S.270A notice naming both limbs is vague; penalty void ab initio (ITAT Delhi)
The Tribunal held "under reporting" (reporting less than actual income) and "mis-reporting" (incorrect information about nature, source or amount) carry different connotations, are not synonyms, and are classified under different sub-sections — sub-sections (2) for under-reporting and (9) for mis-re
CA Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Order: ITA No. 4673/DEL/2024 (ITAT Delhi), Assessment Year 2018-19, against the CIT(A) NFAC order dated 08.08.2024, pronounced 30.06.2025.
Facts
The assessee raised an additional ground, admitted as going to the root of validity, challenging the penalty notice dated 13.05.2021 issued under section 274 read with section 270A as issued in a routine manner without a specific ground.
The notice mentioned both charges, "under reporting" and "mis-reporting", while the penalty order dated 31.12.2021 levied penalty under section 270A(9) for mis-reporting without specifying under which of its six clauses.
The Revenue answered that the order levied penalty under section 270A(9), so there was no ambiguity about the charge.
Issue
Whether a section 270A penalty survives where the notice invokes both "under reporting" and "mis-reporting" and the order finally levies section 270A(9)(c), so the assessee never knows which charge is pursued.
Holding
The Tribunal held "under reporting" (reporting less than actual income) and "mis-reporting" (incorrect information about nature, source or amount) carry different connotations, are not synonyms, and are classified under different sub-sections — sub-sections (2) for under-reporting and (9) for mis-reporting, the latter listing six charges.
The notice required the assessee to answer that it had "under-reported income which is in consequence of misreporting thereof", while the Assessing Officer initiated under section 270A(9), noticed both limbs, and finally levied section 270A(9)(c) for unsubstantiated expenditure — a manner of charging that makes the notice vague and ambiguous.
Penal provisions cannot be invoked on ambiguous charges; the notice dated 13.05.2021 is defective and unsustainable, and subsequent proceedings arising from it are vitiated and void ab initio.
The impugned order was quashed and the appeal allowed.
Why a client would care
A section 270A notice that ticks both "under-reported" and "misreporting" without committing to one charge — and to one clause of section 270A(9) — is challengeable at the threshold, before quantum is even reached.
Questions clients ask
Q1. The penalty notice invoked both under-reporting and mis-reporting. Did it survive?
No — the notice was held vague and the proceedings void ab initio.
Q2. Why does the distinction between the two charges matter?
The Tribunal held they are not synonyms and sit in different sub-sections — (2) for under-reporting and (9) for mis-reporting with its six charges.
Q3. What exactly made this notice defective?
It sought a reply on “under-reported income in consequence of misreporting” while the officer initiated under section 270A(9) and finally levied section 270A(9)(c).
Disclaimer
This note summarises a Tribunal order for general information. It is not professional advice and does not predict the outcome of any other case. Tax and company-law positions depend on facts and dates; take a written opinion before you act. Harun Raaj & Associates is a Chartered Accountants firm in Visakhapatnam.
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