TaxTMI 
TaxTMI 
2025 (10) TMI 1210
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....)-23, New Delhi has erred both in law and on facts in upholding penalty of Rs. 48,70,576/- levied in an order dated 29,8.2024 under section 270A of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that order dated 26.2.2024 made u/s 270A of the Act is barred by limitation and deserves to be quashed as such. 3. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of any specific show cause notice having been issued, the levy of penalty was otherwise wholly illegal. 4. That furthermore that since no valid satisfaction was recorded in the order of assessment, penalty levied was otherwise too not in accordance with law. 5. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding penalty @ 200% of the amount of tax payable on adhoc disallowance of expenses of Rs. 73,65,600/- claimed in the profit and loss account by the appellant. 6. That furthermore upholding of levy of penalty as the appellant has made complete disclosure in the audited financial statements and return of income, therefore the disallowance ....
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....e dated 12.12.2019 for A.Y 2017-18 and pointed out that the notices are vague and are not decisive in respect of the charge levelled against the assessee - whether the penalty is being levied for under- reporting or for mis-reporting u/s 270A of the Act. It is the say of the ld AR that the AO has not specified the exact limb under which the penalty is being imposed. 8. The ld. counsel for the assessee further pointed out that while recording satisfaction for initiation of penalty u/s 270A of the Act, the Assessing Officer initiated penalty u/s 270A(2) for under reporting and while levying penalty, the Assessing Officer has taken recourse to penalty for misreporting u/s 270A(9) of the Act. 9. The ld. counsel for the assessee relied upon the decision in the case of Schneider Electric South East Asia [HQ] Pte 145 taxmann.com 665 (Del) and GE Capital US Holdings Inc. 468 ITR 746(Del) for the proposition that wherein penalty notice, the Assessing Officer failed to specify the limb of under reporting or misreporting of income under which penalty proceedings had been initiated, penalty notice was erroneous and arbitrary. 10. On merits, the ld. counsel for the assessee submitted t....
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....he Act is attracted and how the ingredient of subsection (9) of Section 270A is satisfied. In the absence of such particulars, the mere reference to the word "misreporting" by the Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary. 8. This Court is of the opinion that the entire edifice of the assessment order framed by Respondent No.1 was actually voluntary computation of income filed by the Petitioner to buy peace and avoid litigation, which fact has been duly noted and accepted in the assessment order as well and consequently, there is no question of any misreporting. 9. This Court is further of the view that the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of Section 270AA of the Act to encourage/incentivize a taxpayer to (i) fast-track settlement of issue, (ii) recover tax demand; and (iii) reduce protracted litigation. 10. Consequently, the impugned order dated 09th March, 2022 passed by Respondent No.1 under Section 270AA (4) of the Act is set aside and Respondent No.1 is directed to grant immunity under Section 270AA of the....
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.... We therefore hold, issue of PF/ESI being debatable, the same cannot be visited with the rigour of penalty u/s 270A. Following the decision of the Hon'ble Punjab High Court in the case of Gurdaspur Co-operative Sugar Mills Ltd (supra), we hold that the CIT(A) has correctly deleted the penalty on contribution towards PF/ESI. 15. We further are inclined to agree with the assessee that where addition is made on estimate/adhoc basis by the Assessing Officer, no penalty is leviable u/s 270A of the Act. In the instant case the addition on account of disallowance of expense is on ad hoc basis and therefore, we are of the view that the assessee cannot be fastened with the liability of penalty u/s 270A. For this proposition we follow the decision of the ITAT Bangalore Bench in the case of VDB Infra and Realty Private Ltd, which held as under: "3. We have heard the rival submissions and perused the materials available on record. The contention of the ld. A.R. is that the ld. AO has passed penalty order levying penalty u/s 270A(9)(a) of the Act stating that there is a mis-representation or suppression of the facts, thereby misreporting of income. However, in assessment order, ....
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....correct and complete to the satisfaction of the AO." It is ostensible from the language of sub-s. (6) that an addition made on the basis of estimation cannot provide foundation for under-reported income for the purpose of imposition of penalty under s. 270A of the Act. As the only basis of the addition is the estimate made by the DVO, we hold that the penalty cannot be sustained. We, therefore, order to delete the same." 16. We, therefore, respectfully following the decisions of the Hon'ble High Courts and ITAT [supra], direct the Assessing Officer to delete the penalty so levied u/s 270A of the Act. 17. In the result, appeal of the assessee is allowed. ITA No. 4956/DEL/2024 [A.Y. 2018-19] (Assessee's appeal) 18. The issues raised in this appeal are identical to the facts and circumstances elaborately discussed by us in assessee's appeal hereinabove [supra]. On the basis of our detailed discussion therein, this appeal of the assessee is also allowed. ITA No. 5167/DEL/2024 [A.Y. 2017-18] [Revenue Appeals] 19. The Revenue has raised the following substantive ground of appeal: "1. That the learned Commissioner of Income Tax (Appeals) has erred in Dele....