ITAT Upholds Penalty for False Deductions and Excess HRA, Political Donation Claim; Denies Section 270AA Immunity

The ITAT Pune Bench dismissed the taxpayer’s appeal and upheld a Rs. 6.29 lakh penalty for misreporting income in AY 2022-23 by falsely claiming deductions and excess HRA. Immunity under Section 270AA was denied due to no timely application.

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has announced its decision on an appeal filed by Uday Uttamrao Nevase against the Income Tax Department, challenging an order dated September 04, 2025, passed by the CIT(A) NFAC Delhi, under Section 250 of the Income Tax Act, 1961. The case pertains to the Assessment Year 2022-23.

The assessee is a salaried individual who filed their Income Tax Return (ITR) for the year in consideration, declaring total income at Rs. 5.71 lakh. The Assessing Officer (AO) chose the return for scrutiny after discovering that the assessee had claimed large deductions under Chapter VI-A amounting to Rs. 10.65 lakh, including deductions under Sections 80DD, 80CCD(2), 80DDB, 80E, 80EEA, 80EEB, and 80GGC, for which he was not even eligible. An excess HRA exemption of Rs. 86,593 was claimed.

During the proceedings, the assessee also accepted that these claims were incorrect since they could not provide relevant documents supporting the same. Also, he submitted that he wanted to file a revision to correct the error; however, he could not furnish it. Considering the same, the AO completed the assessment by making additions to the assessee’s income for the wrongly claimed deductions and excess HRA.

The assessee did not raise any arguments, did not file an appeal challenging the additions and also paid all tax demands. However, the AO imposed a penalty amounting to Rs. 6.29 lakh under Section 270A at 200% of the tax on the grounds of misreported income.

The aggrieved assessee filed an appeal before the ITAT, arguing that the mistakes were bona fide. Also, he was eligible for immunity under Section 270AA since he had paid the tax and not filed an appeal. However, the tribunal held the argument raised by the assessee as invalid, stating that no formal application for immunity under Section 270AA was filed within the prescribed time limit.

The Tribunal held that claiming deductions without eligibility, especially for items like political donations and specified medical expenses that were never incurred, does not reflect a genuine mistake. To support this ruling, the tribunal also cited an earlier judgement of the Pune Bench in the case of Shrikant Gajanan Vyavahare Vs. ITO; the tribunal confirmed the penalty and dismissed the appeal.