Immunity under s.270AA was refused because the officer called it 'misreporting'. Can they do that with one word?
No. Denying immunity on a bare label of misreporting, without identifying which limb of s.270A or which sub-clause of s.270A(9) is attracted, was held manifestly arbitrary. The Court directed that immunity be granted.
Decided by the High Court (Delhi High Court — Manmohan J and Dinesh Kumar Sharma J) on 2022-03-28, reported as W.P.(C) No. 5111 of 2022; CM Nos. 15165-15166 of 2022; [2022] 145 taxmann.com 665 (Delhi); 2022 LiveLaw (Del) 257. It bears on section 270A, section 270A(9), section 270AA, section 270AA(4), section 270AA(1), section 270AA(3A) of the Income Tax Act 1961, in Penalty matters.
Section 270AA immunity is the most commonly missed relief in penalty matters, and the most common reason it is refused is a one-word allegation of misreporting. This is the authority that says one word is not enough.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For AY 2018-19 the petitioner filed its return, and the assessment order dated 23 June 2021 accepted the income it had declared — a voluntary computation the petitioner had filed to buy peace and avoid litigation, which the assessment order itself noted. Penalty proceedings under s.270A followed, on a notice that did not say whether under-reporting or misreporting was alleged. The petitioner applied for immunity under s.270AA, and by order dated 9 March 2022 the Assessing Officer rejected the application on the ground that the case did not fall within the scope of s.270AA. Before the High Court the petitioner argued that the rejection was out of time under s.270AA(4), and that as all facts and figures had been accepted and the dispute was a pure question of law on the construction of the contracts, the Act and the DTAA, no misreporting could be alleged.
The order dated 9 March 2022 under s.270AA(4) rejecting the immunity application for AY 2018-19 was set aside and the Assessing Officer directed to grant immunity under s.270AA. Denying immunity on the footing that penalty had been initiated under s.270A for misreporting was erroneous, arbitrary and bereft of reason where the penalty notice did not specify which limb — under-reporting or misreporting — was invoked; there was not even a whisper as to which limb of s.270A was attracted or how the ingredients of s.270A(9) were satisfied, so a bare reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary. The Court added that the assessment rested on the petitioner's own voluntary computation, filed to buy peace and avoid litigation and accepted as such in the assessment order, so no question of misreporting arose (paras 6 to 10). The petitioner's separate argument that the rejection order was barred by limitation under s.270AA(4) was recorded but not decided.
The Court gave three reasons. First, refusing immunity because penalty had been initiated for misreporting was erroneous, arbitrary and bereft of any reason when the penalty notice itself did not specify the limb of s.270A relied on (para 6). Second, there was not even a whisper as to which limb was attracted or how the ingredients of s.270A(9) were satisfied, and in the absence of those particulars a mere reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary (para 7). Third, the entire edifice of the assessment order was in fact the petitioner's own voluntary computation of income, filed to buy peace and avoid litigation and noted and accepted as such in the assessment order, so there was no question of any misreporting (para 8). The Court added that the action was contrary to the avowed legislative intent of s.270AA, which is to encourage a taxpayer to fast-track settlement of the issue, to recover tax demand and to reduce protracted litigation (para 9).
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.
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Handle my notice → Ask a CA on WhatsAppNo. Denying immunity on a bare label of misreporting, without identifying which limb of s.270A or which sub-clause of s.270A(9) is attracted, was held manifestly arbitrary. The Court directed that immunity be granted. This was decided by the High Court (Delhi High Court — Manmohan J and Dinesh Kumar Sharma J) and bears on section 270A, section 270A(9), section 270AA, section 270AA(4), section 270AA(1), section 270AA(3A) of the Income Tax Act 1961. It is reported as W.P.(C) No. 5111 of 2022; CM Nos. 15165-15166 of 2022; [2022] 145 taxmann.com 665 (Delhi); 2022 LiveLaw (Del) 257. Section 270AA immunity is the most commonly missed relief in penalty matters, and the most common reason it is refused is a one-word allegation of misreporting. This is the authority that says one word is not enough. If it applies to you, the first step is this: Apply within one month from the end of the month in which the assessment order was received — the window is short and unforgiving.
For AY 2018-19 the petitioner filed its return, and the assessment order dated 23 June 2021 accepted the income it had declared — a voluntary computation the petitioner had filed to buy peace and avoid litigation, which the assessment order itself noted. Penalty proceedings under s.270A followed, on a notice that did not say whether under-reporting or misreporting was alleged. The petitioner applied for immunity under s.270AA, and by order dated 9 March 2022 the Assessing Officer rejected the application on the ground that the case did not fall within the scope of s.270AA. Before the High Court the petitioner argued that the rejection was out of time under s.270AA(4), and that as all facts and figures had been accepted and the dispute was a pure question of law on the construction of the contracts, the Act and the DTAA, no misreporting could be alleged. The matter was decided on 2022-03-28 by the High Court (Delhi High Court — Manmohan J and Dinesh Kumar Sharma J). On those facts the High Court held as follows. The order dated 9 March 2022 under s.270AA(4) rejecting the immunity application for AY 2018-19 was set aside and the Assessing Officer directed to grant immunity under s.270AA. Denying immunity on the footing that penalty had been initiated under s.270A for misreporting was erroneous, arbitrary and bereft of reason where the penalty notice did not specify which limb — under-reporting or misreporting — was invoked; there was not even a whisper as to which limb of s.270A was attracted or how the ingredients of s.270A(9) were satisfied, so a bare reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary. The Court added that the assessment rested on the petitioner's own voluntary computation, filed to buy peace and avoid litigation and accepted as such in the assessment order, so no question of misreporting arose (paras 6 to 10). The petitioner's separate argument that the rejection order was barred by limitation under s.270AA(4) was recorded but not decided.
The Court gave three reasons. First, refusing immunity because penalty had been initiated for misreporting was erroneous, arbitrary and bereft of any reason when the penalty notice itself did not specify the limb of s.270A relied on (para 6). Second, there was not even a whisper as to which limb was attracted or how the ingredients of s.270A(9) were satisfied, and in the absence of those particulars a mere reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary (para 7). Third, the entire edifice of the assessment order was in fact the petitioner's own voluntary computation of income, filed to buy peace and avoid litigation and noted and accepted as such in the assessment order, so there was no question of any misreporting (para 8). The Court added that the action was contrary to the avowed legislative intent of s.270AA, which is to encourage a taxpayer to fast-track settlement of the issue, to recover tax demand and to reduce protracted litigation (para 9). In the words reproduced by the source cited on this page: "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."
It was decided by the High Court on 2022-03-28 and is reported as W.P.(C) No. 5111 of 2022; CM Nos. 15165-15166 of 2022; [2022] 145 taxmann.com 665 (Delhi); 2022 LiveLaw (Del) 257. 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(4), section 270AA(1), section 270AA(3A), 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 order dated 9 March 2022 under s.270AA(4) rejecting the immunity application for AY 2018-19 was set aside and the Assessing Officer directed to grant immunity under s.270AA. Denying immunity on the footing that penalty had been initiated under s.270A for misreporting was erroneous, arbitrary and bereft of reason where the penalty notice did not specify which limb — under-reporting or misreporting — was invoked; there was not even a whisper as to which limb of s.270A was attracted or how the ingredients of s.270A(9) were satisfied, so a bare reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary. The Court added that the assessment rested on the petitioner's own voluntary computation, filed to buy peace and avoid litigation and accepted as such in the assessment order, so no question of misreporting arose (paras 6 to 10). The petitioner's separate argument that the rejection order was barred by limitation under s.270AA(4) was recorded but not decided. It arises in Penalty matters, on section 270A, section 270A(9), section 270AA, section 270AA(4), section 270AA(1), section 270AA(3A) of the Income Tax Act 1961, and was decided by Delhi High Court — Manmohan J and Dinesh Kumar Sharma 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. Pay the tax and interest within the time allowed in the demand notice and do not file an appeal against the same order. In the application, point out precisely that the notice does not name any sub-clause of s.270A(9).
Searched for later treatment; none was found. That is not the same as a source affirming it. No later decision applying, following or affirming this judgment has been found. Absence of contrary authority is not confirmation, and the judgment should be used as a well-reasoned Division Bench decision rather than as settled law. What has changed since is statutory and it changes how the case is used. Clause 21 of the Finance Act 2026 (Act No. 4 of 2026, assented 30 March 2026) substitutes sub-sections (1) to (3) of s.270AA and inserts sub- section (3A), and is deemed to have done so with effect from 1 March 2026. Substituted sub-section (1) grants 'immunity from imposition or, as the case may be, waiver of penalty', and clause (b) requires that, 'where penalty has been levied or, as the case may be, leviable under the circumstances referred to in sub-section (9) of section 270A', additional income-tax amounting to one hundred per cent of the amount of tax payable on under-reported income be paid within the period specified in the notice of demand, in lieu of such penalty. Sub-section (3A) refuses immunity and waiver where any proceedings have been initiated under Chapter XXII. None of that disturbs this judgment, which is about an officer who gave no reason at all: on a year governed by the pre-1-March-2026 text this remains a route to immunity without paying anything further, and where the officer has since spelt out the limb the assessee now has a priced route instead of none. The relaxation carries into the new Act as well: s.440 of the Income-tax Act 2025, substituted by the same Finance Act with effect from 1 April 2026 and re-headed 'Waiver of penalty and immunity from prosecution', allows waiver of a penalty levied in the s.439(11) circumstances on additional income-tax of one hundred per cent for clauses (a) to (f) and one hundred and twenty per cent for clause (g). Read the section as it stands for the year in hand before advising, because the choice now is between immunity and a priced waiver and the two have different conditions. 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.
THE CASE IN ITS OWN TERMS. W.P.(C) No. 5111 of 2022 with CM Nos. 15165-15166 of 2022, decided 28 March 2022 for assessment year 2018-19; reported at [2022] 145 taxmann.com 665 (Delhi) and 2022 LiveLaw (Del) 257. The order under challenge was the rejection dated 9 March 2022 of an immunity application under s.270AA(4); it was set aside and the Assessing Officer directed to grant immunity. WHAT THE RELIEF TURNED ON, AND WHAT IT DID NOT. Two facts carried it. The first is the officer's silence as to the limb: the penalty notice did not say whether under-reporting or misreporting was alleged, and there was not a whisper as to how the ingredients of any sub-clause of s.270A(9) were satisfied, so the bare use of the word 'misreporting' in the assessment order made the rejection manifestly arbitrary. The second is that the assessment merely accepted the petitioner's own voluntary computation, filed to buy peace and avoid litigation and recorded as such in the assessment order, so no question of misreporting arose on the facts at all. Where the officer has spelt out a s.270A(9) sub-clause and said how it is attracted, this case will not assist; the argument is then on the merits of that allegation and not on the form of the notice. THE POINT THAT WAS NOT DECIDED. The petitioner's limitation argument under s.270AA(4) was recorded at para 3 but not decided, so the case is no authority on the one-month period or on what follows if the officer overruns it. The Court also did not consider whether the conditions precedent in s.270AA(1) were satisfied, because they were not in dispute. Check both on your own facts before relying on the judgment. HOW TO USE IT IN PRACTICE. The immunity route is unforgiving on timing and on conduct: the application must go in within one month from the end of the month in which the assessment order was received, the tax and interest must be paid within the time allowed in the demand notice, and no appeal may be filed against the same order. Losing the appeal right is the price, so the decision to apply has to be taken with the merits of the assessment in view. What this judgment gives you is the answer to the commonest reason immunity is refused, a one-word allegation; make that objection in the application itself rather than saving it for a writ. The Court did not decide the argument that the rejection order was barred by limitation under s.270AA(4), and did not consider whether the s.270AA conditions precedent were satisfied — they were not in dispute. Check those on your own facts. 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 order dated 9 March 2022 under s.270AA(4) rejecting the immunity application for AY 2018-19 was set aside and the Assessing Officer directed to grant immunity under s.270AA. Denying immunity on the footing that penalty had been initiated under s.270A for misreporting was erroneous, arbitrary and bereft of reason where the penalty notice did not specify which limb — under-reporting or misreporting — was invoked; there was not even a whisper as to which limb of s.270A was attracted or how the ingredients of s.270A(9) were satisfied, so a bare reference to the word 'misreporting' in the assessment order made the rejection manifestly arbitrary. The Court added that the assessment rested on the petitioner's own voluntary computation, filed to buy peace and avoid litigation and accepted as such in the assessment order, so no question of misreporting arose (paras 6 to 10). The petitioner's separate argument that the rejection order was barred by limitation under s.270AA(4) was recorded but not decided.
TaxSphere, “Schneider Electric South East Asia (HQ) Pte Ltd v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/schneider-electric-v-acit/ (validity last checked 2026-08-19)
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I applied for immunity under s.270AA after paying the tax on the s.80GGC disallowance. The Assessing Officer refused it because he had charged misreporting. Was he entitled to?
Can the officer reject a s.270AA immunity application without a hearing and without saying which clause of s.270A(9) applies?
The officer refused immunity under s.270AA saying the penalty was for misreporting. Must he show which clause of s.270A(9) applies?
I withdrew my education cess claim after the Finance Act 2022 inserted section 155(18). Can the officer still treat it as under-reported income and levy penalty?
