Section 270A Penalty Reply Format — Under-reporting SCN Response with 270AA Immunity Draft
To,
{{officer_designation}}
Date: 30 July 2026
Reply to Show-Cause Notice under Section 274 read with Section 270A of the Income-tax Act, 1961
Assessee: {{client_name}} | PAN: {{client_pan}} | Assessment Year: {{assessment_year}}
Ref: Show-cause notice dated , issued pursuant to the order u/s {{order_section}}
Respected Sir / Madam,
1. We act as the authorised representative of the above assessee (letter of authority enclosed) and submit this reply to the captioned show-cause notice proposing penalty under section 270A.
A. The statutory scheme — under-reporting vs misreporting
2. Section 270A distinguishes two limbs: under-reporting of income, penalised at 50% of the tax payable on the under-reported income (s. 270A(7)), and under-reporting in consequence of misreporting, penalised at 200% (s. 270A(8)). Misreporting is confined to the six specific defaults in s. 270A(9) — misrepresentation or suppression of facts, unrecorded investments, unsubstantiated claims of expenditure, false entries, unrecorded receipts, and failure to report international / specified domestic transactions.
3. The show-cause notice must specify which limb, and which specific clause, is invoked. In the present case, the notice ____________ [state whether the notice identifies the limb / clause; if it does not, submit that a vague notice that does not specify the charge vitiates the proceeding].
B. Grounds of defence
4. Without prejudice to one another, the assessee submits:
(a) No under-reporting — ____________ [e.g. the addition on which penalty is proposed is itself contested in appeal / arises from a bona fide difference of opinion on a debatable legal position, not from any failure to disclose].
(b) The case falls within section 270A(6) — the assessee offered a bona fide explanation and disclosed all material facts: ____________ [tie the addition to the specific disclosure — return schedule, audit-report clause, submission during assessment]. Additions based on estimates, or on the same facts already disclosed, do not constitute under-reported income by virtue of s. 270A(6).
(c) Without prejudice, no misreporting — even if under-reporting were assumed, none of the six ingredients of s. 270A(9) exists: there is no misrepresentation, suppression, false entry or unrecorded transaction, and the higher 200% rate cannot apply. ____________ [state facts].
(d) Quantification — without prejudice, the computation of under-reported income and tax thereon per s. 270A(3)/(10) should be ____________ [verify the base: the penalty is on the tax on the under-reported income, not on the assessed income].
- Drafting hint: penalty proceedings are independent of assessment — do not merely repeat the quantum submissions; address the penalty ingredients (disclosure, bona fides, the specific 270A(9) clause) directly.
- Drafting hint: if the assessee has decided not to appeal the quantum order, evaluate the 270AA immunity route (Annexure below) before contesting the penalty — the two paths are mutually exclusive in practice because 270AA requires that no appeal be filed.
PRAYER
5. In view of the above, it is prayed that the show-cause notice be discharged and the penalty proceedings under section 270A be dropped. If any adverse view is proposed, the assessee requests a personal hearing (including through video conferencing) before any order is passed.
Yours faithfully,
For {{firm_name}}
Chartered Accountants
_______________________________
{{engagement_partner}}
Partner | Membership No.: {{icai_membership_no}}
Authorised Representative of {{client_name}}
Annexure — Application for Immunity under Section 270AA (where applicable)
[To be made by the assessee in Form No. 68 on the e-filing portal. Use this draft only where the conditions below are satisfied; immunity under s. 270AA is not available where the penalty is initiated on the ground of misreporting.]
I, ____________, on behalf of {{client_name}} (PAN: {{client_pan}}), hereby apply under section 270AA for immunity from imposition of penalty under section 270A and from initiation of proceedings under sections 276C / 276CC, in respect of the order u/s {{order_section}} for AY {{assessment_year}}, and state that:
- The tax and interest payable as per the notice of demand u/s 156 issued pursuant to the said order have been paid in full within the period allowed in the demand notice (challan details: ____________).
- No appeal against the said order has been filed.
- This application is made within one month from the end of the month in which the said order was received.
It is accordingly prayed that immunity be granted under section 270AA(2).
For {{client_name}}
_______________________________
Authorised Signatory
