VEDALA NARSIMHA RAJU,HYDERABAD vs. ITO, WARD-12(6), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.450/Hyd/2026 (िनधा�रण वष�/Assessment Year: 2018-19) Shri Vedala Narsimha Raju Vs. Income Tax Officer HYDERABAD Ward 12 (6) PAN: ADYPV0291M Hyderabad (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: CA Abhiroop Bhargav राज� व �ारा/Revenue by: Shri Mohan Babu, Sr. AR सुनवाई की तारीख/Date of hearing: 06/07/2026 घोषणा की तारीख/Pronouncement: 15/07/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Shri Vedala Narsimha Raju (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 01.12.2025 for the A.Y. 2018-19.

“1. That on facts and circumstances of the case and in law, the Order u/s 270A as well as the Order under Section 250 of Income-tax Act, 1961 ('Act') is bad in law; 2. That on the facts and circumstances of the case, the Ld.AO erred in levying a penalty under Section 270A of the Act and the NFAC/CIT(A) erred in confirming the penalty levied by the Ld.AO amounting to Rs.7,80,329; 3. The Appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal. Each of the Grounds are without prejudice to each other 3. The brief facts of the case are that the assessee is an individual who had not filed any return of income for Assessment Year 2018-19 under section 139 of the Income Tax Act, 1961(“the Act”). Based on the information available with the Learned Assessing Officer (“Ld. AO”), he came to know that during the year under consideration the assessee had purchased an immovable property and had earned salary income. Accordingly, the Ld. AO initiated reassessment proceedings under section 147 of the Act and, after passing an order under section 148A(d) of the Act dated 25.04.2022, issued notice under section 148 of the Act on the same date. In response to the notice issued under section 148 of the Act, the assessee filed the return of income on 20.05.2022 declaring total income of ₹52,16,520/-. After considering the return of income and the submissions of the assessee, the Ld. AO completed the assessment under section 147 read with section 144B of the Act vide order dated 19.01.2024 accepting the returned income of the assessee without making any addition.

However, the Ld. AO initiated penalty proceedings under section 270A of the Act and subsequently levied a penalty of ₹7,80,329/- vide order dated 09.07.2024. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, confirmed the penalty levied by the Ld. AO and dismissed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the only issue arises out of the grounds of appeal of the assessee is the levy of the penalty of ₹7,80,329/- under section 270A of the Act. He further submitted that the assessee is a salaried employee and derives income mainly under the head “Salary”. Inviting our attention to the computation of income placed at page nos. 1 to 3 of the paper book, the Ld. AR submitted that the total tax payable by the assessee on the returned income was ₹15,60,658/-. Out of the said liability, tax of ₹15,60,604/- had already been deducted at source by the employer. Thus, after giving credit for TDS, only a nominal amount of ₹54/- remained payable, which was duly paid by the assessee as self-assessment tax. The Ld. AR further submitted that the assessee could not file the original return of income due to travel and health-related reasons. It was contended that there was no intention whatsoever on the part of the assessee to conceal any income or to evade payment of taxes. It was further submitted that almost the entire tax liability had already been discharged through TDS and, therefore, no mala

fide intention could be attributed to the assessee. The Ld. AR argued that the reassessment proceedings resulted in acceptance of the returned income and no addition whatsoever was made by the Ld. AO. Therefore, the case of the assessee falls within the exceptions carved out under section 270A(6) of the Act. In support of this contention, reliance was placed on the decision of the Coordinate Bench of this Tribunal in the case of Subbalakshmamma Pinnama Vs. ITO in ITA No.1463/Hyd/2025 for Assessment Year 2017-18, order dated 19.11.2025. Accordingly, it was prayed that the penalty levied under section 270A of the Act be deleted. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied upon the orders of the lower authorities. It was submitted that the assessee had failed to file the return of income within the prescribed time and had filed the return only after issuance of notice under section 148 of the Act. Therefore, according to the Revenue, the provisions of section 270A of the Act were rightly invoked by the Ld. AO. The Ld. DR accordingly supported the orders of the Ld. AO and the Ld. CIT(A). 7. We have heard the rival submissions and perused the material available on record including the case laws relied upon. It is an undisputed fact that the assessee had not filed the return of income under section 139 of the Act for Assessment Year 2018-19. Based on the information available with him, the Ld. AO initiated reassessment proceedings and issued notice under section 148 of the Act after passing an order under section 148A(d) of the Act dated 25.04.2022. In

response thereto, the assessee filed the return of income on 20.05.2022 declaring total income of ₹52,16,520/-. It is further an admitted position that the reassessment proceedings culminated in an order passed under section 147 read with section 144B of the Act dated 19.01.2024 whereby the returned income was accepted in toto and no addition whatsoever was made by the Ld. AO. Thus, the very foundation of the penalty proceedings rests only on the fact that the assessee had not filed the original return of income under section 139 of the Act. We have also carefully examined the computation of income placed at page nos. 1 to 3 of the paper book. From the same, we find that the assessee is a salaried employee deriving salary income from NTT Data Business Solutions Private Limited. The total tax liability on the returned income was ₹15,60,658/-, whereas tax of ₹15,60,604/- had already been deducted at source by the employer. Thus, after allowing credit for TDS, only a nominal amount of ₹54/- remained payable by the assessee. Therefore, substantially the entire tax liability stood discharged through TDS even prior to the initiation of reassessment proceedings. The explanation offered by the assessee is that due to travel and health-related reasons, the return of income could not be filed within the prescribed time. We find that the said explanation cannot be brushed aside lightly, particularly when the returned income has been accepted without any variation and no addition has been made by the Ld. AO. Further, the entire income was duly reflected in the salary records and corresponding taxes had already been deducted by the employer. In our considered opinion, these facts clearly demonstrate the absence of any mala fide

intention on the part of the assessee to conceal income or evade payment of taxes. The conduct of the assessee also supports this conclusion, as the return of income was filed immediately in response to the notice issued under section 148 of the Act and the same has been accepted by the Revenue without any modification. We further find that an identical issue came up for consideration before the Coordinate Bench of this Tribunal in the case of Subbalakshmamma Pinnama Vs. ITO (supra). In the said decision, the Tribunal at para nos. 9 to 11 held as under:

“9. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. We have also carefully considered relevant arguments from both sides and the provisions of Section 270A of the Income-tax Act, 1961. The assessee is an individual, did not file return of income for the assessment year under consideration under Section 139(1) of the Income-tax Act, 1961. The assessment has been subsequently reopened under Section 147 of the Act, on the ground that, the assessee was allotted 27 flats in Sri Sai Residency Apartment, Tirupati, in the land given by the assessee to the developer/ vendor, Subbalakshmi Pinnama but the assessee did not admit any income in respect of said transaction. Admittedly, the assessee has furnished return of income in response to notice issued under Section 148 of the Act, on 27.03.2021, admitting total income of Rs.1,50,68,940/- under the head 'Income from Long- Term Capital Gains', and the same has been accepted by the A.O. under order passed under Section 143(3) read with Section 147 of the Act, without any addition. It is also an admitted fact that, the assessee has paid self- assessment tax of Rs. 16,00,000/- on 31.03.2018, 20.05.2018, 18.07.2018, and 31.12.2019, which is much before the date of notice under Section 148 issued by the A.O. on 10.02.2020. The assessee claimed that, there was a confusion in taxability of income derived from capital gains on account of transfer of property in pursuant to the Joint Development Agreement, because, the property was jointly owned by the assessee along with her son and the assessee is only the beneficial owner and the real owner of the property is her son,

because the said property has been received by the assessee by gift. Since there is an ambiguity in the taxability of income, the assessee could not furnish return of income on or before the due date provided under Section 139 of the Act, however, paid taxes on the said income much before the date of issuance of notice under Section 148. Further, the assessee could not file return of Subbalakshmi Pinnama income after payment of self-assessment tax because the window provided for filing of return of income was not accepting the return of income after due date. The assessee had furnished return of income immediately after receipt of notice under Section 148 and disclosed Capital Gains derived from transfer of property which has been accepted by the A.O. Since the assessee had declared the income and also paid taxes, the explanation given by the assessee should have been accepted and the penalty should not be levied by the A.O. 10. We find that, although the assessee has not furnished return of income under Section 139 of the Income-tax Act, 1961, but has paid substantial amount of taxes applicable on the said income via self- assessment tax in the A.Y. 2018-19, much before the A.O. issued notice under Section 148 of the Act, on 27.03.2021. The assessee had also furnished return of income in response to notice under Section 148 immediately after issuance of notice under Section 148. From the conduct of the assessee and the sequence of dates and events, it is undisputedly clear that, the explanation of the assessee with regard to non-filing of return of income appears to be bona fide and genuine without any intention of under-reporting of income, arising on account of transfer of property in pursuant to the Joint Development Agreement. Since the assessee has already paid a substantial amount Subbalakshmi Pinnama of tax and also filed return of income disclosing the complete income in respect of transfer of property, and the same has been accepted by the A.O., in our considered view, the case of the assessee falls under sub-section (6) of Section 270A of the Act, where it has been clearly stated that, the under-reported income shall not include the amount of income in respect of which the assessee offers an explanation and the A.O. is satisfied that, the explanation is bona fide and the assessee has disclosed all material facts to substantiate the explanation offered. 11. In the present case, going by the assessment order passed by the A.O. under Section 143(3) r.w.s. 147 of the Act, in our considered view, there is no dispute regarding

the explanation offered by the assessee for the income offered towards capital gains derived from the transfer of property. Therefore, the A.O. ought not to have levied the penalty under Section 270A of the Act, for under- reporting of income. The Ld. CIT(A), without appreciating relevant facts, simply sustained the penalty levied by the A.O. Thus, we set aside the order passed by the Ld. CIT(A) and direct the A.O. to delete the penalty levied under Section 270A of the Act.” 8. On perusal of the above, we find the Tribunal has categorically held that where no addition is made by the Ld. AO, the returned income filed in response to notice under section 148 of the Act is accepted as such, and substantial taxes had already been paid before initiation of reassessment proceedings, it cannot be said that the assessee had any intention to under-report income. The Tribunal further held that such cases fall within the exceptions provided under section 270A(6) of the Act. The facts of the present case are materially similar. The assessee has offered a bona fide explanation for non-filing of the original return. The returned income filed in response to notice under section 148 of the Act has been accepted by the Ld. AO without any addition. Further, substantially the entire tax liability had already been discharged through TDS and all material facts relating to the income of the assessee were available on record. We further observe that section 270A(6) of the Act specifically provides that under-reported income shall not include an amount of income in respect of which the assessee offers an explanation and the Assessing Officer is satisfied that the explanation is bona fide and that the assessee has disclosed all material facts necessary to substantiate such explanation. Considering the facts of the present case in their entirety, we are of the

considered opinion that the assessee’s case squarely falls within the ambit of section 270A(6) of the Act. Accordingly, respectfully following the decision of the Coordinate Bench in the case of Subbalakshmamma Pinnama Vs. ITO (supra), we hold that the penalty levied under section 270A of the Act in the case of the assessee is unsustainable in law. We therefore direct the Ld. AO to delete the penalty of ₹7,80,329/- levied under section 270A of the Act.

Order pronounced in the Open Court on 15th July, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 15th July, 2026. Vinodan/sps Copy to: S.No Addresses 1 Shri Vedala Narsimha Raju, 15-36-1 Kodanda Ram Nagar, Saroornagar P & T Colony, Hyderabad 500060 2 Income Tax Officer Ward 12(6) Aayakar Bhavan, Opp: LB Stadium, Basheerbagh, Hyderabad 500004 3 Pr. CIT, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order Digitally signed by TUMMALACHARLA TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.15 12:13:18 +05'30'