Prem Lata Bansal, Senior Advocate

Query No.1

The Assessment Unit of the Income Tax Department made an assessment for the AY 2018- 19 u/s 147 r/w section 144B on 14.02.2024 and a Demand of ₹ 1,62,256 is raised. The demand is raised without giving credit of the self assessment tax paid on 07.04.2023 at the time of Filing Return of Income U/s 148 i.e. ₹ 60,917.

Rectification petition for credit of ₹ 60,917/- has been filed with the Jurisdictional Assessing Officer and is pending for processing.

Balance Demand ₹ 1,01,339/- (1,62,256 – 60,917) paid within 30 days of demand raised. Now, I am unable to file the application U/s 270AA (Form 68- Immunity from Imposition of Penalty).

In Point 8 of Form 68– “Details of amounts paid”, since the date of amount paid as self assessment tax at the time of Filing Return of Income U/s 148 is before the date of service of order so an error message is displayed as “Error: Please enter valid date of deposit and it cannot be before date of service of order”

What course of action should one take in such a case so that the Form 68 is successfully filed for grant of Immunity from Imposition of Penalty?

Answer

There is a mistake apparent on record in the notice issued u/s 156 of the Act and also in the computation sheet as credit of self assessment tax paid by the assessee has not been given. As per the facts given, assessee’s application u/s 154 is pending.

Immunity u/s 270AA is available only if an application referred to in sub-section (1) of section 270AA is made within one month from the end of the month in which, the assessment order is received. Moreover, such application is to be made in Form No.68 as per Rule 129 of the Income Tax Rules. By the time, application u/s 154 would be decided, period of 01 month as prescribed in sub-section (2) of section 270AA would be expired.

Hence, an application can be moved before the Jurisdictional Assessing Officer to decide the application u/s 154 expeditiously. Once an order of rectification is passed, the assessment itself is modified and what remains thereafter is, not the order of rectification, but the assessment as rectified (Jeewanlal (1929) Ltd. v. Additional. CIT (1977) 108 ITR 407, 411 (Cal)), (Karan & Co. v. ITAT (2002) 253 ITR 131 (Del)). Accordingly, within one month from the end of month in which rectificatory order is received, Form No. 68 as per rule 129 may be filed.

However, department may not accept such form treating the same as belated one. Hence, an application may be moved before the Board u/s 119(2)(b) of the Act seeking direction to the CIT to admit an application for granting immunity from imposition of penalty u/s 270A i.e. to allow the assessee to file an application in Form No.68 after the expiry of 01 month or after the decision of application u/s 154 by the Jurisdictional Assessing Officer.

A writ petition may be also be filed before the High Court praying for seeking direction to the Jurisdictional Assessing Officer to dispose of application u/s 154 expeditiously and allow the assessee to move an application in Form No.68 seeking immunity from penalty u/s 270A.

Query No.2

An assessee had not filed his return of income for the AY 2018-19 voluntarily u/s 139 in spite of having taxable income. The Return of Income was filed only in response to notice u/s 148. But the assessee inadvertently escaped Saving Bank Interest and availed deduction u/s 80TTA.

The Assessment Unit made assessment u/s 147 r/w section 144B and added Saving Bank Interest and also allowed deduction u/s 80TTA. The Tax demanded u/s 156 was duly paid within 30 days but the time limit for application u/s 270AA (Immunity from Imposition of Penalty) has already expired.

The Assessment Unit levied Penalty u/s 270A(7) @ 50% of the Tax Payable on the Total Income assessed considering the same as under reported income.

Almost 90% of the Tax Payable was deducted by the Employer in the form of TDS on salary Income but even then Penalty was levied on the entire Income considering the same as under reported income.

Answer

In the given query, it appears that Assessing Officer has not issued an intimation u/s 143(1) a) of the Act, after filing a return u/s 148 of the Act. It is also not discernible from the query which income has been treated by the Assessing Officer as under reported income. Unless and until the nature of under reported income is disclosed in the query, it is difficult to give an answer because

1. penalty u/s 270A(1) is leviable only when assessee had under reported his income.
2. In so far as salary income is concerned, it cannot be said that it is the under reported income, because the employer had duly deducted tax at source and had paid the tax in the Government Treasury.
3. As per section 199 of the Act, any deduction made in accordance with section 192 and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made. Thus salary income cannot be treated as under reported income.
4. In so far as savings bank interest is concerned, it is deductible u/s 80TTA to the extent of ₹ 10,000/-. Thus if, assessee’s interest income from savings bank is below ₹ 10,000/- then it is deductible and cannot be treated as under reported income.
5. If interest is more than ₹ 10,000/- , then the excess amount be treated as underreported income on which deduction u/s 80TTA is not available.

The given case is not covered by any of the circumstances stated in Subsection (3) of 270A. Hence, the issue becomes litigatious and therefore relief will be available in appeal/in writ only.