Immunity from penalty under section 270AA: Delay in applying immunity from penalties is only a technical breach of procedural law & immunity should be granted as long as the tax is paid
Here is a key insights from a recent decision of the Jodhpur Tribunal (Order copy enclosed herewith) regarding the levy of penalties:
1. Section 270AA of the Act offers immunity from penalties for under-reporting of income if the demand is paid within 30 days, even if the required form submission for immunity is delayed. The Tribunal emphasized that timely payment of the demand is substantive, while form submission is procedural. Hence, a delay in applying immunity from penalties is only a technical breach of procedural law. Therefore, immunity should be granted as long as the tax is paid.
2. The Tribunal clarified that penalty imposition without specifying the limb i.e. under-reporting or misreporting is bad in law.
3. Misreporting requires mens rea, and willful default constitutes misreporting. In cases of unintentional errors with full disclosure, penalties are deemed unwarranted, and the old law (section 271) in this regard still holds good.
4. Penalty and assessment proceedings are distinct. Mere additions in assessments do not amount to concealment/misreporting, and non-filing of appeals against additions does not imply acceptance of concealment.
The copy of the order is as under:
