting and mischaracterizing the reply filed by the assessee against show cause notice issued under section 270A to portray the matter as a case of “misreporting”. This clearly makes the order liable to be quashed on account of violation of principles of natural justice in as much as the assessee’s submissions were neither considered nor adjudicated. 5. That the authorities below failed to appreciate that the assessee had specifically sought immunity under section 270AA and had expressly relied upon statutory provisions

4 ITA No. 5649/Del/2026 Poonam relating to immunity from penalty. And that the assessee had substantially complied with the substantive conditions of section 270AA. 6. That the assessee could not effectively file Form No. 68 due to practical and procedural impossibility arising from peculiar facts of the case inasmuch as:  taxes and interest already stood discharged through self-assessment tax prior to completion of reassessment;  no consequential effective demand was raised in reassessment order relatable for Form No. 68 purposes; and  Form No. 68 mandatorily requires payment date and challan linkage corresponding to demand. 7. That the Ld. AO incorrectly recorded in penalty order that the assessee had not filed return in response to notice under section 148, whereas the reassessment order itself specifically records filing of return on 19.12.2022 declaring total income of Rs. 38,92,835/-. 8. That the Ld. CIT(A) failed to adjudicate the following crucial grounds specifically raised by the assessee:  absence of additions in reassessment;  absence of ingredients of section 270A(9);  contradiction between reassessment order and penalty order;  improper invocation of “misreporting”;  distortion of assessee’s reply;  immunity under section 270AA; and  impossibility regarding Form No. 68.” 5. We have heard the ld. AR and the ld. DR. The ld. AR, at the very outset, submitted that the assessee had duly disclosed the sale transaction and the resultantly long-term capital gain in the return filed in response to notice u/s 148 of the Act. It was further submitted that the returned income was accepted by the AO without making any addition or variation and,

5 ITA No. 5649/Del/2026 Poonam therefore, there was no case of misreporting of income u/s 270A(9) of the Act. Accordingly, the ld. AR pleaded for deletion of the penalty of Rs.14,96,728/- levied u/s 270A of the Act.

6 ITA No. 5649/Del/2026 Poonam variation. The AO, however, treated the entire income of Rs.38,92,835/- as misreported income and levied penalty u/s 270A at 200%, amounting to Rs.14,96,728/-. In our considered view, mere non-filing of the original return u/s 139 of the Act, by itself, cannot lead to the conclusion that the assessee had misreported her income within the meaning of section 270A(9) of the Act. We also find that the penalty order proceeds on the premise that the assessee had not filed the return in response to notice u/s 148, whereas the assessment order specifically records that the assessee filed the return on 19.12.2022 declaring total income of Rs.38,92,835/-. In view of the above facts, we are of the considered opinion that the Revenue has failed to establish the necessary statutory requirements for treating the case as one of misreporting of income u/s 270A(9) of the Act. We have further noticed that the assessee has made a request for grant of immunity u/s 270AA of the Act which was not considered by the Assessing Officer as well as by the ld. CIT(A) while passing the impugned order. As per section 270AA(3) of the Act, the Assessing Officer shall grant immunity from imposition of penalty u/s 270A where the proceedings for penalty u/s 270A has not been initiated under the circumstances referred to in sub-section (9) of the section 270A of the Act.

7 ITA No. 5649/Del/2026 Poonam The Assessing Officer thus failed to consider the said request of the assessee which was legally and factually justified in the given facts and circumstances of the case. The levy of penalty at 200% of the tax payable on the alleged misreported income is, therefore, not sustainable. Accordingly, we set aside the order of the ld. CIT(A) and delete the penalty of Rs.14,96,728/- levied u/s 270A of the Act. The grounds raised by the assessee are allowed.