2013 (7) TMI 772 - HC - Income Tax

Penalty u/s 271D and 271E - Held that - receipt for which revenue intends to invoke the provisions of section 269SS or 269T as the case may be for imposing penalty under section 271D or 271E as the case may be were during the assessment proceedings treated as the booking advance and consequently assessed as undisclosed income of the assessee invoking section 68 of the Act. Such amounts were treated as booking advance and therefore, taxed as undisclosed income - same would thereafter not bear the character of loan or advances. - Decided against Revenue.

Summary

Issues: Delay condonation application for review petition regarding penalty order under Income-Tax Act, 1961

Delay Condonation Application:
The delay condonation application was filed by the applicant-Department seeking condonation of delay in preferring the review petition. The review petition stemmed from a common order dated February 06, 2013, where the Revenue's appeals against the penalty order imposed by the Assessing Officer were dismissed but deleted by higher authorities, and these orders were passed ex-parte. The delay in question was 44 days. The court noted that while they would not have objected to the delay ordinarily, condoning it would require calling upon the assessee, which was not done during the original Tax Appeal. Thus, the court heard the advocate for the applicant-Department and examined the review petition and the order under review.

Contention of the Applicant-Department:
The main contention of the applicant-Department was related to the penalty under Section 271E of the Income-Tax Act, 1961, concerning Tax Appeal Nos. 674 and 677 of 2012. However, the discussion in the order did not support this contention. The court, after referencing the orders on record, including that of the Tribunal, upheld the Tribunal's view. The court agreed with the view of CIT(Appeals) and the Tribunal that the amounts in question, initially treated as booking advance and assessed as undisclosed income, did not bear the character of loan or advances for the purpose of invoking penalties under sections 271D and 271E of the Act.

Review Decision:
The court found that since the question examined in the appeal pertained to the penalty imposed under sections 271D and 271E of the Act, no grounds for a review were established. Consequently, the court declined to issue a Rule in the matter. Both the proceedings, the Civil Application for condonation of delay and the Miscellaneous Civil Application for review, were disposed of accordingly based on the above reasons.