INCOME TAX OFFICER WARD-5(1), BARODA vs. BARODA CRICKET ASSOCIATION
What did the High Court hold?
The High Court, in considering the appeals, noted the arguments presented by both sides. The Revenue highlighted the amendment to Section 148(1) by the Finance Act, 2006, which inserted a proviso deeming notices issued within a certain period as valid. The assessee's representative submitted that in light of this amendment, the matter should be remitted back to the CIT(A) for reconsideration. The Court agreed with this submission, opining that the matters required reconsideration by both the CIT(A) and the ITAT after considering the factual matrix and the amended provisions. Consequently, the Court quashed and set aside the orders passed by the CIT(A) and the ITAT. The matters were remitted back to the CIT(A) for reconsideration. As the matters were remitted, the substantial questions of law were not answered. All the Tax Appeals were disposed of accordingly.
What were the facts?
The appellant-Revenue challenged the Income Tax Appellate Tribunal's (ITAT) judgment and order dated 31.3.2006 for Assessment Years (AY) 1991-92 to 1996-97. The assessee, Baroda Cricket Association, failed to file returns under Section 139(4A) despite generating receipts from cricket tournaments. The Revenue issued a notice under Section 148 on 30.5.2001, prompting the assessee to file returns on 27.6.2001. Assessment proceedings under Section 143(3) read with Section 147 concluded on 31.3.2003, assessing income at Rs. 3,99,027/- and initiating penalty proceedings under Section 271(1)(c) for furnishing inaccurate particulars. The assessee contended that penalty was not leviable as the Assessing Officer (AO) initiated proceedings without recording reasons or clearly spelling out satisfaction.
What were the issues?
1. Whether the ITAT was right in law and on facts in confirming the order of the CIT(A) thereby deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, holding that when the assessment orders were cancelled, penalty would not be levied? (Mixed question of law and fact, concerning Section 271(1)(c) and the effect of cancellation of assessment orders). Assessee's contentions: The assessee argued that penalty under Section 271(1)(c) is leviable only for "concealed particulars of income" or "furnished inaccurate particulars," which are distinct offences. They further contended that the AO initiated penalty proceedings without recording reasons or clearly stating satisfaction, making the penalty non-leviable. Revenue's contentions: The Revenue relied on observations made by the High Court in Tax Appeals Nos. 1020 of 2006, specifically referring to the proviso to Section 148(1) inserted by an amendment on 28.2.2006. This proviso states that notices issued after 12 months but before completion of assessment/reassessment in respect of returns filed under Section 148 during a specified period shall be deemed valid. The Revenue argued that the matter should be considered in light of these amended provisions.
Which sections of the Income-tax Act were involved?
Section 139(4A),Section 148,Section 143(3),Section 147,Section 271(1)(c),Section 148(1)
AI-generated summary — verify with the full judgment below
O/TAXAP/62/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 62 of 2007 With TAX APPEAL NO. 63 of 2007 With TAX APPEAL NO. 64 of 2007 With TAX APPEAL NO. 65 of 2007 With TAX APPEAL NO. 66 of 2007 With TAX APPEAL NO. 67 of 2007
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and HONOURABLE MR.JUSTICE K.J.THAKER
================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ INCOME TAX OFFICER WARD-5(1), BARODA....Appellant(s) Versus Page 1 of 5
O/TAXAP/62/2007 JUDGMENT BARODA CRICKET ASSOCIATION....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MR MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER
Date : 09/12/2014
ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of these appeals, the appellant- Revenue has challenged the judgment and order dated 31.3.2006 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’ in ITA Nos. 220/Ahd/2006 for AY 1994-95, ITA No. 219/Ahd/2006 for AY 1993-94, ITA No. 221/Ahd/2006 for AY 1995-96, ITA No. 218/Ahd/2006 for AY 1992- 93, ITA No. 222/Ahd/2006 for AY 1996-97 and ITA No. 217/Ahd/2006 for AY 1991-92. 2. While admitting these appeals, this Court has framed the following substantial question of law: “Whether the ITAT was right in law and on facts in confirming the order of CIT(A) thereby deleting the penalty levied u/s. 271(1)(c) of the IT Act holding that when the assessment orders Page 2 of 5
O/TAXAP/62/2007 JUDGMENT were cancelled, penalty would not be levied ?” 3. The facts of the present case are that on perusal of records, it was noticed by the Revenue that no return of income was filed by the assesee, though it was required to do so under sec.139(4A) of the Income tax Act, 1961 and despite it generating substantial receipts year after year by organizing cricket tournaments. Therefore, notice u/s. 148 of the Act was issued on 30.5.2001 requiring the assessee to file the return of income. In response to the said notice, the assessee filed return for the assessment year under consideration on 27.6.2001. The assessment proceedings were finalized u/s. 143(3) r.w.s. 147 of the Act on 31.3.2003, whereby, the income was assessed at Rs. 3,99,027/- and penalty proceedings under sec.271(1)(c) of the Act were initiated for furnishing inaccurate particulars of income by issuing of notice dated 31.3.2003. Assessee had filed reply on 24.4.2004. Since the decision of the CIT(A) had been received after 1.6.2003 in this case, a fresh opportunity was granted to the assessee to submit its reply vide notice dated 28.3.2005. In response to the said notice, the assessee filed reply dated 30.3.2005 reiterating its stand taken vide its reply dated 24.3.2003. It has stated that penalty u/s. 271(1) (c) is leviable only if an assessee has either “concealed the particulars of his income” or Page 3 of 5
O/TAXAP/62/2007 JUDGMENT “furnished inaccurate particulars” of such income which are two separate and different offences and since the AO had initiated penalty proceedings without recording of the reason to do so or without clearly spelling out the satisfaction for initiating the penalty proceedings, no penalty was leviable. 4. Heard the learned advocate appearing for the parties and considered the submissions. Learned advocate for the appellant has contended that this Court in Tax Appeals Nos. 1020 of 2006 has observed in para-4 & 5, which reads as under: 4. Learned advocate appearing for the appellant in all these appeals has pointed out that the proviso to section 148(1) inserted by the Parliament on 28.2.2006 in the IT Act, provides that notice issued after 12 months but before the
completion
assessment/ reassessment in respect of the return u/s. 148 furnished during the period from 1.10.1991 to 30.9.2005 shall be deemed to be a valid notice. In that view of the matter, the matter is required to be considered in light of the amended provisions. Ld. Advocate for the respondent has submitted that in view of the amendment, the matter is required to be remitted back to the CIT(A) for reconsideration. Hence, in view of the amended provisions, we are of the opinion that the matter is required to be re-considered by both the authorities after considering the factual matrix of the matter and amended provisions. Page 4 of 5
O/TAXAP/62/2007 JUDGMENT 5. In that view of the matter, both the orders passed by CIT(A) as well as ITAT are quashed and set aside. The matters are remitted back to the CIT(A) for reconsideration. Therefore, as the matters are remitted back to the CIT(A) for reconsideration, the questions are not answered. All these Tax Appeals are disposed of accordingly.” 5. In that view of the matter, both the orders passed by CIT(A) as well as ITAT are quashed and set aside. The matters are remitted back to the CIT(A) for reconsideration. Therefore, as the matters are remitted back to the CIT(A) for reconsideration, the questions are not answered. All these Tax Appeals are disposed of accordingly. (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 5 of 5
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