S.270A penalty fails where a salaried assessee revised on a wrong exemption belief (ITAT Delhi)

Order: ITA No. 2253/Del/2025 (ITAT Delhi), Assessment Year 2020-21, against the CIT(A) NFAC order dated 12.02.2025, pronounced 26.11.2025.

Facts

The assessee, a salaried employee who opted for a voluntary retirement scheme, originally declared the full receipts matching the employer's Form 24Q, then revised the return from Rs.43,88,320 to Rs.31,26,700 in the wrong belief that voluntary retirement benefits are exempt.
The assessment added the income back, the assessee accepted the assessment without appeal with refunds adjusted, and his Form 68 immunity application under section 270AA was not considered.

Issue

Whether a revised-return reduction on a wrong exemption belief, accepted at assessment with no revenue loss, shows intention to under-report or mis-report for section 270A.

Holding

The Tribunal noted the original income matched tax deducted at source, the revision rested on a wrong impression about voluntary retirement benefits, and there was no loss to the Revenue.
The benefits had been disclosed by the employer and in the original return; once the mistake was pointed out the assessee accepted it — facts squarely showing no intention to under-report or mis-report, so the grounds were allowed.
The appeal was allowed and the order pronounced on 26.11.2025.

Why a client would care

A revised return that reduces income on a wrong-but-transparent belief, with the original figures matching TDS and the assessment accepted, resists section 270A on absence of intention rather than on computation.

Questions clients ask

Q1. A revised return reduced income on a wrong belief about VRS exemption. Was the section 270A penalty sustained?

No — the Tribunal found no intention to under-report or mis-report and allowed the grounds.

Q2. Which facts drove that conclusion?

The original income matched tax deducted at source, the benefits had been disclosed by the employer and in the original return, and the mistake was accepted once pointed out.

Q3. Did the Revenue suffer any loss?

The Tribunal recorded that there was no loss to the Revenue.

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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