Finance Bill, 2025 Extension of Limitation qua Section 270AA visavis Finance Bill, 2025

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The Tax Publishers Income Tax--Finance Bill, 2025 Extension of Limitation qua Section 270AA vis-a-vis Finance Bill, 2025 Sameer Bhatia The learned author in his write-up discusses the amendment made to the provisions of sub-section (4) of section 270AA of the Income Tax Act, 1961. The said amendment pertaining to enlargement of time provided from one month to three months will have the impact of expanding the scope of fairly contesting the matter under consideration before the jurisdictional assessing authority by the assessee. Clause 74 of the Finance Bill, 2025 seeks to introduce changes/amendment to the provisions embedded therein by enlarging the time of processing the application from the previous time frame of one month to three months to be made effective from 1st April, 2025. 1. Prologue Section 270AA of the Income Tax Act, 1961 was inserted by the Finance Act, 2016 and made applicable with effect from 1st April, 2017. The provisions contained in section 270AA provide immunity from imposition of penalty etc. as a consequence of the proceedings initiated under the Income Tax Act, 1961. Clause 74 of the Finance Bill, 2025 seeks to introduce changes/amendment to the provisions embedded therein by enlarging the time of processing the application from the previous time frame of one month to three months to be made effective from 1st April, 2025. 2. Provisions of section 270AA at length Sub-section (1) of section 270AA provides that the assessee may make an application to the Assessing Officer to grant the concession of immunity from imposition of penalty under section 270A i.e. penalty for under-reporting and mis-reporting of income (inserted by the Finance Act, 2016 with effect from 1st April, 2017) and on a simultaneous note immunity from initiation of proceedings under section 276C i.e. Wilful attempt to evade tax, etc. (substituted for section 276C by the Taxation Laws Amendment Act, 1975 with effect from 1st October, 1975) and section 276CC i.e. Failure to furnish returns of income (inserted by the Taxation Laws (Amendment) Act, 1975 with effect from 1st October, 1975). The said concession of immunity is however subject to some conditions contained as per clause (a) & clause (b) of sub-section (1) of section 270AA of the Income Tax Act, 1961. Twin conditions as contained in clause (a) & clause (b) of sub-section (1) of section 270AA provides that immunity from imposition of penalty and from initiation of proceedings under the aforesaid sections can be granted in case (a) the tax and interest payable as per the order of assessment or reassessment under sub-section (3) of section 143 or section 147, as the case may be, has been discharged within the period specified in such notice of demand and (b) the assessee has not preferred any appeal against the order referred to in clause (a). On a literal note, it can be ascertained and concluded that the tax demand quantified in the notice of demand along with interest due as discernible from the order passed on regular assessment or under mechanism of re-assessment must be paid within the time allowed under section 156 of the Income Tax Act, 1961. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Finance Bill, 2025

Extension of Limitation qua Section 270AA vis-a-vis Finance Bill, 2025

Sameer Bhatia

The learned author in his write-up discusses the amendment made to the provisions of sub-section (4) of section 270AA of the Income Tax Act, 1961. The said amendment pertaining to enlargement of time provided from one month to three months will have the impact of expanding the scope of fairly contesting the matter under consideration before the jurisdictional assessing authority by the assessee. Clause 74 of the Finance Bill, 2025 seeks to introduce changes/amendment to the provisions embedded therein by enlarging the time of processing the application from the previous time frame of one month to three months to be made effective from 1st April, 2025.

1. Prologue

Section 270AA of the Income Tax Act, 1961 was inserted by the Finance Act, 2016 and made applicable with effect from 1st April, 2017. The provisions contained in section 270AA provide immunity from imposition of penalty etc. as a consequence of the proceedings initiated under the Income Tax Act, 1961. Clause 74 of the Finance Bill, 2025 seeks to introduce changes/amendment to the provisions embedded therein by enlarging the time of processing the application from the previous time frame of one month to three months to be made effective from 1st April, 2025.

2. Provisions of section 270AA at length

Sub-section (1) of section 270AA provides that the assessee may make an application to the Assessing Officer to grant the concession of immunity from imposition of penalty under section 270A i.e. penalty for under-reporting and mis-reporting of income (inserted by the Finance Act, 2016 with effect from 1st April, 2017) and on a simultaneous note immunity from initiation of proceedings under section 276C i.e. Wilful attempt to evade tax, etc. (substituted for section 276C by the Taxation Laws Amendment Act, 1975 with effect from 1st October, 1975) and section 276CC i.e. Failure to furnish returns of income (inserted by the Taxation Laws (Amendment) Act, 1975 with effect from 1st October, 1975). The said concession of immunity is however subject to some conditions contained as per clause (a) & clause (b) of sub-section (1) of section 270AA of the Income Tax Act, 1961.

Twin conditions as contained in clause (a) & clause (b) of sub-section (1) of section 270AA provides that immunity from imposition of penalty and from initiation of proceedings under the aforesaid sections can be granted in case (a) the tax and interest payable as per the order of assessment or reassessment under sub-section (3) of section 143 or section 147, as the case may be, has been discharged within the period specified in such notice of demand and (b) the assessee has not preferred any appeal against the order referred to in clause (a). On a literal note, it can be ascertained and concluded that the tax demand quantified in the notice of demand along with interest due as discernible from the order passed on regular assessment or under mechanism of re-assessment must be paid within the time allowed under section 156 of the Income Tax Act, 1961.