Jaina Marketing & Associates Vs DCIT (ITAT Delhi)
The appeals before the Income Tax Appellate Tribunal (ITAT), Delhi, arose from orders of the Commissioner of Income Tax (Appeals) confirming penalties imposed under Sections 270A and 271AAB of the Income-tax Act, 1961 for Assessment Years 2017-18, 2018-19, and 2019-20. The Tribunal heard all three appeals together as they involved a common assessee and similar legal issues.
Background of the case: The assessee, a partnership firm engaged in trading and distribution of mobile phones and accessories, was subjected to a search and seizure operation under Section 132 on 29.08.2018 as part of the Jain Group search. Assessments were completed under Sections 153A/143(3), resulting in various additions for Assessment Years 2017-18 to 2019-20. Consequent penalty proceedings were initiated under Sections 270A and 271AAB, and the penalties were confirmed by the CIT(A), leading to the present appeals.
Penalty under Section 270A – Assessment Year 2017-18
Assessee’s submissions: The assessee contended that the notice issued under Section 274 read with Section 270A was vague because it referred only to “under-reported income” but the penalty was ultimately imposed for “misreporting of income.” It was argued that the notice failed to specify how the case fell within any of the clauses prescribed under Section 270A and therefore did not disclose the exact charge against the assessee. The assessee relied on several judicial precedents to contend that such a defective notice vitiated the entire penalty proceedings.
