COMMISSIONER OF INCOME TAX, JALANDHAR vs. GURKAMAL SINGH

ITA/182/2007HC Punjab & HaryanaPHHC01072860200705 October 2012Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE GURMEET SINGH SANDHAWALIA6 pages
AI SummaryDismissed

What were the facts?

The revenue has appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated 23.10.2006. The ITAT had upheld a penalty of ₹3,60,774. A search was conducted on the respondent-assessee on 17.4.1997. A notice under Section 158BC of the Income Tax Act, 1961, was issued for the block period 1.4.1987 to 17.4.1997. The assessee filed a return on 10.8.1998. The assessment was framed under Section 158BC(c) at ₹47,45,121, against a returned income of ₹14,50,000. The Commissioner of Income Tax (Appeals) [CIT(A)] reduced the income to ₹18,10,774. Penalty under Section 158BFA(2) was levied at ₹10,86,464. The CIT(A) directed that the penalty be quantified on the sustained addition of ₹3,60,774, not the entire assessed income.

What did the High Court hold?

The High Court held that the appeal by the revenue had no merit. It referred to Section 158BFA(2) of the Act, which prescribes penalty for undisclosed income. The Court noted the first proviso, which exempts penalty if a return is furnished, tax is paid, evidence of tax paid is furnished, and no appeal is filed against the income shown in the return. Crucially, the second proviso states that if the undisclosed income determined by the AO exceeds the income shown in the return, the penalty shall be imposed on the portion of undisclosed income determined which is in excess of the amount declared in the return. In this case, the assessee declared ₹14,50,000 as undisclosed income, and the assessed income was determined at ₹18,10,774. The excess amount was ₹3,60,774. Therefore, the case fell under the second proviso, and the penalty was correctly directed to be quantified on the excess amount of ₹3,60,774. The Tribunal's findings were not found to be perverse or erroneous. The substantial question of law was answered against the revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in directing the Assessing Officer (AO) to quantify penalty on the tax sought to be evaded on the sustained addition of ₹3,60,774 by the CIT(A), and not on the assessed income, when the return was not furnished under Section 158BC(a) of the Income Tax Act? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's reasoning, which was upheld, indicates that the penalty should be imposed on the portion of undisclosed income in excess of that declared in the return, as per the second proviso to Section 158BFA(2). Revenue's Contention: The revenue argued that the assessee was liable to pay penalty on the total amount of undisclosed income determined, amounting to ₹18,10,774, and that the case was not governed by the Second Proviso to Section 158BFA(2).

Which sections of the Income-tax Act were involved?

Section 158BC,Section 158BFA(2),Section 260A

AI-generated summary — verify with the full judgment below

ITA No.182 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 182 of 2007 Date of decision: 05.10.2012 The Commissioner of Income Tax, Jalandhar II, Jalandhar -----Appellant Vs. Sh.Gurkamal Singh ----Respondent CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present:- Mr. Vivek Sethi, Advocate for the appellant. None for the respondent. Ajay Kumar Mittal,J.

1.

The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 23.10.2006 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, “the Tribunal”) in IT (SS) A.No.26(ASR) 2004 for the block period 1.4.1987 to 17.4.1997 whereby the penalty amounting to ` 3,60,774/- only has been upheld and sustained by the Tribunal.

2.

On 12.10.2007, the appeal was admitted to consider the following substantial question of law:- “Whether on the facts and in the circumstances of the case, the ITAT was correct in law in directing the AO to quantify penalty on tax sought to be evaded on the sustained addition of ` 3,60,774/- only by CIT(A) and not on the assessed income when the r

The order continues below.

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