M/S J.R.SOLVENT INDS LTD vs. COMMISSIONER OF INCOME TAX

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ITA/261/2004HC Punjab & HaryanaPHHC01051405200412 December 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the penalty proceedings under Section 271 of the Act are discretionary, but the assessee's failure to submit any response to the show cause notice or appear for personal hearings, despite being afforded opportunities, meant the assessee had invited the penalty proceedings. The court noted that the additions made to the income, which formed the basis for the penalty, had been found to be correct by the High Court. Consequently, the assessee's case squarely fell within the provisions of Section 271(1)(c) for furnishing inaccurate particulars of income. The court found no reason to interfere with the impugned order dated April 24, 1996, which imposed a penalty equivalent to the evaded tax of Rs. 3,17,154/-. The ratio decidendi is that a consistent failure to participate in penalty proceedings, coupled with upheld additions to income, justifies the imposition of penalty under Section 271(1)(c). The appeal was dismissed.

What were the facts?

The appellant-assessee, M/s J.R. Solvent Inds. Ltd., is in appeal before the High Court against an order imposing penalty. The penalty proceedings were initiated under Section 271 of the Income Tax Act, 1961, following additions made to the assessee's income, which were upheld by the ITAT and subsequently by the High Court. The notice under Section 271 was issued on March 31, 1989, and served on the assessee. Despite being granted an additional opportunity for a personal hearing on January 31, 1996, the assessee failed to appear or submit any explanation. The penalty imposed was equivalent to the evaded tax of Rs. 3,17,154/-, relating to concealed income and additions on account of bogus purchases.

What were the issues?

1. Whether the penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, are sustainable when the assessee failed to respond to the show cause notice and did not appear for a personal hearing, despite opportunities being granted. The assessee contends that the penalty proceedings are discretionary and could have been waived if valid reasons were put forth. The revenue argues that the assessee's failure to respond and appear invited the penalty proceedings. 2. Whether the impugned order dated April 24, 1996, imposing penalty, warrants interference, considering the additions made to the income were upheld by higher authorities. The assessee implicitly argues for interference, while the revenue supports the order.

Which sections of the Income-tax Act were involved?

Section 271,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

ITA-261-2004 (O&M) - 1 - IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 207 ITA-261-2004 (O&M) Decided on : 12.12.2024 M/s J.R. Solvent Inds. Ltd. . . . Appellant(s) Versus Commissioner of Income Tax, Patiala . . . Respondent(s) CORAM: HON’BLE MR. JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR. JUSTICE SANJAY VASHISTH PRESENT: Mr. Abhinav Narang, Advocate for the appellant – assessee. Mr. Saurabh Kapoor, Sr. Standing Counsel with Ms. Pridhi Sandhu, Jr. Standing Counsel for the respondent – revenue. **** SANJEEV PRAKASH SHARMA

, J. (Oral) 1. Admittedly, the appellant – assessee did not file reply to the notice issued under Section 271 of the Income Tax Act, 1961 (in short, ‘the Act’) for proposing to impose penalty. The notice was issued on 31st March, 1989 was duly served on the assessee. 2. The respondents – revenue again granted additional opportunity of hearing to the assessee to appear for personal hearing on 31.01.1996, but the assessee failed to appear, nor any explanation was submitted as to why the penalty proceedings should not be proceeded with. 3. It is an admitted position that the additions were made by the ITAT, which have been upheld by this Court in further appeal preferred by the assessee. As the additions have been found to be correct by this Court, JAWALA RAM 2024.12.17 15:57 I attest to the accuracy and authenticity of this document

ITA-261-2004 (O&M) - 2 - the case of the appellant – assessee squarely falls within the provisions of Section 271(1)(c) of the Act, relating to “furnishing the inaccurate particulars of income”. 4. While the penalty proceedings under Section 271 of the Act are essentially discretionary and if valid reasons are put-forth, the penalty could have been waived, but in the present case, the appellant – assessee has chosen not to submit any response to the show cause notice nor he has personally appeared in spite of being afforded an opportunity for the said purpose. Thus, he has himself invited the penalty proceedings. The penalty imposed on the appellant – assessee relating to the concealed income and additions made on account of the bogus purchases, has been imposed is found to be equivalent to that of the evaded tax of a sum of Rs.3,17,154/-. 5. In view thereof, the impugned order dated 24.04.1996, in our opinion does not warrant any interference. 6. Appeal stands dismissed accordingly. Misc. application(s), if any, also stand(s) disposed of. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE December 12, 2024 J.Ram Whether speaking/reasoned: Yes/No Whether Reportable: Yes/No JAWALA RAM 2024.12.17 15:57 I attest to the accuracy and authenticity of this document

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