GRAND LEGACY,DEHRADUN vs. DCIT CIRCLE 1, DEHRADUN
Facts
The assessee claimed a deduction under Section 80-IC of the Income Tax Act, which was disallowed by the Assessing Officer (AO) because the conditions for the deduction were not met. Consequently, the AO initiated penalty proceedings under Section 270A for under-reporting as a consequence of mis-reporting of income and levied a penalty of INR 67,820.
Held
The Tribunal held that the penalty levied under Section 270A was without basis because the notice initiating penalty proceedings did not specify the exact charge under Section 270A(9). Furthermore, the penalty was initiated for 'under-reporting as a consequence of mis-reporting' but levied for 'under-reporting of income', indicating a discrepancy in the charge.
Key Issues
The key legal issue was whether the penalty levied under Section 270A for under-reporting of income was valid when the penalty notice failed to specify the precise charge and there was a mismatch between the initiated charge and the levied charge.
Sections Cited
Section 80-IC, Section 270A, Section 270A(9), Section 274, Section 143(3), Section 143(3A), Section 143(3B), Section 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DEHRADUN “DB” BENCH: DEHRADUN
Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL
IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN “DB” BENCH: DEHRADUN BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 229/DDN/2025 [Assessment Year : 2018-19] Grand Legacy vs DCIT Khasra No.384 Min/New Circle-1, No.642K, Dehra Khas Dehradun Adjoining Lal Pul Patel Uttarakhand Nagar, Dehradun Uttarakhand -248001 PAN-AAIFG4885D APPELLANT RESPONDENT Appellant by Shri Rajan Malik & Shri A.K. Kashyap Respondent by Ms. Poonam Sharma, CIT DR Date of Hearing 10.03.2026 Date of Pronouncement 12.03.2026 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by assessee against the order dated 19.09.2025 by Ld. Commissioner of Income Tax (A), NFAC, Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2017-18/10101141 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 26.03.2021 passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Act pertaining to Assessment Year 2018-19.
Brief facts of the case are that assessee had claimed deduction u/s 80-IC of the Act which was disallowed by the AO for the reason that the assessee has not fulfilled the conditions prescribed for
ITA No. 229/DDN/2025
claiming said deduction and initiated the penalty proceedings u/s 271A for under reporting as a consequence of mis-reporting of income. Thereafter, AO levied penalty u/s 271A of the Act of INR 67,820/- for under reporting by invoking clause (e) of sub-section (9) of section 270A of the Act.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 19.09.2025, confirmed the same.
Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal.
Before us, Ld.AR submits that assessee was entitled for 03 types of subsidy:- (i) State Government subsidy on capital investment (ii) Exemption from luxury tax for certain period and (iii) Central Government subsidy on account of deduction u/s 80-IC of the Act.
Since the assessee had established new undertaking in the shape of hotel, it claimed deduction u/s 80-IC which was disallowed for the reason that assessee has not established eco-friendly hotel.
Ld.AR for the assessee submits that in notice issued for initiation of penalty proceedings u/s 270A of the Act, AO has not specified the charge under which the penalty proceedings were initiated. He further submits that penalty proceedings were imitated Page | 2
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for under reporting as a consequence of mis-reporting of income however, the penalty is levied for under reporting of income. Therefore, no penalty is levied on the charge for which it was initiated and was levied on different charge. Accordingly, Ld.AR requested for the deletion of the penalty so levied u/s 270A of the Act.
On the other hand, Ld. CIT DR for the Revenue supported the orders of the lower authorities and submits that assessee had claimed deduction u/s 80-IC of the Act for the first time in AY 2013- 14 which was disallowed and the assessee has failed in appellate proceedings also. Despite of this fact, assessee is regularly claiming deduction u/s 80-IC which was disallowed in subsequent Assessment years also. As per Ld. CIT DR, the assessee knowingly claimed the deduction u/s 80IC when such claim was denied in earlier years therefore, it is willful attempt made by the assessee and accordingly, it is the case of under reporting as a consequence of mis- reporting for which penalty u/s 270A of the Act has rightly been levied.
Heard the contentions of both parties and perused the material available on record. In the instant case, AO has initiated the penalty proceedings in terms of the notice issued u/s 274 r.w.s. 270A of the Act dated 26.03.2021 which is reproduced as under:-
ITA No. 229/DDN/2025
ITA No. 229/DDN/2025
From the perusal of the aforesaid notice, it is observed that AO has initiated the penalty proceedings for under reporting as a consequence of mis-reporting of income however, in the notice has not specified the charge as provided in Clause (a) to (f) of section 270A sub-section (9) of the Act. Therefore, the said notice does not speak about the charge for which the penalty proceedings were initiated penalty be levied u/s 270A of the Act. It is further observed that in the assessment order, before initiating the penalty proceedings, satisfaction was recoded for under reporting as a consequence of mis- reporting of income however, the penalty was levied u/s 270A of the Act for under reporting of income.
In view of these facts, in our considered view, penalty levied u/s 270A is without any basis and therefore, the same is hereby deleted.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 12.03.2026.
Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Date-12.03.2026 *Amit Kumar, Sr.P.S*
