Not filing your ITR on time can prove costly, but a recent ruling from ITAT Delhi shows that when the delay stems from genuine circumstances rather than any intent to hide income, taxpayers do have a real defence. Pravesh Aggarwal, a salaried employee from Indirapuram, Ghaziabad, found himself facing a ₹3.74 lakh penalty after failing to file his return on time, and ultimately won his case at the tribunal.
How the Case Started
Aggarwal switched jobs midway through FY 2018-19, earning a combined salary of ₹30.22 lakh across both employers that year. The catch: during the transition, he couldn't obtain Form 16 from his previous employer in time for the ITR filing deadline. His Form 26AS, however, correctly reflected all the TDS his employers had already deducted.
Believing that since TDS had already been deducted and reported, his tax obligation was effectively discharged, Aggarwal chose not to file his return by the due date, a decision that would later come back to bite him.
The Department Steps In
The Income Tax Department reopened his case under Section 147, passing an order under Section 148A(d) on April 19, 2023. In response, Aggarwal filed his ITR on May 8, 2023, declaring his full income of ₹30.22 lakh for that year. Despite this, the Assessing Officer reviewed the filed return and initiated penalty proceedings, arguing that Aggarwal had under-reported his income simply by failing to file within the original deadline.
Aggarwal pushed back, explaining he'd been under the genuine belief that TDS deduction alone meant no further filing was required. The AO wasn't convinced, imposing a penalty of ₹3.74 lakh, equivalent to 50% of the tax on the income the department considered "concealed." The Commissioner of Appeals later upheld that penalty as well, leaving Aggarwal to escalate the matter to ITAT Delhi.
What ITAT Delhi Actually Ruled
On May 13, 2026, the tribunal ruled in Aggarwal's favour. Its reasoning centred on how "under-reporting of income" is legally defined under Section 270A: it occurs specifically when someone discloses a smaller amount than their actual income. In this case, the income Aggarwal eventually reported matched what the tax department itself accepted as accurate, there was no gap between what he declared and what he actually earned.
Because of that, ITAT Delhi held this simply wasn't a case of reporting a smaller amount than actual income, and it ordered the ₹3.74 lakh penalty deleted entirely, allowing all of Aggarwal's grounds of appeal.
Why This Case Matters
The ruling draws an important line between a genuine procedural delay and actual under-reporting. Missing a filing deadline, especially when it's due to something outside your control like a delayed Form 16 during a job transition, isn't automatically treated the same way as deliberately hiding income, provided the income eventually reported matches reality and TDS records back that up.
That said, this doesn't mean late filing carries no risk at all. Situations like Aggarwal's are exactly why staying on top of documentation and filing deadlines through proper ITR filing support matters, especially during a job change, when Form 16 delays and cross-employer TDS reconciliation can easily catch someone off guard.
FAQs
Q1. Why was Pravesh Aggarwal initially penalised by the Income Tax Department?
He failed to file his ITR by the due date after switching jobs mid-year, because he hadn't received Form 16 from his previous employer in time. The department treated this as under-reporting of income.
Q2. Why did ITAT Delhi rule in his favour?
Because Aggarwal's eventually filed return matched what the department itself accepted as his actual income, meeting the legal definition of "under-reporting" under Section 270A requires disclosing a smaller amount than actual income, which wasn't the case here.
Q3. Does having TDS deducted mean you don't need to file an ITR?
No. This case shows that even when TDS is correctly deducted and reflected in Form 26AS, taxpayers are still generally required to file their ITR, though genuine procedural delays may be treated differently from deliberate concealment.
Q4. How much was the penalty, and what happened to it?
The penalty was ₹3.74 lakh, equal to 50% of the tax on the income deemed "concealed." ITAT Delhi ordered it deleted entirely.