2004 (5) TMI 593 - AT - Income Tax

Summary

Issues:
Deletion of penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1992-93.

Analysis:
The appeal by the revenue challenged the deletion of penalty for concealment under section 271(1)(c) of the Income-tax Act, 1961. The issue revolved around whether a penalty for concealment is leviable when an assessee has been assessed on a loss figure. The Tribunal referred to the decision in Dy. CIT v. Galaxy Dyeing & Printing Mills and cited the judgments of the Apex Court and the jurisdictional High Court in similar cases. The Tribunal highlighted that if there was no taxable income or tax assessed is Nil during a particular year, the question of evasion and penalty did not arise.

The Departmental Representative argued that a summary dismissal by the Supreme Court without laying down any law does not have a binding effect under article 141 of the Constitution. The Tribunal examined the case of S. Shanmugavel Nadar v. State of Tamil Nadu to illustrate the importance of a speaking order for a declaration of law by the Supreme Court. The Tribunal emphasized the need for reasons to make a decision binding on all courts within India.

The counsel for the assessee referred to the decision in Kunhayammed v. State of Kerala, where the Supreme Court held that a dismissal of a petition seeking Special Leave signifies that the appellate jurisdiction of the Court was not warranted. The doctrine of merger applies even if the dismissal is without a speaking order. The Tribunal also discussed the case of V.M. Salgaocar & Bros. (P.) Ltd. v. CIT, emphasizing that when the Supreme Court dismisses an appeal by a non-speaking order, the decision of the High Court or Tribunal merges with that of the Supreme Court.

Considering the mandate of article 141 of the Constitution, the Tribunal reiterated that all Indian courts must adhere to the Supreme Court's decisions. The doctrine of binding precedent ensures consistency and certainty in judicial rulings. The Tribunal emphasized the importance of following precedents to maintain stability and uniformity in judicial decisions. Referring to the case of Prithipal Singh & Co., the Tribunal concluded that the decision of the Hon'ble High Court merged with that of the Supreme Court, making the ruling binding under article 141.

In conclusion, the Tribunal upheld the precedent set by the Supreme Court in the case of Prithipal Singh & Co., deciding the appeal in favor of the assessee and against the revenue. The appeal of the revenue was dismissed based on the binding precedent established by the Supreme Court.