Monisha Ravi Jaising Vs ACIT (ITAT Mumbai)
ITAT Mumbai: Section 270A Penalty Quashed – Vague Notice Without Specific Charge Invalid
In this case, the ITAT Mumbai deleted a hefty penalty of ₹3.22 crore levied u/s 270A on alleged under-reporting/misreporting of LTCG arising from sale of property.
The Tribunal did not go into merits of capital gains taxability and instead decided the case on a fundamental legal defect—the penalty notice and order failed to specify the exact limb of “misreporting” under Section 270A(9).
It was observed that:
- Section 270A(9) provides specific categories of misreporting (clauses a to f)
- The AO merely used generic language like “under-reporting due to misreporting”
- There was no clarity on which specific default was alleged
- Such vague initiation violates principles of natural justice and settled jurisprudence
Relying on judicial precedents, the Tribunal held that penalty cannot survive where the charge itself is unclear or unspecified.
Final Outcome:
- Penalty u/s 270A deleted in full
- CIT(A) order set aside
- Appeal of assessee allowed
This ruling reinforces a crucial principle: penalty proceedings must be precise and specific-vague notices are fatal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 18.12.2025 passed by the Ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi[in short the “Ld. CIT(A)”] for A.Y. 2022-23, in relation to penalty u/s. Section 270A of the Income Tax Act, 1961 (in short “the Act”), which was levied by the ld Assessing Officer(AO) and sustained by the Ld. CIT(A).The sole ground raised by the assessee is reproduced as under:
GROUND NO. I:• LEVY OF PENALTY U/ S. 270A OF THE ACT:•
1.1 On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the action of the ld. AO in levying penalty u/ s. 270A of the Act.
1.2 The Appellant prays that the levy of penalty u/ s. 270A of the Act be deleted/ appropriately reduced.
2. Briefly stated, facts of the case are that assessee is an individual, filed the return of income for a year under consideration on 31.12.2022 declaring total income at Rs. 1,15,54,630/-. The return was selected for scrutiny assessment and statutory notices under the Act were issued and duly served upon the assessee. During the course of assessment proceedings, the ld. AO noticed a sale of property reported by the ‘transferee’ or buyer in the TDS return filed in form No. 26Q but the same was not appearing in the return of income of assessee. Further, ld AO observed, large refund out of the self assessment tax which according to him was unusual. In response, the assessee submitted that she entered into a sale agreement for sale of the property i.e. a flat was entered into on 31.03.2022 at total consideration of Rs. 12,11,40,000/- to Shri. Anil R. Malhotra and Seema A. Malhotra and the said buyer deducted TDS on sale consideration and deposited into govt account on 31.03.2022 itself, which is reflecting in the form no. 26(AS) of the assessee for the year under consideration. But the assessee explained that possession of the property was provided only after receipt of the payment and registration of the sale deed on 11.05.2022. Further, it was submitted that the shares of the cooperative society in which flat was located, were also transferred in favour of the purchaser only on 28.06.2022. The the assessee submitted that though the assessee paid self assessment tax of Rs. 1,48,00,000/- computing income from the long term capital gain(LTCG) but later on the assessee was advised that the capital gain was not taxable in the assessment year under consideration i.e. A.Y. 2022-23 and therefore, the assessee filed return of income for the year under consideration without declaring ‘ LTCG’ on above transaction.
