Kishor Digambar Patil Vs ITO (ITAT Pune)
In the consolidated appeals for Assessment Years 2017–18 and 2018–19, Kishor Digambar Patil vs. ITO, the assessee challenged penalty orders passed by the National Faceless Appeal Centre (NFAC) under Section 270A of the Income-tax Act, 1961. The penalties, imposed at 200% of the tax on under-reported income, amounted to ₹1,64,392. These were levied on the basis that the difference between the income reported in response to notice under Section 148 and the revised return filed under Section 139(5) constituted “misreporting” as per the provisions of Section 270A. The assessee, however, argued that the imposition of penalty suffered from procedural lapses and a violation of the principle of natural justice.
A central issue raised was the failure of the Assessing Officer to clearly identify the specific clause under Section 270A(9) that justified the classification of the under-reported income as misreported. Section 270A outlines different thresholds and types of non-compliance, with higher penalties applicable when the under-reported income results from misreporting, as opposed to general under-reporting. The Tribunal noted that unlike the repealed Section 271(1)(c), Section 270A requires clear identification of the nature of non-compliance, which was missing in the penalty order in this case. Relying on the principles of strict interpretation and relevant precedents, including the Supreme Court judgment in Commissioner of Customs (Imports), Mumbai vs. Dilipkumar And Co., the ITAT Pune concluded that the omission of specific references to the relevant sub-clauses of misreporting under Section 270A(9) rendered the penalty order invalid.
