Re: Penalty u/s 271D
A penalty u/s 271D has been imoposed and order served upon the assessee on 25.01.2020. The time to file appeal against such order as on specified date is not expired.
As per section 2 ‘disputed tax’ and ‘disputed penalty’ have been defined differently. While disputed tax includes cases where the order is served upon the assessee before the specified date i.e. 31.01.2020 and the time to file appeal against such order is not expired but it is not so in the case of disputed penalty.
Circular issued by CBDT wherein some FAQs are there and Question 20 relates to penalty which states that where there is an appellate order passed by the CIT (A) and the time to file appeal before ITAT is not expired such case is covered.
Relevant definitions and FAQ are reproduced herein below for ready reference.
Section 2(i) “disputed penalty” means the penalty determined in any case under the
provisions of the Income-tax Act, 1961, where—
(i) such penalty is not levied or leviable in respect of disputed income or
disputed tax, as the case may be;
(ii) an appeal has been filed by the appellant in respect of such penalty;
( j) “disputed tax”, in relation to an assessment year or financial year, as the case
may be, means the income-tax, including surcharge and cess (hereafter in this clause
referred to as the amount of tax) payable by the appellant under the provisions of the
Income-tax Act, 1961, as computed hereunder:—
(A) in a case where any appeal, writ petition or special leave petition is
pending before the appellate forum as on the specified date, the amount of tax
that is payable by the appellant if such appeal or writ petition or special leave
petition was to be decided against him;
(B) in a case where an order in an appeal or in writ petition has been passed
by the appellate forum on or before the specified date, and the time for filing
appeal or special leave petition against such order has not expired as on that
date, the amount of tax payable by the appellant after giving effect to the order
(C) in a case where the order has been passed by the Assessing Officer on
or before the specified date, and the time for filing appeal against such order has
not expired as on that date, the amount of tax payable by the appellant in
accordance with such order;
(D) in a case where objection filed by the appellant is pending before
the Dispute Resolution Panel under section 144C of the Income-tax Act as
on the specified date, the amount of tax payable by the appellant if the
Dispute Resolution Panel was to confirm the variation proposed in the
draft order;
(E) in a case where Dispute Resolution Panel has issued any direction
under sub-section (5) of section 144C of the Income-tax Act and the Assessing
Officer has not passed the order under sub-section (13) of that section on or
before the specified date, the amount of tax payable by the appellant as per the
assessment order to be passed by the Assessing Officer under sub-section (13)
thereof;
(F) in a case where an application for revision under section 264 of the
Income-tax Act is pending as on the specified date, the amount of tax payable by
the appellant if such application for revision was not to be accepted:
Provided that in a case where Commissioner (Appeals) has issued notice
of enhancement under section 251 of the Income-tax Act on or before the specified
date, the disputed tax shall be increased by the amount of tax pertaining to
issues for which notice of enhancement has been issued:
Provided further that in a case where the dispute in relation to an
assessment year relates to reduction of tax credit under section 115JAA or
section 115D of the Income-tax Act or any loss or depreciation computed
thereunder, the appellant shall have an option either to include the amount of
tax related to such tax credit or loss or depreciation in the amount of disputed
tax, or to carry forward the reduced tax credit or loss or depreciation, in such
manner as may be prescribed.
20. In a case there is no disputed tax. However, there is appeal for
disputed penalty which has been disposed of by CIT (Appeals) on 5th
January 2020. Time to file appeal in ITAT against the order of
Commissioner(Appeals) is still available but the appeal has not yet
been filed. Will such case be eligible to avail the benefit?
Yes, the appellant in this case would also be eligible to avail the benefit
of Vivad se Vishwas. In this case, the terms of availing Vivad se
Vishwas in case of disputed penalty/interest/fee are similar to terms in
case of disputed tax. Thus, if the time to file appeal has not expired as
on specified date, the appellant is eligible to avail benefit of Vivad se
Vishwas. In this case the appellant should indicate in the declaration
form that time limit to file appeal in ITAT has not expired.
Please guide as to whether such case of penalty u/s 271D where no appeal is pending as on 31.01.2020 would qualify for scheme. Thanks
The Assessee qualifies as an appellant as per section 2(a)(ii) of the VSVA. The question thereafter is whether it is a “disputed penalty” as defined sec. 2(1)(i) is a penalty. The definition of disputed penalty has two limbs;
(i) such penalty is not levied or leviable in respect of disputed income or disputed tax, as the case may be;
(ii) an appeal has been filed by the appellant in respect of such penalty;
The Assessee qualifies in limb (i) above, however not in limb(ii). It may be seen that the two limbs do not bear a conjunction. Hence one can read that both limbs are cumulative and have to be fulfilled and other may read to say that both limbs are exclusive and do not need to be fulfilled together. In such a scenario, one in favour of the assessee should be taken, and hence it would be safe to conclude that in the present facts, the Assessee may be eligible for VsV. Though, Question no. 20 of the CBDT Circular No. 7/2020 dated March 4, 2020 buttresses this point, it would be worth mentioning that CBDT Circular is prior to the amendment to the Bill, and though the intention was to include such cases as well, it’s a blatant error in drafting the Act + the amendments. One may also note the Circular No 9 of 2020 dt 22 -04 -2020,answer to question No 20.once again clarified that the though there is no disputed tax appeal for penalty is disputed the assessee will be eligible to avail the benefit.
Eligible for VSVS. By paying 25 % of the penalty amount. Pl fill in schedule C of Form 1.