Sold property but did not file ITR? ITAT gives taxpayer another chance to contest ₹90.09 lakh income tax penalty

A property seller facing a ₹90.09 lakh income tax penalty after failing to file an ITR has received another chance to appeal. The ITAT condoned the delay and ordered fresh consideration, but did not cancel the penalty or decide the tax dispute.

The Income Tax Appellate Tribunal (ITAT), Pune Bench, has given a taxpayer another opportunity to challenge a ₹90.09 lakh penalty imposed after he failed to file an income tax return following a property sale. The tribunal's order, dated 9 September 2026, does not cancel the penalty but sends the matter back for fresh consideration.

The ruling came in Gnyanoba Dagadu Masurkar vs Income Tax Officer, Ward 6(5), Pune (ITA Nos. 2462 and 2463/PUN/2026) for assessment year 2016-17. It highlights the consequences of not filing an income tax return or responding to departmental notices after a property transaction, while showing that taxpayers whose appeals are dismissed because of delay may still get an opportunity to contest an assessment if they establish sufficient cause.

How a property sale led to a ₹90 lakh tax penalty

According to the tribunal's order, the Income Tax Department received information that Masurkar had sold an immovable property during financial year 2015-16 and that tax had been deducted at source under Section 194-IA of the Income-tax Act, 1961. However, he had not filed an income tax return for assessment year 2016-17.

The Assessing Officer issued a notice under Section 148 on 17 February 2023, followed by notices under Section 142(1) seeking information and explanations. The department also sought information from the builder under Section 133(6). The taxpayer did not respond to these notices, according to the order.