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2023 (12) TMI 873 - AT - Income TaxLevy of penalty u/s 270A - defective notice - as per assessee AO had not struck off the irrelevant portion and no specific offence committed by the assessee was mentioned by the ld. AO in the show cause notice - whether the assessee has underreported its income or misreported its income - HELD THAT:- We find that the assessee being a charitable trust enjoying registration u/s 12AA of the Act consequentially eligible for exemption u/s 11 of the Act had claimed disallowance of depreciation on certain fixed assets as an application of income, ignoring the amendment brought u/s 11(6) of the Act w.e.f. 01.04.2015. This disallowance of deprecation was accepted by the assessee in the quantum proceedings. AO initiated penalty proceedings u/s 270A of the Act on 01.11.2019 wherein in the said notice issued u/s 274 r.w.s. 270A of the Act, the ld. AO had not struck off the irrelevant portion i.e. whether the assessee has underreported its income or misreported its income. We also find that different rates of penalty are stipulated in Section 270A of the Act for underreporting of income; for misreporting of income and for underreporting as well as misreporting of income. Hence, it is even more onerous on the part of the ld. AO to specifically mention the offence committed by the assessee whether it had underreported the income or misreported the income or committed both the offence so as to apply the respective penalty amounts as stipulated u/s 270A of the Act. This onerous task being not fulfilled by the AO would result in entire penalty proceedings getting vitiated. In view of the specific provisions of the Act and in view of the decision of Mohd. Farhan A. Shaikh [2021 (3) TMI 608 - BOMBAY HIGH COURT (LB)], we direct the AO to delete the penalty levied u/s 270A of the Act in the facts and circumstances of the instant case - Appeal filed by the assessee is allowed.
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