KKG ASSOCIATES,VISAKHAPATNAM vs. INCOME TAX OFFICER, WARD - 2(1), VISAKHAPATNAM

ITA 345/VIZ/2026Status: DisposedITAT Visakhapatnam16 October 2026AY 2019-2011 pages
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What were the facts?

The assessee, KKG Associates, a firm engaged in consultancy services, filed its original return of income for Assessment Year 2019-20 on 31.10.2019, declaring an income of Rs. 45,83,888/-. This return was processed under Section 143(1) of the Income Tax Act, 1961, and accepted. Subsequently, reassessment proceedings were initiated under Section 147 based on information regarding purchases. A notice under Section 148 was issued on 17.04.2023, to which the assessee again declared the same income. The Assessing Officer (AO) completed the reassessment under Section 147 r.w. Section 144B on 28.02.2025, accepting the returned income without any additions. Despite this, the AO initiated penalty proceedings under Section 270A and imposed a penalty of Rs. 7,15,086/- on 22.08.2025, alleging under-reporting of income. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), who upheld the penalty. The assessee has now appealed to the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that the impugned penalty imposed under Section 270A of the Income Tax Act, 1961, is not sustainable. The Tribunal noted that the assessee had voluntarily filed its original return of income under Section 139(1) on 31.10.2019, declaring an income of Rs. 45,83,888/-, which was processed under Section 143(1) and accepted. Even during reassessment proceedings initiated under Section 148, the assessee declared the same income, which was ultimately accepted by the AO in the reassessment order under Section 147 without any additions or disallowances. The Tribunal found that the AO and CIT(A) had failed to appreciate this fundamental fact, which was specifically brought to their notice by the assessee. The Tribunal observed that Section 270A(2)(a) requires a comparison to determine under-reporting, and in this case, there was no difference between the income originally returned and the income assessed. Therefore, the very basis for imposing the penalty was unsustainable. The Tribunal strongly deprecated the manner in which the AO and CIT(A) dealt with the proceedings, finding their actions unsatisfactory and lacking in proper application of mind and statutory provisions. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty of Rs. 7,15,086/-.

What were the issues?

1. Whether the penalty under Section 270A of the Income Tax Act, 1961, is sustainable when the income assessed in reassessment proceedings is identical to the income declared in the original return filed under Section 139(1) and accepted under Section 143(1), thereby demonstrating no under-reported income. Assessee's contentions: The assessee argued that the penalty under Section 270A cannot be invoked as there was no under-reported income, given that the income declared in the original return (Rs. 45,83,888/-) was accepted under Section 143(1) and subsequently confirmed in the reassessment proceedings under Section 147 without any additions. The assessee emphasized that this fact was brought to the notice of both the AO and the CIT(A). The assessee relied on the fact that the original return was voluntarily filed and accepted, and a refund was issued, evidencing due disclosure. The assessee also contended that Section 270A(2)(b) is inapplicable as a valid return was filed under Section 139(1). Revenue's contentions: The judgment does not record any specific contentions made by the revenue before the Tribunal.

Which sections of the Income-tax Act were involved?

Section 270A,Section 139(1),Section 143(1),Section 148,Section 147,Section 144B,Section 148A(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM:

The present appeal filed by the assessee firm is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short, “CIT(A)”), dated 05/01/2026, which in turn arises from the order passed by the Assessing Officer (for short “AO”) under section 270A of the Income Tax Act, 1961

ITA 345/VIZ/2026 KKG ASSO

The order continues below.

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