KUMAR AGRO PRODUCTS,MUMBAI vs. DY. CIT 1 (2), MUMBAI

In the captioned appeal, the assessee assails penalty u/s 271(1)(c) as confirmed by learned first appellate authority vide impugned order dated 20/08/2019. The Ld. AR, Shri Nikhil Tiwari, submitted that the assessee has already opted for settlement of dispute for quantum additions as well as penalty under Direct Tax Vivad Se Vishwas Scheme (VVS Scheme), 2020 and already received Form No.3 from appropriate authority. The copy of the same has been placed on record. The attention has been drawn to the fact that quantum appeal has already been allowed to be withdrawn by the Tribunal vide order dated 31/12/2020. It was, therefore, submitted that the impugned penalty would not survive against the assessee.

To support the same, the Ld. AR drew attention to CBDT Circular No. 9 of 2020 dated 22.04.2020 wherein while giving answer to FAQ no. 8, the CBDT has clarified that it would not be possible for the taxpayer to apply for settlement of penalty appeal only, when the appeal on disputed tax related to such penalty is still pending. In the instant case, since appeal against quantum assessment order is already settled as stated above, the impugned appeal for levy of penalty needs to be disposed off and penalty proceedings u/s 271(1)(c) of the Act should be dropped. 3. We have carefully considered the rival arguments. At the outset, the relevant FAQ No. 8 as referred to by Ld. AR is reproduced as under:- “Q8. Imagine a case where an appellant desires to settle concealment penalty appeal pending before CIT(A), while continuing to litigate quantum appeal that has travelled to higher appellate forum. Considering these are two independent and different appeals, whether appellant can settle one to exclusion of others? If yes, whether settlement of penalty appeal will have any impact on quantum appeal? Ans: If both quantum appeal covering disputed tax and appeal against penalty levied on such disputed tax for an assessment year are pending, the declarant is required to file a declaration form giving details of both disputed tax appeal and penalty appeal. However, he would be required to pay relevant percentage of disputed tax only. Further, it would not be possible for the appellant to apply for settlement of penalty appeal only when the appeal on disputed tax related to such penalty is still pending.”

The appeal stand allowed in terms of our above order.