PRINCIPAL COMMISSIONER OF INCOME TAX 1 KOLKATA vs. ROBBS TRADERS AND FINANCE PVT LTD

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ITAT/226/2024HC CalcuttaWBCHCO003309202420 December 2024Bench: THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM,HON'BLE JUSTICE HIRANMAY BHATTACHARYYA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the penalty proceedings are independent of the assessment proceedings. It found that the Tribunal had examined the facts and concluded that the Assessing Officer had erred in imposing the penalty. The Tribunal noted that the Assessing Officer had not considered the issues raised by the assessee contesting the penalty proceedings and had affirmed the penalty solely on the basis that the assessee should have raised these points during the assessment proceedings. The High Court agreed with the Tribunal's finding that the Assessing Officer's conclusion was erroneous, stating that merely accepting the assessment order cannot be a ground to affirm the penalty proposal. Therefore, the Court found no substantial questions of law arising for consideration. The appeal was dismissed.

What were the facts?

The appeal was filed by the Principal Commissioner of Income Tax-1, Kolkata (the revenue) against an order dated October 10, 2023, passed by the Income Tax Appellate Tribunal (Tribunal), "A" Bench, Kolkata. The Tribunal's order pertained to assessment year 2012-13 and concerned an appeal filed by Robbs Traders & Finance Pvt. Ltd. (the assessee). The core of the dispute revolves around a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The revenue is challenging the Tribunal's decision to allow the assessee's appeal against this penalty order.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Learned Income Tax Appellate Tribunal erred in law by allowing the assessee's appeal regarding the penalty order under Section 271(1)(c) of the Income Tax Act, 1961, without considering the involvement of organized tax evasion through accommodation entries? 2. Whether the Learned Income Tax Appellate Tribunal erred in law by allowing the assessee's appeal regarding the penalty order under Section 271(1)(c) of the Income Tax Act, 1961, without considering that the assessee furnished inaccurate particulars of income and concealed real income, which was only owned up upon reopening of assessment to buy peace, thereby precluding the assessee from arguing that the ingredients for attracting Section 271(1)(c) were absent? The revenue contended that the Tribunal failed to consider the elements of organized tax evasion and the assessee's admission of concealed income upon reopening. The assessee argued that penalty proceedings are independent of assessment proceedings and that accepting the assessment order does not automatically validate a penalty proposal.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

OD-30

IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (INCOME TAX) ORIGINAL SIDE

ITAT/226/2024 IA NO : GA/2/2024 PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA VS ROBBS TRADERS & FINANCE PVT. LTD.

BEFORE : THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAM

And THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA Date : 20th December, 2024 Appearance : Mr. Prithu Dudhoria, Adv. …for appellant Mr. Subash Agarwal, Adv. Mr. Rajarshi Chatterjee, Adv. Mrs. Suman Sahani, Adv. Mr. Govind Sethalia, Adv. …for respondent

The Court : This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the Act) is directed against the order dated October 10, 2023, passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata (Tribunal) in ITA no.743/Kol./2022, for the assessment year 2012-13. The revenue has raised the following substantial questions of law for consideration : i) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in allowing the appeal of the assessee in respect of penalty order u/s. 271(1)(c) of the Income Tax Act, 1961

without considering the fact that there is an involvement of organized tax evasion by way of accommodation entries ? ii) Whether the Learned Income Tax Appellate Tribunal has committed substantial error in law in allowing the appeal of the assessee in respect of penalty order u/s. 271(1)(c) of the Income Tax Act, 1961 without considering the fact that the assessee had indeed furnished inaccurate particulars of its income and had in the process concealed its real income which the assessee owned up only upon reopening of the assessment in order to buy peace and in such view of the matter, the assessee could no longer contend that the ingredients for attracting section 271(1)(c) were not present ? We have heard Mr. Prithu Dudhoria, learned standing counsel appearing for the appellant/department and Mr. Subash Agarwal, learned counsel appearing for the respondent/assessee. The short issue which falls for consideration in this case is whether the Assessing Officer was justified in imposing penalty under Section 271(1)(c) of the Act. Learned Tribunal has examined the facts and found that the Assessing Officer did not consider the issues raised by the assessee contesting the penalty proceedings and affirmed the proposal solely on the ground that the assessee should have canvassed all those points in the assessment proceedings. The legal position is very clear that the penalty proceedings are independent of the assessment proceedings and merely because the assessee

has accepted the assessment order, cannot be a ground to affirm the proposal of the Assessing Officer to impose penalty. Thus, factually the learned Tribunal found that the Assessing Officer’s conclusion was erroneous. Thus, we find no questions of law, much less substantial questions of law, arises for consideration in this appeal. The appeal is thus dismissed. The stay application being IA No : GA/2/2024 is also dismissed.

(T.S. SIVAGNANAM, CJ.)

(HIRANMAY BHATTACHARYYA, J.)

SN. AR(CR)

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