Indian Academy Education Trust Vs DCIT (Exemptions) (ITAT Bangalore)
The ITAT Bangalore deleted penalty levied under Section 270A holding that failure to specify the exact limb of “misreporting” renders the penalty invalid.
The assessee, a charitable trust, had inadvertently claimed double deduction—both depreciation and capital expenditure as application of income. However, even before completion of assessment, the assessee voluntarily withdrew the depreciation claim, and the assessment ultimately resulted in nil income.
Despite this, the AO levied 200% penalty (₹1.22 crore) alleging misreporting of income under Section 270A(9). The CIT(A) confirmed the penalty.
The Tribunal held that for invoking misreporting (higher penalty), the AO must clearly specify which of the six limbs under Section 270A(9) is attracted-either in the assessment order or in the penalty notice. In this case, neither the assessment order nor the notice mentioned the specific charge, making the penalty arbitrary and legally unsustainable.
Relying on Delhi High Court rulings, the ITAT emphasized that mere use of the word “misreporting” without particulars is insufficient, as the assessee must know the exact allegation to defend itself.
Accordingly, the penalty was quashed in entirety, and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 1796/Bang/2025 is filed by M/s. Indian Academy Education Trust (the Assessee/Appellant) against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (the Ld. CIT(A)) for Assessment Year 2018-19 on 26.06.2025 wherein the Appeal filed by the Assessee against the penalty order passed u/s. 270A of the Income Tax Act, 1961 (the Act) by the National Faceless Assessment Centre, Delhi (the Ld. Assessing Officer) dated 11.01.2022 levying a penalty of Rs. 1,22,98,760/- was confirmed.
