KAUSHAL JUGAL TAPARIA,VARODARA vs. OFFICER, VARODARA

IN THE INCOME TAX APPELLATE TRIBUNAL "SMC” BENCH, AHMEDABAD DR. B.R.R. KUMAR VICE PRESIDENT AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.74/AHD/2026 (Assessment Year: 2019-2020) Kaushal Jugal Taparia, Flat No. B 503, Shree Siddhnath Paradise, Waghodiya Road, Vadodara [PAN-AJAPT2365G] …………. Appellant Dy. Commissioner of Income Tax , Vs. Circle-1(1)(1), Vadodara Aaaykar Bhawan Vadodra, Gujarat 390007 …………. Respondent

Appearance For the Appellant/Assessee : Shri Naresh Birla, C.A. Respondent/Department : Shri Amit Pratap Singh, Sr. DR Date Conclusion of hearing : 21.07.2026 Pronouncement of order : 30.07.2026

O R D E R Per Rahul Chaudhary, Judicial Member: 1. This appeal has been preferred by the Assessee against the Order, dated 11/11/2025, passed by National Faceless Appeal Centre, Delhi [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had dismissed the appeal against the Penalty Order, dated 07/07/2025, passed under Section 270A of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment year 2019- 2020.

ITA No. 74/AHD/2026 Assessment Year 2019-2020 3. The brief facts of the case are that the Assessee had filed return of income for Assessment Year 2019-2020 on 12/08/2019 declaring total income of INR.7,13,850/-. The return was processed vide intimation under Section 143(1) of the Act. Subsequently, the Assessing Officer had information that a search action under Section 132 of the Act was conducted on Registered Unrecognized Political Parties (RUPP) in which Yuva Jan Jagriti Party was also covered. It was found that the aforesaid political parties were providing accommodation entries in the form of bogus donations. As per the information the Assessee had obtained accommodation entry of INR.1,00,000/- in the form of donation to political party (i.e. Yuva Jan Jagriti Party) during the previous year relevant to Assessment Year 2019-2020. Reassessment proceedings were initiated in the case of the Assessee and notice, dated 13/04/2023, was issued to the Assessee under Section 148 of the Act. The Assessing Officer passed Assessment Order under Section 147 rws 144 rws 144B of the Act, dated 13/02/2025, assessing total income of INR.8,13,850/- after making addition of INR.1,00,000/- by disallowing the deduction claimed under Section 80GGC of the Act in the original return of income and initiated penalty proceedings under Section 270A of the Act. The aforesaid penalty proceedings culminated into passing of the Penalty Order, dated 07/07/2025, whereby penalty of INR.41,602/- computed @200% of tax on under-reported income of INR.1,00,000/-. The appeal preferred by the Assessee before the Learned CIT(A) did not yield any favourable results as the Learned CIT(A) dismissed the appeal vide order dated 11/11/2025, passed under Section 250 of the Act.

ITA No. 74/AHD/2026 Assessment Year 2019-2020

Bench of the Tribunal in the case of Hiro Mulchand Tanwani Vs. ITO [ITA No.110/AHD/2026, dated 15/05/2026] the relevant extract of which reads as under:

“3. The assessee challenged the levy of penalty under Section 270A of the Income-tax Act, 1961, contending that the Assessing Officer was not justified in treating the disallowance of deduction claimed under Section 80GGC as a case of “misreporting of income.” The facts reveal that the assessee had filed the return of income for Assessment Year 2019-20 declaring total income of Rs.13,25,710 after claiming deduction of Rs.1,50,000 under Section 80GGC in respect of donation made to a political party, namely Manvadhikar National Party. Subsequently, the assessment was reopened under Section 148 to verify the genuineness of the said donation. In the reassessment completed under Section 147 read with Section 144B, the Assessing Officer disallowed the deduction and assessed the total income at Rs.14,75,710, and thereafter levied penalty of Rs.93,600 under Section 270A on the ground that the assessee had under- reported income in consequence of misreporting. 4. The contention of the Assessing Officer that the assessee had accepted the addition by not filing an appeal against the disallowance cannot, by itself, be a valid basis for concluding that there was misreporting of income. The mere fact that the assessee chose not to challenge the quantum addition due to the relatively small amount involved and in order to avoid prolonged litigation does not amount to an admission of concealment or furnishing of false particulars. It is well settled that penalty proceedings are distinct and independent from assessment proceedings, and the findings in the assessment order are not conclusive for the purpose of levy of penalty. Section 270A draws a clear distinction between “under-reporting of income” and “misreporting of income.” Misreporting is attracted only in specific circumstances enumerated in sub-section (9), such as misrepresentation or suppression of facts, failure to record investments, claiming of expenditure not substantiated by

ITA No. 74/AHD/2026 Assessment Year 2019-2020

evidence, recording false entries, or failure to report receipts. In the present case, the assessee had duly disclosed the donation in the return of income and claimed deduction under Section 80GGC based on the belief that the payment qualified for deduction. The disallowance arose because the Assessing Officer was not satisfied about the genuineness or eligibility of the donation. However, there is no material on record to establish that the assessee had furnished any false evidence, suppressed any facts, or made any deliberate misrepresentation. A claim of deduction made in the return, even if ultimately found to be inadmissible, does not automatically lead to the conclusion that the assessee has misreported income. Unless the Revenue demonstrates with cogent evidence that the claim was bogus and knowingly made on the basis of false particulars, penalty for misreporting cannot be sustained. At best, the case may fall within the ambit of under-reporting of income, but even that would require the Assessing Officer to establish that the conditions prescribed under Section 270A are satisfied. In the absence of any finding that the assessee deliberately furnished inaccurate particulars or fabricated documents, the higher penalty prescribed for misreporting is not legally tenable. Accordingly, considering that the deduction was claimed transparently in the return of income and that the disallowance was based solely on the Assessing Officer’s adverse view regarding its admissibility, the levy of penalty under Section 270A on misreporting of income is unsustainable in law. The penalty of Rs.93,600 is therefore directed to be deleted.” 6. In the absence of any change in factual matrix and legal proposition, following the above decisions of the Co-ordinate Benches of the Tribunal, we delete the Penalty of INR.41,602/- levied upon the Assessee under Section 270A of the Act.

ITA No. 74/AHD/2026 Assessment Year 2019-2020 misreporting cannot be sustained.

Order pronounced on 30.07.2026.

Sd/- Sd/- (Dr. B.R.R. Kumar) (Rahul Chaudhary) Vice President Judicial Member

िदनांक Dated : 30.07.2026 अहमदाबाद Ahmedabad; True Copy True Copy DS, PS

ITA No. 74/AHD/2026 Assessment Year 2019-2020 आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent. 3. संबंिधतआयकरआयु�/ Concerned CIT 4. आयकरआयु�(अपील) / The CIT(A) 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण/ DR, ITAT, 6. गाड�फाईल /Guard file. आदेशानुसार/BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, अहमदाबाद / ITAT, Ahmedabad