PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)-1 vs. MANOJ HORA,

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ITA/402/2017HC DelhiDLHC01221246201718 July 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no infirmity in the impugned order passed by the ITAT. The Court agreed with the ITAT's reasoning that Section 140A(3) of the Income Tax Act, 1961, does not provide for any penalty. Consequently, the Revenue's attempt to justify the penalty by invoking Section 221(1) was incorrect, especially since the Assessing Officer had not proceeded on the basis of Section 221(1) at all. The Court found that the wrong invocation of provisions had only one consequence, which was the cancellation of the Assessing Officer's order. Therefore, the appeals filed by the Revenue were dismissed as no substantial question of law arose for consideration. The operative direction was the dismissal of the appeals.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax (Central)-1, filed two appeals before the High Court of Delhi against a common order dated October 2016 passed by the Income Tax Appellate Tribunal (ITAT). The ITAT's order concerned Assessment Year 2009-2010. In its order, the ITAT had set aside a penalty that had been imposed on the Respondent-Assessee. The Revenue had attempted to justify this penalty by invoking Section 221(1) of the Income Tax Act, 1961, despite the fact that the original provision under which the penalty was purportedly levied (Section 140A(3)) does not provide for any penalty. The High Court was therefore considering whether the ITAT's decision to set aside the penalty was correct.

What were the issues?

1. Whether the ITAT was correct in setting aside the penalty imposed on the Assessee under Section 140A(3) of the Income Tax Act, 1961, when the said provision does not provide for any penalty. 2. Whether the Revenue was justified in invoking Section 221(1) of the Income Tax Act, 1961, to impose a penalty when the Assessing Officer did not proceed on that basis. Assessee's Contentions: The judgment does not record specific contentions made by the Assessee before the High Court. However, the ITAT's reasoning, which the High Court found no infirmity in, implies that the Assessee likely argued that Section 140A(3) does not prescribe a penalty and that Section 221(1) could not be invoked arbitrarily or without the Assessing Officer proceeding on that basis. Revenue's Contentions: The Revenue contended that the penalty imposed on the Assessee was justified by invoking Section 221(1) of the Income Tax Act, 1961. The Revenue sought to apply this general penalty provision to the situation.

Which sections of the Income-tax Act were involved?

Section 140A(3),Section 221(1)

AI-generated summary — verify with the full judgment below

* IN THE HIGH COURT OF DELHI AT NEW DELHI 2&3 + ITA 401/2017 PRINCIPAL COMMISSIONER OF INCOME , „ . TAX (CENTRAL)-1 . ..... Appelknt ThroughiMr Ruchir Bhatia, Senior Standing Counsel with Mr Puneet Rai, Junior Standing Counsel versus MANOJHORA . Through; Mr Shashwat Bajpae and Mr Sharad Agarwal, Advocates + v^lfA^02/2017 PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)-l Appellant Through; Mr Ruchir Bhatia, Senior Standing Counsel with Mr Puneet Rai, Junior Standing Counsel versus manojhora' . Through: Mr Shashwat Bajpae and Mr Sharad Agarwal, Advocates CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATHIBA M. SINGH ORDER o/o 18.07.2017 TM 1S287/2017 (exemption'> in ITA 402/2017 1.Allowed, subject to all justexceptions. ITA 401/2017&ITA 402/2017 ^ Digitally Signed By:AMULYA Signature Not Verified

ITA 401/2017 ITA 402/2017 2. These two appeals are directed by the Revenue against a common order dated October, 2016 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA Nos. 829/Del./2014 and 1045/Del./2014 for the Assessment Year ('AY') 2009 - 2010. The ITAT vide the impugned order set aside the penalty imposed on the Respondent - Assessee under Section 140A(3) of theIncome TaxAct, 1961 ('the Act'). 3. Although the said provision does not provide for any penalty, the Revenue sought tojustify thepenalty byinvoking Section 221(1) ofthe Act. The ITAT disagreed with the above submissions ofthe Revenue by pointing out that wrong invocation of the provisions had only one consequence i.e. cancellation ofthe order ofthe Assessing Officer ('AO'). 4.There was no question of invocation of Section 221 (1) of the Act when AO in fact did not proceed onthat basis at all. The Court, therefore, find no infirmity inthe impugned order passed by the ITAT. No substantial question of law arises for consideration. 5. The appeals are accordingly dismissed. JULY 18, 2017 rd ITA 401/2017 & ITA 402/2017 S.MURALIDHAR, J PRATHIBA M. StoH, J Page 2 of2

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