Penalty under section 270A requires a clear charge and cannot stand where the underlying receipt mismatch is explained and rectified.

Penalty proceedings under section 270A require the notice and order to clearly specify the precise limb of misreporting or suppression alleged, so the assessee can meet the exact charge. Where the record does not consider the assessee's explanation for the difference in receipts, and the alleged Form 26AS mismatch is later rectified, the factual basis for penalty is undermined. An assessment finding is not conclusive for penalty purposes; surrounding circumstances and the explanation on record must be examined before sustaining the levy.

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Issues: (i) Whether the penalty notice and order under section 270A were sustainable when they did not specify the precise limb of misreporting or suppression alleged against the assessee. (ii) Whether the penalty could survive when the explanation for the difference in receipts was not considered and the alleged Form 26AS discrepancy was subsequently rectified.

Issue (i): Whether the penalty notice and order under section 270A were sustainable when they did not specify the precise limb of misreporting or suppression alleged against the assessee.

Analysis: The notice and the penalty order did not clearly identify the specific charge within section 270A(9). The assessment and penalty records were also silent on the assessee's explanation, despite the claim that submissions had been filed. A penalty proceeding requires a clear allegation so that the assessee knows the exact default alleged.

Conclusion: The penalty notice was defective and the penalty could not be sustained on that basis.

Issue (ii): Whether the penalty could survive when the explanation for the difference in receipts was not considered and the alleged Form 26AS discrepancy was subsequently rectified.

Analysis: The explanation that the receipts related to another entity and that tax had been deducted against the assessee's PAN was supported by the record. The alleged discrepancy in Form 26AS was later rectified, so the basis for the penalty no longer survived. Findings in the assessment were held not to be conclusive for penalty purposes, and the surrounding circumstances had to be considered before imposing or sustaining penalty.

Conclusion: The penalty was not sustainable on merits and the grounds were allowed.

Final Conclusion: The penalty order under section 270A was set aside and the assessee obtained complete relief.

Ratio Decidendi: A penalty under section 270A of the Income-tax Act, 1961 cannot be sustained where the notice does not clearly specify the alleged limb of default and the material basis for the penalty is displaced by the assessee's explanation and subsequent rectification of the underlying discrepancy.

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