New Penalty introduced U/s 270A, How to deal with it!!

Dear Colleagues

Normally whenever there is an addition in the case of assessment order and the penalty is initiated we prefer going to appeal, however there are cases where we would not prefer an appeal on the addition made by the assessing officer but due to penalty proceedings initiated in the said assessment order the assessee is inclined to prefer an appeal to keep the same in abeyance and for getting the addition to be reduced which in turn reduces the amount of penalty.

However in such scenarios the new section 270AA provides immunity from imposition of penalty, etc. the details of which are as follows:

1. There is a new section inserted for imposition of penalty i.e. u/s. 270A of The Income Tax Act, 1961 and initiation of proceedings u/s. 276C or 276CC of The Income Tax Act, 1961.

2. Against the said initiation of penalty a new section is inserted for Immunity From Imposition of Penalty u/s. 270AA of The Income Tax Act, 1961

3. The immunity application can be made by the assessee within 30 days from the end of month in which order is received by making an application with A.O. in Form 68 for this purpose. (https://drive.google.com/a/snkabra.com/file/d/10GZsyyBrxko5k80AJ3DZ2zCRZ5Qrugfs/view?usp=drivesdk)

4. However the condition with regards to the same is that the tax and interest payable as per the order of the assessment or reassessment has been paid within the period specified in such notice and no appeal against the said order has been filed.

5. It is to note that this immunity is available only for Under Reported transactions as defined u/s 270A (1) to (7) where amount of penalty is 50% of tax payable and not with regards to misreported transaction as defined u/s. 270A(9) where penalty is 200% of tax payable

6. The assessing officer subject to the fulfillment of the conditions as specified above and after the expiry of the period of filing the appeal, grant an immunity for imposition of penalty i.e. u/s. 270A of The Income Tax Act, 1961 and initiation of proceedings u/s. 276C or 276CC of The Income Tax Act, 1961.3

7. The assessing officer has to pass an order accepting or rejecting such application within 1 month from the end of the month in which application for immunity for penalty has been received by him.

8. No appeal u/s. 246A or revision u/s. 264 can be filed against the order of assessment or reassessment in which the penalty was imposed, in case where the order is passed by the AO accepting the application for an immunity for imposition of penalty.

9. Note that the said immunity is not available for earlier years where the penalty has been initiated u/s. 271(1)(c) of The Income Tax Act, 1961.