COMMISSIONER OF INCOME TAX-IV vs. SONAR CONSTRUCTION PVT LTD

TAXAP/905/2011HC GujaratGJHC24025502201124 August 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA3 pages
AI SummaryDismissed

What were the facts?

The Revenue, Commissioner of Income Tax-IV, filed an appeal under Section 260-A of the Income Tax Act, 1961, against a common order dated January 21, 2011, passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad(C). The appeal specifically challenged the portion of the order relating to ITA No. 1839 of 2009. The penalty in dispute, amounting to Rs. 6,20,000/-, was levied under Section 271(1)(c) of the Act. This penalty was consequential to additions made by the Assessing Officer (AO) concerning unproved cement purchases of Rs. 7,20,000/- from Nirav Traders and labour charges of Rs. 6,80,030/-. However, these additions were subsequently set aside by the Commissioner of Income Tax (Appeals) and confirmed by the ITAT.

What did the High Court hold?

The High Court held that the Appellate Tribunal was correct in deleting the penalty of Rs. 6,20,000/- levied under Section 271(1)(c) of the Income Tax Act, 1961. The reasoning was that the penalty was imposed as a consequence of additions made by the Assessing Officer. These additions, concerning unproved cement purchases and labour charges, had been set aside by the Commissioner of Income Tax (Appeals) and subsequently confirmed by the ITAT in a separate appeal (ITA No. 1838 of 2009). Since the foundational additions on which the penalty was predicated were deleted and upheld by the higher authorities, no basis remained for the survival of the penalty. The learned counsel for the Revenue could not dispute this position. Consequently, the appeal was deemed meritless, and no substantial question of law arose for consideration. The appeal was dismissed.

What were the issues?

1. Whether the Appellate Tribunal was correct in law and on facts in deleting the penalty of Rs. 6,20,000/- levied under Section 271(1)(c) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the underlying reasoning implies that the deletion of the additions by the lower appellate authorities formed the basis for the assessee's argument against the penalty. Revenue's Contention: The Revenue contended that the Appellate Tribunal was not right in deleting the penalty. The penalty was imposed under Section 271(1)(c) of the Act, stemming from additions made by the AO on account of unproved purchases and labour charges. The Revenue argued for the upholding of the penalty.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

TAXAP/905/2011 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 905 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX-IV - Appellant(s)

Versus SONAR CONSTRUCTION PVT LTD - Opponent(s) ========================================================= Appearance : MR.VARUN K.PATEL for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 24/08/2012 ORAL JUDGMENT (Per : HONOURABLE MR. JUSTICE N.V.ANJARIA)

The present Appeal by the Revenue preferre

The order continues below.

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