No ITR filed, but ITAT Jaipur still quashed the 200% income tax penalty: Here's what the taxpayer did to win the case

Suppose you did not file an income tax return (ITR) in the first place, received an income tax notice, and faced a penalty of 200% — but still managed to get relief from the Income Tax Appellate Tribunal (ITAT). Sounds impossible?

This is exactly what happened in a case from Sikar, Rajasthan, where ITAT Jaipur quashed a ₹3.99 lakh penalty imposed on a taxpayer, as reported by Economic Times.

The Income Tax Appellate Tribunal (ITAT), Jaipur, ruled in favour of a taxpayer on 23 September 2026, quashing a penalty of ₹3.99 lakh imposed under Section 270A of the Income-tax Act, 1961. Here is what happened, why he won relief, and what taxpayers should know about the law.

What was the income tax case about?

According to the ET report, Sharma, a resident of Sikar, had not initially filed an income tax return. After the Income Tax Department issued a notice, he filed an ITR declaring an income of ₹12.9 lakh for assessment year (AY) 2018-19.

However, the Assessing Officer (AO) believed that Sharma's income would have escaped tax net if the department had not issued the notice. The AO consequently initiated penalty proceedings under Section 270A of the Income-tax Act, 1961.

The tax payable on the income in question was calculated at ₹1.99 lakh. The AO imposed a penalty of ₹3.99 lakh, equivalent to approximately 200% of the tax payable on that income.

The Commissioner of Income Tax (Appeals), or CIT(A), upheld the penalty. Sharma then approached the ITAT Jaipur through advocates Shafi Mohammad Chouhan and Sahil Shafi Chouhan.

What does Section 270A of the Income-tax Act, 1961, say?

Section 270A deals with penalties for under-reporting and misreporting of income. The penalty depends on the nature of the default established by the tax authorities. Under Section 270A(7), the penalty for under-reporting income is generally 50% of the tax payable on the under-reported income.

However, Section 270A(8) provides for a penalty of 200% of the tax payable on the under-reported income when the under-reporting is a consequence of misreporting.