Section 270AA — Immunity from Imposition of Penalty, etc.

Section 270AA of the Income-tax Act, 1961 provides taxpayers with an opportunity to seek immunity from the imposition of penalty under sections 270A and prosecution under section 276C, in cases where the taxpayer has under-reported income. This section applies when an assessee has filed a return of income and the assessment has been completed under section 143(3) or section 147. To avail of this immunity, the taxpayer must pay the tax and interest payable as per the assessment order and make an application to the Assessing Officer within one month from the end of the month in which the assessment order is received. The significance of this provision lies in its ability to encourage voluntary compliance by allowing taxpayers to rectify their mistakes without facing severe penalties or prosecution, provided they meet the statutory requirements. The burden of proof lies on the taxpayer to demonstrate compliance with the conditions laid out in this section.

Common Litigation Flashpoints

1. Eligibility for immunity under section 270AA
2. Timeliness of the application for immunity
3. Interpretation of 'under-reported income'
4. Discretion of the Assessing Officer in granting immunity

Judgments on Section 270AA — Immunity from Imposition of Penalty, etc.

• Olympia Builders Pvt.Ltd. vs CIT(A) NFAC, Delhi — ITAT, 2025
  Disallowance of expenditure on an estimated basis does not automatically equate to under-reporting of income for penalty under Section 270A.
• GM Modular Private Limited vs Principal Commissioner of Income Tax – 1 and Ors — HC,
  A bona fide claim based on a binding judicial precedent cannot attract penal consequences even if the precedent is later reversed.
• Union of India & Anr. vs M/s. Ganpati Dealcom Pvt. Ltd. — SC,
  The 2016 Amendment Act cannot be applied retrospectively as it creates new offences and substantive changes, which cannot be applied to past transactions.
• Kavita Jasjit Singh vs Commissioner of Income Tax (Appeals) — ITAT, 2023
  The non-declaration of interest on income tax refund cannot be considered as underreporting of income if the taxpayer had a bona fide reason for not declaring it.
• SCHNEIDER ELECTRIC SOUTH EAST ASIA (HQ) PTE LTD vs ASST COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE 3 (1)(2), NEW DELHI AND ORS. — HC, 2022
  The denial of immunity under Section 270AA is arbitrary if the Revenue does not specify the grounds for misreporting.