TMI Blog2024 (1) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act or not. The Hon'ble Supreme Court in M/s Godrej Sara Lee Ltd. [ 2023 (2) TMI 64 - SUPREME COURT] has held that where the controversy is purely legal one and does not involve disputed question of fact but only question of law, then it should be decided by the High Court instead of dismissing the writ petition on the ground of alternative remedy. Thus the preliminary objection raised by the respondents regarding maintainability of the writ petition is rejected. Penalty for under reporting and misreporting of income - Section 270A of the Act specifies penalty for under-reporting and misreporting, wherein sub-section (9) of Section 270AA of the Act categorizes the cases of misreporting of income. Sub-section (3) of Section 270AA of the Income Tax Act empowers the assessing officer to grant immunity from imposition of penalty under Section 270A and initiation of proceedings under Section 276C or under Section 276CC of the Income Tax Act on fulfillment of the conditions of sub-section (1) of Section 270AA after the expiry of the period of filing the appeal if the proceeding has not been initiated against the assessee under the circumstances referred to in sub-section (9) of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y against the petitioner-company is liable to be set aside. Resultantly, this writ petition is allowed. The penalty order passed under Section 270A of the Income Tax Act is set aside - HON'BLE MR. JUSTICE VIJAY BISHNOI AND HON'BLE MR. JUSTICE MUNNURI LAXMAN For the Petitioner(s) : Mr. Vikas Balia, Sr. Advocate assisted by Mr. Prateek Gattani For the Respondent(s) : Mr. K. K. Bissa JUDGMENT (PER HON BLE VIJAY BISHNOI, J.) 1. This writ petition is filed by the petitioner seeking following reliefs: It is, therefore, most humbly prayed that this Hon'ble Court may kindly be pleased to:- a. Issue writ in the nature of mandamus or any other appropriate writ, order or direction for quashing and/or set-aside the Impugned Penalty Order dated 31.03.2023 (Annexure-11) passed under Section 270A of the Income-tax Act, 1961 by the Respondent No. 1; b. Issue writ in the nature of mandamus or any other appropriate writ, order or direction for quashing and/or set-aside consequential demand notice dated 31.03.2023 (Annexure-11) issued under Section 156 of the Income-tax Act, 1961 by the Respondent No. 1; c. To issue writ of mandamus and/or any other appropriate writ to declare that disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner-company filed its response vide reply dated 18.10.2022 and also filed an application under Section 270AA of the Act seeking immunity from imposition of penalty under Section 270A of the Act under prescribed form. Another show cause notice dated 06.02.2023 under Section 270A of the Act was issued by the Assessing Officer for imposing penalty which is also replied by the petitioner-company on 13.02.2023. Thereafter, again a show cause notice dated 30.03.2023 for imposing penalty under Section 270A of the Act was issued and the petitioner-company was asked to file reply on or before 31.03.2023 at 5:00 PM. As per the petitioner-company, reply to the same has been filed by it on 31.03.2023 before 5:00 PM however, the respondent-department passed the penalty order dated 31.03.2023 under Section 270A of the income Tax Act and imposed a penalty of 200% of tax upon the petitioner-company. Consequently, notice of demand dated 31.03.2023 under Section 156 of Income Tax Act was issued to the petitioner-company. Being aggrieved with the same, the petitioner-company has filed this writ petition. 5. Reply to the writ petition has been filed on behalf of the respondents, wherein prelimina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. vs. JCIT, Range 2, Kota (D.B. Income Tax Appeal No. 52/2018), wherein the Division Bench of this Court has categorically held that cess is not tax. It is further submitted that the Bombay High Court in Sesa Goa Limited vs. JCIT (ITA No. 17/2013) has also held that education cess is allowable expenditure/deduction. 10. It is contended that in the year 2022 vide Finance Act, 2022 sub-section (18) has been inserted in Section 155 of the Act and the said amendment came into force on 01.04.2022. As per the said amendment, it is provided that any deduction of any surcharge or cess, which is not allowable as deduction under Section 40 of the Act has been claimed and allowed in the case of an assessee in any previous year, such claim shall be deemed to be under-reported income of the assessee for such previous year under sub-section (3) of Section 270A of the Act. It is further provided that such claim of surcharge/cess shall not be considered as under- reported in case the assessee makes an application to the assessing officer in the prescribed form and within the prescribed time, requesting for recomputation of total income of the previous year without allowing the claim for deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. National Faceless Assessment Centre Delhi Anr., 2022(4) 1086 - DELHI HIGH COURT and Rohit Kapur VS. Principal Commissioner of Income Tax-7, New Delhi Anr., 2023(3) TMI 930 DELHI HIGH COURT, learned counsel for the petitioner-company has prayed that the writ petition may be allowed and the reliefs claimed in this writ petition may kindly be granted. 15. Per contra, learned counsel for the respondents countering the submissions of counsel for petitioner on merits has argued that the respondent-department has not committed any illegality in passing the impugned order as the petitioner-company is not eligible for immunity from levying of penalty under Section 270AA of the Act. 16. Heard learned counsel for the rival parties. 17. So far as maintainability of this writ petition is concerned, having gone through the material available on record, we find that in the present case, there is no requirement of making an investigation into facts and the question raised by the petitioner in this writ petition is only this that whether the petitioner-company is entitled to claim benefit of immunity from imposition of penalty under Section 270A of the Act or not. The Hon'ble Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for such previous year and make necessary amendment; and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of section 154 being reckoned from the end of the previous year commencing on the 1st day of April, 2021: Provided that in a case where the assessee makes an application to the Assessing Officer in the prescribed form and within the prescribed time, requesting for recomputation of the total income of the previous year without allowing the claim for deduction of surcharge or cess and pays the amount due thereon within the specified time, such claim shall not be deemed to be under-reported income for the purposes of sub-section (3) of section 270A. 270A. Penalty for under reporting and misreporting of income. (9) The cases of misreporting of income referred to in sub- section (8) shall be the following, namely: (a) misrepresentation or suppression of facts; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence; (d) recording of any false entry in the books of account; (e) failure to record any receipt in books of account having a bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The above referred provisions provide that deduction of any surcharge, cess, which is not allowable as deduction under Section 40 of the Income Tax Act, then such claim shall be deemed to be underreported income of the assessee for the purpose of levy of penalty under Section 270A of the Act. It further provides that if an assessee makes an application to the assessing officer in prescribed form in prescribed time requesting for recomputation of income of previous year deducting the surcharge or cess and pays the difference amount within specified time, his claim shall not be deemed to be unreported income. 21. Section 270A of the Act specifies penalty for under-reporting and misreporting, wherein sub-section (9) of Section 270AA of the Act categorizes the cases of misreporting of income. 22. Sub-section (3) of Section 270AA of the Income Tax Act empowers the assessing officer to grant immunity from imposition of penalty under Section 270A and initiation of proceedings under Section 276C or under Section 276CC of the Income Tax Act on fulfillment of the conditions of sub-section (1) of Section 270AA after the expiry of the period of filing the appeal if the proceeding has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been initiated on account of alleged misreporting of income that an assessee is prohibited from applying and availing the benefit of immunity from penalty and prosecution under Section 270AA. 6. In fact, the statutory scheme for grant of immunity is based on satisfaction of three fundamental conditions, namely, (i) payment of tax demand; (ii) non-institution of appeal; and (iii) initiation of penalty on account of under reporting of income and not on account of misreporting of income. 7. This Court is also of the view that the petitioner cannot be prejudiced by the inaction of the Assessing Officer in passing an order under Section 270AA of the Act within the statutory time limit as it is settled law that no prejudice can be caused to any assessee on account of delay/default on the part of the Revenue. 8. In the present case, the petitioner has satisfied the aforesaid conditions, inasmuch as, (i) the tax has been paid on the additions; (ii) appeal has undisputedly not been filed; and (iii) penalty (as would be evident from the penalty notice) has been initiated on account of underreporting of income. 26. In Rohit Kapur VS. Principal Commissioner of Income Tax-7, New Delhi Anr. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the case of petitioner-company, the said initiation is nonest. The respondent vide impugned order dated 31.03.2022 has clarified that the petitioner-company is fulfilling the conditions mentioned in sub-Section (1) and (2) of Section 270AA, however, its conclusion that the petitioner-company do not fulfill the condition mentioned in sub-section (3) of Section 270AA of the Act is illegal and cannot be sustained. 29. Apart from that the application filed by the petitioner-company under Section 270AA of the Act seeking immunity from imposition of penalty has not been decided by the Assessing Officer within prescribed time as per sub-section (4) of Section 270AA of the Act, the impugned action of the Assessing Officer of imposing penalty against the petitioner-company is liable to be set aside. 30. Resultantly, this writ petition is allowed. The penalty order dated 31.03.2023 passed under Section 270A of the Income Tax Act is set aside. The demand notice issued by the respondent No. 1 under Section 156 of the Income Tax Act is also set aside. The respondent No. 1 is directed to grant immunity under Section 270AA of the Income Tax Act to the petitioner-company. 31. No order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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