Penalty under Section 270A(9) invalid when AO fails to specify applicable clause for mis-reporting income

The ITAT Pune held that penalty under section 270A(9) for mis-reporting of income was invalid due to the AO's failure to specify which particular clause (a-f) of section 270A(9) applied to the assessee's case. Despite the AO discussing how income was mis-reported, the absence of identification of the specific limb in both penalty and assessment orders rendered the proceedings invalid and untenable, following precedent in Kishor Digambar Patil case. The assessee's appeal was allowed.

---

---

Issues involved:
The judgment involves appeals against penalty orders u/s 270A of the Income Tax Act, 1961 for A.Y. 2017-18 & 2018-19. The main issues include alleged inaccurate reporting of income by the assessee and the imposition of penalty without proper justification.

A.Y. 2017-18:
The assessee filed revised returns showing varying total incomes, including a claim for deduction under "Income from House Property." The Income Tax Department initiated proceedings after a survey revealed fraudulent activities by a tax practitioner. The AO accepted the return filed in response to the notice under section 148 without making any additions but imposed a penalty u/s 270A. The assessee contended that since the AO accepted the return, there was no misreporting. The tribunal found that the AO failed to specify how the income was misreported, as required by section 270A(9) of the Act. Citing relevant case law, the tribunal held that without identifying specific clauses from section 270A(9), the penalty could not be sustained. Consequently, the penalty was directed to be deleted, and the appeal was allowed.

A.Y. 2018-19:
The facts for A.Y. 2018-19 mirrored those of A.Y. 2017-18. Following the decision on the first appeal, the tribunal applied the same reasoning to this case. As the AO did not identify the specific clauses from section 270A(9) in this assessment as well, the penalty was deemed unsustainable, and the appeal was allowed.

In conclusion, both appeals by the assessee were allowed by the tribunal, directing the deletion of the penalties imposed under section 270A of the Income Tax Act, 1961.

---