Penalty under section 270A deleted where full disclosure, bona fide valuation explanation, and timely tax payment negated under-reporting.

Penalty under section 270A was not leviable where the assessee disclosed all material facts, gave a bona fide explanation for the lower purchase consideration, and supported it with approvals and documents showing an obligation to demolish the existing factory structure. The addition was not treated as under-reported income because the explanation was neither false nor unsupported, attracting the exclusion in section 270A(6)(a). The adjustment also rested on estimation of fair market value, bringing it within section 270A(6)(c). Payment of the additional tax within 30 days further supported deletion of the penalty.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 was leviable on the addition made in respect of the immovable property transaction, where the assessee had disclosed all material facts, offered a bona fide explanation for the difference in valuation, and paid the additional tax within the prescribed time.

Analysis: The assessee had explained that the lower purchase consideration was attributable to the obligation to demolish the existing factory structure, and had furnished the relevant approval and supporting material during assessment proceedings. The explanation was not found to be false or unsupported, and the material facts were disclosed. On these facts, the amount added could not be treated as under-reported income in view of section 270A(6)(a). The addition was also based on estimation of fair market value, which attracted the exclusion under section 270A(6)(c). The assessee had also agreed to the addition and paid the additional tax within 30 days, reinforcing the case against levy of penalty.

Conclusion: Penalty under section 270A was not leviable and the penalty imposed was deleted.

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