Rs 70k tax penalty for buying land at less value

When Ghaziabad resident Mr Rai purchased a property for Rs 48 lakh, he was unaware of its stamp duty value of Rs 58.7 lakh. The Income Tax Department, however, assumed that Rai had paid the remaining Rs 10.7 lakh by other means and did not report it to the tax authorities. Consequently, they issued a Section 148 tax notice to Rai for not filing an income tax return (ITR).

Rai filed his ITR, acknowledging his lack of knowledge about tax laws, and later paid the tax due on the Rs 10.7 lakh differential amount. However, before he could pay, the Assessing Officer (AO) levied a penalty under Section 270A for Rs 70,700 on unreported income of Rs 10,78,190. Rai appealed the decision to the Income Tax Appellate Tribunal (ITAT) Delhi, where Advocate C M Agarwal and Advocate Archit Agarwal argued his case.

The Tribunal ruled in Rai's favor, stating that the Income Tax Department failed to prove any mala fide intention and that Rai's case fell under the statutory exception under Section 270A(6)(a), which allows penalty exemption when the taxpayer provides a bona fide explanation. Rai's advocates also cited relevant Supreme Court and High Court precedents. Thus, the Tribunal set aside the penalty order and allowed Rai's appeal.