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2023 (1) TMI 871 - HC - Income TaxPenalty u/s 270AA - unabsorbed depreciation and business losses concerning earlier AYs - HELD THAT - Our attention has been drawn to page 247 wherein the information with regard to the unabsorbed depreciation and business losses concerning earlier AYs is set forth. We are of the view that the best way forward would be to set aside the order and remand the matter to the concerned officer for carrying out a de novo exercise. It is ordered accordingly. This exercise will be completed by the concerned officer within the next eight weeks. Pending the exercise which we have directed the concerned officer to carry out, no precipitate steps will be taken against the petitioner.
Issues:
1. Denial of immunity from penalty under Section 270AA of the Income Tax Act, 1961 due to a demand raised for Assessment Year (AY) 2020-21. 2. Unabsorbed depreciation and business losses concerning earlier AYs affecting the demand amount. 3. Decision on setting aside the order and remanding the matter for a de novo exercise. 4. Timeline for the concerned officer to complete the exercise. 5. Stay on precipitate steps against the petitioner pending the exercise. Analysis: Issue 1: The petitioner, represented by Mr. Ajay Vohra, Senior Advocate, challenged the denial of immunity from penalty under Section 270AA of the Income Tax Act, 1961, based on a demand raised for AY 2020-21 amounting to Rs.32,46,20,900. The contention was that this demand was unsustainable due to unabsorbed depreciation and business losses from earlier AYs, which needed consideration. Issue 2: Mr. Vohra highlighted the unabsorbed depreciation and business losses concerning earlier AYs, presenting detailed information from the records of the Income Tax Department. The total unabsorbed depreciation and business losses amounted to Rs.206,27,04,887, indicating that if this aspect was factored in, there would be no outstanding demand left to be fulfilled. Issue 3: In light of the arguments presented, the Court, comprising Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Ms. Justice Tara Vitasta Ganju, decided to set aside the order and remand the matter to the concerned officer for a de novo exercise. This decision was made with the consent of both parties' counsel and aimed at ensuring a fair and thorough review of the situation. Issue 4: The Court directed the concerned officer to complete the de novo exercise within the next eight weeks, indicating a clear timeline for the resolution of the matter. This timeframe was crucial to ensure timely and efficient handling of the case, providing a structured approach to the further proceedings. Issue 5: Pending the completion of the directed exercise, the Court ordered a stay on any precipitate steps against the petitioner. This stay was essential to protect the petitioner's interests and rights during the review process, preventing any hasty or unwarranted actions that could impact the case unfairly. In conclusion, the writ petition was disposed of with the order to set aside the previous decision, remand the matter for reevaluation, and provide a timeline for the concerned officer to complete the exercise. The stay on precipitate steps ensured a fair and just process for all parties involved, maintaining the principles of natural justice and due diligence in the legal proceedings.
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