THE COMMISSIOENR OF INCOME TAX vs. N. NAYAN KUMAR and CO.

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ITA/58/1999HC Bombay05 March 2007Bench: HON'BLE SHRI JUSTICE DR. S. RADHAKRISHNAN, HON'BLE SHRI JUSTICE J.P. DEVADHAR2 pages
AI SummaryDismissed

What did the High Court hold?

The Bombay High Court held that the Income Tax Appellate Tribunal (ITAT) was justified in deleting the penalty under Section 271(1)(c) of the Income Tax Act, 1961. The Court observed that the ITAT had merely given findings of fact. The Tribunal had specifically asked the Departmental Representative to provide material to support the allegations of inflated labour charges and irregular invoicing. Since no such material was found on record by the ITAT, the deletion of the penalty was based on the lack of evidence. The High Court concluded that there was no substantial question of law involved in these applications, as the ITAT's decision was based on factual findings derived from the evidence presented. Consequently, the applications filed by the Commissioner of Income Tax were dismissed.

What were the facts?

These three Income Tax Applications (Nos. 53/1999, 57/1999, and 58/1999) were filed by the Commissioner of Income Tax, Mumbai City VII, against M/s. N. Nayankumar & Co. Application No. 53/1999 pertains to Assessment Year 1979-80, while Applications Nos. 57/1999 and 58/1999 relate to Assessment Year 1981-82. The applications were admitted by the Bombay High Court on April 22, 1999, and June 23, 1999, respectively. The core of the dispute revolves around the Income Tax Appellate Tribunal's (ITAT) order dated July 21, 1998, which deleted penalties imposed under Section 271(1)(c) of the Income Tax Act, 1961.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was justified in deleting the penalty under Section 271(1)(c) of the I.T. Act, 1961? Assessee's Contention: The judgment does not record any specific arguments made by the assessee. Revenue's Contention: The revenue, through the Commissioner of Income Tax, sought to challenge the ITAT's deletion of penalties. The revenue's argument would implicitly be that the ITAT erred in deleting the penalty, implying that there was sufficient material to justify the imposition of the penalty under Section 271(1)(c). The ITAT's order, as quoted in the judgment, indicates that the Departmental Representative was asked to point out material supporting the inference of inflated labour charges and under/over invoicing of sales and purchases, and no such material was found on record.

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 JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPLICATION NO.53 OF 1999 INCOME TAX APPLICATION NO.53 OF 1999 INCOME TAX APPLICATION NO.53 OF 1999 The Commissioner of Income Tax Mumbai City VII, Mumbai .. Petitioner V/s M/s.N.Nayankumar & Co. .. Respondent INCOME TAX APPLICATION NO.57 OF 1999 INCOME TAX APPLICATION NO.57 OF 1999 INCOME TAX APPLICATION NO.57 OF 1999 The Commissioner of Income Tax Mumbai City VII, Mumbai .. Petitioner V/s M/s.N.Nayan kumar & Co. .. Respondent INCOME TAX APPLICATION NO.58 OF 1999 INCOME TAX APPLICATION NO.58 OF 1999 INCOME TAX APPLICATION NO.58 OF 1999 The Commissioner of Income Tax Mumbai City VII, Mumbai .. Petitioner V/s M/s.N.Nayan kumar & Co. .. Respondent Mr.A.Kotangale for the Petitioner. Mr.B.V.Jhaveri for the Respondent.

CORAM : DR.S.RADHAKRISHNAN CORAM : DR.S.RADHAKRISHNAN CORAM : DR.S.RADHAKRISHNAN & J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ.

DATE : 5th March, 2007. DATE : 5th March, 2007. DATE : 5th March, 2007. JUDGMENT: JUDGMENT: JUDGMENT: (PER DR.S.RADHAKRISHNAN,J.) (PER DR.S.RADHAKRISHNAN,J.) (PER DR.S.RADHAKRISHNAN,J.) 1. Heard the learned Counsel for the parties. The Application No.53/1999 pertains to the Assessment Year 1979-80, and the Application Nos.57/1999 & No.58/1999 pertain to the Assessment Year 1981-82. The Application No.53/1999 was admitted on 22.4.1999 and the Application Nos.57/1999 & 58/1999 were admitted on 23.6.1999, on the following substantial question of law :- "Whether on the facts and in the circumstances of the case, the ITAT was justified in deleting penalty under Section 271(1)(c) of the I.T.Act, 1961?" CNR No : HCBM020009941999 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:59:33

2.

Perused the order of the Income Tax Appellate Tribunal dated 21st July, 1998 wherein the Tribunal has observed as under:- "..... The Tribunal asked the Departmental Representative to point out to any material on the basis of which it could be inferred that the assessee had inflated labour chargs and indulged in under or over invoicing of sales and purchases etc. No material was found on record to support the observation." 3. The Tribunal has merely given findings of facts. There is no substantial question of law involved in these applications. Hence, the aforesaid Applications stand dismissed. (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 05:59:33 Powered by TCPDF (www.tcpdf.org)

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