COMM. OF I.T. ASR vs. M/S NAVDEP THEATRE

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ITC/100/1999HC Punjab & HaryanaPHHC01038420199912 March 2013Bench: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose from the Tribunal's order. The Tribunal had correctly declined to interfere with the cancellation of the penalty. The reasoning was that the penalty under Section 271(1)(c) of the Act cannot be imposed when, even after any additions made by the revenue, the assessee's income tax return reflects a loss. The High Court affirmed the Tribunal's decision, which was based on the principle that the term 'income' in the context of penalty provisions under Section 271 refers to positive income, not a loss. Consequently, the penalty of Rs. 85,129/- was rightly cancelled. The operative direction was the dismissal of the Revenue's petition.

What were the facts?

This case involves a petition filed by the Commissioner of Income Tax, Amritsar (the Revenue) under Section 256(2) of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal, Amritsar Bench. The Tribunal had declined the Revenue's petition under Section 256(1) of the Act. The dispute pertains to a penalty of Rs. 85,129/- imposed by the Assistant Commissioner of Income-Tax on M/s Navdeep Theatre (P) Ltd. Amritsar (the assessee). The Tribunal's decision was based on a prior judgment of the High Court in CIT vs. Prithpal Singh and Co., which was later affirmed by the Supreme Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the provisions of the Explanation to Section 271(1)(c) will not be attracted to the present case? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the word 'income' occurring in clauses (c) and (iii) of Section 271 refers to a positive income only and not to a loss? 3. Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in cancelling the penalty of Rs.85,129/- imposed by the Assistant Commissioner of Income-Tax by holding that no penalty could be levied against the assessee? Assessee's Contentions: The assessee argued that the penalty could not be levied because even after additions made by the Assessing Officer, the assessee's return was still showing a loss. They relied on the High Court judgment in CIT vs. Prithpal Singh and Co., which was affirmed by the Supreme Court in CIT vs. Prithpal Singh and Co. (2001) 249 ITR 670. Revenue's Contentions: The Revenue's primary argument before the Tribunal was that a Special Leave Petition against the High Court's order in CIT vs. Prithpal Singh and Co. was pending before the Supreme Court. However, this argument was rendered moot by the Supreme Court's dismissal of the SLP.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 256(2),Section 256(1)

AI-generated summary — verify with the full judgment below

ITC No. 100 of 1999 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision: 12.03.2013 ITC No. 100 of 1999 The Commissioner of Income Tax, Amritsar ...Petitioner versus M/s Navdeep Theatre (P) Ltd. Amritsar ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Rajesh Katoch, Advocate for the petitioner. M/s Akshay Bhan and Alok Mittal, Advocates, for the respondent. HEMANT GUPTA, J. (ORAL) The present petition under Section 256(2) of the Income Tax Act, 1961 (for short 'the Act') arises out of an order of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short 'the Tribunal') dated 25.08.1998 claiming the following substantial questions of law:- “1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding: (a) that the provisions of the Explanation to Section 271 (1)(c) will not be attracted to the present case? (b) that the word 'income' occurring in clauses (c) and (iii) of Section 271 refers to a positive income only and not to a loss? 2. Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in cancelling the penalty of Rs.85,129/- imposed by the Assistant Commissioner of Income-Tax by holding that no penalty could be levied against the assessee?”

ITC No. 100 of 1999 -2- Learned Tribunal has declined the petition filed by the Revenue under Section 256(1) of the Act, in view of the judgment of this Court in the case of CIT vs. Prithpal Singh and Co. (1990) 183 ITR 69. The argument raised before the Tribunal was that special leave petition against the order of this Court is pending consideration before Hon'ble the Supreme Court. Learned counsel for the assessee has pointed out that the said appeal has been dismissed by Hon'ble the Supreme Court by judgment reported as CIT vs. Prithpal Singh and Co (2001) 249 ITR 670. Thus, the judgment of this Court stands affirmed by Hon'ble the Supreme Court. We find that the penalty under Section 271(1) (c) of the Act, cannot be imposed for the reason that even after addition, the Income Tax Return was that of a loss. Consequently, we do not find that any substantial question of law arises in the present petition. The same is accordingly dismissed. (HEMANT GUPTA) JUDGE ( RITU BAHRI ) JUDGE March 12, 2013 G.Arora

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