2002 (7) TMI 53 - HC - Income Tax

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in setting aside the order of the Commissioner of Income-tax (Appeals) with a direction to him to reconsider the penalty imposed under section 271(1)(c) on merits? - 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal had jurisdiction to entertain the assessee s plea for giving a fresh opportunity to argue its case on merits before the Commissioner of Income-tax (Appeals) especially when it neither filed a regular appeal against the order of the Commissioner of Income-tax (Appeals) or even cross-objection against the Departmental appeal? - both the questions referred at the instance of the Revenue are answered against the Revenue and in favour of the assessee

Summary

Issues:
1. Jurisdiction of the Income-tax Officer to impose penalty under section 271(1)(c).
2. Tribunal's authority to remit the matter back to the Commissioner of Income-tax (Appeals) for reconsideration on merits.

Analysis:
1. The case involved a dispute regarding the jurisdiction of the Income-tax Officer to impose a penalty under section 271(1)(c). The assessee initially filed a return of income, later revised to show a higher income. The Income-tax Officer imposed a penalty of Rs. 60,000, which was challenged by the assessee. The Commissioner (Appeals) held that the Income-tax Officer lacked jurisdiction to levy the penalty, as it should have been done by the Inspecting Assistant Commissioner. The Commissioner also noted that since the amounts were voluntarily returned, there was no concealment, limiting the penalty to the actual concealed income of Rs. 37,533. The Tribunal, citing the Jain Brothers case, reversed the Commissioner's decision, stating that the Income-tax Officer had the jurisdiction to impose the penalty.

2. The Tribunal, upon hearing the appeal, was informed by the assessee's representative that the matter should be sent back to the Commissioner (Appeals) for consideration of certain unaddressed aspects. The Tribunal, in the interest of justice, decided to remit the matter back to the Commissioner (Appeals) for a fresh review on the merits. The Revenue, dissatisfied with this decision, argued that the Tribunal should have decided the question on its merits instead of remitting it back. However, the High Court upheld the Tribunal's decision, stating that the Tribunal properly exercised its discretion in remitting the matter for a fresh review, as requested by the assessee's representative. The High Court found no reason to disturb the Tribunal's decision and answered both questions against the Revenue, in favor of the assessee.

In conclusion, the judgment clarified the jurisdictional issue regarding the imposition of a penalty by the Income-tax Officer and upheld the Tribunal's authority to remit the matter back to the Commissioner of Income-tax (Appeals) for reconsideration on merits in the interest of justice.