AO should grant immunity from penalty and prosecution if conditions U/S 270AA are satisfied: Delhi HC

AO should grant immunity from penalty and prosecution if conditions U/S 270AA are satisfied: Delhi HC

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AO should grant immunity from penalty and prosecution if conditions U/S 270AA are satisfied:

Delhi HC

ULTIMATE INFRA TECH PRIVATE LIMITED (W.P.(C) 6305/2022 & CM APPLs. 18990- 18991 /2022)
Facts:
 1. A show cause notice seeking to levy penalty under Section 270A of the Income Tax Act, for under reporting income, was issued requiring the Petitioner to show cause as to why the penalty for under-reported income be not levied.
 2. The petitioner filed an application in terms of Section 270AA(2) seeking immunity from imposition of penalty under Section 270A, since the conditions prescribed for immunity U/S 270AA are satisfied.
 3. The National Faceless Assessment Center passed the impugned order denying the immunity from penalty and prosecuting the Petitioner on the ground that since no order under Section 270AA had been passed by the jurisdictional Assessing Officer within the statutory timeline, it may be treated as no order granting immunity to the assessee had been passed.
Note: The statutory scheme for grant of immunity as per Sec 270AA, is based on satisfaction of three fundamental conditions, namely, (i) payment of tax demand; (ii) non-institution of appeal; and (iii) initiation of penalty on account of under reporting of income and not on account of misreporting of income.
The Hon. Delhi HC held as below:
 1. Legislative intent of Section 270AA of the Act to encourage/incentivize a taxpayer to (i) fast-track settlement of issue, (ii) recover tax demand; and (iii) reduce protracted litigation.
 2. The petitioner has acquired a right to be granted immunity under Section 270AA of the Act.

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