Penalty u/s 270A deleted as assessee filed revised computation during scrutiny

Penalty u/s 270A deleted as assesse filed revised computation during scrutiny correcting the mistake which was noticed only after the case was selected for scrutiny.

In a recent judgment, ITAT has deleted penalty u/s 270A as the assesse filed revised computation during scrutiny and stated that due to inadvertent errors on account of a technical glitch in the software utility, certain details were omitted / entered in wrong columns.

ABCAUS Case Law Citation:
5188 (2026) (07) abacus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A)/National Faceless Appeal Centre(NFAC) in confirming the penalty u/s 270A of Income Tax Act, 1961 (the Act) Act on account of alleged under-reporting of income in consequence of misreporting.

The assesse had filed its return declaring loss. The case of the assesse was selected for complete scrutiny. During the course of scrutiny proceedings, the assessee filed a revised computation of income disallowing some expenses on account of loss on sale of assets and on account of charity and donation u/s 37 of the Act. Accordingly, the total loss was revised.

The assessment was completed u/s 143(3) of the Act at the revised loss. However, the AO initiated penalty proceedings u/s 270A of the Act for under-reporting of income in consequence of misreporting in respect of disallowances as above.

Subsequently, a penalty computed @ 200% of tax sought to be evaded was imposed on the ground that if the case was not selected for scrutiny, these expenses wrongly claimed would not be detected and therefore, the assessee was held to be in default in view of provisions of Section 270A of the Act.

Before the ITAT, the assesse submitted that the revised computation of income was filed suo motu without any adverse observation from the Assessing Officer (AO). It was further explained that, due to inadvertent errors on account of a technical glitch in the software utility, certain details were omitted / entered in wrong columns. It was only after the case was selected for scrutiny that the assessee noticed the mistake and, accordingly, filed a revised computation of income, since it was not possible to file a revised return for which the time limit had expired.

It was submitted that since the mistake was inadvertent, bona fide, and was rectified suo motu by the assessee, no penalty should have been levied in the facts and circumstances of the case.

The ITAT opined that the explanation given by the assessee was bonafide and the Revenue had not been able to demonstrate that the revised computation was filed in response to the mistake / omission having been detected by the Department.

The ITAT held that the present case was not a fit case for imposing of penalty, since the assessee had suo moto rectified the error during the course of the assessment proceedings. Accordingly, the penalty was deleted.

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