COMMISSIONER OF INCOME TAX vs. DEEP CHAND

Income Tax Appeal No. 3 of 2007 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 3 of 2007 Date of decision: 25.2.2011 Commissioner of Income Tax Karnal --- Appellant Versus Deep Chand, Panipat --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Yogesh Putney, Senior Standing Counsel for the appellant-Revenue. Mr. D.K. Goyal, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 2.3.2006, passed by the Income Tax Appellate Tribunal New Delhi Bench ‘SMC’, New Delhi (in short “the Tribunal”) in ITA No. 4892/DEL/2005, relating to the assessment year 1993-94.

The appeal was admitted on 26.3.2007 for determination of the following substantial question of law:

Income Tax Appeal No. 3 of 2007 2 “Whether on the facts and in the circumstances of the case, (263 ITR 484), whereas facts of the two are entirely different.” The facts, in brief, necessary for adjudication as narrated in the appeal, are that during the assessment year under consideration, the assessee had received a gift amounting to Rs.1,75,000/- on payment of the equal amount in cash, along with premium for arranging that gift. During proceedings under Section 148 of the Act initiated against the assessee, the amount equal to the amount of the gift, i.e. Rs. 1,75,000/- and Rs. 17,500/- on account of premium at the rate of 10% were added to the income of the assessee. The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, confirmed the order of the assessing officer whereas the Tribunal accepted the appeal of the assessee and deleted the penalty vide order dated 22.9.2005. Meanwhile proceedings under Section 271(1)(c) of the Act were also initiated against the assessee whereby a penalty of Rs. 82,000/- was imposed on the assessee. The assessee preferred appeal against imposition of penalty. The CIT(A) cancelled the penalty imposed, vide order dated 26.10.2005. The appeal carried by the Revenue was dismissed by the Tribunal vide order under appeal and it was observed that since the assessing officer had not recorded his satisfaction before initiating the penalty proceedings, the order of penalty could not be sustained. Hence, this appeal at the instance of the Revenue.

We have heard learned counsel for the parties and have perused the record.

Income Tax Appeal No. 3 of 2007 3 The point for consideration in this case is, whether the Tribunal was justified in deleting the penalty levied against the assessee under Section 271(1)(c) of the Act. The gift amounting to Rs. 1,75,000/- said to have been received by the assessee was held to be bogus. Once that is so, the only

conclusion is that the assessee had furnished inaccurate particulars of his income and the order of the Tribunal deleting the penalty is unsustainable in law. Accordingly, it is held that the assessee had concealed the particulars of income and, thus, penalty was liable to be levied against him under Section 271(1)(c) of the Act. Further, the issue regarding recording of satisfaction for initiation of penalty proceedings in the course of assessment proceedings stands concluded against the assessee in the judgment of this Court reported in Commissioner of Income Tax v. Peareyt Lal & Sons (EP) Ltd. [2009] 308 ITR 438. In view of the above, the substantial question of law is answered in favour of the Revenue and the appeal is allowed accordingly. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) February 25, 2011 JUDGE *rkmalik*