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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)/NFAC Delhi [‘CIT(A)’ in short] dated 13.11.2025 arising from the penalty order dated 14.07.2025 under Section 270A of the Income Tax Act, 1961 (‘the Act’) by the KNP-W-(17)(91) for Assessment Year (A.Y.) 2020-21.
Brief facts of the case are that the assessee had not filed the return of income for A.Y 2020-21. The AO had information that during the A.Y 2020-21, the assessee had received salary of Rs. 14,94,852/-and had sold property worth Rs. 63,00,000/-. However, the assessee had failed to file return of income and therefore, notice u/s 148 dated 29.02.2024 was issued to the assessee. In response to the notice u/s 148 of the Act, the assessee has filed return of income on 01.03.2024 declaring total income of Rs.27,94,420/- wherein the assessee offered income from salary of Rs.14,94,852/- and long term capital gains of Rs.16,99,564/- on sale of property of Rs. 63,00,000/- after claiming cost of acquisition and cost of construction with indexation.
The AO passed the assessment order u/s 147 r.w.s 144B of the Act dated 10.01.2025 accepting the return of income of Rs.27,94,420/-but initiated penalty proceedings u/s 270A(9) for under reporting of income in consequence of misreporting thereof. The penalty order u/s 270A dated 14.07.2025 was passed levying a penalty of Rs.10,00,206/-@ 200% of the tax on misreported income u/s 270A (9) of the Act.
The assessee had not filed any appeal against the assessment order u/s 147 dated 10.01.2025 but filed an appeal before learned CIT(A)/NFAC against the penalty order u/s 270A. Learned CIT(A)/NFAC dismissed the appeal of the assessee and confirmed the penalty levied by the AO of Rs.10,00,206/- under section 270A(9) of the Act, being 200% of the tax payable on the under reported income.
Aggrieved by the order of CIT(A)/NFAC, assessee is now in appeal before us with the following grounds:
1.“Because, learned commissioner of income tax (A) is manifestly wrong in sustaining the order of penalty u/s 270AA, in the absence of any tax levied over the tax already paid even before the due date of filing return u/s 139(1) and refund is allowed, beside there is no addition to admitted income.
2.Because, learned commissioner of income tax (A), further misdirected himself as non-filing of ITR can-not tantamount to mis reporting of income and in any case, (though reason for same is explained despite paying full tax) penalty for same is imposed u/s 234F.
3.Because, learned commissioner of income tax (A) grossly erred in sustaining the order of penalty issued without mentioning the limb of section 270A(9) specifying the charge, thus order is against scores of cases of jurisdictional tribunal and contrary law laid down by courts.
Therefore, it is prayed that penalty of Rs. 10,00,206/- sustained may kindly be quashed.”
Learned AR of the assessee submitted that it is the case of penalty under section 270A of the Act on account of failure of the assessee to file ITR. The learned Counsel further raised the issue of absence of mentioning of specific limb in the penalty notice.
Per contra, learned DR relied upon the order of the AO.
We have heard the learned DR and perused the material available on record. We find that a TDS was deducted at Rs.1,73,387/- on salary and TDS Rs.63,000/- on sale of property which is reflected in Form 26AS and the assessee had paid advance tax Rs.2,91,200/- which was deposited on 09.12.2019 and there was refund of Rs.27,484/-. On account of the Pandemic Corona, the assessee could not file the return. But when the notice under section 148 was issued, the assessee filed ITR claiming upon returned income and refund wherein fee under section 234F of the Act was deducted and balance was refunded.
We further find that it is an admitted fact that the notice u/s 270A do not contain the specific mention of the limb under which penalty under section 270A of the Act is to be imposed. In such facts and circumstances, the ratio of the hon’ble Delhi High Court in the case of GE Capital US Holding Inc vs. Dy. Commissioner of Income Tax (International Taxation) Circle 1(13)(1), New Delhi & Ors. [2024 SCC OnLine Del 4233] is squarely applicable which held as follows:,
24.Notwithstanding the above, we note that the SCNs’ which came to be issued for commencement of action under Section 270A were themselves vague and unclear. This since they failed to specify whether the petitioner was being charged with underreporting or misreporting of income. The aforesaid aspect assumes added significance bearing in mind the indisputable position that a prayer for immunity could have been denied in terms of Section 270AA(3) only if it were a case of misreporting. The SCNs’ failed to indicate the specific charge which was sought to be laid against the petitioner. This, since they sought to invoke both sub-sections (2) as well as sub-section (9) of Section 270A. There was thus an abject failure on the part of the respondents to indicate the branch of Section 270A which was sought to be invoked. The SCNs’ would thus clearly fall foul of the principles which had been enunciated in Minu Bakshi and Schneider Electric 443 ITR 186(Del).
Respectfully following the above decision, we hold that the non-mentioning of specific limb in the penalty notice u/s 270A, for seeking explanation for misreporting or under reporting, is fatal to the penalty proceedings. The penalty notice u/s 270A as well as the consequent penalty order is accordingly quashed. Ground 3 is allowed.
In the result, appeal filed by the assessee is allowed.