Divya Burman Vs Assessment Unit (ITAT Delhi)
Penalty under section 270A is unsustainable if the Assessing Officer fails to specify the exact statutory clause of section 270A(2) invoked for under-reporting or misreporting of income, either in the penalty notice or in the penalty order.
The ITAT Delhi in Divya Burman Vs Assessment Unit held that penalty proceedings under Section 270A of the Income Tax Act are invalid if the Assessing Officer fails to specify the exact statutory clause of Section 270A(2) invoked for under-reporting or misreporting of income. The assessee had disclosed long-term capital gains on sale of jewellery, which were recomputed during scrutiny, resulting in an addition partly sustained by the first appellate authority. Subsequently, the Assessing Officer imposed penalty at 200% of tax under Section 270A without identifying the precise clause applicable to the alleged default either in the show-cause notice or in the penalty order. The Tribunal observed that Section 270A creates distinct categories of default and a valid assumption of jurisdiction requires clear specification of the relevant statutory limb. Relying on judicial precedents including Schneider Electric South East Asia (HQ) Pte Ltd. v. ACIT, the Tribunal held that such non-specification was a jurisdictional defect rendering the entire penalty proceeding unsustainable in law.
