Assessee eligible for Sec. 264 revision if its application to get immunity from penalty got rejected: HC

Case Details: Haren Textiles (P.) Ltd. v. PCIT - [2021] 132 taxmann.com 39 (Bombay)

Judiciary and Counsel Details

• • K.R. Shriram and Abhay Ahuja, JJ.
  • Jintendra Singh for the Petitioner. Sham V. Walve for the Respondent.

Facts of the Case

The assessee was engaged in the business of manufacturing and selling fabrics. It was also a trading member in the National Stock Exchange. It filed its Return of Income (ITR), declaring a total income of Rs. 2,27,11,32.

Assessing Officer (AO) initiated scrutiny assessment by issuing statutory notices under sections 143(2) and 142(1). He passed the Assessment order determining the total income at Rs. 7,41,84,730 and also determined book profit under the provisions of section 115JB at Rs. 2,19,33,505. Following the Assessment Order, he issued a demand notice.

The assessee accepted the order and duly paid the tax demand determined by the AO. After that assessee filed an application under section 270AA, in Form No. 68, seeking immunity from penalty, etc. However, the AO rejected the application.

Aggrieved by the order, the assessee filed a revisional application under section 264 before the Commissioner (CIT) against the assessment order. CIT rejected the application because section 270AA(6) specifically prohibits revisionary proceedings against the assessment order if assessee filed an application seeking immunity from penalty. Aggrieved-assessee filed the writ petition before the Bombay High Court.

High Court Held

The Bombay High Court held that as per section 270AA(6), no appeal under section 246A or an application for revision under section 264 shall be admissible against the order of assessment or reassessment if an order has been passed by AO accepting the application of assessee seeking immunity from penalty.

This only means that when an assessee makes an application and AO has accepted such application, the assessee cannot file an appeal under section 246A or an application for revision under section 264. This does not provide any bar or prohibition against the assessee challenging an order passed by the Assessing Officer rejecting its application.
Therefore, CIT was not correct in rejecting the section 264 application on the ground that there was a bar under section 270AA(6) in filing such application.