ITAT directs Deletion of Rs.54L Income Tax Penalty u/s 274 r/w 270A observing No Specific Mention of Clause Invoked u/s270A [Read Order]
The Assessee wandered into the crosshairs of the Revenue department when allegations of LTCG concealment were raised against the Assessee.
![ITAT directs Deletion of Rs.54L Income Tax Penalty u/s 274 r/w 270A observing No Specific Mention of Clause Invoked u/s270A [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/12/ITAT-Chennai-income-tax-income-tax-news-Taxscan.jpg "ITAT directs Deletion of Rs.54L Income Tax Penalty u/s 274 r/w 270A observing No Specific Mention of Clause Invoked u/s270A [Read Order]")
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) while adjudicating an appeal regarding concealment of Long Term Capital Gains (LTCG), directed the deletion of Income Tax Penalty of Rs.54 Lakh under Section 274 read with Section 270A of the Income Tax Act, being certain that the Assessing Officer had failed to mention the specific clause of Section 270A which had been invoked...
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) while adjudicating an appeal regarding concealment of Long Term Capital Gains (LTCG), directed the deletion of Income Tax Penalty of Rs.54 Lakh under Section 274 read with Section 270A of the Income Tax Act, being certain that the Assessing Officer had failed to mention the specific clause of Section 270A which had been invoked to ascribe such impugned penalty.
Appellant-Assessee Melekandy Puthalath Farook filed the present appeal before the ITAT being aggrieved by the decision of the Commissioner of Income Taxes (Appeals), National Faceless Appeal Centre (NFAC), Delhi upholding the decision of the Assessing Officer (AO).
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D. Anand, appearing for the Appellant contended that since no specific charge had been purported against the Assessee in the show-cause notice, consequent penalty proceedings would be bad in law.
Referencing the decision of a coordinate Bench in M/s.Enrica Enterprises Pvt. Ltd. vs.The Dy. Commissioner of Income Tax (2024), it was reaffirmed that the provisions of Sec.270A of the Act deals with ‘under-reporting of income’ under Sub-Sections (1) to (6) as well as ‘misreporting of income’ under Sub-Sections (8) and (9) of Section 270A of the Income Tax Act, 1961.
In Enrica, it was observed that the AO had imposed penalty under Section 270A(9) but the same had not been mentioned in the impugned show-cause notice, rendering such a notice under Section 274 read with Section 270A of the Income Tax Act, 1961 to be invalid for lack of clear mention of the specific limb.
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Taking into consideration the similarity of the matters, the ITAT Bench comprising Aby T. Varkey, Judicial Member and Manoj Kumar Aggarwal, Accountant Member observed that in the impugned show-cause notice, the AO had initiated penalty on both limbs - under-reporting as well as misreporting of income.
Despite the AO’s claims that the instant case was fit for levy of penalty under Section 270A(9)(a) due to it being a case of under-reporting of income in consequence of misreporting of income, the Bench observed that the lack of a specific charge against the Assessee vitiates a penalty issued in this regard.
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Conclusively, the Bench allowed the appeal, directing the AO to delete such a penalty.
To Read the full text of the Order CLICK HERE
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