Immunity from imposition of penalty, etc.

270AA. (1) An assessee may make an application to the Assessing Officer to grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, if he fulfils the following conditions, namely:—

 (a) the tax and interest payable as per the order of assessment or reassessment under sub-section (3) of section 143 or section 147, as the case may be, has been paid within the period specified in such notice of demand; and

 (b) no appeal against the order referred to in clause (a) has been filed.

(2) An application referred to in sub-section (1) shall be made within one month from the end of the month in which the order referred to in clause (a) of sub-section (1) has been received and shall be made in such form and verified in such manner as may be prescribed.

(3) The Assessing Officer shall, subject to fulfilment of the conditions specified in sub-section (1) and after the expiry of the period of filing the appeal as specified in clause (b) of sub-section (2) of section 249, grant immunity from imposition of penalty under section 270A and initiation of proceedings under section 276C or section 276CC, where the proceedings for penalty under section 270A has not been initiated under the circumstances referred to in sub-section (9) of the said section 270A.

Penalty

(4) The Assessing Officer shall, within a period of one month from the end of the month in which the application under sub-section (1) is received, pass an order accepting or rejecting such application:

Provided that no order rejecting the application shall be passed unless the assessee has been given an opportunity of being heard.

(5) The order made under sub-section (4) shall be final.

(6) No appeal under section 246A or an application for revision under section 264 shall be admissible against the order of assessment or reassessment, referred to in clause (a) of sub-section (1), in a case where an order under sub-section (4) has been made accepting the application.

——

A) This application can be made only to the assessing officer and not to any other authorities…means it can’t be give to the commissioner of income taxes..

B) Only penalty for underreporting us 270A shall be covered and no other penalty imposable under this act shall be covered in this application. Means Assessee can’t seek relief from penalty for failure to get tax audit done us 271B while moving the application us 270AA to the assessing officer or penalty us 272A for not compliance of notice us 142(1) us not covered here.

C) Penalty for Concealed income us 153A ie during the income tax search and seizure is separately dealt in accordance with section 271AAB and shall not be computed in accordance with section 270AA since there is a specific provisions for that. Hence assessee us 270AA can’t get relief from penalties which are imposable under section 271AAB.

Further penalty for under reporting of income calculated pursuant to order passed under section 144 is not covered. Hence assessee can’t move application for relief of such penalty.

D) Crux of point no (a+b+c) above is that only those penalty which will be going to imposable by the assessing officer us 270A while passing the Assessment order us 143(3) and 147 shall be subject to immunisation us 270 AA ..

E) steps to be followed by the assessee.

1) The assessee shall have to paid the taxes and interest like 234A, B & C type interest within due date specified in notice of demand us 156. Means within 30 days of services of the notice of demand to the assessee..

2) it should be kept in mind that it is mandatory for department to issues show cause notice before passing the Assessment order for levying of penalty proceedings us 270 A. Technically which is known as initiation of penalty proceedings. If the AO fails to initiate the penalty proceedings before passing the Assessment order , then he can’t levied penalty us 270 A later on, neither CIT us 263 can direct him to levy the fresh penalty us 270 A if he fails to do so.

There is a difference between assessment proceedings and penalties proceedings.. both are separate and dealt accordingly.

3) Assessee can’t make an appeal against the Assessment order to the CIT (A) us 246. however in the bare act, there is no reference regarding section 154 .. hence prima facie it seems that assessee can move Rectification application us 154 even if he wishes to move the application us 270AA.

4) Application to be made within 1 month from the end of month in which order is received us 143(3) & 147..
logic behind such time limits.

Say order us 143(3) is received by the assessee on 01/12/2019 and demand notice is prepared on or before the signing of the order.

(Refer of CIT vs Purshottam Das T Patel, wherein the entire order is called as void because demand notices and calculation of tax and interest was not prepared before the signing of the order).

Say demand notice and order both are received on 01/12/2019. Assessee is required to paid the entire demand within 30 days otherwise he will be treated as assessee in default.

And the primary requirements of this application us 270AA that assessee should paid the demand us 156 in order to get relief from imposition of penalty us 270AA. It’s means Assessee have to pay entire demand means ( taxes + interest) within 30 days of receiving of demand notice.. means UpTo 31/12/2019.

Now if he desirous of getting relief from penalty us 270A then he must have given some more time to file the application. Hence the time limits for filing of application us 270 AA is one month from the end of the month in which order is received.

5) After making the payment assessee should make a declaration in form 68 regarding payment details and that he hadn’t preferred an appeal against the Assessment order.

F) Date UpTo which the order accepting / Rejecting the application is to be passed by the AO.

Suppose Assessee Received the order us 143(3) on 01/12/2019 along with demand notice us 156 on the very same date.. then maximum time UpTo which assessee can file application us 270AA is 31/01/2020. Now let us say assessee make an application us 270AA on 31/01/2020 after paying the taxes and interest then AO will grant immunity from penalty for under reporting us 270AA as the earliest but not before the expiry date as mentioned in Section 249(2)(b)… Which deals with filling of appeal to the CIT (A) wherein the demand notices had been served on the assessee.

Hence AO can passed the order only after 31/12/2019 in the above Example. But minimum time limits in this example had no relevance since the assessee itself filed an application after 31/12/2019 which is after the expiry of period us 249.

G) maximum time limits of acceptance/ rejection of application is 1 months from the end of month when the application is Recieved by him. Ie UpTo 28/02/2020. The order of acceptance/ rejection is final and no appeal is possible against it.. however if assessee wants he can go to CIT us 273A to seeks relief after fulfilling conditions laid down there..

H) if application is accepted then AO is duty bound to grant the relief , but if such penalty is on account of misreporting of income , then application is duty bound to get rejected. Assessee upon acceptance can’t go for further appeal against the Assessment order.

I) however on rejection assessee can move application against the Assessment order.. since time limits laid down in section 249(2)(b) had been amended by virtue of insertion of a proviso therein.

Suppose order of rejection is passed by the AO on 28/02/2020 and is Recieved by the assessee on 01/03/2020. Now as per section 249 , the time limits of Filling to the CIT (A) shall in case of application under section 270AA is rejected, shall be increased from the date when the application is made till the date when the order Rejecting the application is Received by the assessee.

it’s means normal time limits us 249 for filing of appeals to the CIT(A) in this cases is 31/12/2019 which shall be increased by (31/01/2020 to 01/03/2020 i.e. by 30 days which comes to 31/01/2020.. and assessee Received the rejected order on 01/03/2020 and hence there is a error in law.

Disclaimer :-  this article is for the purposes of information and shall not be treated as solicitation in any manner or of for any other purposes whatsoever. For the benefits of reader a short glimpse of provisions is presented in my personal language as per my capabilities. It shall not to be used for any legal advice /opinion and shall not to be used to rendering any professional opinion. Readers are advised to kindly go through to original government publications and published case laws and judicial pronouncements. Errors may creep in and hence it will be highly appreciable to highlight such errors or providing suggestions for effective improvements.

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