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Judgment
Per Renu Jauhri, Accountant Member:
The above captioned appeal is preferred by the assessee against the order dated 30.10.2025, passed by CIT(A)/ NFAC, Delhi u/s 250 of the Inco me Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y . 2017-18.
The assessees has raised following grounds of appe al:
“1 On the fac ts and ci rcumstanc es of the case and i n law, both t he l earned CIT(A)/ A.O has erred in le vyi ng penalty on matt er of val ua tion versus i ndexation of cost of j ewel lery of Rs 0.797 crs.
2 On the fac ts and ci rcumstanc es of the case and i n law, bot h t he l ear ned CIT(A )/ A.O has erred i n l evy of penalty of Rs 0.797 crs u/s 270A without given any findi ng u/s 270(6) despites assessee objecti on of non-levy of penalty.
3 On the fac ts and ci rcumstanc es of the case and i n law, both the learned CIT (A)/ A.O has erred in enhanci ng u/s 2 70A(9) @ 200% without mentioning under which s ub-clause of secti on 270A(9), there was misrepor ti ng.
4.T he appellant craves l eave to alter, a mend or withdraw all or any of t he grounds of appeal herei n or add any fur ther grounds as may be considered necess ary and to submit such statem ents, documents and papers as may be considere d nec essary either be for e or during the heari ng.”
Brief facts are that the assessee had filed her return for A.Y . 2017-18 on 30.07.2 017 declaring income of Rs.4 ,53,27,960/-. The case w as selected for scrutiny. Ld . AO noted that the asse ssee had declared lo ng term cap ital gain (LTCG) of Rs.4,16,03,657/- on sale of jewellery. In order to examine the LT CG claim, AO called for details of purchases and sales alongwith supporting documentary evidences. After detailed examination, the LTCG was worked out at Rs.5 ,20,90,844/- resulting in ad dition of Rs.1,0 4,87,187/- in the assessment o rder u/s 143(3) dated 25.12.2019 .
Aggrieved, the assessee preferred an appeal before the ld. CIT(A). After consider ing the sub missio ns of the assessee, part relief was allowed by the ld. C IT(A) vide order dated 31.05.2023 resulting in reduction of the amount of add ition form Rs.1 ,04,87,187/- to Rs.79,7 4,315/-. The assessee did not file appeal against the order of ld . CIT(A) .
Thereafter the AO imposed penalty @200% o n this amount u/s 270A for under reporting of income vide order dated 11.03.2025. Aggrieved, the assessee preferred appeal against the penalty order before ld. CIT(A) who dismissed the same vide order dated 31.10.2025. Further aggrieved, the assessee has filed appeal before the Tribunal.
Before us, ld. AR has submitted that the AO has not mentioned the specific clause of 270A invoked by him for levying the penalty in the notice as well as the penalty order. He further submitted that the issue is covered in favour of the assessee by the decision of the Hon’ble jurisdictional High Cour t in the case of Schneider Electric South East Asia (H Q) Pte Ltd. vs. ACIT(IT) (2022) 443 ITR 186 wherein it has been held that penalty proceedings initiated without specifying the limb of section 270A and the exact clause is arbitrary. Ld. AR has further placed reliance on the following decisions of the co-ordinate benches:
Karamvir Singh Vs. ITO in ITA N o. 4673/Del/2024 (Del. Tri b. )
St. Jos eph’s Educ ational Trus t Vs. DCIT in ITA Nos. 3 293 to 3297/C hny/2024
Pre m Bro thers Inf rastructure LLP [2022 (6) IMI 130 – Del hi High Court]
Ujal a Credit Cooperative S ocie ty Ltd. [2024 (6) TMI 600 – ITA T D el hi]
Ld. AR has pointed out from the copies placed before us that nowhere in the penalty no tice/order, the AO has specified the exact clause of section 270A(2) regarding under-reporting of income which has been invoked in this case.
Ld. DR on the o ther hand has str ongly relied on the orders of the lower authorities and pointed out that the assessee did not file appeal against the addition confirmed by ld. CIT(A) and therefore, it is clearly a case of under-reporting of income which has been accepted by the assessee and the penalty levied for the same deserves to be uphe ld.
We have heard the r ival submissio ns and perused the material o n reco rd. Var ious judicial authorities on the issue of non-mentioning of specific clause of section 270A while levying penalty for under-reporting or mis-reporting have been perused. Respectfully follow ing the decision of the Hon’ble jurisdictional High Court in the case of Schneider Electric South East Asia (supra ) and of the co-ordinate benches, we hold that the notice and penalty order u/s 270A p assed by the AO without specifying the clause of section 270A(2) applicable for under-reporting of income is bad in law and is, therefore, liable to be quashed.
In the result, ap peal o f the assessee allowed.