2023 (12) TMI 1266 - HC - Income Tax

Penalty for under-reporting and misreporting of income u/s 270A - application u/s 270AA seeking immunity from imposition of penalty - HELD THAT - On a perusal of sub-Section (9) of Section 270A it is seen that if there has been misrepresentation or suppression of facts by the assessee, then the application seeking immunity from imposition/payment of penalty under Section 270AA of the Act shall not be maintainable. The assessing authority while examining the application u/s 270AA cannot sit in appeal against its own assessment order to record a different finding than what was recorded in the assessment order. The assessing officer cannot examine the correctness or otherwise of the assessment order while examining the application u/s 270AA of the Act seeking immunity from imposition/payment of penalty, etc. If there is a specific finding recorded in the assessment order that the assessee had underreported the income by misrepresenting the facts in the return of its income, then the application u/s 270AA of the Act would not be maintainable, in view of the express bar under Section 270A of the Act. We do not find that the impugned order rejecting the application of the petitioner under Section 270AA of the Act suffers from any illegality on facts or law. Therefore, the present writ petition is hereby dismissed. Pending interlocutory application, if any, in the writ petition stands dismissed.

Summary

Issues involved:
The judgment involves the interpretation of Section 270AA of the Income Tax Act, 1961 and the application for immunity from penalty under this section. The main issue is whether the petitioner's application for immunity under Section 270AA can be rejected based on the grounds specified in sub-Section (9) of Section 270A of the Act.

Interpretation of Section 270AA:
Section 270AA of the Act provides for immunity from imposition of penalty under certain conditions. The assessing officer is required to grant immunity if the conditions specified in sub-section (1) are fulfilled, and no appeal has been filed against the assessment order. The application for immunity must be made within a specified period and in the prescribed form. The assessing officer must grant immunity if the conditions are met and no penalty proceedings have been initiated under sub-Section (9) of Section 270A.

Rejection of Application under Section 270AA:
In this case, the assessing authority rejected the petitioner's application under Section 270AA based on sub-Section (9) of Section 270A, which lists specific instances of misreporting of income. The assessment order noted misrepresentation of facts by the assessee, claiming deductions that were already self-disallowed, making it a fit case for penalty proceedings under Section 270A. The order initiated penalty proceedings separately under sub-Section (9) of Section 270A.

Assessing Officer's Authority:
The judgment clarifies that the assessing officer cannot reassess the correctness of the assessment order while considering an application for immunity under Section 270AA. If the assessment order contains a specific finding of misrepresentation of facts leading to underreporting of income, the application for immunity cannot be maintained as per the provisions of Section 270A.

Conclusion:
The court found that the assessing officer did not act illegally in rejecting the petitioner's application under Section 270AA, as the assessment order clearly indicated misreporting of income by the assessee. Therefore, the writ petition was dismissed, and any pending applications were also dismissed.