CIT HISAR vs. B.B. SINGHAL

ITA/725/2010HC Punjab & HaryanaPHHC01093690201005 January 2011Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryDismissed

What were the facts?

The Revenue appealed to the High Court against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2004-05. The assessee, an employee of New India Assurance Company Limited, voluntarily retired and received an ex-gratia benefit. While only ₹5 lacs was exempt under Section 10(10C) of the Income Tax Act, 1961, the assessee claimed exemption on the entire gratuity amount. The Assessing Officer made additions to income and imposed a penalty for furnishing inaccurate particulars. The CIT(A) deleted the penalty, finding the claim to be a bonafide mistake, which the ITAT upheld.

What did the High Court hold?

The High Court upheld the ITAT's decision to delete the penalty. The Court found that both the CIT(A) and the ITAT had categorically held that the assessee's claim, though inadmissible, was put forward under a bonafide mistaken view. This finding was not shown to be perverse. The Court noted that whether inaccurate particulars were furnished is normally a question of fact. While penalty can be levied if an exemption is wrongly claimed with a view to evade tax, this needs to be examined on a case-to-case basis. The judgment in Zoom Communication was considered fact-specific and not applicable. The revenue's contention that Dilip N. Shroff was no longer good law was also found irrelevant, as the requirement of Section 271(1)(c) must still be complied with. If the assessee provided a valid explanation of a bonafide mistaken belief, not intended to evade tax, the setting aside of the penalty cannot be held illegal. No substantial question of law arose.

What were the issues?

1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the penalty without appreciating that the assessee furnished inaccurate particulars of income by relying upon hearsay and unreliable interpretation of legal provisions? (Question of law) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The statutory provision for exemption was clear, and claiming exemption on the entire gratuity amounted to furnishing inaccurate particulars of income. Reliance was placed on Commissioner of Income-Tax Vs. Zoom Communication P. Ltd. [2010] 327 ITR 510 (Delhi). The revenue also argued that the Supreme Court judgment in Dilip N. Shroff Vs. JCIT, (2007) 210 CTR (SC) 228, relied upon by the Tribunal, had been overruled by Union of India and others Vs. Dharamendra Textile Processors and others (2008) 13 Supreme Court Cases 369.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10(10C),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income-tax Appeal No.725

of 2010

-1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.725

of 2010

Date of decision: 5.1.2011 Commissioner of Income-Tax, Hisar ...Appellant Versus B.B.Singhal ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. K.K.Mehta, Advocate for the appellant.

**** ADARSH KUMAR GOEL, J (

Oral)

.

1.

This Appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) against order dated 30.6.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi in ITA No.2884/DEL/2008, for the assessment year 2004-05, raising following substantial question of law:- “Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the penalty without appreciating the fact that the assessee furnished inaccurate particulars of income by relying upon hearsay and unreliable interpretation of legal provisions?”

Income-tax Appeal No.725

of 2010

-2- ****

2.

The assessee was an employee of New India Assurance Com

The order continues below.

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