C.I.T vs. MR RAVI PAUL

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ITR/59/1992HC Punjab & HaryanaPHHC01022007199209 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE AJAY KUMAR MITTAL2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal was justified in cancelling the penalties imposed under Section 271(1)(c). The Tribunal's reasoning, which was not controverted by the Revenue, was that there was no material in the assessment order to warrant the inference of concealment on the part of the assessee. The Court agreed that low household expenses alone were not sufficient to record a finding against the assessee, and no specific item of concealment was attributed to the assessee in the assessment order. Therefore, the question of law was answered against the Revenue and in favour of the assessee. The reference was disposed of accordingly, upholding the Tribunal's deletion of the entire penalty.

What were the facts?

The assessee, a doctor, filed returns for assessment years 1984-85 and 1985-86, which were processed under Section 143(1). During assessment, the Assessing Officer made additions to income due to discrepancies in professional receipts and low household withdrawals. Consequently, penalties under Section 271(1)(c) of Rs. 15,973 and Rs. 16,661 were levied for the respective years. The Commissioner of Income-tax (Appeals) directed that sums received by the assessee from his wife be adjusted towards household expenses and the penalty re-calculated. Both parties appealed to the Income Tax Appellate Tribunal. The Tribunal deleted the entire penalty, dismissing the Revenue's appeal and allowing the assessee's appeal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalties imposed under Section 271(1)(c)? Assessee's Contentions: The judgment does not record specific arguments made by the assessee before the High Court, but the Tribunal's finding indicates the assessee argued that there was no material to warrant an inference of concealment and that low household expenses alone were insufficient to record a finding against them. No particular item of concealment was attributed. Revenue's Contentions: The Revenue argued that the Appellate Tribunal was not justified in cancelling the penalties imposed under Section 271(1)(c). The judgment notes that the learned counsel for the Revenue was not able to controvert the Tribunal's findings with material on record.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

I.T.R.Nos. 59 and 60 of 1992 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.Nos. 59 and 60 of 1992 Date of decision: 9.11.2006 The Commissioner of Income-tax Jalandhar Applicant through

Dr. N.L.Sharda, Advocate v. Dr. Ravi Paul Respondent through Nemo CORAM: Hon'ble Mr.Justice Ajay Kumar Mittal Hon'ble Mr.Justice Rajesh Bindal

1.

Whether Reporters of local papers may be allowed to see the judgment ?

2.

To be referred to the Reporters or not ?

3.

Whether the judgment should be reported in the Digest? Rajesh Bindal, J. Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, `the Tribunal'), arising out of its order dated 21.9.1990 in I.T.A. Nos. 1405(ASR)/1989 and 1406(ASR)/1989, in respect of assessment years 1984-85 and 1985-86: “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalties imposed under Section 271(1)(c)?” Briefly, the facts, as noticed in the statement of the case, are that the assessee, who derived income from medical profession, filed return for the assessment year in question, which was processed under Section 143(1) of the Income-tax Act, 1961 (for short, `the Act'). Later on, in assessment proceedings, the Assessing Officer found discrepancies in the professional receipts and low household withdrawls. On the basis thereof, additions were made in the income. In penalty proceedings under Section 271(1)(c) of the Act, penalty of Rs. 15,973/- and Rs. 16,661/- was levied for the assessment years 1984-85 and 1985-86

I.T.R.Nos. 59 and 60 of 1992 [2] respectively. In appeal, the Commissioner of Income-tax (Appeals) directed that sums of Rs. 17,000/- and Rs. 8,000/- respectively for the assessment years in question, received by the assessee from his wife, be adjusted towards household expenses and penalty be re-worked out accordingly. In further appeal before the Tribunal by both the parties, entire penalty was ordered to be deleted. The appeal of the Revenue was dismissed, whereas the appeal of the assessee was accepted. The Tribunal held that there was no material in the assessment order to warrant the inference that there was concealment on the part of the assessee. The only inference from the low household expenses was not sufficient to record a finding against the assessee. No particular item of concealment was attributed to the assessee in the order of assessment. Learned counsel for the Revenue has not been able to controvert the findings recorded by the Tribunal on the basis of any material on record to convince this Court to take a view contrary to what has been taken by the Tribunal on appreciation of the facts on record. Accordingly, we do not find that any illegality has been committed by the Tribunal in cancelling the penalty imposed under Section 271(1)(c) of the Act. The question is thus, answered against the Revenue and in favour of the assessee. The reference is disposed of in the manner indicated above. ( Rajesh Bindal ) Judge (Ajay Kumar Mittal) Judge 9.11.2006 mk

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