Ishwar Chand Agro Private Limited Vs DCIT (ITAT Delhi)
Summary : The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning penalty of INR 4,63,500 imposed under Section 270A of the Income Tax Act, 1961 for Assessment Year 2017-18. An addition on account of bogus purchases had reduced the loss declared in the return. The Assessing Officer initiated penalty proceedings for “under reporting of income in consequence of mis-reporting”, but ultimately levied penalty for “under reporting of income” under Section 270A(2)(g). The assessee contended that the notice did not specify the applicable charge and that the charge was changed without confronting the assessee or recording satisfaction regarding under-reporting. The Revenue submitted that the assessee had accepted the addition, the claimed loss was reduced and the case consequently fell under Section 270A(2)(g).
The Tribunal examined Section 270A and observed that, for under-reporting, the Assessing Officer must identify the applicable circumstance under clauses (a) to (g) of Section 270A(2), while misreporting requires satisfaction of one of the circumstances under Section 270A(9). The Tribunal found that the Assessing Officer had failed to identify and communicate the specific statutory clause applicable to the assessee, either in the assessment order or notice. It further observed that the penalty notice initiated proceedings for under-reporting in consequence of mis-reporting, whereas the penalty was finally levied for under-reporting. Relying on Schneider Electric South East Asia (HQ) Pte Ltd. and the coordinate Bench decision in Grand Legacy, the Tribunal held that the failure to identify and communicate the applicable statutory limb rendered the penalty proceedings invalid. The penalty under Section 270A was therefore quashed and all grounds of appeal were allowed.
