Penalty under section 270A requires a specific misreporting limb and a proven statutory basis, not just reassessment disallowance.

Penalty under section 270A of the Income-tax Act is discussed in the context of non-filing of return, reassessment, and disallowance of deduction under section 80P(2)(d). The commentary states that penalty cannot rest merely on a reassessment addition; the Revenue must still establish concealment, suppression, or a statutory basis for misreporting. It also notes that misreporting under section 270A(9) requires the specific statutory limb to be clearly identified in the notice and penalty order, and that a bona fide explanation not shown to be false does not justify penalty solely because taxable income was determined during reassessment.

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Issues: (i) Whether penalty under section 270A of the Income-tax Act, 1961 was leviable when the assessee did not file a return and the taxable income was determined during reassessment after disallowance of deduction under section 80P(2)(d). (ii) Whether the case fell within the category of misreporting of income and whether the show-cause notice and penalty order validly specified the relevant limb under section 270A(9).

Issue (i): Whether penalty under section 270A of the Income-tax Act, 1961 was leviable when the assessee did not file a return and the taxable income was determined during reassessment after disallowance of deduction under section 80P(2)(d).

Analysis: The assessee was a co-operative credit society and had explained that an incorrect PAN status as "Firm" created technical difficulty in filing the return and in claiming the deduction. The interest income was disclosed and the dispute related only to the allowability of deduction. Penalty proceedings are independent of assessment proceedings, and the mere making of an addition does not automatically attract penalty unless the statutory conditions are satisfied. On the facts, the explanation was not found false and no material was brought to show concealment or suppression.

Conclusion: The penalty could not be sustained on the mere basis of reassessment and disallowance of deduction, and the assessee succeeded on this issue.

Issue (ii): Whether the case fell within the category of misreporting of income and whether the show-cause notice and penalty order validly specified the relevant limb under section 270A(9).

Analysis: For misreporting, the Revenue had to establish that the case fit one of the specific categories in section 270A(9). No material showed false particulars, suppression of income, or any other specified mode of misreporting. The notice referred only to under-reporting, while the penalty was imposed for under-reporting in consequence of misreporting, without identifying the precise clause under section 270A(9). The mandatory foundation for enhanced penalty was therefore absent.

Conclusion: The allegation of misreporting was not made out and the penalty order was unsustainable.

Final Conclusion: The penalty under section 270A was held to be unsustainable and the assessee's appeal was allowed.

Ratio Decidendi: Penalty for misreporting under section 270A cannot be imposed unless the Revenue specifically establishes that the case falls within a defined statutory category of misreporting and the charge is clearly and validly identified; a bona fide, non-false explanation does not attract penalty merely because the taxable income was determined in reassessment.

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