C.I.T.AMRITSAR vs. SATPAL

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ITR/11/2000HC Punjab & HaryanaPHHC01036423200023 November 2006Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the parameters for making additions to income differ from those for imposing penalties. It emphasized that penalty under Section 271(1)(c) can only be justified if a clear finding of concealment of income is recorded. The Tribunal, in its impugned order, had concluded that a clear finding of concealment could not be recorded. The High Court found no perversity in the Tribunal's view and held that the Tribunal had not misdirected itself in law. Consequently, the questions referred were answered against the Revenue and in favour of the assessee. The penalty of Rs. 61,750/- was thus confirmed to be deleted. The operative direction was to dispose of the reference in the manner indicated, meaning the Revenue's appeal was dismissed.

What were the facts?

The Revenue, Commissioner of Income-tax, Amritsar, has filed a reference application before the High Court of Punjab and Haryana at Chandigarh concerning the assessment year 1969-70. The dispute arises from an order passed by the Income Tax Appellate Tribunal (ITAT), Amritsar Bench, on January 31, 1981. A search conducted by the Customs Department on the assessee's premises on September 20, 1968, led to the seizure of gold. Consequently, additions were made to the assessee's income for the assessment year 1969-70. These additions were subsequently reduced on appeal and further by the ITAT. Following this, a penalty of Rs. 61,750/- was imposed under Section 271(1)(c) of the Income Tax Act, which was then deleted by the ITAT via the impugned order.

What were the issues?

The High Court was asked to decide two questions of law arising from the ITAT's order concerning the assessment year 1969-70: 1. Whether the Tribunal erred in law by holding that the Revenue failed to prove the assessee's liability for penalty under Section 271(1)(c) concerning moneys invested in gold bars, which were assessed as income from undisclosed sources? 2. Whether the Tribunal was legally justified in cancelling the penalty of Rs. 61,750/- levied under Section 271(1)(c)? Assessee's Contentions: The judgment does not record specific contentions made by the assessee's counsel. However, the ITAT's decision, upheld by the High Court, implies that the assessee argued against the finding of concealment. Revenue's Contentions: The Revenue argued that the Tribunal had misdirected itself in law by cancelling the penalty, implying that the conditions for imposing 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

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

**** I.T.R. No.11 of 2000 Date of Decision:23.11.2006 The Commissioner of Income-tax, Amritsar .....Petitioner Vs. Shri Sat Pal, P/o M/s Khushi Ram & Sons, Amritsar

.....Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present:- Dr. N.L.Sharda, Advocate for the petitioner. Mr. Akshay Bhan, Advocate for the respondent. **** ADARSH KUMAR GOEL, J. The following questions of law have been referred for opinion of this Court arising out of order passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in I.T.A. No.883(ASR)/1979 dated 31.1.1981 in respect of assessment year 1969-70:- “1. Whether on the facts and in the circumstances of the case, the Tribunal has misdirected itself in law in holding that the Revenue has failed to prove the liability of the assessee for penalty under section 271(1)(c) in respect of the moneys which were invested by assessee in the purchase of gold bars and which had been assessed as income from undisclosed sources? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty in the sum of Rs.61,750/- levied on the assessee under section 271(1)(c) of the Act?” Search was conducted on the premises of the assessee on 20.9.1968 by the Custom Department which led to recovery of gold which was taken into custody and was seized. Taking this into account, during assessment for the assessment year 1969-70, some additions were made to

I.T.R. No.11 of 2000 -2- the income of the assessee. Addition to income was reduced on appeal and was further reduced by the Tribunal. Thereafter, penalty of Rs.61,750/- was imposed. The same was deleted by the impugned order of the Tribunal. Having regard to the facts and circumstances of the case, the Tribunal concluded that finding of concealment of income could not be recorded. We have heard learned counsel for the parties and perused the record. It cannot be disputed that parameters for making addition to income are different from parameters applied for imposing penalty. Imposition of penalty can be justified only when a clear finding of concealment of income can be recorded. The Tribunal having held that a clear finding of concealment of income could not be recorded and having regard to the facts and circumstances of the present case, we are unable to hold that the said view is perverse or that the Tribunal has misdirected itself in law. For the above reasons, the questions referred are answered against the revenue and in favour of the assessee. Reference is disposed of in the manner indicated above.

( ADARSH KUMAR GOEL ) JUDGE November 23, 2006 ( RAJESH BINDAL ) renu JUDGE

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