A salaried professional filed a return with fake deductions arranged by an unreliable consultant, corrected the position voluntarily before anyone asked, and still faced a ₹1.46 lakh penalty five years later. Here's how the correction was proven genuine, and what the ruling means for anyone in the same position.
What happened
- 2017–18: A return was filed underreporting roughly 50% of actual income, based on false deductions arranged by a consultant.
- 28 May 2019: Before any notice arrived, the individual voluntarily paid the tax and interest due, and filed a police complaint against the consultant.
- February 2020: A notice under Section 148 (income escaping assessment) followed regardless.
- 11 March 2020: The correct income was formally disclosed to the assessing officer.
- 12 September 2021: The assessing officer still levied a ₹1.46 lakh penalty under Section 270A.
The ruling
On 8 May 2025, ITAT Pune quashed the penalty, holding that the voluntary correction, the police complaint against the consultant, and full cooperation with the department were evidence of good faith, not an attempt to evade tax.
Why the timing mattered
The tribunal's reasoning turned on sequence: the correction happened before the department ever raised the issue, not after. Section 270A itself carves out a lighter standard for underreporting made in good faith; acting first, rather than waiting to be caught, is what put this case on the right side of that line.
What this means if you're in a similar position
- Recheck your return against Form 16 and your AIS/26AS statement, especially if a consultant prepared it without much visibility into their working.
- Get it reviewed by a qualified CA before deciding whether anything needs correcting.
- Correct proactively, through a revised return or voluntary disclosure, rather than waiting for a scrutiny notice to force the issue.
- Keep every piece of documentation: tax and interest payment proof, correspondence with the original preparer, and any complaint filed against them.
- Cooperate fully once the department does make contact; the ruling above turned partly on exactly that.
How we help
Strategic representations that document good faith while preserving the legal position, calm handling of Section 148 reassessment notices on a real timeline, and, more usefully, proactive, audit-resilient compliance built before there's ever a notice to respond to.
This article is general information, not tax or legal advice for your situation. Speak with a qualified adviser before acting.