JOYDEEP MUKHERJEE,PRESENTLY RESIDING AT USA V. DCIT, INTL TAXATION CIRCLE 1(2), BANGALORE, BMTC BUILDING, KORAMANGALA

ITA 2017/BANG/2025

AI Insights

The case involves Joydeep Mukherjee, the appellant, contesting a penalty imposed by the Deputy Commissioner of Income Tax, International Taxation, Bangalore, under section 270A of the Income Tax Act, 1961, for underreporting income. The penalty of 7,062,608 was levied following the appellant's failure to file a return of income for the assessment year 2018-19 and subsequent disclosure of income only in response to a notice under section 148. The appellant sought immunity from the penalty under section 270AA, claiming compliance with the conditions for immunity, which was rejected by the assessing officer without a proper hearing. The Tribunal found procedural lapses in the rejection of the immunity application and remanded the matter for a proper hearing.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841229 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 12-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRANAV KRISHNA
• Keywords: Principle of natural justice
• Section: 147; 148; 144; 68; 139; 270AA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No.2017/Bang/2025 Assessment year : 2018-19 Joydeep Mukherjee, A 202, Prestige St. Johns Woods Apt., 80, St. Johns Cross Road, Bengaluru South 560 029. PAN: AAWPM 7656E Vs. The Deputy Commissioner of Income Tax International Taxation, Circle 1(2), Bangalore. APPELLANT RESPONDENT Appellant by : Shri Pranav Krishna, Advocate Respondent by : Shri K. Saravanan, Addl.CIT(DR)(ITAT), Bengaluru. Date of hearing : 27.01.2026 Date of Pronouncement : 23.02.2026 O R D E R Per Prashant Maharishi, Vice President 1. ITA No. 2017/Bang/2025 for assessment year 2018 – 19 is filed by Joydeep Mukherjee (the assessee/appellant) against the appellate order passed by the Commissioner of Income Tax (Appeals), Bengaluru – 12 (the learned CIT – A) dated 14 August 2025 wherein the assessee’s appeal against the penalty order passed under section 270A of the Income Tax Act, 1961 [the Act] dated 30 August 2024 passed by the Printed from counselvise.com ITA No.2017/Bang/2025 Page 2 of 9 Deputy Commissioner of Income Tax, International Taxation, Circle 1 (2), Bangalore (the learned AO) of ₹ 7,062,608/– was dismissed. 2. The assessee is in appeal before us wherein the claim of the assessee is that the assessee has applied for immunity under section 270AA of the income tax act and despite the above fact, the penalty has been levied dismissing the claim of immunity of the assessee, without affording any opportunity of hearing to the assessee. 3. The brief facts of the case show that assessee is an individual who has not filed his return of income for the impugned assessment year. In the case of the assessee specific information was flagged as per the risk management strategy of the Central Board Of Direct Taxes that assessee has purchased mutual fund units of ₹ 83,377,496/–, received salary of ₹ 362,14,288, interest income of ₹ 780,802, rent of ₹ 591,626 and purchase of immovable properties of ₹ 9,879,309 during the financial year 2017 – 18 relevant to the impugned assessment year. 4. Accordingly the notice under section 148 was issued on 7 April 2022 in response to which the assessee filed return of income on 23 April 2023 at a total income of ₹ 414,92,315. The assessment was completed under section 147 read with section 144 of the Act on 2 February 2024 accepting the income returned by the assessee at assessed income of ₹ 41,272,320. 5. As the assessee has not filed any return of income under section 139 (1) or under section 139 (4) of the Act and the return filed by the assessee Printed from counselvise.com ITA No.2017/Bang/2025 Page 3 of 9 is subsequently in response to notice under section 148 of the Act penalty proceedings under section 270A of the Act were initiated. 6. In response to the above penalty show cause notice the assessee submitted that assessee has filed an application in form No. 68 under section 270AA(2) on 8 February 2024 requesting the assessing officer to grant immunity from imposition of penalty and initiation of proceedings under section 276C. The assessee submitted that rectification application dated 6 February 2024 had been filed. Another letter was issued to the assessee which was replied on 17 August 2024 wherein the assessee submitted that he had filed a rectification application on 4 April 2024. 7. The ld. Ao noted that , on verification it was seen that no application for rectification has been filed in his office. Therefore the learned assessing officer initiated the penalty proceedings and concluded that as assessee has not filed any reply and has also not filed any appeal against the assessment order, the assessee is liable for penalty under section 270A of the Act. 8. With respect to the application of the assessee for rectification wherein the assessee has stated that if rectification is carried out, the entire demand raised pursuant to the assessment would be reduced to Rs. Nil. The learned assessing officer on verification found that no application for rectification has been filed in the office of the assessing officer. According to the AO the assessee should have paid the above amount of outstanding tax as per the period specified in the notice of demand in Printed from counselvise.com ITA No.2017/Bang/2025 Page 4 of 9 order to qualify for immunity. As the assessee has not paid the demand, the learned assessing officer further rejected the claim of the assessee for immunity from penalty. 9. In the end the learned assessing officer held that as assessee has disclosed this income in response to a notice under section 148 of the Act, the assessee is liable for penalty of underreporting of income to the extent of Rs.141,25,216 and levied the penalty at ₹ 7,062,608 on underreported income of ₹ 41,272,320. The penalty order was passed on 30 August 2024. 10. The assessee aggrieved with the same preferred an appeal before the learned CIT – A. On the grounds of appeal the learned CIT – A asked for the remand report of the assessing officer. The learned assessing officer submitted remand report that that assessee has disclosed the income in response to a notice under section 148 of the Act and therefore the penalty of ₹ 7,062,608 being 50% of the tax on the underreported income of Rs.141,25,216 was levied. With respect to the immunity application made by the assessee in form No. 68, the learned AO stated that it has been disposed of on 30 August 2024 and no immunity has been granted to the assessee. 11. The assessee in response to the above remand report was asked to submit his rejoinder. Such a rejoinder was submitted on 26 June 2025. The assessee submitted that he is entitled to the immunity for the reason that assessee has filed form No. 68 on 8 February 2024 in response to the assessment order passed on 2 February 2024. It was Printed from counselvise.com ITA No.2017/Bang/2025 Page 5 of 9 further claim of the assessee that before disposing of the application filed by the assessee for immunity, the learned assessing officer has passed the penalty order and levied the penalty. The learned CIT – A was also submitted that the learned assessing officer should have first passed an order rejecting the immunity granted to the assessee and further thereafter the opportunity should have been given to the assessee to reply to the show cause notice. In this case there is no separate order passed by the learned assessing officer for rejecting the immunity application of the assessee though form No. 68 was filed in time. It was further the claim of the assessee that the entire tax has been paid at the time of issuing notice under section 148 of the Act and only a part of interest was pending. 12. The learned CIT – A considered the application of the assessee as well as the explanation given by the assessee. She held that as the assessee has not paid the demand raised within the period specified in the notice of demand, the appellant should have paid such demand within a period specified in the order to qualify for granting of immunity from imposition of penalty under section 270A of the Act. As the assessee has not fulfilled those conditions the immunity is correctly rejected. Accordingly she confirmed the order of the penalty. 13. The assessee is aggrieved with the same and is in appeal before us. The learned authorised representative vehemently submitted that assessee has made an application to the assessing officer for granting immunity from imposition of penalty under section 270A of the Act. The assessee Printed from counselvise.com ITA No.2017/Bang/2025 Page 6 of 9 has already paid the tax and interest payable in response to the assessment order passed under section 143 (3) of the Act. Assessee has also not filed any appeal against the assessment order. The assessee’s application is also in time however the learned assessing officer has rejected the same. He further referred to the proviso to subsection 4 of section 270AA of the Act that if the assessing officer rejects the application of the assessee for such immunity, the assessee must be given an opportunity of hearing. If the opportunity of hearing is not given to the assessee and the application for immunity is rejected, there is a clear-cut violation of the provisions of the Income Tax Act and the assessee now must be granted immunity immediately from levy of the penalty and consequently the penalty order passed by the learned assessing officer deserves to be quashed. He further submitted that the same proposition was raised before the learned CIT – A that no opportunity has been granted by the learned assessing officer before rejecting the application for immunity. But the learned CIT – A has confirmed the action of the learned assessing officer without giving any finding on the same. 14. The learned departmental representative vehemently submitted that the assessee has failed to comply with the conditions mentioned under section 270AA of the Act. As the assessee has not complied with the condition, the learned assessing officer has correctly rejected the application for immunity against the penalty. He further submitted that as the assessee has not submitted any explanation before the learned AO or before the learned CIT – A, and assessee has filed his return of Printed from counselvise.com ITA No.2017/Bang/2025 Page 7 of 9 income in response to a notice under section 148 of the Act, there is no reason that assessee should not be penalised under the section 270A of the Act. Therefore he submitted that the order of the learned lower authorities deserves to be confirmed. 15. We have carefully considered the rival contention and perused the orders of the learned lower authorities. The admitted facts coming out of from the orders of the learned lower authorities show that the assessee did not file any return of income but on the basis of the information available with the Income Tax Department, a notice under section 148 of the Act was issued to the assessee. In response to that the assessee furnished his return of income, which is accepted as it is. However as the assessee did not disclose the return of income under section 139 (1) or under section 139 (4) of the Act, the learned AO levied the penalty under section 270A of the Act for underreporting of the income of ₹ 4 crores. At the time of show cause notice issued by the learned assessing officer for the levy of penalty under section 270A of the Act, the assessee submitted form No. 68 and stated that he is entitled to the immunity from penalty and prosecution. The assessee further referred to certain rectification application. The learned assessing officer noted that no such application is found and he rejected the application for immunity against the penalty. Before granting or rejecting the immunity against the penalty, the learned assessing officer is duty-bound to give an opportunity of hearing to the assessee that why his application for immunity cannot be entertained. This is the mandate of the provisions of section 270AA (4) of the act wherein in Printed from counselvise.com ITA No.2017/Bang/2025 Page 8 of 9 the proviso to that subsection it is mentioned that before rejecting the immunity application of the assessee, the learned assessing officer is duty-bound to give an opportunity of hearing to the assessee. This is the principle of natural justice enshrined in that section of the Income Tax Act itself. The same has not been followed by the learned assessing officer. Further it is a fact that assessee has filed an application for rectification which was stated before the assessing officer twice, the learned assessing officer noted that he did not find any application for rectification and thereafter, he straightway rejected the immunity application of the assessee. He should have asked the assessee that what rectification he is requesting for. Without asking for the same, the learned assessing officer has rejected the application for immunity against the penalty. 16. In view of the above facts we find that the issue needs to be restored to the file of the learned assessing officer, where the irregularity has occurred, to examine the application made by the assessee for immunity from imposition of penalty under section 270AA of the Act. If the assessee does not fulfil the condition or any further information is required and then assessing officer is of the view that assessee is not entitled to immunity, before passing such an order the assessee must be given an opportunity of hearing. In this regard we direct the learned assessing officer to grant an opportunity of hearing to the assessee and then pass an order in accordance with the law. Printed from counselvise.com ITA No.2017/Bang/2025 Page 9 of 9 17. After that the assessee must also be given an opportunity to contest the penalty u/s 270A of the act on its merits. 18. In view of the above facts the appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on this 23rd day of February, 2026. Sd/- Sd/- ( SOUNDARARAJAN K. ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER VICE PRESIDENT Bangalore, Dated, the 23 February, 2026. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "