THE COMMR.OF INCOME TAX BHD.` vs. MANGAT RAI

ITA/664/2008HC Punjab & HaryanaPHHC01080677200824 December 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL4 pages
AI SummaryRemanded

What were the facts?

The Revenue appealed against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 2002-03. The assessee, a civil contractor, had additions made to his income by the Assessing Officer (AO) for claiming inflated expenses. Penalty proceedings were initiated. While the additions were upheld by the Commissioner of Income-tax (Appeals) and the Tribunal, the Tribunal set aside the penalty. The Tribunal's reasoning was that the AO had not recorded proper satisfaction for initiating penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, citing the High Court's judgment in CIT vs. Munish Iron Store. The Revenue's appeal to the High Court was admitted based on a previous judgment in CIT vs. Pearey Lal and Sons (EP) Ltd.

What did the High Court hold?

The High Court held that the matter was covered by its own judgment in CIT vs. Pearey Lal and Sons (EP) Ltd. This earlier judgment, after considering CIT vs. Munish Iron Store, other case law, and the retrospective amendment by way of adding sub-section (1B) to Section 271 by the Finance Act, 2008, concluded that in such circumstances, the requirement of law for recording satisfaction would be deemed complied with. Therefore, the substantial question of law was answered in favour of the revenue and against the assessee. The appeal was allowed, and the matter was remitted to the Tribunal for a fresh decision on merits after issuing notice to the assessee.

What were the issues?

1. Whether the judgment of the ITAT and the ratio of this Hon'ble High Court in CIT Vs. Munish Iron Store has become erroneous in view of the insertion of sub-section (1B) to Section 271 by the Finance Act, 2008, with retrospective effect from 01.04.1989? Assessee's contentions: The judgment does not record any contentions for the assessee as none appeared before the court. Revenue's contentions: The Revenue argued that the insertion of sub-section (1B) to Section 271 by the Finance Act, 2008, with retrospective effect from 01.04.1989, rectifies the defect in the recording of satisfaction by the AO. They relied on the High Court's judgment in CIT vs. Pearey Lal and Sons (EP) Ltd., which considered the judgment in Munish Iron Store and the statutory amendment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 24.12.2010 The Commissioner of Income-tax ....Appellant. Versus Mangat Rai Contractor ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Advocate for the appellant. None for the respondent. ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against order dated 04.03.2008 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 27(ASR)/2008, for the assessment year 2002-03, claiming following substantial question of law:- “Whether on the facts and in the circumstances of the case, the judgment of Hon'ble ITAT and the ratio of the judgment of this Hon'ble High Court in the case become erroneous in view of the insertion of sub- -2- section (IB) to section 271 by the Finance Act, 2008 with retrospective effect from 01.04.1989?”

2.

The assessee is a civil contractor. While mak

The order continues below.

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