2026 (5) TMI 107

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....25 wherein the Appeal filed by the Assessee against the penalty order passed u/s. 270A of the Income Tax Act, 1961 (the Act) by the National Faceless Assessment Centre, Delhi (the Ld. Assessing Officer) dated 11.01.2022 levying a penalty of Rs. 1,22,98,760/- was confirmed. 2. The Assessee is aggrieved and is in Appeal before us. 3. The main grievance of the Assessee is that the Ld. CIT(A) has confirmed levy of the penalty holding that underreporting of income which is in consequence of misreporting thereof is leviable despite the fact that neither the Assessment Order passed u/s. 143(3) r.w.s. 143(3A) r.w.s. 143(3B) of the Income Tax Act dated 15.02.2021 invokes any of the clauses of section 270A(9) as well as the notice for penalty i....

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....enalty proceedings which was contested by the Assessee stating that Assessee on its own as per para no. 6 of the letter dated 24.12.2020 has withdrawn the claim of the depreciation. It was further stated that even without such claim of depreciation, the Assessee trust has applied 85% of gross assets. Thus, there is no case of misreporting of total income. The Ld. Assessing Officer rejected the contention of the Assessee and levied a penalty u/s. 270A of the Act holding that Assessee has underreported the total income which is in consequence of misreporting as the tax on underreported income comes to Rs. 61,49,380/- levied 200% penalty at Rs. 1,22,98,760/-. 7. The Assessee challenged the same before the Ld. CIT(A). The Ld. CIT(A) relying ....

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....in Schneider Electric South East Asia (HQ) Pte Ltd. v. ACIT(IT) (2022) 443 ITR 186 (Delhi) wherein it is held that if the Assessee is not aware about which clause of section 270A(9) is invoked for levy of penalty, the penalty notice and the penalty order are required to be quashed. Decision of the Deputy Commissioner of Income Tax (Exemptions) v/s. Rashtrotthana Parishat in ITA No. 1666/Bang.2024 which is made basis for levy of penalty by the ld CIT (A) was later on recalled in MA and subsequently penalty got deleted. 9. The Ld. Departmental Representative vehemently supported the order of the Ld. lower authorities. 10. We have carefully considered the rival contentions and perused the Assessment Order, Penalty Order and the order of ....

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.... how he ingredients of sub section 9 of section 270A is satisfied, in absence of such mere reference to the word misreporting by the Ld. Assessing Officer in the Assessment Order makes the order manifestly arbitrary. The Hon'ble Delhi High Court further strengthened the above view in the decision of GE Capital US Holdings Inc. vs. Deputy Commissioner of Income-tax (International Taxation) [2024] 163 taxmann.com 146 (Delhi)/[2024] 299 Taxman 108 (Delhi)/[2024] 468 ITR 746 (Delhi)[31-05-2024]where in it is held that Where Assessing Officer had issued show cause notices under section 270A for initiating consequential penalty proceedings and application filed by assessee to avail of statutory remedy as codified under section 270AA was also reje....