G R INFRAPROJECTS LIMITED vs. ASSISTANT COMMISSIONER OF INCOME-TAX

Facts

The petitioner, G R Infraprojects Limited, filed its income tax return for AY 2020-21 on February 13, 2021. During assessment proceedings, the Assessing Officer (AO) proposed disallowing the petitioner's claim for deduction of education cess amounting to Rs. 12,85,58,982/- and initiating penalty proceedings under Section 270A of the Income Tax Act, 1961. The petitioner, by reply dated March 19, 2022, withdrew its claim for deduction of education cess and accepted the proposed addition. The AO passed an assessment order on September 22, 2022, making the addition and ordering penalty proceedings. The petitioner filed a reply and an application for immunity under Section 270AA. Despite further show cause notices and replies, the AO passed a penalty order on March 31, 2023, imposing a penalty of 200% of the tax and issuing a demand notice. Aggrieved, the petitioner filed a writ petition challenging these orders.

Held

The Court held that the writ petition was maintainable. It found that the Assessing Officer (AO) had failed to specify which part of Section 270A(9) was attracted in the case of the petitioner, rendering the initiation of penalty proceedings 'nonest'. The Court also noted that the petitioner had withdrawn its claim for deduction of education cess and accepted the addition, making it eligible for immunity under Section 270AA. The AO's conclusion that the petitioner did not fulfill the conditions of Section 270AA(3) was deemed illegal. Furthermore, the AO failed to decide the petitioner's application for immunity under Section 270AA within the prescribed time limit as per Section 270AA(4). Consequently, the penalty order and demand notice were set aside, and the AO was directed to grant immunity under Section 270AA to the petitioner.

Key Issues

1. Whether the writ petition is maintainable despite the availability of an alternative remedy of appeal under Section 246A of the Income Tax Act, 1961, given the alleged violation of principles of natural justice and the statutory scheme. 2. Whether the petitioner is entitled to immunity from penalty under Section 270AA of the Income Tax Act, 1961, considering its withdrawal of the education cess deduction claim and acceptance of the addition, and whether the AO correctly determined the petitioner's eligibility for immunity. Assessee's Arguments: - The writ petition is maintainable as the issue is purely legal and involves violations of natural justice and the statutory scheme, relying on M/s Godrej Sara Lee Ltd. vs. The Excise and Taxation Officer-cum-Assessing Authority and Ors. - The petitioner is entitled to immunity under Section 270AA as it accepted the addition and paid the tax, and the AO failed to specify the grounds for invoking Section 270A(9) and did not decide the Section 270AA application within the prescribed time. - The petitioner had a valid claim for deduction of education cess based on prior High Court judgments (Chambal Fertilisers and Chemical Ltd. vs. JCIT and Sesa Goa Limited vs. JCIT) before the insertion of Section 155(18). Revenue's Arguments: - The writ petition is not maintainable due to the availability of an alternative statutory remedy of appeal under Section 246A, relying on Hindustan Zinc Limited vs. National Faceless Assessment Centre & Ors. and Veetrag Buildcon Private Limited vs. Union of India and Ors.