ITAT: Section 270A Penalty Cannot be Levied If AO Fails to Specify Misreporting Clause

The Income Tax Appellate Tribunal (ITAT), New Delhi held that no penalty under Section 270A of the Income Tax Act should be levied for underreporting or misreporting income for the Assessment Year 2017-18.

The assessee, Ashok Kumar Gupta, filed his income tax return (ITR), declaring an income of Rs 4,93,460. Based on a survey conducted on the assessee, his return was selected for scrutiny. As a result, an assessment was framed, and a penalty of 200% under section 270A was levied for under-reporting of income.

The assessee challenged the penalty and the order before the Income Tax Appellate Tribunal (ITAT). The assessee argued that there was no underreporting or misreporting of income. He said that he filed his return disclosing all income details. Another issue was that the AO did not mention the specific clause specifying the offences committed by the assessee, which is a requirement for imposing such penalties.

The ITAT referred to past decisions of the Delhi High Court and observed that the AO failed to mention as to why the case fell under the “misreporting” category. Also, the assessee had disclosed all the relevant details in his ITR. Therefore, the tribunal held that there was no misreporting or underreporting of income, and in such a case, the penalty under section 270A of the Act cannot be levied.