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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SUDHANSHU SRIVASTAVA & SHRI VIKRAM SINGH YADAV
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE: SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 131/SRT/2019 Assessment Year :2010-11 M/s Meridian Infratel Pvt. Ltd., ITO, Plot No. 4509, Nr. Seven Water Vs. Ward 2(2), Tank GIDC Industrial Estate, Bharuch Ankleshwar, Bharuch-393002 PAN/GIR No.: AAGCM1481N Appellant Respondent Assessee by : Shri Viresh I. Rudalal (CA) & Shri Rushi J. Parekh (CA) Revenue by : Shri B.P.K. Panda (Sr. DR) Date of Hearing : 10/05/2019 Date of Pronouncement: 26/06/2019 ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Vadodara dated 10.01.2019 wherein the assessee has taken the following grounds of appeal:- “1. That the CIT(A) erred in not considering the application made under the Direct Tax Dispute Resolution Scheme, 2016. 2. That the penalty levied of Rs. 29,660/- u/s 271(1)(c) may be kindly be cancelled.”
Briefly stated, the facts of the case are that the assessment was completed u/s 143(3) wherein the AO has made the addition u/s 68 amounting to Rs. 96,000/- in respect of unsecured loan taken from 5 depositors as the assessee has failed to discharge its obligation to prove the identity of the
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli depositor, genuineness of the transaction and also the creditworthiness of the depositors. Separately, the penalty proceedings, u/s 271(1)(c) were initiated for concealment of income and furnishing inaccurate particulars of his income. The assessee carried the matter in appeal before the ld. CIT(A) and thereafter before the Tribunal and the additions so made by the Assessing Officer have since been confirmed and the quantum proceedings have attained finality.
In the penalty proceedings, a fresh show cause notice u/s 274 read with section 271(1)(c) was issued on 4.10.2014 and thereafter, the AO passed the penalty order dated 30.03.2015 stating that the assessee has furnished inaccurate particulars of his income in respect of unsecured cash credit of Rs. 96,000/- and accordingly it is a fit case for levy of penalty u/s 271(1)(c) and penalty amounting to Rs. 29,660/- was levied on the assessee.
In the appellate proceedings before the ld. CIT(A), besides various others contentions, the assessee submitted that it has filed a letter dated 25.07.2016 with the ld. CIT(A)-3, Vadodara along with prescribed declarations for settlement of the issue under the Dispute Resolution Scheme, 2016 and it was not responded till date. It was submitted that as per the conditions of Dispute Resolution Scheme, 2016, the assessee has paid the quantum demand. However, we find that there is no finding given by the ld. CIT(A) in respect of the declarations so filed by the assessee under Dispute Resolution Scheme 2016 as apparent from para 2.3.1 of the ld. CIT(A) order which reads as under:- “2.3.1 I have considered the facts of the case and gone through the assessment order and submission of the appellant. This is clear use of not discharging the onus of proof u/s 68 of the Act in spite of ample opportunities as the documents and submission made for so-called creditors were inadequate and misleading. The crystallized finding is 2
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli based on several findings of the AO in the penalty order which have been underlined by me while reproducing the penalty order of the AO. It is precisely for these reasons both Appellate Authority CIT(A) as well as ITAT confirmed the addition of Rs. 96,000/- on account of non-genuine cash credits. The AO has cited several case laws to levy penalty in this case and dealt with several citations made by the appellant to drop the penalty. Before me too several premises were raised with some case laws to cancel the penalty. However, I do not find any of premises and case laws applicable on facts of the case and therefore the same are brushed aside.”
In above factual matrix, in Ground No. 1, the assessee has challenged the action of the ld. CIT(A) in not considering the declaration made under the Dispute Resolution Scheme 2016 and during the course of hearing, our reference was drawn to letter dated 26.07.2016 addressed to the ld. CIT(A)-3, Vadodara, the contents thereof reads as under:-
“The above appeal is fixed for hearing today. The penalty of Rs. 29,660/- is raised against which the assessee wants to take the benefit of the Direct Tax Dispute Resolution Scheme, 2016 for which the Form No. 1 & 2 are prepared by the assessee. As we are today filing this application before CIT- (Baroda), this appeal is deemed to have been withdrawn for which necessary certificate may kindly be issued.”
It was further submitted by the ld AR that the assessee has filed the necessary declarations in Form No. 1 u/s 203 of the Finance Act 2016 in respect of Direct Tax Dispute Resolution Scheme 2016 wherein it has been declared that the appeal filed before the ld. CIT(A) was pending as on 29.09.2016 against the levy of penalty u/s 271(1)(c) in respect of order passed 3
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli by the Assessing Officer dated 30.03.2015 for the impugned assessment year. Further, declaration/undertaking was also filed under Form No. 2 u/s 203(4) of the Finance Act 2016. It was accordingly submitted that the ld. CIT(A) has not taken cognizance of the said declarations so filed by the assessee and has proceeded and decided the matter confirming the levy of penalty whereas as per the Direct Dispute Resolution Scheme 2016 with the filing of the application, the appeal of the assessee was deemed to have been withdrawn and necessary certificate needs to be issued.
The ld. DR is heard who has relied on the finding of the lower authorities. It was further submitted by the ld DR that the assessee has filed the declaration under Direct Tax Dispute Resolutions Scheme, 2016 before the ld. CIT(A) and not before the appropriate authority as notified under the said scheme. Therefore, till the time appropriate authority has not issued the certificate as required under Direct Dispute Resolution Scheme, 2016, there nothing wrong in the action of the ld. CIT(A) in deciding the appeal and passing impugned order dated 10.01.2019 confirming the levy of penalty.
We have heard the rival contentions and perused the material available on record. It is noted that the Government has come out with Direct Tax Dispute Resolution Scheme, 2016 and the same has been incorporated as Chapter X of the Finance Act, 2016 which provides an opportunity to the tax payer who are under litigation to come forward and settle their disputes in accordance with the provisions of the said scheme. Further, Direct Tax Dispute Resolution Rules, 2016 have been notified which prescribed the necessary declaration to be submitted by the assessee and the certificates to be issued by the appropriate authority. In the present case, it has been contended by the assessee that it has filed the necessary declaration u/s 203 of the Finance Act in prescribed Form No. 1 and also an undertaking as required u/s 203(4) in the 4
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli prescribed Form No. 2. Further, a letter has been filed before the ld. CIT(A)-3, Vadodara dated 26.07.2016, contents thereof have been noted above. In this regard, we also refer to Circular No. 33 of 2016 dated 17th September 2016 wherein the CBDT has come out certain clarifications in relation to Direct Dispute Resolution Act, 2016 and we refer to certain specific clarifications as relevant which are reproduced as under: “Question No. 1 In a case an appeal was pending before CIT(Appeals) as on 29.02.2016. However, before making declaration under the Scheme the appeal is disposed of by CIT(Appeals). Is the assessee eligible to avail the Scheme? Answer In such a case where the appeal was pending before CIT(Appeals) as on 29.02.2016 and the CIT(Appeals) has already disposed of the same before making the declaration, the declaration under the Scheme cannot be filed. Question No. 2 In a case where the appellant has filed a declaration under the Scheme or has intimated the CIT(Appeals) his intention to file declaration under the Scheme, whether the CIT(Appeals) will dispose-off the appeal? Answer The CIT(Appeals) have been instructed vide letter F. No. 279/Misc./M-30/2016 dated 30.03.2016 that appeals where the appellants have expressed their intention to avail the Scheme should be kept pending. Further, vide letter F. No. 279/Misc./M-74/2016-ITJ dated 19.07.2016, the designated authority have been instructed to obtain an endorsement from CIT(Appeals) concerned that the appeal for which declaration has been filed was pending on 29.02.2016 and has not yet been disposed. Therefore, in a case where the declaration has been made under the Scheme or an intention to avail the Scheme has been made by the 5
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli appellant, the CIT(Appeals) shall not dispose the pending appeal.” 9. In the present case, we find that the assessee has filed the present appeal before the ld. CIT(A) on 30.04.2015 against the penalty order u/s 271(1)(c) dated 30.03.2015. As per the finding of the ld. CIT(A), the appeal of the assessee was filed well within time and was admitted for disposal. Therefore, as on 29.02.2016, the appeal was pending before the ld. CIT(A) against the levy of penalty and therefore, the assessee was very much within its right to file the declarations under the Dispute Direct Resolutions Scheme 2016. Regarding the contention of the ld. DR that the declaration has been filed before the ld. CIT(A) and not before the appropriate authority, we find that on record, there is a copy of the application dated 26.07.2016 which has been filed before the ld. CIT(A)-3, Vadodara and along with that, Form No. 1 and Form No. 2 have been duly filled up and enclosed. Even where the ld CIT(A) is not an appropriate authority, the ld. CIT(A) atleast has been made aware by the assessee of intention to seek settlement under the scheme, in such scenario, the ld. CIT(A) ought to have kept the appeal pending and not disposed off the same in view of specific directions issued by the CBDT as stated in Circular No. 33 of 2016 dated 17th September 2016. Given that the present status of the declaration so filed by the assessee is not known, we deem it appropriate to set-aside the impugned order to the file of the ld. CIT(A) who shall seek a report from the Assessing Officer in respect of the status of the assessee’s declarations before the appropriate authority and what action has been taken by the appropriate authority or write to the appropriate authority seeking its comments on the application so filed by the assessee and taking the same into consideration, decide the matter afresh as per law. In view of the same, we set aside the matter to the file of the ld. CIT(A). The other contentions so advanced by the AR are therefore kept open and have not been examined by us. 6
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 26/06/2019.
Sd/- Sd/- (Sudhanshu Srivastava) (Vikram Singh Yadav) Accountant Member Judicial Member Jaipur Dated:- 26/06/2019 Copy of the order forwarded to : 1. The Appellant- Meridian Infratel Pvt. Ltd., Bharuch 2. The Respondent- ITO, Ward 2(2), Bharuch 3. CIT CIT(A) 4. DR, ITAT, 5. Guard File {ITA No. 131/SRT/2019} 6. By order, / / TRUE COPY / / Asst. Registrar