BALAJI ,CHENNAI vs. DCIT, NON CORP. CIRCLE-22(1), CHENNAI

PDF · subscribers
ITA 1422/CHNY/2026Status: DisposedITAT Chennai02 July 2026AY 2017-188 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation for not filing the return was bona fide, as he substantially declared his income and paid taxes before assessment completion. The penalty under Section 270A was deemed unsustainable.

What were the facts?

The assessee did not file his return of income for AY 2017-18, believing taxes were already deducted. He later paid tax voluntarily and a reassessment was completed with additions. Penalty proceedings under Section 270A were initiated.

What were the issues?

Whether penalty under Section 270A is leviable when the assessee had a bona fide belief for non-filing and subsequently disclosed income and paid taxes. Whether additions under Section 69A are subject to penalty under Section 270A.

Which sections of the Income-tax Act were involved?

Section 270A,Section 139,Section 148,Section 69A,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 29.06.2026Pronounced: 02.07.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 23.01.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The order of NFAC arises out of the order of AO imposing penalty u/s.270A of the Act. The relevant Assessment Year is 2017-18.

ITA No.1422/CHNY/2026 - 2 - Balaji 2. The solitary issue that is argued is whether the First Appellate Authority (FAA) is justified in confirming the penalty of Rs.16,62,193/- imposed u/s.270A of the Act.

3.

Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2017-18, assessee had not filed his return of income u/s.139 of the Act. The Department had information that assessee has income above the taxable limit. Hence, notice u/s.148 of the Act was issued on 31.03.2021 requiring the assessee to furnish his return of income within 30 days. In response to the notice u/s.148 of the Act, assessee did not file a valid return. It is submitted that assessee was prevented from filing return due to portal related technical glitches. It was stated nevertheless, assessee computed his income and paid tax of Rs.10,29,890/- on 21.12.2021. It is further stated that assessee had uploaded a paper return in e-proceedings which was not accepted as valid. The AO completed the reassessment u/s.147 r.w.s.144 r.w.s 144B of the Act on 02.03.2022 by determining gross total income at Rs.1,01,02,774/- comprising of salary income of Rs.41,92,230/-, income from house property of Rs.35,01,104/-, interest income of Rs.14,09,440/- under ‘income from other sources’ and addition of Rs.10,00,000/- as unexplained money u/s.69A of the Act (less

ITA No.1422/CHNY/2026 - 3 - Balaji Chapter VIA deduction of Rs.74,834/-). Thereby, assessing the total income at Rs.1,00,27,940/- and raising demand of Rs.38,50,017/-.

4.

In the reassessment completed, penalty proceedings u/s.270A of the Act was initiated in respect of tax payable and under-reporting income of Rs.1,01,02,774/-. In response to notices issued u/s.270A r.w.s. 274 of the Act, assessee filed objections on 30.03.2022 and 06.12.2024 seeking to drop the penalty proceedings. However, the objections raised by the assessee was rejected and the AO passed the impugned penalty order u/s.270A of the Act on 28.02.2025. The AO in the said penalty order computed the tax payable at Rs.33,24,387/- and levied penalty of Rs.16,62,193/- being 50% thereof in terms of section 270A(7) of the Act.

5.

Aggrieved by the penalty imposed u/s.270A of the Act, assessee filed appeal before the FAA. Before the FAA, it was submitted that assessee had earlier worked in USA and was earning salary income from there. It was stated that since the salary income, income from house property and income from other sources were reflected in Form 26AS and due taxes has been deducted under the prescribed rates, assessee was under a bonafide belief that no return of income needs to be filed. With regard to addition of Rs.10,00,000/- u/s.69A

ITA No.1422/CHNY/2026 - 4 - Balaji of the Act, it was stated that deposits were renewal from US foreign income which could not be produced due to paucity of time. It was further submitted that in response to notice issued u/s.148 of the Act, assessee having realized the mistake in not filing the return tried filing the return, which failed on account of technical glitches in the income-tax portal. Consequently, uploaded a paper return in e- proceedings, which was treated as not valid. It was further submitted that the tax due amount of Rs.10,29,890/- subsequent to TDS amounts were paid on 21.12.2021 i.e., prior to reassessment being completed. Therefore, it was argued that there was no contumacious conduct and there was Bonafide reason for not filing the return on time. Hence, it was prayed that penalty imposed u/s.270A of the Act may be deleted. However, the FAA rejected the submissions made by the assessee and confirmed the penalty imposed u/s.270A of the Act. The FAA by referring to the judgment of the Hon’ble Apex Court in the case of Union of India vs. Dharmendra Textile Processors reported in (2008) 306 ITR 277 (SC) held that penalty provision is a civil liability. It was further held that assessee’s case does not come within the exceptions mentioned in Section 270A(6) of the Act.

6.

Aggrieved, assessee has filed the present appeal before the Tribunal. The Ld. AR submitted that the penalty order passed u/s.

ITA No.1422/CHNY/2026 - 5 - Balaji 270A of the Act is bad in law, being contrary to the statutory requirements prescribed under the Act. It was contended that the authorities below failed to appreciate that the provisions of section 270A were not applicable to the facts of the present case and that the penalty had been levied mechanically merely because the assessee had not filed the return of income within the prescribed time. The Ld. AR argued that mere non-filing of a return under sections 139(1) or 148 does not automatically amount to "under- reporting of income" u/s.270A(2)(b), unless there is material to establish suppression or misrepresentation of income. In the present case, the income subsequently declared by the assessee was accepted by the AO while completing the assessment u/s.147 r.w.s.144 r.w.s. 144B of the Act, and therefore, there was no under- reporting warranting levy of penalty. It was further submitted that the authorities had failed to consider the explanation offered by the assessee, the surrounding circumstances, and the supporting documents to determine whether the omission to file the return was bona fide or contumacious before imposing penalty. Without prejudice, the Ld. AR further submitted that penalty u/s.270A could not have been levied on the addition of Rs.10,00,000 made u/s.69A, as such addition is specifically covered by the penalty provisions of section 271AAC. It was further pointed out that the addition u/s. 69A

ITA No.1422/CHNY/2026 - 6 - Balaji had subsequently been deleted by the Tribunal in the quantum proceedings and, therefore, even assuming that penalty under section 270A was otherwise leviable, the said amount ought to have been excluded from the computation of penalty. The Ld. AR also emphasized that penalty proceedings are independent of assessment proceedings and the levy of penalty must be tested on its own merits after satisfying the statutory conditions prescribed u/s. 270A of the Act. In support of the above contentions, the Ld. AR placed reliance on the order of the Ahmedabad Bench of the Tribunal in the case of Parulben Vijaykumar Patel v. ITO in ITA No. 164/Ahd/2024, (order dated 22.05.2024) contending that on identical facts, the Tribunal had held that penalty under section 270A was not sustainable and, therefore, the ratio laid down therein squarely applied to the facts of the present case.

7.

The Ld.DR supported the order of the AO and FAA

8.

We have heard rival submissions and perused the material on record. It is an undisputed fact that the assessee had not filed the return of income for the year under consideration on account of a bona fide belief that tax had already been deducted at source on all the incomes assessable in his hands and the same stood duly reflected in Form 26AS. The record further reveals that during the

ITA No.1422/CHNY/2026 - 7 - Balaji reassessment proceedings, the assessee furnished a computation of total income, voluntarily admitted the income ultimately assessed by the Assessing Officer and also discharged the corresponding tax liability before the completion of the assessment proceedings. Except for the disallowance of deduction claimed under Chapter VI-A for want of supporting evidence and the addition of Rs.10,00,000/- made under section 69A read with section 115BBE, there was no variation between the income offered by the assessee and the income assessed by the Assessing Officer. It is also pertinent to note that the addition of Rs.10,00,000/- under section 69A has subsequently been deleted by this Tribunal in the quantum proceedings. Section 270A(6)(a) specifically excludes from the ambit of under-reported income any amount in respect of which the assessee offers a bona fide explanation and discloses all material facts to substantiate the same. In the facts of the present case, we find that the explanation offered by the assessee regarding non-filing of the return is plausible and bona fide. The assessee has neither concealed any material fact nor disputed the income assessed during the reassessment proceedings. On the contrary, the income offered by the assessee substantially tallied with the assessed income and the taxes due thereon were voluntarily paid before the completion of the assessment. The minor variation arising on account of denial of

ITA No.1422/CHNY/2026 - 8 - Balaji deduction under Chapter VI-A for non-furnishing of supporting evidence cannot, by itself, lead to the conclusion that the assessee had under-reported income warranting levy of penalty u/s.270A of the Act.

9.

Considering the totality of the facts and circumstances and having regard to the provisions of section 270A(6)(a), we are of the considered view that the assessee's case falls within the exception contemplated under the statute. Accordingly, the penalty levied under section 270A is unsustainable and the same is directed to be deleted. The grounds raised by the assessee are allowed.

10.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 2nd July,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 2nd July, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.03 17:36:45 +05'30'

More judgments on Section 270A

All 4,156 judgments and leading authorities on Section 270A →

Recent GST High Court judgments

Search GST case law →