2024 (1) TMI 1138 - HC - Income Tax

Immunity from imposing penalty u/s 270AA - Penalty u/s 270A for failure to file the return of income (ITR) - under reported income - Period of limitation - whether the facts and circumstances justify exemption from imposition of penalty and whether the application in such regard was filed in time? HELD THAT - Delay is about one month beyond the stipulated period - By taking into account the fact that the gross total income disclosed by the petitioner in the return of income was accepted in order dated 09.03.2023 and the fact that the total tax liability of Rs. 3,68,906/-, as disclosed in the return of income, was also accepted in order dated 09.03.2023, this is a fit case to condone the delay of 30 days in filing the application for immunity from imposition of penalty. Therefore, the delay is condoned. Under reporting of income - As per clause Sub section 6 (a) of Section 270A the amount of income in respect of which the assessee offers an explanation, which is accepted as bona fide is liable to be excluded provided all material facts were disclosed. This case appears to fall within the scope of clause (a) of sub-section 6 of Section 270 A. In any event, since the order rejecting the application for immunity from imposition of penalty warrants interference, the consequential order is also liable to be quashed. For reasons set out above, the impugned orders are quashed. As a consequence, the first respondent is directed to re-consider the application for immunity from imposition of penalty on merits by taking into account the observations set out in this order.

Summary

Issues involved:
The petitioner challenges an order rejecting the application for immunity from imposition of penalty and the consequential order imposing penalty.

Details of the judgment:

Issue 1: Application for immunity from penalty rejection
The petitioner, an authorized dealer of Tally software, faced penalty for not filing income tax return due to ill health. The petitioner filed the return late, leading to penalty proceedings. The application for immunity from penalty was rejected due to late payment and delayed application filing. The penalty was imposed, constituting 50% of the tax payable on underreported income.

Issue 2: Petitioner's argument for immunity
The petitioner argued that the disclosed income was accepted in the order, and the tax liability was fully paid through TDS and self-assessment tax. The petitioner contended that the delay in filing the application should be condoned, and the disclosed income should not be considered underreported. The petitioner sought immunity from penalty under Section 270 AA.

Issue 3: Respondents' submission
The respondents argued that the application for immunity was filed late, beyond the specified period, and the statute does not allow for condonation of delay. They maintained that the penalty imposition was in line with statutory provisions, treating the entire assessed income as underreported.

Issue 4: Court's analysis and decision
The court observed discrepancies in the tax liability calculation, noting that the total tax paid by the petitioner was not fully considered in the order. The court justified condoning the delay in the application filing due to the acceptance of disclosed income and tax liability. The court emphasized the provision under Section 270 A for excluding income if the explanation is bona fide and all material facts are disclosed. Consequently, the impugned orders were quashed, directing a re-consideration of the application for immunity from penalty. No costs were awarded, and connected petitions were closed.