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2023 (11) TMI 791 - AT - Income TaxLoss of immunity from Penalty u/s. 271AAA - Delay in payment full tax as per the order of Settlement Commission (ITSC) - till the disposal of assessment assessee only paid 30 lacs and the balance was till outstanding - According to the ld. AO the provisions of section 245H(1A) an immunity granted to a person from penalty and prosecution shall stand withdrawn if he fails to pay any sum specified in order of Settlement within the time specified in such order - HELD THAT - On perusal of the documents, we find that the assessee paid the tax not within the stipulated period but paid as per the list - reflection of payment was also found in Form 26AS. In any case, the assessee had not failed to comply the payment as directed by the ITSC. We fully relied on the order of the Sandeep Singh 2017 (1) TMI 1147 - SUPREME COURT - The ITSC has power to extend the limitation period for payment of tax. For application of Section 271AAA of the Act, the statute grants immunity in Sub-Section2(i) for non-specification of undisclosed income u/s 132(4) of the Act. In the statement recorded no such undisclosed income was derived. It is duty of the Authorised Officer to ask the relevant question to ascertain the undisclosed income during the statement recorded in search proceeding, relied on Jayendra N. Shah 2018 (3) TMI 950 - ITAT AHMEDABAD - DR in argument mentioned that the assessee had lost the immunity, so penalty is justified. But remained silent about the application of Section 271AAA(2)(i) - In our considered view, the assessee is eligible for granting immunity for application of penalty u/s 271AAA - Decided in favour of assessee.
Issues Involved:
1. Legality of the penalty levied under Section 271AAA of the Income Tax Act. 2. Non-appreciation of facts and reliance on the Assessing Officer's order by CIT(A). 3. Rejection of appeal due to non-filing of an application for condonation of delay. 4. Lack of opportunity for being heard in filing the belated appeal. 5. Consideration of the assessee's counsel's medical condition. 6. Applicability of Section 271AAA. 7. Financial constraints and intention behind delayed payment. Summary: 1. Legality of the Penalty Levied under Section 271AAA: The assessee contested the penalty of Rs. 35,45,120/- levied under Section 271AAA, asserting that it was against the facts and untenable in law. The search conducted on 03.09.2009 led to an application before the Income Tax Settlement Commission (ITSC), which ordered the payment of tax in installments. The assessee failed to pay within the stipulated period, leading to the penalty. 2. Non-appreciation of Facts and Reliance on AO's Order by CIT(A): The CIT(A) was criticized for merely relying on the AO's order without appreciating the facts. The CIT(A) confirmed the penalty without considering the specific circumstances and arguments presented by the assessee. 3. Rejection of Appeal Due to Non-filing of Application for Condonation of Delay: The appeal was rejected on the grounds of not filing an application for condonation of delay. The assessee argued that the CIT(A) should have allowed an opportunity to explain the delay. 4. Lack of Opportunity for Being Heard in Filing the Belated Appeal: The assessee cited a precedent from the Chandigarh Bench, emphasizing that the CIT(A) should have provided an opportunity to be heard regarding the delayed appeal. 5. Consideration of the Assessee's Counsel's Medical Condition: The assessee's counsel underwent heart surgery, which was communicated to the CIT(A). However, the CIT(A) proceeded with the case without considering this fact, leading to the rejection of the appeal. 6. Applicability of Section 271AAA: The assessee argued that the case did not fall within the mischief of Section 271AAA. The penalty was contested on the grounds that the undisclosed income was not calculated during the search proceedings, and the immunity granted should not have been withdrawn. 7. Financial Constraints and Intention Behind Delayed Payment: The assessee cited unfavorable financial conditions as the reason for delayed payment, arguing that there was no malafide intention. The penalty was deemed excessive and unjustified. Judgment: The Tribunal found that the assessee had paid the tax, albeit not within the stipulated period, but before filing the appeal to the ITAT. Citing the Supreme Court's judgment in Sandeep Singh vs. UOI, the Tribunal noted that the ITSC has the power to extend the payment period. The Tribunal also referred to JCIT vs. Jayendra N. Shah, emphasizing that the onus was on the authorized officer to question the manner of deriving undisclosed income during the search. The Tribunal concluded that the penalty under Section 271AAA was not justified and quashed the penalty of Rs. 35,45,120/-. Result: The appeal of the assessee was allowed, and the penalty was quashed.
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