ITAT Allows Appeal Over Rs 26.03 Lakh Addition After Assessee Settles Tax Dispute Under Vivad Se Vishwas Scheme 2024:

The ITAT Jaipur Bench has allowed an appeal filed by Krishan Dev Verma for Assessment Year 2014-15 after noting that he had opted for the Direct Tax Vivad Se Vishwas Scheme, 2024 and paid the settled amount. However, the relief is subject to verification by the Assessing Officer (AO).

Initially, the assessment of Krishan Dev Verma was framed under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2014-15, determining the total income at Rs 16.44 lakh. Later, the case was reopened based on the information that the assessee during the year under consideration had purchased 1,00,000 shares of Kailash Auto Finance Ltd.; however, he had only 32,000 of these shares to tax. Consequently, 68,000 shares of the value of Rs 27.33 lakh had escaped assessment.

The Assessing Officer (AO), denying the assessee's argument, held that "the assessee has not disclosed the transfer of Kailash Auto Finance Ltd., a penny stock company, and as such proportionate amount of Rs. 26,03,297/- was declared as unexplained money u/s 69A of the Act and the commission on the entry amount @ 5% of Rs. 26,03,297/-, which comes to Rs. 1,30,164/- treated as unexplained expenditure u/s 69C of the Act and thereby framed u/s 143(3) r.w.s. 147 r.w.s. 144B of the Act."

The assessee, being dissatisfied with the AO's decision, filed an appeal before the first appellate authority, i.e., Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A), after considering the facts of the case, dismissed the appeal following the quashing of the impugned addition.

The assessee subsequently filed an appeal before the Income Tax Appellate Tribunal (ITAT), Jaipur. During the personal hearing before the tribunal, the assessee submitted that he had opted for settlement under the Direct Tax Vivad Se Vishwas Scheme, 2024, during the first appellate proceedings and had paid the settled amount. He produced Forms 2 and 3 as evidence of the settlement and payment.

After considering the submissions and records, the Jaipur Bench held that the matter required verification of the payment by the AO. It directed the AO to verify whether the settled amount had actually been deposited in accordance with the settlement and, upon verification, issue Forms 4 and 5 to the assessee.

The ITAT held that "in the face of the facts that assessee has already deposited the settled amount as per Form No. 2 and 3 and the addition sustained by the Ld. CIT(A) is not sustainable. However Form No. 2 and 3 would be subject to the verification by the concerned Assessing Officer if the amount is actually deposited as per settlement arrived at between the parties to the appeal. Thereafter Assessing Officer shall issue Form No. 4 and 5 to the assessee."

Accordingly, the ITAT allowed the appeal subject to the AO's verification of the settlement payment.