Schneider Electric South East Asia (HQ) Pvt Ltd Vs ACIT (Delhi High Court)
The Delhi High Court allowed the writ petition challenging the order dated 09.03.2022 passed under Section 270AA(4) of the Income-tax Act, whereby the petitioner’s application seeking immunity from penalty under Section 270A for Assessment Year 2018-19 had been rejected. The petitioner had also sought a direction for grant of immunity in respect of the income assessed through the assessment order dated 23.06.2021.
The petitioner contended that the rejection order was barred by limitation under Section 270AA(4) as it was passed beyond the prescribed period. It further submitted that all facts, information, documents, and figures furnished by it had been accepted by the tax authorities, and that the dispute involved only a question of law concerning the interpretation of contracts, the Income-tax Act, and the Double Taxation Avoidance Agreement (DTAA). According to the petitioner, there was no basis for alleging misreporting of income.
The High Court observed that the impugned order denied immunity solely on the ground that penalty proceedings had been initiated for misreporting of income. However, the penalty notice itself did not specify whether the proceedings were initiated for under-reporting or misreporting of income. The Court further noted that neither the impugned order nor the assessment order identified the applicable limb of Section 270A or explained how the requirements of Section 270A(9) relating to misreporting were satisfied. It held that merely referring to the expression “misreporting” without providing the necessary particulars rendered the order arbitrary and without reasons.
