PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 2 vs. NATIONAL DAIRY DEVELOPMENT BOARD

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TAXAP/519/2018HC GujaratGJHC24025426201812 June 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court of Gujarat dismissed the Revenue's appeal. The Court noted that the ITAT had deleted the penalty under Section 271(1)(c) primarily on the ground that the explanation provided by the assessee was reasonable. The Court also observed that the quantum additions related to the same issue were confirmed by the ITAT, and a further appeal by the Revenue was pending. Crucially, the Court referred to its own prior decision on June 11, 2018, in Tax Appeal No. 515 of 2018, which concerned a penalty arising from the same ITAT judgment and involved the same assessee. In that prior case, the Revenue's appeal was dismissed. Applying the same reasoning and without giving further elaborate reasons, the present Tax Appeal was also dismissed. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue, Principal Commissioner of Income Tax Vadodara 2, filed an appeal before the High Court of Gujarat against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had deleted a penalty imposed on the assessee, National Dairy Development Board, under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was related to a claim for deduction under Section 36(1)(viii). The Assessing Officer had imposed the penalty, which was confirmed by the CIT(A). The ITAT deleted the penalty, finding the assessee's explanation reasonable. The quantum additions related to the same issue were confirmed by the ITAT and a further appeal by the Revenue was pending before the High Court. The High Court noted that on similar circumstances concerning the same assessee and arising from the same ITAT judgment, another appeal by the Revenue (Tax Appeal No. 515 of 2018) was dismissed on June 11, 2018.

What were the issues?

1. Whether, in the facts and circumstances of the case, the Income Tax Appellate Tribunal erred in law and on facts in deleting the penalty under Section 271(1)(c) of the Income Tax Act, 1961, concerning the assessee's claim for deduction under Section 36(1)(viii), without appreciating that it was not a case of a plausible claim based on a bona fide interpretation of law and that the assessee was clearly not eligible for the claimed deduction, and whether the penalty was supported by the decision in Zoom Communication Private Limited (327 ITR 310)? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which the High Court is considering, was based on the ground that the explanation rendered by the assessee was reasonable. Revenue's Contention: The Revenue contended that the ITAT erred in deleting the penalty. They argued that the claim for deduction was not plausible or based on a bona fide interpretation of law, and the assessee was ineligible for the deduction. The Revenue relied on the decision in Zoom Communication Private Limited (327 ITR 310) to support its claim for penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 36(1)(viii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for

supported by the decision in Zoom Communication Private Limited, 327 ITR 310 ?”

As can be seen, the issue pertains to penalty under Section 271 [1](c) of the Income Tax Act, 1961. The Assessing Officer having imposed penalty, CIT [A] confirmed the same. The Tribunal, however, deleted the penalty primarily on the ground that the explanation rendered by the assessee was reasonable. We may also notice that though quantum additions were confirmed till the stage of Tribunal, further appeal at the hands of the appellant is pending before the High Court. On the similar circumstances, in case of this very assessee, Revenue’s appeal being Tax Appeal No. 515 of 2018 concerning penalty arising out of the same judgment of the Tribunal came to be dismissed by this Court on 11th June 2018.

Without giving further elaborate reasons, this Tax Appeal is also dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash

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