Shrine Empire Gallery Pvt. Ltd. Vs DCIT (ITAT Delhi)
Delhi ITAT Deletes Section 270A Penalty as AO Failed to Specify Exact Charge of Misreporting
The Delhi ITAT deleted the penalty levied under section 270A, holding that the Assessing Officer failed to specify the exact statutory charge of misreporting of income as required under section 270A(9). The Tribunal held that such a defect is not a mere technical irregularity but a jurisdictional defect that vitiates the entire penalty proceedings.
The case arose out of a search under section 132 in the Samir Modi group, pursuant to which proceedings under section 153C were initiated against the assessee. The Assessing Officer made an addition of ₹5,29,575 towards estimated business profits from alleged unrecorded cash receipts reflected in seized Excel sheets and thereafter levied a penalty of ₹2,75,380 (200% of tax sought to be evaded) under section 270A for alleged misreporting of income.
Before the Tribunal, the assessee contended that while the assessment order referred to “under-reporting of income in consequence of misreporting”, the show-cause notice and penalty order merely alleged “misreporting of income” without identifying the specific clause of section 270A(9)(a) to (g) that was allegedly attracted. The Tribunal found merit in this contention.
The Tribunal observed that section 270A draws a clear distinction between under-reporting of income and under-reporting in consequence of misreporting, and that the enhanced penalty of 200% can be imposed only if the case falls within one of the exhaustively enumerated instances of misreporting under section 270A(9)(a) to (g). Failure to specify the exact limb of default renders the penalty proceedings invalid.
Relying on the decisions of the Delhi High Court in Schneider Electric South East Asia (HQ) Pte. Ltd. v. ACIT and Prem Brothers Infrastructure LP v. NFAC, the Tribunal held that the defect was non-curable, deleted the penalty, and allowed the assessee’s appeal.
Cases Discussed
- Schneider Electric South East Asia (HQ) Pte. Ltd. v. ACIT (Delhi High Court),[2022] 145 taxmann.com 665
- Prem Brothers Infrastructure LP v. NFAC (Delhi High Court),[2022] 142 taxmann.com 38
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is preferred by the assessee against the order dated 22.10.2025 of the Ld. Commissioner of Income Tax (A)-26, Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/APL/S/250/2025-26/1081924041(1) arising out of the order dated 30.08.2024 u/s 271DA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by Circle, Range-4, for AY: 2019-20.
