S.270A penalty deleted: bona-fide ITR-form error, nothing concealed (ITAT Mumbai)
The Tribunal held a bona-fide and inadvertent error in not offering income in the return due to clerical staff cannot make the assessee guilty of under-reporting or misreporting, where all facts were already before the Assessing Officer during assessment and nothing was hidden or concealed.
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Order: ITA No. 2764/Mum/2025 (ITAT Mumbai), Assessment Year 2017-18, against the CIT(A) NFAC order dated 11.03.2025 confirming the penalty order dated 25.01.2022, pronounced 19.01.2026.
Facts
Interest income duly shown in the profit-and-loss account filed with the return was shown as other income in the computation but missed in the ITR format at a zero figure — an inadvertence of the form filer, since the amount was nil in the computation — and the Assessing Officer also assessed it as income from other sources though it was business income.
The addition of Rs.8,77,815 under other sources after set-off of depreciation loss was admitted on the Assessing Officer's query under section 142(1), and neither the Assessing Officer in the penalty order nor the Commissioner (Appeals) found the explanation false.
Issue
Whether a bona-fide, inadvertent return-form error, with all facts on record and the explanation never found false, constitutes under-reporting or misreporting inviting section 270A penalty.
Holding
The Tribunal held a bona-fide and inadvertent error in not offering income in the return due to clerical staff cannot make the assessee guilty of under-reporting or misreporting, where all facts were already before the Assessing Officer during assessment and nothing was hidden or concealed.
Following the Supreme Court in Price Waterhouse Coopers (inadvertent bona-fide error, no concealment or inaccurate particulars) and in Reliance Petroproducts, it set aside the orders below and directed deletion of the section 270A penalty.
The appeal was allowed and the order pronounced on 19.01.2026.
Why a client would care
Where the figure was disclosed in the accounts, the error is clerical, and the explanation was never found false, section 270A penalty is resistible on bona-fide-error grounds rather than on quantum.
Questions clients ask
Q1. A clerical error in the return left out income the Assessing Officer already knew about. Is that a section 270A penalty?
The Tribunal held it is not: a bona-fide inadvertent error with nothing hidden cannot be under-reporting or misreporting, and it directed deletion of the penalty.
Q2. Does it matter that the facts were already on record?
Yes — the Tribunal relied on all facts having been before the Assessing Officer during assessment.
Q3. Which precedents did it follow?
The Supreme Court in Price Waterhouse Coopers and in Reliance Petroproducts.
Disclaimer
This note summarises a Tribunal order for general information. It is not professional advice and does not predict the outcome of any other case. Tax and company-law positions depend on facts and dates; take a written opinion before you act. Harun Raaj & Associates is a Chartered Accountants firm in Visakhapatnam.
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