Grand Legacy Vs DCIT (ITAT Dehradun)
Summary: The Dehradun Bench of the Income Tax Appellate Tribunal considered an appeal filed by Grand Legacy against the order dated 19.09.2025 passed by the Commissioner of Income Tax (Appeals), NFAC, Delhi, under Section 250 of the Income Tax Act, 1961. The appeal arose from the assessment order dated 26.03.2021 passed under Section 143(3) read with Sections 143(3A) and 143(3B) for Assessment Year 2018-19.
The assessee had claimed deduction under Section 80-IC of the Act. The Assessing Officer disallowed the deduction on the ground that the assessee had not fulfilled the prescribed conditions for claiming the deduction. The assessee had established a new undertaking in the shape of a hotel and claimed the deduction, which was disallowed on the ground that it had not established an eco-friendly hotel.
The assessee had also been entitled to three types of subsidy, namely, State Government subsidy on capital investment, exemption from luxury tax for a certain period, and Central Government subsidy on account of deduction under Section 80-IC. Following the disallowance of the deduction, the Assessing Officer initiated penalty proceedings. The penalty proceedings were initiated through a notice under Section 274 read with Section 270A dated 26.03.2021.
The Assessing Officer levied penalty of INR 67,820/- under Section 270A for under-reporting by invoking clause (e) of sub-section (9) of Section 270A. The CIT(A) confirmed the penalty. Before the Tribunal, the assessee contended that the penalty notice did not specify the particular charge under which penalty proceedings were initiated. According to the assessee, the proceedings had been initiated for “under reporting as a consequence of mis-reporting of income”, whereas the penalty was ultimately levied for under-reporting of income. The assessee therefore contended that the penalty had been levied on a different charge from that for which the proceedings had been initiated.
The Revenue supported the orders of the lower authorities. It submitted that the assessee had claimed deduction under Section 80-IC for the first time in Assessment Year 2013-14, that the claim had been disallowed and the assessee had also failed in appellate proceedings, yet continued to claim the deduction in subsequent assessment years. According to the Revenue, the repeated claim despite earlier disallowances constituted a wilful attempt and justified penalty for under-reporting as a consequence of mis-reporting under Section 270A.
The Tribunal examined the penalty notice issued under Section 274 read with Section 270A. The notice stated that the assessee had “under-reported income which is in consequence of misreporting thereof”, but did not specify the particular charge contemplated under clauses (a) to (f) of Section 270A(9). The Tribunal also noted that the satisfaction recorded in the assessment order before initiation of penalty proceedings was for under-reporting as a consequence of mis-reporting of income, whereas the penalty was ultimately levied under Section 270A for under-reporting of income.
The Tribunal held that the notice did not speak about the charge for which the penalty proceedings were initiated and that the penalty was ultimately levied on a different basis. In view of these facts, the Tribunal concluded that the penalty levied under Section 270A was without any basis and deleted the same.
Accordingly, the appeal of the assessee was allowed. The order was pronounced in the open Court on 12.03.2026.
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
The present appeal is filed by assessee against the order dated 19.09.2025 by Ld. Commissioner of Income Tax (A), NFAC, Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-18/10101141 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 26.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act pertaining to Assessment Year 2018-19.
2. Brief facts of the case are that assessee had claimed deduction u/s 80-IC of the Act which was disallowed by the AO for the reason that the assessee has not fulfilled the conditions prescribed for claiming said deduction and initiated the penalty proceedings u/s 271A for under reporting as a consequence of mis-reporting of income. Thereafter, AO levied penalty u/s 270A of the Act of INR 67,820/- for under reporting by invoking clause (e) of sub-section (9) of section 270A of the Act.
3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 19.09.2025, confirmed the same.
4. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal.
5. Before us, Ld.AR submits that assessee was entitled for 03 types of subsidy:-
(i) State Government subsidy on capital investment
(ii) Exemption from luxury tax for certain period and
(iii) Central Government subsidy on account of deduction u/s 80-IC of the Act.
6. Since the assessee had established new undertaking in the shape of hotel, it claimed deduction u/s 80-IC which was disallowed for the reason that assessee has not established eco-friendly hotel.
7. Ld.AR for the assessee submits that in notice issued for initiation of penalty proceedings u/s 270A of the Act, AO has not specified the charge under which the penalty proceedings were initiated. He further submits that penalty proceedings were imitated for under reporting as a consequence of mis-reporting of income however, the penalty is levied for under reporting of income. Therefore, no penalty is levied on the charge for which it was initiated and was levied on different charge. Accordingly, Ld.AR requested for the deletion of the penalty so levied u/s 270A of the Act.
8. On the other hand, Ld. CIT DR for the Revenue supported the orders of the lower authorities and submits that assessee had claimed deduction u/s 80-IC of the Act for the first time in AY 2013-14 which was disallowed and the assessee has failed in appellate proceedings also. Despite of this fact, assessee is regularly claiming deduction u/s 80-IC which was disallowed in subsequent Assessment years also. As per Ld. CIT DR, the assessee knowingly claimed the deduction u/s 80IC when such claim was denied in earlier years therefore, it is willful attempt made by the assessee and accordingly, it is the case of under reporting as a consequence of mis-reporting for which penalty u/s 270A of the Act has rightly been levied.
9. Heard the contentions of both parties and perused the material available on record. In the instant case, AO has initiated the penalty proceedings in terms of the notice issued u/s 274 r.w.s. 270A of the Act dated 26.03.2021 which is reproduced as under:-
10. From the perusal of the aforesaid notice, it is observed that AO has initiated the penalty proceedings for under reporting as a consequence of mis-reporting of income however, in the notice has not specified the charge as provided in Clause (a) to (f) of section 270A sub-section (9) of the Act. Therefore, the said notice does not speak about the charge for which the penalty proceedings were initiated penalty be levied u/s 270A of the Act. It is further observed that in the assessment order, before initiating the penalty proceedings, satisfaction was recoded for under reporting as a consequence of mis-reporting of income however, the penalty was levied u/s 270A of the Act for under reporting of income.
11. In view of these facts, in our considered view, penalty levied u/s 270A is without any basis and therefore, the same is hereby deleted.
12. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 12.03.2026.
