COMMISSIONER OF INCOME TAX-II, ASR. vs. M/S NANAK MILK FOOD (I) PVT. LTD.

The revenue has preferred this appeal under Section 260A of the Income-Tax Act, 1961 ( for short, “the Act”) against the order dated 15.4.2004 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, for the assessment year 1995-96, proposing to raise the following substantial question of law: “Whether on the facts and in the circumstances of the case, the ITAT, Amritsar Bench, Amritsar is right in law, in deleting the penalty imposed for the Assessment Year 1995-96, by relying upon the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT v. Prithipal Singh & Co. 183 ITR 69, as also ITA No. 307 of 2004 [2] affirmed by the Hon'ble Supreme Court in the same case [2001] 249 ITR 670 wherein the assessment year involved was 1970-71, when section 271(1)(c) has undergone substantive amendments since 1.4.1976, wherein penalty leviable has been linked to “tax sought to be evaded” rather than to income concealed, which was the position upto 31.3.1976?”

The assessee was alleged to have concealed income while declaring net loss. The Assessing Officer after making assessment, initiated proceeding for levy of penalty and passed an order of penalty. Levy of penalty was deleted by the CIT(A), which view has been upheld by the Tribunal following the judgment of this Court in CIT v. Prithipal Singh & CO. 183 ITR 69 which stood affirmed by the Hon'ble Supreme Court in CIT v. Prithipal Singh & Co. [2001]249 ITR 670 (SC).

It is not disputed that the view taken in Prithipal Singh case (supra) has since been reversed by the Hon'ble Supreme Court in later judgment in CIT vs. Gold Coin Health Food P.Ltd. [2008] 304 ITR 308. It has been held that even if there is loss, penalty could be levied for concealment of income under Section 271(1)(c) of the Act. This legal position has not been disputed by learned counsel for the assessee.

In view of later judgment of the Hon'ble Supreme Court in Gold Coin Health Food, supra, the view taken by the Tribunal has to be ITA No. 307 of 2004 [3] reversed. The substantial question of law has to be answered in favour of the revenue and against the assessee.

Accordingly, the appeal is allowed. The impugned order of the Tribunal is set aside and that of the Assessing Officer is restored.

There is, however, one more aspect. Vide order dated 28.4.2009, this Court directed that issue of waiver be considered by the CBDT having regard to the financial position of the assessee. On 20.8.2009, we noted that no information was available about the decision, if any, taken by the CBDT. Learned counsel for assessee was also unable to state whether material was placed before the Board about financial status.

Learned counsel for the assessee now states that necessary material was placed before the Board about financial status. Learned counsel for the revenue states that under Section 273A of the Act, power to waive penalty is also available with the Commissioner, in addition to the power of the CBDT under Section 119(2) of the Act.

In view of the earlier order dated 28.4.2009, we direct CBDT to take a decision in terms of the said order, within one month from the date of receipt of a copy of this order.

The appeal is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) August 27, 2009