DIPESH NARENDRAKUMAR PATEL,SURAT vs. ITO, WARD 3(2)(6), SURAT

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ITA 1379/SRT/2025Status: DisposedITAT Surat04 June 2026AY 2019-204 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the assessee withdrew the bogus deduction and the Assessing Officer accepted the revised return without making any addition, it cannot be considered as underreporting or misreporting of income. Therefore, the penalty under Section 270A is not sustainable.

What were the facts?

The assessee claimed a bogus deduction of Rs. 1,80,000/- under Section 80GGC. After a search operation revealed the bogus nature of the donation, the assessee withdrew the claim in a revised return filed in response to a notice under Section 148. The Assessing Officer accepted the revised return without making any addition.

What were the issues?

Whether penalty under Section 270A is leviable when the assessee withdraws a bogus claim and the Assessing Officer accepts the revised return without making any addition? Whether the withdrawal of a claim and acceptance of revised income constitutes underreporting or misreporting?

Which sections of the Income-tax Act were involved?

Section 270A,Section 274,Section 148,Section 80GGC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT ‘SMC’ BENCH, SURAT

For Appellant: Shri Rajesh Upadhyay, AR
For Respondent: Shri Ajay Uke, Sr. DR
Hearing: 26.03.2026Pronounced: 04.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT ‘SMC’ BENCH, SURAT (HYBRID HEARING) BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1379/SRT/2025 (Assessment Year: 2019-20) Mr. Dipesh Narendrakumar Patel, Income Tax Officer, 303 Kailash Residency, Ward 3(2)(6), Motala Sheri Raghanathpura, Surat – 395001 Vs. Hirabazar, Surat, Gujarat – 395003 PAN: AMIPP8912E (Appellant) : (Respondent) Assessee by : Shri Rajesh Upadhyay, AR Respondent by : Shri Ajay Uke, Sr. DR Date of Hearing : 26.03.2026 Date of Pronouncement : 04.06.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short “Ld. CIT(A)”] dated 25.11.2025 for the Assessment Year (in short “AY”) 2019-20.

2.

The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case, the order passed by the CIT(A), NFAC, Delhi is bad both in the eyes of law and on facts. 1.1 Ld. CIT(A) has erred in law and on fact in confirming the action of the AO despite the fact that the penalty order passed by the AO is illegal, invalid and liable to be quashed. 2. On the facts and circumstance of the case, the Learned CIT(A) has erred both on facts and in laws in confirming the action of the AO levying penalty of Rs. 1,12,320/- invoking the provision of section 270A read with section 274 of the Income-tax Act.

ITA No.1379/SRT/2025 Mr. Dipesh Narendrakumar Patel 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty on the amount of Rs. 1,80,000/- despite the fact that the alleged amount has already been declared by the assessee in the return of income filed in response to notice under section 148 of the Act and the same was accepted by the AO in the assessment order passed under section 147 r.w.s. 144B of the Act and no adverse inference or variation has been made by the AO in the amount disclosed by the assessee. 4. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty ignoring the factual metrics that there is no variation between income assessed and income returned for donation amounting to Rs. 1,80,000/-. Even no SCN was issued for proposed variation while completing assessment. (ii) That the above said penalty has been confirmed ignoring the fact that there is no malafide intention of the assessee for not making the disallowance and hence, no penalty is leviable. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty levied despite the fact that the notice issued by AO under section 270A read with section 274 of the Act does not specify the charge mentioned under specified clauses of section 270A(9) of the Act. 6. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the penalty despite the fact that there is neither misreporting of income nor under-reporting of income. 7. On the facts and circumstances of the case the learned CIT (A) has erred both on facts and in law in confirming the penalty levied by the AO ignoring the contention of the assessee that the penalty proceedings are independent proceedings, as such mere addition/disallowance does not lead to levy of penalty. 8. On the facts and circumstances of the case, the learned CIT (A) has erred both on facts and in law in confirming the penalty levied u/s 270A of the Act despite the fact that no finding has been given on merit regarding underreporting of income in the order passed by the AO.” 3. The assessee being an individual filed his return of income for A.Y. 2019- 20 on 03.08.2019 declaring total income of Rs.18,25,640/-. The Ld. Assessing Officer (in short “Ld. AO”) observed that during the relevant assessment year, the assessee claimed bogus deduction u/s 80GGC of the Income Tax Act, 1961 (in short “the Act”) to the extent of Rs.1,80,000/-. A search and seizure action was conducted u/s 132 of the Act on registered unrecognised political parties,

ITA No.1379/SRT/2025 Mr. Dipesh Narendrakumar Patel group of Ahmedabad on 07.09.2022. It was found that the said parties and charitable organisations accept donations from various individuals through banking channel and thereafter return the donation amount to the respective doner in cash. The search operation revealed that the assessee made bogus donation of Rs.1,80,000/- to one such party namely Rashtriya Samajwadi Party (Secular). Notice u/s 148 of the Act was issued on 10.04.2023 by way of passing order u/s 148A(D) of the Act. In response to such notice u/s 148 of the Act, return of income was filed by the assessee on 18.04.2023 declaring total income of Rs.20,05,640/- by way of withdrawing the said claim of deduction u/s 80GGC of the Act to the tune of Rs.1,80,000/-. Accordingly, the assessment order u/s 147 r.w.s. 143(3) r.w.s. 144B of the Act was completed on 10.03.2025 thereby assessing the total income at Rs.20,05,640/- by way of accepting the income declared by the assessee, in response to the notice u/s 148 of the Act. The Ld. AO has initiated penalty proceedings u/s 270A of the Act thereby stating that the assessee has underreported his income which is in consequence of misreporting. Notice u/s 274 r.w.s. 270A of the Act was issued on 10.03.2025. The assessee filed reply. After taking cognizance of the assessee’s reply the Ld. AO imposed penalty of Rs.1,12,320/- u/s 270A of the Act.

4.

Being aggrieved by the penalty order u/s 270A of the Act, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the assessee has already declared the said amount of Rs.1,80,000/- in his return of income and has withdrawn the claim of deduction u/s 80GGC of the Act. Thus, the assessee has given the full and clear details of his income and there was no variation between income assessed and income returned for donation. The Ld. AR relied upon the decision of Hon’ble Delhi High Court in case of Schneider Electric South East Asia (Hq) Pte Ltd. vs. ACIT, International Taxation (2022) 3 TMI 1295-Delhi. The Ld. AR also relied upon the decision of the Tribunal in case of Dd Target Pmt Pvt. Ltd. vs. DCIT (ITA No.2773 to 2776/Del/2023 order dated 17.01.2025).

ITA No.1379/SRT/2025 Mr. Dipesh Narendrakumar Patel

6.

The Ld. Departmental Representative (in short “Ld. DR”) for the Revenue relied upon the assessment order, penalty order and the order of the Ld. CIT(A).

7.

Heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee, while giving details of return of income in response to notice u/s 148 of the Act, has categorically withdrawn the deduction claimed by him u/s 80GGC of the Act. The Ld. AO has accepted the assessee’s return of income and has not made any addition to that extent. Thus, it cannot be termed as underreporting or misreporting of the income of the assessee. The decision of the Hon’ble Delhi High Court in case of Schneider Electric South East Asia (Hq) Pte Ltd (supra) also reiterates the same. Thus, the penalty order u/s 270A of the Act does not survive.

8.

In result, appeal of the assessee is allowed.

Order pronounced in the open court on 04.06.2026

Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Surat; Dated: 04.06.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order,

Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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