FARJANA MEMON,RAJNANDGAON vs. INCOME TAX OFFICER, RAJNANDGAON, RAJNANDGAON

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ITA 261/RPR/2026Status: DisposedITAT Raipur16 April 2026AY 2014-155 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that confirming penalties without verifying settlement under the Vivad Se Vishwas Scheme is incorrect and arbitrary. The penalty cannot stand if the quantum is settled under the scheme, and the assessee's request for withdrawal should have been considered.

What were the facts?

The assessee opted for the Vivad Se Vishwas Scheme, 2024, for settlement of the quantum of income. Despite this, the CIT(Appeals) confirmed penalties under Section 271(1)(b) and 271(1)(c) without verifying the settlement under the scheme. The assessee had also requested withdrawal of appeals.

What were the issues?

Whether penalties can be confirmed when the assessee has opted for the Vivad Se Vishwas Scheme for settlement of the quantum of income. Whether the CIT(Appeals) erred in not verifying the settlement and proceeding with the appeal when withdrawal was sought.

Which sections of the Income-tax Act were involved?

Section 271(1)(b),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY

For Respondent: Dr. Priyanka Patel, Sr. DR
Hearing: 16.04.2026Pronounced: 16.04.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned appeals preferred by the assessee emanates from the respective orders of the Ld.CIT(Appeals)/NFAC, Delhi dated 08.01.2026 for the assessment year 2014-15 as per the grounds of appeal on record.

2.

At the time of hearing, none appeared for the assessee. However, an adjournment petition has been filed which is rejected. The matters are heard after recording submissions of the Ld. Sr. DR and on careful perusal of the materials available on record.

3.

That on perusal of the records, I shall first take up the appeal in ITA No.259/RPR/2026, A.Y.2014-15 as lead case which pertains to penalty u/s.271(1)(b) of the Income Tax Act, 1961 (for short ‘the Act’). In this regard, at the first appellate stage, the assessee had submitted that she had opted for Vivad Se Vishwas Scheme, 2024 of the Department and the said declaration has been accepted by the Pr. Commissioner of Income Tax, Raipur. The Copy of Form IV has also been submitted before the Ld. CIT(Appeals)/NFAC and accordingly, the assessee wanted to withdraw the appeal. However, the Ld. CIT(Appeals)/NFAC had still went further in disposing of the appeal of the assessee pertaining to penalty without verifying the issue whether the quantum had been settled under Vivad Se

3 Farjana Memon Vs. ITO, Rajnandgaon ITA Nos.259 & 261/RPR/2026

Vishwas Scheme, 2024 or not. That suppose, quantum is settled as per Vivad Se Vishwas Scheme, 2024, then penalty shall not have any legs to stand. More so, the right to appeal is of the aggrieved party and suppose as in this case, the aggrieved party herself wants to withdraw the appeal, it is prerogative of the aggrieved party to appeal or not to appeal. In this case, the assessee has clearly expressed her willingness and has stated that the appeal may be withdrawn since she had opted for Vivad Se Vishwas Scheme, 2024 regarding settlement of quantum , therefore, it was not open for the Ld. CIT(Appeals)/NFAC to still confirm the penalty u/s. 271(1)(b) of the Act without looking into the settlement of quantum through Vivad Se Vishwas Scheme, 2024 and furthermore, it was also not correct for the First Appellate Authority to go ahead with the matter when the aggrieved party i.e. the assessee herself had prayed for withdrawal of the appeal.

4.

Similarly, in the appeal filed by the assessee in ITA No.261/RPR/2026 for A.Y.2014-15, wherein penalty has been retained by the Ld. CIT(Appeals)/NFAC u/s. 271(1)(c) of the Act in spite of the fact that the assessee had opted for Vivad Se Vishwas Scheme, 2024 and had requested for withdrawal of the appeal before the Ld. CIT(Appeals)/NFAC.

5.

Considering the totality of the facts and circumstances, when the assessee herself had opted for Vivad Se Vishwas Scheme, 2024 which has

4 Farjana Memon Vs. ITO, Rajnandgaon ITA Nos.259 & 261/RPR/2026

been accepted and relevant Form IV has been provided to the assessee, it was therefore incorrect and arbitrary on the part of the Ld. CIT(Appeals)/NFAC to still go ahead and further retain the penalty under the relevant provisions of the Act without looking into the fact whether quantum has been settled under the Vivad Se Vishwas Scheme, 2024 or not. The penalty cannot be levied in routine manner without having any liability on the quantum.

6.

Be that as it may, in the present cases, confirming of penalty by the Ld.CIT(Appeals)/NFAC is, therefore, perverse and bad in law. The respective orders of the Ld. CIT(Appeals)/NFAC are set-aside.

7.

That as per above terms, both the appeals of the assessee are allowed. Order pronounced in open court on 16th day of April, 2026.

Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 16th April, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur.

5 Farjana Memon Vs. ITO, Rajnandgaon ITA Nos.259 & 261/RPR/2026

गाड� फ़ाइल / Guard File. 5.

आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur

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