SAURABH BAHETY vs. INCOME TAX OFFICER WARD 63(1), DELHI

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W.P.(C)/14817/2024HC DelhiDLHC01072802202422 October 2024Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA3 pages
AI SummaryRemanded

What did the High Court hold?

The Delhi High Court, in its oral order, noted that the additions made by the AO were based on disclosed facts, suggesting it might not be a case of mis-reporting. The Court also acknowledged that the impugned order rejecting the immunity application was passed without considering the petitioner's contentions, partly due to claimed technical difficulties. The Revenue's counsel conceded to a remand. Consequently, the Court set aside the impugned order dated 23.09.2024 passed by the AO under Section 270AA. The matter was remanded to the AO to consider the petitioner's request for immunity afresh, after affording an opportunity of being heard. The AO was directed to pass a fresh order in accordance with law. No specific finding was made on the merits of the mis-reporting allegation, as the matter was remitted for fresh consideration.

What were the facts?

The petitioner, Saurabh Bahety, filed a writ petition challenging an order dated 23.09.2024 passed by the Income Tax Officer (ITO) under Section 270AA of the Income Tax Act, 1961. The ITO rejected the petitioner's application for immunity from penalty. The rejection was based on the assessment order under Section 143(3), which stated that the case involved "under-reporting of income in consequence of mis-reporting." The dispute arose from additions of ₹23,29,606/- made by the Assessing Officer (AO) on account of a "negative spread of interest" concerning interest-bearing loans and unsecured loans advanced by the assessee. The petitioner claimed to have faced technical difficulties in seeking an adjournment online, leading to the impugned order being passed without considering his contentions.

What were the issues?

1. Whether the petitioner's case involves "under-reporting of income in consequence of mis-reporting" as contemplated under Section 270AA of the Income Tax Act, 1961, thereby disentitling him to immunity from penalty? Assessee's Contention: The petitioner argued that the facts leading to the additions were disclosed by him, and therefore, it would not be a case of mis-reporting. He also claimed to have faced technical difficulties in attending the proceedings online. Revenue's Contention: The Revenue, through the learned counsel, fairly conceded that in the given circumstances, the matter could be remanded to the AO for fresh consideration of the petitioner's request for immunity.

Which sections of the Income-tax Act were involved?

Section 270AA,Section 143(3)

AI-generated summary — verify with the full judgment below

W.P. (C) 14817/2024 Page 1 of 3

$~82 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision : 22.10.2024

+ W.P.(C) 14817/2024 & CM APPL. 62273/2024

SAURABH BAHETY .....Petitioner

Through: Mr Amit Kaushik, Advocate.

versus

INCOME TAX OFFICER WARD 63(1), DELHI .....Respondent Through: Mr Vipul Aggarwal, SSC, Mr Girban Naushad and Ms Sakshi Shairwal, JSCs.

CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

VIBHU BAKHRU, J. (ORAL)

1.

Issue notice. The learned counsel for the Revenue accepts notice. 2. The petitioner has filed the present petition, inter alia, impugning the order dated 23.09.2024 (hereafter the impugned order) passed under Section 270AA of the Income Tax Act, 1961 (hereafter the Act) rejecting the petitioner’s application for immunity from imposition of penalty. 3. The learned Assessing Officer (hereafter the AO) had, in the assessment order passed under Section 143(3) of the Act, observed that no immunity from penalty could be granted as the assessee’s case was one of Digitally Signed By:DUSHYANT RAWAL Signature Not Verified

W.P. (C) 14817/2024 Page 2 of 3

“under-reporting of income in consequence of mis-reporting”. This was also noted by the AO in the impugned order. 4. The controversy relates to the income and expenditure booked on account of interest accrued and payable. The petitioner had availed certain interest-bearing loans, and at the same time, had also advanced unsecured loans. The AO found that the interest payable in respect of certain loans advanced by the assessee was higher than the interest at which the funds were arranged. For the aforesaid reason, the assessee had made an addition of ₹ 23,29,606/- being on account of the negative spread of interest. 5. Prima facie, this case would not be one of mis-reporting as the facts on the basis of which additions have been made appear to be disclosed by the assessee. 6. The AO had issued the Show Cause Notice dated 17.09.2024 to the assessee calling upon him to show cause as to why his application for immunity from imposition of the penalty not be rejected on the ground that the petitioner’s case was of under reporting of income on account of mis- reporting. The petitioner claims that he had attempted to seek an adjournment online, however, he faced with certain technical difficulties and was not able to do so. 7. It is noted that consequently, the impugned order has been passed without considering the contentions of the petitioner, as sought to be advanced before this Court. 8. The learned counsel appearing for the Revenue fairly states that in Digitally Signed By:DUSHYANT RAWAL Signature Not Verified

W.P. (C) 14817/2024 Page 3 of 3

the given circumstances, the matter may be remanded to the AO to consider the request of the petitioner for immunity from imposition of the penalty under Section 270AA of the Act, afresh. This course commends to this Court. 9. We, accordingly, set aside the impugned order passed by the AO under Section 270AA of the Act and remand the matter to the AO to consider afresh. The AO shall pass a fresh order after affording an opportunity of being heard to the petitioner, in accordance with law. 10. The petition is disposed of in the aforesaid terms. Pending application also stands disposed of.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J OCTOBER 22, 2024 M

Click here to check corrigendum, if any Digitally Signed By:DUSHYANT RAWAL Signature Not Verified

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