INCOME TAX OFFICER WARD-5(1), BARODA vs. BARODA CRICKET ASSOCIATION

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TAXAP/65/2007HC GujaratGJHC24039997200709 December 20145 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, in its oral judgment, referred to its own observations in Tax Appeals Nos. 1020 of 2006. In those appeals, the Court noted that a proviso to Section 148(1) was inserted on 28.02.2006, which deemed notices issued within a specific period before assessment/reassessment completion as valid. Considering this amendment, the Court in the cited case opined that the matter required reconsideration by both the CIT(A) and the ITAT after examining the factual matrix and the amended provisions. Consequently, in the present appeals, the High Court quashed and set aside the orders passed by both 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 Revenue (Income Tax Officer, Ward-5(1), Baroda) filed these appeals challenging the Income Tax Appellate Tribunal's (ITAT) orders for assessment years 1991-92 to 1996-97. The ITAT had upheld the Commissioner of Income Tax (Appeals) [CIT(A)] order deleting penalties levied under Section 271(1)(c) of the Income Tax Act, 1961. The Revenue had initiated penalty proceedings against the assessee (Baroda Cricket Association) for furnishing inaccurate particulars of income after issuing a notice under Section 148 for failure to file returns under Section 139(4A). The assessment was finalized under Section 143(3) read with Section 147, assessing income at Rs. 3,99,027/-. The assessee contended that penalty was not leviable as the AO initiated proceedings without recording satisfaction or clearly spelling out the reasons.

What were the issues?

1. 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 were cancelled, penalty would not be levied? (Question of law and fact, concerning Section 271(1)(c) and the validity of penalty when assessment orders are cancelled). Assessee's Contention: The assessee argued that penalty under Section 271(1)(c) is leviable only for 'concealing particulars of income' or 'furnishing inaccurate particulars', which are distinct offences. They further contended that the Assessing Officer (AO) initiated penalty proceedings without recording the necessary satisfaction or clearly stating the reasons for initiation, making the penalty not leviable. Revenue's Contention: The Revenue relied on observations made by the High Court in Tax Appeals Nos. 1020 of 2006, which referred to the proviso to Section 148(1) inserted by an amendment on 28.02.2006. This proviso deemed notices issued within a certain period before assessment/reassessment completion as 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 143(3),Section 147,Section 148,Section 148(1),Section 271(1)(c)

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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