Soheb Malik Vs DCIT (Delhi ITAT)
Section 270A – Addition May Survive, But “Misreporting” Cannot Be Whispered Into a Penalty Order: ITAT Deletes Penalty for Failure to Identify Limb u/s 270A(9)
Summary: The Delhi ITAT dealt with an important issue concerning levy of penalty for misreporting of income u/s 270A(8). The Tribunal held that merely because an addition has been made in assessment, the AO cannot mechanically characterize it as “misreporting of income”. Where the penalty order does not identify which specific clause of u/s 270A(9) is attracted & contains no reasoning explaining how the addition constitutes misreporting, penalty u/s 270A(8) cannot survive.
Facts
The assessee filed his return for AY 2023-24 declaring total income of ₹83,810. A search u/s 132 was conducted on the ALM Group on 03.01.2023, with which the assessee was associated. Subsequently, the assessee’s case was centralized & assessment was completed u/s 143(3) on 25.03.2025, wherein the AO made an addition of ₹13,12,997 u/s 45 towards capital gains.
Consequent to the addition, penalty proceedings u/s 270A were initiated for under-reporting of income. However, while passing the penalty order dated 25.08.2025, the AO invoked u/s 270A(8) & imposed penalty of ₹4,80,532, thereby treating the case as one involving misreporting of income. The CIT(A) confirmed the penalty.
