VINOD JINDAL,FARIDABAD, HARYANA V. DCIT, CENTRAL CIRCLE-2, FARIDABAD, HARYANA

ITA 1923/DEL/2025

AI Insights

The case involves appeals by the assessee, Shri Vinod Jindal, against the penalties levied by the Deputy Commissioner of Income Tax, Central Circle-2, Faridabad, under sections 271(1)(c) and 270A of the Income Tax Act for the assessment years 2013-14 to 2017-18. The primary contention was that the penalty notices were issued without specifying the exact charges, such as whether the penalties were for concealment of income, furnishing inaccurate particulars, or underreporting/misreporting of income. The Tribunal examined various precedents and found that the notices were indeed vague and did not meet the legal requirements for imposing penalties.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773784 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2017-2018
• Appeal Filed On: 27-03-2025
• Other Referred Cases: CIT vs. SSA's Emerald Meadows, PCIT Vs. Gopal Kumar Goyal, PCIT Vs. Sahara India Life Insurance Company Limited, Schneider Electric South East Asia (HQ) Pte. Ltd. vs. ACIT, Manish Manohardas Asrani vs. Int. Tax, Mr. Mohd. Farhan A. Shaikh vs. ACIT, Saltwater Studio LLP v. NFAC, Delhi, Jaina Marketing & Associates, Dilip N. Shroff, Sudhir Kumar Singh, Rajesh Kumar v. CIT, State of Orissa v. Dr. Binapani Dei, CIT vs. Manjunatha Cotton & Ginning Factory, CIT vs. Sahara India Life Insurance Co. Ltd., PCIT Vs. Sahara India Life Insurance Co. Ltd., PCIT Vs. Gopal Kumar Goyal, PCIT Vs. Sahara India Life Insurance Company Limited, Schneider Electric South East Asia (HQ) Pte. Ltd. vs. ACIT, Manish Manohardas Asrani vs. Int. Tax, Mr. Mohd. Farhan A. Shaikh vs. ACIT, Saltwater Studio LLP v. NFAC, Delhi, Jaina Marketing & Associates, Dilip N. Shroff, Sudhir Kumar Singh, Rajesh Kumar v. CIT, State of Orissa v. Dr. Binapani Dei
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: DEEPESH GARG
• Keywords: Set aside; Opportunity of being heard; Question of law; Principle of natural justice; Double taxation relief
• Section: 271(1)(c); 270AA

Judgement Text

"SHRI VINOD JINDAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI M BALAGANESH, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A Nos.1918, 1919, 1920, 1921 & 1923/Del/2025 िनधा रणवष /Assessment Years:2013-14 to 2017-18 SHRI VINOD JINDAL, H.No.1203A, Tower C-3, SRS Pearl Heights, Sector-87, Faridabad. PAN No.AENPJ1202Q बनाम Vs. DCIT, Central Circle-2, Faridabad. अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent Assessee by Shri Deepesh Garg, Advocate Revenue by Shri Sahil Kumar Bansal, Sr. DR सुनवाईक\bतारीख/ Date of hearing: 28.08.2025 उ\u000eोषणाक\bतारीख/Pronouncement on 12.09.2025 आदेश /O R D E R PER BENCH The appeals in ITA 1918 to 1921/Del/2025 are filed by the assessee against the order u/s 250 of the Act, NFAC, Delhi dated 28.01.2025 for the AYs 2013-14 to 2016-17 in sustaining the penalty levied u/s 271(1)(c) of the Act. The appeal in ITA No.1923/Del/2025 is filed against the order of the Ld. CIT(A) in sustaining penalty u/s 270A of the Act for AY 2017-18. Printed from counselvise.com SHRI VINOD JINDAL 2 2. Ld. Counsel for the assessee, at the outset, submits that penalty orders passed u/s 271(1)(c) & 270A are invalid and bad in law for the reason that the penalty proceedings were initiated and penalty was levied without assigning specific charge, the exact limb of section 271(1)(c)/270A of the Act. In other words, the Ld. Counsel submits that the AO did not specify under which limb of section 271(1)(c)/270A penalty proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income or whether for under reporting or misreporting of income . Therefore, it is submitted that in the absence of specific charge in the notice issued u/s 271(1)(c) of the Act the said notice is bad in law and consequently the penalty order is bad in law. Reliance was placed on the following decisions: - 1. CIT s. SSA’s Emerald Meadows (242 Taxman 180) (SC); 2. PCIT Vs. Gopal Kumar Goyal (153 taxmann.com 534) (Del); 3. PCIT Vs. Sahara India Life Insurance Company Limited 432 ITR 84 (Del); 4. Schneider Electric South East Asia (HQ) Pte. Ltd. vs. ACIT (145 Taxmann.com 665) (Del.) 5. Manish Manohardas Asrani vs. Int. Tax (170 taxmann.com 792) (Mumbai – Trib.) 3. On the other hand, the Ld. DR supported the orders of the authorities below. Printed from counselvise.com SHRI VINOD JINDAL 3 4. Heard rival submissions. On perusal of the penalty notices issued u/s 274 r.w.s. 271(1)(c)/270A of the Act, we observe that the notices were issued mechanically stating that assessee has concealed the particulars of income or furnished inaccurate particulars of such income, under reported/misreported the income. The AO failed to specify the exact limb for which the notice was issued. In other words, the AO did not specify the specific charge for which the penalty proceedings were initiated i.e. either for concealment of particulars of income or for furnishing of inaccurate particulars of income, whether for under reporting or misreporting of income. 5. We observed that the Hon’ble Karnataka High Court in the case of CIT vs. SSA’s Emerald Meadows (73 taxmann.com 241) by relying on its earlier decision in the case of CIT vs. Manjunatha Cotton & Ginning Factory (359 ITR 565) held that notice issued by the AO u/s 274 r.w.s. 271(1)(c) of the Act was bad in law as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Against this decision the Revenue filed SLP before the Hon’ble Supreme Court and the Hon’ble Supreme Court in CIT vs. Printed from counselvise.com SHRI VINOD JINDAL 4 SSA’s Emerald Meadows (73 taxmann.com 248) dismissed the Special Leave Petition filed by the Revenue. 6. We observe that an identical issue came up before the Hon’ble Bombay High Court (full bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh vs. ACIT [434 ITR (1)] and the Hon’ble High Court held as under: \"Question No.1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(l)(c), does a mere defect in the notice— not striking off the irrelevant matter—vitiate the penalty proceedings? 181. It does. The primary burden ties on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(l)(c), read with section 274 of IT Act. True, the assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other. Nor can each cure the other's defect. A penalty proceeding is a corollary; nevertheless, it must stand on its own. These proceedings culminate under a different statutory scheme that remains distinct from the assessment proceedings. Therefore, the assessee must be informed of the grounds of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 182. More particularly, a penal provision, even with civil consequences, must be construed strictly. And ambiguity, if any, must be resolved in the affected assessee's favour. 183. Therefore, we answer the first question to the effect that Goa Dourado Promotions and other cases have adopted an approach more in consonance with the Printed from counselvise.com SHRI VINOD JINDAL 5 statutory scheme. That means we must hold that Kaushaiya does not lay down the correct proposition of law. Question No.2: Has Kaushaiya failed to discuss the aspect of 'prejudice? 184. Indeed, Kaushaiya did discuss the aspect of prejudice. As we have already noted, Kaushaiya noted that the assessment orders already contained the reasons why penalty should be initiated. So, the assessee, stresses Kaushaiya, \"fully knew in detail the exact charge of the Revenue against him\". For Kaushaiya, the statutory notice suffered from neither non-application of mind nor any prejudice. According to it, \"the so called ambiguous wording in the notice [has not] impaired or prejudiced the right of the assessee to a reasonable opportunity of being heard\". It went onto observe that for sustaining the plea of natural justice on the ground of absence of opportunity, \"it has to be established that prejudice is caused to the concerned person by the procedure followed\". Kaushalya doses the discussion by observing that the notice issuing \"is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done \", 185. No doubt, there can exist a case where vagueness and ambiguity in the notice can demonstrate non-application of mind by the authority and/or ultimate prejudice to the right of opportunity of hearing contemplated under section 274. So asserts Kaushalya. In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya's insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. Printed from counselvise.com SHRI VINOD JINDAL 6 Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187. In Dilip N. Shroff, for the Supreme Court, it is of \"some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done\". Then, Dilip N. Shroff, on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. 188. We may, in this context, respectfully observe that a contravention of a mandatory condition or requirement for a communication to be valid communication is fatal, with no further proof. That said, even if the notice contains no caveat that the inapplicable portion be deleted, it is in the interest of fairness and justice that the notice must be precise. It should give no room for ambiguity. Therefore, Dilip N. Shroff disapproves of the routine, ritualistic practice of issuing omnibus show-cause notices. That practice certainly betrays non-application of mind. And, therefore, the infraction of a mandatory procedure leading to penal consequences assumes or implies prejudice. 189. In Sudhir Kumar Singh, the Supreme Court has encapsulated the principles of prejudice. One of the principles is that \"where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, \"except in the case of a mandatory provision of law which is conceived not only in individual interest but also in the public interest\". 190. Here, section 271(l)(c) is one such provision. With calamitous, albeit commercial, consequences, the provision is mandatory and brooks no trifling with or dilution. For a further precedential prop, we may refer to Printed from counselvise.com SHRI VINOD JINDAL 7 Rajesh Kumar v. CIT[74], in which the Apex Court has quoted with approval its earlier judgment in State of Orissa v. Dr. Binapani Dei[ 75]. According to it, when by reason of action on the part of a statutory authority, civil or evil consequences ensue, principles of natural justice must be followed. In such an event, although no express provision is laid down on this behalf, compliance with principles of natural justice would be implicit. If a statue contravenes the principles of natural justice, it may also be held ultra virus Article 14 of the Constitution. 191. As a result, we hold that Dilip N. Shroff treats omnibus show cause notices as betraying non-application of mind and disapproves of the practice, to be particular, of issuing notices in printed form without deleting or striking off the inapplicable parts of that generic notice. Conclusion: We have, thus, answered the reference as required by us; so we direct the Registry to place these two Tax Appeals before the Division Bench concerned for further adjudication.\" 6.1 As could be seen from the above the Hon'ble Bombay High Court (Full Bench at Goa) in the case of Mr. Mohd. Farhan A. Shaikh v. ACIT [(2021) 434 ITR 1 (Bom)] while dealing with the issue of non strike off of the irrelevant part in the notice issued u/s 271 (1)(c) of the Act, held that assessee must be informed of the grounds of the penalty proceedings only through statutory notice and an omnibus notice suffers from the vice of vagueness. 7. In the case of PCIT Vs. Sahara India Life Insurance Co. Ltd. (supra) the Hon’ble jurisdictional High Court held as under:- Printed from counselvise.com SHRI VINOD JINDAL 8 “The respondent had challenged the upholding of the penalty imposed under section 271(1)(c) of the Act, which was accepted by the Income Tax Appellate Tribunal. It followed the decision of the Karnataka High Court in CIT Vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn.) and observed that the notice issued by the Assessing Officer would be bad in law if it did not specify in which limb of section 271(1)(c) the penalty proceedings had been initiated under, i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. The Karnataka High Court had followed the above judgement in the subsequent order in CIT Vs. SSA’s Emerald Meadows (2016) 73 taxmann.com 241 (Karn.), the appeal against which was dismissed by the Supreme Court of India in SLP No. 11485 of 2016 by an order dated August 5, 2016 [CIT Vs. SSA’s Emerald Meadows (2016) 386 ITR (St.) 13 (SC)].” 8. Similar view has been taken by the Hon’ble Jurisdictional High Court in the case of PCIT Vs. Gopal Kumar Goyal (supra), wherein the Hon’ble High Court held as under: - “11. The Tribunal, after perusing the record and considering the submissions, observed as follows: \"13. In the present appeal, the show-cause-notice dated 15-3-2013 which has been issued by the Assessing Officer under section 274 read with section 271(1 )(c) of the Act reveals that Assessing Officer has not recorded any clear cut satisfaction as to whether the penalty under section 271(l)(c) of the Act has been levied for concealment of income or for furnishing of inaccurate particulars of income.\" 12. As is evident upon a perusal of the impugned order, the Tribunal, in concluding that there was a requirement in law for the AO to clearly indicate his satisfaction, as to which limb of section 271(l)(c) of the Printed from counselvise.com SHRI VINOD JINDAL 9 Act was triggered qua the respondent/assessee, placed reliance on the following judgments: Pr. CIT v. Sahara India Life Insurance Co. Ltd. [20191 108 taxmann.com 597/[2021] 432 ITR 84 (Delhi) and Mohd. Farhan A Sheikh v. Dy. CIT [20211 125 taxmann.com 253/280 Taxman 334/434 ITR 1 (Bom.) (FB). 13. Thus, having regard to the aforesaid, the Tribunal concluded, that the penalty order could not be sustained, and consequently allowed the appeal of the respondent/assessee. 14. Mr Kumar, in support of his appeal, has vehemently argued that the impugned order is erroneous. In support of his submission, Mr Kumar has relied upon the judgment of another coordinate bench of this Court in CIT v. ECS Ltd. [20101 194 Taxman 311/T20111 336 ITR 162. 15. Having heard Mr Kumar and perused the record, in our view, there cannot be any dispute, that the AO failed to clearly reflect his satisfaction in the penalty notice, as to which limb of the provisions of section 271(l)(c) of the Act was triggered vis-a-vis the respondent/assessee. 16. As indicated above, in a given case, both limbs may get attracted, but even in such situation the AO would need to set forth his prima facie, satisfaction in the penalty notice. The reason, perhaps, why the Legislature has provided for two circumstances in section 271(l)(c) of the Act, to our minds, emanates from the need to distinguish between the gravity and consequences which may accompany concealment of particulars of income, as against a case which involves furnishing inaccurate particulars. The quantum of penalty, that the AO may levy, would depend on which slot and/or limb of section 271(l)(c) of the Act, the assessee's infraction falls in. 17. Furthermore, having regard to the doctrine of stare decisis which impels courts not to disturb settled propositions or points of law, we are of the view, that the judgment of the coordinate bench of this Court rendered in Sahara India Life Insurance Co. Ltd's, case (supra) would have to be followed, as nothing has been Printed from counselvise.com SHRI VINOD JINDAL 10 brought on record by Mr Kumar, which would persuade us to deviate from the view taken by the coordinate bench, and refer the matter to a larger bench. 18. We may also note, that this very view has been taken by another coordinate bench, of which one of us i.e., Rajiv Shakdher, J. was a member. This view has been rendered in Pr. CIT v. Ms. Minu Bakshi 2022: DHC:2814-DB and also in the judgment in Pr. CIT v. Unitech Reliable Projects (P.) Ltd. 2023: DHC:4258-DB. The relevant observations made in the aforesaid judgement are extracted hereafter: \"21. Penalty proceedings entail civil consequences for the assessee. The AO is required to apply his mind to the material particulars, and indicate clearly, as to what is being put against the respondent/assessee when triggering the penalty proceedings. 22. In case the AO concludes, that a case is made out under section 271 (l)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/assessee. In a given case, where concealment has taken place, a heavier burden may be imposed, than in a situation where an assessee is involved in furnishing inaccurate particulars. 23. Therefore, it is necessary for the AO to indicate, broadly, as to the provision/limb under which penalty proceedings are triggered against the assessee. 24. Clearly, this has not happened in the instant case. \" 8.1 As could be seen from the above the Hon'ble jurisdictional High Court upheld the order of the Tribunal in holding that the notice issued by the Assessing Officer was bad in law if it did not specify under which limb of section 271(1)(c) of the Act the penalty Printed from counselvise.com SHRI VINOD JINDAL 11 proceedings had been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. 9. Ratio of the full bench decision of the Hon'ble Bombay High Court (Goa) squarely applies to the facts of the assessee's case as the notice u/s. 274 r.w.s. 271(1)(c) of the Act was issued without striking off the irrelevant portion of the limb and failed to intimate the assessee the relevant limb and charge for which the notices were issued. Thus, respectfully following the said decision we hold that the penalty orders passed u/s. 271(1)(c) of the Act by the Assessing Officer is bad in law and accordingly the penalty order passed u/s. 271(1)(c) of the Act for Assessment Years 2013-14 to 2016-17 are quashed. 10. We further observed that the Hon’ble Jurisdictional High Court in the case of Schneider Electric South East Asia (HQ) Pte. Ltd. vs. ACIT (145 taxmann.com 665) held as under: “2. By way of the impugned order, dated 09th March, 2022, the Petitioner’s application was rejected on the ground that the case of the Petitioner did not fall within the scope and ambit of Section 270AA of the Act. 3. Learned counsel for the Petitioner submits that the impugned order is barred by limitation in terms of Section 270AA(4) of the Act, having been passed well beyond the Printed from counselvise.com SHRI VINOD JINDAL 12 period of one month from the end of the month in which the Petitioner had filed the application seeking immunity. 4. He states that in the instant case, all the facts, information, documents and figures submitted by the Petitioner had been accepted by the Respondents and the subject matter of dispute is a pure question of law, being interpretation of the contracts and the provisions of the Act & DTAA, for which there cannot be any allegation of \"misreporting\" of income on the part of the Petitioner. 5. Issue notice Mr.Sunil Agarwal, learned senior standing counsel accepts notice on behalf of the Respondents. He relies on the impugned order dated 09th March, 2022 to contend that the Petitioner is not entitled to the benefit of immunity under Section 270AA of the Act. 6. Having perused the impugned order dated 09th 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 Section 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 Section 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 Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary. 8. This Court is of the opinion that the entire edifice of the assessment order framed by Respondent No.1 was actually voluntary computation of income filed by the Petitioner to buy peace and avoid litigation, which fact has been duly noted and accepted in the assessment order as well and consequently, there is no question of any misreporting. Printed from counselvise.com SHRI VINOD JINDAL 13 9. This Court is further of the view that the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of Section 270AA of the Act to encourage/incentivize a taxpayer to (i) fast-track settlement of issue, (ii) recover tax demand; and (iii) reduce protracted litigation. 10. Consequently, the impugned order dated 09th March, 2022 passed by Respondent No.1 under Section 270AA (4) of the Act is set aside and Respondent No.1 is directed to grant immunity under Section 270AA of the Act to the Petitioner.” 11. We also observed that the Mumbai Bench of the Tribunal in the case of Manish Manohardas Asrani vs. Int. Tax (170 taxmann.com 792) (Mumbai – Trib.) held as under: 7. We have heard the parties and perused the material available on record. Admittedly, in the notices dated 11.11.2021 and 20.12.2021 issued u/s 274 r.w.s. 270A of the Act, no specific charge/limb is specified. Misreporting of income and under reporting of income, are having two different connotations and having its own different consequences. We Shri Manish Manohardas Asrani observe that the identical issue was dealt with by the co-ordinate Bench of the Tribunal in Jaina Marketing & Associates (supra), wherein the Hon'ble Tribunal analyzed the provisions of law as well as various judgments including in the case of Schneider Electric South East Asia (HQ) Pte Ltd. vs. ACIT [W.P.(C)] 5111/2022 (Delhi) dated 28.03.2022, wherein the Hon'ble Delhi High Court dealt with a cases wherein the ingredients of sub section 9 of section 270A of the Act, were not specified while imposing the penalty. The Hon'ble High Court ultimately affirmed the deletion of the penalty imposed u/s 270A(9) of the Act, by holding as under: \"6. Having perused the impugned order dated 09th March, 2022, this Court is of the view that the Printed from counselvise.com SHRI VINOD JINDAL 14 Respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under Section 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 Section 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 Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary. 8. This Court is of the opinion that the entire edifice of the assessment order framed by Respondent No. 1 was actually voluntary computation of income filed by the Petitioner to buy peace and avoid litigation, which fact has been duly noted and accepted in assessment order as well and consequently, there is no question of any misreporting.\" 7.1 The Hon'ble Tribunal also taken into account the judgment of the co-ordinate Bench of the Tribunal at Mumbai in the case of Saltwater Studio LLP v. NFAC, Delhi (ITA No.13/Mum/2023) dated 22.5.2023, [2023] 157 taxmann.com 749 (Mumbai – Trib.), wherein the identical issue as involved in the instant case was also dealt with and ultimately the penalty levied u/s 270A of the Act was deleted by holding as under: \"10. The Mumbai Bench of the Tribunal in ITA No. 13/Mum/2023 in the case of Saltwater Studio LLP v. NFAC, Delhi vide order dated 22.5.2023 held as under:- 11. It has to be examined as to whether the action of the AO to have levied penalty under sub-section (9) of section 270A of the Act is legally valid or not. The AO in order to levy the penalty has given the reason for doing so as under:- Printed from counselvise.com SHRI VINOD JINDAL 15 \"The contention of the assessee to drop the penalty proceedings is rejected because the assessee has clearly misreported its income by an amount of Rs.3,94,996/- as per the provisions of the Section 270(A)(9) of the Act. And a misreported income leads to evasion of Tax. Hence, it is clearly established that the assessee has committed an intentionally fault under the provisions of the Section 270(A)(9) of the Act by under reporting its income in consequence of misreporting its income, to the tune of Rs.3,94,996/-. Therefore, I am satisfied that it is a fit case for levy of penalty u/s 270A of the Income Tax Act, 1961. The amount of penalty that is to be levied for the fault of under reporting income in consequence of misreporting income is determined under section 270A(8) of the Act, which is two hundred percent of the tax payable on under reported income in consequence of misreported income.\" 12. And the above action of AO has been confirmed by the Ld. CIT(A) on the same reasoning. 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: - 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 sub-section (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 Printed from counselvise.com SHRI VINOD JINDAL 16 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 Shri Manish Manohardas Asrani the AO u/s 270A of the Act suffers from the vice of non- application 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.\" 7.2 The Hon'ble co-ordinate Bench of the Tribunal in Jaina Marketing & Associates case (supra) ultimately deleted the identical penalty as imposed u/s 270A(9) of the Act, by holding as under: \"15. In the instant case, on perusal of the penalty notice placed on record dated 02/06/2021, it is evident that the Ld. AO had show caused the assessee as to why the assessee should not be imposed with penalty for 'under reporting of income'. The assessee had filed its submissions stating that he had not 'under reported its income' We are unable to comprehend ourselves to accept to the argument of the Ld. DR that assessee did not make any submissions with regard to 'mis reporting of income'. The assessee could be expected to give reply only in respect of show cause notice that is put to him. Why at all the assessee should infer/ assume/presume that the Ld. AO having recorded satisfaction in the quantum assessment order that offence of both 'under reporting' and 'mis reporting' is committed by the assessee and accordingly the penalty would be levied on the assessee for both in terms of section 270A(9) of the Act? 16. It is well settled that penalty proceedings and assessment proceedings are separate and distinct. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of Anantharam Veera Singhaiah & Co. Vs. CIT (1980) 123 ITR 457 (SC) wherein it was held that findings recorded in Printed from counselvise.com SHRI VINOD JINDAL 17 assessment proceedings cannot be taken as conclusive for penalty proceedings. Even the provisions of section 270A(6) of the Act provides for granting immunity from penalty if the case falls in \"under reporting of income\". Moreover different rates of penalty are prescribed for 'under reporting of income' alone and for 'under reporting' in consequence of 'misreporting of income'. Hence it is all the more essential to mention in the show cause notice itself as to which of the offence is committed by the assessee for which explanations are being sought for by the Id. AO. There is no whisper at all in the notice issued u/s 270A read with section 274 of the Act about \"misreporting of income\". In-fact two notices were issued by the Id. AO and in both the notices, the A.O. had only directed the assessee to reply with regard to 'under reporting of income'. But we find that the penalty had been levied ultimately for both 'under reporting' and 'misreporting of income' @ 200% in terms of section 270A(9) of the Act for which show cause notice was never issued to the assessee. The ratio laid down in the aforesaid Full Bench decision of Hon'ble Bombay High Court, the decision of Hon'ble Jurisdictional High Court in the case of Sahara India Shri Manish Manohardas Asrani Life Insurance reported in 432 ITR 84 (Del) and other decision referred supra squarely applies to the facts of the instant case before us. Hence we direct the Ld. AO to delete the penalty levied u/s 270A of the Act for the Assessment Year 2017-18. Accordingly, we allow the Appeal of the Assessee on this technical ground and leave the grounds raised on levy of penalty on merits left open as adjudication of the same becomes academic in nature.\" 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 Printed from counselvise.com SHRI VINOD JINDAL 18 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 notice issued u/s 270A read with section 274 of the Act about \"misreporting of income\" whereas the penalty has been levied ultimately for both 'under reporting' and 'misreporting of income' @ 200% in terms of section 270A(9) of the Act, for which show cause notice was never issued to the Assessee. And therefore in view of the judgment passed by the co- ordinate Bench of the Tribunal in the case of Jaina Marketing & Associates (supra), wherein the Co-ordinate Bench of the Tribunal not only analyzed the provisions of law but also considered the judgments of the Higher Courts and the Tribunal and deleted the identical penalty as involved in this case, hence respectfully following the decision of the Tribunal, we are inclined to delete the penalty under consideration. Thus, the penalty is deleted and appeal filed by the Assessee is allowed. 11.1 Thus, respectfully following the decision of the Jurisdictional High Court in the case of Schneider Electric South East Asia (HQ) Pte. Ltd. vs. ACIT (supra), we hold that the penalty order passed u/s 270A of the Act by the Assessing Officer for the AY 2017-18 is bad in law and accordingly the penalty order is quashed. 12. As we have decided the preliminary and legal ground in favour of the assessee by quashing the penalty orders the other grounds raised by the assessee on merits are not gone into as the adjudication of these grounds become only academic at this stage. Printed from counselvise.com SHRI VINOD JINDAL 19 13. In the result, appeals of the assessee are allowed. Order pronounced in the open court on 12.09.2025 Sd/- Sd/- (M BALAGANESH) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12.09.2025 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "