CIT, CHANDIGARH vs. M/S PRINCE ZEVER MEHAL PVT. LTD.

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ITA/71/2010HC Punjab & HaryanaPHHC01093673201015 February 2010Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeals filed by the Revenue did not warrant admission as they involved concurrent findings of fact. These findings were based on evidence and did not raise any substantial question of law. The Tribunal had affirmed the CIT(A)'s decision to delete the penalties because there was no evidence on record to suggest that the assessee's claim of bad debts was not bona fide or that there was an intention to evade tax, especially since the bad debts were not set off against any income. The Court found that the Assessing Officer had failed to demonstrate inaccurate particulars of income or concealment of income by the assessee, which are prerequisites for imposing penalty under Section 271(1)(c). Consequently, the appeals were dismissed.

What were the facts?

The Commissioner of Income Tax-I, Chandigarh (Revenue) has filed two appeals before the High Court of Punjab and Haryana challenging a composite order dated April 24, 2009, passed by the Income Tax Appellate Tribunal (Tribunal). The appeals pertain to assessment year 2006-07 and involve two assessees: M/s. Chandigarh Zever Mehal Pvt. Ltd. and M/s. Prince Zever Mehal Pvt. Ltd. The Tribunal had affirmed the findings of the CIT(A) who had deleted penalties of Rs. 22,64,168 and Rs. 17,46,606. The deletion was based on the finding that the assessees did not claim any benefit from the bad debts written off, and there was no evidence of mala fide intention or tax evasion. The Assessing Officer was required to show inaccurate particulars or concealment of income for penalty to be leviable.

What were the issues?

1. Whether the Tribunal erred in upholding the deletion of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961, when the assessee claimed bad debts without substantiating the bona fide nature of the claim and the intention to evade tax? (Question of law). Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the reasoning of the lower authorities, affirmed by the Tribunal, indicates that the assessee's claim of bad debts was not set off against any income, and there was no evidence to suggest that the claim was not bona fide or that there was an intention to evade tax. Revenue's Contention: The Revenue argued that penalties were leviable. The judgment does not explicitly detail the Revenue's arguments beyond the fact that they are challenging the deletion of penalties. However, the implication is that the Revenue believed the conditions for levying penalty under Section 271(1)(c) were met.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appeal No. 70 of 2010 Income Tax Appeal No. 71 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

I.T.A. No. 70 of 2010 Date of Decision: February 15, 2010

The Commissioner of Income tax-I Chandigar ----Appellant Versus M/s. Chandigarh Zever Mehal Pvt. Ltd. Shop No. 8-9, Sec. 20-C Chandigarh ---Respondent I.T.A. No. No. 71 of 2010 The Commissioner of Income tax-I Chandigar ----Appellant Versus M/s. Prince Zever Mehal Pvt. Ltd. Booth No. 47, Sec. 19-C Chandigarh ---Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. Urvashi Dhugga, Advocate for the appellant. 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? **** M.M. KUMAR, J. Revenue has approached this court challenging the composite order dated 24.04.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (for brevity 'the Tribunal') in ITA Nos. 110 & 111/Chd/2009 in respect of the assessment year 2006-07. Therefore, both the appeals bearing I.T.A. Nos. 70 and 71 of 2010 are

Income Tax Appeal No. 70 of 2010 Income Tax Appeal No. 71 of 2010 -2- being disposed of jointly. The findings recorded by the CIT(A) in its order dated 28.11.2008 as affirmed by the Tribunal in the impugned order are categorical that penalty of Rs. 22,64,168 and Rs. 17,46,606 has been rightly deleted because no benefit has been claimed by the assessee-respondent by virtue of claimed bad debts. In para 4 it has been found that there was no evidence on record that the claim of the assessee was not bona fide and there was no intention of evading tax by the assessee because the claimed bad debts has not been set off against any income. Accordingly, it has been held that penalty is not leviable automatically because Assessing Officer is supposed to show inaccurate particulars of income or concealment of two incomes by the assessee. Having heard learned counsel for the appellant, we find that these are concurrent findings of fact, which would not be open to interference of this Court. These findings of fact are necessarily based on evidence and both the appeals do not warrant admission because no question of law much less a substantive question of law would arise for determination of this Court. Accordingly, both the appeals fail and are hereby dismissed. A photocopy of this order be placed on the record of connected appeal. (M.M. KUMAR)

Judge

(JITENDRA CHAUHAN) 15th February, 2010

Judge Atul

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