SANKALP MUNRAJ KALE,PUNE V. DCIT, PUNE

ITA 2248/PUN/2025

AI Insights

The case revolves around a penalty imposed on Sankalp Munraj Kale by the Assessing Officer (AO) for underreporting income due to misreporting, specifically related to a large donation claimed under section 80GGC of the Income Tax Act. The AO added Rs.51,00,000 to the assessee's income and initiated penalty proceedings under section 270A. Both the AO and the Commissioner of Income Tax (Appeals) upheld the penalty, citing non-compliance and lack of substantiation from the assessee. However, the Tribunal found procedural lapses in the penalty imposition, particularly the failure to specify the applicable subsection of section 270A, leading to the penalty's cancellation.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841589 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2022-2023
• Appeal Filed On: 27-09-2025
• Other Referred Cases: Satish Pandurang Pawar Vs. ITO, DCIT Vs. Chakradhar Contractors And Engineers Private Limited, Sushil Rajendra Kothari VS. NFAC, Delhi, Santosh Kumar Khandelwal Vs. ACIT, Kedari Redekar Shikshan Sanstha Vs. ACIT, Mahavir Realties Vs. ACIT, Schneider Electric South East Asia (HQ) PTE Ltd. Vs. ACIT, Mohd. Farhan A. Shaikh Vs. ACIT, Saltwater Studio LLP Vs. ACIT, Kasat Prakash M. HUF vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV K SINGH
• Assessee Lawyers: BHARAT SHAH
• Keywords: Capital asset; Transfer pricing; International transaction; Question of law; Capital expenditure; Principle of natural justice; Bonafide mistake; Charitable institution
• Section: 142(1); 271(1)(c); 12A; 80C; 260A

Judgement Text

" आयकर अपीलीय अधिकरण “बी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2248/PUN/2025 धििाारण वर्ा / Assessment Year : 2022-23 Sankalp Munraj Kale, B-3 501, Eves Garden, Keshav Nagar, Mundhwa, Pune-411036 PAN : BSAPK1600D Vs. DCIT, Pune अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Bharat Shah Department by : Shri Gaurav K Singh Date of hearing : 23-02-2026 Date of Pronouncement : 25-02-2026 आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 22.07.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] wherein he has confirmed the penalty of Rs.34,64,740/- levied by the Ld. Assessing Officer (“AO”) u/s 270A of the Income Tax Act, 1961 (the “Act”) pertaining to Assessment Year (“AY”) 2022-23. 2. Briefly stated, the facts of the case are that the assessee is an individual and was employed with M/s. Nvidia Graphics Private Limited during the AY 2022-23. For AY 2022-23, he filed his return of income on 30.06.2022 declaring total income of Rs.66,29,320/- after claiming deduction of Rs.52,54,000/- comprising of : (i) donation of Rs.51,00,000/- u/s 80GGC; (ii) Rs.15,000/- u/s 80C and (iii) Rs.4,000/- u/s 80D of the Act. The case of the assessee was selected for scrutiny under CASS for the reason “verification of deduction from total income” (Chapter VI-A) (Non business ITR). During the course of assessment proceedings, the assessee could not submit any documentary evidence in respect of his claim of deduction u/s 80GGC for donation of Rs.51,00,000/- made to a political Printed from counselvise.com 2 ITA No. 2248/PUN/2025, AY 2022-23 party. The Ld. AO therefore completed the assessment by making an addition of Rs.51,00,000/- and determined the total income of the assessee at Rs.1,17,29,320/-. Thereafter, the Ld. AO initiated penalty proceedings u/s 274 r.w.s. 270A of the Act vide issue of notice dated 15.03.2024 on account of underreporting of income in consequence of misreporting. During the penalty proceedings, the assessee failed to submit reply to the said show cause notice, however, he filed part response to the letter of the Ld. AO issued on 24.05.2024. The reply of the assessee was not found to be tenable by the Ld. AO and citing the reasons that the assessee did not file any appeal against the assessment order which clearly establish that the assessee willfully made default by underreporting of income by misreporting, he levied penalty of Rs.34,64,740/- being 200% of tax payable on underreported income u/s 274 r.w.s. 270A of the Act vide his order dated 02.08.2024. 3. On appeal, the various notices of hearing issued by the Ld. CIT(A)/NFAC remained un-complied with by the assessee which resulted into an ex-parte order passed by the Ld. CIT(A)/NFAC for non-prosecution. On merits, the Ld. CIT(A)/NFAC affirmed the action of the Ld. AO in imposing penalty of Rs.34,64,740/- u/s 270A of the Act due to lack of any response/submission/documentary evidence filed by the assessee to substantiate his case despite several opportunities granted to the assessee. 4. Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1) The authorities below erred in the facts and circumstances of the case, and as per the law in levying and confirming the penalty of Rs. 3464740 under section 270A. The penalty so levied and confirmed by authority below be cancelled. Just and proper relief be granted to the assessee in this respect. 2) The authorities below erred in the facts and circumstances of the case, and as per the law, in levying and confirming the penalty on account of under-reporting of income in consequence of misreporting, without a specific limb and subsection and clause under which the penalty is levied and hence the penalty so levied and confirmed by the authorities below be cancelled. Just and proper relief be granted to the assessee in this respect. 3) The appellant prays to be allowed to add, amend, modify, rectify, delete, or raise any ground of appeal before or at the time of the hearing.” Printed from counselvise.com 3 ITA No. 2248/PUN/2025, AY 2022-23 5. The Ld. AR submitted that the assessee has accepted the quantum addition made by the Ld. AO and has also paid the due taxes thereon for the reason that the assessee did not have any corroborative evidence in support of his claim of deduction u/s 80GGC of the Act. He further submitted that the Ld. AO has issued the impugned notice u/s 274 r.w.s. 270A of the Act on 15.03.2024 without a specific limb and there is no clear specification under which sub-section of section 270A the alleged misreporting has been covered. While passing the impugned penalty order u/s 270A, the Ld. AO failed to adhere to the requirements of section 270A(9) of the Act. Relying on the following decisions, the Ld. AR submitted that if the penalty notice does not mention which limb of section 270A of the Act is attracted and how the ingredients of sub-section (9) of section 270A is satisfied, mere reference to the word misreporting in the show cause notice/assessment order/penalty order for imposition of penalty is manifestly arbitrary and deserves to the quashed. i. Satish Pandurang Pawar Vs. ITO in ITA Nos. 361 & 362/PUN/2023 for AYs 2017-18 & 2018-19, order dated 05.07.2023; ii. DCIT Vs. Chakradhar Contractors And Engineers Private Limited in ITA Nos. 1939 & 1940/PUN/2024 for AYs 2020-21 & 2021-222, order dated 26.12.2024; iii. Sushil Rajendra Kothari VS. NFAC, Delhi in ITA No. 4734/Mum/2023 for AY 2017-18, order dated 21.11.2024 and iv. Santosh Kumar Khandelwal Vs. ACIT, order dated 25.11.2024. 5.1 The Ld. DR supported the order of the Ld. CIT(A)/NFAC and submitted that despite number of opportunities granted the assessee failed to substantiate his claim by submitting any documentary evidence and therefore the Ld. CIT(A)/NFAC has rightly upheld the penalty order of the Ld. AO. As regards the legal issue raised by the Ld. AR, the Ld. DR could not bring to our notice any contrary material/decision to rebut the above submissions of the Ld. AR. 6. We have given our careful thought to the rival submissions of the parties and perused the material available on record as well as paper book filed by the Ld. AR on behalf of the assessee and the judicial precedents cited before us. It is matter of fact that the penalty notice issued by the Ld. Printed from counselvise.com 4 ITA No. 2248/PUN/2025, AY 2022-23 AO (reproduced below) does not mention which limb of section 270A(9) of the Act is attracted : If that be so, the decisions (supra) cited by the Ld. AR squarely apply to the facts of the assessee’s case in hand. 7. We find that the Co-ordinate Bench of the Pune Tribunal in the case of Chakradhar Contractors and Engineers P. Ltd. (supra) in turn relying on the decision of the Hon’ble Delhi High Court in the case of Schneider Electric Sought East Asia (HQ) Pte. Ltd. Vs. Asst. Commissioner of Income Printed from counselvise.com 5 ITA No. 2248/PUN/2025, AY 2022-23 Tax (2022) 145 taxmann.com 665 (Delhi) and several other decisions of the Pune Tribunal has dismissed the appeal of the Revenue observing that where neither in the assessment order nor in the notice issued u/sec.274 r.w.s.270A the Assessing Officer has specified as to under which limb of provisions of sec.270A(2) or 270A(9) the case of the assessee falls, then in that case, no penalty u/sec.270A is leviable. The relevant observation and findings of the Tribunal is reproduced below : “7. We have heard the rival arguments made by both the sides and perused the material available on record. We have also considered the various decisions cited before us by both the sides. We find the Assessing Officer in the instant case completed the assessment u/sec.143(3) determining the total income of the assessee at Rs.32,18,44,630/- as against the returned income of Rs.23,83,97,010/-, wherein he made an addition of Rs.8,33,51,448/- to the income determined u/sec.143(1)(a) by making addition of the difference between the profit estimated @ 10% and the profit declared by the assessee @ 7.37% of the total turnover. Since the Assessing Officer, neither in the assessment order nor in the penalty notice, has specified as to whether penalty is proposed for any of the conditions mentioned in sec.270A(2)(a) to 270A(2)(g) by virtue of which the income of assessee is held as underreported or in sec.270A(9)(a) to sec.270A(9)(f) by virtue of which the assessee has mis-reported it’s income, the Ld. CIT(A) deleted the penalty. The detailed reasoning given by him has already been reproduced in the preceding paragraphs. 7.1. We do not find any infirmity in the order of the Ld. CIT(A) in deleting the penalty so levied by the Assessing Officer. It is an admitted fact that the Assessing Officer in the assessment order has not specified as to under which limb of provisions of sec.270A(2) or 270A(9), the assessee has misreported or under-reported it’s income, we find the Assessing Officer in the body of the assessment order has mentioned as under after making the addition : “In light of the above, the amount of Rs.8,33,51,480/- is added to the total income of the assessee company for A.Y. 2020-21. Penalty proceedings u/s 270A of the Income Tax Act, 1961 is initiated separately for underreporting in consequence of mis-reporting of income.” 7.1. Similarly, we find the notice issued u/sec.274 r.w.s.270A dated 30.09.20222, copy of which, is placed at page-12 of the paper book, reads as under : Printed from counselvise.com 6 ITA No. 2248/PUN/2025, AY 2022-23 7.2. Similarly, the second notice issued u/sec.270A dated 05.01.2023 reads as under : 7.3. We find the Hon’ble Delhi High Court in the case of Schneider Electric South East Asia (HQ) PTE Ltd. v. ACIT reported in (2022) 443 ITR 186 (Del) has held that when there is not even a whisper as to which limb of sec.270A is attracted and how the ingredient of sub-sec.(9) of sec.270A is satisfied, the action of the Assessing Officer is contrary to the legislative intent. The relevant observations of Hon’ble High Court reads as under : “6. Having perused the impugned order dt. 9th March, 2022, this Court is of the view that the respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under s.270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the respondents have failed to specify the limb \"underreporting\" or \"misreporting\" of income, under which the penalty proceedings had been initiated. 7. This Court also finds that there is not even a whisper as to which limb of s.270A of the Act is attracted and how the ingredient of sub- s.(9) of s.270A is satisfied, In the absence of such particulars, the mere reference to the word \"misreporting\" by the respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary.” 7.4. We find the Coordinate Bench of the Tribunal in the case of ACIT v. Kedari Redekar Shikshan Sanstha in ITA No.559/PUNE/2024] vide order dated 05.07.2024 while deciding an identical issue deleting the penalty levied u/sec.270A has observed as under : “9. We have carefully considered the rival submissions and perused the records. The assessee is a charitable trust registered u/s 12A of the Act and engaged in educational activities whose income is exempt Printed from counselvise.com 7 ITA No. 2248/PUN/2025, AY 2022-23 from tax. It is manifest from para 4 of the assessment order that on perusal of Schedule EC of the ITR, the Ld. AO noticed that the assessee had claimed capital expenditure of Rs.2,40,02,040/-. Vide notice u/s 142(1) of the Act he required the assessee to furnish headwise and naturewise bifurcation of said capital expenditure. It was in reply thereof that the assessee submitted revised computation showing capital expenditure of Rs.97,47,772/- for which explanation was submitted. On consideration of such explanation, the Ld. AO observed in para 4.5 of the assessment order that the assessee has obtained fresh loans of Rs.1,42,54,268/- from bank during AY 2018- 19. Accordingly, since the assessee has pleaded that fresh loan has been obtained for capital expenditure on assets which has been claimed as capital expenditure in the ITR and now assessee submits request to reduce its claim of capital expenditure for the assets on which loan has been taken in next years. According to the Ld. AO, the plea of the assessee is found acceptable. Not only this the Ld. AO went on to observe further that in this way, the assessee had saved itself from the double deduction on same capital assets on which loan is availed in coming years whose repayment may have been claimed by the assessee in subsequent AYs. It was in the above backdrop of the factual matrix that the Ld. AO disallowed the excess claim of capital expenditure of Rs.1,42,54,268/-. In our considered view there is no intentional misrepresentation of expenditure as alleged. By no stretch of imagination it can be said to be a case of attempted tax evasion as even after revision of computation, the taxable income remained Nil which is same as returned income of the assessee. In the assessment order there is no whisper that there is under- reporting on total income as a consequence to misreporting as envisaged u/s 270A(8) and (9) of the Act. 10. None-the-less the notice dated 27.12.2019 u/s 274 r.w.s. 270A of the Act states : \"it appears to me under-reporting/misreporting of income\". Obviously, the initiation of penalty itself is based on suspicion and surmise. Nowhere it has been pinpointed - either in the penalty notice or in the impugned order of penalty as to under which stipulated specific clauses (a) to (f) to subsection (9) r.w. sub-section (8) of section 270A of the Act, the assessee has committed default attracting \"underreporting\" as a consequence of \"mis-reporting\". In such a scenario the Co-ordinate Bench of the Tribunal in the case of Mahavir Realties (supra) held that not only Hon'ble Bombay High Court's Full Bench landmark decision in Mohd. Farhan A. Shaikh Vs. ACIT (2021) 434 ITR 1 (Bom.) applies wherein it is held that such a failure on the Assessing Officer's part indeed vitiates the entire penal proceedings (in old scheme), but also the very principle applies qua this new scheme of section 270A applicable w.e.f. 01.04.2017 for AY 2017-18 onwards as per Schneider Electric South East Asia (HQ) Ltd. Vs. ACIT (2022) 443 ITR 186 (Delhi). 11. We are inclined to agree with the submissions of the Ld. AR that a revision in computation of income was made with a view to correct bonafide mistake which did not have any tax implication so as to cause misrepresentation resulting in misreporting. Misrepresentation is often willful or intentional done with the intention of gaining wrongfully. Nothing of the sort has been done by the assessee. It only corrected an inadvertent mistake. 12. For the reason set out above, we endorse the finding of Ld. CIT(A) that on the facts and in the circumstances of the case of the assessee, the impugned penalty is not exigible. Consequently, we reject the appeal of the Revenue being devoid of any merit and substance. Printed from counselvise.com 8 ITA No. 2248/PUN/2025, AY 2022-23 13. In the result, the appeal of the Revenue is dismissed.” 7.5. We find the Pune Bench of the Tribunal in the case of Kasat Prakash M. HUF vs. ITO in ITA No.1328/PUNE/2023 vide order dated 19.06.2024 while deciding an identical issue deleting penalty levied u/sec.270A has observed as under : “4. We have given our thoughtful consideration to the assessee's forgoing legal issue raised in the instant appeal that the impugned penalty proceedings stand vitiated on account of the Assessing Officer's failure to pinpoint the relevant clauses (a) to (f) to sub-section (9); while initiating the proceedings herein u/s.270A(8) of the Act, thereby alleging under reporting of income as a sequence of misreporting. Faced with this situation, we find no merit in Revenue's arguments placing reliance on M/s. Veena Estate Pvt. Ltd. (supra) once the issue before their lordships was that of the concerned appellant seeking to frame an additional substantial question of law in section 260A proceedings whereas the law regarding the tribunal's jurisdiction to entertain such a pure question of law, not requiring any further detailed investigation on facts, is already settled in NTPC Ltd. Vs. CIT (1998) 229 ITR 383 (SC). That being the case, we are of the considered view that going by the foregoing judicial precedent, this tribunal is very much entitled to entertain and decide such a pure legal plea for the first time in section 254(1) proceedings. We accordingly reject the Revenue's instant technical arguments to conclude in light of section 270A (8) & (9) r.w. clauses (a to f) that the learned Assessing Officer's failure to pinpoint the corresponding default of assessee's part indeed vitiates the entire proceedings as per (2022) 443 ITR 186 (Del) Schneider Electric South Asia Ltd. Vs. ACIT (in the new scheme) and Md. Farhan S.A. Vs. ACIT (2021) 434 ITR 1 (Bom.) in section 271(1)(c) old penal provision. We order accordingly. The impugned penalty of Rs. 15,54,736/- stands deleted in very terms. 5. This assessee's appeal is allowed.” 7.6. The various other decisions relied on by the Learned Counsel for the Assessee also supports his case to the proposition that where neither in the assessment order nor in the notice issued u/sec.274 r.w.s.270A the Assessing Officer has specified as to under which limb of provisions of sec.270A(2) or 270A(9) the case of the assessee falls, then in that case, no penalty u/sec.270A is leviable. We, therefore, uphold the order of the Ld. CIT(A) and the grounds raised by the Revenue are dismissed.” 8. Similar view has been taken by the Co-ordinate Bench of the Tribunal in the case of Satish Pandurang Pawar (supra) wherein it has been held as under : “7. In this case, in the assessment order dated 13.09.2021 the AO has accepted Return of Income shown in the Return filed in response to notice under section 148. Nowhere in the assessment order, the AO has discussed how the assessee has mis-reported the income. The AO has not identified the specific limb of section 270A(9) of the Act, either in the penalty order or in the assessment order which is applicable in the case of assessee. We find that ITAT Pune in the case of Kishor Digambar Patil(supra) has held that failure on the part of the AO to showcase which of the specific action of the assessee from Clause(a-f) of section 270A(9) was determinant before imposing the impugned penalty under section 270A of the Act has rendered Printed from counselvise.com 9 ITA No. 2248/PUN/2025, AY 2022-23 the entire proceedings invalid and untenable. Similarly, ITAT Mumbai in the case of Saltwater Studio LLP(supra) has held as under : “The question is whether the AO’s action to levy penalty u/s 270A(9) of the Act is sustainable in the given facts of the case. In order to examine that let us have a look at relevant provisions of Section 270(8) &(9) of the Act which reads as under: “Penalty for under-reporting and misreporting of income. 270A. (1) …………………… (8) Notwithstanding anything contained in sub-section (6) or subsection (7), where under-reported income is in consequence of any misreporting thereof by any person, the penalty referred to in subsection (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported income. (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.” 13. The AO has levied the higher penalty of 200% of tax payable of misreporting income. Then in such a scenario, the AO has to bring the action/omission on the part of the assessee in the ken of subsection (9) of section 270A of the Act which are given (supra), viz (a) to (f) of section 270A(9) of the Act. However, a reading of the reasons given by the AO to levy penalty for misreporting (supra) it is discerned that he has failed to spell out as to how the assessee’s case/additions falls within the ken of instances given in clause (a) to (f) of sub-section (9) of section 270A of the Act. Since AO failed to bring the addition/disallowance he made in quantum assessment, under the ken of (a) to (f) of the sub-section(9) of section 270A of the Act, the penalty levied for misreporting @ 200% cannot be sustained because it is trite law that penalty provisions have to be strictly interpreted. And therefore, taking into consideration, the facts and circumstances of the case, we find that the levy of penalty by the AO u/s 270A of the Act suffers from the vice of nonapplication of mind as well as violates principles of natural justice. And therefore, the penalty levied on addition of sustained quantum addition of Rs.67,970/- cannot survive. And therefore, it is directed to be deleted.” 8. In the case under consideration, the AO has failed to identify the specific Clauses from Clause (a-f) of section 270A(9) of the Act. Therefore, respectfully following ITAT Pune and ITAT Mumbai decisions the AO is directed to delete the penalty under section 270A of the Act. Accordingly, grounds of appeal raised by the assessee are allowed.” 9. On the aforesaid facts and in the circumstances of the case and following the decisions (supra) of the Co-ordinate Bench of the Tribunal, we hold that the impugned penalty is not exigible which we hereby vacate. The effective grounds raised by the assessee are accordingly allowed. Printed from counselvise.com 10 ITA No. 2248/PUN/2025, AY 2022-23 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25th February, 2026. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 25th February, 2026. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com "