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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.357 OF 2010
BETWEEN:
SHRI G. DASHARATHARAMI REDDY (HUF) 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, QUEEN’S 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 AS STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE TRIBUNAL IN I.T.A. NO.823/BANG/2009 DATED 19-5-2010, IN THE INTEREST OF JUSTICE.
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 a Hindu Undivided Family. A search under Section 132 of the Income Tax Act, 1961, (for short, ‘the Act’) was conducted in the case of Sri Dasaratharami Reddy and his associates. Certain gold jewelry were found during the course of search. The appellant claimed that part of the jewelry belongs to the Hindu Undivided Family. A notice under Section 142(1) was issued to the appellant to file their return of income. Thereafter, in response to the notice, the
appellant declared a total income of Rs.48,200/- and agricultural income of Rs.90,250/-. Thereafter, notice under Sections 142(1) and 143(2) of the Act were issued. The Assessing Officer added to the income of the appellant to the value of the jewelry of Rs.6,06,790/-. Subsequently, the assessing Officer issued notice under Section 271(1)(c) to show-cause as to why penalty should not be imposed. In response to the notice, a reply was furnished. Thereafter, penalty of Rs.1,97,572/- was imposed on the appellant. Aggrieved by the same, the appellant filed an appeal 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 appeal. Aggrieved by the same, the present appeal is filed.
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.1,97,572/- 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?
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?”
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
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