Direct Tax Dispute Resolution Scheme eligibility extends to penalty cases under Sections 271D and 271E despite Revenue objections.

Penalty levied under Sections 271D and 271E of the Income-tax Act was examined for eligibility under the Direct Tax Dispute Resolution Scheme, 2016. The Kerala HC noted that these provisions prescribe penalty equal to the amount involved in the contravention, and rejected the Revenue's narrow reading that the Scheme applied only where both minimum and maximum penalties were prescribed. It held that the assessees could have their applications considered under the Scheme notwithstanding the CBDT circulars, and the Revenue's challenge failed.

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Issues: Whether assessees against whom penalty had been levied under Sections 271D and 271E of the Income-tax Act, 1961, were entitled to have their applications considered under the Direct Tax Dispute Resolution Scheme, 2016, notwithstanding the circulars issued by the CBDT.

Analysis: Section 271D provides for penalty equal to the amount of loan or deposit or specified sum accepted in contravention of Section 269SS, and Section 271E similarly provides for penalty equal to the amount of loan, deposit or specified advance repaid in contravention of the Act. The specified sum itself constitutes the minimum penalty payable under those provisions. The interpretation suggested by the Revenue, based on the reference in Clause 202(b) to twenty-five per cent of the minimum penalty leviable, was rejected because the Scheme was not confined only to provisions prescribing both a minimum and maximum penalty. The contention was also not urged before the learned single Judge.

Conclusion: The assessees were entitled to have their applications processed under the Scheme, and the Revenue's challenge failed.

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