Share India Fincap Pvt. Ltd. vs. DCIT, New Delhi: Appeal Against Penalty for Assessment Year 2016-17

In a notable judgment by the Income Tax Appellate Tribunal, Delhi Bench ‘G’, the case between Share India Fincap Private Ltd., New Delhi (appellant) and the Deputy Commissioner of Income Tax, Circle-22(2), New Delhi (respondent) for the assessment year 2016-17 was decided. ITA No. 1571/DEL/2022 addresses significant legal and procedural complexities surrounding the imposition of penalties under the Income Tax Act, 1961.

The appeal was lodged by Share India Fincap Pvt. Ltd. against the order of the Commissioner of Income-tax (Appeals), National Faceless Assessment Centre, Delhi, dated 11.05.2022. The primary grounds of the appeal revolved around the arguments that the appellant was not afforded a proper opportunity of being heard, thereby breaching the principles of natural justice. Additionally, the appellant contested the legality of the penalty proceedings on account of their participation in the Vivad Se Vishwas Scheme, 2020.

The facts of the case highlight that the appellant had initially declared income amounting to Rs. 80,05,710 during the electronic filing of their return, which was subsequently processed under section 143(1) of the Act. However, following a limited scrutiny, the Assessing Officer amended the assessment under section 143(3), resulting in an income reassessment of Rs. 8,35,35,710. This considerable increment led to the initiation of penalty proceedings under section 271(1)(c) of the Act, culminating in a proposed penalty of Rs. 2,49,72,484.

The article would delve deeper into the appellant’s grounds for appeal, including their assertion of the order being ‘void, illegal, and bad in law’, and their plea for the appeal right, amongst others. The Tribunal’s analysis and the resultant order would be dissected to understand the applicability of the Vivad Se Vishwas Scheme in mitigating penalty proceedings and its implications for tax jurisprudence.

In an interesting turn of events, despite the appellant’s absence during the proceedings, the Tribunal proceeded to decide the case based on the merits of the documents and arguments presented. The decision to allow the appeal for statistical purposes, subject to verification of the appellant’s claim to the Vivad Se Vishwas Scheme, marks a significant milestone in the realm of tax litigation.

This article aims to provide a detailed narrative of the legal proceedings, the arguments put forth by both parties, and the Tribunal’s rationale behind the verdict. It will explore the broader legal principles involved, including the rights to a fair hearing, implications of opting for settlement schemes like Vivad Se Vishwas, and the principles guiding penalty impositions under the Income Tax Act.

Concluding with the Tribunal’s final judgment, the article will provide critical insights into how such cases shape the understanding and application of tax laws in India, offering valuable lessons for both taxpayers and practitioners in the field.

Share India Fincap Pvt. Ltd. vs. DCIT, New Delhi: Appeal Against Penalty for Assessment Year 2016-17