DEVENDER KUMAR TYAGI,GHAZIABAD vs. INCOME TAX OFFICER, WARD 2(1)(2), GHAZIABAD

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ITA 3379/DEL/2026Status: DisposedITAT Delhi28 July 2026AY 2017-186 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 penalty under Section 270A cannot be levied mechanically. Merely because an item of income is claimed as exempt by the assessee and taxed by the revenue does not automatically attract penalty for underreporting.

What were the facts?

The assessee claimed interest on enhanced compensation as exempt, but the AO taxed it. The CIT(A) upheld the addition, and a penalty under Section 270A was levied. The assessee argued that the issue was debatable and penalty was not warranted.

What were the issues?

Whether penalty under Section 270A is leviable when the taxability of income is a debatable issue and the assessee claimed it as exempt based on their interpretation of law.

Which sections of the Income-tax Act were involved?

Section 270A,Section 10(37),Section 56(2)(viii),Section 57(iv)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

For Appellant: Shri Sunil Kumar Tyagi, C.A
For Respondent: Shri Balkishan Gopal, Sr. D.R
Hearing: 28.07.2026Pronounced: 28.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3379/Del/2026 (Assessment Year : 2017-18) Devender Kumar Tyagi Vs. ITO S/o Chandakiran Tyagi NFAC, Delhi Village Makanpur, B.O. Makanpur, Ghaziabad UP-201 014 PAN No. AMNPT 6776 H (APPELLANT) (RESPONDENT) Assessee by Shri Sunil Kumar Tyagi, C.A. Revenue by Shri Balkishan Gopal, Sr. D.R. Date of hearing: 28.07.2026 Date of Pronouncement: 28.07.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : The instant appeal filed by the assessee is directed against the order dated 29.01.2026 passed by Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)/NFAC], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, ‘Act’] order u/s. 270A of the Income Tax Act, 1961 passed by the National Faceless Assessment Centre, Delhi on 24.06.2025 for the A.Y. 2017-18.

ITA No. 3379/DEL/2026 [A.Y 2017-18] Devender Kumar Tyagi vs. ITO 2. Assessee filed the following grounds of appeal as under:

1.

That the ld. authorities below passed/confirmed the impugned penalty order Ex-Parte in mechanical manner without providing effective and reasonable opportunity of being heard to assessee and thus the same is against the specific provisions of law and is also in violation of principles of natural justice and is liable to be quashed. 2. That the Id. authorities below passed/confirmed the impugned penalty order Ex-Parte in mechanical manner using facts and figures of some other case, which are absolutely alien/ de-hors to AY 2017- 18 and as per records, neither any assessment order nor any assessed income, transaction year or filing of appeal etc exists for the said year as cited in impugned penalty order and thereby the same is passed as per ipse-dixit of ld. AO without existence of fact and figures which are made basis of such penalty and thereby impugned penalty is non-est and is liable to be quashed. 3. That the impugned penalty u/s 270A is imposed without any iota of any allegation or whisper of any underreporting by the assessee while passing the assessment order u/s 143(3), which is imperative and condition precedent before imposing any penalty upon the assessee and thus the impugned penalty is legally untenable and is liable to be quashed. 4. That the impugned penalty u/s 270A is imposed without any satisfaction by the ld. AO, which is imperative and condition precedent before imposing any penalty upon the assessee, being a penal provisions and as per binding guidelines of the Central Broad of Direct Taxes and thus the impugned penalty is legally untenable and is liable to be quashed. 5. That the assessee has not underreported any income and furnished its return in accordance with the rulings laid down by the Honorable Supreme Court and the income as assessed emanated from return filed by the assessee and assessee substantiated its claim and explanation with requisite supporting documents and thus at any rate without prejudice, impugned penalty of Rs. 672495/- u/s 270A is absolutely arbitrary, perverse, unlawful, unwarranted, bad in law and is liable to be deleted. 6. That the ld. authorities below passed/confirmed the impugned penalty u/s 270A in most mechanical and automatic manner without any deliberation and appreciation of correct facts and by ignoring Page 2 of 7

ITA No. 3379/DEL/2026 [A.Y 2017-18] Devender Kumar Tyagi vs. ITO settled legal position by the Hon'ble Supreme Court that merely income claimed as exempt by assessee is taxed by revenue does not warrant to levy any penalty and various observations in impugned order are either factually incorrect or having no relevancy to the facts and circumstances of the case and thus the impugned penalty is liable to be deleted. 7. That the Id. AO erred in imposing impugned penalty based on unwarranted additions, purportedly made by referring-to non- jurisdictional High Court judgment and ignoring the ruling of Honorable Supreme Court and at any rate without prejudice, the rulings most beneficial to assessee ought to have applied and thereby the said impugned action is perverse and bad in law is liable to be quashed. 8. That the impugned penalty order dated 24.06.2025 u/s 270A is barred by limitation because the same is passed after the stipulated limitation period prescribed for imposing penalty and thus the same is legally untenable and is liable to be quashed. 9. That the impugned penalty order u/s 270A was passed without obtaining approval of the competent authority, as evident from body of such order and thus the said order is against the specific provisions of section 274(2) and is untenable in law and is liable to be quashed. 10. That all the above grounds are independent grounds, which are without prejudice to one another and adjudication of any particular ground in a particular manner would not adversely affect the adjudication of other ground(s). 11. The Appellant reserves its right to add, amend, modify, supplement, rectify, correct, omit, alter, delete, not to press or withdraw any ground of appeal at any time during the course of appellate proceedings.” 3. Brief facts of the case are that the assessee filed original on 21.03.2018 showing total income of Rs. 45,82,390/- and agricultural income at Rs. 1,02,350/-. Subsequently the revised return was filed on 21.03.2019 showing total income at Rs. 2,47,710/- and agricultural income at Rs. 1,02,350/-. In the revised return the income shown at

Page 3 of 7

ITA No. 3379/DEL/2026 [A.Y 2017-18] Devender Kumar Tyagi vs. ITO Rs. 44,86,246/- on account of interest received on enhanced compensation from Ghaziabad Development Authority, was claimed as exempt u/s 10(37) of the Act. The case was selected for 'scrutiny' through CASS. Notice under section 143(2) was issued, and delivered electronically on 23.09.2019. Notice under section 142(1) was also issued on 11.10.2019. 4. During the assessment proceedings, the AO held the interest received on compensation/enhanced compensation, to be taxable u/s 56(2)(viii) of the Act, subject to deduction u/s 57(iv). Accordingly, an addition of Rs.49,42,001/- was made and the assessment was completed u/s 143(3) read with section 144B of the Act. Simultaneously, penalty proceedings u/s 270A were initiated for under- reporting of income. Upon appeal, the Ld. CIT(A), vide appellate order dated 04.12.2024, partly allowed the quantum appeal. However, the principal grounds challenging the addition of Rs.49,42,001/- were dismissed, thereby sustaining the addition made by the Assessing Officer. Consequent to the above, the Assessing Officer passed the impugned penalty order u/s 270A, holding that the assessee had under- reported income to the extent of Rs.49,42,001/- and levied penalty of Rs.6,72,495/-, being 50% of the tax on such under-reported income. Aggrieved with the action of AO, the assessee has preferred appeal

Page 4 of 7

ITA No. 3379/DEL/2026 [A.Y 2017-18] Devender Kumar Tyagi vs. ITO before the learned CIT(A). The learned CIT(A) dismissed the appeal of the assessee. Aggrieved, assessee now in appeal before us. 5. Before us, the substantive issue involved in the case is whether penalty levied under section 270A on account of interest received on enhanced compensation, calls for penalty u/s 270A for underreporting. The learned Counsel of the assessee informed that the quantum appeal was dismissed by the ITAT on technical ground as the Form 36 was not signed. The ld AR submitted that the assessee was in the process of filing correct Form 36 and reviving the quantum appeal. The ld AR further submitted that the issue of taxability of interest on enhanced compensation is debatable. The ld AR further pointed out that no satisfaction was recorded by the AO for initiating penalty u/s 270A.

6.

The learned DR of the Revenue submitted that now the quantum appeal has been confirmed the penalty should also be confirmed. 7. We have heard the rival submission and perused the material available on record. It is a settled position of law that penalty under section 270A cannot be levied mechanically and in automatic manner. The assessee, in the instant case, has claimed income from interest on enhanced compensation from the sale of land, as exempt u/s 10(37), which has been taxed by the Revenue u/s 56(2)(viii) r.w. section 57(iv) of the Act. We find force in the assessee’s submissions that just

Page 5 of 7

ITA No. 3379/DEL/2026 [A.Y 2017-18] Devender Kumar Tyagi vs. ITO because the assessee has claimed an item of income as exempt by way of his interpretation of law, does not give liberty to the Revenue to levy penalty for underreporting u/s 270A. In such facts and circumstances, we follow the decision Commissioner of Income-tax, Ahmedabad vs. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC), where it was held that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). We accordingly, hold that penalty levied under section 270A, in the instant facts and circumstances of the case, is untenable in law and therefore, quashed. Appeal is decided in aforesaid terms. 8. In the result, appeal filed by the assessee in ITA No.3379/Del/2026 is allowed. Order pronounced in the open court on 28.07.2026 Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 03.08.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Page 6 of 7

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