SESA RESOURCES LTD., vs. THE ASSISTANT COMMISSIONER OF INCOME TAX.,

PDF · subscribers
TXA/42/2012HC BombayHCBM05002652201119 October 2012Author: F. M. REIS,S. J. VAZIFDAR3 pages
AI SummaryAllowed

What did the High Court hold?

The Tribunal was in error in holding that merely because the claim for deduction was denied, the appellant is liable to pay a penalty. The High Court held that there is no dispute that the appellant disclosed all the facts and did not conceal any information. The claim for deduction was denied on the ground that the assessee was not legally entitled to it, based on the disclosed material. The Court answered the question of law in the negative, in favour of the assessee, by following the Supreme Court's decision in Commissioner of Income-tax vs. Reliance Petroproducts Pvt. Ltd. and a Bombay High Court judgment. The appeal was allowed, and the penalty was set aside.

What were the facts?

The assessee, Sesa Resources Ltd., filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) dated April 13, 2011, pertaining to Assessment Year 2005-06. The ITAT had dismissed the assessee's appeal against the Commissioner of Income-tax (Appeals), who had upheld the Assessing Officer's order levying a penalty under Section 271 of the Act. The assessee had claimed a deduction under Section 10B, which was denied. The dispute centers on whether a penalty is leviable solely because a claim for deduction was rejected, despite full disclosure of all material facts supported by a Chartered Accountant's certificate.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in sustaining a penalty levied merely on the basis that the appellant had made a claim for deduction in its return which was subsequently rejected in assessment proceedings, and when admittedly all the relevant facts necessary for assessment were fully disclosed, supported by a Chartered Accountant's certificate? (Question of mixed law and fact, turning on Section 271). Assessee's Contention: The assessee argued that a penalty cannot be sustained merely because a claim for deduction was rejected, especially when all necessary facts were fully disclosed and supported by a Chartered Accountant's certificate. The assessee relied on the Supreme Court judgment in Commissioner of Income-tax vs. Reliance Petroproducts Pvt. Ltd. and a Bombay High Court judgment in Commissioner of Income Tax – III vs. M/s. Adiya Birla Nova Limited. Revenue's Contention: The judgment records no specific arguments for the revenue.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271,Section 10B

AI-generated summary — verify with the full judgment below

Cited by 12 judgments on BharatTax

See all citing judgments →

Counted from the text of the judgments hosted here. Most recent first.

Cause title — parties, addresses and appearances
1 txa42-12 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 42 OF 2012 Sesa Resources Ltd., Jeevan Vishwas, 2, EDC Complex, Patto, Panaji, Goa 403 001. ..... Appellant. V/s. The Assistant Commissioner of Income Tax, Circle 1(1) having his office at “Aayakar Bhavan” Patto Plaza, Panaji, Goa. ….. Respondent. Mr. Sudin Usgaonkar, Advocate for the appellant. Ms. Asha Dessai, Advocate for the respondent. CORAM :- S.J. VAZIFDAR & F.M. REIS, JJ. Date : - 19th October, 2012.

ORAL JUDGMENT : (PER VAZIFDAR, J.)

1.

This is an appeal under Section 260A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal (ITAT) dated 13th April, 2011 in ITA No. 44/PNJ/2009 pertaining to the Assessment Year 2005-06. 2 txa42-12

2.

The appeal is admitted on the following question of law : Whether on the facts and in the circumstances of the case, the Tribunal was justified in sustaining penalty which was levied merely on the basis that the appellant had made a claim for deduction in its return which was subsequently rejected in assessment proceedings, and when admittedly all the relevant facts necessary for assessment were fully disclosed, supported by a Chartered Accountant's certificate ?

3.

The Tribunal dismissed the appellant's/assessee's appeal against the order of the Commissioner of Income-tax (Appeals) which, in turn, had upheld the order of the Assessing Officer, levying a penalty under Section 271 of the Act.

4.

The appellant had claimed a deduction under Section 10B of the Act. The appellant, however, was denied the same. The orders in this regard have attained finality. The question is, whether merely on account thereof the appellant is liable for penalty.

5.

There is no dispute that the appellant disclosed all the facts. The appellant did not conceal any facts. Based on the disclosed

3 txa42-12 material, the appellant sought the deduction which was denied on the ground that it was not entitled to the same as a matter of law. The Tribunal was in error in holding that merely because the claim for deduction was denied the appellant is liable to pay a penalty.

6.

The question raised is answered in favour of the assessee by the judgment of the Supreme Court in Commissioner of Income-tax vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 = 2010 (11) SCC 762 and a judgment of this Court, to which one of us (S.J. Vazifdar, J.) was a party dated 14th August, 2012 in Commissioner of Income Tax – III vs. M/s. Adiya Birla Nova Limited (Income Tax Appeal No.3899 of 2010).

7.

In the circumstances, the question of law is answered in the negative, in favour of the assessee.

8.

The appeal is, therefore, allowed in terms of prayer clause (a). No order as to costs. S.J. VAZIFDAR, J. F.M. REIS, J. ssm.

More judgments on Section 271

All 211 judgments and leading authorities on Section 271 →

Recent GST High Court judgments

Search GST case law →