Penalty under Section 270A deleted due to defective notice failing to specify applicable sub-section or clause

ITAT Pune deleted penalty u/s 270A imposed on assessee for under-reporting income due to disallowance of school charges claimed as tuition fees. The penalty notice failed to specify the particular sub-section or clause under which penalty was initiated, making it impossible for assessee to respond adequately. Following precedent in Shashikant Sukdeo Ambekar case, the tribunal held the penalty notice defective and ruled in favour of assessee.

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Issues:
Penalty under section 270A imposed on the assessee for under-reporting income due to misreporting.

Analysis:
The appeal was filed by the assessee against the order of the LD CIT(A)/NFAC confirming the penalty under section 270A of the IT Act. The assessee contended that the penalty was unjustified as it was attributable to the wrong actions of the tax consultant, and the assessee, being a salaried employee from a technical background, was reliant on the consultant for filing tax returns. The assessee argued that there was no history of incorrect claims in past or subsequent years, and the penalty was not warranted given the circumstances.

The facts revealed that the assessee, an individual earning income from salary, filed the original return of income for the assessment year 2018-19, which was later revised due to information about false/excess claims made by the tax consultant. The Assessing Officer initiated penalty proceedings under section 270A due to the difference in assessed income and income shown in the revised return. The penalty was imposed, and the appeal to the LD CIT(A)/NFAC was dismissed, leading to the appeal before the Tribunal.

During the Tribunal proceedings, the assessee argued that the penalty was unjustified as the tax consultant had manipulated deductions without the assessee's knowledge, leading to a police complaint and subsequent correction of the return. The penalty notice did not specify the particular sub-section or clause under which the penalty was imposed, making it difficult for the assessee to respond adequately. The Tribunal observed that the penalty notice lacked specificity regarding the relevant sub-section of section 270A, rendering the imposition of penalty invalid.

In line with a previous decision by a Co-ordinate Bench of the Tribunal, the penalty was deleted as the specific clauses from section 270A(9) were not identified by the Assessing Officer. The Tribunal allowed the appeal, citing the lack of specificity in the penalty notice and the precedent set by the earlier decision. Consequently, the penalty of Rs. 1,61,548 imposed under section 270A of the IT Act was deleted, and the appeal by the assessee was allowed.

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