Penalty proceedings under section 270A require a clear...

Penalty proceedings under section 270A require a clear sequential charge: the Assessing Officer must first identify under-reporting and then specify whether it is attributable to a particular form of misreporting. Where the notice alleged only under-reporting but the penalty order proceeded on under-reporting in consequence of misreporting, without stating the exact statutory clauses invoked, the proceedings were held invalid for breach of natural justice. Independently, the assessee's reliance on Form 16 showing the amount as exempt, together with full disclosure of material facts, was accepted as a bona fide explanation falling within section 270A(6)(a), supporting deletion of the penalty.

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