THE CHIEF COMMISSIONER OF INCOME TAX vs. BHARTO DEVI

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ITA/392/2006HC Punjab & HaryanaPHHC01075107200625 February 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted the statement made by the assessee's counsel that the quantum proceedings had become final in favour of the assessee. In light of this, the Court deemed it unnecessary to delve into the issue of penalty. Therefore, the appeal filed by the Revenue was dismissed. The judgment does not record a specific finding on the merits of the penalty issue itself, nor does it provide a ratio decidendi for the penalty aspect. The operative direction is the dismissal of the appeal. No issue was expressly left undecided, as the appeal was disposed of on a preliminary ground.

What were the facts?

The Revenue, represented by the Chief Commissioner of Income-Tax, Faridabad, appealed against an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The ITAT had dismissed the Revenue's appeal against the Commissioner of Income Tax (Appeals) [CIT(A)] order, which had deleted a penalty imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961. The assessment year in question was 1996-97. The penalty was levied for alleged failure to file a return of income and furnish required details. The assessee, Smt. Bharto Devi, had claimed exemption under Sections 54B and 54F on capital gains from land sale, which was partially accepted by the CIT(A) and fully upheld by the Tribunal. The High Court noted that the Revenue had not appealed the Tribunal's decision on the quantum of income.

What were the issues?

1. Whether, on the facts and in the circumstances, the ITAT was correct in dismissing the Revenue's appeal against the deletion of penalty under Section 271(1)(c) by the CIT(A), despite the assessee failing to file a return in response to a notice under Section 148 and not furnishing required details to the AO. (Question of law) 2. Whether the ITAT was correct in following the Punjab and Haryana High Court judgment in Munish Iron Store (2003) 263 ITR 484, when the facts of the present case were entirely different. (Question of law) 3. Whether the ITAT was correct in not deciding the issue of penalty under Section 271(1)(c) on merits and cancelling it solely on the ground of lack of proper satisfaction recorded in the assessment order for initiating penalty proceedings. (Question of law) Assessee's contention: The assessee argued that since the Revenue had not appealed the Tribunal's decision on the quantum of income, which was decided in favour of the assessee, the present appeal concerning the penalty should be dismissed. Revenue's contention: The Revenue argued that even if specific satisfaction for initiating penalty proceedings was not recorded in the assessment order, such satisfaction could be inferred from the order, making the penalty valid. They relied on Commissioner of Income Tax Vs Pearey Lal & Sons (EP) Ltd. (2009) 308 ITR 438 (P&H). The Revenue's counsel was unaware of the assessee's success in the quantum proceedings.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 148,Section 260A,Section 54B,Section 54F

AI-generated summary — verify with the full judgment below

of 2006

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No. 392 of 2008 Date of decision: 25.2.2011 The Chief Commissioner of Income-Tax, (O ), Faridabad ...Appellant Versus Smt. Bharto Devi ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant. Mr. Ravi Shanker, Advocate for the respondent

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

Since Registry has not been able to send the file on account of fire in the Court premises, learned counsel for the revenue has furnished copy of paper-book which is taken on record. We proceed to decide the matter after hearing learned counsel for the parties.

2.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 16.9.2005 passed by the Income Tax Appellate Tribunal, Delhi Bench 'A',Delhi in ITA No.3873/DEL/2004, for the assessment year 1996-97, claiming following substantial questions of law:- “i). Whether on the facts and in the circumstances of of 2006

-2- *** the case, the Hon'ble ITAT was right in law in dismissing the appeal of the Revenue against the order of the CIT(A) in deleting the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act despite of the fact that the assessee failed to file her return of income even in response to notice u/s 148 and no details as required by the Assessing Officer were furnished? ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in following the judgment of the Hon'ble Punjab and Haryana High Court in the case of Munish Iron Store (2003) 263 ITR 484 even though the facts of the present case are entirely different than the case of M/s Munish Irong Store (supra)? iii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was correct in not deciding the issue of levy of penalty u/s 271(1)(c) of the Income Tax Act on merits of the case and in cancelling the penalty merely on the issue of recording of satisfaction?”

3.

The assessee was sought to be taxed on the capital gain received on account of sale of land. The assessee claimed exemption under Section 54B and 54F on the ground that amount received by way of capital gain was utilized in purchase of of 2006

-3- *** agricultural land and for construction of a new house. The said plea was not accepted by the Assessing Officer. On appeal, the CIT(A) affirmed the finding of the Assessing Officer that the land purchased was not after the date of sale of land and claim under Section 54F could not be fully accepted as the investment by the assessee was in two residential houses and not in one. However, for one residential house claim for exemption under Section 54F was allowed. On further appeal, the Tribunal upheld the claim of the assessee. It was held that investment by the assessee was only in one residential house and investment in land was after the sale.

4.

Learned counsel for the assessee states that no appeal has been filed by the revenue against the order of the Tribunal whereby plea of the assessee for exemption was upheld. The assessee having succeeded in quantum proceedings and present appeal being on the question of penalty, the same was liable to dismissed.

5.

The Assessing Officer had levied penalty under Section 271(1)(c) on the ground that the assessee failed to declare her income and the plea of the assessee that income was exempted from tax was not correct. The CIT(A) held that the concealment was not proved and therefore, set aside the penalty which view was upheld by the Tribunal. The Tribunal has given additional reason that in the order of assessment due satisfaction was not recorded for initiating penalty proceedings.

6.

We have heard learned counsel for the parties.

of 2006

-4- ***

7.

Learned counsel for the revenue submits that even if due satisfaction for initiating penalty proceedings was not specifically recorded in the order of assessment, such satisfaction could be discerned from the said order and thus, levy of penalty was valid. Reliance has been placed on Commissioner of Income Tax Vs Pearey Laland sons (EP) Ltd. (2009) 308 ITR 438 (P&H). She, however, expressed ignorance about success of the assessee in quantum matter.

8.

In view of the statement made by the learned counsel for the assessee that in quantum proceedings, the issue had become final in favour of the assessee, we are of the view that it is not necessary to go into the question of penalty. Accordingly, this appeal is dismissed.

(Adarsh Kumar Goel)

Judge February 25, 2011 (Ajay Kumar Mittal) Pka

Judge

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