THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 vs. ADANI RETAIL PVT LTD

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TAXAP/968/2018HC GujaratGJHC24045176201806 August 2018Bench: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE A.Y. KOGJE3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it was in complete agreement with the view taken by the ITAT. The ITAT had observed that the quantification of penalty under Section 271(1)(c) is dependent on the addition made to the income of the assessee. Since the issue of addition, on which the penalty was imposed, had been set aside by the ITAT to the Assessing Officer for re-adjudication, the ITAT rightly concluded that the penalty issue also deserved to be set aside to the Assessing Officer. The Assessing Officer was to decide whether the assessee was liable for penalty after adjudicating the quantum addition on merits. The High Court found no substantial question of law arising from the ITAT's order and therefore dismissed the appeal. The operative direction was the dismissal of the Revenue's appeal, upholding the ITAT's order to set aside the penalty to the AO.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax 1, has filed a Tax Appeal against an order passed by the Income Tax Appellate Tribunal (ITAT) dated March 7, 2018. The ITAT's order pertained to Assessment Year 2008-09 and had set aside a penalty imposed under Section 271(1)(c) of the Income Tax Act. The ITAT's decision was based on the fact that the quantum issue, upon which the penalty was predicated, had been remanded to the Assessing Officer (AO) for re-adjudication. The Revenue's appeal challenges the ITAT's decision to set aside the penalty issue to the AO. It is also noted that a separate appeal by the Revenue against the ITAT's order on the quantum issue (Tax Appeal No. 521 of 2018) was rejected, confirming the remand.

What were the issues?

1. Whether the Appellate Tribunal has erred in setting aside the issue of penalty under Section 271(1)(c) of the Act to the Assessing Officer? Assessee's Contention: The judgment does not record any specific contentions made by the assessee, Adani Retail Pvt Ltd, in this Tax Appeal. The ITAT's reasoning, as quoted in the judgment, indicates that the quantification of penalty under Section 271(1)(c) is dependent on the addition made to the assessee's income. Since the quantum addition issue was set aside by the ITAT to the AO for re-adjudication, the ITAT concluded that the penalty issue also deserved to be set aside to the AO for a decision after the quantum addition is adjudicated on merits. Revenue's Contention: The Revenue, represented by the Principal Commissioner of Income Tax 1, contends that the ITAT erred in setting aside the penalty issue to the Assessing Officer, implying that the penalty should have been decided on its own merits or that the ITAT's approach was incorrect.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

C/TAXAP/968/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 968 of 2018 ================================================================ THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 Versus ADANI RETAIL PVT LTD ================================================================ Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE A.Y. KOGJE

Date : 06/08/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. Feeling aggrieved and dissatisfied with the impugned order passed by the learned ITAT dated 07.03.2018 passed in ITA No.2359/Ahd/2015 for Assessment Year 2008-09, by which the learned Tribunal has set aside the order of penalty imposed by observing that as the quantum issue is remanded to the first authority and the quantification of penalty is dependent upon the addition made to the income of the assessee, the Revenue has preferred the present Tax Appeal with the following proposed questions of law:- “Whether the Appellate Tribunal has erred in setting aside the issue of penalty under Section 271(1)(c) of the Act to the Assessing Page 1 of 3

C/TAXAP/968/2018 ORDER Officer?” 2. It is reported that even against the order passed by the learned Tribunal in quantum appeal, the appeal by the Revenue being Tax Appeal No.521 of 2018 is rejected. Therefore, the order of remand made by the ITAT has been confirmed. While deleting the penalty, the learned ITAT has observed in para-4 as under:- “4. We have heard ld. representatives, and gone through the record. We find that sub- clause (iii) of section 271(1)(c) provides mechanism for quantification of penalty. It contemplates that the assessee would be directed to pay a sum in addition to taxes, if any, payable him, which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of income and furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is dependent upon the addition made to the income of the assessee. In the present case, issue of addition on which penalty has been imposed has been set aside by the Tribunal to the file of the AO for re-adjudication vide order dated 13.12.2017 (supra). Thus, issue of penalty under section 271(1)(c) also deserves to be set aside to his file to decide whether the assessee is liable to be visited with penalty or not after adjudication on quantum addition on merit. Therefore, impugned penalty imposed under section 271(1)(c) of the Act is set aside Page 2 of 3

C/TAXAP/968/2018 ORDER to the file of AP to be decided in accordance with law as indicated above.” 3. We are in complete agreement with the view taken by the Tribunal. The order passed by the learned Tribunal does not call for any interference. No substantial question of law arises. The appeal deserves to be dismissed and it is accordingly dismissed. Sd/- (M.R. SHAH, J) Sd/- (A.Y. KOGJE, J) SHITOLE Page 3 of 3

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