PRIN. COMMISSIONER OF INCOME TAX vs. ARTISTIC STONE PVT LTD

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TAXAP/935/2017HC GujaratGJHC24057201201726 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 dismissed the Tax Appeal filed by the Revenue. The Court noted that the ITAT had passed a common judgment setting aside several appeals, some of which concerned the assessee's appeals on quantum additions. The ITAT had found the Revenue's additions and disallowances to be incorrect. While acknowledging that for the current assessment year, the assessee might not have appealed the quantum additions, the Court reasoned that when identical grounds for other years led to the deletion of additions by the ITAT, there would be no basis for levying a penalty. Therefore, the ITAT's decision to delete the penalty was upheld. The operative direction was the dismissal of the Revenue's appeal.

What were the facts?

The Revenue is in appeal against a judgment of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, dated April 28, 2017. The appeal concerns a penalty levied under Section 271(1)(c) of the Income Tax Act. The ITAT had dismissed the Revenue's appeal, leading to the deletion of the penalty. The Revenue's contention is that the ITAT wrongly deleted the penalty on the ground that quantum additions were deleted, even though the quantum additions for the assessment year in question were not the subject of the appeal before the ITAT. The penalty was initially imposed by the Assessing Officer and upheld by the CIT(A).

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in dismissing the appeal of the Revenue and thereby deleting the penalty levied under Section 271(1)(c) on the ground that the quantum addition has been deleted, even though the quantum addition involved in this assessment year has not been the subject matter of the appeal before the Appellate Tribunal? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. The ITAT's reasoning, as described by the Revenue, suggests the assessee likely argued that if quantum additions are deleted, the penalty should also be deleted. Revenue's contentions: The Revenue argued that the ITAT committed an error by observing that quantum additions were deleted and consequently deleting the penalty. The Revenue emphasized that the assessee had not challenged the quantum additions in appeal for the assessment year in question.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

C/TAXAP/935/2017 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 935 of 2017 =========================================================== == PRIN. COMMISSIONER OF INCOME TAX Versus ARTISTIC STONE PVT LTD ============================================================= Appearance : Mr NIKUNT RAVAL for Mrs KALPANAK RAVAL for the PETITIONER(s) No. 1 Mrs MAUNA M BHATT for the PETITIONER(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 26th February 2018

ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal, Ahmedabad Bench [“Tribunal” for short] dated 28th April 2017 raising following question for our consideration : “Whether on the facts and in circumstances of the case, the Appellate Tribunal is justified in dismissing the appeal of the Revenue thereby deleting the penalty levied under Section 271 [1] (c) on the ground that the quantum addition has been deleted even though the quantum addition involved in this assessment year has not been subject matter of the appeal before the Appellate Page 1 of 2

C/TAXAP/935/2017 ORDER Tribunal ?” Issue pertains to penalty imposed by the Assessing Officer, but upheld by the CIT [A] which was confirmed by the Tribunal. Counsel for the Revenue submitted that the Tribunal committed an error in observing that the quantum additions have been deleted, and therefore, penalty also should be deleted. In the present case, the assessee had not challenged quantum addition in appeal at all. However, noticing that the Tribunal had by a common judgment set aside several appeals, some of them concerning assessee’s appeal on quantum, the Tribunal found that the Revenue was incorrect in making additions and disallowances. It was this portion of the order which the Tribunal perhaps referred to, while dealing with Revenue’s appeal against penalty. May be, for the current year, the assessee may not have taken quantum additions in appeal, nevertheless, when on identical grounds for other years the Tribunal had deleted additions, surely there would be no case for penalty. In the result, Tax Appeal is dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 2 of 2

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