TaxTMI 
TaxTMI 
2026 (8) TMI 686
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....ion as Income from Other sources, the same was held as business income which was admitted by the assessee and thus, dismissed the appeal of the assessee. In the assessment order, the AO recorded the satisfaction of initiation of the penalty proceedings u/s. 270A for "under reporting" of income in consequence of misrepresentation. Thereafter, AO levied penalty u/s. 270A of the Act of INR 4,63,500/- for "under reporting" by invoking the provision of section 270A(2)(g) of the Act. 3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 04.12.2025, dismissed the appeal of the assessee. 4. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo where all the grounds of appeal are with respect to the levy of penalty u/s. 270A of the Act at INR 4,63,500/- thus, they all are taken together for consideration. 5. Before us, Ld. AR for the assessee submits that in the notice issued for initiation of penalty proceedings u/s. 270A of the Act, AO has not specified the charge under which the penalty proceedings were initiated. He further submits that penalty proceed....
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....the return processed under clause (a) of sub-section (1) of section 143; (b) the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; (c) the income reassessed is greater than the income assessed or reassessed immediately before such reassessment; (d) the amount of deemed total income assessed or reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause (a) of sub-section (1) of section 143; (e) the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148; (f) the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessmen....
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....ediately preceding the order during the course of which the penalty under sub-section (1) has been initiated; (b) in a case where an assessment or reassessment has the effect of reducing the loss declared in the return or converting that loss into income, the amount of under-reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed. (4) Subject to the provisions of sub-section (6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as "preceding year") and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment. (5) The amount referred to in sub-section (4) shall be deemed to be amount of income underreported for the preceding year in the following order- (a) the preceding year immediately befo....
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.... (9) The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:- (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearing on total income; and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply. (10) The tax payable in respect of the under-reported income shall be- (a) where no return of income has been furnished or where return has been furnished for the first time under section 148 and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income; (b) where the total income determined under clause (a) of sub-section (1) of section 143 or assessed, ....
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....specific clause lineally from sub-section (2) or sub-section (9) would drastically obstruct an assessee from enforcing his right to dismantle the charge alleged against him, thus resulting into violation of principle of natural justice. 11. In the light of afore mentioned reasoning and discussion, we observed that, the notice initiating the penal proceedings is silent on the circumstance or incidence triggering the very initiation in this case. Further, the order of penalty did neither mention the circumstance or incidence nor make a mention of alleged action in reaching the final imposition. 12. Further from the perusal of the aforesaid notice, it is observed that AO has initiated the penalty proceedings for 'under reporting of income in consequence of mis-reporting' however, the penalty was finally levied u/s. 270A of the Act for 'under reporting of income'. 13. The Hon'ble Delhi High Court in the case of Schneider Electric South East Asia (HQ) Pte Ltd (supra) has dealt the issue of satisfaction recorded at the time of levying the penalty u/s. 270A of the Act, wherein, the Hon'ble Court has held as follows: "6. Having perused the impugned order dated 09 ....