Facts of the Case

The petitioner challenged an order dated 23.09.2024 passed under Section 270AA of the Income Tax Act, 1961, whereby the Assessing Officer rejected the petitioner’s application seeking immunity from imposition of penalty. The rejection was premised on the ground that the petitioner’s case involved under-reporting of income in consequence of mis-reporting.

 

Issues Involved

  1. Whether the petitioner’s case constituted under-reporting of income on account of mis-reporting so as to disentitle him from immunity under Section 270AA.
  2. Whether the rejection of the application for immunity without considering the petitioner’s explanation violated principles of natural justice.
  3. Whether the impugned order under Section 270AA was sustainable in law.

 Petitioner’s Arguments

  • The additions made in the assessment were based on facts already disclosed by the petitioner.
  • The issue related to interest income and expenditure and did not involve concealment or mis-reporting of facts.
  • The petitioner attempted to seek an adjournment in response to the show cause notice but was prevented due to technical difficulties.
  • The impugned order was passed without considering the petitioner’s submissions, thereby denying an effective opportunity of being heard.

 Respondent’s Arguments

  • The Assessing Officer had concluded that the case involved under-reporting of income in consequence of mis-reporting.
  • However, during the hearing, the Revenue fairly submitted that in the given circumstances, the matter could be remanded to the Assessing Officer for fresh consideration.

Court Order / Findings

  • The Court observed that prima facie the case did not appear to involve mis-reporting of income, as the facts forming the basis of the addition were disclosed by the assessee.
  • It was noted that the impugned order had been passed without considering the contentions of the petitioner.
  • The Court found it appropriate to set aside the impugned order and remand the matter for reconsideration.

 Important Clarification

The Court clarified that rejection of immunity under Section 270AA must be preceded by proper consideration of the assessee’s explanation and compliance with principles of natural justice, particularly where the case does not prima facie involve mis-reporting of income.

 Final Outcome

The impugned order passed under Section 270AA of the Income Tax Act, 1961 was set aside. The matter was remanded to the Assessing Officer to consider the petitioner’s application for immunity from penalty afresh, after affording an opportunity of being heard, in accordance with law. The writ petition was disposed of accordingly.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770114206_SAURABHBAHETYVsINCOMETAXOFFICERWARD631DELHI.pdf 

 

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