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2024 Supreme(Raj) 34
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
ARUN BHANSALI, SHUBHA MEHTA, JJ.
Chambal Fertilizers and Chemicals Limited, through its authorised Representative Anuj Jain, S/o. Mr. JBK Jain - Petitioner
Versus
Office of the Principal Commissioner of Income Tax and Anr. – Respondents
D.B. Civil Writ Petition No. 10198 Of 2023
Decided On : 04-01-2024
For the Petitioner: Mr. Sanjay Jhanwar, assisted by Ms. Vrinda Lakhotia, Mr. Rajat Sharma & Mr. Aryan Singh Chouhan.
For the Respondents: Mr. Shantanu Sharma with Ms. Bhawana Laddha.
IMPORTANT POINT
The court emphasized the need for specific reasons and evidence to justify the imposition of penalty under Section 270A (9) and highlighted the legislative intent of encouraging settlement of tax issues.
Headnote:
Income Tax - Revision Petition - Section 264 of the Income Tax Act, 1961 - Section 139 (1), Section 139 (5), Section 164 (2), Section 142 (1), Section 143 (3), Section 270A, Section 270AA - The court discussed the provisions of Section 270A and Section 270AA of the Income Tax Act, 1961, and their application in the case. It highlighted the requirement of providing an opportunity of being heard under Section 270AA (4) and the conditions for granting immunity from penalty under Section 270AA (1). The court also emphasized the need for specific reasons and evidence to justify the imposition of penalty under Section 270A (9) and the importance of legislative intent to encourage settlement of tax issues.
Fact of the Case:
The petitioner filed a revision petition under Section 264 of the Income Tax Act, 1961, challenging the rejection of its application for immunity from penalty under Section 270AA. The petitioner voluntarily disclosed an amount during scrutiny proceedings and sought immunity from penalty, but its application was rejected without providing an opportunity of being heard.
Finding of the Court:
The court found that the rejection of the petitioner's application and the subsequent revisional order were not justified. It highlighted the non-compliance with the proviso to Section 270AA (4) and the lack of specific reasons for imposing the penalty under Section 270A (9). The court concluded that the orders impugned were quashed and set aside, directing the respondents to grant immunity to the petitioner under Section 270AA.
Issues: Non-compliance with the proviso to Section 270AA (4), lack of specific reasons for imposing penalty under Section 270A (9), and rejection of the petitioner's application for immunity from penalty.
Ratio Decidendi: The court emphasized the importance of providing an opportunity of being heard under Section 270AA (4) and the need for specific reasons and evidence to justify the imposition of penalty under Section 270A (9). It also highlighted the legislative intent of encouraging settlement of tax issues.
Final Decision: The writ petition was allowed, and the orders impugned were quashed and set aside. The respondents were directed to grant immunity under Section 270AA of the Act to the petitioner.
ORDER :
1. This writ petition has been filed by the petitioner aggrieved of order dated 13.03.2023 (Annex.14) passed by the Principal Commissioner of Income Tax, Udaipur whereby revision petition filed by the petitioner under Section 264 of the Income Tax Act, 1961 (‘the Act’) has been rejected.
2. The petitioner had filed its original return of income under Section 139 (1) of the Act on 30.11.2018 for the Assessment Year 2018-19 and revised return of income on 29.03.2019 under Section 139 (5) of the Act. The case of the petitioner was selected for complete scrutiny and an exhaustive list of issues was communicated by notice under Section 164 (2) of the Act on 22.09.2019. During the course of scrutiny, various notices under Section 142 (1) of the Act were issued and replies to the same were submitted by the petitioner.
3. It is claimed that during the course of scrutiny proceedings, the petitioner realized that ‘provision for doubtful GST input tax credit’ amounting to Rs.16,30,91,496/- had been inadvertently merged with another expense account and mistakenly claimed as expenses under the IT provisions. Accordingly, the said amount was suo moto surrendered by the petitioner by revising its return of income and adding back the amount ‘provision for doubtful GST input tax credit’, to the total income. The said aspect was communicated vide letter dated 24.02.2021 alongwith submission of revised computation.
4. The assessment order (Annex.6) under Section 143 (3) of the Act was passed by the National E-Assessment Centre (‘NeAC’) making only addition of suo moto surrendered amount of Rs.16,30,91,496/-, however, it was observed in the order that the penalty under Section 270A of the Act is imposed for misreporting of the income.
5. The petitioner filed an application under Section 270AA of the Act against the penalty order before the Deputy Commissioner, which came to be rejected by order dated 27.07.2021 (Annex.9).
6. The petitioner challenged the order of rejection by filing revision petition under Section 264 of the Act, inter-alia, on the ground that no opportunity of hearing was provided to the petitioner, which was in non-compliance of Section 270AA of the Act and that the order rejecting the application did not specify how there was misreporting of the income when the amount was disclosed by the petitioner on its own volition and that the case of the petitioner did not fall in any of the exceptions under Section 270AA of the Act. However, the revision petition came to be rejected by order dated 13.03.2023.
7. Learned counsel for the petitioner, with reference to order dated 27.07.2021 (Annex.9), passed by the Deputy Commissioner rejecting the application under Section 270AA of the Act made submissions that the said order has been passed contrary to the express provisions of the Act. Submissions have been made that in the application filed under Section 270AA of the Act (Annex.7), the petitioner had clearly sought opportunity of being heard, however, no opportunity was provided to the petitioner, which action of the authority is in clear violation of the proviso to Section 270AA (4) of the Act. Further submissions have been made that the order is wholly non-speaking, inasmuch as only one line order has been passed that on perusal of the application the authority did not find the same tenable and on that count, the order deserves to be set aside.
8. Further submissions have been made that the revisional authority, instead of appreciating the defect in the order passed by the Deputy Commissioner, has rejected the application by observing that the case of the petitioner is within the ambit of Clauses (a) and (c) of Section 270A (9) of the Act and, therefore, Clause (3) of Section 270AA would apply to its case. It is submitted that the said observations are also without any basis, as nowhere it has been shown as to how the case would fall within Clause (a) or (c) of Section 270A (9) of the Act. It was emphasized that the petitioner
