Section 270A

What a section 270A notice is

Penalty — Under-reporting / Mis-reporting. Penalty proposed for under-reporting or mis-reporting income. It is a critical-severity notice in the penalty family under the Income Tax Act 1961.

If you ignore it: Penalty levied. Immunity window may lapse.

Time to reply: this notice type carries no standard period. The date is printed on the notice itself and you must read it off the document. ALWAYS check immunity u/s 270AA — see IMMUNITY below. It is time-barred and routinely missed.

Under the Income Tax Act 2025: section 439. But read that as reference, not as the provision to cite. Under s.536(2) of the 2025 Act, a proceeding for any tax year beginning before 1 April 2026 stays under the Income Tax Act 1961 from the notice through to the appeal — so a notice arriving today for an earlier year is a 1961 Act matter, whatever today's date is.

Section 270A — the law in short

What the courts have decided on section 270A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• High Vista Buildcon P Ltd v NFAC High CourtHelps taxpayerNo later treatment found
  I asked NFAC for a video hearing in my appeal and never got a link. Can that order stand?
  No. A virtual hearing is mandatory once it is specifically requested in faceless appellate proceedings, and passing the appellate order without ever providing the video-conference link violated natural justice. The order was set aside, the appeal restored for a proper virtual hearing, and the consequential penalty orders under ss.271AAC(1) and 270A were quashed with it.
• Vijaya Agro Traders v ITO High CourtHelps taxpayerNo later treatment found
  The faceless unit has disallowed my purchases for not deducting under s.194Q and has said nothing at all about the Board's circular I quoted in my reply. Is that enough to get the order set aside?
  Yes. The Karnataka High Court set aside an order under s.143(3) read with s.144B, made in a s.194Q scrutiny, on the single ground that CBDT Circular No. 13/2021 had not been considered or appreciated by the assessing unit, and remitted the matter for fresh consideration in the light of that circular. Guidelines issued under s.194Q(3) are issued with the approval of the Central Government and the officer is not free to pass over them in silence.
• Mohammed Kaleem Ullah v Principal Chief Commissioner of Income Tax High CourtHelps departmentNo later treatment found
  My client's return has been picked up for scrutiny and he now wants to put things right by filing an updated return. Can he still do it?
  No. The Telangana High Court held that clause (b) of the third proviso to s.139(8A) means what it says: no updated return may be furnished for an assessment year where any proceeding for assessment, reassessment, recomputation or revision is pending or has been completed for that year in the assessee's case. The petitioner's case had been selected for scrutiny under CASS by a notice under s.143(2), so the Assessing Officer was right to reject his request to file an updated return, and the writ petition against the assessment order was dismissed with liberty to pursue the appeal.
• Man Truck & Bus India P. Ltd. v Assessment Unit High CourtHelps taxpayerNo later treatment found
  My APA was signed after the assessment and I filed a modified return under s.92CD(1) offering a smaller figure. The officer has levied s.270A penalty on the pre-APA assessed income. Is there anything I can do about it now?
  The Bombay High Court has granted ad-interim relief on exactly that grievance, finding force in the contention that penalty, if it lies at all, cannot be worked out on the pre-APA assessment order but must be worked out on the modified return filed under s.92CD(1). The penalty order was stayed and recovery restrained. It is an interim order only; the point has not been decided.
• GE Capital US Holdings Inc v DCIT High CourtHelps taxpayer
  The officer refused immunity under s.270AA saying the penalty was for misreporting. Must he show which clause of s.270A(9) applies?
  Yes. The Delhi High Court held that once the assessee complies with clauses (a) and (b) of s.270AA(1) - paying the tax and interest and not appealing - the officer must reach a firm conclusion that the case falls in the category of misreporting, because that alone warrants rejection of the immunity application. Here neither the assessment orders nor the show cause notices contained any finding answering any of the six clauses of s.270A(9); the notices alleged 'under-reporting/misreporting' in the alternative and invoked both s.270A(2) and s.270A(9), which made them vague. The Court quashed both the rejection orders and the show cause notices. It also held that a legal position taken on the strength of a binding High Court decision, later vindicated by the Supreme Court, is not misreporting.
• Chambal Fertilizers and Chemicals Ltd v PCIT, Udaipur High CourtHelps taxpayer
  Can the officer reject a s.270AA immunity application without a hearing and without saying which clause of s.270A(9) applies?
  No. The Rajasthan High Court held that the Deputy Commissioner had violated the proviso to s.270AA(4) by giving no opportunity of hearing, that his order was wholly laconic and did not indicate under which part of s.270A(9) the case was said to fall, and that the revisional authority had, without cogent reasons, cursorily placed the case within clauses (a) and (c). On the facts the amount had not been detected by the department at all - it was disclosed voluntarily during scrutiny after ten other issues had been raised without any addition - so clauses (a) and (c) were not attracted. The Court quashed both orders and directed that immunity under s.270AA be granted.
• G R Infraprojects Limited v ACIT High CourtHelps taxpayer
  I withdrew my education cess claim after the Finance Act 2022 inserted section 155(18). Can the officer still treat it as under-reported income and levy penalty?
  The Rajasthan High Court set the penalty aside and directed that immunity under s.270AA be granted. Where the company withdrew its cess claim by letter dated 19 March 2022, before s.155(18) came into force on 1 April 2022, and accepted the proposed variation, it was entitled to immunity from penalty under s.270A, and the initiation was in any event non est because the officer never specified which limb of s.270A(9) was attracted.
• Virdichand Bawandas HUF v National e-Assessment Centre High CourtHelps taxpayer
  You asked for time to reply to the draft order and were refused. Is the final order safe?
  No. The scheme requires an opportunity to respond to the modifications proposed in the draft order. Refusing time and then finalising was held wrong, and the assessment and the penalty notice were set aside.
• Prem Brothers Infrastructure LLP v National Faceless Assessment Centre High CourtHelps taxpayer
  The Assessing Officer raised my own section 14A disallowance and then called it misreporting, so he refused me immunity under section 270AA and levied penalty under section 270A. Can he do that?
  No. The Delhi High Court quashed the penalty order and directed the Assessing Officer to grant immunity under section 270AA. The only addition was a recomputation of a section 14A disallowance the assessee had itself estimated and disclosed. Both sides worked from the same details and reached different figures; the Court said that by no stretch of imagination can that be called misreporting. It also found that the penalty order did not say which limb of section 270A was attracted or how sub-section (9) was satisfied, and that the bare use of the word misreporting made the order manifestly arbitrary.
• Schneider Electric South East Asia (HQ) Pte Ltd v ACIT High CourtHelps taxpayerNo later treatment found
  Immunity under s.270AA was refused because the officer called it 'misreporting'. Can they do that with one word?
  No. Denying immunity on a bare label of misreporting, without identifying which limb of s.270A or which sub-clause of s.270A(9) is attracted, was held manifestly arbitrary. The Court directed that immunity be granted.
• Mantra Industries Ltd v NFAC High CourtHelps taxpayerSuperseded by amendment
  The faceless order says I filed no reply when I did, and my hearing request was ignored. Is it valid?
  It was set aside. The final order reproduced the draft order word for word apart from one sentence, recorded that no response had been filed when two replies were on the record, and ignored the requests for adjournment and personal hearing — so it was held non est under s.144B(9) as it then stood. The Court warned that costs would be recovered from the Assessing Officer personally and entered in the service record if it recurred.
• Ghanta Srinivas v DCIT, Central Circle-1, Guntur ITATHelps taxpayerNo later treatment found
  After a search I admitted the cash as professional receipts in a revised computation during the assessment and paid the tax. The AO has now levied penalty under s.270A(9) for misreporting AND a second penalty under s.271AAD(1)(ii) for omitting entries from my books. Can he do both?
  The Tribunal deleted both. The s.270A penalty fell because the s.274 notice never said which of the six sub-clauses of s.270A(9) was alleged, and the s.271AAD(1)(ii) penalty fell because once the assessee had brought the receipts on record in a revised statement of total income filed during the assessment and paid the tax, there was no longer an omitted entry to penalise.
• Aamrakunj Realty Limited v PCIT, Ahmedabad-1 ITATHelps taxpayerNo later treatment found
  The Principal Commissioner has passed a s.263 order saying my AO was wrong not to initiate a s.271AAD penalty on a disallowed payment, and has directed him to initiate and levy it. Can he do that?
  No. The Tribunal held that s.271AAD names the Assessing Officer, the Commissioner (Appeals) and, since the Finance Act 2023, the Joint Commissioner (Appeals), and that even after those amendments it still does not empower the Principal Commissioner or the Commissioner to initiate or levy the penalty. What the Commissioner cannot do himself he cannot get done through the Assessing Officer by exercising revisional powers, and the s.263 order was quashed.
• Mayur Bhararbhai Popat v ITO ITATHelps departmentNo later treatment found
  I applied for immunity under s.270AA after paying the tax on the s.80GGC disallowance. The Assessing Officer refused it because he had charged misreporting. Was he entitled to?
  Yes, on the law as it stood for AY 2019-20 and down to 28 February 2026. Section 270AA(3) then granted immunity only where penalty proceedings under s.270A had NOT been initiated in the circumstances in s.270A(9), so once the Assessing Officer invoked s.270A(9) the statute itself excluded immunity and the 200 per cent penalty under s.270A(8) followed. That bar no longer exists: clause 21 of the Finance Act 2026 substituted s.270AA(1) to (3) with effect from 1 March 2026, and immunity, or waiver of a penalty already levied, is now available on a s.270A(9) charge on payment of additional income-tax of one hundred per cent of the tax on the under-reported income, in lieu of the penalty. A second qualification belongs to the old law and still governs any year decided on it: where the invocation of s.270A(9) is a bare label with no clause identified and no reasoning on its ingredients, the Delhi High Court in Prem Brothers Infrastructure LLP v NFAC (W.P.(C) 7092/2022, 31 May 2022) quashed the penalty and directed immunity to be granted — so the battleground is the quality of the initiation, not the availability of s.270AA in the abstract.
• Mithibai College Employees Co-operative Credit Society Ltd v ITO ITATHelps taxpayerNo later treatment found
  The notice said under-reporting; the order said misreporting. Can the charge change between them?
  No. The enhanced penalty for misreporting is available only if the case falls within a named sub-clause of s.270A(9), and the officer must say which. Shifting to a heavier charge in the order, having alleged only under-reporting in the notice, sank the penalty.
• Uday Garudachar v ITO ITATHelps taxpayerNo later treatment found
  My client set off the whole house property loss against salary for AY 2018-19, not knowing about the new Rs 2,00,000 cap. The officer restricted it and has levied a s.270A penalty for under-reporting. Can the penalty be resisted?
  Yes, on this authority. The Bangalore Tribunal deleted a s.270A penalty where the assessee had disclosed the whole computation of house property income but had set off the loss in full because he was unaware of s.71(3A), which had been inserted with effect from assessment year 2018-19 — the very year in issue. The explanation was held bona fide within s.270A(6), so the addition did not amount to under-reported income.
• Niket Maheshbhai Shah v ITO ITATHelps taxpayerNo later treatment found
  I gave up the fight on the s.80GGC disallowance and paid the tax. Now there is a 200 per cent penalty under s.270A for misreporting. Can I still resist the penalty?
  Yes. The Tribunal quashed the penalty outright. Claiming a deduction the assessee genuinely believed was available is not under-reporting or misreporting, and where the penalty order does not say which limb of s.270A(9) is attracted or how its ingredients are satisfied, the order is arbitrary and cannot stand.
• Edelweiss Crossover Opportunities Fund v ITO — a scheme of a registered Category II AIF does not lose the pass-through because the SEBI certificate is in the trust's name ITATHelps taxpayerNo later treatment found
  The Assessing Officer says my AIF scheme has its own PAN but no SEBI registration of its own, so it is not an 'investment fund' and section 10(23FBA) is gone. Is that right?
  No, on these facts. The Mumbai Tribunal held that exemption under section 10(23FBA) cannot be denied solely because the scheme has a separate PAN while the SEBI registration stands in the name of the trust, where the scheme is floated under a SEBI-registered Category II Alternative Investment Fund trust — and it pointed to Explanation 1 to section 115UB, which itself recognises a 'scheme of the investment fund'. The consequential addition treating the book surplus in excess of the distributed income as business income was also deleted, because once the pass-through applies the premise for that addition disappears, and because the difference was only statutory indexation under section 48.
• Acronis Asia Pte Ltd v. DCIT — distribution revenue was not fees for technical services, a Singapore resident cannot be tested under the India-Switzerland treaty, and the s.10(50) exemption follows once Explanation 1 does not bite ITATHelps taxpayerNo later treatment found
  My client paid two per cent equalisation levy on its Indian receipts and the department has still assessed the same receipts as fees for technical services and denied s.10(50). In what order should the argument be run?
  Characterisation first, exemption second. The equalisation levy is charged by Chapter VIII of the Finance Act, 2016 and not by the Income-tax Act; the Act's only point of contact is section 10(50), whose Explanation 1 takes out of the exemption income chargeable as royalty or fees for technical services under the Act read with a treaty. The ITAT Mumbai held that a Singapore limited-risk distributor's revenue from Indian sub-distributors was not fees for technical services — it rendered no service, owned no intellectual property and made nothing available — and that the Dispute Resolution Panel could not test a Singapore resident under the India-Switzerland treaty merely because the group's software and intellectual property sat in Switzerland. Having so held, the Tribunal held that the bar in Explanation 1 to section 10(50) did not come into operation and the assessee was entitled to the exclusion, subject to verification of payment of the levy.
• Capgemini Technology Services India Ltd v ACIT ITATHelps taxpayerNo later treatment found
  I claimed cess before the 2022 amendment and filed Form 69. Can they still levy s.270A penalty?
  No. A cess claim made in good faith on High Court authority that was binding when the return was filed is not under-reported income, and the proviso to s.155(18) gives statutory immunity where Form 69 was filed and the recomputed tax paid.
• Fidelity Rutland Square Trust II — an FPI may choose the set-off order between its section 115AD and section 111A short-term gains ITATHelps taxpayerNo later treatment found
  My foreign portfolio investor client has non-STT short-term gains taxed under section 115AD and STT-paid short-term gains taxed at the section 111A rate, plus an STT-paid short-term loss. The officer re-sequenced the set-off. Can he?
  No. The Tribunal held that section 70 prescribes no chronology for set-off of losses and that the provisions do not compel an assessee to set the STT-paid short-term loss off against the STT-paid short-term gain first, so the assessee was entitled to exercise the option most beneficial to it. The Assessing Officer was directed to accept the net short-term capital gains as offered in the return and to delete the additional demand.
• Deepak Kantilal Shah v DCIT ITATHelps taxpayerNo later treatment found
  I owned two houses at the start of the year and sold one in July. I treated the second house as deemed let out for those first months and claimed the full section 24(b) interest for that period. The Assessing Officer says there is no such thing as a split-year claim and has capped me at Rs 2,00,000. Who is right?
  The Tribunal held that the assessee was right. Section 23(4)(a) is a complete and self-exhaustive code for the case where more than one house is held, the legislature has not restricted it by any proviso or explanation, and it does not restrict a splitting-up of the accounting period; applying a strict construction the Tribunal held that both the lower authorities had erred and deleted the disallowance of Rs 13,81,247.
• Alrameez Construction P Ltd v CIT/NFAC ITATHelps taxpayer
  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.
• Statutory position — section 56(2)(viib) was NOT omitted: the Finance (No. 2) Act 2024 inserted a third proviso switching the clause off from 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  I have read that angel tax was abolished. Is section 56(2)(viib) gone from the statute book, and from which year does it stop applying?
  The clause has not been omitted. It remains printed in section 56(2), and the Finance (No. 2) Act 2024 inserted a third proviso reading: 'Provided also that the provisions of this clause shall not apply on or after the 1st day of April, 2025.' A consolidation of 2024 vintage records the insertion as being made by the Finance (No. 2) Act, 2024 with effect from 1 April 2025, and a consolidation of 2025 vintage prints the third proviso as part of the enacted text.
• Statutory position — s.271AA(2): a flat five hundred thousand rupees for failing to furnish the master file under s.92D(4), imposed by the PRESCRIBED AUTHORITY and not by the Assessing Officer — and how it differs from the two per cent penalty in s.271AA(1) CBDT Circulars & InstructionsCuts both waysNo later treatment found
  We did not file Form 3CEAA. Which penalty applies, who imposes it, and is it a percentage of anything?
  Section 271AA(2) provides: "If any person fails to furnish the information and the document as required under sub-section (4) of section 92D, the prescribed income-tax authority referred to in the said sub-section may direct that such person shall pay, by way of penalty, a sum of five hundred thousand rupees." It is a flat figure — five lakh rupees — not a percentage, and the power is in the PRESCRIBED AUTHORITY under s.286(1), not in the Assessing Officer or the Commissioner (Appeals). That is what distinguishes it from s.271AA(1), which is the older penalty: without prejudice to s.270A, s.271 or s.271BA, where a person in respect of an international transaction or specified domestic transaction fails to keep and maintain the information and document required by s.92D(1) or (2), or fails to report such transaction which he is required to do, or maintains or furnishes an incorrect information or document, the ASSESSING OFFICER OR COMMISSIONER (APPEALS) may direct payment of "a sum equal to two per cent of the value of each international transaction or specified domestic transaction entered into by such person". Both sub-sections are named in s.273B, so no penalty is imposable under either if the person proves there was reasonable cause for the failure.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.