Gujarat High Court
Shanaji Becharji Baraiya vs Income Tax Office Circle 1(3)(1) ... on 12 August, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12968 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
√
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SHANAJI BECHARJI BARAIYA
Versus
INCOME TAX OFFICE CIRCLE 1(3)(1) AHMEDABAD
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Appearance:
MR DHINAL A SHAH(12077) for the Petitioner(s) No. 1
MS MAITHILI D MEHTA, SR. STANDING COUNSEL for the Respondent(s)
No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 12/08/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1 Heard learned advocate Mr.Dhinal Shah for the petitioner and learned Senior Standing Counsel Ms.Maithili Mehta for the respondent. 2 Having regard to the controversy arising in this Page 1 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined petition in a narrow compass, with the consent of the learned advocates appearing for the respective parties, the same is taken up for hearing. 3 Rule returnable forthwith. Learned Senior Standing Counsel Ms.Maithili Mehta waives service of notice of rule for the respondent. 4 By this petition under Article 227 of the Constitution of India, the petitioner has prayed for quashing and setting aside the order dated 31.05.2023 passed under Sec.270AA(4) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), whereby, the respondent has rejected the application of petitioner to grant immunity from penalty proceeding carried out under Sec.270A(9) of the Act. 5 Brief facts of the case are as under:
5.1 The petitioner is an agriculturist and is not Page 2 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined normally assessed to income tax as the petitioner is not liable to file the return of income for earnings derived from agriculture income. The petitioner, therefore, did not file the return of income for the Assessment Year 2018-19.
5.2 It is the case of petitioner that a show-cause notice under Sec.148A(b) of the Act dated 21.03.2022 was issued by the respondent as to why notice under Sec.148 of the Act should not be issued as the petitioner did not file the return of income though the petitioner had sold immovable property during the Assessment Year 2018-19 for a consideration of Rs.2,60,00,000/- on which TDS was also deducted.
5.3 In response to the show-cause notice, by a reply dated 29.03.2022, wherein the petitioner admitted that he had sold an agricultural land along with other co-owners on 05.10.2017 for aggregate consideration Page 3 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined of Rs.1,30,00,000/-, out of which he has received Rs.25,00,000/- as his part of consideration and a copy of Sale Deed dated 4.10.2017 was also provided as supporting evidence. The petitioner, further contended that he did not file the return of income for the relevant year under a belief that the same is not taxable as agricultural land was sold. It was also contended that subsequent to the receipt of the notice dated 21.03.2022, the petitioner approached the tax consultant and further sought time upto 15.04.2022 for filing of return of the income.
5.4 The Assessing Officer thereafter passed an order dated 31.03.2022 under Sec.148A(d) of the Act declaring the case of the petitioner as a fit case to issue notice under Sec.148 of the Act and thereby issued notice under Sec.148 on the same date.
5.5 The petitioner, pursuant to such notice, filed Page 4 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined return of income on 16.04.2022 which was processed under regular assessment and Assessment Order dated 22.03.2023 was passed under Sec.147 read with section 144B of the Act determining total income of the petitioner at Rs.20,85,579/- raising a nil demand as the petitioner had already paid the amount of tax.
5.6 The Assessing Officer, while framing the assessment under Sec.143(3) of the Act also opined to initiate penalty proceedings under Sec.270A(8) read with Sec.270A(9) on the ground of under reporting as a consequence of misreporting. Accordingly, notice under Sec.274 read with Sec.270A of the Act dated 22.03.2023 was issued.
5.7 The petitioner made an application dated 31.03.2023 in Form No.68 for granting immunity and initiation of proceeding under Sec.276C or 276CC Page 5 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined from imposition of penalty under Sec.270A of the Act on the ground that the petitioner has already paid tax and interest as per the order of assessment and no appeal is preferred against the Assessment Order.
5.8 The petitioner also filed a reply dated 13.04.2023 to the notice for penalty stating that the petitioner has already applied for immunity from imposition of penalty under Sec.270AA of the Act.
5.9 The respondent, however, by the impugned order dated 31.05.2023 passed under Sec.270AA(4) of the Act, rejected the application of the petitioner to grant immunity from levy of penalty on the ground that there is misreporting by the petitioner of the income and but for the initiation of the reassessment proceedings, the income would have escaped the assessment. It was also observed by the respondent in the impugned order that the contention of the Page 6 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined petitioner that the order under Sec.270AA(4) of the Act is not passed within one month as the application of the petitioner was received on 12.04.2023 and as per provision of Sec.270AA(4) of the Act, it is clear that such order shall be passed within one month from the end of the month in which the application was received and the said period of one month expired on 31.05.2023 and as the petitioner sought time which was granted, the matter would not get time barred.
5.10 On merits it was observed by the respondent that provision of Sec.270AA(3) of the Act is clear to the effect that the penalty proceedings initiated under Sec.270A(9) of the Act does not find its place for immunity under Sec.270AA(1) read with Section 270AA(3) of the Act.
6 Learned Advocate Mr.Dhinal Shah for the Page 7 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined petitioner submitted that the case of the petitioner would fall under Sec.270A(2)(b) of the Act and not under Sec.270A(9) of the Act. It was submitted that the petitioner has filed the return of income for the first time under Sec.148 for the year under consideration, and therefore, the petitioner can only be considered to have under reported his income and not misreported the income as none of the eventualities mentioned in Clause a to f of sub-section (9) of Sec.270A arises in the facts of the case. It was submitted that the misrepresentation or suppression of fact would arise only when the petitioner files return of income and from that some wrong facts are found. Similarly, failure to record investments in the books of accounts or claim of expenditure not substantiated by evidence or recording of false entry in the books of accounts or failure to record any receipt in books of accounts or failure to report any international transactions would not arise in the facts Page 8 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined of the case so as to attract the provisions of Sec.270A(9) of the Act. It was therefore submitted that the petitioner is entitled to immunity from the imposition of penalty as provided under Sec.270AA(3).
6.1 In support of his submissions, learned advocate Mr.Dhinal Shah referred to and relied upon the provisions relating to the Direct Taxes in Finance Bill,2016, which has brought into effect the provision of Sec.270A and 270AA in order to rationalize the penalty provisions. It was submitted that in view of the insertion of provision of section 270A, the existing provisions of the penalty on account of the concealment of the particulars of income or furnishing inaccurate particulars of income leviable under Sec.271(1)(c) of the Act have been rationalized so as to bring objectivity, certainty and clarity in the penalty provisions. It was submitted that with effect Page 9 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined from 01.04.2017, the penalty under Sec.271 is not leviable. It was, therefore, submitted that the provision of immunity is brought on statute so as to see that in case of under reporting, once the assessee pays the tax and interest, penalty is not levied. In support of his submissions, reliance was also placed on the decision of the Hon'ble Delhi High Court in the case of Schneider Electric South East Asia (HQ) PTE Ltd vs. Asst. Commissioner of Income Tax International Taxation Circle3(1)(2), New Delhi & Ors., rendered on 28.03.2022 in WP(C) No. 5111 of 2022 and other allied matters, to submit that benefit of the immunity on the ground that penalty was initiated under Sec.270A of the Act for misreporting of the income is erroneous and arbitrary as the respondent has failed to specify as to whether the penalty is initiated under reporting or misreporting as the ground for initiation of penalty is under reporting as a consequence of misreporting Page 10 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined and both under reporting and misreporting cannot co- exist in view of the separate provision being Sec.270A(2) read with Sec.270A(9) in the Statute. 6.2 It was therefore submitted that the petitioner is entitled to immunity from levy of the penalty under Sec.270A(9) though a penalty at the best can be under Sec.270A(2) of the Act.
7 On the other hand learned learned Senior Standing Counsel Ms.Maithili Mehta for the respondent submitted that admittedly, the petitioner did not file the return of income for the year under consideration, but for the issuance of notice under sec.148 of the Act, the petitioner would not have filed the return of income and would not have paid tax and interest resulting into escapement of the income, and therefore, if he is under reporting as a consequence of misreporting of income, the respondent authority Page 11 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined has rightly rejected the application for immunity under Sec.270AA(4) of the Act.
7.1 In support of such submissions, learned Senior Standing Counsel Ms.Mehta for the respondent, has referred to and relied upon the following averments made in the affidavit-in-reply filed on behalf of the department, which reads as under:
" 6. I state that the petitioner by way of this petition has sought a writ, order and/or direction Quashing and Setting aside the impugned order dated 31.05.2023 passed under section 270AA(4) of the Act; whereby the respondent has rejected the application of present petitioner to grant immunity from penalty proceeding carried out under section 270A(9) of the act. Copy of the order dated 31.05.2023 marked as Annexure-A, to the petition.
7. I state that the assessee has mentioned that in regular course he is not required to file ITR based on the fact that his income arises from agriculture activities, thus he has not filed his ITR for A.Y.2018-19.
8. I state that The issue in question falls within the period of A.Y. 2018-19.On the basis of information available with the department was that the Assessee sold immovable property during the year under consideration, hence Page 12 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined notice under section 148A(b) was issued and their after order under section 148A(d) was passed by the authorities on 31.03.2022 and accordingly, notice under section 148 of the Income Tax was issued.
9. I state that considering the sale of the immovable property the consideration so received amounting to Rs. 25,00,000/- would be his taxable income and thus the petitioner was required to file its Income tax return for the Assessment year 2018-19. Therefore the contention of the assessee that income tax return was not filed inadvertently is not tenable.
10. I state that based on the said transaction the assessing officer has finalized the assessment and penalty proceeding under section 270A(9)of the act was initiated after recording the satisfaction. The relevant part of assessment order is reproduced as under:
Thus, the assessee has declared Rs. 20.53.518 as calculatad above, as LTCG ander his retum for the same in response to notice under section 1ed in view of the above nothing adverse has been found and thus notion in the case is made.
Penalty proceedings under section 270A(8) read with section 270A(9) on ground of under-reporting as a consequence of misreporting is being initiated as had the case not been selected for scrutiny, the above income would have escaped assessment, is being initiated separately. Page 13 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025
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11. I state that penalty proceedings which came to be initiated for mis-reporting of the income have resulted in initiating proceedings under section 270A(9) of the act. Based on the said circumstances the authority has passed the order rejecting immunity from passing the penalty proceeding which stood initiated under section 270A(9) of the act
12. I state that penalty proceedings are initiated u/s 270A(9) of the Act in the case of the petitioner and in response to the same. assessee filed application seeking immunity from penalty As per the provisions of section 270AA of the Act, immunity can not be granted, if penalty was initiated u/s 270A(9) of the Act. Further, during proceedings, opportunity of being heard was also provided to the assessee Thereafter, order of rejection of immunity from penalty was passed on 31.05.2025. Therefore, the said order is passed as per the provisions of section 270AA of the Act.
13. I state that after issuance of notice u/s 148 of the Act, the assessee has filed ITR in response to notice u/s 148 of the Act. declaring total income of Rs. 20,85,579/ The assessee has offered said income in ITR filed only after initiation of reopening proceedings by issuance of notice u/s 148 of the Act. Assessment was completed in this case on 22.03.2023, accepted returned income filed in response to notice u/s 148 of the Act, wherein, income of Rs.20,85,579/- was offered by assessee.
14. I state that vide assessment order dated Page 14 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined 22.03.2023, penalty proceedings under section 270A(8) read with section 270A(9) of the Act was initiated for under-reporting of income as a consequence of misreporting the case of the petitioner was selected for scrutiny by issuance of notice u/s 148 of the Act, as the income would has escaped assessment. The relevant part of assessment order is reproduced as under:
Thus, the assessee has declared Rs 20.53.518 as calculated above as LTCG and his return for the same in response to notice under section 14 in view of the sco nothing adverse has been found and thus no addition in the case is made Penalty proceedings under section 270A(8) read with section 270A(19) on ground of under reporting as a consequence of misreporting is being initiated as had the case not been selected for scrutiny, the above income would have escaped assessment is being initiated separately."
7.2 Referring to the above averments, it was submitted that no interference be made in the impugned order rejecting the application for immunity from penalty while exercising extraordinary jurisdiction under Article 227 of the Constitution of India.Page 15 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025
NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined 8 Considering the submissions made by the learned advocates for the parties, it would be germane to refer to the relevant provisions for deciding the short question which has arisen in this petition.
"270A. Penalty for under-reporting and misreporting of income.
(1)The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income.
(2)A person shall be considered to have under- reported his income, if--
(a)the income assessed is greater than the income determined in the return processed under clause (a) of sub-section (1) of section 143;
(b)the income assessed is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148;
(c)the income reassessed is greater than the income assessed or reassessed immediately before such reassessment;
(d)the amount of deemed total income assessed or reassessed as per the provisions of section Page 16 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined 115JB or section 115JC, as the case may be, is greater than the deemed total income determined in the return processed under clause
(a) of sub-section (1) of section 143;
(e)the amount of deemed total income assessed as per the provisions of section 115JB or section 115JC is greater than the maximum amount not chargeable to tax, where no return of income has been furnished or where return has been furnished for the first time under section 148;
(f)the amount of deemed total income reassessed as per the provisions of section 115JB or section 115JC, as the case may be, is greater than the deemed total income assessed or reassessed immediately before such reassessment;
(g)the income assessed or reassessed has the effect of reducing the loss or converting such loss into income.
XXX XXX XXX (8) Notwithstanding anything contained in sub-
section (6) or sub-section (7), where under- reported income is in consequence of any misreporting thereof by any person, the penalty referred to in sub-section (1) shall be equal to two hundred per cent of the amount of tax payable on under-reported 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;Page 17 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025
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(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 bearing on total income; and
(f)failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.
XXX XXX XXX
270AA. Immunity from imposition of
penalty, etc.
(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.Page 18 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025
NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined (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.19 (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. (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."
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NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined 9 On perusal of the above provisions, it is clear that Sec.270A provides for penalty for under- reporting and misreporting of income. Sub-section(2) of Sec.270A provides for under-reporting of income whereas sub-section (3) to (7) of Sec.270A provides for computation of the unreported income and levy of the penalty upon such unreported income. Sub-sec.8 and 9 provides for misreporting of income and levy of penalty on the misreported income. Thus, there are two different limbs for levy of penalty, one is unreported income and second is misreported income.
9.1 In the facts of the case, it appears that the respondent has lost sight of the fact that unreported income cannot be a misreported income because sub- section (9) of sec.270A prescribes six types of eventualities which result into misreporting of income and none of the eventuality is present in the facts of Page 20 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined the case, whereas, clause (b) of Sub-sec.(2) of sec.270A which provides that if income assessed is greater than maximum amount not chargeable to tax where no return of income has been furnished or where return has been furnished for the first time under sec.148, would be applicable in the facts of the case as the petitioner being agriculturist did not file the return in spite of having the long term capital gains and the return was filed for the first time pursuant to the notice under Sec.148 of the Act. Therefore, admittedly, the petitioner has under- reported the income and the penalty ought to have been levied and can be levied only for under reporting of the income.
9.2 Therefore, it is clear that in case of an under- reporting of income, the petitioner can apply for immunity from imposition of penalty as per the provision of Sec.270AA of the Act because as per the Page 21 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined provision of sub-section (3) of sec.270AA of the Act, immunity cannot be granted only in cases under the circumstances referred to in sub-section (9) of sec.270A of the Act.
9.3 It is not in dispute that none of the circumstances prescribed in Clause a to f of sub- section (9) of Sec.270A of the Act exist in the facts of the case. Neither there is misrepresentation or suppression of the facts as no return of income was filed, whereas clause b to e pertains to the entries in the books of accounts whereas, clause f refers to the international transaction.
9.4 Therefore, in the facts of the case, the petitioner is entitled to immunity under Sec.270AA of the Act. In view of the above analysis, it would be also helpful to refer to the decision of the Hon'ble Delhi High Court in the case of Schneider Electric South East Asia Page 22 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined (HQ) Pvt. Ltd (supra), wherein, it is held as under:
"6 Having perused the impugned order dated 09th March,2022, this Court is of the view that the Respondents' action of denying the benefit of immunity on the ground that the penalty was initiated under Section 270A of the Act for misreporting of income is not only erroneous but also arbitrary and bereft of any reason as in the penalty notice the Respondents have failed to specify the limb "underreporting" or "misreporting" of income, under which the penalty proceedings had been initiated.
7 This Court also finds that there is not even a whisper as to which limb of Section 270A of the Act is attracted and how the ingredient of sub- section (9) of Section 270A is satisfied In the absence of such particulars, the mere reference to the word "misreporting" by the Respondents in the assessment order to deny immunity from imposition of penalty and prosecution makes the impugned order manifestly arbitrary.
8 This Court is of the opinion that the entire edifice of the assessment order framed by Respondent No 1 was actually voluntary computation of income filed by the Petitioner to buy peace and avoid litigation, which fact has been duly noted and accepted in the assessment order as well and consequently, there is no question of any misreporting.
9. This Court is further of the view that the impugned action of Respondent No.1 is contrary to the avowed Legislative intent of Section 270AA of the Act to encourage/incentivize a Page 23 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined taxpayer to (1) fast-track settlement of issue, (11) recover tax demand, and (i) reduce protracted litigation."
10 Memorandum explaining the Finance Bill,2016, for rationalization of the penalty provisions also provides for as under:
"Rationalisation of penalty provisions Under the existing provisions, penalty on account of concealment of particulars of income or furnishing inaccurate particulars of income is leviable under Section 271(1)(c) of the Income- tax Act. In order to rationalize and bring objectivity, certainty and clarity in the penalty provisions, it is proposed that section 271 shall not apply to and in relation to any assessment for the assessment year commencing on or after the 1st day of April,2017 and subsequent assessment years and penalty be levied under the newly inserted section 270A with effect from 1 st April,2017. The new section 270A provides for levy of penalty in cases of under reporting and misreporting of income."
11 In view of the above, we are of the opinion that the petitioner is entitled to the immunity from levy of the penalty as per the provisions of Sec.270AA of the Act and as a consequence the impugned order dated 31.05.2023 passed by the respondent under Page 24 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025 NEUTRAL CITATION C/SCA/12968/2023 JUDGMENT DATED: 12/08/2025 undefined Sec.270AA(4) of the Act is quashed and set aside and the respondent is directed to grant immunity under Sec.270AA of the Act to the petitioner. Rule is made absolute to the aforesaid extent with no orders as to costs.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) BIMAL Page 25 of 25 Uploaded by BIMAL B CHAKRAVARTY(HC01089) on Thu Aug 28 2025 Downloaded on : Fri Aug 29 22:53:26 IST 2025