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Facts
The assessee filed an appeal against the CIT(A)'s order for AY 2013-2014, which was delayed by 372 days. The primary issue was a penalty levied under section 271B for non-audit of books of account, despite the assessee having not maintained any books. The assessee had also opted for the Vivad Se Vishwas (VSV) scheme.
Held
The Tribunal condoned the delay of 372 days. It held that the penalty under section 271B was not sustainable as the AO should have initiated penalty under section 271A for non-maintenance of books. Furthermore, the penalty order was barred by limitation, having been passed on 16.03.2022, beyond the extended deadline of 30.09.2021 (due to COVID-19 extensions).
Key Issues
Condonation of delay in filing appeal; validity of penalty under section 271B for non-audit of books when books were not maintained; limitation period for imposing penalty considering COVID-19 extensions and the Vivad Se Vishwas scheme.
Sections Cited
271A, 271B, 275(1)(c), 144C, 10(23C), 12AB, 35(1)(ii), 35(1)(iia), 35(1)(iii), 80G, 54, 54GB, 9A(5), 139AA, 245M, Vivad Se Vishwas Scheme
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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
(नििाारण वर्ा / Assessment Year : 2013-2014) Asha Didwania Vs ITO, Bhadrak Ward, Bhadrak Matru Mandir, P.O/P.S:- Charampa, Dist:- Bhadrak, 756101 PAN No. : AOOPD 2243 Q (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. नििााररती की ओर से /Assessee by : Shri P.K.Mishra, Advocate राजस्व की ओर से /Revenue by : Shri Vijay Singh, Sr. DR सुनवाई की तारीख / Date of Hearing : 22/09/2025 घोषणा की तारीख/Date of Pronouncement : 22/09/2025 आदेश / O R D E R Per Bench : This is an appeal filed by the assessee against the order of the Ld CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 09/02/2024 passed in Appeal No. NFAC/2012-13/10068461 for the assessment year 2013-2014.
At the outset, it is found that the appeal of the assessee is barred by 372 days. In this regard, the assessee has filed an affidavit stating sufficient reasons for condonation of delay, which are plausible and not found to be false. Ld.Sr. DR also did not raise any serious objection to condone the delay. Accordingly, the delay of 372 days in filing the appeal by the assessee is condoned and the appeal of the assessee is admitted for hearing.
It was submitted by the ld.AR that the assessment year under consideration is A.Y.2013-2014. It was the submission that the issue is now squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case for A.Y.2014-2015 and 2012-2013 passed in order dated 20.05.2024, wherein the Tribunal in para 7 to 12 has held as follows :- 7. We have heard the rival submissions and perused the material available on record. We find that it is an undisputed fact that the assessee has not maintained any books of accounts, thus, the question of getting the books audited does not arise. Ld. CIT(A), while confirming the penalty has observed that it is not a case of non-maintenance of books of accounts but it is a case of non- maintenance of books of accounts properly which are not correct observations. From the perusal of the assessment order it is clearly evident that assessee during the course of assessment proceedings categorically replied that she has not maintained any books of accounts. The AO also in assessment order observed that the assessee has not maintained regular books of accounts, therefore, the proper recourse available with the AO is to initiate penalty proceedings u/s.271A of the Act for non-maintenance of books of accounts which he failed to do so. Once the AO has granted immunity by not initiating the penalty proceedings u/s.271A of the Act, the initiation of penalty proceedings u/s.271B of the Act for non-audit of the books of accounts is not correct, therefore, the penalty levied u/s.271B of the Act is not sustainable.
With regard to the limitation, we find that the assessment order was passed on 11.12.2019 and the issue of initiation of penalty proceedings u/s.271B of the Act was not challenged in appeal, therefore, the time limit for imposing the penalty as per section 271(1)(c) of the Act are applicable which reads as under :- 1 [Bar of limitation for imposing penalties.
No order imposing a penalty under this Chapter shall be passed— (a) xxxxxxxx (b) xxxxxxx (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.
In the present case, as per Section 275(1)(c) of the Act, time limits of passing the penalty order expired on 30/09/2020, however, due to Covid-19, the date for completion of the assessment proceedings as well as for passing the penalty orders stood extended by the CBDT through various instructions and finally vide Instruction dated 25.06.2021, it was finally extended to 30.09.2021. The relevant instruction is reproduced here under :- Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, 25th June, 2021 PRESS RELEASE Government grants further extension in timelines of compliances. Also announces tax exemption for expenditure on Covid treatment and ex-gratia received on death due to Covid A. Tax exemption I. Many taxpayers have received financial help from their employers and well wishers for meeting their expenses incurred for treatment of Covid-19. In order to ensure that no income tax liability arises on this account, it has been decided to provide income-tax exemption to the amount received by a taxpayer for medical treatment from employer or from any person for treatment of Covid-19 during FY 2019-20 and subsequent years. II. Unfortunately, certain taxpayers have lost their life due to Covid- 19. Employers and well-wishers of such taxpayers had extended financial assistance to their family members so that they could cope with the difficulties arisen due to the sudden loss of the earning member of their family. In order to provide relief to the family members of such taxpayer, it has been decided to provide income-tax exemption to ex-gratia payment received by family members of a person from the employer of such person or from other person on the death of the person on account of Covid-19 during FY 2019-20 and subsequent years. The exemption shall be allowed without any limit for the amount received from the employer and the exemption shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons. Necessary legislative amendments for the above decisions shall be proposed in due course of time. B. Extension of Timelines In view of the impact of theCovid-19 pandemic, taxpayers are facing inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease compliances to be made by taxpayers during this difficult time, reliefs are being provided through Notifications nos. 74/2021 & 75/2021 dated 25th June, 2021 Circular no. 12/2021 dated 25th June, 2021. These reliefs are: 1) Objections to Dispute Resolution Panel (DRP) and Assessing Officer under section 144C of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for which the last date of filing under that section is 1st June, 2021 or thereafter, may be filed within the time provided in that section or by 31st August, 2021, whichever is later. 2) The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, required to be furnished on or before 31st May, 2021 under Rule 31A of the Income-tax Rules,1962 (hereinafter referred to as “the Rules”), as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021. 3) The Certificate of Tax Deducted at Source in Form No.16, required to be furnished to the employee by 15th June, 2021 under Rule 31 of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021. 4) The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64D for the Previous Year 2020- 21, required to be furnished on or before 15th June, 2021 under Rule 12CB of the Rules, as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021. 5) The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64C for the Previous Year 2020- 21, required to be furnished on or before 30th June, 2021 under Rule 12CB of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021. 6) The application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc., required to be made on or before 30th June, 2021, may be made on or before 31st August, 2021. 7) The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between 1st April,2021 to 29th September, 2021 (both days inclusive), may be completed on or before 30th September, 2021. 8) The Quarterly Statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021, required to be furnished on or before 15th July, 2021 under Rule 37 BB of the Rules, may be furnished on or before 31st July, 2021. 9) The Equalization Levy Statement in Form No. 1 for the Financial Year 2020- 21, which is required to be filed on or before 30th June, 2021, may be furnished on or before 31st July, 2021. 10) The Annual Statement required to be furnished under sub- section (5) of section 9A of the Act by the eligible investment fund in Form No. 3CEK for the Financial Year 2020-21, which is required to be filed on or before 29th June, 2021, may be furnished on or before 31st July, 2021. 11) Uploading of the declarations received from recipients in Form No. 15G/15H during the quarter ending 30th June, 2021, which is required to be uploaded on or before 15th July, 2021, may be uploaded by 31st August,2021. 12) Exercising of option to withdraw pending application (filed before the erstwhile Income Tax Settlement Commission) under sub- section (1) of Section 245M of the Act in Form No. 34BB, which is required to be exercised on or before 27th June, 2021, may be exercised on or before 31st July, 2021. 13) Last date of linkage of Aadhaar with PAN under section 139AA of the Act, which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021. 14) Last date of payment of amount under Vivad se Vishwas(without additional amount) which was earlier extended to 30th June, 2021 is further extended to 31st August, 2021. 15) Last date of payment of amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021. 16) Time Limit for passing assessment order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021. 17) Time Limit for passing penalty order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021. 18) Time Limit for processing Equalization Levy returns which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021. (Surabhi Ahluwalia) Commissioner of Income Tax (Media & Technical Policy) Official Spokesperson, CBDT 10. From perusal of the instructions, it is clear that all the cases where time limits for passing penalty orders expired within the Covid period, the limitation were extended by the CBDT upto 30th September, 2021. The present case also falls under the above category. Therefore, the final date for passing the penalty order was 30.09.2021, however, the AO has levied penalty vide order dated 16.03.2022, which is beyond the time limit extended by the CBDT. Further, the assessee has opted for Vivad Se Vishwas Scheme and submitted before the ld. CIT(A) that once the assessee has opted for VSV Scheme, she got immunity from the penalty proceedings. In this regard, while rejecting the claim of the assessee, the ld. CIT(A) has referred the CBDT FAQ No.80 given in Circular No.21/2020 dated 04.12.2020, which reads as under :- Question 80: Whether appeal against penalties that are not related to quantum assessment lime penalty u/s.271B, 271A, 271DA of the Act etc. are also waived upon settlement of appeal relating to disputed tax.? Answer : No, appeal against such penalty order is required to be settled separately. In view of the above it is held that VSVS does not grant immunity from penalty u/s.271B.
In the above FAQ, the CBDT has made it clear that the penalty proceedings u/s.271B is not related to the quantum assessment, therefore, that cannot be waived under VSV Scheme. This being so, it cannot be said that the time limit for levy of penalty should be extended till the disposal of the appeal in quantum proceedings or till the issue of final certificate under VSV Scheme. In view of these facts, in our considered view the penalty order dated 16.03.2022 is barred by limitation and therefore, deserves to be cancelled.
Under these circumstances, the penalty levied u/s.271B of the Act is deleted both on merits as well as on limitation issue. Thus, the appeal of the assessee is allowed.
In reply, ld. Sr. DR vehemently supported the order of the ld. CIT(A).
We have considered the rival submissions. As it is noticed that the issues in this appeal are squarely covered by the decision of this Tribunal in assessee’s own case for the A.Y.2014-2015 & 2012-2013 passed in vide order dated 20.05.2024, respectfully following the observations made by the Tribunal therein, the penalty levied by the AO and confirmed by the ld. CIT(A) stands deleted for the reasons as was for the assessment year 2014-2015 & 2012-2013.