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2022 (12) TMI 1123 - AT - Income TaxLevy of penalty u/s 271C - Whether appellant is entitled to immunity from penalty as the appellant has opted for VSVS in respect of order u/s 201(1)? - HELD THAT - It is pertinent to note that the assessee filed application dated 09.12.2020 wherein the assessee opted for Vivad se Vishwas Scheme and the Revenue issued Form No. 3 on 11.02.2021 thereby determining the settlement amount. Which was paid by the assessee on 19.03.2021 as per Form 4 and Form 5 was issued on 09.04.2021 thereby giving order for full and final settlement of tax arrears in respect of the dispute under Section 201(1)/201(1A) of the Act. Since the dispute is related to the quantum of 201(1) proceedings the same is already settled and therefore, penalty cannot be imposed subsequently under Section 271C of the Act. Thus, the penalty proceedings by the Department and confirm by the CIT(A) is deleted. The appeal of the assessee allowed.
Issues:
- Appeal against order passed by Ld. CIT(Appeals), NFAC for A.Y. 2015-16 - Imposition of penalty under Section 271C for non-compliance with TDS provisions - Applicability of Vivad se Vishwas Scheme for immunity from penalty Analysis: 1. Imposition of Penalty under Section 271C: - The Assessing Officer found the assessee liable for non-compliance with TDS provisions under Section 194IA of the Income Tax Act for a property purchase. Consequently, a penalty of Rs. 33,000 was imposed under Section 271C. - The assessee appealed before the CIT(A) challenging the penalty order. The CIT(A) upheld the penalty, leading the assessee to further appeal. 2. Applicability of Vivad se Vishwas Scheme: - The assessee opted for the Vivad se Vishwas Scheme, settling the dispute under Section 201(1) of the Act. This settlement was done while the appeal before the CIT(A) was pending on quantum proceedings. - The Revenue issued relevant forms for settlement, and the settlement amount was paid by the assessee. Consequently, the order for full and final settlement of tax arrears was issued by the Department. - The Tribunal noted that since the dispute related to the quantum proceedings under Section 201(1) was already settled through the VSVS, the imposition of penalty under Section 271C after the settlement was not justified. 3. Judgment and Decision: - The Tribunal considered the settlement under the VSVS and the subsequent penalty imposition. It observed that as the dispute under Section 201(1) was resolved through the VSVS, the penalty under Section 271C could not be sustained. - Citing a similar case of a co-owner where the penalty was deleted due to VSVS settlement, the Tribunal allowed both appeals filed by the assessee against the penalty orders. - Consequently, the penalty proceedings initiated by the Department and confirmed by the CIT(A) were deemed invalid, and the penalties were deleted. In conclusion, the Tribunal allowed the appeals filed by the assessee against the penalty orders, emphasizing the impact of the Vivad se Vishwas Scheme settlement on the imposition of penalties under Section 271C of the Income Tax Act.
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