2013 (11) TMI 1052 - HC - Income Tax

Penalty u/s 271(1)(c) - Held that - tribunal had granted relief following the decision in Parmanand M. Patel 2005 (7) TMI 72 - GUJARAT High Court - It is not in dispute that the decision in case of Parmanand M. Patel Supra was rendered considering pre-amended Section 271 1 of the Income-tax Act, 1961 Act for short . It is also not in dispute that the Tribunal was required to consider post-amended provision of section 271 1 of the Act. Under the circumstances, the impugned judgment and order passed by the Tribunal cannot be sustained and the same deserves to be quashed and set-aside - matter remanded back to ITAT for fresh decision.

Summary

Issues:
Challenge to impugned judgment and order dated 24th July 2009 passed by the Income Tax Appellate Tribunal regarding the interpretation of Section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The High Court was presented with a tax appeal challenging the Tribunal's decision on the question of law regarding the correctness of setting aside the order passed by the Commissioner of Income Tax under Section 263 of the Act, when the Assessing Officer failed to initiate proceedings under Section 271(1)(c) of the Act. The Tribunal had relied on a previous decision in the case of CIT v. Parmanand M. Patel, which was based on the pre-amended provision of Section 271(1) of the Act. However, the Tribunal was required to consider the post-amended provision of Section 271(1) of the Act. Both parties did not dispute the need to remand the matter to the Tribunal for reconsideration in light of the amended provision.

The Court noted that the decision in the case of Parmanand M. Patel was based on the pre-amended Section 271(1) of the Act, and the Tribunal should have considered the post-amended provision. As a result, the Court found that the impugned judgment and order passed by the Tribunal could not be sustained. Therefore, the Court quashed and set aside the Tribunal's decision and remanded the matter back to the Tribunal for a fresh decision considering the amended Section 271(1) of the Act. The Court clarified that this decision was made solely on procedural grounds without expressing any opinion on the merits of the case.

Consequently, the Tax Appeal was allowed to the extent of quashing the Tribunal's decision and remanding the matter for fresh consideration. No costs were awarded in this regard.