Section 270A of the Income Tax Act – Penalty for Under-Reporting and Misreporting of Income
Section 270A of the Income Tax Act provides for penalties where income has been under-reported or misreported by a taxpayer. This section applies when the Income Tax Department determines that the income assessed is higher than the income declared, or that incorrect particulars were deliberately furnished.
Penalties under Section 270A can be substantial and are often initiated after assessment, reassessment, or scrutiny proceedings.
At N D Savla & Associates, we assist taxpayers in evaluating penalty exposure under Section 270A and responding effectively to penalty notices.
What Is Under-Reporting of Income?
Income is considered under-reported when:
Assessed income is higher than the income declared in the return
Loss declared is reduced or converted into income
Income assessed is higher than income processed under Section 143(1)
Income is reassessed at a higher figure under Sections 147 or 148
Under-reporting may occur due to errors, interpretation differences, or incomplete disclosures.
What Is Misreporting of Income?
Misreporting is treated more seriously and includes cases involving:
Misrepresentation or suppression of facts
Failure to record investments or income
Claim of bogus expenses or deductions
False entries in books of accounts
Incorrect reporting of transactions
Misreporting attracts a higher penalty and limited scope for relief.
Penalty Amount Under Section 270A
Under-reporting of income: Penalty up to 50% of tax payable on the under-reported income
Misreporting of income: Penalty up to 200% of tax payable on the misreported income
The classification between under-reporting and misreporting has a major impact on liability.
When Section 270A Penalty Is Not Levied?
Penalty may not be imposed where:
Proper disclosures are made in the return
Differences arise due to bona fide interpretation of law
All material facts are correctly disclosed
Additions are made on estimation basis
Each case depends on facts, records, and conduct during proceedings.
How to Respond to a Section 270A Penalty Notice
Review the assessment order and grounds for penalty
Examine whether the case is under-reporting or misreporting
Prepare a factual and legal explanation
Submit a reply within the prescribed time
Seek waiver or reduction where permissible
Timely response can significantly reduce exposure.
Our Section 270A Penalty Services
Review of assessment and penalty notice
Classification analysis: under-reporting vs misreporting
Drafting replies and legal submissions
Representation before tax authorities
Appeal support where required
Why Choose N D Savla & Associates?
Strong experience in penalty proceedings
Practical, fact-based defence approach
Clear advice on exposure and remedies
Timely handling of penalty notices
Trusted CA firm serving clients across Mumbai and India
We focus on limiting damage and resolving matters efficiently.
Take Penalty Notices Seriously
Penalties under Section 270A can be significant if not addressed correctly.
If you have received a Section 270A penalty notice, get professional assistance before responding.
Speak to our tax advisory team today.
