BRIJESH RAMESHBHAI BAVARVA,GANDHINAGAR vs. THE ITO, WARD-1, GANDHINAGAR

ITA 179/AHD/2026Status: DisposedITAT Ahmedabad14 October 2026AY 2019-208 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty of Rs. 5,49,120/- levied under Section 270A of the Income Tax Act, 1961, was unsustainable. The Tribunal observed that the penalty order failed to establish how the assessee's case fell within the instances of misreporting specified under Section 270A(9) of the Act. It was not clear whether the penalty was levied for 'under-reporting' of income under Section 270A(2)(d) or 'mis-reporting' of income under Section 270A(9). The AO imposed a penalty at 200% of the tax sought to be evaded, which is applicable for misreporting. However, the AO's conclusion in the penalty order, while mentioning initiation for 'under reporting of income', later stated that the increased income due to assessment under Section 147 was considered 'mis reported income' and attracted penalty as per Section 270A(2)(d). The Tribunal noted that the AO did not indicate which specific offence under Section 270A(9) was committed. The Tribunal followed its earlier decisions in 'Hiro Mulchand Tanwani Vs. ITO' and 'Siddharth Laxminkant Vaderkar vs. ITO', which held that the levy of penalty under Section 270A on misreporting of income is unsustainable in law without establishing the specific statutory ingredients. Therefore, the penalty was deleted.

What were the facts?

The assessee, Brijesh Rameshbhai Bavarva, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against an order by the NFAC, Delhi, dated 05.12.2025, which upheld a penalty imposed under Section 270A of the Income Tax Act, 1961, for Assessment Year 2019-20. The original return claimed a deduction of Rs. 8,00,000/- under Section 80GGC for donations. Following information regarding alleged bogus donation entries, reassessment proceedings were initiated. The assessee then filed a revised return, withdrawing the deduction and paying applicable tax and interest. The Assessing Officer (AO) accepted this revised income but initiated penalty proceedings under Section 270A, imposing a penalty of Rs. 5,49,120/-. The assessee contended that there was no misreporting, as the deduction was withdrawn in good faith and tax paid. The AO treated the withdrawn deduction as misreported income, and the CIT(A) confirmed the penalty.

What were the issues?

1. Whether the penalty under Section 270A of the Income Tax Act, 1961, is sustainable when the assessee has neither misreported income nor falls under any clauses specified under sub-section (9) of Section 270A, and the AO failed to invoke or refer to a specific sub-clause of Section 270A(9) in the penalty order. 2. Whether the penalty under Section 270A(9) of the Act, amounting to Rs. 5,49,120/-, is valid when the assessee has withdrawn the deduction claimed earlier, paid the applicable tax and interest, and there is no misreporting of income. Assessee's Contentions: - The penalty under Section 270A is unsustainable as the AO did not specify the sub-clause of Section 270A(9) under which misreporting was alleged. - Withdrawal of the deduction, by itself, does not constitute misreporting of income. - The deduction was withdrawn in good faith to avoid litigation, and applicable tax and interest were paid. Revenue's Contentions: - The revenue contended that the assessee had withdrawn the deduction only after reopening proceedings were initiated on the same issue, and subsequent payment of tax did not absolve the assessee from penalty. The CIT(A) considered the increased income due to assessment under Section 147 as misreported income attracting penalty under Section 270A(2)(d).

Which sections of the Income-tax Act were involved?

Section 270A,Section 270A(9),Section 270A(2)(d),Section 80GGC,Section 147,Section 148,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: SHRI RAHUL CHAUDHARY, JUDICIALMEMBER &SHRI GANGADHAR PANDA

For Respondent: Shri Amit Pratap Singh, Sr. DR
Hearing: 06.10.2026Pronounced: 14.10.2026

PER GANGADHAR PANDA - ACCOUNTANTMEMBER:

The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (hereinafter referred to as “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi dated 05.12.2025 under Section 250 of the Income Tax Act, 1961 arising out of the Penalty Order, dated 29.07.2025 completed under Section 270A of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2019-20. 2. The assessee has raised the following grounds of appeal:

“1. The Ld. CIT(A) erred in laws and facts by upholding the penalty u/s 270A without appreciating that the assessee has neither misreport

The order continues below.

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