Harish Kumar Dhawan , Delhi V. DCIT Circle-28(1), Delhi

ITA 1389/DEL/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6081 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 09-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 154; 143(3)

Judgement Text

1 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No. 1389/DEL/2022 (A.Y 2016-17) Harish Kumar Dhawan 59-A, Friends Colony East, New Delhi PAN No. AAAPD3076D (APPELLANT) Vs. DCIT Cricle-28(1) New Delhi. (RESPONDENT) ORDER PER YOGESH KUMAR US, JM This appeal is filed by the assessee against the order dated 04/08/2021 passed by the Income Tax Department (National Faceless Assessment Centre, Delhi) for Assessment Year 2016-17. 2. The assessee has raised the following ground of appeal:- “1. That on the facts and circumstances of the case and in law, the Ld. Commissioner of Income tax (National faceless appeal centre (NFAC) (hereinafter referred to as ‘Ld CIT’) erred in wrongfully Assessee by : Sh. Harish Kumar Dhwan, Self Department by: Sh. S. L. Anuragi, Sr. DR Date of Hearing 13.07.2022 Date of Pronouncement 18.07.2022 2 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN understanding the case. 2. Briefly the facts and circumstances of the case are as under: 3. That the appellant had opted for the Vivad Se Vishwas Scheme vide application dated 27.12.2020. Pursuant thereto, Pr. Commissioner of Income Tax, Delhi has certified the full and final payment of Rs.50,519/- in terms of Form No.5 dated 10.02.2021 (which fact has been acknowledged and intimated in para 2 of the order of the Ld CIT). 4. That Five months after the settlement, the appellant had received by E-mail a show cause notice for penalty on 14.5.2021, The appellant had immediately furnished a reply addressed to Additional Commissioner ACIT 28(1) Delhi (it Later transpired that it had to be sent to a different E-mail Address for which clarificatory instructions were also issued by the Dept and published in newspapers). In the meanwhile the Ld. Assessing Authority had imposed a penalty of 100% of the tax amount of Rs.6,24,580/- by an ex-parte order dated 4.8.2021. (Copy of the order is attached). The Ld Assessing Authority was apparently not aware of the settlement under the Vivad Se Vishwas Scheme. The appellant had applied on 11 Aug 2021 for rectification u/s 154 of IT Act which application though acknowledged is still pending. 5. That simultaneously the appellant had filed an appeal to Commissioner Appeals, NFAC on the following grounds: (a) The case had been settled in Jan 2021 under the Vivad Se Vishwas Scheme. Hence the ex-parte Penalty orders issued on 04 th August 2021 have been issued in error, as the Ld Assessing Officer 3 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN was not aware of the settlement under the Vivad Se Vishwas Scheme on 12 Jan 2021. Hence the penalty should be revoked (withdrawn). (b) The appellant had also requested that if required he be given a personal hearing in the case. 6. That the Ld. CIT dismissed the appeal on the following grounds as per para 2 and 3 of the said order extract given below: 2. “The appeal is treated as infructuous as per clause 5 of the Direct Tax Vivad Se Vishwas Act, 2020.” 3. “Accordingly, the appeal is treated as dismissed for statistical purposes”. 7. That the Ld CIT did not appreciate that he was required to dismiss the penalty order which had been wrongly issued eight months after settlement under the Vivad Se Viswas Scheme. The penalty order still subsists and is required to be set aside. 3. Brief facts of the case are that, the assessment order u/s 143(3) of the Act has been passed against the assessee on 14/09/2018 by computing the income of the assessee at Rs. 66,82,514/- as against the returned income of Rs. 46,61,222/-. The assessee has applied under “Vivad Se Vishwas Scheme” to settle the dispute. Form No. 5 dated 10/02/2021 has been issued on payment of tax under the said scheme. After lapse of 3 months from issuance of Form No. 5, a show cause notice u/s 271 (1) (c) of the Act dated 13/05/2021 has been issued for Assessment Year 2016-17. Consequent to the same, an order u/s 271(1)(c) of the Act has also been passed on 04/08/2021 by levying the penalty at 100% of the tax sought to be evaded. As against the penalty order dated 04/08/2021, the assessee has preferred an 4 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN appeal before the CIT(A). Since the dispute has already been settled under ‘Vivad Se Vishwas Scheme’, the Ld.CIT(A) has dismissed the filed by the assessee on 12/05/2022 for having become infructuous but did not delete the order of the penalty. 4. Aggrieved by the order dated 12/05/2022 passed by the CIT(A), the assessee has preferred the present appeal. 5. The assessee appearing in person submitted that, the tax dispute has already been under VSVS, therefore, the penalty order ought to have been deleted by CIT(A), the CIT(A) even after mentioning regarding settling the dispute under VSVS, did not delete the penalty order which is illegal. 6. Per contra, the Ld. DR submitted that, in all the cases where the dispute is settled under VSVS, the similar stereotype order been passed by the CIT(A). The present appeal has been filed without their being any cause of action to the Assessee. 7. We have heard the assessee appeared in person and also Ld. DR, perused the records and gave our thoughtful consideration. It is evident from the record that after passing the assessment order, the assessee has applied for “Vivad Se Vishwas Scheme” to settle the dispute and paid the requisite tax as per the said scheme for the year under consideration. The Department has also issued From No. 5 dated 10/02/2021 as per Clause (b) of the Form No. 5, the assessee is also entitled for immunity from instituting any proceedings for prosecution for any offence under the Income Tax Act or from imposition of penalty under the said enactment in respect of the tax arrears. Therefore, in our opinion, initiating penalty proceedings u/s 271(1)(c) of the Act by the Lower Authority after settling the dispute under ‘Vivad se Vishwas 5 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN Scheme’ is wholly illegal and arbitrary. 8. Further, the Ld.CIT(A) has admitted the fact that the appellant has opted for “Vivad Se Vishwas Scheme” and also admitted that assessee has made full and final payment of Rs. 50,519/- in terms of Form 5 dated 10/02/2021 but treated the appeal as ‘become infructuous’ and dismissed the appeal but did not delete the penalty order passed by the A.O. The Ld.CIT (A) ought to have deleted the penalty since the dispute has already been settled in the “Vivad Se Vishwas Scheme”. Therefore, we deem it fit to delete the penalty imposed by the A.O vide order dated 04/08/2021 by allowing the Grounds of Appeal of the Assessee. 9. In the result, Appeal filed by the assessee is allowed and the penalty stood deleted. Order pronounced in the open court on 18 th July, 2022. Sd/- Sd/- ( SHAMIM YAHYA ) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 18/07/2022 *R.N* Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT 6 ITA No. 1389/Del/2022 Sh. HARISH KUMAR DHAWAN ASSISTANT REGISTRAR ITAT NEW DELHI