ROCKLINE ENTERTAINMENTS PRIVATE LIMITED,BENGALURU vs. DCIT, CENTRAL CIRCLE-2(1), BANGALORE

ITA 1562/BANG/2025Status: DisposedITAT Bangalore24 September 2026AY 2018-1913 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty levied under section 270A of the Income-tax Act, 1961, could not be sustained. The primary reason for this decision was the defect in the notice issued by the Assessing Officer. The Tribunal noted that section 270A(2) outlines different circumstances under which income is considered to have been under-reported. However, the notice issued to the assessee merely referred to 'under-reporting of income' without specifying the applicable clause under section 270A(2). This vagueness denied the assessee a proper opportunity to present its defense, violating the principles of natural justice. The Tribunal found support from the Madras High Court's decision in PCIT v. Shri R. Elangovan, which emphasized the need for the AO to specify the particular clause under which penalty proceedings are initiated. Consequently, the Tribunal quashed the penalty proceedings as invalid and directed the deletion of the penalty. The issue of whether the income was indeed under-reported was not decided on merits due to the procedural defect.

What were the facts?

The assessee, Rockline Entertainments Private Limited, is in appeal against the orders of the CIT(A) confirming the levy of penalty under section 270A of the Income-tax Act, 1961, for Assessment Years 2017-18 to 2019-20. For AY 2017-18, the assessee initially filed a return declaring an income of Rs. 1,31,68,740, which was processed under section 143(1) without variation. A search under section 132 was conducted on 03.10.2019, following which the assessee filed a revised return under section 153A, declaring an additional income of Rs. 16,50,000. The Assessing Officer (AO) accepted this additional income, completing the assessment at Rs. 1,48,18,740. The AO initiated penalty proceedings under section 270A, levying a penalty of Rs. 2,72,769, being 50% of the tax on the under-reported income of Rs. 16,50,000. The CIT(A) confirmed this penalty.

What were the issues?

1. Whether the penalty levied under section 270A of the Income-tax Act, 1961, is justified on account of under-reporting of income. Assessee's Contentions: The assessee argued that the penalty proceedings initiated under section 274 read with section 270A are vitiated because the notice issued by the AO was vague. It did not specify the particular limb of under-reporting of income under section 270A(2) for which the penalty was proposed. The assessee contended that it was not made aware of the precise charge, thus being deprived of a proper opportunity to defend its case, violating principles of natural justice. The assessee relied on the decision in Mr. Nateshan Sampath vs. DCIT, circle-3 (1)(1), Bangalore (ITA No. 1779/Bang/2024) for this proposition. Revenue's Contentions: The Revenue supported the orders of the lower authorities, arguing that the notice issued under section 274 read with section 270A clearly specified the charge as 'under-reporting of income'.

Which sections of the Income-tax Act were involved?

Section 270A,Section 139,Section 143(1),Section 132,Section 153A,Section 143(3),Section 274,Section 271AAB,Section 132(4)

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Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI SANDEEP SINGH KARHAIL

PER SHRI WASEEM AHMED, ACCOUNTANT MEMBER:

These three appeals filed by the assessee are directed against the orders passed by the Learned Commissioner of Income Tax Appeals (hereafter Ld. CIT(A)) under section 270A of the Income-tax Act, 1961 (hereafter the Act), for A.Ys. 2017-18 to 2019-20. Since the facts and issues invo

The order continues below.

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