Expanding the scope of immunity from imposition of penalty or prosecution under section 270AA-
Section 270AA of the Act, provides, inter-alia, procedure of granting immunity by the Assessing Officer from imposition of penalty or prosecution, if assessee fulfils the following conditions, namely: –
(a) the tax and interest payable as per Assessment order, has been paid within the period specified in notice of demand;
(b) no appeal against the such assessment order has been filed.
2. Further, sub-section (2) provides that assessee shall file an application within one month from the end of the month in which said assessment order has been received by him. Furthermore, sub-section (3) provides that assessing officer shall, subject to the fulfilment of
the aforementioned conditions, and after the expiry of the period of filing the appeal, grant the immunity from imposition of penalty under section 270A and initiation of prosecution proceedings under section 276C or section 276CC. Further, sub-section (4) provides that Assessing Officer shall pass an order accepting or rejecting the application, within a period of three months from the end of the month in which the application for requesting immunity is received.
3. Presently, immunity under section 270AA can only be granted in the cases of under reporting of income and not in the case of under-reporting of income in consequence of misreporting. However, the taxpayer is required to pay an additional income-tax to the extent of 100% of the amount of tax payable on such income in lieu of the penalty.
4. In this regard, it is considered that provision of immunity should also be extended to such cases where under-reporting of income is in consequence of misreporting.
5. In view of the same, it is proposed to amend the section 270AA of the Act so as to extend the scope of immunity to such cases where penalty is initiated for under-reporting of income in consequence of misreporting.
6. This amendment will take effect from the 1st day of March, 2026 for AY 2026-27 or any earlier Assessment years.