Section 270A Penalty Deleted: Excess Section 80G Deduction Claimed as Bona Fide Mistake – ITAT Jabalpur

Case Reference

Police Welfare Petrol Pump Vs DCIT (ITAT Jabalpur)
Assessment Year: 2020-21
Order Date: 30/06/2026

Background and Material Facts

The assessee in this case is a Police Welfare Society — an entity engaged in welfare activities for police personnel — holding valid registration under Section 12A of the Income Tax Act, 1961 and enjoying approval under Section 80G of the same Act. During the assessment year under consideration, the society operated a petrol pump, treating the revenue generated therefrom as incidental to its broader charitable objectives, and accordingly claimed exemption on such income.

Upon completion of assessment proceedings under Section 143(3) of the Income Tax Act, 1961, the Assessing Officer (AO) took the position that income derived from petrol pump operations did not qualify for exemption. Consequently, additions were made to the returned income. This triggered penalty proceedings under Section 270A of the Act for alleged under-reporting and misreporting of income. The AO ultimately levied penalty at the rate of 200% of the tax payable on the under-reported income.

When the assessee challenged this penalty before the CIT(A)/NFAC, the first appellate authority upheld the penalty order, prompting the assessee to approach the Income Tax Appellate Tribunal, Jabalpur.

Procedural History: Condonation of Delay

Before proceeding to adjudicate the matter on merits, the Tribunal was required to address a preliminary issue — the appeal was filed with a delay of 437 days beyond the prescribed limitation period.

The assessee filed a condonation application supported by a sworn affidavit, attributing the delay to bureaucratic decision-making processes within the Police establishment. The assessee's counsel emphasized that the delay was neither intentional nor tactical in nature, and that no undue advantage was sought by the delayed filing.

The Revenue's representative strongly resisted the condonation request, pointing out that the affidavit itself acknowledged the absence of any formal instruction from Police Headquarters. The DR argued that the delay was attributable to negligence and inaction on the assessee's part, and should not be excused.