Section 270A penalty must specify the exact limb of default; vague misreporting allegations cannot sustain levy.

Penalty under section 270A of the Income-tax Act, 1961 requires the notice and penalty order to clearly identify the exact statutory limb alleged, whether under-reporting or misreporting, because the two attract different consequences. A vague invocation of section 270A(9) and a shift from under-reporting in the notice to misreporting in the order render the penalty unsustainable. The note also records that disclosure of the relevant income particulars in the return negates any actionable under-reporting or misreporting on the facts. On that reasoning, the penal levy was deleted and the matter was decided in favour of the assessee.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 could be sustained when the notice and penalty order proceeded on under-reporting of income but did not specify the exact limb of misreporting under section 270A(9), and whether the assessee's disclosure in the return negatived the levy.

Analysis: Penalty under section 270A operates on distinct limbs, namely under-reporting and misreporting, with different consequences under sub-sections (7) and (8). The notice issued in the case proceeded on under-reporting, while the penalty was ultimately imposed at the higher rate applicable to misreporting, without specifying the particular clause of section 270A(9) said to be attracted. The absence of a clear and specific limb in the notice and penalty order rendered the proceedings unsustainable. It was also found that the assessee had already disclosed the relevant income particulars in the return, and the record did not establish misreporting or any actionable under-reporting justifying penalty.

Conclusion: The penalty under section 270A of the Income-tax Act, 1961 was not maintainable and was deleted; the issue was decided in favour of the assessee.

Final Conclusion: The assessment-related concealment allegation did not justify the penal levy, and the appeal succeeded with the impugned penalty set aside.

Ratio Decidendi: A penalty under section 270A of the Income-tax Act, 1961 cannot be sustained unless the notice and order clearly specify the exact statutory limb and the material ingredients of the alleged default, and a higher penalty for misreporting cannot be imposed on a vague or unspecified basis.

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