LAXMAN ANAND SHELAR ,MUMBAI vs. ITO WARD 42(1)(8), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER:

assessment year (AY) 2022- 23, in confirming the penalty levied

under section 270A of Income Tax Act. Though, the assessee has

raised multiple grounds of appeal, however, in our considered view

the substantial grounds of appeal relate to validity of order in

imposing of imposing penalty under section 270A, on the basis of

making addition by rejecting books of account and estimating

income.

perused. The learned authorised representative of the assessee

ITA No. 1299/M/2026 (AY-2022-23) Laxman Anand Shelar, submits that during assessment, the assessing officer rejected the

books of account under section 145(3) of the Income Tax Act and

estimated income at the rate of 15% of gross receipts of ₹ 9.09

crore during relevant financial year. The assessing officer initiated

penalty for under reporting of income. The learned authorised

representative submits that no penalty can be levied on account of

under reporting of income when the addition in the assessment order was made by estimating income on ad hoc basis. In the

alternative submission, the learned authorised representative of the

assessee submits that in response to show cause notice issued by

assessing officer for levying penalty under section 270A, the

assessee filed application under section 270AA for seeking immunity

from imposition of penalty. As per conditions prescribed in section

270AA, the assessee is eligible for such immunity if the assessee

has not preferred any appeal against the addition in the quantum

assessment, secondly the assessee has paid the entire tax and

interest demand as per the assessment order, and thirdly

application for immunity as been filed within one month from the

end of month in which assessment order was received. The

assessee clearly satisfied first two conditions, firstly that no appeal

was filed against the quantum addition and secondly the entire tax

and interest on demand was paid. However, there was a marginal

delay in filing application for immunity, which ought to have been

ITA No. 1299/M/2026 (AY-2022-23) Laxman Anand Shelar, condoned by the lower authorities. Thus, the assessee was also

eligible for immunity.

for the revenue supported the order of lower authorities. On the

alternative plea the learned senior departmental representative for

the revenue submist that application for immunity was not filed as

per time limit prescribed under section 270AA.

gone through the orders of lower authorities carefully. On careful perusal of assessment order dated 21stMarch 2024, we find that

during assessment the assessing officer rejected the books of

account of assessee by invoking his jurisdiction under section

145(3) of the Income Tax Act and estimated income @ 15% on

gross received of ₹ 9.09 crore shown by assessee during the entire

financial year. The assessing officer allowed the set off of income

already declared by the assessee and thereby made addition of ₹

65.46 lakhs to the total income of assessee. The assessing officer

initiated penalty under section 270A. The assessing officer vide his order dated 25th September 2024 levied penalty under section

270A, being 50% of amount of total tax on the alleged under

reporting income. We find that when the addition was made on the

basis of estimation of income, there was no basis for imposing a

penalty for under reporting of income, as been held in a series of

decision by various bench of tribunal across the country. Thus, we

ITA No. 1299/M/2026 (AY-2022-23) Laxman Anand Shelar,

accept the primary submission of learned authorised representative

of the assessee. Once, we have accepted/allowed appeal on primary

submission, hence all other grounds of appeal or the submissions

have become academic. In the result substantial ground of appeal

raised by assessee is allowed.

Order pronounced in the open court on 29 June 2026.

Sd/- Sd/-

Sd/- Sd/- GIRISH AGRAWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai, Dated: 29/06/2026 Self (dragon) Self (dragon) Self (dragon) Self (dragon)

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT (5) Guard file. By Order

Assistant Registrar /Sr Private Secretary ITAT, Mumbai