Penalty Under Section 270A Quashed As AO Failed To Specify Misreporting Clause In Notice And Assessment Order

AO imposed penalty under s.270A for unsubstantiated business expenses including advertising, development, land, and excavation charges, which were disallowed from capital work-in-progress. While CIT(A) reduced penalty from 200% to 50%, ITAT found the penalty proceedings fundamentally flawed. AO failed to specify which clause under s.270A formed basis for penalty initiation, either in assessment order or penalty notice. Following precedent, ITAT held penalty invalid due to procedural non-compliance. Penalty order vacated in favor of taxpayer due to AO's failure to meet statutory requirements for penalty imposition under s.270A. Essential requirement of identifying specific misreporting clause was not fulfilled. .....

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