THE COMMISSIONER OF INCOME TAX (CENTRAL), KOCHI vs. M/S.PARTHAS POWER HOUSE ROAD, TRIVANDRUM

PDF · subscribers
ITA/145/2013HC KeralaKLHC01026030201311 November 2013Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court found that the decision of the appellate authorities was based on the factual circumstances of the case. The assessee had voluntarily offered an additional income of Rs. 1.21 crores to cover any potential omissions and commissions, and to avoid protracted litigation. The difference between the disclosed income and the assessed income was found to be very meagre (Rs. 8,41,37,212 assessed income against Rs. 8,39,77,210 declared income). There was no material to indicate that the assessee had not disclosed proper income. The Court agreed with the Tribunal's finding that the imposition of penalty under Section 271AAA was bad in law under these circumstances, as the assessee's voluntary disclosure and the negligible difference in income did not warrant such a penalty. Therefore, no substantial question of law arose for consideration.

What were the facts?

The Revenue (Commissioner of Income Tax) filed an appeal against an order of the Income Tax Appellate Tribunal (ITAT) in Cochin Bench. The appeal stemmed from a search conducted under Section 132 of the Income Tax Act at the assessee's (M/s. Parthas) business premises on October 11, 2007. The assessee subsequently filed a return of income on September 30, 2008, declaring a total income of Rs. 8,39,77,210, which included Rs. 1.22 crores offered to cover potential omissions. The assessment was completed under Section 143(3) at Rs. 8,41,37,212. A penalty was imposed under Section 271AAA for concealment of income, amounting to Rs. 12,26,000. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal against the penalty, finding no violation of Section 271AAA. The ITAT upheld this decision, leading to the Revenue's present appeal.

What were the issues?

1. Whether the Tribunal was justified in holding that Section 271AAA of the Income Tax Act, 1961, was not applicable to the facts and circumstances of the case, despite a discrepancy in accounts aggregating to Rs. 39,30,732 for Assessment Year 2008-2009? Assessee's Contention: The assessee argued that they had offered Rs. 1.21 crores as additional income in their return to cover any possible omissions and commissions, thereby avoiding separate additions. The First Appellate Authority and the Tribunal found that the assessee had offered Rs. 2 crores more than the income returned for the previous year (Assessment Year 2007-2008) to avoid protracted litigation, and nothing was unearthed as undisclosed income as a result of the search. The difference between the disclosed income and the assessed income was negligible. Revenue's Contention: The Revenue contended that the Tribunal erred in concluding that Section 271AAA had no application. They argued that during penalty proceedings, a discrepancy of Rs. 39,30,732 was noticed for AY 2008-2009, and since the assessee had admitted Rs. 1.21 crores as additional income, the imposition of penalty was justified.

Which sections of the Income-tax Act were involved?

Section 132,Section 143(3),Section 271AAA

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE MONDAY, THE 11TH DAY OF NOVEMBER 2013/20TH KARTHIKA, 1935 ITA.No. 145 of 2013 ----------------------- ITA NO. 367/2011 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 16-11-2012 ..... APPELLANT(S):APPELLANT: -------------------------------------------- THE COMMISSIONER OF INCOME TAX (CENTRAL), COCHIN. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, INCOME TAX RESPONDENT(S):RESPONDENT: -------------------------------------------------- M/S.PARTHAS, POWER HOUSE ROAD, TRIVANDRUM - 695 036. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 11-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss

ITA.NO.145/2013 APPENDIX APPELLANT'S ANNEXURES: ANNEX.A: COPY OF PENALTY ORDER U/S 260A OF I.T.ACT. ANNEX.B: COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DTD. 03/02/2011. ANNEX.C: COPY OF THE QUESTIONNAIRE DTD. 25/03/2009 AND ANSWERS. ANNEX.C1: COPY OF STATEMENT RECORDED U/S 132(4). ANNEX.D: COPY OF ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DTD. 16/11/2012 WITH A COPY. RESPONDENT'S ANNEXURES: N I L /TRUE COPY/ P.S.TO JUDGE Kss

MANJULA CHELLUR, C.J. & A.M.SHAFFIQUE, J. ---------------------------------------------------- I.T. Appeal No. 145 of 2013 --------------------------------------------------- Dated this the 11th November, 2013 J U D G M E N T Shaffique, J. The appeal is filed by the revenue against the order passed in ITA No. 367/Coch/2011 of the Income Tax Appellate Tribunal, Cochin Bench. 2. The facts of the case would disclose that a search was conducted under S. 132 of the Income Tax Act at the business premises of the assessee on 11.10.2007. Pursuant to the same, the assessee had filed return of income on 30.9.2008 declaring a total income of Rs. 8,39,77,210/- which includes a sum of Rs. 1.22 crores offered by the assessee to cover any possible omissions and commissions. Notice under S. 143 (2) was issued on 25.3.2009 and the assessment was completed

I.T. Appeal No. 145 of 2013 2 under S. 143(3) on 31.12.2009 determining the income at Rs. 8,41,37,212/-. 3. Subsequently, a penalty was imposed on the assessee for concealment of income under S. 271AAA for an amount of Rs. 12,26,000/-. 4. Assessee filed an appeal before the Commissioner of Income Tax (Appeal) against the order of penalty. The appeal was allowed on the ground that there is no violation of S. 271AAA. The revenue preferred further appeal before the Tribunal and the appeal came to be dismissed. 5. While impugning the order passed by the Tribunal, it is inter alia contended that the Tribunal was not justified in coming to the conclusion that Section 271AAA has no application in the facts and circumstances of the case. It is contended that during the course of penalty proceedings, it was noticed that there was discrepancy in the accounts aggregating to Rs. 39,30,732/- for the assessment year 2008-2009. Since the assessee had admitted

I.T. Appeal No. 145 of 2013 3 Rs. 1.21 crores as additional income in their return, no separate additions were made. Therefore according to the revenue, the imposition of penalty was justified. 6. The First Appellate Authority found that Section 271AAA postulates a 10% penalty on the undisclosed income with reference to the books of accounts or other documents or transactions found in the course of search. Since the Managing Partner of the assessee firm had admitted by giving a statement that to avoid protracted litigations, they have offered to file return of income for the assessment year 2008-2009 by declaring income of Rs. 2 crores more than the income return for the assessment year 2007-2008 and nothing was un- earthed as undisclosed income as a result of search and since the assessee had remitted Rs. 1.21 crores to cover any possible omissions and commissions, there was no reason to come to a conclusion that the assessee had violated S.271AAA. The Tribunal also found that while filing the

I.T. Appeal No. 145 of 2013 4 return the assessee has shown a sum of Rs.1.2 crores over and above what was returned in the earlier years and after assessment when it is found that the income was only Rs. 8,41,37,212/- as against the admitted disclosed income of Rs.8,39,77,210/-, there was no reason to impose any penalty. 7. The learned standing counsel appearing for the revenue contends that substantial questions of law arises for consideration especially in regard to the applicability of Section 271AAA. Having regard to the nature of findings entered into by the appellate authorities, the decision taken is purely on the basis of factual circumstances involved in the matter. It is found that the difference between the disclosed income and the assessment was very meagre. There was no material to indiciate that the assessee has not disclosed the proper income. Whereas in this case the assessee had offered to show an additional income of 1.21 crores to avoid unnecessary controversy in

I.T. Appeal No. 145 of 2013 5 the matter. It is under these circumstances that the Tribunal came to a finding that the imposition of penalty was bad in law. We do not have a different view and we do not think that any question of law arises for consideration in this matter. Accordingly, the appeal is dismissed. Sd/- MANJULA CHELLUR, CHIEF JUSTICE Sd/- A.M.SHAFFIQUE, JUDGE

rka /true copy/

More judgments on Section 132

All 14,598 judgments and leading authorities on Section 132 →

Latest GST High Court judgments

Search GST case law →