SMT G NIRMALA DEVI vs. THE ASSISTANT COMMISSIONER OF INCOME TAX

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ITA/358/2010HC KarnatakaKAHC01062268201014 November 2018Bench: RAVI MALIMATH,K.NATARAJAN5 pages
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What did the High Court hold?

The Tribunal's decision to confirm the penalty was set aside. The High Court followed its own judgment in a similar case, holding that the penalty was not sustainable due to a defective notice under Section 274.

What were the facts?

A search in the appellant's husband's case led to a notice under Section 153C for the appellant. The Assessing Officer added Rs. 18,00,000/- to the appellant's income under Section 69 and later imposed a penalty under Section 271(1)(c). The CIT(A) allowed the appeal, but the Tribunal reversed this decision.

What were the issues?

Whether the penalty levied under Section 271(1)(c) is sustainable when the notice under Section 274 did not specify the grounds for penalty initiation.

Which sections of the Income-tax Act were involved?

Section 132,Section 153C,Section 153A,Section 142(1),Section 143(2),Section 69,Section 271(1)(c),Section 274

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ON THE 14TH DAY OF NOVEMBER, 2018

BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH

AND

THE HON'BLE MR. JUSTICE K. NATARAJAN

INCOME TAX APPEAL NO.358 OF 2010

BETWEEN:

SMT. G. NIRMALA DEVI G-1, EDEN AULAC APARTMENTS, OLD MADRAS ROAD, INDIRA NAGAR, BANGALORE.

... APPELLANT

(BY SRI A. SHANKAR & SRI M. LAVA, ADVOCATES)

AND:

THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2), C.R. BUILDING, QUEENS ROAD, BANGALORE.

... RESPONDENT

(BY SRI E.I. SANMATHI, ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY THE TRIBUNAL IN I.T.A. NO.833/BANG/2009 DATED 14-5-2010.

THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH, J., DELIVERED THE FOLLOWING:

J U D G M E N T

The appellant is an individual. A search under Section 132 of the Income Tax Act, 1961, (for short, ‘the Act’) was conducted in the case of the appellant’s husband. Documents were seized. Appellant was served with a notice under Section 153C read with Section 153A of the Act. In response to the notice, the appellant filed a return of income. Subsequently, a notice under Sections 142(1) and 143(2) of the Act were issued. The seized material indicated that the appellant made an advance of Rs.30,00,000/-. The source was explained. The Assessing Officer being satisfied of the source to an

extent of Rs.12,00,000/- and balance of Rs.18,00,000/- added to the income of the appellant under Section 69 of the Act. Thereafter, a show-cause notice was issued as to why penalty should not be imposed. A reply was furnished. The Assessing Officer imposed a penalty of Rs.6,98,000/-. Aggrieved by the same, an appeal was preferred before the Commissioner of Income Tax (Appeals) VI, Bengaluru. The appeal was allowed. Aggrieved by the same, the Revenue preferred an appeal before the Tribunal. The Tribunal allowed the same and reversed the finding of Commissioner of Income Tax. Hence, the present appeal.

2.

By the order dated 28-6-2011, the appeal was admitted to consider the following substantial questions of law;

i. Whether the Tribunal was justified in law in confirming the penalty of Rs.5,95,400/- levied under Section 271(1)(c) of the Income-tax Act, 1961, on the facts and circumstance of the case?

ii. Whether the Tribunal was justified in law in holding that the Assessing Officer has recorded the satisfaction for initiating the penalty proceedings on the facts and circumstance of the case?

iii. Whether the Tribunal was justified in law in holding that the appellant has concealed the particulars of income or furnished inaccurate particulars of income on the facts and circumstance of the case?

3.

Learned counsels submit that the aforesaid substantial questions of law would not arise for consideration. They have advanced arguments on the same. They plead that the appeal requires to be considered and heard on the following substantial question of law;

“Whether the levy of penalty under section 271(1)(c) of the Act is sustainable in law when the notice issued under section 274 of the Act by the assessing officer does not indicate

the specific ground for initiation of penalty proceedings and is thus not in accordance with the provisions of law on the facts and circumstances of the case?”

4.

Learned counsel for the appellant contends that the said substantial question of law is covered by the judgment of this Court in the case of THE COMMISSIONER OF INCOME TAX AND ANOTHER v. MANJUNATHA COTTON AND GINNING FACTORY [(2013) 359 ITR 565].

Following the aforesaid judgment of this Court, the substantial question of law is answered in favour of the assessee and against the Revenue. The appeal is, accordingly, disposed off.

SD/-

SD/- JUDGE

JUDGE kvk

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