Seeking Immunity u/s 270AA would not assessee to challenge same issue in earlier years: CBDT [Read Circular]

The Central Board of Direct Taxes ( CBDT ), Thursday clarified that when an assessee prefers to make an application under Section 270AA of the Income Tax Act to seek immunity from penalty proceedings in case of under-reporting of income, the Assessing Officer shall not take an adverse view in penalty proceedings under section 271(1)(c) in earlier Assessment Years merely because assessee has agreed on the issue in later AY by preferring an immunity under section 270AA.

A clarification issued by the Board had pointed out that apprehensions have been raised that when such an application has been made and in the earlier year(s) penalty under section 271(1)(c) of the Act has been initiated on the same issue, the Income-tax Authority may contend that the assessee has acquiesced on the issue in such earlier year (s), by seeking immunity under section 270AA of the Act and therefore, take an adverse view in the proceedings for penalty under section 271(1)(c) of the Act.

In this regard, the CBDT missive clarified that “where an assessee makes an application seeking immunity under section 270AA of the Act, it shall not preclude such assessee from contesting the same issue in any earlier assessment year. Further, the Income-tax Authority, shall not take an adverse view in the proceedings for penalty under section 271(1)(c) of the Act in earlier assessment years merely on the ground that the assessee has acquiesced on the issue in any later assessment year by preferring an immunity on such issue under section 270AA of the Act.”