AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 283
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....C CIT (A) in is bad in law. 3. The learned NFAC CIT (A) Without Jurisdiction erred in concluding that Interest paid in excess of Interest received was a shift from sound business prudence and hence it is misreporting & not eligible for Immunity. 4. The National faceless Appeal Centre CIT (A) Ignored the fact that granting of Immunity is the power of AO and not of NFAC or National Faceless Appeal Centre. 2. The assessee is an individual and filed the return of income for AY 2017-18 on 31.10.2017 declaring total income at Rs. 63,02,320/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the course of assessment, the AO noticed that the assessee has claimed a deduction of Rs. 1,58,09,988/- under section 57 of the Income Tax Act, 1961 (the Act) against the interest income of Rs. 1,60,00,683/-. The AO called on the assessee to furnish the details pertaining to the interest paid and from the details furnished by the assessee the AO noticed that the assessee has paid interest of Rs. 54,80,631/- at 18% to one Mr. Sunil Dalal. The AO was of the view that the assessee has paid interest at extra rate when compared to the prevailing mar....
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....A(9) of the Income Tax Act, 1961, the misreporting of income includes misrepresentation or suppression of facts and for sake of clarity, the relevant provisions are reproduced as under: (9) The cases of misreporting of income referred to in sub-section (9) shall be the following namely (a) misrepresentation or suppression of facts;....... Hence, it is held that the assessee has misrepresented the facts of actual taxable income. 7. In view of the above, it is held that this is a fit case for levy of penalty uns. 270A of the Income Tax Act, 1961 for under-reporting of income in consequence of misreporting. Hence, the assessee is liable to pay penalty of two hundred percent of the amount of tax payable on the under-reporting of income in consequence of misreporting. The income tax payable on underreported in consequence of misreported income worked out as under- Particulars Amount (in Rs. ) Tax Payable on Assessed income (A) 23,31,673- Tax Payable on Returned Income (B) 17,67,167/- Tax payable on under-reported in consequence of misreported income (A-B) 5,64 506/- 200% of Tax payable on under-reported in consequence of misreported income 11,29,012/- Penalty u/s. 270A of....
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....wance of 6% of interest which according to the AO is in excess of market rate. The assessee agreed to the disallowance and accordingly the addition towards excess interest claimed by the assessee is made while completing the assessment under section 143(3) of the Act. Subsequently the AO initiated the penalty proceedings under section 270A stating that penalty proceedings are initiated since there is "under-reporting of income in consequence of misreporting". The main contention of the assessee is that the AO in the penalty notice has not mentioned specific limb of section 270A(9) under which penalty proceedings are initiated in assessee's case. In this regard we notice that the Hon'ble Delhi High Court in the case of Schneider Electric South East Asia (HQ) Pte Ltd. (supra) has considered a similar issue and held that "6. Having perused the impugned order dated 09th March, 2022, this Court is of the view that the Respondents action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents ....
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.... to in sub-section 2 to 6 of Sec.270A of the Act. In the present case, these provisions are not relevant, because, the AO has not invoked under reporting of income. The second limb or charge is 'under reporting of income as consequence of misreporting of income' thereof and in the present case, the AO invoked second limb of provisions of Sec.270A of the Act. Admittedly, these provisions have been substituted by the Finance Act, 2016 w.e.f.01.04.2017 and applicable for AY 2017-18 onwards. Prior to insertion of Sec.270A of the Act, a similar provision was existed in the statue by way of sec.271(1)(c) of the Act, for concealment of particulars of income or furnishing of inaccurate particulars of income. Provisions of Sec.271(1)(c) of the Act, was also having two limbs or two charges i.e. i) for concealment of particular of income and ii) furnishing of inaccurate particulars of income. If you go by provisions of Sec. 271(1)(c) of the Act & Sec.270A of the Act, and wordings therein both provisions are similar and para materia to each other. Although, the term 'tax evasion' has been redefined by way of 'under reporting of income and under reporting as a consequence of....
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....nalty u/s. / 270A(9) of the Act, but no such ground was specified in the show cause notice dated 26.07.2021. In our considered view notice u/s 274 r.w.s. 270A of the Act, is not valid notice for the reason that the AO did not specify the satisfaction as to whether assessee had either 'under reporting of income' or 'misreporting of income'. In absence of proper notice, which is mandatory, the AO cannot imposed penalty, because, it is a cleare violation of principles of natural justice, because, issuing a vague notice without specifying the charge under which limb the proposed penalty proceedings is initiated, would vitiate the entire proceedings, because, the assessee was not given an opportunity to explain its case on specific charge. Therefore, in our considered view, penalty levied on the basis of invalid or vague notice is invalid and void ab initio. 24. In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that penalty levied by the AO u/s. 270A of the Act, is unsustainable in law on two counts, i.e. for failure to specify in the notice issued u/s. 274 r.w.s.270A of the Act, as to under which limb of subsection, 270A....