Case Law Details
Chambal Fertilizers and Chemicals Limited Vs PCIT (Rajasthan High Court)
Chambal Fertilizers triumphs in legal battle vs. PCIT (Rajasthan High Court). Court quashes penalty, emphasizing Section 270AA immunity. Details of the landmark case.
In a landmark legal victory, Chambal Fertilizers and Chemicals Limited successfully challenged the penalty imposed by the Principal Commissioner of Income Tax, Udaipur. The Rajasthan High Court, in its decision dated 13.03.2023, quashed the penalty and emphasized that Section 270AA immunity cannot be denied on vague grounds such as “misreporting” without specifying the exact violation.
Understanding Chambal’s Case: Chambal’s legal battle began when it filed its original return of income for the Assessment Year 2018-19. Subsequently, during the scrutiny proceedings, Chambal identified an error related to the ‘provision for doubtful GST input tax credit.’ Realizing the inadvertent merging of this provision with another expense account, Chambal voluntarily surrendered the amount of Rs.16,30,91,496/- by revising its return of income.
While the National E-Assessment Centre (NeAC) accepted Chambal’s response to the scrutiny issues and made only the addition of the surrendered amount, a penalty under Section 270A of the Income Tax Act was imposed, alleging misreporting of income. Chambal, exercising its rights under Section 270AA, filed an application seeking immunity from the penalty.
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