2026 (9) TMI 146

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....itioner's request for immunity from penalties arising from the show-cause notice issued under Section 270A of the Income Tax Act, 1961 (For brevity, hereinafter referred to as the 'Act'). 2. The factual matrix is that the petitioner filed its return (Annexure 1) for the Assessment Year 2018-19 and vide Assessment Order dated 24.2.2021 (Annexure 2), the petitioner's claim for deductions under Section 80 of the Act was disallowed. Instead of opting for an appeal, the petitioner deposited the assessed demand and the Assessing Officer issued a notice for penalty under Section 274 read with Section 270A of the Act (Annexure-3). The petitioner filed his response (Annexure 5) and sought immunity under Section 270AA of the Act by....

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.... 270A of the Act, immunity is not permissible and the Act also prohibits the Assessing Officer (AO) from initiating proceedings concerning an immunity application for "underreporting of income in consequence of misreporting thereof." Immunity is only available for "under-reporting of income." The learned counsel refers to Section 277AA of the Act. 7. The respondents' counsel further explains that the delay in issuing the order was due to the COVID-19 pandemic and pursuant to Board Notification No. SO 3814(E) dated 17.9.2021, such delay was condoned. 8. Before examining the core issues, it is essential to refer to the relevant provisions of the Act concerning immunity, specifically Sections 270A and 270AA, which are reproduced as follo....

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....appeal as specified in clause (b) of sub-section (2) of section 249, grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A. (4) The Assessing Officer shall, within a period of 97[three months] from the end of the month in which the application under sub-section (1) is received, pass an order accepting or rejecting such application: Provided that no order rejecting the application shall be passed unless the assessee has been given an opportunity of being heard. (5) The order made under sub....

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....s of Section 270AA, concluded that the petitioner's case does not fall within the clause of under-reporting but rather falls under underreporting of income resulting from misreporting, which, as per subsection (9) of Section 270A, excludes it from the immunity clause. The absence of explicit mention of the sub-category in the notice does not, by itself, constitute arbitrariness or violate principles of natural justice. Although the assessment order and penalty proceedings are separate, the petitioner was aware before the initiation of penalty proceedings that the assessing officer explicitly indicated in the assessment order that the petitioner failed to produce accounting records for income derived from its solar plant unit, thereby br....