Penalty under tax law fails where the order does not specify the limb of under-reporting or misreporting.

Penalty under section 270A of the Income-tax Act could not be sustained where the assessee's deduction claim under section 80GGC was disallowed, but the penalty order failed to specify the applicable limb of under-reporting or misreporting and did not set out the requisite factual particulars. The material on record, including the explanation that the donation was routed through banking channels and supported by a certificate, did not justify treating the claim as deliberate misreporting. On those facts, the penalty was deleted because the statutory basis for invoking section 270A and the ingredients of section 270A(9) were not clearly established.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 was sustainable where the assessee's claim for deduction under section 80GGC was disallowed and the order did not clearly specify the applicable limb of under-reporting or misreporting.

Analysis: The deduction claimed by the assessee was examined in assessment proceedings and the disallowance was accepted, but the penalty could survive only if the order clearly established the statutory basis for invoking section 270A, including the precise limb attracted and the factual ingredients of misreporting. The assessee's claim was made on the basis of a donation said to have been routed through banking channels and supported by a certificate, and the material placed on record did not justify treating the claim as deliberate misreporting. The penalty order also lacked the necessary particulars showing how the conditions of section 270A(9) were satisfied.

Conclusion: The penalty under section 270A was not sustainable and was rightly deleted in favour of the assessee.

Final Conclusion: The appeal succeeded and the penalty proceedings could not be maintained on the facts and manner in which the order was framed.

Ratio Decidendi: A penalty under section 270A of the Income-tax Act, 1961 cannot be sustained unless the order specifically identifies the applicable limb and establishes the ingredients of misreporting or under-reporting with requisite particulars.

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