ITAT Delhi Deletes 200% Penalty Under Section 270A; Holds Absence of “Misreporting” and Defective Notice Fatal

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, allowed the appeal of Ashok Kumar Gupta for Assessment Year 2017–18 and deleted penalty imposed under Section 270A of the Income Tax Act.

The assessee had filed a return declaring income of ₹4.93 lakh, which was subsequently assessed at ₹13.53 lakh under Section 143(3). The Assessing Officer initiated penalty proceedings under Section 270A and imposed penalty at 200% of tax on alleged under-reported income, treating the case as one of “misreporting” under Section 270A(8). The penalty was upheld by the CIT(A).

The Tribunal examined the statutory framework of Section 270A and noted that the provision distinguishes between “under-reporting” of income, attracting penalty at 50%, and “misreporting,” which attracts enhanced penalty at 200% under Section 270A(8) read with Section 270A(9).

On facts, the Tribunal found that the penalty notice issued by the Assessing Officer referred only to “under-reporting of income” and did not specify any charge of “misreporting.” Further, neither the notice nor the penalty order identified the specific clause under Section 270A(9) to justify invocation of the higher penalty.

The Tribunal also noted that the assessee had disclosed all material particulars in the return of income, and there was no finding of suppression of facts or misrepresentation.

Holding that absence of a clear and specific charge is fatal to penalty proceedings, the Tribunal concluded that imposition of penalty at 200% was unsustainable. It further held that the case did not fall within the ambit of “misreporting” under the Act.

Accordingly, the penalty under Section 270A was deleted and the appeal of the assessee was allowed.