2012 (9) TMI 652 - HC - Income Tax

Penalty u/s 271 FA - non maintainable of appeal u/s 246A (1) (q) to the Commissioner Appeals against order passed u/s 271 FA by the Director Income Tax, who holds the rank of a Commissioner in the Income Tax Department - Held that - Section 246A (1)(q) provides for appeals before the Commissioner Appeals against an order of penalty passed under Chapter 21 of the 1961 Act & Section 271 FA admittedly falls within Chapter 21 of the 1961 Act, therefore on a plain reading of the said provision an appeal against an order passed by an officer of the rank of Commissioner Income Tax under Section 271 FA is maintainable before the Commissioner Appeals. As against orders passed under Section 271 and 272A (also under Chapter XXI) before the ITAT, this court cannot on analogy hold that because the said orders passed by an officer of the rank of Commissioner of Income Tax are appealable before the ITAT under Section 253 of the 1961 Act, an order under Section 271 FA also passed by an officer of the rank of Commissioner Income Tax should also be appealable before the ITAT - it is an admitted fact that in the course of the demand notice under Section 156 following the order of penalty under Section 271 FA of the 1961 Act, the assessee was informed that the said order was appealable before the jurisdictional Commissioner (Appeals) - in the instant case Commissioner Appeals III Jaipur - in favour of assessee.

Summary

Issues:
Appealability of order passed under Section 271 FA of the Income Tax Act before Commissioner Appeals.

Analysis:
The judgment addresses the issue of whether an order passed under Section 271 FA of the Income Tax Act by the Director Income Tax, equivalent to a Commissioner, is appealable before the Commissioner Appeals. The petitioners argue that the ITAT erred in holding that such an appeal is maintainable before the Commissioner Appeals, contending that an appeal from the Director Income Tax to a Commissioner Income Tax is not conceivable under the statute. They suggest that the appeal should be heard by the ITAT, a superior authority, based on a literal reading of the provisions. However, the respondents argue that appeals are creatures of statute and must be availed as provided. They emphasize that the plain language of Section 246A (1) (q) of the Income Tax Act allows appeals against orders of penalty under Chapter XXI to be heard by the Commissioner Appeals. They stress that a literal reading of the statute should not be abandoned for a stretched interpretative exercise, as long as the statute is not challenged and set aside.

The judge, after considering the arguments, opines that an appeal against an order under Section 271 FA of the Income Tax Act by an officer of the rank of Commissioner Income Tax is indeed maintainable before the Commissioner Appeals as per Section 246A (1) (q) of the Act. The judge rejects the analogy that because orders passed by a Commissioner of Income Tax are appealable before the ITAT under Section 253, similar orders under Section 271 FA should also be appealable before the ITAT. The judge notes that appeals from orders of penalty under Section 271 and 272A are excluded before the Commissioner Appeals under the general provisions of Section 246A (1) (q) due to a specific provision under Section 253 (1) (c) of the Act. The judge emphasizes that an order under Section 271 FA is plainly appealable under Section 246A (1) (q) and that no interpretative exercise can displace the law as enacted. Additionally, it is highlighted that the demand notice following the penalty order informed the assessee of the appealability before the jurisdictional Commissioner Appeals III Jaipur.

Consequently, the judge finds no error in the orders passed by the ITAT and dismisses the writ petitions challenging the appealability of orders under Section 271 FA before the Commissioner Appeals.