Priti Mishra Vs ACIT (ITAT Allahabad)
The Income Tax Appellate Tribunal (ITAT), Allahabad bench, has permitted a taxpayer, Priti Mishra, to withdraw her appeal against a penalty levied under Section 270A of the Income Tax Act, 1961. The withdrawal was allowed after the assessee informed the tribunal that she had opted for the Vivad Se Vishwas Scheme, 2024, to settle the underlying tax dispute and had fulfilled the initial requirements of the scheme, including payment of taxes and receipt of confirmation from the tax department.
The appeal before the ITAT was directed against an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), on March 29, 2024. The CIT(A) had sustained a penalty of Rs. 86,774/- imposed on the assessee under Section 270A of the Act. Section 270A deals with penalty for under-reporting or misreporting of income, typically linked to additions or disallowances made during the assessment process.
The assessee had challenged the penalty before the ITAT on several grounds. These included assertions that the lower authorities erred in sustaining the penalty, that genuine and bona fide explanations had been offered for the additions made in the assessment, rendering the penalty provisions (specifically referencing Section 270A(6), which provides circumstances where under-reporting is not penalised) inapplicable. The assessee also contended that the additions upon which the penalty was based were disclosed voluntarily during the assessment proceedings, making the penalty unjustified. Furthermore, the assessee claimed eligibility for immunity from penalty under Section 270AA(1) of the Act, a provision typically linked to the acceptance of assessment additions and payment of tax and interest, or resolution under a scheme like Vivad Se Vishwas.
However, the merits of these grounds were not adjudicated by the ITAT. During the course of the hearing, the Authorized Representative for the assessee submitted an application to the tribunal. The application informed the ITAT about a significant development outside the immediate appellate proceedings: the assessee had decided to avail the benefits of the Vivad Se Vishwas Scheme, 2024.
The Vivad Se Vishwas Scheme (VSV), including its variations introduced for different periods or contexts, is a direct tax dispute resolution scheme introduced by the Indian government to reduce pending income tax litigation. It allows taxpayers to settle disputes by paying a specified percentage of the disputed tax, interest, or penalty, in exchange for waiver of the balance amount, interest, and penalty, and immunity from prosecution. A key requirement for finalising settlement under such schemes is the withdrawal of pending appeals before various appellate forums, including the ITAT, High Courts, and the Supreme Court.
The assessee’s application stated that due taxes had already been paid under the Vivad Se Vishwas Scheme, 2024, and that the department had issued Form No. 3, which serves as a certificate of settlement confirming the details of the amount payable and the demand covered under the scheme. The application further mentioned that for the final settlement process to be completed, the assessee was required to submit proof of withdrawal of the appeal before the specified authority.
Given these circumstances, the assessee’s application included a prayer requesting the ITAT’s permission to formally withdraw the appeal filed against the penalty order.
The tribunal consulted with the learned Senior Departmental Representative (Sr. DR) representing the tax department regarding the assessee’s request for withdrawal. The Ld. DR expressed that the department had no objection to the withdrawal of the appeal under these circumstances, acknowledging that the matter was being settled under the Vivad Se Vishwas Scheme.
In light of the assessee’s decision to opt for the Vivad Se Vishwas Scheme, 2024, the payment of due taxes thereunder, the issuance of Form No. 3 by the department, the requirement under the scheme to withdraw pending appeals, and the consent of the tax department, the ITAT found it appropriate to allow the withdrawal request.
The ITAT’s order, pronounced on February 25, 2025, in accordance with Rule 34(4) of the ITAT Rules, 1963 (concerning orders pronounced in open court), recorded these facts. The tribunal allowed the prayer made by the assessee’s Authorized Representative.
Consequently, the appeal filed by Priti Mishra against the CIT(A)’s order sustaining the penalty under Section 270A was dismissed as withdrawn. This means that the ITAT did not delve into or pronounce judgment on the merits of the penalty itself or the grounds raised by the assessee challenging it. The appeal proceedings were closed based on the taxpayer’s election to resolve the underlying dispute through the amnesty scheme.
The order reflects a common procedural outcome in tax litigation when taxpayers decide to participate in dispute resolution schemes like Vivad Se Vishwas, leading to the closure of pending court cases upon compliance with the scheme’s conditions. No judicial precedents were cited in the ITAT’s order, as the decision was based on the procedural request for withdrawal in the context of the scheme rather than a legal determination of the penalty’s validity.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
