Defective penalty notice under section 270A vitiated proceedings where the precise default was not specified.

Penalty proceedings under section 270A were held invalid because the show-cause notice did not specify the applicable limb of section 270A(9)(a) to (f), while the penalty was imposed for under-reporting by misreporting. The Tribunal treated the objection as a pure question of law and held that it could be raised for the first time under section 254(1) without further factual enquiry. On merits, the failure to identify the precise default in the notice vitiated the penalty proceedings, and the penalty was deleted.

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Issues: Whether the penalty proceedings under section 270A of the Income-tax Act, 1961 were vitiated because the show-cause notice did not specify the relevant clause under section 270A(9) and whether such a legal plea could be entertained for the first time before the Tribunal.

Analysis: The notice initiating penalty proceedings did not specify the applicable limb under section 270A(9)(a) to (f), while the penalty was levied for under-reporting of income by reason of misreporting. The Tribunal held that the objection raised a pure question of law and could be examined in proceedings under section 254(1) without further factual enquiry. On merits, the omission to identify the precise default in the notice was held to vitiate the penalty proceedings.

Conclusion: The penalty proceedings were invalid and the penalty was deleted in favour of the assessee.

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