2011 (9) TMI 10 - HC - Income Tax

Disallowance - Penalty - waiver of penalty under Section 273A - Non speaking order - The petitioner in the profit and loss account had shown income of Rs.37, 80, 000/- from sub-letting of space to a third party after taking a premises on lease from the director of the company who had gone abroad - learned counsel for the petitioner has submitted that the tax demands as raised under Section 156 of the Act were initially paid - It does not deal with the various contentions and issues raised - As facts have not been discussed and stated in this order we are not inclined to examine the case law relied upon and answer any question on hypothetical basis - Matter remanded back to AO - It is open to the petitioner to file an application under Section 220 (2A) of the Act if so advised and necessary before AO. The writ petition is accordingly disposed of

Issues:
1. Quashing of notices and rectification order under the Income Tax Act.
2. Levy of interest under Section 220(2) of the Income Tax Act.
3. Disallowance of tour expenses and penalty under Section 271(1)(c).
4. Waiver of penalty under Section 273A of the Act.
5. Validity of notice of demand under Section 156 of the Act.
6. Interpretation of the Taxation Law (Continuation and Validation of Recovery Proceedings) Act, 1964.
7. Application for waiver of interest under Section 220(2A) of the Act.
8. Validity of show cause notices and rectification order.

Analysis:
1. The petitioner sought to quash notices and a rectification order under the Income Tax Act. The petitioner argued against the levy of interest under Section 220(2) of the Act. The court noted the additions made by the Assessing Officer for tour expenses and the subsequent penalty imposed under Section 271(1)(c) for the assessment years 1994-95 and 1995-96. The orders imposing penalty had attained finality, and the petitioner's challenge for waiver of penalty under Section 273A was dismissed.

2. The petitioner contended that notice of demand under Section 156 of the Act was nullified after deletions by the Commissioner of Income Tax (Appeals). The respondent argued that the earlier notice under Section 156 of the Act stands revived if the demand was not paid in full, citing relevant case law. The petitioner expressed willingness to file an application for waiver of interest under Section 220(2A) of the Act.

3. The court examined the show cause notices issued for failure to deposit tax and found no reason to interfere. However, the order passed for rectification was deemed non-speaking and non-reasoned. The court set aside the order and remitted the matter for further examination, directing the petitioner to appear before the Assessing Officer for a hearing. The application for rectification was to be disposed of within four months.

4. In conclusion, the writ petition was partly allowed, and the court emphasized the need for a detailed examination of facts and issues before making any determinations. The petitioner was given the opportunity to file an application under Section 220(2A) of the Act if necessary. The judgment was disposed of without any order as to costs.

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