Date of Order: 18th July 2023
Appellant: Harsha Shah, Delhi
Respondent: ITO, Ward-59(3), New Delhi
The appeal by Harsha Shah challenges the imposition of a penalty by the Income Tax Officer despite the appellant opting for the Vivad Se Vishwas Scheme, aimed at resolving disputes without penalty. This case questions the enforcement of penalties that conflict with the provisions of the Direct Tax Vivad Se Vishwas Act, 2020, which stipulates that no penalties should be applied once an agreement is reached under the scheme.
The grounds of the appeal highlight an alleged error by the Commissioner of Income-Tax Appeals (CIT-A), who dismissed the case stating the appeal was infructuous due to the assessee’s participation in the Vivad Se Vishwas Scheme. However, it was contended that the CIT-A did not adequately address the grounds of the appeal or provide an opportunity for being heard, resulting in a decision to impose a penalty that contradicts the terms of the settlement scheme.
The appellate tribunal, upon reviewing the submissions and precedent set by a coordinate bench in a similar case for the same assessment year, recognized the oversight and ruled in favor of the appellant. The Tribunal ordered the cancellation of the penalty, reaffirming that once a dispute is settled under the Vivad Se Vishwas Scheme, subsequent penalties related to the same matter are not enforceable.
This case highlights the importance of adhering to the legislative intent of dispute resolution schemes and ensures that taxpayers who opt for such schemes are granted the full benefits promised, particularly exemption from penalties that could otherwise undermine the scheme’s purpose.
The decision by the Tribunal underscores the protective measures for taxpayers under the Vivad Se Vishwas Scheme, emphasizing that penalties should not be imposed once a dispute has been amicably settled through the scheme. This ruling serves as a significant precedent for similar cases, ensuring that the rights and decisions under such schemes are respected and implemented correctly.
Harsha Shah vs. ITO, Ward-59(3), Delhi – Penalty Issue under Vivad Se Vishwas for AY 2015-16
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