2023 (5) TMI 998 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee has settled the dispute related to the one addition in VSVS - As the order of the ld. CIT(A) considered that the whole issue of levy of penalty is covered by VSVS scheme is not correct as argued by assessee - HELD THAT - Considering the peculiar circumstances and facts as it emerges from the order of the lower authority that if the revenue peruse for the penalty demand of the assessee which is not covered under VSVS scheme then in that case the revenue before proceeding against the assessee CIT(A) should hear the case of the assessee on merits of dispute which is not settled in the VSVS scheme to that extent the order of the ld. CIT(A) is amended and restored to the file of the ld. CIT(A) for deciding the contentions of the assessee raised in the appeal afresh on merits after giving an opportunity of being heard to the assessee. The assessee is also directed to co-operate with the ld. CIT(A) in deciding the appeal on merits and without sufficient reason, not to take further adjournments - Appeal of the assessee is allowed for statistical purpose.

Summary

Issues involved:
The issues in this case involve the settlement of penalties under the Vivad se Vishwas Scheme and the proper opportunity of being heard for the assessee.

Settlement under Vivad se Vishwas Scheme:
The appeal filed by the assessee arose from an order under section 271(1)(c) of the Income Tax Act. The assessee had raised grounds related to the settlement under the Vivad se Vishwas Scheme, disputing the additions made by the Assessing Officer. The CIT(A) had considered the settlement under the scheme and the eligibility of penalties to be settled. The assessee opted for the scheme during the pendency of the appeals, resulting in the withdrawal of the quantum appeal and the penalty appeal. However, the assessee contended that the CIT(A) did not provide a proper opportunity to be heard on the penalty issues not settled under the scheme. The tribunal noted that the assessee should have a chance to represent her case on merits for the unresolved penalty issues, and the order of the CIT(A) was amended to allow for a fresh hearing on those specific contentions.

Proper Opportunity of Being Heard:
The assessee's representative argued that the penalty was levied on two issues, and the settlement under the Vivad se Vishwas Scheme only covered one of them. The tribunal acknowledged the assessee's application for rectification of the order and emphasized the need for a fair chance to present the case on the unresolved penalty issue. It was noted that the assessee acted in good faith based on advice and had already engaged a tax consultant. Therefore, the tribunal directed the CIT(A) to reconsider the unresolved penalty issue, ensuring the assessee's right to be heard and present the case on its merits. The order was restored to the CIT(A) for a fresh decision on the contentions raised by the assessee, providing an opportunity for a fair hearing.

Conclusion:
The appeal of the assessee was allowed for statistical purposes, emphasizing the importance of a fair opportunity for the assessee to present her case on the penalty issues not settled under the Vivad se Vishwas Scheme. The matter was remanded to the CIT(A) for a fresh decision, ensuring the assessee's right to be heard and considered on the unresolved penalty issues.