SHRINE EMPIRE GALLERY PVT. LTD.,DELHI vs. DCIT, CENTRAL CIRCLE-14, NEW DELHI, DELHI

Heard and perused the records. A search and seizure action under section 132 of the Act was conducted on 03.02.2021 in the cases of Shri Samir Modi and others and allegedly during the course of the said search, certain loose papers, digital records, excel sheets and other documents were found and seized and based solely on such seized material and information purportedly pertaining to the Appellant, proceedings under section 153C of the Act were initiated and assessment was completed vide order dated 19.01.2024, wherein addition on account of alleged business profits amounting to Rs.5,29,575/- was made by estimating profit on alleged unrecorded cash receipts reflected in the seized excel sheets. Simultaneously, penalty proceedings under section 270A of the Act were initiated alleging under-reporting of income in consequence of misreporting. The impugned penalty order dated 22.07.2024 under section 270A of the Act, was passed levying penalty of Rs.2,75,380/- (being 200% of tax on income sought to be evaded) for alleged misreporting of income. Aggrieved thereby, the Appellant preferred an appeal before the Ld. CIT(A)but failed for which assessee is in appeal before this Tribunal. 4. It is ground no. 2, which is stressed for disposal as allegedly the impugned order is illegal, being not based on valid charge. Though ld. DR, submits that the alleged discrepancy is technical we find that on perusal of the assessment order dated 19.01.2024, that satisfaction as recorded and penalty proceedings as were initiated by the Ld. AO, were alleging act of "under-reporting of income in consequence of misreporting". Then in the show cause notice issued under section 274 r.w.s 270A of the Act dated 19.01.2024, (available at Pg. No. 34 of PB) as well as the impugned penalty order dated 22.07.2024, the allegation of the Ld. AO has made is qua "misreporting of income". Thus failing to specify the exact charge of default as to the particular limb of section 270A(9)(a) to 270A(9)(g) of the Act, pursuant to which penalty has been invoked therein. 5. Now, Section 270A of the Act, draws a clear distinction between under-reporting of income and under-reporting in consequence of misreporting. Since the enhanced penalty of 200% under section 270A(8) can be levied only where the case falls within any of the specific instances of misreporting enumerated under section 270A(9)(a) to (g), it is incumbent upon the Ld. AO to clearly specify the exact limb of default attracted to validly invoke applicable penalty provision. Failure to demonstrate that the case falls within one of the exhaustively enumerated instances contained in clauses (a) to (g) of section 270A(9), penalty at the enhanced rate of 200% cannot be sustained. Reliance of same is placed on the decision of Hon'ble Delhi High Court in case of Schneider Electric South East Asia (HQ) Pte. Ltd. v. ACIT |2022] 145 taxmann.com 665 and Prem Brothers Infrastructure LP v. NFAC [2022] 142 taxmann.com 38. Thus the entire proceedings, therefore, get vitiated and are non-curable defects. 6. Thus ground no. 2 is sustained and the appeal is allowed. The impugned penalty is deleted. Order pronounced in the open court on 05.08.2026.