The High Court of Madras, directed that a decision be made after granting a personal hearing in a case where an income tax penalty notice under Section 270A of the Income Tax Act, 1961, was not properly served initially and was only reminded after four months of its issuance.

Jesu Micheal Spelman,petitioner-assessee, had challenged the show cause notice dated 21.01.2025 issued under Section 270A which proposed to levy a penalty. The deadline to respond was 30.01.2025. The petitioner stated that the notice was not served earlier and was only reminded on 14.05.2025.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

A response was submitted thereafter, but apprehending that the authorities might have already passed an order without considering the reply, the petitioner approached the Court.

Section 270A of the Income Tax Act, introduced in 2017, deals with penalties for underreporting or misreporting income in tax returns. If someone underreports income, a penalty of 50% of the tax on that income is charged. If the income is misreported meaning false or misleading information is given on purpose the penalty goes up to 200% of the tax. These penalties are over and above the actual tax payable. Misreporting is treated more seriously than underreporting because it involves intentional fraud.

The petitioner counsel informed the Court that no order had been passed pursuant to the show cause notice dated 21.01.2025, issued under Section 270A of the Income Tax Act.This was also confirmed by the counsel appearing for the first respondent.

A single member bench comprising Justice C. Saravanan took note of the fact that the petitioner had already submitted a response to the show cause notice and that no final order had been passed as of yet.

Accordingly, the Court disposed of the writ petition with a direction to the third respondent to consider the petitioner’s reply and pass a speaking order on merits within four weeks from the date of receipt of a copy of the order.

The bench further directed that the petitioner be given an opportunity of personal hearing before issuing the final order. It imposed no costs and closed the connected miscellaneous petitions.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates