Form 26AS Disclosure Does Not Replace Return Filing Obligation: ITAT Nagpur Restores Section 270A Penalty for Fresh Adjudication

Overview

A recent ruling by the Income Tax Appellate Tribunal, Nagpur Bench, in the matter of Apex Detonators Pvt. Ltd. Vs ACIT (ITAT, Nagpur Bench) has reinforced an important principle of tax compliance: the mere reflection of income in Form 26AS cannot be equated with the statutory obligation to file a return of income. At the same time, the Tribunal acknowledged that a penalty under Section 270A of the Income Tax Act, 1961 cannot be mechanically sustained without a proper examination of the computation methodology and without affording the assessee a meaningful opportunity to be heard.

The Tribunal ultimately set aside the penalty order and directed the Jurisdictional Assessing Officer (JAO) to conduct a fresh adjudication (de novo) in accordance with law, for Assessment Year 2019-20.

Background and Facts of the Case

Apex Detonators Pvt. Ltd. is a private limited company that failed to file its regular return of income for AY 2019-20. Information available with the Revenue through Form 26AS indicated that the company had received interest income of ₹8,62,624 from The Saraswat Co-operative Bank Ltd., and that tax of ₹86,263 had been deducted at source by the bank on this payment.

Since no return was filed despite this recorded financial transaction, the Assessing Officer (AO) initiated reassessment proceedings by issuing a notice under Section 148 of the Income Tax Act, 1961.

Non-Participation During Assessment

Throughout the course of reassessment proceedings, the assessee failed to respond or make proper compliance. In the absence of any reply, the AO treated the entire interest receipt of ₹8,62,624 as the total income of the assessee for the relevant year. Simultaneously, the AO initiated penalty proceedings under Section 270A on the ground that income had been under-reported.

Even after notices were issued in connection with the penalty proceedings, the assessee once again did not respond. The AO accordingly levied penalty at 50% of the tax payable on the under-reported income. The tax on the under-reported income was computed at ₹2,69,137, and the resultant penalty under Section 270A was determined at ₹1,34,568.

Proceedings Before CIT(A)/NFAC

The assessee challenged the penalty order before the Commissioner of Income Tax (Appeals)/NFAC, Delhi, under Section 250 of the Income Tax Act, 1961. However, even at the first appellate stage, no submissions were placed on record by the assessee. Given the continued non-compliance, the CIT(A) confirmed the penalty and dismissed the appeal vide order dated 26.12.2025.

The assessee thereafter approached the ITAT, Nagpur Bench, contending that the penalty had been wrongly upheld without any proper examination of either the nature of the alleged default or the correctness of the underlying tax computation on which the penalty was based.

Arguments Raised Before the ITAT

Assessee's Submissions

The learned counsel for the assessee advanced the following contentions before the Tribunal: