CHITRA PRASHANT METE,PUNE vs. DCIT, CIRCLE 12, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.183/PUN/2026 िनधा�रण वष� / Assessment Year : 2018-19 Chitra Prashant Mete, Vs. DCIT, Circle-12, Pune. 1414/1, Trio Chambers, Sadashiv Peth, Pune- 411030. PAN : AEHPG7143R Appellant Respondent Assessee by : Shri Rajendra Agiwal Revenue by Shri Dayanand Jawalikar (Virtual) : Date of hearing 11.05.2026 : Date of pronouncement : 08.07.2026 आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 12.12.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2018-19. 2. The appellant has raised the following grounds of appeal :- “The appellant, Mrs. Chitra Mete (referred as Appellant / Assessee) is aggrieved by the penalty order dated 28.07.2021 passed U/s 270A(9) of the Act and as upheld by the Ld. CIT(A), NFAC (herein after referred as Ld. CIT(A)) vide order dated 12.12.2025 passed u/s 250 has preferred this appeal before the Hon'ble Income Tax Tribunal on the following grounds of appeal which are independent and without prejudice to each other. On the facts and the circumstances of the case and in law: General Ground 1. The Ld. CIT(A) erred in confirming the penalty of Rs. 27,53,912 which is 200% of tax, levied by the Ld. AO u/s

2 ITA No.183/PUN/2026 270A(9) of the Income-tax Act, 1961, for underreporting of income in consequence of misreporting which is bad in law and opposed to the facts of the case. Acceptance of bonafide mistake by the appellant during the course of assessment proceedings in the claim of interest u/s 24(b) from "Income From House Property" do not amount to underreporting in consequence of misreporting. 2. The Ld. AO and Ld. CIT(A) failed to appreciate the fact that the appellant during the course of assessment has conceded the mistake in claim of interest u/s 24(b) of the act under the head "Income From House Property" and accepted the disallowance. The Ld.AO and Ld. CIT(A) failed to appreciate bonafide explanation of the appellant. Failed to appreciate that the error was inadvertently committed in ITR and the correct treatment of interest on loan was disclosed in audited accounts u/s 44AB. 3. The Ld. AO and Ld. CIT(A) failed to appreciate that the interest on loan from the impugned property was correctly accounted for in the books and disclosed in the audited accounts u/s 44AB of the act. The inadvertent error has occurred only while filing the ITR do not amount to underreporting in consequence of misreporting. 4. The Ld.AO and Ld. CIT(A) failed to appreciate that the error committed in computation of income by impugned claim of interest u/s 24(b) has only resulted in reduction of carried forward loss as declared in ITR. The levy of penalty is unsustainable. 5. The Ld.AO and Ld. CIT(A) failed to appreciate that the final assessed income is still a loss and there is no avoidance/reduction of tax liability by virtue of inadvertent error in computation for this year. The penalty is liable to be deleted. 6. The Ld.AO and Ld. CIT(A) erred in alleging that the appellant has claimed double benefit by virtue of claim of interest u/s 24(b) and depreciation u/s 32 of the act by capitalizing the interest in books. Failed to appreciate that while computing income from house property the law does not provide for allowability of depreciation u/s 32 or any other section and therefore, the allegation of the Ld.AO and Ld. CIT(A) is unsustainable in law. The penalty may kindly be deleted. Failure to point out specific limb for underreporting in consequence of misreporting

3 ITA No.183/PUN/2026 7. The Ld.AO failed to point out the specific charge as per the clauses of section 270A(9) inter alia including sub clause (a) to (f). 8. The Ld. CIT(A) erred in concluding that the charge falls under clause (a) when the Ld.AO has failed to point out the specific charge. 9. The Ld. CIT(A) failed to appreciate that when the penalty was initiated and levied by the Ld.AO he is required to point out the specific charge attracting the particular clause of section 270A(9). The Ld. CIT(A) is not justified in substituting his opinion to justify the penalty u/s 270A(9)(a) as the penalty was levied in the proceedings before the Ld.AO. The appellant craves leave to add, alter, modify, delete all or any of the grounds of appeal on or before hearing.” 3. Facts of the case, in brief, are that the assessee is an individual deriving income from business and profession, income from house property, income from long term capital gains and also income under the head “Income from other sources” and has furnished its return of income on 22.10.2018 by declaring loss of Rs.1,12,28,768/-. The case was selected for scrutiny and notice u/s 142(1) was issued to the assessee wherein the Assessing Officer specifically asked about the claim of Rs.87,71,185/- made u/s 24b of the IT Act regarding interest on house loans. In response to the above notice, the assessee submitted that due to in advertent error the assessee claimed excess interest only in computation of income, however in audited books of accounts there is no such error and interest is claimed correctly. The assessee accordingly

4 ITA No.183/PUN/2026 furnished a revised/rectified return before the Assessing Officer and requested to accept the revised return of income wherein loss carried over to next year was reduced to the extent of Rs.44,56,167/-. The Assessing Officer accepted the revised return, however initiated penalty u/s 270A of the IT Act. Subsequently, vide order dated 28.07.2021, the Assessing Officer levied penalty of Rs.27,53,911/- u/s 270A(9) of the IT Act for underreporting of income in consequence of misreporting. 4. Being aggrieved with the above penalty order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 5. It is the above order against which the assessee is in appeal before this Tribunal. 6. We have heard Ld. counsels from both the sides and perused the material available on record including the paper books furnished by the assessee. In this regard, we find that it is the contention of the assessee that due to a bona fide error deduction of interest on capital was claimed in the computation of income whereas the same interest was already shown in the books of accounts and there was no need to claim it again in the

5 ITA No.183/PUN/2026 computation of income which increased the claim of loss in the original return of income. It is also the claim of the assessee that as soon as the mistake came in the knowledge of the assessee, the assessee immediately revised/rectified return of income by reducing the excess claim of interest. It is also the contention of the assessee that this was bona-fide & unintentional human error which was rectified by the assessee on its own without any argument. It was also the contention that in books of accounts no such error was there and only in the computation of income excess deduction was claimed which was subsequently rectified. Before the bench, Ld. AR also relied on section 270A(6) of the IT Act and submitted that the explanation submitted before the Assessing Officer as well as before Ld. CIT(A)/NFAC was bona-fide and should have been accepted by them. Ld. AR also relied on the judgement passed by Hon’ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. vs. Commissioner of Income-tax, Kolkata-I [2012] 25 taxmann.com 400 (SC) wherein it was held that the assessee cannot be levied penalty if it was a bona-fide error, by observing as under :- “20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona

6 ITA No.183/PUN/2026 fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars.” 7. Respectfully following the above judgement passed by Hon’ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. vs. Commissioner of Income-tax, (supra), we are of the considered opinion that the assessee is not liable for penalty for under reporting of income in consequence of misreporting u/s 270A(9) of the IT Act. At the most the assessee could be liable for penalty u/s 270A of the IT Act for underreporting of income, since its loss was reduced by substantial amount, however at the same time, the assessee could be given immunity u/s 270A(6) of the IT Act, since the explanation offered by the assessee was bona-fide. In support of this contention, Ld. AR relied on decision passed by a coordinate bench of this Tribunal in the case of Shri Sridhar Murthy S. vs. The ITO in ITA No.1175/Bang/2022 order dated 28- 02-2023 wherein in the case of excess claim of house property loss by the assessee in computation of income & subsequent revision of computation of income reducing the excess loss claimed, the Tribunal has deleted the penalty by providing benefit of section 270A(6)(a) of the IT Act by observing as under :- 8. The above section 270A(6)(a) of the Act states that when explanation is bona fide and the assessee has disclosed all the

7 ITA No.183/PUN/2026 material facts to substantiate the explanation offered, then it cannot be a case of under reporting of income for the purpose of Section 270A of the Act. In the instant case as mentioned earlier the assessee being a salaried employee would have been dependent on the consultant for filing his return of income. When the erroneous claim of the excess interest income against rental income by aggregating both the housing loans was pointed out the assessee immediately filed revised computation for AY 2018-19 and also filed revised return for AY 2020-21 withdrawing the excess claim. The Mumbai Tribunal, on identical facts in the case of Venkateshwearan Krishnan (supra) had held that assessee's explanation in making the incorrect claim is bona fide and deleted the penalty under Section 271(1)(c) of the Act by following the judgement of the Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC). The relevant finding of the Mumbai Bench of the Tribunal reads as follows: - "8. Now coming to the disallowance of Rs. 7,07,933, the assessee's entire claim, as discussed above, is not proper, however, it cannot lead to an inference that the assessee has furnished inaccurate particulars. On the facts of the assessee's case, at the most, it can be said that the assessee has made incorrect claim by not bifurcating the interest on loans taken for the self-occupied property and for he let out property. If the assessee on wrong legal advice has claimed the balance interest paid on loan for self- occupied property, while computing the rental income of the other house property, then so far as the assessee is concerned, it cannot be said that there is no bonafide of the assessee. At best, it is a Shri Sridhar Murthy S claim, which cannot be allowed. If the entire particulars of interest has been given and merely because some non-permissible claim has been made, then such an incorrect claim cannot tantamount to furnishing of inaccurate particulars of income, as explained by the Hon'ble Supreme Court in Reliance Petroproucts Pvt. Ltd. (supra) wherein Their Lordships observed and held as under:- "A glance at the provisions of section 271(1)(c) of the Income- tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an

8 ITA No.183/PUN/2026 incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 9. Thus, on the facts and circumstances of the case, we are of the opinion that no penalty can be levied. Accordingly, we set aside the impugned order passed by the learned Commissioner and allow the ground raised by the assessee. Thus, the penalty confirmed by the learned Commissioner (Appeals) stands deleted." 9. For the aforesaid reasons and the order of the Mumbai Tribunal in the case of Venkateshwaran Krishnan (supra) we hold that on the facts of the instant case the explanation of the assessee is bona fide and it is not a case of under reporting of income by virtue of Section 270AS(6)(a) of the Act. Therefore the penalty imposed amounting to Rs.2,19,796/- is deleted. It is ordered accordingly.” 8. Considering the totality of the facts of the case and respectively following the above decision passed by a coordinate bench of this Tribunal in the case of Shri Sridhar Murthy S. vs. The ITO in ITA No 1175/Bang/2022 order dated 28-02-2023, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to delete the penalty of Rs.27,53,911/- levied u/s 270A(9) of the IT Act by

9 ITA No.183/PUN/2026 providing the benefit of section 270A(6)(a) of the IT Act. Thus, the grounds related to the merits of the case have been allowed & legal grounds raised by the assessee are dismissed being not pressed by the assessee. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 08th day of July, 2026. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 08th July, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.07.14 11:28:11 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A” ब�च, 4. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.