SQUARE FEET REALTORS PRIVATE LIMTED ,MUMBAI vs. NATIONAL FACELESS ASSESSMENT CENTRE, MUMBAI

This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 22.08.2022 for the assessment year 2012-13 wherein the Ld. CIT(A) was pleased to dismiss the appeal of the assessee and thus confirmed the penalty of Rs.9,21,000/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”).

At the outset, the Ld. AR of the assessee brought to our notice that the quantum assessment made by the AO in this case vide assessment order dated 27.11.2019 u/s 143(3)/147 of the Act wherein the addition of Rs.30 Lakhs was made by the AO had been settled by the assessee as per the Vivad Se Vishwaas Act 2020 (hereinafter “the scheme”) and the competent authority as per the scheme have issued 2 A.Y. 2012-13 Square Feet Realtors Pvt. Ltd. Form No. 5, after receiving Form No. 3 and assessee having made payment along with Form No. 4. We note that the Form No. 5 has been issued by the competent authority on 12.10.2021 [in respect of assessment order dated 27.11.2019 u/s 143(3)/147 of the Act]. Thus, it is noted that the AO has levied penalty against Rs. 30 Lakhs addition made by him by assessment order dated 27.11.2019. Since the penalty of Rs.9,21,000/- u/s 271(1)(c) of the Act has been levied for concealing of particulars of income to the tune of Rs.30 Lakhs which has been settled by the assessee by opting for Vivad Se Vishwaas Scheme and the assessee having received Form No.5, the foundation for levying penalty stands removed. And therefore the legal Maxim “Sublato Fundamento credit opus” is squarely applicable, meaning in case foundation is removed, the super-structure falls. In the case of Badarinath Vs. Tamilnadu AIR 2000 (SC) 3243 SC the Hon’ble Supreme Court has held that once the basis of proceeding is gone, all consequential orders and acts would fall on the ground automatically which is applicable to judicial and quasi-judicial proceedings. And therefore applying the maxim, the penalty levied is cancelled.