PRICIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR vs. SURESHCHANDRA M SHAH

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TAXAP/523/2018HC GujaratGJHC24029114201811 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 held that no question of law arises from the order of the Income Tax Appellate Tribunal. The Tribunal had deleted the penalty of Rs. 21,77,147 imposed under Section 271(1)(c) of the Income Tax Act, 1961. The reasoning provided by the Tribunal, as noted in the judgment, was that the assessee had furnished all necessary particulars pertaining to income and that it was not a case of providing inaccurate particulars. The Tribunal also appeared to consider the assessee's explanation regarding the treatment of Kisan Vikas Patra as a capital asset as not wholly unjustified. Based on these observations, the High Court found no legal ground to interfere with the Tribunal's decision. The operative direction was to dismiss the appeal.

What were the facts?

The assessee, Sureshchandra M Shah, invested in Kisan Vikas Patra and reflected this in his balance sheet. However, he did not offer the accruing interest for taxation, explaining that Kisan Vikas Patra was a capital asset and the gain would be taxed upon encashment after indexation. The Assessing Officer disagreed, taxed the interest, and imposed a penalty of Rs. 21,77,147 under Section 271(1)(c) of the Income Tax Act, 1961. The Income Tax Appellate Tribunal (ITAT) subsequently deleted this penalty. The Principal Commissioner of Income Tax, Gandhinagar, is in appeal against the ITAT's order dated November 22, 2017.

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts in deleting the penalty of Rs. 21,77,147 levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961? Assessee's contentions: The assessee argued that Kisan Vikas Patra was a capital asset and the gain would be offered to tax upon encashment after indexation. The Tribunal, in its deletion of the penalty, observed that the assessee had furnished all necessary particulars pertaining to income and that this was not a case where inaccurate particulars of income were provided. The Tribunal also seemed to lean towards the view that the assessee's explanation was not entirely unjustified. Revenue's contentions: The revenue, through the Principal Commissioner of Income Tax, appealed the ITAT's deletion of the penalty, contending that the Tribunal had erred in law and facts. The specific arguments of the revenue are not detailed in the judgment, beyond the framing of the question of law.

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/523/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 523 of 2018 ========================================================== PRICIPAL COMMISSIONER OF INCOME TAX, GANDHINAGAR Versus SURESHCHANDRA M SHAH ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 11/06/2018

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

1.

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   22.11.2017 raising following question for our consideration: “Whether the Appellate Tribunal has erred in law and on facts the case in deleting the penalty   of   Rs.21,77,147/­   levied   by   the Assessing Officer u/s 271(1)(c) of the Act?”

2.

The   issue   pertains   to   penalty   under   section 271(1)(c) of the Income Tax Act, 1961 ('the Act' for short), which the Assessing Officer imposed but which the Tribunal eventually deleted.

3.

The assessee had made investment in Kisan Vikas Patra and also shown the same in the balance­sheet. C/TAXAP/523/2018 ORDER The   assessee   had   however   not   offered   the   interest accruing on such investment for tax.  The explanation of the assessee was that Kisan Vikas Patra was his capital asset and the gain would be offered to tax after   indexation   at   the   time   of   encashment.     The Assessing Officer did not accept this explanation and taxed   the   interest   and   also,   as   noted,   imposed penalty.

4.

In   relation   to   penalty,   the   Tribunal   however observed   that   the   assessee   had   furnished   all necessary particulars pertaining to income.  This was not   a   case   where   inaccurate   particulars   of   income were provided.    Though  not so observed  in so many words, the Tribunal also seem to be leaning in favour of the view that the explanation of the assessee was not totally unjustified.

5.

No   question   of   law   arises.     Tax   Appeal   is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH

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