ANGIRA DIAMONDS AND JEWELLERY PRIVATE LI MITED,BANGALORE vs. INCOME TAX OFFICER, WARD(1)(1)(1), KORAMANGALA

The brief facts of the case are that the assessee filed its return of income on 17/10/2023. The case was selected for scrutiny under CASS to verify the large turnover from the Gems and Jewellery business and low returned income. The AO sought for the details about the rent expenses, salary expenses and other expenses. The assessee had not fully

As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) not accepted the explanations and confirmed the penalty order.

As against the said order, the assessee is in appeal before this Tribunal.

At the time of hearing, the Ld.AR submitted that the AO had not mentioned in the notice as well as in the order about the limb under which the AO intended to impose penalty u/s. 270A of the Act and therefore the entire proceedings are ab-initio-void and illegal. The Ld.AR further submitted that all the details were furnished before the AO while the assessment proceedings were conducted and therefore there is no underreporting or misreporting warranting penalty.

The Ld.DR relied on the lower authorities order and submitted that there is an underreporting of income and misreporting since the assessee had not furnished the details for the expenses and therefore the appeal is liable to be dismissed.

We have heard the arguments of both sides and perused the materials available on record.

Before going into the merits of the case, we will first decide about the submission that the penalty notice and the consequential penalty order are bad in law, since the same does not indicate under which limb, the underreporting of income in consequence of misreporting was done.

We have perused the assessment order, penalty notice u/s. 274 r.w. section 270A of the Act and the penalty order u/s. 270A of the Act. In the assessment order, the AO had simply stated that penalty proceedings u/s. 270A of the Act is initiated for underreporting of

This Tribunal, in its earlier order had deleted the penalty levied u/s. 270A of the Act since the AO had not mentioned under which limb the penalty has been imposed. A Coordinated Bench of this Tribunal, in its order in ITA No. 20/Bang/2026 dated 20/07/2026 in the case of Sermadevi Yegnaswamy Ramakrishnan vs. ITO, had considered the penalty levied u/s. 270A of the Act and deleted the same as not sustainable since the AO had not mentioned under which limb the penalty has been imposed. The relevant extract of the said order is as follows: “10. We have also considered the orders of the Coordinate Bench of this Tribunal which was filed in the case law compilation, in which the Tribunal had taken a view that the non mentioning of the limb under which the penalty has been imposed is fatal to the proceedings. In one of the orders of the Coordinate Bench of this Tribunal reported in (2025) 181 taxmann.com 302 (Bangalore) in the case of Essae Suhagraja (P.) Ltd. vs. DCIT which was relied on by the assessee, it was held that, “penalty can be levied on six types of acts on behalf of the assessee. The Ld.AO neither in the assessment order nor even otherwise has stated that under which sub-clause of section 270A of the Act, penalty is levied.” 11. The Tribunal relied on the judgment of the Hon’ble Delhi High Court reported in (2024) 163 taxmann.com 146 (Delhi) in the case of GE Capital US Holdings Inc. to arrive the above said conclusion and deleted the penalty. 12. In another order of this Tribunal in ITA No. 1148/Bang/2024 dated 28/08/2024, the Tribunal had relied on the order of the Coordinate Bench of this Tribunal in the case of Shri Chiguruvada Dileep Kumar in ITA No. 832/Bang/2023 dated 27/05/2024 and deleted the penalty levied u/s. 270A(9) of the Act since the proceedings does not mention about the limb under which the penalty has been proposed and levied. 13. We have also considered the judgment of the Hon’ble Delhi High Court reported in (2024) 468 ITR 746 (Delhi) in the case of GE Capital US Holdings Inc. vs. DCIT (IT) wherein it was held that the failure to specify under which limb, the assessee is being tried on an

In the result, the appeal filed by the assessee is allowed.