Immunity u/s 270AA – No bar or prohibition against the assessee challenging an order passed by the A.O. rejecting its application made under sub-section 1 of section 270 AA – Application u/s 264 against rejection of such application maintainable

Immunity u/s 270AA – No bar or prohibition against the assessee challenging an order passed by the A.O. rejecting its application made under sub-section 1 of section 270 AA – Application u/s 264 against rejection of such application maintainable

The petitioner, engaged in the business of manufacturing and selling fabrics and a trading member of the National Stock Exchange, filed its return for the A.Y. 2017-2018 on 31st October, 2017 declaring a total income of Rs. 2,27,11,320. The A.O. initiated scrutiny assessment by issuing statutory notices under sections 143(2) and 142(1) of the Act. He passed an assessment order dated 19th December, 2019 u/s 143(3) determining the total income of the petitioner at Rs. 7,41,84,730. He determined book profit under the provisions of section 115(JB) at Rs. 2,19,33,505. Following this, the A.O. issued a demand notice dated 19th December, 2019 u/s 156 raising a demand of Rs. 1,80,14,619. The petitioner noted that the A.O. had not correctly allowed the Minimum Alternate Tax (MAT) credit available to it while determining the tax liability. Hence it filed an application dated 6th January, 2020 u/s 154 seeking rectification of the assessment order. The A.O. accepted the submission of the petitioner and granted the MAT credit available and issued a revised Computation Sheet dated 14th January, 2020 determining the correct amount of tax liability of the petitioner. He also issued a revised notice of demand dated 14th January, 2020 u/s 156 raising a demand of Rs. 57,356 payable within 30 days from the service of the said notice.

The petitioner accepted the order passed by the A.O. u/s 154 and on 29th January, 2020 paid fully the tax demand of Rs. 57,356. Thereafter, on 30th January, 2020 it filed an application u/s 270AA in the prescribed Form No. 68 before the A.O. seeking immunity from penalty, etc. This application was rejected by the A.O. by an order dated 28th February, 2020. Aggrieved by this order, the petitioner filed an application dated 18th December, 2020 before the Pr. CIT under the provisions of section 264. The Pr. CIT rejected this application on the ground that sub-section 6 of section 270AA specifically prohibits revisionary proceedings u/s 264 against the order passed by the A.O. u/s 270AA(4). This order was challenged by the petitioner before the High Court.

The Court observed that under sub-section 6 of section 270AA, no appeal under section 246(A) or an application for revision u/s 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. This only means that when an assessee makes an application under sub-section 1 of section 270AA and such an application has been accepted under sub-section 4 of section 270AA, the assessee cannot file an appeal u/s 246(A) or an application for revision u/s 264 against the order of assessment or reassessment passed under sub-section 3 of section 143 or section 147. This does not provide for any bar or prohibition against the assessee challenging an order passed by the A.O. rejecting its application made under sub-section 1 of section 270AA. The application before the Pr. CIT was an order challenging an order of rejection passed by the A.O. of an application filed by the petitioner under sub-section 1 of section 270AA seeking grant of immunity from imposition of penalty and initiation of proceedings under sub-section 276C or section 277CC.

Therefore, the Pr. CIT was not correct in rejecting the application on the ground that there is a bar under sub-section 6 of section 270AA in filing such application. The impugned order was set aside and the matter was remanded back to the Pr. CIT to consider de novo.