Re: Received notice for penalty proceedings, while Form 3 is awaiting from Designated Authority

I have already filed Form 1 and 2 under VSV for disputed tax, awaiting for Form 3.

Now, I have received a show cause notice for penalty proceedings as to why penalty u/s 271(1)(b) should not be imposed.

My question is whether penalty will be waived once Form 5 is issued to me?

As per section 2(1)(i) of the VSV Act , disputed penalty means , any penalty  determined I. any case under the provisions of the Income -tax Act , which is not levied or leviable on the disputed income or disputed tax  where an appeal is filed against such dispute penalty. Section 271(1) (b) is one such provision .    Please refer Circular No  . 21/ 2020 dt 4 -12 -2020 .    Q.No 80 and answer Given by the CBDT  wherein the CBDT clarified that where the appeal related to penalties that are not related to quantum assessment like  u/ s 273B 271BA, 271DA of the Acts  , etc are required to be settled separately .Penalty u/s 271(1)(b) is in respect of failure to comply with the notices , hence  it may not be waived automatically .     The assessee is  advised to file a detailed reply giving the reasons why the assessee could not attend the notices and also mention that the assessee has opted for Vsv Scheme hence the proposed initiation for levy of penalty may be dropped . The AO may drop the proceeding.

 

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