Notice 142(1) and penalty proceedings
Summary of my case:
Had transacted VDA in FY 24-25 along with futures trading. Did not file ITR -2. The ITR-1 had a number of incorrect claims including HRA(no documentary evidence), and non-disclosure of VDA spot and derivatives transactions. The ITR also did not have scheduled FA and stocks.
Notice 133(6) was sent as the Income tax department observed crypto transactions. Notice also asked to file revised ITR.
Revised ITR-2 was filed but this as well had errors, instead of showing genuine home loan, the CA had shown incorrect HRA. This was due to the misunderstanding, and I am equally responsible as I did not verify. I was going through some personal issues. Also, ITR-3 might needed to be filed because i also had crypto futures trading apart from spot trading(crypto futures is considered speculative business income as per exchange reports)
CA sent the reply and filed revised ITR-2
Still got E proceedings notice that profile is selected for scrutiny
Got E proceedings 142(1) notice for the submission of proofs and also reasoning for filing updated return.
My new CA has submitted the response.
My question is, will AO even disallow genuine Home Loan deduction, can i challenge this if he does so? If AO initiates penalty proceedings, what is the best course of action for me, appeal or try to pay 100% penalty under new amendment bill 2026? How the timeline looks like?