Facts of the Case

The petitioner, Rohit Kapur, filed his income tax return for Assessment Year 2020–2021 declaring a total income of ₹1,73,72,262. The return was selected for scrutiny under Section 143(3) of the Income Tax Act, 1961.

Subsequently, the Assessing Officer passed an assessment order dated 23.09.2022 disallowing certain expenditure amounting to ₹22,08,857 on the ground that it represented personal expenses. A demand of ₹9,37,329 was raised, which was duly paid by the petitioner.

Thereafter, penalty proceedings under Section 270A were initiated. The petitioner filed an application under Section 270AA(2) seeking immunity from penalty proceedings. However, the application was rejected by order dated 31.01.2023 on the ground that it was filed beyond the prescribed time limit.

 Issues Involved

  1. Whether rejection of an application under Section 270AA without granting an opportunity of hearing violates Section 270AA(4) of the Income Tax Act.
  2. Whether delay in filing an application under Section 270AA can be considered or condoned by the authority.

Petitioner’s Arguments

  • The petitioner contended that all substantive conditions for grant of immunity were fulfilled, including:
    • Acceptance of the assessment order
    • Payment of tax and interest
    • Non-filing of appeal
  • The delay of 48 days in filing the application occurred due to technical glitches in the portal.
  • It was argued that the rejection order is invalid as no opportunity of being heard was granted, which is mandatory under Section 270AA(4).
  • The petitioner further submitted that the authority has the power to condone delay and should have considered the explanation.

 Respondent’s Arguments

  • The Respondent rejected the application solely on the ground that it was filed beyond the statutory time limit prescribed under Section 270AA.
  • No consideration was given to the explanation for delay or compliance with other conditions.

 Court’s Findings / Order

The Delhi High Court observed that:

  • Section 270AA(4) clearly mandates that no application shall be rejected without granting an opportunity of being heard.
  • In the present case, it was undisputed that no such opportunity was provided to the petitioner.
  • Therefore, the impugned order was passed in violation of the statutory requirement and principles of natural justice.

Final Order:

  • The impugned order dated 31.01.2023 was set aside.
  • The matter was remanded to the concerned authority for fresh consideration.
  • The petitioner was directed to appear before the authority for hearing.

Important Clarification

  • The Court did not adjudicate on:
    • Whether delay can be condoned under Section 270AA
    • Whether the petitioner’s explanation for delay is sufficient
  • These aspects were left open for determination by the Assessing Officer upon reconsideration.

Sections Involved

  • Section 143(3) – Assessment
  • Section 270A – Penalty for under-reporting of income
  • Section 270AA – Immunity from penalty and prosecution
    • Particularly Section 270AA(4) – Mandatory opportunity of hearing before rejection

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/59514032023CW30592023_143343.pdf

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