ITAT Deletes Penalties u/s 271(1)(c) & 270A for Defective Penalty Notices:

ITAT Deletes Penalties u/s 271(1)(c) & 270A for Defective Penalty Notices Ajay Vision Education Pvt. Ltd., engaged in the education sector, was subjected to reassessment proceedings for AY 2016–17, resulting in an addition of ₹98,59,655/- treated as “unrecorded cash income,” despite the assessee having already included the same amount in its return filed in response to section 148 notice. Penalty proceedings u/s 271(1)(c) were initiated based on this addition. For AYs 2017–18, 2018–19, and 2019–20, penalties were imposed u/s 270A on the ground of “under-reported income in consequence of misreporting.” The assessee challenged the penalties before the CIT(A), who deleted them by holding that the show cause notices were defective and did not specify the precise charge concealment, furnishing inaccurate particulars, under-reporting, or mis-reporting. Aggrieved, the Revenue filed four appeals before the ITAT Delhi. All appeals involved the same assessee and revolved around the validity of penalty notices. Main Issue: Whether penalties imposed under sections 271(1)(c) and 270A can survive when the penalty notices issued u/s 274 do not specify the exact limb of the charge—i.e., whether the assessee is alleged to have concealed income, furnished inaccurate particulars, under-reported income, or mis-reported income. Decision: The ITAT Delhi dismissed all four appeals filed by the Revenue. For the penalty u/s 271(1)(c), the Tribunal held that the notice failed to specify whether penalty was proposed for “concealment of income” or “furnishing inaccurate particulars,” rendering the penalty void. The CIT(A)’s finding that the Assessing Officer “disallowed” income already included in the return—an incorrect basis for alleging concealment—was also upheld. Regarding penalties u/s 270A for AYs 2017–18, 2018–19, and 2019–20, the Tribunal found that the notices did not specify whether the alleged violation constituted “under-reporting” or “mis-reporting,” nor did they indicate which specific clause of section 270A(2) or 270A(9) applied. Since penal provisions require strict compliance and clear specification of charge, the notices were held legally defective. The Tribunal relied on binding precedents, including SSA’s Emerald Meadows, Sahara India Life Insurance Co., and Virgo Marketing Pvt Ltd, which hold that penalty notices must clearly mention the precise charge. Accordingly, all penalties were ordered to be deleted. To Read Full Judgment, Download PDF Given Below