A salaried taxpayer who wrongly claimed ₹10.65 lakh in Chapter VI-A deductions for AY 2022-23 ended up paying a 200% penalty after the Income Tax Appellate Tribunal upheld the action for “misreporting.” The ruling makes it clear: paying tax later does not protect you from penalty if claims are deliberate.
ITAT Pune upholds penalty for misreporting under Section 270A (AI-generated illustration for representaional purposes)
A salaried individual who claimed over Rs 10.65 lakh in incorrect deductions under Chapter VI-A for AY 2022-23 ended up facing a 200% penalty for “misreporting” of income — even after paying the additional tax demand.
In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Pune Bench, upheld the penalty under Section 270A, making it clear that paying tax after detection does not automatically protect a taxpayer from penal consequences.
The case details were highlighted in a thread of posts on social media platform ‘X’ by one chartered accountant, Pratibha Goyal, who broke down the tribunal’s findings and explained why the “bonafide mistake” argument failed before the appellate authority.
🚨 Salaried Guy Claimed Wrong Deductions. Paid Tax Later. Still Faced 200% Penalty.
ITAT Pune upholds penalty for misreporting under Section 270A.
Here’s what happened 👇— Pratibha Goyal (@PratibhaGoyal) February 24, 2026
Here’s a simple breakdown of what happened — and why this ruling is important for salaried taxpayers.
What triggered the penalty?
The taxpayer filed his income tax return for Assessment Year 2022-23 and claimed multiple deductions under Chapter VI-A of the Income Tax Act. These included: Section 80DD, Section 80DDB, Section 80E, Section 80EEA, Section 80EEB, Section 80CCD(2) and Section 80GGC.
The total deduction claimed wrongly was Rs 10.65 lakh.
During scrutiny assessment, the Assessing Officer (AO) asked the taxpayer to produce documentary evidence to support these deductions. He failed to produce any documents. In fact, he admitted that the claims were incorrect.
The AO disallowed the deductions and raised a tax demand. The taxpayer paid the additional tax.
But that was not the end of the matter.
Why was a 200% penalty imposed?
After disallowing the deductions, the AO initiated penalty proceedings under Section 270A for under-reporting of income and misreporting of income.
Under Section 270A:
A 50% penalty applies for under-reporting.
A 200% penalty applies for misreporting, which includes deliberate misrepresentation or suppression of facts.
In this case, the AO treated the incorrect claims as “misreporting.” A penalty of Rs 6,29,382 — equivalent to 200% of the tax payable on the misreported income — was imposed.
Taxpayer’s defence: “It was a bonafide mistake”
The taxpayer argued that the wrong claims were a bonafide mistake and he intended to file a revised return. He also argued that he paid the tax demand within 30 days and that he should be granted immunity under Section 270AA.
However, the tribunal examined the conduct closely.
What did ITAT Pune say?
The Income Tax Appellate Tribunal made several key observations:
-No revised return was filed under Section 139(5).
-No application for immunity under Section 270AA was filed within the statutory time.
-Deductions were claimed despite clear ineligibility.
One example cited by the tribunal was Section 80GGC, which relates to donations to political parties. The taxpayer had claimed this deduction even though he had not made any such donation.
The tribunal held that this was not a clerical or calculation error. It was a conscious claim made without eligibility.
It further noted that if scrutiny had not taken place, the taxpayer would have retained the excess refund. That indicated intent.
Relying on earlier Pune Bench rulings, the ITAT held that deliberate inflation of deductions amounts to “misreporting” under Section 270A(9). As a result, the 200% penalty was upheld and the appeal was dismissed.
Important legal position: Paying tax is not enough
One key takeaway from the ruling is this – paying additional tax after detection does not automatically grant immunity from penalty.
For immunity under Section 270AA:
The tax and interest must be paid.
A formal application must be filed within the prescribed time.
The case should not involve misreporting.
In this case, no such application was filed in time.
Bigger picture: Why wrong deductions are high risk today
Under the Income Tax Act, 1961, Section 270A provides for a 50% penalty for under-reporting. The same section provides for a 200% penalty for misreporting.
Section 139(5) allows filing of a revised return before assessment completion. Section 154 allows rectification for minor mistakes. Section 277 provides for prosecution in cases of knowingly false statements.
Today, false or inflated claims — especially under Sections 80C, 80D, 80G, HRA, 80E, and home loan-related sections — are increasingly tracked through data analytics and AI-based systems.
Common high-risk areas include claiming deductions without proof, bogus donation receipts under 80G, incorrect interest claims under 80EE or 80EEB, false political donation claims under 80GGC, and HRA claims without valid rent documentation.
If the claim is found to be deliberate, it may be treated as misreporting — attracting a 200% penalty.
Final outcome of the case was – a penalty of Rs 6.29 lakh confirmed and appeal dismissed. The tribunal also rejected the argument of “Bonafide mistake”. Further, the tribunal clearly distinguished between a genuine error and conscious misrepresentation.
This case sends a strong message to salaried taxpayers:
-Do not claim deductions without documentary support.
-If you realise a mistake, file a revised return within time.
-If eligible, apply for immunity under Section 270AA formally.
-Paying tax after detection does not erase the violation.
-Incorrect claims under Chapter VI-A are no longer minor issues. In the current compliance environment, inflated or false deductions can become costly mistakes.
-For salaried individuals, the safest approach is simple — claim only what you can prove.
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