2016 (2) TMI 41 - HC - Income Tax

Penalty under section 271(1)(c) - recovering full amount of penalty - Held that - As against quantum addition, the petitioner has already appealed before the Tribunal. The Tribunal has granted stay against recovery on the condition of depositing 50% of tax dues. The appeal against quantum addition is ripe for hearing before the Tribunal. Quite apart from these developments, it is hugely doubtful whether this would be a case for penalty under section 271(1)(c) of the Act which is imposable on the assessee furnishing inaccurate particulars of the income or concealing the particulars of income. The fact that the petitioner as a statutory authority is engaged in implementing town planning schemes and in developing of Ahmedabad urban area is well known to the department and all concerns. Whether such activity is a charitable activity and would qualify for exemption under section 12A of the Act and consequently the income from such activity would be exempted from tax under section 2(15) of the Act, is only a matter of interpretation. Even post amendment with effect from 1.4.2009, the petitioner s claim for exemption would be eligible or not, is purely a question of law. We fail to see what could be the omission on part of the assessee to disclose inaccurate particulars of the income or conceal the particulars of income in the present case so as to invite penalty. Facts would have to be viewed in light of ratio of decision in case of Commissioner of Incometax v. Reliance Petroproducts Pvt. Ltd reported in (22010 (3) TMI 80 - SUPREME COURT). On such prima facie consideration, it is directed that pending the petitioner s appeal against the order of penalty imposed by the Assessing Officer, there shall be no coercive recovery of such penalty demand

Summary

Issues Involved:
Challenge to recovery of penalty imposed by Assessing Officer for assessment year 20102011 by Ahmedabad Urban Development Authority.

Detailed Analysis:

1. Challenge to Recovery of Penalty:
The petitioner, Ahmedabad Urban Development Authority, challenged the action of the department in recovering the full amount of penalty imposed by the Assessing Officer for the assessment year 20102011. The Assessing Officer disputed the computation of income disclosed by the petitioner, leading to a scrutiny assessment that resulted in an addition of &8377; 327.68 crores and the imposition of a penalty of &8377; 101.24 crores under section 271(1)(c) of the Income Tax Act. The petitioner applied for a stay against the recovery of the penalty, but coercive recovery was directed by the Assessing Officer, prompting the filing of this petition.

2. Legal Interpretation and Doubts Regarding Penalty Imposition:
Upon hearing the advocates for both parties and examining the documents, it was observed that the petitioner had already appealed against the quantum addition before the Tribunal, which had granted a stay on recovery subject to depositing 50% of the tax dues. The Court expressed doubts whether the case warranted a penalty under section 271(1)(c) of the Act, which pertains to furnishing inaccurate particulars of income or concealing income details. The Court noted that the petitioner's activities as a statutory authority involved town planning and urban development, raising questions about the charitable nature of its operations and eligibility for tax exemption under relevant sections of the Act. The Court emphasized that the issue of exemption eligibility post-amendment was a legal matter, and it found no apparent omission by the assessee to attract a penalty, citing relevant case law.

3. Court's Direction and Conclusion:
Considering the prima facie aspects, the Court directed that there should be no coercive recovery of the penalty demand pending the petitioner's appeal against the penalty order. The Court clarified that its observations did not hinder the department from defending the penalty order. Ultimately, the petition was disposed of based on the above considerations.

This judgment highlights the legal intricacies surrounding the imposition of penalties in tax matters, emphasizing the need for a thorough examination of facts and legal interpretations before enforcing penalties. The Court's analysis focused on the nature of the petitioner's activities, the applicability of tax exemptions, and the lack of apparent grounds for penalty imposition, showcasing a meticulous approach to resolving the dispute.