C I T vs. PARVEEN SOOD PROP.

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ITA/574/2008HC Punjab & HaryanaPHHC01080580200827 November 2008Author: MR. JUSTICE L.N. MITTAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court found no merit in the Revenue's contentions. It held that merely reiterating a stand after a notice under Section 148 does not, in itself, prove that the assessee's stand was not bonafide. The Court found no perversity in the ITAT's finding that the assessee did not furnish any incorrect particulars and that the claim was bonafide. The Court further clarified that the amendment introduced by Act No. 55 of 2005 related to the eligibility for deduction under Section 80HHC, not to the imposition of penalty under Section 271(1)(c), and therefore, it was not relevant to the penalty issue. Consequently, the Court concluded that there was no substantial question of law arising from the ITAT's order.

What were the facts?

The Revenue has appealed under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertains to Assessment Year 2003-04 and challenges the ITAT's deletion of a penalty of Rs. 11,84,236 imposed under Section 271(1)(c). During the assessment, the Assessing Officer (AO) disallowed a deduction under Section 80HHC on the grounds of negative profit and initiated penalty proceedings. The penalty was initially upheld by the CIT(A). The ITAT, however, held that while the assessee might not be entitled to the Section 80HHC deduction, there was no evidence of the claim not being bonafide or of the assessee furnishing inaccurate particulars, thus deeming the penalty unjustified.

What were the issues?

1. Whether, on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the penalty of Rs. 11,84,236 imposed under Section 271(1)(c) by ignoring the amendments made by Taxation Laws (Amendment Act No. 55 of 2005)? Assessee's Contention: The judgment does not record specific contentions made by the assessee before the High Court. However, the ITAT's reasoning, which the High Court upheld, indicates that the assessee's claim for deduction under Section 80HHC was considered bonafide, and there was no evidence of furnishing inaccurate particulars or concealment of income, which are prerequisites for levying penalty under Section 271(1)(c). Revenue's Contention: The Revenue argued that a notice under Section 148 was issued, and the assessee, despite being asked to file a fresh return, reiterated the original return. The Revenue also contended that the ITAT ignored the amendments introduced by Taxation Laws (Amendment Act No. 55 of 2005.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271(1)(c),Section 80HHC,Section 148

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 574 of 2008 Date of Decision: November 27, 2008. The Commissioner of Income Tax-I, ---Appellant Ludhiana. Versus

Shri Parveen Sood Prop. --Respondent M/s East West Indl. Exports CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L.N. MITTAL Present: Mr. Rajesh Sethi, Senior Standing Counsel for Revenue. *** ADARSH KUMAR GOEL.J (ORAL) The Revenue has preferred this appeal under Section 260 A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Chandigarh Bench 'B' passed in I.T.A. No.67/CHANDI/2007 dated 19.9.2007 for the Assessment Year 2003-04, proposing following substantial question of law for consideration:- “ Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the penalty of Rs.11,84,236/- imposed u/s 271(1)(c) by ignoring the amendments made by Taxation Laws (Amendment Act No.55 of 2005?” During the assessment, the A.O. disallowed deduction under Section 80 HHC on negative profit and initiated penalty proceedings. This was followed by order of penalty, which was upheld by the CIT(A). On further appeal, the Tribunal held that even though the assessee may not be entitled to deduction u/s 80 HHC, there was nothing -2- to show that the claim of the assessee was not bonafide or that the assessee had furnished inaccurate particulars. In absence of concealment or furnishing of inaccurate particulars, penalty was not justified.

We have heard learned counsel for the Revenue. Learned counsel for the Revenue states that even after notice under Section 148 was issued and the assessee was asked to file fresh return the assessee reiterated the return that had already been filed. Learned counsel submitted that amendment introduced vide Act No. 55 of 2005 has been ignored by the Tribunal. We do not find any merit in the contentions raised by the learned counsel. Mere fact that the assessee reiterated his stand is not enough to show that stand of the assessee was not bonafide. There is nothing to show that the finding of the Tribunal that the assessee did not furnish any incorrect particulars and his claim was bonafide is perverse. The amendment vide Act No.55 of 2005 does not relate to penalty but to the liability of the assessee to claim deduction under Section 80 HHC, which is not the issue. We, thus, do not find any substantial question of law in this appeal. Accordingly, the appeal is dismissed.

(ADARSH KUMAR GOEL) JUDGE (L.N. MITTAL) JUDGE 27.11.2008 lucky

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