Full disclosure and an unspecified misreporting charge may prevent Section 270A penalty for an erroneous indexed-cost claim

Section 270A penalty principles concern whether an erroneous indexed-cost claim constitutes misreporting when the return discloses the property transfer, consideration, ownership share, and other material facts. An excess claim based on the entire property, despite transfer of only a 45% share, may represent a computational error rather than concealment or suppression. The penalty framework also requires the notice to clearly identify the applicable limb or clause of Section 270A(9). Where the relevant facts are disclosed and the notice fails to specify the precise misreporting charge, the penalty is described as not leviable under the stated analysis.

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Issues: Whether penalty under Section 270A of the Income-tax Act, 1961 could be sustained where the assessee had disclosed all material facts relating to the transfer in the return of income, but had erroneously claimed indexed cost on the entire property, and the penalty notice did not specify the applicable limb of Section 270A(9).

Analysis: The material on record showed that the assessee had disclosed the nature of the property transfer, the consideration received, and his ownership share in the return itself. The dispute arose from an excess claim of indexed cost of acquisition and improvement on 100% of the property, whereas only 45% had been transferred to the builder. The facts relevant to computation were already on record and there was no concealment or suppression of ownership details. The penalty was levied at the rate applicable to misreporting under Section 270A(9), but the notice did not specify the precise limb or clause of Section 270A(9) allegedly attracted. In the absence of a clear identification of the charge and where the return itself contained the relevant disclosure, the case did not fall within misreporting or under-reporting warranting penalty.

Conclusion: Penalty under Section 270A was not leviable; the issue was decided in favour of the assessee.

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