COMM. OF INCOME TAX vs. KRISHNA COLD STORAGE

TAXAP/64/2000HC GujaratGJHC24022584200016 March 2012Author: HONOURABLE MS. JUSTICE HARSHA DEVANI,HONOURABLE MR. JUSTICE R.M.CHHAYA26 pages
AI SummaryDismissed

What were the facts?

The assessee, Krishna Cold Storage, engaged in the business of cold storage, was required to deduct tax at source on interest payable to creditors. If creditors were not liable to pay income tax, the assessee needed to obtain declarations in Form No. 15H and file them with the Commissioner of Income Tax (CIT) under Section 197A of the Income Tax Act, 1961. The assessee failed to furnish these declarations in time for assessment years 1991-92, 1992-93, and 1994-95. The Assessing Officer initiated penalty proceedings, and the CIT levied penalties amounting to Rs. 1,23,000/- and Rs. 1,20,900/- for Tax Appeals No. 64 and 65 of 2000, and Rs. 20,37,500/- for Tax Appeal No. 61 of 2000. The assessee appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT, in its order dated 02.11.1999, held that no penalty could be levied for the period up to 01.06.1992 due to no statutory obligation to file Form 15H, but upheld penalty for the period after 01.06.1992, directing calculation as per the proviso to Section 272A, treating it as retrospective. The Revenue has appealed these decisions.

What did the High Court hold?

The Tribunal held that for assessment years 1991-92 and 1992-93, no penalty under Section 272A(2)(f) could be levied for the delay up to 01.06.1992, as there was no statutory obligation to file Form 15H under Section 197A during that period. The Tribunal acknowledged that Rule 29C(5) of the Income Tax Rules provided for filing Form 15H prior to 01.06.1992, but a breach of this rule would not attract penalty. However, for assessment year 1994-95, the Tribunal found that penalty was leviable, as ignorance of law is not an excuse. The Tribunal directed that the penalty for assessment year 1994-95, and for the period after 01.06.1992 for earlier years, should be calculated in accordance with the proviso to Section 272A, which limits the penalty to the amount of tax deductible, holding this proviso to be retrospective. The reasoning was that the proviso was remedial in nature, introduced to mitigate hardship and prevent exorbitant penalties disproportionate to the default, especially since no revenue loss occurred in cases falling under Section 197A. The High Court agreed with the Tribunal's findings, answering both formulated questions in favour of the assessee.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether the Tribunal was right in law and on facts in holding that no penalty under Section 272A(2)(f) could be levied up to 01.06.1992 because there was no statutory obligation to file the prescribed form under Section 197A. 2. Whether the Tribunal was right in law and on facts in directing that the penalty should be calculated in accordance with the proviso to Section 272A, giving retrospective effect to this proviso. Assessee's contentions: - For assessment years 1991-92 and 1992-93, no penalty under Section 272A(2)(f) was leviable as there was no statutory obligation to file Form 15H under Section 197A until 01.06.1992. - Ignorance of law is not a ground for penalty. - There was no loss of revenue due to the failure to file Form 15H. - For assessment year 1994-95, if penalty was to be levied, it should not exceed the tax deductible, as the proviso to Section 272A(2) was retrospective, citing Motisagar Estate (P) Ltd. v. Dy. Commissioner of Income Tax, Pune, 47 ITD 72 (Surat) and Superintending Engineer v. Income Tax Officer, 54 TTJ 608. Revenue's contentions: - The proviso to Section 272A was inserted by the Finance Act, 1991, with effect from 01.10.1991. (This point is incomplete in the provided text but indicates the revenue's stance on the proviso's applicability).

Which sections of the Income-tax Act were involved?

Section 272A,Section 197A,Section 272A(2)(f),Section 197A(2),Section 260A

AI-generated summary — verify with the full judgment below

TAXAP/61/2000 1/26 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 61 of 2000 With TAX APPEAL No. 64 of 2000 With TAX APPEAL No. 65 of 2000 For Approval and Signature: HONOURABLE MS.JUSTICE HARSHA DEVANI HONOURABLE MR.JUSTICE R.M.CHHAYA ========================================= 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 ? ========================================= COMM OF INCOME TAX - Appellant(s) Versus KRISHNA COLD STORAGE - Opponent(s) ========================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, MR SN SOPARKAR for Opponent(s) : 1, ========================================= CORAM : HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 16/03/2012

TAXAP/61/2000 2/26 JUDGMENT CAV JUDGMENT (Per : HONOURABLE MS.JUSTICE HARSHA DEVANI)

1.

These appeals unde

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 272A

All 140 judgments and leading authorities on Section 272A →

Recent GST High Court judgments

Search GST case law →