ITAT Removes Penalty as Voluntary Deposits Tax Not Be Believed as an Admission of Guilt Until Receive a Notice

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) ruled that making a voluntary tax deposit must not be regarded as an acknowledgement of guilt before being served with a notice under Section 148 of the Income Tax Act, 1961. Consequently, the bench abolished the penalty levied under Section 271(1) of the Income Tax Act, 1961.

Pradip Burman, the assessee, filed an appeal against the decision of the CIT(A) related to the AY 2007-08 concerning funds held in an HSBC account.

Upon learning of information related to his purported deposit in an alleged HSBC Bank account, Pradip Burman initiated his own investigation and offered to pay income tax.

This was in response to the Central Board of Direct Taxes (CBDT) receiving information about the taxpayer’s foreign account and income for the relevant assessment years 2006–07 and 2007–08.

Before receiving the notice under Section 148 of the Act, Pradip Burman voluntarily paid taxes on the income he had offered for taxation, amounting to US$ 40,000 in the assessment year 2006–07 and US$ 32.13 lacs in the assessment year 2007–08. At the time of making this offer, he explicitly stated that this payment should not be construed as an admission of guilt.

Subsequently, the assessment was concluded, and a penalty was imposed under Section 271(1) of the IT Act. The tribunal noted that the taxpayer had deposited the additional tax for the relevant assessment years well before the initiation of proceedings under Section 148 of the Act, indicating that there was no potential revenue loss.

Furthermore, in the context of tax assessment procedures, a taxpayer may retract from the position they voluntarily took in their income return. Therefore, offering money as tax in exchange for peace does not imply an admission of ownership.

Following a thorough examination of the facts and records, the two-member bench comprising Astha Chandra (Judicial Member) and N. K. Billaiya (Accountant Member) ruled that a voluntary tax deposit should not be considered an acknowledgement of guilt before the receipt of a notice under Section 148 at Income Tax Act. M.P. Rastogi represented the taxpayer, while Vivek Vardhan represented the revenue.

Case TitlePradip Burman Vs. DCIT
CitationITA No.6725/Del/2018
Date04.10.2023
Appellant bySh. M.P. Rastogi, Advocate
Respondent bySh. Vivek Vardhan, Sr DR
Delhi ITAT OrderRead Order
Arpit Kulshrestha

Arpit Kulshrestha seeks higher interests in financial services, taxation, GST, I-T, etc. Writes articles with depth knowledge and is extensive for the same. The resources provide effective articles for the products of SAG infotech which provides taxation and IT software. Writing from observations and researching makes his articles virtuous.

Recent Posts

No GST Returns Will Be Accepted If Filed More Than 3 Years Past Their Due Date

An advisory has been released by the Goods and Services Tax Network (GSTN) which notifies…

18 hours ago

Delhi HC: Two Judgment Orders Against One SCN Cannot Be Accepted for the Same Period

It was cited by the Delhi HC that the two adjudication orders against one SCN…

20 hours ago

CBDT Allows Electronic Filing of Forms 3CEDA and 3C-O Via Notification No. 5/2024

The Central Board of Direct Taxes (CBDT) in an update for the taxpayers via the…

21 hours ago

October 2024 Records the 2nd Highest GST Collection, Driven by Domestic Sales

In October, Gross GST collection surged to 9% to Rs 1.87 lakh crore, the second…

23 hours ago

UP AAR: GST Will Be Levied on the Installation of Electricity Distribution Systems by DISCOMs

Goods and Services Tax (GST) is to get paid on the procurement of materials and…

2 days ago

Bombay HC Quashes Rejection Order for Voluntary GST Cancellation Due to Lack of Stated Reasons

The Bombay High Court carried that as the revocation orders for the registration cancellation on…

3 days ago