THE COMMISSIONER OF INCOME TAX-V vs. HARSIDDH SPECIFIC FAMILY TRUST

TAXAP/1051/2008HC GujaratGJHC24041274200813 June 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA3 pages
AI SummaryDismissed

What were the facts?

The Revenue is in appeal against an Income Tax Appellate Tribunal (ITAT) order dated September 15, 2006. The assessee, Harsiddh Specific Family Trust, was subjected to scrutiny for assessment year 1989-90. The Assessing Officer (AO) made additions of Rs. 17.73 lacs for purchases not accepted as genuine and Rs. 32.35 lacs by disallowing a claim under Section 32AB. The AO also initiated penalty proceedings under Section 271(1)(c) and imposed a penalty of Rs. 26.30 lacs. The ITAT deleted the entire penalty. The Revenue's appeal to the High Court was admitted on a specific question of law.

What did the High Court hold?

The High Court held that the ITAT did not commit any error in deleting the penalty. Regarding the addition for purchases, the AO had imposed penalty on the entire amount. However, the ITAT had substantially reduced the addition to 12.5% on the ground that the purchases were genuine but made without bills, and the assessee would have benefited from such purchases. The Court found that when the very basis of the addition was significantly reduced, the ITAT rightly deleted the penalty. The Court noted that an interesting question might arise whether penalty could be saved to the extent the addition was retained, but since the remaining amount was extremely small, the possible penalty would also be negligible, and thus this question was not examined. Regarding the other additions, the Tribunal correctly found that the claim was plausible, full facts were presented, and the issue was debatable. The Court held that mere non-acceptance of a claim would not give rise to a penalty. Consequently, the question of law was answered against the Revenue, and the Tax Appeal was dismissed.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) cancelling the penalty of Rs. 26,30,006/- imposed u/s. 271(1)(c) of the Act? Assessee's contentions (as inferred from the Tribunal's reasoning and the High Court's discussion): - Regarding the addition for purchases, the Tribunal granted substantial relief, sustaining only 12.5% of the addition because the purchases, though without bills, were considered genuine and beneficial to the assessee. Therefore, the penalty should be deleted. - Regarding the disallowance under Section 32AB, the assessee contended that there was no concealment of income, as full material facts were placed before the AO for claiming the deduction. Even if the claim was rejected, it would not warrant a penalty. The assessee also noted that an appeal against this disallowance was entertained by the High Court. Revenue's contentions: The Revenue's primary contention is that the ITAT erred in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69C,Section 32AB

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/1051/2008 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 1051 of 2008 ========================================================== THE COMMISSIONER OF INCOME TAX-V Versus HARSIDDH SPECIFIC FAMILY TRUST ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 MRS SWATI SOPARKAR(870) for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 13/06/2018

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

1.

Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 15.09.2006. At the time of admission, following question of law was framed: “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) cancelling the penalty of Rs. 26,30,006/- imposed u/s. 271(1)(c) of the Act?”

2.

Briefly stated the facts are that the respondent-assessee was subjected to scrutiny assessment for the assessment year 1989- 90 du

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 271(1)(c)

All 24,918 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →