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Facts
The assessee filed two appeals against the order of the CIT(A) concerning the assessment year 2019-20. The appeals were related to the upholding of penalty under Section 270A and additions to income. The assessee later submitted that the dispute was settled under the Direct Tax Vivad se Vishwas Scheme, 2024 and sought to withdraw the appeals.
Held
The Tribunal allowed the assessee to withdraw the appeals as they were rendered infructuous due to settlement under the Vivad se Vishwas Scheme. Consequently, the appeals were dismissed as withdrawn.
Key Issues
Whether the appeals can be withdrawn as infructuous due to settlement under the Vivad se Vishwas Scheme. The legality of the penalty imposed under Section 270A and additions made by the AO.
Sections Cited
270A, 133A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.:
These two appeals, filed by the assessee, against the separate order dated 28/09/2021 for and order dated 17.04.2023 for of learned Commissioner of Income Tax (Appeals) – 3, Lucknow [hereinafter referred as the “Ld. CIT(A)”] for the assessment year 2019-20. The assessee has raised the following grounds of appeal: -
1. Because the CIT(A) has failed to appreciate the facts and circumstances of the case and has erred in upholding the levy of penalty of Rs.51,07,340/- applying the provisions of Section 270A of the Act which levy of penalty is contrary to the provisions of law be deleted.
2. Because there being neither underreporting nor misreporting of income as per the provisions of section 270A of the Act, 1961, the CIT(A) was not justified in upholding the levy of penalty of Rs.51,07,340/- the penalty imposed is bad in law and be deleted.
& 67/VNS/2023 Page 2 of 4
Because there being neither satisfaction as contemplated in the section 270A nor recorded in the assessment order while initiating the penalty proceedings u/s 270A in as much as, as per the AO “it appears to me underreporting and misreporting of income”, the penalty proceedings initiated and the penalty levied are contrary to the provisions of law be deleted.
4. Because the CIT(A) has erred to appreciate that the AO has failed to give any SCN to explain the facts and circumstances of the case in as much as no notice has been issued by the AO after passing of the quantum appeal order by the CIT(A) and before levying of penalty, thus depriving the assessee of filing explanation and submissions, the penalty order is violative to the principles of natural justice the same be quashed.
5. Because the penalty imposed and upheld by the CIT(A) is all based on mere presumption estimated addition, the provisions of section 270A are not applicable, (for no penalty need be imposed on estimated addition) the penalty of Rs.51,07,340/- imposed is bad in law be deleted. 6. Because the approval given to the draft penalty order by the Additional Commissioner of Income tax is without appreciation of facts and circumstances of the case, being mechanical in nature, the CIT(A) has erred in law in upholding the levy of penalty which order being bad in law be quashed.” “1. Because the CIT(A) has erred on facts and in law in upholding the addition of Rs.90,60,180/- made by the AO on estimate and assumption basis, which order of the CIT(A) is bad in law, the addition made by the AO and sustained by the CIT(A), be deleted.
2. Because survey u/s.133A having taken place on 28.05.2018 the CIT(A) was not justified in upholding the addition of Rs.90,60,180/- being total of the receipts calculated on the basis of the impounded material, relating to 46 days (01.04.2018 to 28.05.2018) receipts calculated at Rs.79,389/- per day aggregating to Rs.36,51,815/- thereby estimated for the entire remaining period of the year (29.05.2018 to 31.03.2019), for the reasons that the books of account as maintained, being audited and having not been rejected, the addition made and upheld is totally unjustified and unwarranted.
3. Because on a proper appreciation of the facts and circumstances of the case, when regular books of account have been maintained, tax audited, in which no defects have been found, nor having being rejected, the CIT(A) was not justified in upholding the addition of Rs.90,60,180/made by the AO as unexplained /undisclosed income for the whole year, such addition being without any basis, be deleted.
4. Because the CIT(A) has failed to appreciate that no addition can be made for the remaining part of the year (29.05.2018 to 31.03.2019) based on the records of 46 days (01.04.2018 - 28.05.2018), especially when no defects in the books of account as maintained having not been found or pointed out by the AO, the addition of Rs.90,60,180/- made be deleted.
Because the CIT(A) has failed to appreciate the facts and circumstances especially the innocence and the ignorance of the assessee, relying totally on the letter dated 27.09.202ibeing conditional as signed and filed by the assessee’s counsel, surrendering an amount of Rs.90,60,168/- which is self contradictory, not maintainable in law, for all surrender of income has & 67/VNS/2023 Page 3 of 4 to be based on facts and events taken place and not on facts or events presumed or likely to take place, the addition made by the AO be deleted.
Because on a proper reading of the letter dt. 27.09.2021 it would be found that the same has been signed by the AR of the assessee itself speaks that the assessee director was not informed or taken in confidence, the letter dated 27.09.2021 being not one prepared by the assessee in its own hand writing has no binding force, the addition of Rs.90,60,168/- made on the basis of the same be deleted.
Because without prejudice letter dated 27.09.2021 signed by the A.R. of the company, has no binding force, cannot be read in piece meal or in part and has to be read as a whole, that having not been done, in as much as penalty u/s.270A having being levied and upheld by the CIT(A), the contents of letter dated 27.09.2021 cannot be applied in part, the same has to be ignored and any reliance or addition made on the basis of the same would be against the spirit of the same, the addition of Rs.90,60,180/- made be deleted.
Because the calculation and computation of the addition of Rs.90,60,168/- itself Is without any basis ignoring and overlooking the facts of the case, as well as the realities of the Manner and modus operandi of the business, itself being erroneous and not free from doubts be deleted.”
At the outset, the Ld. Counsel for the assessee submitted that the dispute has been settled under the Direct Tax Vivad se Vishwas Scheme, 2024 and prayed for withdrawal of the appeal. And a letter dated 26.03.2025 along with Form nos. 2 & 3 is placed on record. The relevant contents of the letter dated 26.03.2025 is reproduced as under: - “1. The above mentioned appeals filed by the assessee and are fixed for hearing before the Hon'ble Bench on Thursday March 27, 2025, The appellant has participated in the Vivad se Vshwas Scheme- 24 and hence does not want to pursue the appeals further. Copy of Forms No. 2 and 03 along with payment of tax challan is enclosed. The appeals be treated withdrawn as infructuous.”
3. The Learned Departmental Representative has no objection for withdrawal of these appeals.
In view of the facts discussed above, we permit the assessee to withdraw these appeals. Accordingly, the appeals are dismissed as withdrawn.
& 67/VNS/2023 Page 4 of 4 5. In the result, the appeals of the assessee are dismissed as withdrawn. Order pronounced in the open Court on 28/03/2025.