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ITAT Jaipur Scraps Rs 8.29 Lakh Tax Penalty for NRI Worker

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ITAT Jaipur cancelled a Rs 8.29 lakh penalty on a professional who missed his ITR after moving to the US in 2018, citing a bona fide explanation.

The Income Tax Appellate Tribunal (ITAT) at Jaipur has cancelled a penalty of Rs 8,29,034 slapped on a salaried professional who failed to file his tax return for the year he relocated to the United States for work. On August 17, 2026, the tribunal handed him complete relief, ruling that his failure to file was a genuine lapse and not an attempt to dodge tax.

The taxpayer, Saxena, had accepted an onsite posting with a multinational firm and shifted to the US in August 2018. Caught up in the move, a new country and an unfamiliar workplace, he did not file his income tax return in India. By the time he noticed the omission, the window for filing a belated return had also closed. Despite this, on August 23, 2019, he paid self-assessment tax of roughly Rs 1.62 lakh on his own, along with the applicable interest and late fee. No reassessment had been opened against him at that point.

He assumed the payment settled the matter. It did not. The Income Tax Department later reopened his case after finding he had drawn a salary of about Rs 26.06 lakh during the year without filing any return. A notice was issued under Section 148, and in response Saxena filed a return declaring total income of Rs 20.49 lakh.

Penalty for 'misreporting'

The Assessing Officer (AO) accepted that return and made no change to the income figure Saxena declared during the reassessment. Even so, the officer launched penalty proceedings under Section 270A, treating the income disclosed for the first time in the Section 148 return as under-reported. The AO then escalated the charge, labelling it a case of misreporting under Section 270A(9)(a) on the ground that facts had been misrepresented or suppressed. The Commissioner of Income Tax (Appeals) later backed the penalty.

Saxena's position throughout was that he never set out to evade tax. He argued that he had simply overlooked the deadline while managing his relocation and settling into his job abroad, and pointed to the fact that he had cleared the tax, interest and late fee voluntarily, well before any reassessment began. The authorities were not swayed, and the penalty stood until he took the fight to the ITAT.

Chartered Accountant Jitendra Agarwal appeared for Saxena before the Jaipur bench. The matter was decided by the tribunal's SMC bench, made up of Accountant Member Annapurna Gupta and Judicial Member Kuldip Singh.

Why the tribunal sided with the taxpayer

Chartered Accountant Suresh Surana said that, on a strict reading, Section 270A(2)(b) does allow income to be treated as under-reported when a taxpayer files no original return and reveals the income only in a return prompted by a Section 148 notice. But the tribunal weighed that against the carve-out in Section 270A(6)(a).

According to Surana, that clause keeps an amount out of the under-reported category when the taxpayer offers a genuine explanation and lays out all the material facts needed to back it up. The bench found Saxena's account of why he missed the original filing believable. His track record helped his case, since he had filed returns regularly in earlier years, and the single slip coincided with his departure for the US.

Surana also stressed what Saxena did once he realised his error. Rather than sit back and wait for the department to move, he paid the tax, interest and late fee on his own. "The first reopening action came only in March 2022, almost three years after his voluntary payment," Surana noted. That gap, a clean compliance history and the AO's acceptance of the declared income without any change all pointed to an honest oversight rather than tax avoidance.

On these grounds, the ITAT held that Saxena qualified for the shield under Section 270A(6) and directed that the full penalty of Rs 8,29,034 be struck down. The bench also excused a 49-day delay in filing the appeal, accepting that it stemmed from a genuine jurisdictional mix-up on the income tax portal between Kanpur and Jaipur, which the taxpayer had tried to sort out.

Surana said the ruling shows that Section 270A cannot be triggered merely because income technically fits the definition of under-reporting; the exclusion in Section 270A(6) must be examined too. Where a taxpayer gives a genuine, well-supported reason for the default, that protection can apply.

ITAT Jaipur, Section 270A, income tax penalty, belated ITR, Section 148 notice, under-reported income, self-assessment tax, NRI taxpayer

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