Section 270A Penalty —
Under-Reporting or Misreporting?
The 50% penalty for under-reporting income, the 200% penalty for misreporting, how it replaced the old Section 271(1)(c), and how to get immunity under Section 270AA.
Section 270A levies 50% of the tax on under-reported income (an inadvertent omission or shortfall) and 200% of the tax on misreported income (deliberate fraud, false evidence, suppression of facts). It replaced the old Section 271(1)(c) from AY 2018-19. You can escape the 50% penalty by paying tax + interest and applying for immunity under Section 270AA (Form 68) without filing an appeal — but immunity is never available for misreporting.
Section 270A Penalty Rates
The penalty is charged on the tax attributable to the disputed income, not on your whole tax bill. The category the Assessing Officer proves decides the rate.
| Category | Penalty | Nature | Immunity (270AA) |
|---|---|---|---|
| Under-reporting of income | 50% of tax | Inadvertent omission, computational error | Yes |
| Misreporting of income | 200% of tax | Fraud, false documents, suppression | No |
| Both in one addition | Split | 50% on under-reported + 200% on misreported | Part only |
Penalty = rate × (tax on assessed income − tax on returned income) for the relevant portion.
Misreporting attracts 200% of tax and is not eligible for immunity under Section 270AA. The AO must specifically identify which of the six misreporting categories applies — a bare assertion of "misreporting" without that finding is regularly struck down on appeal.
Facing a 270A show-cause? Get the correct category and immunity checked before you reply.
Talk to a CA →What Counts as Under-Reporting
Under Section 270A(2), income is treated as under-reported mainly where the assessed income is higher than what you returned:
- Income assessed or re-assessed is greater than the income declared in your ITR.
- No return was filed and the assessed income exceeds the basic exemption limit.
- Book profit assessed under Section 115JB (MAT) exceeds the book profit declared.
- Assessed income exceeds the income determined in an earlier assessment (in reassessment).
Under-reporting — worked example
What Counts as Misreporting
Section 270A(9) lists six acts that make an addition "misreporting" — each is a deliberate act, not an honest mistake:
- Misrepresentation or suppression of facts — intentionally hiding information from the AO.
- Failure to record investments in the books of account.
- Claiming false or fictitious expenditure to reduce taxable income.
- Failure to record receipts in the books that affect total income.
- Failure to report income from any asset (incl. financial interest) outside India.
- Use of forged or fabricated documents to support a claim.
If a single addition contains an under-reported and a misreported part, the penalty is bifurcated — 50% on the under-reported portion and 200% on the misreported portion. The AO must record which limb of 270A(9) applies to the misreported part in the penalty order.
Section 270A vs Old Section 271(1)(c)
Old Section 271(1)(c) — up to AY 2017-18
- Discretionary range of 100% to 300% of tax on concealed income.
- Wide AO discretion — same facts, very different penalties.
- Trigger: "concealment or furnishing inaccurate particulars".
- Immunity via Section 273A — Commissioner discretion, not time-bound.
Section 270A — AY 2018-19 onwards
- Two fixed tiers: 50% under-reporting, 200% misreporting.
- Limited discretion — defined categories drive the rate.
- Six specific misreporting limbs under 270A(9).
- Clear immunity route under Section 270AA (Form 68).
The Income-tax Act, 2025 (effective AY 2026-27) renumbers many provisions but carries the same penalty scheme — 50% for under-reporting and 200% for misreporting, with immunity on the same conditions. The familiar "Section 270A / 270AA" references remain the practical way notices and orders are described. Always check the section citation printed on your own order.
Immunity Under Section 270AA
Section 270AA lets you avoid the under-reporting (50%) penalty entirely if you accept the assessment instead of litigating. All four conditions must be met:
- An order is passed under Section 143(3) or 147.
- You pay the full tax and interest in the order within the time allowed.
- You apply in Form No. 68 within one month from the end of the month in which the order is received.
- You do not file an appeal against the assessment order.
If the conditions are satisfied the AO shall grant immunity — it is not discretionary — and must pass the immunity order within one month from the end of the month the Form 68 is received. Immunity also covers prosecution under Sections 276C and 276CC for that assessment.
Section 270AA immunity applies only to under-reporting (50%). For a misreporting (200%) addition there is no immunity — the fight is on merits before the CIT(A) / ITAT. Where an addition is part under-reporting and part misreporting, immunity is available only for the under-reported portion.
Weighing immunity vs appeal? We model both and file Form 68 or the appeal correctly.
Get Expert Help →Section 270A — Frequently Asked Questions
Related TaxClue Services
Related income-tax guides
Received a Section 270A Penalty Notice?
Our CA team checks whether it is under-reporting (50%) or misreporting (200%), evaluates immunity under Section 270AA, files Form 68 or drafts your appeal, and represents you before the Assessing Officer — 100% online, pan-India.