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2022 (11) TMI 1016 - AT - Income TaxPenalty proceedings u/s 271D - Assessee settled the matter under VSVS 2020 for appeal filed as against the assessment u/s 143(3) - independent of assessment proceedings - HELD THAT - The penalty imposed u/s 271D of the I.T.Act is independent of assessment proceedings completed u/s 143(3) - Even without completion of assessment u/s 143(3) of the I.T.Act, penalty u/s 271D of the I.T.Act can be imposed for violation of provisions of section 269SS of the I.T.Act. The penalty proceedings u/s 271D of the I.T.Act is unconnected with the assessment order passed u/s 143(3) of the I.T.Act. The assessee in the instant case has only settled the matter under VSVS 2020 insofar as the issues that are raised in the appeal filed as against the assessment u/s 143(3) of the I.T.Act. the assessee has not settled the penalty imposed u/s 271D under VSVS 2020. CIT(A) has erred in rejecting the appeal of the assessee stating that the issue raised in the appeal has become infructuous and the same has been dismissed as infructuous. The issue is restored to the files of the CIT(A). The CIT(A) is directed to adjudicate the grounds raised before him as regards the merits of imposition of penalty u/s 271D of the I.T.Act. Appeal filed by the assessee is partly allowed for statistical purposes
Issues:
Penalty imposition under section 271D of the Income Tax Act. Analysis: The appeal before the Appellate Tribunal ITAT Bangalore was against the CIT(A)'s order regarding penalty imposition under section 271D of the Income Tax Act for violating provisions of section 269SS. The assessee, a medical practitioner, had received cash during demonetization, leading to penalty proceedings initiated by the Assessing Officer. The assessee settled the matter under the Vivad Se Vishwas Scheme 2020 (VSVS 2020) related to the assessment but not the penalty. The CIT(A) dismissed the appeal as withdrawn and infructuous, which the Tribunal found erroneous. The Tribunal held that the penalty under section 271D is independent of assessment proceedings and directed the CIT(A) to adjudicate the grounds raised regarding the penalty's imposition. The appeal was partly allowed for statistical purposes. This judgment addressed the issue of the CIT(A) dismissing the appeal as withdrawn and infructuous without canceling the penalty order under section 271D or providing directions for refund post VSVS 2020 settlement. The Tribunal found the CIT(A)'s action improper as the penalty and assessment are distinct, leading to a directive for the CIT(A) to review the penalty imposition on its merits. The Tribunal emphasized that settling the assessment under VSVS 2020 does not automatically resolve the penalty issue, necessitating a separate assessment of the penalty imposition. Furthermore, the Tribunal highlighted the CIT(A)'s failure to follow principles of natural justice by not granting sufficient opportunity for submissions or a personal hearing to the appellant. The Tribunal's decision to restore the issue to the CIT(A) for proper adjudication aimed to ensure fairness and adherence to procedural requirements. The Tribunal's order sought to rectify the oversight in the CIT(A)'s decision-making process and uphold the appellant's right to a fair hearing and consideration of all relevant grounds. The judgment also addressed the CIT(A)'s omission in adjudicating all grounds of appeal and the condonation of delay application, underscoring the necessity for comprehensive review and consideration of all aspects raised by the appellant. The Tribunal's decision to allow the appellant to modify or supplement the grounds at the hearing demonstrated a commitment to ensuring a thorough and just examination of the case. The Tribunal's approach aimed to uphold the principles of justice and fairness in the appellate process, emphasizing the importance of addressing all relevant issues raised by the appellant for a comprehensive resolution.
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