The only addition is the gap between the stamp duty value and my price. Can that carry a s.270A penalty?
No, on this Tribunal's reasoning, and note the facts it rests on. The Tribunal read s.270A as dealing with deemed income only where the addition is made under s.115JB or s.115JC, so an addition under s.43CA read with s.56(2)(x) falls outside the under-reporting scheme; where a deeming provision applies the assessee has no option but to accept the difference, so neither concealment nor under-reporting can be established. Two further grounds carried the result: the notice never said which limb of s.270A was charged, and the assessment order itself recorded that the assessee had accepted the addition to buy peace. The penalty of Rs. 20,843 was deleted; the addition of Rs. 1,34,100 stands.
Decided by the ITAT (ITAT Mumbai Bench 'A' - Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member)) on 2023-06-12, reported as [2023] 152 taxmann.com 382 (Mum.)(Trib.); [2023] 202 ITD 379 (Mum.)(Trib.); ITA No. 482/Mum/2023. It bears on section 270A, section 270A(9), section 115JB, section 43CA, section 56(2)(x) of the Income Tax Act 1961, in Penalty, Capital Gains and Gifts, Shares & Angel Tax matters.
A stamp-value addition almost always comes with a s.270A notice, and the department's position is that the assessed figure exceeds the returned figure, so under-reporting follows arithmetically. This is the answer to that: the excess is produced by the statute, not by the assessee's conduct, and the officer still has to identify a limb. It matters more where misreporting is alleged, because misreporting doubles the rate and shuts out immunity under s.270AA.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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For assessment year 2018-19 the assessee company returned income of Rs. 42,540 on 28 September 2018. On scrutiny the income was assessed at Rs. 1,76,640, an addition of Rs. 1,34,100 made under s.43CA read with s.56(2)(x), and a penalty of Rs. 20,843 was levied under s.270A on that addition. The assessment order recorded that the assessee had accepted the addition to buy peace and avoid litigation. The penalty was finalised on 1 February 2022 without waiting for the outcome of the quantum proceedings then pending. The Commissioner (Appeals) upheld the penalty and the assessee appealed. No one appeared for the assessee before the Tribunal.
The appeal was allowed and the penalty of Rs. 20,843 was deleted, on three grounds each of which is stated independently: an addition produced by a deeming provision of the s.43CA and s.56(2)(x) kind does not amount to under-reporting within s.270A; the notice never said which limb, under-reporting or misreporting, was charged, or how the ingredients of s.270A(9) were satisfied; and the assessment order itself recorded that the assessee had accepted the addition to buy peace and avoid litigation, so there was no question of misreporting. The addition of Rs. 1,34,100 was not disturbed. The Tribunal observed that even the addition looked unsustainable on the authority it followed, but expressly declined to act on that, only the penalty being before it.
The Tribunal reproduced the whole of s.270A before reasoning on it, and its first step was statutory: the section deals with deemed income only in the limbs that name s.115JB and s.115JC, so an addition under s.43CA read with s.56(2)(x) is a deeming provision of a different kind and falls outside the under-reporting scheme. Where a deeming provision applies, the statute leaves no option except to adjust the figure the section produces against the figure the assessee disclosed, and in that situation neither concealment nor under-reporting can be established, there being no active participation of the assessee. The second step was the notice: there was not even a whisper of which limb of s.270A was attracted or how the ingredients of sub-section (9) were satisfied, and the mere use of the word 'misreporting' in the assessment order made the penalty order manifestly arbitrary. The third was on the record: the assessment order itself noted and accepted that the addition rested on the assessee's voluntary acceptance to buy peace and avoid litigation. The Tribunal also criticised the levy of the penalty while the quantum was still pending, given the time available under s.275, and set out a Pune Bench decision holding that a s.43CA addition founded on a valuation estimate cannot found under-reported income.
In the cases where deeming provisions applied for addition of income neither concealment of income nor under reporting of income can be established against the assessee as there is no active participation of the assessee can be established in doing so.
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Handle my notice → Ask a CA on WhatsAppNo, on this Tribunal's reasoning, and note the facts it rests on. The Tribunal read s.270A as dealing with deemed income only where the addition is made under s.115JB or s.115JC, so an addition under s.43CA read with s.56(2)(x) falls outside the under-reporting scheme; where a deeming provision applies the assessee has no option but to accept the difference, so neither concealment nor under-reporting can be established. Two further grounds carried the result: the notice never said which limb of s.270A was charged, and the assessment order itself recorded that the assessee had accepted the addition to buy peace. The penalty of Rs. 20,843 was deleted; the addition of Rs. 1,34,100 stands. This was decided by the ITAT (ITAT Mumbai Bench 'A' - Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member)) and bears on section 270A, section 270A(9), section 115JB, section 43CA, section 56(2)(x) of the Income Tax Act 1961. It is reported as [2023] 152 taxmann.com 382 (Mum.)(Trib.); [2023] 202 ITD 379 (Mum.)(Trib.); ITA No. 482/Mum/2023. A stamp-value addition almost always comes with a s.270A notice, and the department's position is that the assessed figure exceeds the returned figure, so under-reporting follows arithmetically. This is the answer to that: the excess is produced by the statute, not by the assessee's conduct, and the officer still has to identify a limb. It matters more where misreporting is alleged, because misreporting doubles the rate and shuts out immunity under s.270AA. If it applies to you, the first step is this: Reply to the s.270A notice by separating the arithmetic from the conduct: the returned figure was the actual price, and the excess exists only because the section deems it.
For assessment year 2018-19 the assessee company returned income of Rs. 42,540 on 28 September 2018. On scrutiny the income was assessed at Rs. 1,76,640, an addition of Rs. 1,34,100 made under s.43CA read with s.56(2)(x), and a penalty of Rs. 20,843 was levied under s.270A on that addition. The assessment order recorded that the assessee had accepted the addition to buy peace and avoid litigation. The penalty was finalised on 1 February 2022 without waiting for the outcome of the quantum proceedings then pending. The Commissioner (Appeals) upheld the penalty and the assessee appealed. No one appeared for the assessee before the Tribunal. The matter was decided on 2023-06-12 by the ITAT (ITAT Mumbai Bench 'A' - Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member)). On those facts the ITAT held as follows. The appeal was allowed and the penalty of Rs. 20,843 was deleted, on three grounds each of which is stated independently: an addition produced by a deeming provision of the s.43CA and s.56(2)(x) kind does not amount to under-reporting within s.270A; the notice never said which limb, under-reporting or misreporting, was charged, or how the ingredients of s.270A(9) were satisfied; and the assessment order itself recorded that the assessee had accepted the addition to buy peace and avoid litigation, so there was no question of misreporting. The addition of Rs. 1,34,100 was not disturbed. The Tribunal observed that even the addition looked unsustainable on the authority it followed, but expressly declined to act on that, only the penalty being before it.
The Tribunal reproduced the whole of s.270A before reasoning on it, and its first step was statutory: the section deals with deemed income only in the limbs that name s.115JB and s.115JC, so an addition under s.43CA read with s.56(2)(x) is a deeming provision of a different kind and falls outside the under-reporting scheme. Where a deeming provision applies, the statute leaves no option except to adjust the figure the section produces against the figure the assessee disclosed, and in that situation neither concealment nor under-reporting can be established, there being no active participation of the assessee. The second step was the notice: there was not even a whisper of which limb of s.270A was attracted or how the ingredients of sub-section (9) were satisfied, and the mere use of the word 'misreporting' in the assessment order made the penalty order manifestly arbitrary. The third was on the record: the assessment order itself noted and accepted that the addition rested on the assessee's voluntary acceptance to buy peace and avoid litigation. The Tribunal also criticised the levy of the penalty while the quantum was still pending, given the time available under s.275, and set out a Pune Bench decision holding that a s.43CA addition founded on a valuation estimate cannot found under-reported income. In the words reproduced by the source cited on this page: "In the cases where deeming provisions applied for addition of income neither concealment of income nor under reporting of income can be established against the assessee as there is no active participation of the assessee can be established in doing so." The decision followed or applied Jaibalaji Business Corporation (P.) Ltd. v. Asstt. CIT [2023] 147 taxmann.com 333 / 200 ITD 58 (Pune)(Trib.) — followed at para 6.
It was decided by the ITAT on 2023-06-12 and is reported as [2023] 152 taxmann.com 382 (Mum.)(Trib.); [2023] 202 ITD 379 (Mum.)(Trib.); ITA No. 482/Mum/2023. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 270A, section 270A(9), section 115JB, section 43CA, section 56(2)(x), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeal was allowed and the penalty of Rs. 20,843 was deleted, on three grounds each of which is stated independently: an addition produced by a deeming provision of the s.43CA and s.56(2)(x) kind does not amount to under-reporting within s.270A; the notice never said which limb, under-reporting or misreporting, was charged, or how the ingredients of s.270A(9) were satisfied; and the assessment order itself recorded that the assessee had accepted the addition to buy peace and avoid litigation, so there was no question of misreporting. The addition of Rs. 1,34,100 was not disturbed. The Tribunal observed that even the addition looked unsustainable on the authority it followed, but expressly declined to act on that, only the penalty being before it. It arises in Penalty, Capital Gains and Gifts, Shares & Angel Tax matters, on section 270A, section 270A(9), section 115JB, section 43CA, section 56(2)(x) of the Income Tax Act 1961, and was decided by ITAT Mumbai Bench 'A' - Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask the officer, in the reply, to state which limb is charged and, if misreporting, which clause of s.270A(9) - a penalty order that does not is open to attack on that ground alone. Put the disclosure on record - the sale deed, the stamp duty value and the computation - because the argument depends on there being nothing withheld. Where the addition was accepted in the assessment to close the matter, make sure the assessment order records that it was accepted to buy peace; that recital did independent work here. Where the value was disputed and a Valuation Officer's report was obtained, say so: an addition that turns on a valuation is not an admission of anything.
Still good law. Applied by name and citation in Narayanbhai Shivabhai Patel v. ITO [2025] 178 taxmann.com 576 (Ahd.)(Trib.), decided 18 September 2025. At para 7 that Bench identified this decision as the only authority before it in point on s.270A, recorded that the addition there was also under s.56(2)(x) and had been held not to amount to under-reporting or misreporting, and quashed the penalty before it on the same footing at paras 7.2 and 8. Two qualifications travel with that status. The later order carries no case-review tag recording this decision as followed, so the support is in that Bench's own reasoning rather than in an editorial note. And both are co-ordinate Tribunal benches: no High Court has considered the point, so this decision persuades rather than binds, and it rests in part on the assessee's voluntary acceptance of the addition recorded in the assessment order. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The cause title on the order is Alrameez Construction (P.) Ltd. v. CIT/NFAC, Delhi; the shorter 'v. NFAC' form comes from a digest. The holding and the reasoning here are taken from the numbered paragraphs of the order. The decision does not hold that a deeming addition can never be penalised. It has three grounds, and the third is that the assessment order itself recorded the assessee's acceptance of the addition to buy peace and avoid litigation - that recital is what stops the case being read as a general immunity for deeming additions, and it should be quoted to a reader who wants to rely on the first ground alone. The Tribunal added that even the addition under s.43CA looked unsustainable on the Pune Bench decision it followed, but expressly declined to act on that because only the penalty was before it, so the addition of Rs. 1,34,100 stands. It also criticised the imposition of the penalty while the quantum was still pending, given the time available under s.275. No one appeared for the assessee. Nothing here touches a penalty on the seller's side under s.50C. The decision is under s.43CA read with s.56(2)(x) and says nothing about a penalty on the seller's side under s.50C, and nothing about immunity under s.270AA. Because the third ground was available on the record, it does not show how the first two would fare against a contested addition the assessee had not accepted. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the penalty of Rs. 20,843 was deleted, on three grounds each of which is stated independently: an addition produced by a deeming provision of the s.43CA and s.56(2)(x) kind does not amount to under-reporting within s.270A; the notice never said which limb, under-reporting or misreporting, was charged, or how the ingredients of s.270A(9) were satisfied; and the assessment order itself recorded that the assessee had accepted the addition to buy peace and avoid litigation, so there was no question of misreporting. The addition of Rs. 1,34,100 was not disturbed. The Tribunal observed that even the addition looked unsustainable on the authority it followed, but expressly declined to act on that, only the penalty being before it.
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