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2017 (9) TMI 846 - AT - Income TaxPenalty u/s 271(1)(c) - unexplained cash credit under section 68 - benefit of Direct Tax Dispute Resolution Scheme, 2016 and Pr. CIT, Noida has issued certificate in favour of assessee - Held that - The assessee has filed copies of sections 202 and 203 of the Direct Tax Dispute Resolution Scheme, 2016 and explained that the above Scheme will supersede the provisions contained under the Income Tax Act on filing the declaration and accepted by the Designated Authority. The Rule also provides for deeming withdrawal of the appeals when declaration is filed in specified Form and accepted by the Designated Authority. The Scheme also provides that no Appellate Authority shall decide the appeal on any issue relating to the specified tax mentioned in the declaration and in respect of which an order has been made under section 204 by the Designated Authority or the payment of same determined under that Section. The assessee, therefore, explained that these special Scheme would prevail the provisions of Income Tax Act and the appeal pending before Ld. CIT(A) shall be deemed to have been withdrawn. However, these submissions have not been made by the assessee before the Ld. CIT(A) and assessee did not appear before Ld. CIT(A) to appraise him of all the relevant provisions of the special Scheme enacted by the Direct Tax Dispute Resolution Scheme, 2016. The assessee also did not make request to withdraw appeal. The matter therefore, requires reconsideration at the level of the Ld. CIT(A). Accordingly, set aside the order of the Ld. CIT(A) and restore the appeal of assessee to his file with a direction to re-decide the appeal of the assessee considering the objections of the assessee now raised before the Tribunal. Assessee is directed to cooperate with the Ld. CIT(A) for finalization of the matter. Ld. CIT(A) shall give reasonable, sufficient opportunity of being heard to the assessee and A.O. Appeal of assessee is allowed for statistical purposes.
Issues:
Appeal against dismissal of assessee's appeal under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 2009-2010. Detailed Analysis: 1. Issue of Dismissal of Assessee's Appeal: The appeal was directed against the order of Ld. CIT(A)-1, Noida, challenging the dismissal of the assessee's appeal under section 271(1)(c) of the I.T. Act, 1961. The A.O. made an addition on account of unexplained cash credit under section 68 of the I.T. Act, 1961, as the genuineness of the gifts received by the assessee could not be explained. The penalty under section 271(1)(c) was levied separately by the A.O. The Ld. CIT(A) noted that the Finance Act, 2016 under Chapter-X provided the "Direct Tax Dispute Resolution Scheme, 2016," which did not supersede the provisions of the Income Tax Act under section 251(1)(a) under Chapter-XX. The Ld. CIT(A) observed that the assessee had approached the Pr. CIT, Noida for availing the benefits of the Direct Tax Dispute Resolution Scheme, 2016, and a certificate was issued certifying that the assessee had paid a portion of the penalty imposed by the A.O. The Ld. CIT(A) concluded that the appeal was decided with the presumption that the assessee intended to withdraw the appeal as per the Scheme, even though no specific request for withdrawal was made by the assessee. 2. Interpretation of Direct Tax Dispute Resolution Scheme, 2016: The Counsel for the Assessee argued that the provisions of the Direct Tax Dispute Resolution Scheme, 2016, should supersede the I.T. Act as provided under the Scheme's rules. The Counsel referred to Rule 203(2) of the Scheme, which stated that upon declaration of tax arrear, appeals pending before the CIT(A) shall be deemed to have been withdrawn. The Counsel contended that the Ld. CIT(A) should not have dismissed the appeal on its merits. The Ld. CIT(A) acknowledged that the Scheme would supersede the provisions of the Income Tax Act upon filing the declaration accepted by the Designated Authority, leading to the deeming withdrawal of appeals. However, these arguments were not presented before the Ld. CIT(A) by the assessee. 3. Decision and Remand by ITAT: After considering the contentions of both parties, the ITAT found that the Ld. CIT(A) did not have the benefit of the submissions regarding the Direct Tax Dispute Resolution Scheme, 2016, as they were not raised before him by the assessee. Therefore, the ITAT set aside the order of the Ld. CIT(A) and directed a re-decision of the appeal, instructing the assessee to cooperate with the Ld. CIT(A) for the finalization of the matter. The Ld. CIT(A) was directed to provide sufficient opportunity for both the assessee and the A.O. to be heard. The appeal of the assessee was allowed for statistical purposes. In conclusion, the ITAT remanded the case back to the Ld. CIT(A) for reconsideration in light of the submissions regarding the Direct Tax Dispute Resolution Scheme, 2016, which were not previously presented, emphasizing the importance of providing all relevant information during the appeal process.
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