Question And Answer
Subject: At what circumstances the assessee will get immunity from penalty u/s 270AA of the Act ?
Querist: Sree Lekha
Answered by:
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Date: May 23, 2021
Query asked by Sree Lekha

Good evening sir. The assessment is completed by making five additions to the total returned income. Penalty u/s 270A is levied for these five additions, one for misreporting of income and four for underreporting of the income. In this case, can the assessee opt for immunity from penalty u/s 270AA for that assessment year? Section 270AA(3) specifies that if the penalty is initiated on account of misreporting of income, then the assessing officer will not grant immunity from penalty. Please clarify.

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Section 270AA of the Income-tax Act, 1961 provides taxpayers with immunity from imposition of penalty under section 270A of the Act.

However, Section 270AA (3) of the Act takes into its account penalty on account of `Under-reported Income and not mis-reporting of income.

The cases of misreporting of income referred to in sub-section (8) shall be the following, namely:

(a) misrepresentation or suppression of facts;
(b) failure to record investments in the books of account;
(c) claim of expenditure not substantiated by any evidence;
(d) recording of any false entry in the books of account;
(e) failure to record any receipt in books of account having a bearing on total income; and
(f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.

Therefore, if the nature of addition is on account of any of the above, immunity cannot be granted under section 270AA of the Act. The Tax consultant will be able to guide properly after studying the assessment order .

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