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Facts
The assessee's case was re-opened following a search action, leading to a reassessment under Section 143(3) read with 147. This resulted in additions totaling Rs. 9,40,024/- for disallowance of HRA exemption (Section 10(13A)) and donation deduction (Section 80GGC). Penalty proceedings initiated under Section 274 read with 270A led to a penalty of Rs. 5,86,574/-, which the CIT(A) upheld. The assessee had paid the tax and interest and filed Form 68 under Section 270AA(2) seeking immunity, but the AO levied the penalty without rejecting the immunity application.
Held
The Tribunal found that the assessee fulfilled all statutory conditions for immunity under Section 270AA(1) and (2) by paying tax/interest, filing Form 68 within time, and not appealing the assessment order. The AO failed to issue a speaking order rejecting the immunity application or provide reasons for denial, and the revenue could not demonstrate that the case fell under 'misreporting' as per Section 270A(9). Consequently, following legal precedent, the penalty levied under Section 270A was deemed unsustainable and quashed.
Key Issues
Whether the penalty levied under Section 270A is valid when the assessee complied with all conditions for immunity under Section 270AA, and the Assessing Officer failed to pass an order rejecting the immunity application or prove misreporting under Section 270A(9).
Sections Cited
Section 250, Section 270A, Section 132, Section 133A, Section 148, Section 143(2), Section 142(1), Section 143(3), Section 147, Section 10(13A), Section 80GGB, Section 80GGC, Section 270AA, Section 274, Section 270A(9)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI GIRISH AGRAWAL
Per: Anikesh Banerjee (JM):
The instant appeal of the assessee filed against the order of the Ld. Commissioner of Income Tax Appeal-47, Mumbai [for brevity ‘the Ld. CIT(A)], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for assessment year 2019-20, date of order 29.05.2025. The impugned order emanated from the order of the Assessment Unit Income-tax Department (for
2 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth brevity the ‘Ld. AO’) order passed under section 270A of the Act date of order 20.02.2024. 2. The brief facts of the case are that the aassessee is a salaried individual employed with “Trejhara Solutions Limited' during the year. The assessee filed its original return of income on 31.08.2019 declaring income of Rs. 35,91,520/-. A search and survey action u/s. 132/133A of the Act was conducted by DDIT (Inv.), FAIU3(1), Mumbai on 22.03.2022 in the cases pertaining to the Mr. Niranjan Hiranandani, Mr. Surendra Hiranandani and their related Group entities/persons. The assessee was also covered in the Search action-initiated u/s 132 of the Act. Accordingly, the case of the assessee was re-opened u/s 148 for the year under consideration. In response, the assessee filed return of income on 17.11.2022 declaring total income of Rs.35,91,520/-. Thereafter, assessment proceeding was initiated and notice u/s. 143(2) of the Act along with a notice u/s. 142(1) of the Act was issued and served to the assessee. The Ld. A.O. concluded the assessment proceedings on 19.05.2023 by passing an assessment order u/s 143(3) r.w.s. 147 of the Act, assessing the total income of the assessee at Rs.45,31,540/- and thereby making an addition of Rs.9,40,024/- the details of which are tabulated as under-
Sr.No. Additions made in the assessment Quantum of Penalty initiated for order Disallowance 1 Disallowance of exemption claimed Rs.8,40,024/- Under Reporting of u/sec. 10(13A) income 2 Disallowance of deduction u/sec. Rs.1,00,000/- Mis Reporting of 80GGC income Total Rs.9,40,024/-
3 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth Thereafter, penalty proceedings were initiated and a notice u/s 274 r.w. section 270A was issued wherein the assessee was requested to show cause why an order imposing a penalty u/s 270A should not be made for the aforesaid additions. In response to the same, the details were duly compiled and submitted by the assessee. The Ld. AO concluded the penalty proceedings on 20/02/2024 by passing a penalty order u/sec. 270A thereby levying penalty as under:-
Sr. No. Nature Penalty Amount % of Penalty Under/Misreporting levied of penalty 1 House Rent Allowance 5,24,174/- 200 Misreporting u/sec. 10(13A) 2 Donation to political 62,400/- 200 Misreporting party u/sec. 80GGC Total 5,86,574/-
Thereafter, in accordance with the provisions of section 270AA(2) of the Act, the assessee filed Form No. 68 electronically on 18.06.2023 before the Ld. AO, seeking grant of immunity from penalty under section 270A of the Act. Bu the Ld. AO proceeds to impose penalty U/s 270A of the Act.
Aggrieved by the above, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld the impugned penalty order. Being aggrieved assessee filed an appeal before us.
The Ld. AR advanced his submissions and filed a paper book comprising pages 1 to 24, which has been taken on record. He submitted that the assessment was completed vide order dated 19.05.2023 passed under section 147 of the Act.
4 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth In the said assessment, the Ld. AO made an addition of Rs. 8,40,024/- by denying the exemption claimed under section 10(13A) of the Act and further disallowed deduction of Rs. 1,00,000/- claimed under sections 80GGB/80GGC of the Act on account of an alleged bogus donation. The Ld. AR further submitted that upon receipt of the impugned assessment order and consequential demand notice, the assessee discharged the entire tax liability amounting to Rs. 4,03,533/- on 13.06.2023. Thereafter, in accordance with the provisions of section 270AA(2) of the Act, the assessee filed Form No. 68 electronically on 18.06.2023 before the Ld. AO, seeking grant of immunity from penalty under section 270A of the Act. However, without passing any order rejecting the said Form No. 68 as contemplated under the Act, the Ld. AO proceeded to levy penalty under section 270A.
The Ld. AR further contended that an identical issue relating to grant of immunity under section 270AA has been considered by the Coordinate Bench of the ITAT, Patna, in the case of Sangam Almirah Pvt. Ltd. vs. NFAC, Delhi, ITA No. 338/PAT/2025, order dated 27.10.2025. The relevant observations contained in paragraphs 7 and 8 of the said decision are reproduced hereunder: “7. Since the assessee had filed the application u/s 270AA seeking immunity from imposition of penalty within time, it was incumbent upon the Ld. AO to pass an order within one month from the end of the month in which the application seeking immunity was filed, which has not been done in this case. Further, neither in the assessment/penalty order nor even in the appeal order of the Ld. CIT(A) has it been specified as to under which clause of sub-section (9) the assessee's case was falling so as to treat it as misreporting of income referred to in sub-section (8) of section 270AA. Since the assessee had substantively complied with the provision of section 270AA by not contesting the order and had paid the tax and interest payable and no appeal
5 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth against the order referred to in clause (a) of sub-section (1) of section 270AA was filed, therefore, the immunity from imposition of penalty under section 270A ought to have been granted by the Ld. AO as on facts, the penalty was not imposable as it was a case of under reporting of income and not a case of the underreported income being in consequence of any misreporting thereof. This being so, therefore, relying upon the decision in the case of Schneider Electric South East Asia (HQ) Pvt Ltd.(supra) and the Ld. DR not being able to rebut the submission of the assessee by pointing out any counter argument, we are inclined to allow the appeal of the assessee. Accordingly, the penalty imposed is hereby cancelled and the appeal of the assessee is allowed. 8. In the result, the appeal filed by the assessee is allowed.”
The Ld. DR strongly supported the orders passed by the revenue authorities. However, with regard to the filing of Form No. 68 by the assessee under section 270AA(2) of the Act, the Ld. DR did not advance any specific argument nor point out any adverse finding or defect in the said submission made by the assessee.
We have carefully considered the rival submissions and perused the material placed on record. It is an undisputed fact that the assessment was completed under section 143(3) read with section 147 of the Act on 19.05.2023 and the consequential demand was duly raised. The assessee discharged the entire tax liability on 13.06.2023 and thereafter filed Form No. 68 electronically on 18.06.2023 under section 270AA(2) of the Act, seeking immunity from imposition of penalty under section 270A. The assessee also intimated the Ld. AO of the said compliance vide letter dated 20.06.2023. On perusal of the record, we find that the assessee has complied with all the statutory conditions prescribed
6 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth under section 270AA(1) and (2) of the Act, namely: (i) payment of the tax and interest as per the assessment order within the stipulated time, (ii) filing of the prescribed application in Form No. 68 within the time allowed, and (iii) non-filing of any appeal against the assessment order. However, the Ld. AO neither passed any order rejecting the application under section 270AA(4) nor assigned reasons as to why the assessee was not entitled to immunity. Instead, the penalty under section 270A was levied. The Coordinate Bench of the ITAT, Patna, in Sangam Almirah Pvt. Ltd. (supra) has categorically held that once an assessee has fulfilled the conditions stipulated under section 270AA, it is incumbent upon the Assessing Officer to grant immunity, and failure to pass a speaking order on the application vitiates the subsequent levy of penalty. The revenue has not been able to distinguish the said decision or point out any adverse material against the assessee’s compliance. In the present case, the penalty has been levied treating the additions as cases of misreporting, without demonstrating how the case falls within the ambit of section 270A(9) so as to deny the benefit of immunity under section 270AA. In absence of any valid rejection of the assessee’s application in Form No. 68 and considering the substantive compliance made by the assessee, the levy of penalty cannot be sustained. Accordingly, respectfully following the decision of the Coordinate Bench and in view of the statutory mandate of section 270AA, we hold that the penalty levied by the Ld. AO amounting to Rs. 5,86,574/- is unsustainable in law and is hereby quashed. Hence, the appeal of the assessee is allowed.
7 ITA No.4702/Mum/2025 Mehul Pravinchandra Sheth 7. In the result, the appeal of the assessee bearing ITA No.4702/Mum/2025 is allowed. Order pronounced in the open court on 05th day of March 2026. Sd/- Sd/- (GIRISH AGRAWAL) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 05/03/2026 SAUMYASr.PS
Copy of the Order forwarded to: अपीलाथ�/The Appellant , 1. �ितवादी/ The Respondent. 2. आयकरआयु� CIT 3. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, 4. Mumbai गाड�फाइल/Guard file. 5.
BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI