Penalty Invalid If Specific Charge u/s 270A is Not Mentioned in Income Tax SCN: ITAT Deletes Penalties for Four Assessment Years [Read Order]
ITAT deleted all the penalties for four years under Section 270A and held that failure to mention the exact sub-clause of misreporting within the SCN and penalty orders rendered them legally invalid.
![Penalty Invalid If Specific Charge u/s 270A is Not Mentioned in Income Tax SCN: ITAT Deletes Penalties for Four Assessment Years [Read Order]](https://images.taxscan.in/h-upload/2025/07/24/2068451-penalty-income-tax-scn-itat-penalties-assessment-years-taxscan.webp "Penalty Invalid If Specific Charge u/s 270A is Not Mentioned in Income Tax SCN: ITAT Deletes Penalties for Four Assessment Years [Read Order]")
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted penalties levied on an assessee under Section 270A of the Income Tax Act, 1961 for Assessment Years (AY) 2017–18 to 2020–21 and observed that the Assessing Officer (AO) failed to mention the specific sub clause of misreporting within the Show Cause Notice (SCN) and penalty orders. Also Read:Belated...
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has deleted penalties levied on an assessee under Section 270A of the Income Tax Act, 1961 for Assessment Years (AY) 2017–18 to 2020–21 and observed that the Assessing Officer (AO) failed to mention the specific sub clause of misreporting within the Show Cause Notice (SCN) and penalty orders.
The assessee-appellant, DD Target PMT Pvt. Ltd., was subject to a search and seizure action u/s 132 of the Income Tax, 1961, carried out at their premises. The assessments under Section 153A read with Section 143(3) were completed for the four years, with disallowances made against expenditures.
The AO imposed penalties under Section 270A(9)(a), alleging misreporting of income and levied a 200% penalty on the additional income. The penalty notices were issued in standard format without referencing any specific clause of misreporting under Section 270A(9).
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The penalty orders were upheld by the Commissioner of Income Tax (Appeals) ( CIT (A) ).
Before the tribunal, the assessee contended that the show cause notices or the penalty orders did not explain which of the six clauses (a) to (f) of Section 270A(9) had been invoked. The assessee was not informed of the exact charge and thus could not argue against it.
The assessee relied on the Delhi High Court’s decision in Schneider Electric South East Asia (HQ) Pte. Ltd. vs ACIT, International Taxation (2022), which held that failure to specify the clause of misreporting under Section 270A(9) is a sufficient ground to invalidate the penalty.
The Revenue argued that since the income was disclosed only after the search and was based on findings from seized material, misreporting was established. The Revenue also pointed out that some decisions cited by the assessee were pending appeal before the Supreme Court.
The Tribunal observed that the notices issued under Section 274 or the penalty orders failed to mention the clause of Section 270A(9) under which the AO had held the assessee guilty of misreporting.
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The bench comprising M.Balaganesh (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) in an open court held that non mentioning of the specific charge and the relevant clause of Section 270A(9) in the SCN and the penalty order rendered the penalty order invalid in law.
Accordingly, the ITAT allowed all four appeals and deleted the penalty orders.
The assessee was represented by Ved Jain along with Ayush Garg, while Rajesh Kumar Dhanesta represented the revenue.
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