Section 270AA protection is unavailable in the case of income misreporting
Facts and Issue of the case
The present writ petition challenges the Respondent No. 1’s order made according to the Act. The petitioner further requests protection from the imposition of a penalty under the Act under Section 270AA in relation to the income assessed.
The petitioner’s learned counsel claims that the petitioner filed its income tax return for the assessment year 2017-18, declaring a loss of Rs.1,51,57,259/-. She claims that the Petitioner’s case was chosen for review, and that an order was issued under the Act bringing to tax Rs.43,55,548/- as “business income” of the Petitioner, and that the total income of the Petitioner was consequently assessed at a loss of Rs.1,08,01,711/-, raising a tax demand of Rs.NIL. She also claims that Respondent No.2 issued a show cause notice seeking to levy a penalty under the Act, requiring the Petitioner to show reason why the penalty for under-reported income should not be imposed.
According to the petitioner’s learned counsel, the petitioner filed an application in Form with respondent No. 2 seeking immunity from penalty imposition under the Act. She claims that the Respondent No.1 issued the impugned order denying the Petitioner’s immunity from penalty and prosecuting him on the grounds that because no order under Section had been issued by the jurisdictional Assessing Officer within the statutory deadline, it could be interpreted as no order granting immunity to the assessee. She also claims that the Respondents, in denying the Petitioner statutory immunity under the Act, failed to recognise that once the Act’s prerequisites were met, the assessing officer was obligated to provide immunity to the Petitioner. Send out a note. On behalf of the respondents/Revenue, Mr. Puneet Rai, Advocate receives the notice.
Observation of the Court
After hearing learned counsel for the petitioner, this Court is of the opinion that an assessee is only barred from applying for and receiving the benefit of immunity from penalty and prosecution under the Act in cases where proceedings for levy of penalty have been initiated on the basis of alleged misreporting of income.
In fact, the statutory framework for granting immunity is based on the satisfaction of three basic conditions: I payment of the tax demand; (ii) non-institution of an appeal; and (iii) beginning of a penalty for underreporting of income rather than misreporting of income..
This Court also believes that the petitioner cannot be affected by the Assessing Officer’s failure to issue an order under the Act within the statutory time limit since it is well established that no assessee can be prejudiced by the Revenue’s delay or default.
In this case, the petitioner has met the aforementioned standards because I the tax on the additions has been paid; (ii) no appeal has been lodged; and (iii) a penalty has been imposed on account of “underreporting” of income (as evidenced by the penalty notice).
This Court believes that the petitioner has acquired a claim to immunity under the Act. In fact, this Court held in Schneider Electric South East Asia (HQ) Pvt Ltd. Vs. Assistant Commissioner of Income Tax International Taxation that “the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of the Act to encourage/incentivize a tax payer to I fast-track settlement of issue, (ii) recover tax demand, and iii) reduce protracted litigation.”
The court reversed the ruling challenged under the Act and ordered the respondents to grant the petitioner immunity under the Act.Ultimate-Infratech-Private-Limited-Vs-National-Faceless-Assessment-Delhi-High-Court