M/S COTTON CITY DEVELOPERS P vs. THE ASSISTANT COMMISSIONER O

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TCA/922/2019HC Madras25 January 2021Bench: Hon`ble Mr Justice T. S. SIVAGNANAM6 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal due to a subsequent event. The assessee had filed a declaration under the Vivad Se Vishwas Scheme on December 16, 2020. Consequently, the Competent Authority was directed to process this declaration under the Direct Tax Vivad Se Vishwas Act, 2020, and pass appropriate orders expeditiously. The assessee was granted liberty to restore the appeal if the decision on their declaration under the Vivad Se Vishwas Act was not in their favor. In such an event, the Registry was instructed to entertain the restoration request without requiring a delay condonation application. As a result of this disposal, the substantial questions of law framed for the appeal were left undecided.

What were the facts?

This case involves an appeal filed by M/s. Cotton City Developers Pvt. Ltd. (the assessee) against an order of the Income Tax Appellate Tribunal (the Tribunal) dated January 22, 2016. The appeal pertains to the assessment year 2008-09 and challenges the confirmation of a penalty levied under Section 271(1)(c) of the Income Tax Act, 1961. The assessee is appealing the Tribunal's decision to the High Court under Section 260A of the Act. The procedural history leading to this appeal involves the initial assessment, appeal to the first appellate authority, and then to the Tribunal. The High Court noted a subsequent development where the assessee filed a declaration under the Vivad Se Vishwas Scheme.

What were the issues?

The Tribunal was asked to decide three substantial questions of law concerning the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961: 1. Whether the Tribunal erred in confirming the penalty despite the survey statement of the Managing Director and the admission of income/reimbursement of expenses in the return of income. 2. Whether the Tribunal erred in confirming the penalty by rejecting the assessee's explanation without reversing the findings of the First Appellate Authority that were in favor of the assessee, indicating perversity. 3. Whether the Tribunal erred in confirming the penalty without distinguishing between a bona fide explanation and a mala fide intention to reduce tax liability, specifically regarding a claim for land development expenses. The assessee argued that the penalty was wrongly confirmed, citing the Managing Director's statement and the return of income. The assessee also contended that the Tribunal's decision was perverse and failed to differentiate between genuine explanations and attempts to evade tax. The revenue's arguments are not explicitly recorded in the provided text.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

TCA.No.922 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.01.2021 CORAM : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Ms.Justice R.N.MANJULA Tax Case Appeal No.922 of 2019 M/s.Cotton City Developers Pvt. Ltd., 1029, Avinashi Road (Opp to PRS), Coimbatore - 641 018. PAN: AAACC7317D ...Appellant Vs The Assistant Commissioner of Income Tax, Company Circle - 1(1), Coimbatore. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 22.01.2016 made in ITA.No.1575/Mds/2012 on the file of the Income Tax Appellate Tribunal, 'A' Bench, Chennai for the assessment year 2008-09. For Appellant: Mr.A.S.Sriraman For Respondent: Mr.T.R.Senthil Kumar Senior Standing Counsel 1/6 https://www.mhc.tn.gov.in/judis/ TCA.No.922 of 2019 JUDGMENT (Delivered by

T.S.Sivagnanam,J

) This appeal has been filed by the assessee under Section 260A of the Income Tax Act, 1961 ('the Act' for brevity) challenging the order dated 22.01.2016 made in ITA.No.1575/Mds/2012 on the file of the Income Tax Appellate Tribunal, 'A' Bench, Chennai ('the Tribunal' for brevity) for the assessment year 2008-09. 2. The assessee has raised the following substantial questions of law for consideration: "1. Whether the Appellate Tribunal is correct in law in confirming the levy of penalty u/s 271(1)(c) of the Act even after noticing the survey statement of the Managing Director as well as the admission of income/reimbursement of expenses in the return of income filed by him? 2. Whether the Appellate Tribunal is correct in law in confirming the levy of penalty u/s 271(1)(c) of the Act despite the rejection of explanation offered effectively without reversing the findings of the First Appellate Authority on various factual issues given in favour of the 2/6 https://www.mhc.tn.gov.in/judis/ TCA.No.922 of 2019 appellant, thereby proving the perversity in the findings in para 10 of the impugned order? 3. Whether the Appellate Tribunal is correct in law in confirming the levy of penalty u/s 271(1)(c) of the Act without making the distinction between the offer of bonafide explanation and malafide intention to reduce the tax liability in making the claim for land development expenses in the computation of taxable total income?" 3. We have heard Mr.A.S.Sriraman, learned counsel appearing for the appellant/assessee and Mr.T.R.Senthil Kumar, learned Senior Standing Counsel appearing for the respondent/Revenue. 4. The learned counsel for the appellant/assessee submits that the appellant/assessee has already filed the declaration/undertaking under the Vivad Se Vishwas Scheme on 16.12.2020 and is awaiting orders to be passed in Form No.3. 5. In the light of the subsequent event, the Competent Authority shall process the application/declaration in accordance with the Direct Tax Vivad 3/6 https://www.mhc.tn.gov.in/judis/ TCA.No.922 of 2019 Se Vishwas Act, 2020 (Act 3 of 2020) and pass appropriate orders as expeditiously as possible. The assessee is given liberty to restore this appeal in the event the ultimate decision to be taken on the declaration filed by the assessee under Section 4 of the said Act is not in favour of the assessee. If such a prayer is made, the Registry shall entertain the prayer without insisting upon any application to be filed for condonation of delay in restoration of the appeal and on such request made by the assessee by filing a miscellaneous petition for restoration, the Registry shall place such petition before the appropriate Division Bench for orders. 6. The tax case appeal stands disposed of with the aforementioned liberty and consequently, the substantial questions of law framed are left open. No costs. (T.S.S.,J.) (R.N.M.,J.) 25.01.2021 Index: Yes/No Internet:Yes/No Speaking Judgment/Non speaking Judgment hvk 4/6 https://www.mhc.tn.gov.in/judis/ TCA.No.922 of 2019 To 1. The Income Tax Appellate Tribunal, 'A' Bench, Chennai. 2. The Assistant Commissioner of Income Tax, Company Circle - 1(1), Coimbatore. 5/6 https://www.mhc.tn.gov.in/judis/ TCA.No.922 of 2019 T.S.SIVAGNANAM,J AND R.N.MANJULA,J hvk TCA.No.922 of 2019 25.01.2021 6/6 https://www.mhc.tn.gov.in/judis/

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