Mumbai ITAT Quashes ₹17.41 Lakh Penalty Over Clerical Error in Revised ITR

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has set aside a penalty of ₹17.41 lakh imposed under Section 270A of the Income-tax Act after concluding that an incorrect revised Income Tax Return (ITR) was filed due to a genuine clerical mistake and not because of intentional misreporting of income.

The matter related to Assessment Year (AY) 2017–18. The taxpayer had originally filed an income tax return declaring a loss of ₹1.59 lakh. Subsequently, a revised return showing a loss exceeding ₹1.06 crore was submitted, leading the Income Tax Department to initiate penalty proceedings on the grounds of under-reporting and misreporting of income.

During the appellate proceedings, the taxpayer explained that the revised return containing incorrect financial figures had been uploaded unintentionally by a junior staff member at the chartered accountant’s office while processing multiple tax returns. The proprietor of the CA firm submitted a sworn affidavit acknowledging responsibility for the filing error and detailing the circumstances that resulted in the incorrect submission.

After examining the facts, the Tribunal observed that the affidavit remained unchallenged by the Revenue and that no evidence had been produced to establish any deliberate attempt by the taxpayer to furnish inaccurate particulars or evade tax. The ITAT held that a bona fide clerical mistake, supported by credible documentary evidence, could not be treated as misreporting of income for the purpose of imposing a penalty under Section 270A.

Accordingly, the Tribunal ruled that the statutory conditions required for levy of the penalty were not satisfied and directed the deletion of the ₹17.41 lakh penalty. CA Sansaar