The Income Tax Appellate Tribunal, Agra deleted a search‑case penalty imposed on an addition that arose from an F&O loss overstatement the assessee had herself corrected during assessment.
The Income Tax Appellate Tribunal (ITAT), Agra has held that an addition arising from a clerical computation error in a return, which the assessee herself pointed out during assessment, is not “undisclosed income” and cannot attract penalty under Section 271AAB(1A) of the Income Tax Act, 1961 [Pallavi Sethi v. ACIT/DCIT, Central Circle, Agra, 2026-juristway.com-3416-ITAT(Agra)-IT].
Brajesh Kumar Singh, Accountant Member, wrote the order for a Bench with Sunil Kumar Singh, Judicial Member, in the assessee’s appeal for assessment year 2023‑24. Her case was centralised after a search on 3 Aug 2022 on a Jhansi group. In reply to the Assessing Officer on 19 Feb 2024, she stated that her return overstated the futures and options (F&O) loss at ₹19,50,335 instead of ₹19,09,647, and paid the resulting tax.
The Assessing Officer added the difference of ₹40,688 and levied a penalty of ₹24,410, at 60% of the addition, under Section 271AAB(1A). The Commissioner (Appeals) upheld it.
Section 271AAB(3)(c) defines undisclosed income in a search case as income represented by money, bullion, valuables or entries found in the search and not recorded or disclosed before the search, or an expense entry found false and which would not have been found to be so had the search not been conducted.
The Tribunal held that the ₹40,688 arose from a clerical computation error in the return, which the assessee had herself brought to the officer’s notice. It did not fall within the definition of undisclosed income, so the penalty could not stand.
The penalty was deleted and the appeal was allowed.
2026-juristway.com-3416-ITAT(Agra)-IT
