DINMAHMAD HAJIBHAI MOMIN,AHMEDABAD vs. THE ITO, WARD-3(2)(1), AHMEDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI GANGADHAR PANDA, ACCOUNTANT MEMBER I.T.A. No.2210/Ahd/2025 (Assessment Year: 2018-19) Dinmahmad Hajibhai Momin, Vs. Income Tax Officer, 702, Momin Vas, Shela, Daskroi, Ward-3(2)(1), Ahmedabad-380058 Ahmedabad [PAN No. BCMPM1298P] (Appellant) .. (Respondent) Appellant by : ShriRushin Patel, AR Respondent by: Shri Rameshwar P Meena, Sr. DR Date of Hearing 24.08.2026 Date of Pronouncement 27.10.2026 O R D E R PER GANGADHAR PANDA - ACCOUNTANTMEMBER:

This appeal filed by the assessee is directed against the order dated 28.10.2025 passed by the Ld. Commissioner of Income Tax (Appeals) (hereinafter referred to as the “Ld. CIT(A)”), National Faceless Appeal Centre, Delhi [in short “NFAC”], arising out of the penalty order dated 27.08.2024 completed under section 270A of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2018-19.

“1. The ld. CIT(A) erred in law and on facts of the case, in sustaining the penalty imposed u/s 270A of the Act, for alleged misreporting of income.

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 2– 2. The appellant craves liberty to add, amend and/or delete any ground of appeal at the time of hearing, if need arise” 3. On perusal of records, it emerges that the assessee, an individual, did not file his return of income under section 139(1) of the Act for the AY 2018-19. On the basis of information that the assessee had purchased as well as sold certain immovable properties, the case was reopened u/s 147 of the Act. In response to notice under section 148 of the Act dated 08.04.2022, the assessee filed his return of income on 03.06.2022, declaring total income of Rs.2,90,63,110/- declaring LTCG on sale of agriculture land and also claimed exemption under section 54B of the Act on agricultural lands purchased. Subsequently, after realizing that he has inadvertently claimed exemption only in respect of in 3 agricultural lands, the assessee revised its computation to include exemption claim u/s 54B of the Act for the fourth agricultural land purchased at Rs. 25,41,885/-. However, the AO did not consider the additional claim and restricted deduction to the amount claimed in the return, while completing the assessment on 19.02.2024, under section 147 read with section 143(3) and section 144B of the Act, by accepting the returned income declared by the assessee. Rectification application seeking full Sec 54B exemption by assessee was rejected by AO and later by Ld. CIT(A) until ITAT, vide Order dated 19.11.2025 in ITA No. 1010/Ahd/2025, restored the matter to the file of AO with a direction to examine

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 3– the additional claim of assessee u/s 54B of the Act. In between, the Assessing Officer levied penalty of Rs.1,36,51,648/- under section 270A of the Act, treating the case as one of under-reporting of income in consequence of misreporting, primarily on the ground that the return had not been filed within the time prescribed under section 139(1) of the Act. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the Ld. CIT(A). The appeal was filed with a delay of approximately 55 days, which was explained as having occurred due to technical difficulties on the Income Tax Department’s portal. The Ld. CIT(A), however, declined to condone the delay on the ground that the assessee had not furnished contemporaneous evidence to substantiate the technical glitch and consequently dismissed the appeal as time-barred without examining the merits of the penalty. 5. Aggrieved against the impugned appellate order, therefore, the assessee filed appeal before the Tribunal. 6. Before us, the Ld. AR submitted that the assessee is an agriculturist and illiterate person having no knowledge of income tax liability. He was under impression that no tax was payable on sale of agriculture land, and thus no original tax return was filed under this bonafide belief. The Ld. AR further mentioned that in

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 4– response to notice u/s 148 of the Act, the assessee had duly filed return of income and paid self-assessment tax which was accepted by the Department, and later in compliance to ITAT direction, AO passed another order on 07.02.2026 to grant refunds of Rs. 5,92,170/- to assessee after adjustment of pre-paid taxes. He further submitted that the assessee had explained the aforesaid reasons for not filing the original tax return and also pleaded that his explanation for the alleged under-reporting of income was bonafide. In support of his argument, the Ld. Counsel relied on a number of decisions of Coordinate Benches and also the decision of the Hon’ble Jurisdictional High Court in the case of Shanaji Becharji Baraiya vs. ITO, Circle-1(3)(1), Ahmedabad in R/Special Civil Application No. 12968 of 2023 order dated 12.08.2025. 7. In response, the Ld. Sr. DR placed reliance on the orders of the AO and the Ld. CIT(A) and argued for the confirmation of the levy of penalty. 8. We have heard both the parties and perused the material available on record. 9. We have carefully considered the rival submissions and examined the materials on records relating to the levy of penalty under section 270A of the Act. The provision of section 270A(2)(b) of the Act stipulates that a person shall be considered to have

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 5– under-reported his income where no return of income is furnished or where the return is furnished for the first time under section 148 of the Act. Therefore, the provisions of the section 270A(2)(b) of the Act was squarely applicable to the case of assessee. At the same time, the provisions of section 270A(6) of the Act provides as under :-

(6) The under-reported income, for the purpose of this section, shall not include the following, namely :- (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) pr the Commissioner or the Principal Commissioner , as the case may be , is satisfied that the explanation is binafide and the assessee has disclosed all the material facts to substantiate explanation offered. 10. As per section 270A(6) of the Act, where the assessee offers an explanation for non-filing of the return and if the explanation of the assessee is found bonafide, then it will not be considered as under-reporting of income. It is an undisputed fact that in the present case, the assessee filed the tax return in response to notice under section 148 of the Act, declaring total income of Rs.2,90,63,110/-, and the same was accepted by the Assessing Officer without making any addition or disallowance. From the details filed by the assessee in response to notice under section 148 of the Act and the materials on record, it is found that the assessee has paid self-assessment tax of Rs.1,28,35,340/- on dated

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 6– 25.04.2022 in addition to TDS of Rs. 3,50,000/- and applicable interests, the credit of which was also allowed by the AO in the computation sheet of the order u/s 254 read with section 147 of the Act dated 07.02.2026. Thus, the assessee has disclosed all the material facts including income to the Department by paying the taxes due in compliance proceeding u/s 147 of the Act, and later received refund from the Department for excess payment of tax. Considering these facts, the explanation of the assessee for not furnishing the original return is found to be bonafide. Taking into account the explanation and the conduct of the assessee, the case is found to be covered in the exception provided u/s 270A(6) of the Act. Under the circumstances, no penalty under section 270A of the Act was called for in this case.

“ Computation of penalty : 1 Tax on under reported income of Rs 2,90,63,110/- Rs. 68,25,824/- 2 Penalty u/s 270A(1) rws 270A(8) of the IT Act for Rs.1,36,51,648/- under-reported income in consequence of misreporting of income, leviable @200% of the tax on under-reported income. In view of the above, I am satisfied that Penalty under section 270A of the Income Tax Act ,1961 attracts in this case on the ground of under reporting of income in consequence of misreporting of income. Therefore penalty under section 270A of the Act of Rs. 1,36,51,648/- being equal to 200% of the

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 7– amount of tax payable on under-reported income as detailed in the body of the order is hereby imposed.” 12. From above, we noticed that penalty has been imposed u/s 270A(8) r.w.s u/s 270A(1) of the Act, at 200% of the tax payable, on the ground that the assessee had misreported income by not filing the original return within the prescribed time. There are several judicial precedents which have held that penalty u/s.270A of the Act, requires precise classification, whether the penalty is being levied for under-reporting or misreporting of income. In the impugned penalty order, the AO’s imposition of penalty @200% on the amount of tax payable hinges on misreporting as per Section 270A(9) r.w.s. 270A(8) of the Act. But the AO has not indicated which specific offence under section 270A(9) of the Act has been committed by the assessee leading to misreporting. It would be useful to reproduce the relevant extract of section 270A(9) of the Act for ready reference :-

The provision of section 270A(9) reads as under: Section 270A(9) in The Income Tax Act, 1961 “…(9)The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:— (a)misrepresentation or suppression of facts; (b)failure to record investments in the books of account; (c)claim of expenditure not substantiated by any evidence; (d)recording of any false entry in the books of account; (e)failure to record any receipt in books of account having a bearing on total income; and

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 8– (f)failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply…” 13. On going through the provisions of the Act, the specific actions or the essential ingredients in regard to misreporting have not been demonstrated by the AO with the requisite clarity while imposing penalty under section 270A of the Act. We also find that this issue is covered by the decisions of the Coordinate Benches of this Tribunal in the case of Suresh Rao v. ITO, in ITA No. 1235/Ahd/2024, order dated 24.01.2025, and Ishit Kamleshbhai Sheth v. ITO, ITA No. 753/Ahd/2025, order dated 25.07.2025. In these cases, the Ahmedabad Bench of the Tribunal has deleted the penalty under section 270A of the Act in a case where the return filed in response to notice under section 148 of the Act was accepted in toto without any variation or disallowance. 14. On going through the provisions of the Act, the factum of filing of return and payment of entire taxes, keeping in view the specific facts and circumstances of the instant case, and the aforesaid decisions of Coordinate Benches, we have no hesitation to hold that no penalty u/s.270A for mis-reporting of income is leviable in this case. 15. We, accordingly, hold that the penalty of Rs.1,36,51,648/- levied under section 270A of the Act is not sustainable in the facts

ITA No. 2210/Ahd/2025 DinmahmadHajibhaiMominvs. ITO Asst. Year –2018-19 - 9–

and circumstances of the present case. The penalty is therefore directed to be deleted.

Sd/- Sd/- (SANJAY GARG) (GANGADHAR PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 27/10/2026 JEETENDR TANMAY, Sr. PS TRUE COPY Digitally signed by JEETENDRA DEVENDRABHAI UPADHYAY आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : A DN: c=IN, o=PERSONAL, title=6087, 2.5.4.20=7e5568a89b633f174b 1. अपीलाथ�/ The Appellant 28a80f5e63c638da40b7313fb4 DEVENDR 7ebaefda841cf59d1703, 2. ��थ�/ The Respondent. postalCode=380059, ABHAI st=Gujarat, 3. संबंिधतआयकरआयु�/ Concerned CIT serialNumber=816dc56e89621 1a1a21ccc4abc94ddc94458f4a UPADHYA 1b37be8e1854e9399295106d4, 4. आयकरआयु�(अपील) / The CIT(A)- cn=JEETENDRA DEVENDRABHAI UPADHYAY 5. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad Y Date: 2026.10.30 10:10:01 +05'30' 6. गाड�फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, अहमदाबाद / ITAT, Ahmedabad