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Facts
The assessee appealed against a penalty of Rs. 1,56,877/- levied under Section 271(1)(c) of the Income Tax Act, 1961, for AY 2014-15, which was related to an addition of Rs. 5,07,695/- made under Section 143(3). The assessee informed the Tribunal that the underlying quantum addition had been settled under the Direct Tax Vivad Se Vishwas Scheme, 2024, by filing the necessary declarations and receiving a final settlement order.
Held
The Tribunal observed that once the quantum matter is settled under the DTVSVS-2024 scheme, Section 93 of the scheme explicitly states that no penalty shall be imposed in respect of such an addition. Consequently, the impugned penalty of Rs. 1,56,877/- was ordered to be deleted.
Key Issues
Whether a penalty levied under Section 271(1)(c) can be sustained when the underlying quantum addition, for which the penalty was imposed, has been settled under the Direct Tax Vivad Se Vishwas Scheme, 2024, in light of Section 93 of the said scheme.
Sections Cited
250, 271(1)(c), 143(3), 92(2), 93
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Appearances by: Assessee represented by : Akkal Dudhewala, A.R. Department represented by : Dheeraj, Addl. CIT, Sr. DR Date of concluding the hearing : 24.06.2025 Date of pronouncing the order : 30.06.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
This appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, vide order dated 06.01.2025. The single issue pertains to a penalty levied u/s 271(1)(c) of the Act of Rs. 1,56,877/-. This penalty has been confirmed at first appellate stage.
Right at the outset, the Ld. AR filed a letter dated 19.06.2025 informing as under:
Indu Mohta L/H of Chhagan Lal Mohta “This is with reference to the captioned appeal filed by the assessee in which is fixed for hearing before the Hon'ble Bench on 19.06.2025. In this regard, it is submitted that the captioned appeal has been filed by the assessee against the penalty order dated 30.06.2017 passed u/s 271(1)(c) of the Act by the NFAC for the AY 2014-15, levying penalty of Rs 1,56,877/ u/s 271(1)(c) of the Act in relation to the addition of Rs.5,07,695/- made in the assessment order dated 27.12.2016 passed u/s 143(3) of the Act. The undersigned wishes to submit that the assessee had filed an appeal against the quantum addition of Rs.5,07,695/-, which was subsequently settled by the assessee under the Direct Tax Vivad Se Vishwas Scheme, 2024 by filing the necessary declaration in Form 1 on 23.12.2024 Copy of the Farm 1 is enclosed at Pages 1 to 6 of the Paper Book The assessee submits that subsequent thereto, the concerned authority, Le. the Ld. PCIT has since accepted the application and issued Form 2 on 10.01.2025 and has since passed the order for full and final settlement of tax arear u/s 92(2) r.w.s. 93 of the Direct Tax Vivad Se Vishwas Scheme, 2024 in Form 4 on 11.02.2025 (Copy of the Form 4 is enclosed at Page 9 of the Paper Book). It shall thus be appreciated that the quantum addition whose appeal was filed by the assessee has since been settled under the Direct Tax Vivad Se Vishwas Scheme, 2024. In view of the foregoing therefore, it is submitted that once the appeal arising out of the quantum addition has been settled by the assessee under the Direct Tax Vivad Se Vishwas Scheme, 2024, then in terms of the Section 93 of the said scheme, no penalty in respect of such addition can be legally imposed. It is thus prayed that the impugned penalty order dated 06.01.2025 passed u/s 271(1)(c) of the Act may kindly be quashed and the penalty of Rs.1,56,877/-u/s 271(1)(c) may kindly be deleted in full.” 2.1 It was prayed that with the settlement of the quantum matter under the DTVSVS-2024, the impugned penalty deserved to be quashed, considering the provisions of section 93 of the said scheme.
2.2 The Ld. DR relied on the orders of authorities below.
We have considered the documents before us and have also gone through section 93 of the said scheme. It is clear that with the settlement of quantum matter, the impugned penalty cannot survive. It is accordingly deleted.
In result, appeal of the assessee is allowed.
Order pronounced on 30.06.2025