2026 (5) TMI 729

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....0A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") amounting to Rs.12,20,784/-. 2. Brief facts is that the Assessee is an individual, who for the AY 2017-18 filed his Return of Income (ROI) income on 23.09.2017 admitting a total income of Rs. 2,13,23,700/-, inclusive of long term capital gains (LTCG) of Rs. 1,99,10,377/-. This ROI was selected for scrutiny and the AO completed the assessment vide order u/s. 143(3) of the Act dated 16.12.2019 wherein he disallowed the indexed cost of improvement of Rs. 1,83,67,529/- and assessed the long term capital gains at Rs. 3,92,77,906/-. Aggrieved by the assessment order, the assessee filed an appeal before the Ld CIT(A). The Ld CIT(A) after considering the relevant documents and....

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....jurisdiction of the AO to have imposed penalty u/s. 270A of the Act, on the ground that the AO during the course of assessment proceedings neither directed nor recorded satisfaction that assessee has 'underreported his income' and shall be liable to pay penalty on it. In the absence of such endorsement, as required under sub-section (1) of Section 270A of the Act, the impugned penalty is bad in law. To appreciate such a contention, it would be gainful to reproduce Section 270A(1), which reads as under:- Penalty for under-reporting & misreporting of income: 270A(1) The Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of a....

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....ion about assessee having committed the faults as given in Clause (c) of Section 271(1) of the Act vitiates the penalty levied on assessee. These decisions was followed by this Tribunal in DCIT vs. Jayapriya Company [ITA No.1899/Chny/2025 & C.O No.65/Chny/2025], wherein it was held as under: 24. Secondly, it is well settled in law by now that, the recording of satisfaction / finding of fact for initiating and levying penalty is mandatory and a condition precedent, without which the penalty order shall stand rendered ab initio void in the eyes of the law. In view of the same, the order levying penalty u/s. 270A of the Act is liable to be quashed. 8. Thus, the Ld.AR submitted that the AO in the course of assessment procee....