Immunity from penalty under section 270AA survives procedural lapse where tax, interest, and non-appeal conditions are met.

Immunity from penalty under section 270AA was held to depend on fulfilment of the substantive statutory conditions, namely payment of tax and interest within the permitted time and no appeal against the assessment order. Non-filing of Form 68 within the prescribed time was treated as a procedural lapse that could not defeat the immunity where the core requirements were satisfied and the immunity application had in fact been filed. On that basis, the penalty for under-reporting of income under section 270A was found unsustainable and was directed to be deleted.

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Issues: Whether the assessee was entitled to immunity from penalty under section 270AA of the Income-tax Act, 1961 despite not filing Form 68 within the prescribed time, and consequently whether the penalty under section 270A of the Income-tax Act, 1961 for under-reporting of income was sustainable.

Analysis: The assessee had paid the tax and interest within the time allowed in the assessment proceedings and had not appealed against the assessment order, thereby satisfying the substantive conditions for immunity under section 270AA(1) of the Income-tax Act, 1961. The non-filing of Form 68 was treated as a procedural lapse. The Tribunal held that such omission could not defeat the substantive right to immunity when the core statutory conditions stood fulfilled, and found that the application for immunity had in fact been filed. On that basis, the levy of penalty under section 270A of the Income-tax Act, 1961 was held to be unjustified.

Conclusion: The assessee was entitled to immunity from penalty, and the penalty levied under section 270A of the Income-tax Act, 1961 was directed to be deleted.

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