KAMLESHKUMAR SOMALAL BHATT,HIMATNAGAR vs. INCOME TAX OFIFCER, WARD 1, HIMATNAGAR, HIMATNAGAR

ITA 2130/AHD/2026Status: DisposedITAT Ahmedabad21 October 2026AY 2019-207 pages
AI SummaryAllowed

What were the facts?

The assessee, an individual, filed an income tax return for Assessment Year 2019-20 declaring a total income of Rs. 13,86,810/-, which included a deduction of Rs. 5,00,000/- under Section 80GGC for donations to political parties. Subsequently, reassessment proceedings under Section 148A were initiated based on information from investigations into certain unrecognised political parties, specifically concerning a donation of Rs. 2,00,000/- to Apan Desh Party. The Assessing Officer (AO) initiated penalty proceedings under Section 270A and levied a penalty of Rs. 3,12,000/-, treating the case as 'misreporting of income'. The Commissioner of Income Tax (Appeals) [CIT(A)] confirmed this penalty. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that the penalty levied under Section 270A for misreporting of income was not sustainable. The Tribunal respectfully followed its co-ordinate bench's decision in Hiro Mulchand Tanwani Vs Income Tax Officer for AY 2019-20 (ITA No.110/Ahd/2026 dated 15.05.2026). In that case, it was held that the mere disallowance of a deduction claimed under Section 80GGC, even if the donation was not found to be eligible, does not automatically amount to 'misreporting of income' as defined under Section 270A(9). The Tribunal noted that the assessee had disclosed the donation transparently in the return. The disallowance arose from the AO's dissatisfaction with the genuineness or eligibility. Crucially, there was no material on record to establish that the assessee had furnished false evidence, suppressed facts, or made deliberate misrepresentation. The Tribunal reasoned that unless the revenue demonstrates with cogent evidence that the claim was knowingly made on the basis of false particulars, the higher penalty for misreporting is not legally tenable. At best, it could be considered 'under-reporting', but even that requires specific conditions to be met. Since the assessee's case was factually similar to the cited precedent, and no contrary decision or distinguishing facts were presented, the penalty was deleted. The appeal was allowed.

What were the issues?

1. Whether the penalty levied under Section 270A(8) read with Section 270A(9) of the Income-tax Act, 1961, for misreporting of income is sustainable when there is no evidence of misrepresentation, suppression of facts, false entry, or fabrication by the assessee? (Question of law) 2. Whether the withdrawal of a deduction claimed under Section 80GGC in a Section 148 return, coupled with voluntary tax payment, constitutes 'misreporting' under Section 270A(9), especially when none of the specific clauses (a) to (f) are satisfied? (Question of law) 3. Whether the penalty can be sustained without specific evidence proving the donation was bogus, the assessee received cash back, participated in accommodation entries, or had a nexus with alleged activities of political parties, relying solely on third-party investigation findings? (Question of mixed law and fact) 4. Whether Section 270A(6)(a) of the Act, providing immunity from penalty if the assessee offers a bona fide explanation and discloses all material facts, was correctly applied? (Question of law) 5. Whether penalty under Section 270A is fundamentally misconceived and without jurisdiction when the reassessment under Section 147 accepted the returned income without any addition, meaning there is no legally determinable 'under-reported income'? (Question of law) Assessee's contentions: The assessee argued that there was no misreporting as per Section 270A(9), no evidence of bogus donations or accommodation entries, and that Section 270A(6)(a) provided immunity. They also contended that no addition was made in reassessment, rendering the penalty baseless, and that principles of natural justice were violated by not allowing cross-examination. They relied on ITAT Raipur and Rajkot Bench decisions. The revenue did not record specific contentions in the judgment.

Which sections of the Income-tax Act were involved?

Section 270A,Section 270A(6)(a),Section 270A(7),Section 270A(8),Section 270A(9),Section 80GGC,Section 147,Section 148,Section 148A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD

For Appellant: Smt. Asha Sukhadiya, AR
For Respondent: Shri Kalpesh Rupavatia, Sr. DR
Hearing: 19.10.2026Pronounced: 21.10.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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This appeal has been filed by the Assessee against the order dated 11.12.2025 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2019- 2020. ITA No.2130/AHD/2026, AY-2019-20 Kamleskumar S Bhatt - 2–

2.

The Assessee has raised the following grounds of Appeal:-

1.

The learned CIT(A) [NFAC] has erred in law and on facts in confirming the penalty of Rs. 3,12,000/- levied u/s 270A(8) read with section 270A(9) of the Act, treating the Appella

The order continues below.

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