Can the officer reject a s.270AA immunity application without a hearing and without saying which clause of s.270A(9) applies?
No. The Rajasthan High Court held that the Deputy Commissioner had violated the proviso to s.270AA(4) by giving no opportunity of hearing, that his order was wholly laconic and did not indicate under which part of s.270A(9) the case was said to fall, and that the revisional authority had, without cogent reasons, cursorily placed the case within clauses (a) and (c). On the facts the amount had not been detected by the department at all - it was disclosed voluntarily during scrutiny after ten other issues had been raised without any addition - so clauses (a) and (c) were not attracted. The Court quashed both orders and directed that immunity under s.270AA be granted.
Decided by the High Court (Arun Bhansali J and Shubha Mehta J) on 2024-01-04, reported as D.B. Civil Writ Petition No. 10198/2023 (High Court of Judicature for Rajasthan, Bench at Jaipur). It bears on section 270A, section 270A(9), section 270AA, section 270AA(3), section 270AA(4), section 142(1), section 264 of the Income Tax Act 1961, in Penalty and Assessment & Scrutiny matters.
It is a rare case where the High Court did not merely set aside the refusal and send it back but ordered the immunity to be granted. It is authority for two practical propositions: the proviso to s.270AA(4) means a real hearing before rejection, and a mistake the assessee volunteers and corrects before the department finds it is not misrepresentation or suppression.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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During scrutiny for AY 2018-19 the petitioner found that it had inadvertently merged a provision for doubtful GST input tax credit of Rs. 16,30,91,496 with expense accounts. It disclosed and corrected this itself during the scrutiny proceedings, communicating the correction on 24 February 2021 and adding the amount back to income. The assessment order accepted the addition but recorded initiation of penalty under s.270A for misreporting of income. The petitioner applied for immunity under s.270AA. The Deputy Commissioner rejected the application by order dated 27 July 2021 without giving any hearing, and the revisional authority rejected the petitioner's revision by order dated 13 March 2023, observing cursorily that the case fell within clauses (a) and (c) of s.270A(9). The petitioner moved the High Court under Article 226.
The writ petition was allowed. The orders dated 27 July 2021 and 13 March 2023 were quashed and set aside and the respondents were directed to grant immunity under s.270AA to the petitioner. The Deputy Commissioner had violated the proviso to s.270AA(4) by not providing any opportunity of hearing; his order was wholly laconic and did not indicate under which part of s.270A(9) the case fell; and the revisional authority had without cogent reasons indicated in a wholly cursory manner that the case was within clauses (a) and (c). On the facts, the merging of the GST input credit with expenses had not been detected by the authorities and was pointed out voluntarily by the petitioner, so clauses (a) and (c) of s.270A(9) were not attracted.
The Court read the assessment order and found it clear that the authorities had not themselves detected the provision for GST and that it was voluntarily offered by the petitioner. It found the rejection order wholly non-speaking, doing no more than restating sub-section (3) of s.270AA and asserting that the case fell within the circumstances in s.270A(9). Neither that order nor the revision order indicated under which sub-clause of s.270A(9) the case fell, and the revisional authority's reference to clauses (a) and (c) was cursory and appeared uncertain. The Court noted that although several notices under s.142(1) had been issued during scrutiny and as many as ten issues raised on which no addition could be made, the merging of GST input credit with expenses was never pointed out or detected by the authority and was disclosed voluntarily, so that a finding of misrepresentation or suppression of facts under clause (a), or of a claim of expenditure not substantiated by evidence under clause (c), was contrary to the facts and based on assumptions. It relied on the Delhi High Court's decision in Schneider Electric South East Asia (HQ) Pte Ltd, an extract from which appears at para 21.
In view of above, it is apparent that the Deputy Commissioner violated the provisions of proviso to Section 270AA (4) of the Act by not providing any opportunity of hearing, the order passed was wholly laconic, the same did not indicate as to under which part of Section 270A (9), the case of the petitioner was covered
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Handle my notice → Ask a CA on WhatsAppNo. The Rajasthan High Court held that the Deputy Commissioner had violated the proviso to s.270AA(4) by giving no opportunity of hearing, that his order was wholly laconic and did not indicate under which part of s.270A(9) the case was said to fall, and that the revisional authority had, without cogent reasons, cursorily placed the case within clauses (a) and (c). On the facts the amount had not been detected by the department at all - it was disclosed voluntarily during scrutiny after ten other issues had been raised without any addition - so clauses (a) and (c) were not attracted. The Court quashed both orders and directed that immunity under s.270AA be granted. This was decided by the High Court (Arun Bhansali J and Shubha Mehta J) and bears on section 270A, section 270A(9), section 270AA, section 270AA(3), section 270AA(4), section 142(1), section 264 of the Income Tax Act 1961. It is reported as D.B. Civil Writ Petition No. 10198/2023 (High Court of Judicature for Rajasthan, Bench at Jaipur). It is a rare case where the High Court did not merely set aside the refusal and send it back but ordered the immunity to be granted. It is authority for two practical propositions: the proviso to s.270AA(4) means a real hearing before rejection, and a mistake the assessee volunteers and corrects before the department finds it is not misrepresentation or suppression. If it applies to you, the first step is this: If you find and correct an error yourself during scrutiny, put on record in writing that the department had not detected it and set out the notices already issued and the issues already examined without addition. That record is what carried the day here.
During scrutiny for AY 2018-19 the petitioner found that it had inadvertently merged a provision for doubtful GST input tax credit of Rs. 16,30,91,496 with expense accounts. It disclosed and corrected this itself during the scrutiny proceedings, communicating the correction on 24 February 2021 and adding the amount back to income. The assessment order accepted the addition but recorded initiation of penalty under s.270A for misreporting of income. The petitioner applied for immunity under s.270AA. The Deputy Commissioner rejected the application by order dated 27 July 2021 without giving any hearing, and the revisional authority rejected the petitioner's revision by order dated 13 March 2023, observing cursorily that the case fell within clauses (a) and (c) of s.270A(9). The petitioner moved the High Court under Article 226. The matter was decided on 2024-01-04 by the High Court (Arun Bhansali J and Shubha Mehta J). On those facts the High Court held as follows. The writ petition was allowed. The orders dated 27 July 2021 and 13 March 2023 were quashed and set aside and the respondents were directed to grant immunity under s.270AA to the petitioner. The Deputy Commissioner had violated the proviso to s.270AA(4) by not providing any opportunity of hearing; his order was wholly laconic and did not indicate under which part of s.270A(9) the case fell; and the revisional authority had without cogent reasons indicated in a wholly cursory manner that the case was within clauses (a) and (c). On the facts, the merging of the GST input credit with expenses had not been detected by the authorities and was pointed out voluntarily by the petitioner, so clauses (a) and (c) of s.270A(9) were not attracted.
The Court read the assessment order and found it clear that the authorities had not themselves detected the provision for GST and that it was voluntarily offered by the petitioner. It found the rejection order wholly non-speaking, doing no more than restating sub-section (3) of s.270AA and asserting that the case fell within the circumstances in s.270A(9). Neither that order nor the revision order indicated under which sub-clause of s.270A(9) the case fell, and the revisional authority's reference to clauses (a) and (c) was cursory and appeared uncertain. The Court noted that although several notices under s.142(1) had been issued during scrutiny and as many as ten issues raised on which no addition could be made, the merging of GST input credit with expenses was never pointed out or detected by the authority and was disclosed voluntarily, so that a finding of misrepresentation or suppression of facts under clause (a), or of a claim of expenditure not substantiated by evidence under clause (c), was contrary to the facts and based on assumptions. It relied on the Delhi High Court's decision in Schneider Electric South East Asia (HQ) Pte Ltd, an extract from which appears at para 21. In the words reproduced by the source cited on this page: "In view of above, it is apparent that the Deputy Commissioner violated the provisions of proviso to Section 270AA (4) of the Act by not providing any opportunity of hearing, the order passed was wholly laconic, the same did not indicate as to under which part of Section 270A (9), the case of the petitioner was covered" The decision followed or applied Schneider Electric South East Asia (HQ) Pte Ltd v. ACIT (Delhi High Court) - relied on and extracted.
It was decided by the High Court on 2024-01-04 and is reported as D.B. Civil Writ Petition No. 10198/2023 (High Court of Judicature for Rajasthan, Bench at Jaipur). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 270A, section 270A(9), section 270AA, section 270AA(3), section 270AA(4), section 142(1), section 264, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed. The orders dated 27 July 2021 and 13 March 2023 were quashed and set aside and the respondents were directed to grant immunity under s.270AA to the petitioner. The Deputy Commissioner had violated the proviso to s.270AA(4) by not providing any opportunity of hearing; his order was wholly laconic and did not indicate under which part of s.270A(9) the case fell; and the revisional authority had without cogent reasons indicated in a wholly cursory manner that the case was within clauses (a) and (c). On the facts, the merging of the GST input credit with expenses had not been detected by the authorities and was pointed out voluntarily by the petitioner, so clauses (a) and (c) of s.270A(9) were not attracted. It arises in Penalty and Assessment & Scrutiny matters, on section 270A, section 270A(9), section 270AA, section 270AA(3), section 270AA(4), section 142(1), section 264 of the Income Tax Act 1961, and was decided by Arun Bhansali J and Shubha Mehta J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask for a hearing on the s.270AA application and record the request; the proviso to s.270AA(4) requires one before rejection. In the reply and in any revision, ask the authority to name the clause of s.270A(9) relied on, and press the point that a non-speaking order that only reproduces the statute cannot stand. Where the refusal order and the revision order are both non-speaking, consider a writ petition rather than waiting for the penalty order; the Court here quashed both and directed immunity.
Validity check could not be completed. No decision doubting or reversing this judgment was located, but no dedicated search of its subsequent history, including any SLP, was carried out. It is a different case from Chambal Fertilisers and Chemicals Ltd. v. Joint Commissioner of Income Tax, Range-2, Kota, already in this library, which concerns the deductibility of education cess. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is not a search case; it is included because it is the clearest High Court authority on the officer's duty under s.270AA(4) and on when a voluntary correction cannot be misreporting. The judgment records the amount of the provision for doubtful GST input tax credit that was added back as Rs. 16,30,91,496; it does not state the amount of penalty proposed, and none should be inferred. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed. The orders dated 27 July 2021 and 13 March 2023 were quashed and set aside and the respondents were directed to grant immunity under s.270AA to the petitioner. The Deputy Commissioner had violated the proviso to s.270AA(4) by not providing any opportunity of hearing; his order was wholly laconic and did not indicate under which part of s.270A(9) the case fell; and the revisional authority had without cogent reasons indicated in a wholly cursory manner that the case was within clauses (a) and (c). On the facts, the merging of the GST input credit with expenses had not been detected by the authorities and was pointed out voluntarily by the petitioner, so clauses (a) and (c) of s.270A(9) were not attracted.
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