PRINCIPAL COMMISSIONER vs. GOMATHI RADHAKRISHNAN

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TCA/340/2017HC Madras16 March 2020Bench: Hon`ble Dr Justice VINEET KOTHARI5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court did not decide the substantial questions of law on merits. The Court noted a Circular instruction issued by the Central Board of Direct Taxes (CBDT) vide Circular No. 17/2019 dated 8th August 2019. This circular stipulated that appeals shall not be filed or pursued by the Department before the High Court if the tax effect does not exceed Rs. 1,00,00,000/- (Rupees One Crore). Since the tax effect in the instant cases was stated to be less than this monetary limit, the appeals filed by the Revenue were dismissed as not pressed. The Court explicitly stated that the substantial questions of law were kept open for determination in an appropriate case. No specific finding was given on any of the issues raised, nor was any ratio decidendi established for future cases. The operative direction was the dismissal of the appeals.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed five Tax Case Appeals (TCA Nos. 340 to 344 of 2017) before the High Court of Judicature at Madras. These appeals challenged the common order of the Income Tax Appellate Tribunal (ITAT), 'B' Bench, Chennai, dated 29.07.2016. The ITAT's order had dealt with ITA Nos. 1617, 649, 1078, 682, and 683/Mds/2013. The appeals were filed under Section 260A of the Income Tax Act, 1961. The core of the dispute involved the cancellation of penalties levied under Section 271(1)(c) of the Income Tax Act by the Assessing Officer, which were confirmed by the CIT(A) in certain additions made to the assessee's income.

What were the issues?

The High Court was called upon to decide the following substantial questions of law: 1. (TCA Nos. 340-342/2017) Whether the Appellate Tribunal was right in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act? 2. (TCA Nos. 340-342/2017) Whether, in search cases where returned income is lower than assessed income, penalty under Section 271(1)(c) is automatically attracted due to Explanation 5A to Section 271(1)(c), applicable to search cases? 3. (TCA Nos. 340-342/2017) Whether the Appellate Tribunal was correct in law in stating that Section 271AAA, and not Section 271(1) read with Explanation to Sub-Section (4) of Section 271AAA, is applicable only to the assessment year relevant to the 'specified previous year'? 4. (TCA Nos. 343-344/2017) Whether the Appellate Tribunal was correct in law in deleting the penalty levied under Section 271(1)(c) attributable to additions of Rs. 40,50,000/- and Rs. 94,00,000/- made in the assessment, which were confirmed by the CIT(A)? Contentions: Assessee: Not recorded in the judgment. Revenue: The revenue argued that the penalty under Section 271(1)(c) should be attracted, particularly in search cases with lower returned income, citing Explanation 5A to Section 271(1)(c) and the applicability of Section 271AAA. The revenue also contested the Tribunal's deletion of penalties related to specific additions confirmed by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 260A,Section 271(1)(c),Section 271AAA

AI-generated summary — verify with the full judgment below

Order in TCA Nos.340 to 344 of 2017 (Principal Commissioner of Income Tax -Vs- Gomathi Radhakrishnan) dated 16.03.2020 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 16.03.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARI AND THE HON'BLE MR.JUSTICE R.SURESH KUMAR Tax Case (Appeal) Nos.340, 341, 342, 343 and 344 of 2020 Principal Commissioner of Income Tax, Central 2 No.108, Mahatma Gandhi Road Chennai. ... Appellant in all appeals Vs. Gomathi Radhakrishnan No.931, 11th Sector, 69th Street KK Nagar, Chennai. ... Respondent in all appeals Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961 against the common order of the Income Tax Appellate Tribunal 'B' Bench, Chennai dated 29.07.2016 in ITA Nos.1617, 649, 1078, 682 and 683/Mds/2013. For Appellant : Ms.K.G.Usha Rani Junior Standing Counsel

For Respondent : Mr.A.S.Sriraman & Sridhar

Page 1 of 5 http://www.judis.nic.in Order in TCA Nos.340 to 344 of 2017 (Principal Commissioner of Income Tax -Vs- Gomathi Radhakrishnan) dated 16.03.2020 J U D G M E N T (Judgment of the Court was delivered by DR.VINEET KOTHARI,J) These Tax Case Appeals have been filed by the Revenue calling in question the correctness of the order passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, by raising the following substantial question of law: “ TCA Nos.340 to 342 of 2017 (i) Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was right in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act? (ii) Whether on the facts and in the circumstances of the case and in law, in search cases where the returned income is lower than the assessed income, whether the penalty under Section 271(1)(c) is not attracted automatically in view of the special provisions of Explanation 5A to Section 271(1)(c) which are applicable to only search cases? And (iii) Whether on the facts and in the circumstances of the case the Appellate Tribunal is correct in law stating that the provisions of Section 271AAA and not the provisions of Sub-section (1) to Section 271AAA read with Explanation to Sub-Section (4) of that Section, the provisions of Section 271AAA as applicable only to the assessment year relevant to the 'specified previous year'? Page 2 of 5 http://www.judis.nic.in Order in TCA Nos.340 to 344 of 2017 (Principal Commissioner of Income Tax -Vs- Gomathi Radhakrishnan) dated 16.03.2020 TCA Nos.343 & 344 of 2017 (i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal i s correct in law in deleting the penalty levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 attributable to the addition of Rs.40,50,000/- and Rs.94,00,000/- respectively made in the assessment in the case of the assessee, which was confirmed by the CIT (A)?”

2.

When the matter was taken up for hearing, the learned Standing Counsel brought to our notice the Circular instruction issued by the Central Board of Direct Taxes vide Circular No.17/2019 dated 8th August 2019, wherein, it is stipulated that appeals shall not be filed/pursued by the Department before the High Court in cases where the tax effect does not exceed Rs.1,00,00,000/- (Rupees One Crore). 3. In the instant cases, the tax effect is said to be less than the monetary limit imposed and therefore, the appeals filed by the Revenue are dismissed as not pressed, keeping open the substantial questions of law for determination in an appropriate case. (V.K.,J.) (R.S.K.,J.) 16.03.2020 KST Page 3 of 5 http://www.judis.nic.in Order in TCA Nos.340 to 344 of 2017 (Principal Commissioner of Income Tax -Vs- Gomathi Radhakrishnan) dated 16.03.2020 Page 4 of 5 http://www.judis.nic.in Order in TCA Nos.340 to 344 of 2017 (Principal Commissioner of Income Tax -Vs- Gomathi Radhakrishnan) dated 16.03.2020 DR.VINEET KOTHARI, J. AND R.SURESH KUMAR, J. KST To Income Tax Appellate Tribunal 'B' Bench,Chennai. T.C.(A) Nos.340 to 344 of 2017 16.03.2020 Page 5 of 5 http://www.judis.nic.in

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