TaxTMI 
TaxTMI 
2026 (4) TMI 1916
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.... the levy of penalty u/s. 270A of the Act be deleted/appropriately reduced. 2. Briefly stated, facts of the case are that assessee is an individual, filed the return of income for a year under consideration on 31.12.2022 declaring total income at Rs. 1,15,54,630/-. The return was selected for scrutiny assessment and statutory notices under the Act were issued and duly served upon the assessee. During the course of assessment proceedings, the ld. AO noticed a sale of property reported by the 'transferee' or buyer in the TDS return filed in form No. 26Q but the same was not appearing in the return of income of assessee. Further, ld AO observed, large refund out of the self assessment tax which according to him was unusual. In response, the assessee submitted that she entered into a sale agreement for sale of the property i.e. a flat was entered into on 31.03.2022 at total consideration of Rs. 12,11,40,000/- to Shri. Anil R. Malhotra and Seema A. Malhotra and the said buyer deducted TDS on sale consideration and deposited into govt account on 31.03.2022 itself, which is reflecting in the form no. 26(AS) of the assessee for the year under consideration. But the assessee explained th....
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....ted in the ROI, the self assessment tax already paid was refunded while processing of the ROI u/s. 143(1)(a) of the Act. Such refund was not claimed in the ROI with the intent to obtain undue benefit, rather, it was a mechanical consequence of the omission to report income from capital gains in the ROI. 1.3.3. At this stage, the Appellant invites Your Honour's attention to section 270A(6) of the Act which provides specific exceptions where an addition shall not be treated as a case of under-reporting. Clause (a) thereof stipulates that where the assessee offers an explanation and the AO is satisfied that the explanation is bona fide and all material facts have been disclosed, the same shall not constitute under reporting of income. 1.3.4. In the present case, the Appellant suo motu disclosed the transaction and furnished all relevant details in the course of assessment proceedings. The ld. AO computed the LTCG based on the particulars submitted by the Appellant. This clearly demonstrates that the explanation offered by the Appellant was bona fide and substantiated by complete material facts. Accordingly, the Appellant's case squarely falls within the exception u/s....
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....visors. Relevant extract of the decision is reproduced herewith: "A party must not suffer for no default on its part and for a sheer mistake or oversight on the part of its legal advisors. All that was necessary for the firm to do was in fact done by it and its partners. That the chartered accountants made a mistake through oversight should not have been considered a fatal circumstance outweighing all other facts and circumstances in favour of the assessee." 1.4.3. The Assessee also relies on the principle laid down by the Hon'ble Supreme Court in Hindustan Steel Ltd. v. State of Orissa (83 ITR 26) (refer page numbers 13 - 17 of LPB) that penalty will not be imposed merely because it is lawful to impose it; unless the party deliberately acted in defiance of law or was guilty of conduct or was dishonest or acted in conscious disregard of its obligations, penalty cannot be imposed. 1.4.4. In the instant case, as the Appellant had made complete disclosure of facts before the ld. AO and paid due tax thereon, penalty u/s. 270A of the Act cannot be imposed. 1.4.5. In view of the above, the Appellant prays that the penalty levied u/s. 270A of the Act al....
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....ion 270A of the Act is attracted and how the ingredient of sub section (9) of section 270A is satisfied. In the absence of such particulars, the mere reference to the word "misreporting" by the Revenue in the assessment order, for imposition of penalty makes the impugned order manifestly arbitrary." 2.4 After considering the submission of the assessee, the Ld. CIT(A) dismissed the appeal of the assessee observing as under: "5. Decision: I have gone through the facts of the case and have considered the written submissions filed by the appellant as well as material on record. There is no dispute about the fact that the appellant has not disclosed her income under the head Long Term Capital Gains in the return if income filed for the year. The fact came to light in view of the information available in Form No. 26QB statement. The appellant in her written submission tried to shift the burden of disclosure upon an accountant for not disclosing income under the head capital gains for the year. The appellant is an individual the appellant cannot be held responsible for any omission or commission on the part of the appellant. All responsibility lied upon the appellant only for ....
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....id capital gain in the year under consideration. Further, he submitted that since the return of the income was filed by the assessee on 31.12.2023 and there was no period available for revising the return of income to the assessee. Therefore, he could not revise the return of total income also. The Ld. Counsel in support submitted that tax payment had already been done and no penalty u/s. 270A is liable relied on the decision of the coordinate bench of the Tribunal in the case of Merlyn Lenin Fernandes Vs. INT Tax Ward 2(3)(1), Mumbai in ITA No. 6862/MUM/2025 for assessment year 2018-19. 3.2 Thirdly, the Ld. Counsel submitted that the notice for penalty issued u/s. 270A of the Act is vague and it is not clear under which ingredient of sub-section (9) of Section 270A, the penalty was levied. The Ld. Counsel referred to the provision of Section 270A(9) which comprises of sub-clause (a) to (f).The Ld. Counsel for the assessee filed a copy of the notice u/s. 270A dated 13.03.2024, wherein the AO has mentioned that the assessee had under reported income which was in consequence of misreporting thereof as per the details given in the assessment order. The Ld. Counsel submitted that sp....
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.... from imposition of penalty and prosecution makes the impugned order manifestly arbitrary." 4.2 Further Coordinate Bench of the Tribunal in the case of Manish Manohardas Asrani Vs. INT Tax (Supra) is held as under:- 8. Coming to the instant case, admittedly in the assessment order, the AO initiated the penalty proceedings u/s 270A of the Act without mentioning any sub clause of the section 270A of the Act or not specifying any limb of the penalty proposed to be levied. Further, in the penalty notice issued u/s 274 r.w.s 270A of the Act dated 11.11.2021 mentioned under reporting of the income. Subsequently during the penalty proceedings again issued the notice dated 20.12.2021 u/s 274 r.w.s 270A of the Act, without specifying any limb or sub clause of section 270A of the Act and ultimately vide order dated 22.02.2022 u/s 270A of the Act levied the penalty for misreporting of the income as well as underreporting of the income, as per provisions of section 270A(8) of the Act with the aid of section 270A(9)(e) of the Act. As the AO issued the vague notice without specifying any particular limb or sub clause for levying the proposed penalty. There is no whisper at all in the....
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....ssessing Officer is required to specify the specific limb of Section 270A(9) of the Act under which the Appellant was held to have misreported its income leading to under-reporting of income. The invocation of specific limb of Section 270A(9)(a) to 270A(9)(g) of the Act should either be apparent from the express provisions stated in the penalty order or should be unambiguously discernable from the reading of the penalty order as a whole; and in absence of the same penalty levied under Section 270A of the Act cannot be sustained. In the case before us, on perusal of Penalty Order, dated 29/11/2023, we find that the Assessing Officer has not specified the specific limb of Section 270A(9) of the Act which has been invoked. Further, even on perusal of the penalty order as a whole it is not clearly discernible whether the Assessing Officer has invoked provisions contained in Section 270A(a)/(c)/(d) of the Act. Though the Assessing Officer has alleged that the Assessee has not filed any supporting evidence, the findings recorded by the Tribunal support the contention of the Assessee that the claim for deduction for purchase expenses was substantiated by some documentary evidence. ....