PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S.LALITHA JEWELLERY MART P LTD

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TCA/383/2019HC Madras30 April 2024Bench: Honourable Mr Justice R. MAHADEVAN5 pages
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What did the High Court hold?

The High Court, considering that the quantum appeals filed by the assessee were allowed by this court vide judgment dated 11.08.2017, held that the question of levy of penalty in respect of the same assessment does not arise. Therefore, there was no requirement to remand the matter to the Assessing Officer to revisit the issue of penalty levied under Section 271(1)(c) of the Income Tax Act. The court set aside the order of the Tribunal to that extent. The Tax Case Appeal filed by the Revenue was accordingly disposed of. The substantial questions of law raised were left open to be adjudicated in an appropriate case. No costs were awarded.

What were the facts?

The Revenue, represented by the Principal Commissioner of Income Tax, filed a Tax Case Appeal under Section 260-A of the Income Tax Act, 1961, challenging an order dated 21.08.2018 passed by the Income Tax Appellate Tribunal (ITAT) 'B' Bench, Chennai. The appeal pertained to Assessment Year 2007-2008. The High Court admitted the appeal on two substantial questions of law. The ITAT had previously set aside orders of lower authorities and remanded the issue of penalty under Section 271(1)(c) for fresh consideration by the Assessing Officer. The assessee is M/s. Lalitha Jewellery Mart P Ltd.

What were the issues?

1. Whether the Tribunal was right in law in remitting back to the Assessing Officer the issue of levy of penalty under Section 271(1)(c) of the Income Tax Act for consideration afresh? (Question of law) 2. Whether on the facts and circumstances of the case and in law, the Tribunal was legally justified in not considering the provisions of Section 251(b) of the Income Tax Act? (Question of mixed law and fact) Assessee's Contention: The assessee argued that since the quantum appeals filed against the assessment orders were allowed by the High Court, no penalty would lie in respect of those assessment proceedings. Revenue's Contention: The Revenue contended that the Tribunal only has the power to confirm or cancel a penalty order and cannot remand the penalty issue to lower authorities. The Revenue argued that the ITAT erred in remanding the matter to the Assessing Officer for fresh consideration of the penalty issue. However, the Revenue fairly submitted that this court, in a prior judgment dated 11.08.2017 in TCA Nos.435 and 436 of 2013, had allowed the quantum appeals filed by the assessee, deleting additions on the share capital/premium issue. Consequently, the penalty proceedings initiated by the Revenue against the said assessment are not maintainable.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 271(1)(c),Section 251(b)

AI-generated summary — verify with the full judgment below

TCA No.383 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 30.04.2024 CORAM THE HONOURABLE MR. JUSTICE R. MAHADEVAN and THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ T.C.A.No.383 of 2019 --- Principal Commissioner of Income Tax Central 1 No.108, Nungambakkam High Road Chennai 600 034 .. Appellant Versus M/s.Lalitha Jewellery Mart P Ltd No.123, Usman Road T.Nagar, Chennai 600 017 PAN : AAACL1523A

.. Respondent Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961, against the order dated 21.08.2018 passed by the Income Tax Appellate Tribunal 'B' Bench, Chennai, in I.T.A.No.2290/Chny/2015, relating to the AY 2008-2009. For Appellant : Mr. Karthick Ranganathan Senior Standing Counsel For Respondent : Mr. N.Muralikumaran, Senior Advocate for M/s. McGan Law Firm JUDGMENT 1/5 https://www.mhc.tn.gov.in/judis TCA No.383 of 2019 (Judgment of the court was delivered by R. MAHADEVAN, J) This tax case appeal is filed by the appellant/Revenue, challenging the order dated 21.08.2018 passed by the Income Tax Appellate Tribunal, 'B' Bench, Chennai, in I.T.A. No. 2290/Chny/2015, relating to the assessment year 2007-2008. 2. By order dated 20.06.2019, the appeal was admitted on the following substantial questions of law: “(i) Whether the Tribunal was right in law in remitting back to the Assessing Officer the issue of levy of penalty under Section 271(1)(c) of the Income Tax Act for consideration afresh ? and (ii) Whether on the facts and circumstances of the case and in law, the Tribunal was legally justified in not considering the provisions of Section 251(b) of the Income Tax Act ?” 3. The main contention of the learned Senior Standing Counsel for the appellant is that Tribunal has power only to confirm or cancel the order of penalty and it cannot remand the penalty issue to the lower authorities. Whereas, in the present case, the Tribunal while setting aside the orders of the lower authorities, has erred in remanding the matter to the Assessing Officer for consideration the penalty issue afresh in accordance with law. However, he 2/5 https://www.mhc.tn.gov.in/judis TCA No.383 of 2019 fairly submitted that this court vide judgment dated 11.08.2017 in TCA Nos.435 and 436 of 2013, allowed the quantum appeals filed by the assessee, by deleting addition on the share capital / premium issue and hence, the penalty proceedings initiated by the Revenue against the said assessment, are not maintainable. 4. We have heard the learned counsel for the respondent/ assessee, who also submitted that the appeals filed by the assessee against the assessment orders got allowed by this court and therefore, no penalty would lie in respect of the said assessment proceedings. 5. Considering the facts and circumstances of the case, more particularly that the quantum appeals filed by the assessee were allowed by this court vide judgment dated 11.08.2017, this court is of the opinion that the question of levy of penalty in respect of the same assessment does not arise and hence, there is no requirement to remand the matter to the Assessing Officer to revisit the issue of penalty levied under section 271(1)(c) of the Income Tax Act. In such view of the matter, the order of the Tribunal is set aside to that extent alone. The Tax Case Appeal filed by the Revenue is accordingly, disposed of. However, the substantial questions of law raised herein are left open to be adjudicated in an appropriate case. No costs. 3/5 https://www.mhc.tn.gov.in/judis TCA No.383 of 2019 [R.M.D,J.] [M.S.Q, J.] 30.04.2024

Neutral Citation : Yes/No gya To 1.The Income Tax Appellate Tribunal 'B' Bench, Chennai. 2.The Commissioner of Income Tax (Appeals)-8, Chennai. 3.The Principal Commissioner of Income Tax, Central 1, No.108, Nungambakkam High Road Chennai 600 034 R. MAHADEVAN, J. AND MOHAMMED SHAFFIQ, J. 4/5 https://www.mhc.tn.gov.in/judis TCA No.383 of 2019 gya T.C.A.No.383 of 2019 30.04.2024 5/5 https://www.mhc.tn.gov.in/judis

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