Sukrit Kalia Vs ITO (ITAT Delhi)
Delhi ITAT Quashes ₹20.56 Lakh Penalty u/s 270A – Vague Penalty Notice Without Specifying Exact ‘Limb’ Held Void-Ab-Initio
The Delhi ITAT deleted penalty of ₹20.56 lakh levied at 200% under section 270A after holding that the penalty notice itself was legally defective for failing to specify the exact charge or “limb” under which penalty proceedings were initiated.
The assessee, an individual professional, had originally filed return declaring income of about ₹79.62 lakh. During scrutiny, the AO noticed that although actual rent paid was only ₹10.20 lakh, the assessee had claimed HRA exemption u/s 10(13A) amounting to ₹25.46 lakh. The AO disallowed the claim and thereafter levied penalty u/s 270A treating the case as one of “misreporting” of income and imposed penalty at 200% of tax payable.
Before the Tribunal, the assessee argued that the penalty notice issued u/s 270A did not specify whether the proceedings were for “under-reporting” or “misreporting” of income and therefore the very initiation of penalty proceedings was invalid. The assessee also contended that the incorrect HRA claim arose due to mistakes committed by the previous counsel while classifying professional receipts as salary income.
The ITAT accepted the legal plea and observed that the notice dated 13.03.2024 did not clearly mention under which specific limb of section 270A penalty was proposed. Relying on the Delhi High Court judgment in Prem Brothers Infrastructure LLP v. NFAC, the Tribunal held that such vague and omnibus notices are unsustainable in law since the assessee must be made aware of the precise charge against him.
Accordingly, the Tribunal held the penalty notice itself to be “void-ab-initio”, quashed the consequential penalty order, and allowed the assessee’s appeal in entirety.
FULL TEXT OF THE ORDER OF ITAT DELHI
