COMMISSIONER OF INCOME TAX,JLDHR vs. M/S GURU NANAK MERCANTILE CO.,JLDHR

PDF · subscribers
ITR/328/1995HC Punjab & HaryanaPHHC01032400199503 April 2007Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court decided to remit the matter back to the Income Tax Appellate Tribunal (ITAT) for adjudication on merits. The Court observed that the ITAT had not examined the quantum of the penalty or the grounds for its imposition. Instead, the ITAT had cancelled the penalty solely on the basis that the quantum appeal was decided in favour of the assessee. However, in a separate judgment concerning the quantum appeal, the High Court had ruled in favour of the Revenue. Therefore, to ensure a proper decision, the High Court deemed it appropriate to send the case back to the ITAT to decide the penalty issue on its merits. The operative direction is to remand the matter to the ITAT. The issue of whether the penalty was rightly cancelled was not decided on merits by the High Court.

What were the facts?

The Commissioner of Income-Tax, Jalandhar (Revenue) filed a reference application before the High Court of Punjab and Haryana at Chandigarh against an order of the Income Tax Appellate Tribunal (ITAT), Amritsar Bench. The ITAT's order, dated February 22, 1993, passed in ITA No. 531/ASR/1989, pertained to the assessment year 1978-79. The ITAT had cancelled a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The High Court noted that in a related quantum appeal (ITR No. 221 of 1995), the issue had been decided in favour of the Revenue and against the assessee, M/s Guru Nanak Mercantile Company, Jalandhar. The ITAT had not adjudicated the penalty on merits, but rather set it aside based on the favorable outcome for the assessee in the quantum appeal.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961? (Question of law) Assessee's contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, it is implied that the assessee would have supported the ITAT's decision to cancel the penalty. Revenue's contention: The Revenue argued that the ITAT erred in cancelling the penalty without deciding the issue on merits. They relied on the High Court's separate judgment in the quantum appeal (ITR No. 221 of 1995), which was decided in favour of the Revenue, implying that the underlying additions leading to the penalty were valid.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

I.T.R.

No. 328 of 1995

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.

No. 328 of 1995

Date of decision: 3.4.2007 The Commissioner of Income-Tax, Jalandhar ...Petitioner Versus M/s Guru Nanak Mercantile Company, Jalandhar ...Respondent CORAM: HON'BLE MR.JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.Sanjiv Bansal, Advocate for the revenue. **** RAJESH BINDAL, J. Following question of law had been referred for opinion of this Court by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar arising out of its order dated 22.2.1993 passed in I.T.A.No.531/ASR/1989, in respect of the assessment year 1978-79: “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961?” While dealing with the issue in the quantum proceedings in ITR No.221 of 1995 (The Commissioner of Income-tax, Jalandhar Vs. M/s Guru Nanak Mercantile Company, Jalandhar) vide our spearate judgment delivered today, the issue has been answered in favour of the revenue and against the assessee. As in the present case, the Tribunal had not gone into the merits of the controversy regarding leviability of penalty and had set aside the penalty only on the ground that in quantum appeal, the

I.T.R.

No. 328 of 1995

-2- *** matter had been decided in favour of the assessee, we deem it appropriate to remit the matter back to the Tribunal to deal with the issue on merits. The reference is disposed of, accordingly. (Rajesh Bindal) Judge April 03, 2007 (M.M.Kumar) Pka Judge

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →