Immunity from penalty under section 270AA:
1. Introduction:
Section 270AA of the Income-tax Act, 1961 relates to immunity from imposition of penalty or prosecution.
2. Time limit:
The assessee should apply for immunity within one month from the end of the month in which the assessment or reassessment order has been received by him subject to fulfilment of prescribed conditions. Vide Finance Bill, 2025, the time-limit for processing application of the assessee under section 270AA has been increased from 1 month to 3 months from the end of the month in which application of assessee for immunity is received by the Assessing Officer.
3. Conditions:
The prescribed conditions are: – (i) Assessee has paid tax and interest payable as per such order within the period specified in notice of demand; and (ii) no appeal against such order has been filed.
4. Prescribed form:
As per Rule 129 of the Income Tax Rules, 1962, an application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and from initiation of proceedings under section 276C or section 276CC shall be made in Form No.68.
5. Not applicable to misreporting:
Immunity is not available where the case involves misreporting, as per Section 270A(9).
6. Where penalty notice does not specify – “underreporting” or “misreporting” of income:
Hon Delhi HC in Schneider Electric South East Asia (HQ) Pte. Ltd vs. ACIT International Taxation Circle 3 (1)(2), New Delhi observed that the notice initiating penalty did not specify the particular limb under which penalty notice was issued. The Court further observed that the mere reference to the word ‘misreporting’ by the Assessing Officer in the assessment order could not form the basis to deny immunity (from imposition of penalty and prosecution) where there was no mention as to how the ingredients of “misreporting” were satisfied.
The copy of the order is as under:
