2014 (2) TMI 377 - HC - Income Tax

Tax effect of appeal - Held that - No notice under Sections 148/143 (2) or 142 (2) was issued to the assessee before he had surrendered the gift or filed the revised return - It cannot be said to be concealment of income merely because he surrendered certain amount to buy peace with the department - The tax effect in the present appeal being less than Rs. 4 lacs and the case being covered by the Circular dated 24/10/2005, this appeal cannot be entertained - Decided against petitioner.

Summary

Issues:
- Appeal against Tribunal's order allowing assessee's appeal under Section 271(1)(c) of the Income Tax Act, 1961.
- Preliminary objection raised regarding the monetary limit for entertaining the appeal under Section 260A of the Act.
- Whether the appeal should be entertained despite the circular dated 24/10/2005 setting a monetary limit of Rs. 4 lakhs.
- Tribunal's finding on concealment of income by the assessee and the relevance of surrendered amount.

Analysis:

The appeal before the Allahabad High Court stemmed from the Tribunal's decision allowing the assessee's appeal against the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 for concealing income. The Commissioner of Income Tax Appeals had reduced the penalty, and the Tribunal further allowed the appeal, prompting the Department to challenge the decision.

A preliminary objection was raised regarding the monetary limit set by a circular dated 24/10/2005 for entertaining appeals under Section 260A of the Act. The assessee's counsel argued that the appeal should not be entertained due to the tax effect being below Rs. 4 lakhs, citing the provisions of Section 268A of the Income Tax Act, 1961.

The appellant's counsel contended that despite the circular, the appeal should be entertained, referencing a judgment of the Bombay High Court. He also argued that the revised return submitted by the assessee beyond the stipulated time should not have been considered, supported by a Supreme Court judgment.

The Tribunal's finding was crucial, stating that the assessee did not conceal income by surrendering a certain amount to settle with the department. It was noted that no notice was issued to the assessee before the surrender or revised return was filed, impacting the concealment aspect.

The High Court analyzed the judgments cited by both parties. The judgment of the Bombay High Court and the Supreme Court case were distinguished based on their facts, concluding that the present case did not fall within the exceptions outlined in the circular dated 24/10/2005. The Court emphasized that the tax effect being below Rs. 4 lakhs and the case falling under the circular, the appeal could not be entertained, ultimately dismissing the appeal.