PRINCIPAL COMMISSIONER OF INCOME TAX-4 vs. ROBINSON IMPEX(INDIA) LTD.

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TAXAP/18/2018HC GujaratGJHC24008384201826 February 2018Bench: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the order of the Income Tax Appellate Tribunal. The Tribunal, in its order, had confirmed the deletion of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. This deletion was based on the reasoning that the disallowance of the bad debt claim by the Assessing Officer was made due to a retrospective amendment to Explanation 1 to Section 36(1)(vii). This amendment stipulated that bad debts are allowable only upon actual write-off. Both the Commissioner of Income Tax (Appeals) and the Tribunal were of the opinion that imposing a penalty based on the retrospective application of a legal provision is not permissible, a principle considered well-settled. Consequently, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue is in appeal against the Income Tax Appellate Tribunal's order dated June 27, 2017. The dispute concerns a penalty levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. This penalty was imposed after the disallowance of a bad debt claim made by the assessee, Robinson Impex (India) Ltd. The Commissioner of Income Tax (Appeals) had deleted the penalty, a decision subsequently upheld by the Tribunal. Both the Commissioner (Appeals) and the Tribunal were of the view that the disallowance was made due to a retrospective amendment to Explanation 1 to Section 36(1)(vii), which made bad debts allowable only upon actual write-off. They concluded that penalty cannot be imposed based on such retrospective applicability of law.

What were the issues?

1. Whether the Appellate Tribunal is correct in law and on facts in deleting the penalty under Section 271(1)(c) of the Act? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, the reasoning of the Tribunal, as stated in the facts, implies the assessee argued that penalty cannot be levied based on a retrospective amendment of law. The Tribunal's decision suggests this argument was accepted. Revenue's Contention: The Revenue, in its appeal, is questioning the correctness of the Tribunal's decision to delete the penalty. The core of the revenue's challenge is that the Tribunal erred in law and facts by allowing the deletion of the penalty imposed by the Assessing Officer.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 36(1)(vii)

AI-generated summary — verify with the full judgment below

C/TAXAP/18/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 18 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX-4 Versus ROBINSON IMPEX(INDIA) LTD. ========================================================== Appearance: MRS MAUNA M BHATT for the PETITIONER(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 26/02/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   27.06.2017 raising following question for our consideration: “Whether   the   Appellate   Tribunal   is   correct   in law   and   on   facts   in   deleting   the   penalty u/s.271(1)(c) of the Act ?” 2. Issue   pertains   to   penalty   which   the   Assessing Officer levied under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' for short) after disallowing a certain amount of bad debt claimed by the assessee. Commissioner of Income Tax (Appeals) however deleted the   penalty   which   the   Tribunal   by   the   impugned judgment confirmed.   The  Commissioner of Income Tax (Appeals)  as well as the Tribunal both were of the Page 1 of 2

C/TAXAP/18/2018 ORDER opinion that only through retrospective amendment by insertion   of   Explanation­1   to   section   36(1)(vii), whereby, the bad debts were allowable only on actual write off.  In view of such retrospective amendment, the disallowance was made by the Assessing Officer. However,   on   the   basis   of   such   retrospective applicability of law, penalty cannot be imposed as is well settled. 3. No   question   of   law   arises.     Tax   Appeal   is dismissed. (AKIL KURESHI, J.) (B.N. KARIA, J.) ANKIT SHAH Page 2 of 2

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