THE COMMISSIONER OF INCOME TAX vs. M/S AVTAR SINGH

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ITA/210/1999HC Punjab & HaryanaPHHC01038325199906 September 2007Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE M.M. KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the appeal filed by the Revenue did not raise any substantial question of law. The Tribunal found that a factual finding was recorded that creditors prepared drafts and erroneously deposited them into the account of the Excise and Taxation Department instead of the assessee's account. This error, which was required for the assessee to pay licence fees, was considered a technical default. The Tribunal opined that it was a fit case for cancellation of penalty under Section 271D as the assessee had not acted deliberately in defiance of Section 269SS. The order of the CIT(A) was deemed fully justified. Consequently, the High Court found no merit in the appeal and dismissed it.

What were the facts?

The Revenue, Commissioner of Income-tax, Jalandhar, filed an appeal under Section 260A of the Income-tax Act, 1961, challenging an order dated July 16, 1999, passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order pertained to ITA No. 14(ASR)/1993 for the assessment year 1989-90. The dispute involved a penalty imposed under Section 271D of the Act, which was deleted by the Commissioner of Income-tax (Appeals) and subsequently upheld by the ITAT. The core of the issue was a deposit made into the account of the Excise and Taxation Department instead of the assessee's account, which the Assessing Officer considered a violation of Section 269SS of the Act.

What were the issues?

The Tribunal had to decide two questions of law: 1. Whether the ITAT was legally correct in upholding the deletion of the penalty imposed under Section 271D of the Income-tax Act, 1961, on the grounds that the default was merely technical for the year ending March 31, 1988. 2. Whether the ITAT was legally correct in alternatively holding that the assessee had not acted deliberately in defiance of Section 269SS of the Income-tax Act, 1961, or in conscious disregard of its obligations. The Revenue contended that the ITAT erred in its findings. The Assessee's contentions are not explicitly recorded in the provided text, but the ITAT's reasoning suggests the assessee argued the default was technical and not deliberate. The ITAT relied on the Supreme Court judgment in Hindustan Steel Ltd. v. State of Orissa, (1972) 83 ITR 26.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271D,Section 269SS

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: 6.9.2007 The Commissioner of Income-tax, Jalandhar …Appellant Versus M/s Avtar Singh & Co., Nakodar, District Jalandhar …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE AJAY KUMAR MITTAL Present: Mr. Vivek Sethi, Advocate, for Mr. Sanjiv Bansal, Advocate, for the appellant-revenue. M.M. KUMAR, J. The revenue has approached this Court by filing instant appeal under Section 260A of the Income-tax Act, 1961 (for brevity, ‘the Act’), challenging order dated 16.7.1999, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for brevity, ‘the Tribunal’), in ITA No. 14(ASR)/1993, in respect of assessment year 1989-90 (A-3). The revenue has claimed that the following questions of law would arise for our determination:-

1.

Whether on the facts and in the circumstances of the case, the ITAT was right in law in dismissing

the appeal of the Revenue and upholding the deletion by the CIT (A) of the penalty imposed under Section 271D of the Income-tax Act, 1961 on the ground that the default, if any, was merely that of technical nature for the year ending 31.03.1988?

2.

Whether on the facts and in the circumstances of the case, the ITAT was right in law even in alternatively holding that the assessee had not acted deliberately in defiance of the provisions of Section 269SS of the Income-tax Act, 1961 or has acted in conscious disregard of its obligation, to follow the said provision for the year ending 31.03.1988? After hearing learned counsel for the revenue, perusing the orders passed by the Assessing Officer, CIT (A) and the Tribunal we find that a finding of fact has been recorded by the Tribunal in para 8 of its order showing that the creditors got the drafts prepared and instead of depositing the same in the account of the assessee, erroneously deposited the same in the account of the Excise and Taxation Department. The licence fee was required to be paid by the assessee and this error has been considered as a technical default on the part of the assessee, which was considered by the Assessing Officer as violation of Section 269SS of the Act. The Tribunal opined that it was a fit case for cancellation of penalty under Section 271D of the Act for a mere technical default as the assessee had not acted deliberately in defiance of provisions of Section 269SS of the Act and the order passed by the CIT (A) was held to be fully justified. The Tribunal has also drawn support from the judgment of Hon’ble the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa, (1972) 83 ITR 26. Having heard learned counsel we do not find that any question of law warranting admission of the appeal would arise. Therefore, there is no merit in the appeal and the same is accordingly dismissed.

(M.M. KUMAR) JUDGE (AJAY KUMAR MITTAL) September 6, 2007 JUDGE Pkapoor 3

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