KOUS KHAN MAHABOOB KHAN,KANYAKUMARI vs. ITO, INTL TAXN. WARD,, TUTUCORIN

ITA 981/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2018-199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty notice issued under section 274 read with section 270A of the Act suffered from a fundamental infirmity as it failed to clearly and specifically delineate the precise charge for which penalty proceedings were initiated. The Tribunal noted that a notice which does not indicate the specific limb or ground under which penalty is proposed to be levied is not only violative of the principles of natural justice but also renders the entire penalty proceedings void ab initio. The Tribunal relied on the decisions of the Delhi High Court in Prem Brothers Infrastructure LLP v. National Faceless Assessment Centre and Schneider Electric South East Asia (HQ) Pte. Ltd. v. ACIT, as well as coordinate bench decisions of the ITAT in Prakashchand Jain v. Dy. CIT and Enrica Enterprises (P.) Ltd. v. Dy. CIT. The Tribunal found that in the present case, the AO had not stated the specific limb of underreporting income in consequence of misreporting under section 270A(9), making the notice vague and defective. Consequently, the penalty proceedings were held to be void ab initio and the penalty levied was liable to be deleted. The appeal of the assessee was allowed.

What were the facts?

The assessee, an individual and a Non-Resident, failed to file a return of income for Assessment Year 2018-19. The Assessing Officer (AO) received information about the sale of an immovable property for Rs. 1,02,00,000/-. The AO reopened the assessment under section 148 after issuing a notice under section 148A(d). The AO completed the assessment, computing Long Term Capital Gain (LTCG) at Rs. 39,66,774/-, on which the assessee paid tax. Subsequently, the AO initiated penalty proceedings under section 270A for misreporting of income and levied a penalty of Rs. 16,34,312/- (200% of the tax liability). The assessee accepted the LTCG and tax payment but argued against the penalty. The Commissioner of Income Tax (Appeals) confirmed the penalty, stating that non-filing of the return led to underreporting through misreporting. The assessee appealed this order to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the penalty levied under section 270A of the Income Tax Act, 1961, is valid when the notice initiating penalty proceedings did not specify the exact limb of sub-section (9) of section 270A under which the penalty was proposed. Assessee's Contention: The assessee argued that the penalty notice was legally invalid because it failed to inform the assessee of the specific limb of section 270A(9) under which the penalty for underreporting of income in consequence of misreporting was being initiated. The assessee relied on the decision of the Coordinate Bench in DCIT vs. Ethirajulu Vajravel Kumaran [2025] 180 taxmann.com 11 (Chny-Trib.). Revenue's Contention: The Revenue argued that the assessee did not raise this legal contention before the lower authorities. The Revenue further submitted that the AO's penalty order clearly stated that the penalty was levied for misrepresentation of suppression of facts under clause (a) of Section 270A(9) of the Act, and therefore, supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 270A,Section 274,Section 148,Section 148A(d),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S

For Respondent: Ms. Anshu Sharatwat, Addl. CIT

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Chennai-16 (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 17.12.2025 for Assessment Year (AY) 2018-19. M/s. Kous Mahaboob Khan :- 2 -:

2.

The assessee is an individual and a Non-Resident. The assessee did not file the return of income for the AY 2018-19. The AO rece

The order continues below.

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