2018 (2) TMI 1991 - HC - Income Tax

Penalty u/s 271(1)(c) - addition of gift which were clearly disclosed in the original return of income - Whether the entire proceedings for penalty under Section 271(1)(c) are rendered without jurisdiction as it has been commenced, confirmed and upheld on composite ground of concealment of income / furnishing of inaccurate particulars , without particularizing the nature of breach evidencing non application of mind? - HELD THAT - As Revenue objects to question no.(ii) being admitted, as he states that this issue was not urged before the Tribunal. Prima facie, we are of the view that this is an issue of jurisdiction. Therefore, it could be raised before us as it goes to the root of the dispute. Issue of jurisdiction can be urged at any time i.e. even before the appeal Court for the first time, particularly when it requires no investigation into facts. Thus, we have admitted question no.(ii) for consideration. Registry is directed to communicate a copy of this order to the Tribunal.

Summary

Issues involved:
1. Jurisdiction of the Tribunal in upholding penalty under Section 271(1)(c) of the Act for disclosed gifts in the original return of income.
2. Validity of penalty proceedings under Section 271(1)(c) without specifying the nature of breach.

Analysis:

Issue 1: Jurisdiction of the Tribunal
The High Court addressed the first issue concerning the Tribunal's jurisdiction in imposing a penalty under Section 271(1)(c) of the Act for disclosed gifts in the original return of income. The Court admitted the reframed substantial questions of law related to this issue. The main contention was whether the Tribunal was justified in upholding the penalty despite the gifts being clearly disclosed in the original income tax return. The Court considered the arguments presented by both parties and decided to admit this issue for further consideration.

Issue 2: Validity of Penalty Proceedings
The second issue revolved around the validity of penalty proceedings under Section 271(1)(c) without specifying the nature of the breach. The Court deliberated on whether the entire penalty proceedings were without jurisdiction as they were based on a composite ground of "concealment of income/furnishing of inaccurate particulars" without detailing the specific nature of the breach. The respondent objected to this issue being admitted, claiming it was not raised before the Tribunal. However, the Court noted that the jurisdiction issue could be raised at any stage, especially if it did not require a factual investigation. Consequently, the Court admitted this issue for consideration and directed the Registry to inform the Tribunal about the order to ensure the relevant documents are available for future proceedings.

In conclusion, the High Court's judgment focused on the jurisdiction of the Tribunal in imposing penalties for disclosed gifts and the validity of penalty proceedings without specifying the nature of the breach. The Court allowed both issues to be considered further, emphasizing the importance of addressing jurisdictional matters and ensuring procedural fairness in penalty assessments under the Income Tax Act.