SALIM ABUBAKAR KHERANI vs. ASSISTANT COMMISSIONER OF INCOME TAX VAPI CIRCLE

PDF · subscribers
TAXAP/1134/2018HC GujaratGJHC24040438201808 October 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that while the assessee's contention regarding the correctness of taxing income in the hands of the correct assessee might not be accepted, the imposition of penalty was unwarranted. The Court found that the relevant facts indicated no attempt on the part of the assessee to evade tax payment, especially since the family members had also been assessed separately. Therefore, the imposition of penalty was reversed. The question of law was answered in favour of the assessee, and the Tax Appeal was disposed of.

What were the facts?

The assessee, Salim Abubakar Kherani, filed a Tax Appeal before the High Court of Gujarat challenging the order of the Income Tax Appellate Tribunal (Tribunal) dated January 23, 2018, for Assessment Year 2008-2009. The appeal concerns the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. The penalty was confirmed by the Tribunal based on the clubbing of income of other family members of the assessee. The assessee's consistent contention was that his family members were separately assessed to tax, had disclosed their incomes in their returns, and had paid the corresponding tax, leading to the same income being taxed twice by the Revenue.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the order of the CIT(A) upholding the levy of penalty on clubbing of income, ignoring the fact that all the family members had an independent source of income and were separate assessees on the record of the Department who had filed returns of income showing the incomes in question? (Question of law). Assessee's Contention: The assessee argued that his family members were separately assessed to tax, had disclosed their respective incomes in their returns, and had paid the taxes due thereon. Therefore, the Revenue taxing the same income twice was an error, and penalty should not have been levied on this basis. Revenue's Contention: The judgment does not explicitly record the revenue's specific arguments on this issue, other than its appearance at the delay condonation stage and its representation by counsel.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/1134/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 1134 of 2018 ============================================================= SALIM ABUBAKAR KHERANI Versus ASSISTANT COMMISSIONER OF INCOME TAX VAPI CIRCLE ============================================================= Appearance : Mr B S SOPARKAR(6851) for the PETITIONER Mr NIKUNT RAVAL for Mrs KALPANAK RAVAL(1046) for the RESPONDENT ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 8th October 2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

This Appeal is filed by the assessee to challenge the judgment of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 23rd  January 2018 for AY 2008­ 2009. The following questions is framed for our consideration : “Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the order of the CIT [A] upholding levy of penalty on clubbing of income,   ignoring   the   fact   that   all   the   family members   had   independent   source   of   income and were  separate assessees on record  of the Department who had filed returns of income showing the incomes in question?” C/TAXAP/1134/2018 ORDER Considering short facts, we took up the Tax Appeal for final hearing at the admission stage. For such purpose, we adopted the above noted question as the question of law.

Having heard learned advocate Shri BS Soparkar for the assessee and Shri Nikunt Raval for the Revenue, who had appeared at the stage of delay condonation, we notice that the Tribunal had confirmed the penalty under Section 271 [1](c) of the  Income­tax  Act,  1961 against the assessee only  on  the ground of clubbing of income of the other family members of the assessee. The assessee’s contention all along being that his family members were separately assessed to tax. Such income, therefore, was disclosed by them in their return and they had also paid the matching tax, the Revenue therefore had taxed the same income twice.

In the context of taxing the income in the hands of the correct assessee, though we may not accept such a contention of the assessee, in the context of imposition of penalty, the relevant   facts   would   show   no   attempt   on   the   part   of   the C/TAXAP/1134/2018 ORDER assessee to evade payment of tax; particularly if the family members   had   also   been   assessed   separately.   Under   such circumstances, imposition of penalty is reversed.

Question   is   answered   in   favour   of   the   assessee.   Tax Appeal is disposed of. [Akil Kureshi, J.] [B.N Karia, J.] Prakash

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →