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Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
(Assessment Year: 2020-21) Ajay Pal Singh, vs. ITO, Ward 1 (1), Village Gadi, Near Dadri Noida. Gautam Budh Nagar - 201 301 Uttar Pradesh). (PAN : AXGPS6679A) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Vijay Kumar Singla, CA REVENUE BY : Shri Ajay Kumar Arora, Sr. DR Date of Hearing : 02.09.2025 Date of Order : 26.11.2025 O R D E R
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
1. The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 12.02.2025 for the Assessment Year 2020-21.
Brief facts of the case are, assessee had originally filed his return of income declaring total income of Rs.43,88,320/-. Subsequently, assessee filed revised return on 30.03.2021 declaring revised total income of Rs.31,26,700/-. The return of income was processed under section 143(1) of the Income-tax Act, 1961 (for short ‘the Act’). Subsequently, the case CASS for the reason that excess refund was sought declaring revised return of income. Accordingly, notices were issued and served on the assessee. During the course of assessment proceedings, the assessee failed to explain as to why income was reduced in revised return. The AO observed that the total taxable income shown in Annexure II of TDS return of employer in Form 24Q was more than the revised return of income filed by the assessee. Accordingly, the AO made an addition of Rs.12,61,420/- being difference between the total income as per original return of income and revised return. Simultaneously, the AO also initiated penalty u/s 270A of the Act for under-statement of income in consequence of mis-reporting and thereof. During penalty proceedings, AO was not satisfied with the explanation offered by the assessee and hence levied penalty u/s 270A @ 200% of Rs.12,61,420/-. Accordingly, assessee preferred an appeal before the ld. CIT (A) and raised several grounds of appeal
and also submitted detailed submissions in reference to grounds of appeal before him as under :- “Reply of Ground No.1. Conditions for grant of immunity An application for immunity can be made subject to satisfaction of both the undermentioned conditions - the tax and interest, as demanded, as per the assessment or reassessment are paid; such payment is within the time specified in the notice of demand issued under section 156 of the Act; the assessee does not. file any appeal against the order of assessment or reassessment. For the amount of tax and interest reference is made to the order of assessment or reassessment whereas when it comes to the period of payment the reference is to the notice of demand. The amount mentioned in the notice of demand will have to be paid as the word' such' is used before (a) of sub-section (1). Section 270AA(3) and 270AA(4): The Assessing Officer shall, subject to fulfilment of the conditions specified in subsection (1) and after the expiry of the period of filing the appeal as specified in clause (b) of sub-section (2) of section 249, grant immunity from imposition of penally under section 270A and initiation of proceedings under section 276C or section 276CC, where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A (4) The Assessing Officer shall, within a period of one month from the end of the month in which the application under sub-section (1) is received, pass an order accepting or rejecting such application On the facts and in the circumstances of the case, the Ld. AO has erred in invoking penalty for misreporting without appreciating that there is no misrepresentation and/or suppression of facts by the Appellant who had taken a consistent position, details of which have been explained to the l.d. AO and are also supported by several judicial precedence. That, on the facts and in the circumstances of the case and in law, impugned penalty order dated 26/09/2023 passed by the (ld. AO') levying penalty under section 270A of the Act is bad in law and liable to be quashed. As per aforesaid grounds, penalty order passed u/s 270A of I T Act, 1961 itself is illegal and liable to be quashed hence prayed for the same and as an alternative without diluting the above prayer all the additions are illegal & bad in law. Reply of Ground No 2.3 & 4:- The Submission is submitted by Assesses during Penalty Assessment on dated 01/1112022 with full explanation for immunity under Section 270M of Income Tax Act, 1961 and not considered the same. I would like to give reference to the case of the Honorable Supreme Court of India which was given order by him on 25. September 2023 which is as follows: The Supreme Court on 25.09.2023, in a Judgment on issue of immunity from penalty and prosecution by the Settlement Commission, delivered has held that: the assessee ought to have a) made full and true disclosure before the Commission b) Co-operated with the Commission in the proceedings before it. ( para 6) It further held that "having regard to the legislative intent, frequent interference with the orders or proceedings of the Settlement Commission should be avoided.
There are limited grounds on which an order or proceeding of the Settlement Commission can be judicially reviewed. The High Court should not scrutinise an order or proceeding of Settlement Commission as an appellate court [t upheld the order of the Settlement Commission granting immunity from penalty and prosecution. Copy of judgment is also attached as MIs KOTAK MAHINDRA BANK LIMITED Vs CIT, Bangluru civil appeal n NO.9720 OF 2014. The another order of Hon’ble Delhi Court as under: The division bench of Delhi High Court presided by Mr. Justice Manmohan and Ms. Justice Manrneet Pritam Singh Arora has held that penalty u/s 270A will not attract by mere reference of misreporting of Income. The petitioner, Prem Brothers Infrastructure LLP. approached High Court against the order of respondent, National Faceless Assessment Centre imposing a penalty of Rs.2,50,78,168/- under section 270A of the Act alleging misreporting of income. The counsel for the petitioner submitted that the only addition in the assessment order is in respect of disallowance under section 14A of the Act. The Petitioner itself has made a disallowance of Rs.3,,20,14,010/- which was more than the exempt income of Rs45,08,371/- The respondent has enhanced this disallowance to Rs.6,82,45,759/-. The petitioner by relying the judgement of High Court in Joint Investments Pvt Ltd Versus Commissioner of Income Tax has submitted that when disallowance over and above exempt income itself is not permissible, there can't be any misreporting of income. The issue involved herein is of estimation of disallowance under section 14A of the Act. As per clause (c) of section 270A(6) of the Act, no penalty is leviable where the amount of underreported income is determined on the basis of an estimate, if the assessee has on his own, estimated a lower amount of disallowance on the same issue and had included such income in the computation of his income. The High Court has observed that the underreporting allegedly done by the assessee cannot amount to misreporting as the assessee had furnished all the details of the transactions relating to disallowance made under Section 14A of the Act and the AO as well as assessee has used the same details to arrive at different conclusions i.e. differing quantum of disallowances under Section 14A of the Act. This by no stretch of imagination can be held to be 'misreporting’. The High Court while quashing the penalty order has held that "there is not even a whisper as to which limb of Section 270A of the Act is attracted and how the ingredient of sub-section (9) of Section 270A is satisfied. In the absence of such particulars, the mere reference to the word "misreporting" by the Respondents in the penalty order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary". The High Court directs the respondent to grant immunity under Section 270M of the Act to the Petitioner. i. The Income is show Under Reported as per Ld AO passed Assessment order dated 1610912022. After the order was passed by the Income Tax Officer, the Assessee deposited his tax in full and also submitted his Form 68, Immunity Form 68 within time on 08/10/2022, which fulfills all the conditions Income Tax as per the rules, which a Assessee is entitled for gets under this law for immunity. ii. In response to the showcase notice also a copy of Form 68 was filed with reply to the Income Tax Officer in reply dated 8.10.2022, a copy is attached. As per the provisions of the Income Tax Act u/s 270M for immunity, the Assessee has fulfilled all the four conditions according to the rules, which are as follows- The Assessee had fulfilled all the four conditions as per law. The Assessee had filled form 68 online on dated 08/10/2022.
The Assessee have not suppressed any hidden anything 2. The assessment income is under reporting 3. The Assessment order comes under 147/143(3).
The Assessee have filled form 68 for immunity as per u/s 270AA online within 30 days i.e 08.10.2022 5. The Assessee have not received any demand as per 156 demand and accepted the case demand, because the Assessee did not want any kind of litigation in the future. iii. The said provision provides immunity from imposition of penalty under section 270A and initiation of prosecution in respect of cases of under- reporting of income if the tax and the interest payable as per the assessment or the reassessment order is paid within the period specified in the notice of demand i.e. within 30 days of the service of notice and also if no appeal has been filed against the assessment or the reassessment order. To avail this immunity, assessee is required to file an application in Form 68 within 1 month from the end of the month in which the assessment order is received by the assessee. It has been provided that in case conditions specified are fulfilled, then the assessing officer upon expiry of the period of filing of appeal i.e. 30 days from the date of service of notice of demand, shall grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC. iv. The Assessee has also not filled any appeal u/s 246A against the assessment order dated 16/09/2022 and not interest in future. v. The Assessee has truthfully presented all the facts before you and this is the bonafide explanation of the Assessee. The Assessee has not deliberately/ intently hidden any fact because the Assessee is a labour class worker and has fully cooperated with the Ld. AO during the assessment. vi. The assessee had also not filed an appeal against the said assessment order. The assessee had submitted his Form 68 manually as Form 68 was not being submitted online due to technical issues/ some technical glitcl1es in the portal which prevented the said application from being uploaded within time.
The Court highlights that the assessee is eligible for immunity under Section 270AA on satisfying three fundamental conditions: payment of tax and interest demand, and non-filing of appeal against the demand order. Moreover, the assessing officer initiated a penalty for underreporting income and not for misreporting income. Consequently, the Petitioner acquired a right to be granted immunity under Section 270AA of the Act. After considering the submissions of the assessee, ld. CIT (A) dismissed 3. the appeal preferred by the assessee by observing as under :- “7. I have considered the order of the AO and the submission made by the appellant during appellate proceedings. It is seen from the assessment order that the appellant had originally filed return of income with total income of Rs.43,88,120/-. Subsequently, the appellant filed a revised return on 30.03.2021 with total income of Rs.31,26,700/-. The appellant during the course of the assessment proceedings before the AO, failed to explain as to why income was reduced in the revised return. The AO also noticed that the income of the appellant in the revised return was less than total taxable income shown in annexure-II of TDS return of employer in Form 24Q for which no explanation could be offered by the appellant. Hence, the AO made addition of Rs.12,61,420/- being difference between the total income as per original return of income and the revised return. The AO also initiated penalty u/s 270A for under statement of income in consequence of mis-reporting thereof. During the penalty proceedings, the AO was not satisfied with the explanation offered by the appellant and hence, levied penalty u/s 270A @ 200 % of Rs. 12,61,420/-. The present appeal is filed against the said order. 7.1 During the course of the appellate proceedings the appellant submitted that he had filed Form No. 68 u/s 270AA for immunity from penalty. The appellant also submitted that he was under bona-fide belief that the VRS income was exempted. 7.2 It is seen that penalty u/s 270A was initiated for mis-reporting of income. Provisions of section 270AA are applicable only when penalty was not initiated for misreporting of income. Hence, the appellant is not eligible for immunity u/s 270AA of the Act as the condition laid down in section 270AA(3) of the Act is not fulfilled. 7.3 It is seen that initially the appellant had shown total income of Rs.43,88,120/- in the original return filed which is in accordance with Form No.16 issued by the employer. Subsequently, the appellant revised the return and income was reduced to Rs.31,26,700/- which is less than income shown in the original return and also income shown by the employer in Form No.
When confronted, the appellant failed to offer any explanation before the AO. Hence, the AO made addition of Rs.12,61,420/- and initiated penalty u/s 270A for mis-reporting of income. The addition was accepted by the appellant. The action of the appellant in showing lesser income in the revised return and claiming refund amounts to misrepresentation or suppression of facts within the meaning of section 270A (9)(a) of the Act. If the case was not selected for scrutiny, the amount would have escaped assessment. Hence, I hold that the appellant had under stated his income in consequence of misreporting of income u/s 270A(9)(a) of the Act and hence, he is liable for penalty u/s 270A @ 200% of the amount of tax payable on under reported income in consequence of misreporting of income. The case laws quoted by the appellant are not applicable to the facts of the case of the appellant. Hence, penalty u/s 270A of Rs.11,12,912/- levied by the AO is confirmed and the appeal of the appellant is dismissed. Aggrieved with the above order, assessee is in appeal before us raising 4. following grounds of appeal :-
1. That the impugned Penalty order passed by the Ld. AO and Confirmed by CIT(A) is bad in law, wrong on facts and against the Principal of natural justices hence is unsustainable.
2. That the impugned Penalty order proceeding by the Ld AO for under reporting of Income with reference to any clause of section of 270A was bad in Law, wrong, having no base and against the circumstance of the case.
3. That on facts and circumstances of the case and in Law, the assessing officer had erred in assessing the Penalty of the appellant the amount received under voluntary retirement scheme has been a total composite package under a scheme of voluntary separation, While the demand for the Assessment order was zero. The assessee had filed a application for immunity under Section 270M of Income Tax Act, 1961 (hereafter 'the Act) was not consider and passed the impugned penalty order of Rs 1112912.00 and demand issued of Rs.11,12,912/ - please be deleted.
4. The Submission is submitted by Assesses during Penalty Assessment on dated 08/10/2022 for a application for immunity under Section 270AA of Income Tax Act, 1961 and riot considered the same While the demand for the Assessment order was zero and Not considered the Submission of Assessee by Ld CIT(A) and as The Submission is not also considered by Ld AO. Therefore, there cannot be any tax of Income tax act 1961.
5. That the ld. Assessing officer on the fact and circumstances and legal position of the case the learn AO ought not to have rejected the application of the Assessee under section 270M made in form 68 Online portal about the provision of law. The ld CIT(A) ought not to have consider the fact of the penalty order of the technical ground which the assessing officer had relied in making additions. The assessment order is therefore illegal being in violation of the principal of natural justice and unsustainable in law.
6. That the impugned assessment order is arbitrary, illegal, bad in law in violation of rudimentary principal of contemporary jurisprudence. 7. That the impugned Assessment order passed by Ld. Assessing Officer, Noida is a clear cut case of misunderstanding and wrong interpretation of Law.”
At the time of hearing, ld. AR of the assessee submitted that assessee is a 5. salaried employee in Honda company. During the year under consideration, the assessee was offered for voluntary retirement from service under the Scheme floated by the Honda company. On acceptance of the offer, the assessee had received full and final payment of ex-gratia payment and other benefits as per the scheme. Accordingly, assessee filed return of income declaring the whole settlement amount. However, subsequently assessee revised the return of income with the belief that VRS benefits are exempt from tax. At the time of assessment proceedings, the assessee has accepted the original return of income and demand notice u/s 156 of the Act was issued to the assessee with nil tax demand. It was submitted that assessee has not preferred any appeal to buy peace and assessee had not disclosed any income considering the facts available on record. It was prayed that the penalty may be deleted. Further the assessee has disclosed all the income and he is eligible to get immunity from imposition of penalty u/s 270AA of the Act and assessee also filed an application in Form 68 before the AO which was not considered.
On the other hand, ld. DR of the Revenue relied on the findings of the 6. authorities below.
Considered the rival submissions and material placed on record. We observe that assessee is a salaried employee opted for VRS scheme from the company and originally declared the whole income received from the company which was matching with the Form 24Q filed by the employer. Due to wrong belief, he was of the view that the VRS benefits are exempt from tax, accordingly he has revised the return of income. However, during assessment proceedings, the Assessing Officer has allowed the gratuity and other benefits as per the slab and rest of the income was added to the total taxable income of the assessee. Assessee has not preferred any appeal against the assessment order and accepted the final assessment order and whatever refund amount allowed to the assessee was adjusted while passing final assessment order. After considering the facts on record, we observe that assessee being a salaried employee and revised the return of income with wrong impression and there is no loss to the Revenue considering the fact that original income was declared by the assessee as per the tax deducted at source by the employer. It is brought to our notice that assessee also moved application in Form 68 before the AO which was not considered by the AO. Further we observe that ld. CIT (A) was of the view that immunity u/s 270AA (4) of the Act is not applicable in this case. On careful consideration of the peculiar facts in this case, assessee being a salaried employee and whatever benefits under VRS compensation scheme was already disclosed by the employer as well as in the original return of income, only due to wrong belief assessee has revised the return of income however when the mistake was pointed out during assessment proceedings, the assessee has accepted the same. Therefore, the peculiar facts available on record squarely show that there is no intention to under-reporting or mis- reporting his income and there was no loss to the Revenue in this case. Therefore, we are inclined to allow the grounds raised
by the assessee. In the result, the appeal filed by the assessee is allowed.
8. Order pronounced in the open court on this 26th day of November, 2025.