Penalty for 'Under-reporting' done in accordance with Section 270A not sustainable: ITAT underlines difference from 'Misreporting' of Income [Read Order]
The Revenue department did not demonstrate with cogent evidence that the deduction claim was bogus and knowingly made on the basis of false particulars
![Penalty for Under-reporting done in accordance with Section 270A not sustainable: ITAT underlines difference from Misreporting of Income [Read Order]](https://images.taxscan.in/h-upload/2026/05/23/2137926-penalty-under-reporting-done-accordance-taxscan.webp "Penalty for Under-reporting done in accordance with Section 270A not sustainable: ITAT underlines difference from Misreporting of Income [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, noted the distinction between ‘misreporting’ and ‘under-reporting’ of income and held that the penalty under Section 270A cannot be sustained for under-reporting. The facts reveal that the assessee, Hiro Mulchand Tanwani, claimed deduction after declaring his income under Section 80GGC in respect of donation made to...
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, noted the distinction between ‘misreporting’ and ‘under-reporting’ of income and held that the penalty under Section 270A cannot be sustained for under-reporting.
The facts reveal that the assessee, Hiro Mulchand Tanwani, claimed deduction after declaring his income under Section 80GGC in respect of donation made to a political party. Assessment was reopened under Section 148 to verify the genuineness of the said donation.
The Assessing Officer (AO) disallowed the deduction after reassessment was completed and levied a penalty of INR 93,600 under Section 270A as the assessee had under-reported income in consequence of misreporting. It is to be noted that the Revenue department did not demonstrate with cogent evidence that the deduction claim was bogus and knowingly made on the basis of false particulars.
The assessee contended that the AO was not justified in treating disallowance of deduction claimed as a case of “misreporting of income”. The AO contended that the assessee had accepted the addition by not filing an appeal against the disallowance.
ITAT referred to Section 270A which draws a clear distinction between “under-reporting of income” and “misreporting of income” and observed that misreporting is only attracted in specific circumstances enumerated in sub-section (9), such as suppression of facts. Therefore, the tribunal was of the opinion that there is no material on record to establish that the assessee had furnished any false evidence, suppressed any facts, or made any deliberate misrepresentation and thus even if the claim of deduction was found inadmissible then penalty for misreporting cannot be sustained.
The bench of Dr. B.R.R. Kumar (Vice President) accordingly allowed the appeal and directed the penalty of INR 93,600 to be deleted. It was further held that the deduction disallowed was based solely on the AO’s adverse view regarding its admissibility.
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