THE PR COMMISSIONER OF INCOME TAX, vs. SIMPLEX TMC PVT LTD,

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ITA/180/2024HC KarnatakaKAHC01029041202430 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court disposed of the appeal on a procedural ground. It noted that the tax effect in the appeal was less than Rs. 2 Crores, making it not maintainable at the instance of the Revenue in view of CBDT Circular No. 09/2024 dated 17.09.2024, which binds the Revenue. The Revenue sought liberty to revive the appeal if the matter fell within the exceptions under Circular No. 09/2024 and Circular No. 5/2024 dated 15.03.2024. The Court granted this liberty. The substantial questions of law were kept open to be adjudicated in an appropriate proceeding. Therefore, no decision was made on the merits of the penalty deletion by the ITAT.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax, filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated 01.12.2023 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The appeal pertains to Assessment Year 2018-19 and challenges the ITAT's decision to delete the penalty levied under Section 271AAB of the Act on the assessee, Simplex TMC Pvt Ltd. The ITAT had set aside the penalty imposed by the lower authorities. The tax effect in this appeal was noted to be less than Rs. 2 Crores.

What were the issues?

The Tribunal was asked to decide the following substantial questions of law: 1. Whether the Tribunal was right in law in deleting the penalty levied under Section 271AAB of the Act, based on the observation that the clauses of penalty were not correctly mentioned in the show-cause notice proposing the levy. 2. Whether the Tribunal was right in law in not appreciating that undisclosed income was detected during search proceedings and, with the assessee admitting its existence, the penalty under Section 271AAB(1A) was accordingly levied. 3. Whether the Tribunal was right in law in holding that the levy of penalty on undisclosed income is not mandatory. The Revenue contended that undisclosed income was detected during search, and the assessee admitted it, justifying the penalty under Section 271AAB(1A). The Revenue also argued that the penalty on undisclosed income is mandatory. The judgment does not record specific arguments from the assessee.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 271AAB

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:41291-DB ITA No. 180 of 2024

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 30TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 180 OF 2024 BETWEEN:

1.

THE PR COMMISSIONER OF INCOME TAX, CENTRAL, 3RD FLOOR, C R BUILDING, QUEENS ROAD, BENGALURU – 560001

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(1) PRESENT ADDRESS DCIT, CENTRAL CIRCLE-1(1)(1), 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU - 560 001. …APPELLANTS (BY SRI. DILIP M, ADVOCATE A/W SRI. Y V RAVIRAJ., ADVOCATE)

AND:

SIMPLEX TMC PVT LTD, NO 116-C/1 KHB COLONY 5TH BLOCK, KORAMANGALA, BENGALURU - 560034 PAN. AADCS 5669M REP BY MANAGING DIRECTOR …RESPONDENT

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:41291-DB ITA No. 180 of 2024

APPELLATE TRIBUNAL, BENGALURU IN ITA NO. 736/BANG/2023 DATED 01.12.2023 FOR ASSESSMENT YEAR 2018-2019 ANNEXURE-A AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), BENGALURU AND ETC.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri. Dilip. M., along with Sri. Raviraj. Y.V., for appellants/Revenue.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 01.12.2023 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.736/Bang/2023 for the assessment year 2018-19, raising the following substantial questions of law: “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the penalty levied

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NC: 2024:KHC:41291-DB ITA No. 180 of 2024

under section 271AAB of the act based on observation that the clauses of penalty have not been correctly mentioned in showcause notice proposing to levy of penalty? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in not appreciating that undisclosed income was detected during the search proceedings and with the assessee admitting the existence of undisclosed income, the penalty under section 271AAB(1A) was accordingly levied? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the levy of penalty on undisclosed income is not mandatory?”

3.

It is noticed that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal would not be maintainable at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

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NC: 2024:KHC:41291-DB ITA No. 180 of 2024

4.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 5. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

BS List No.: 4 Sl No.: 9

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