2016 (3) TMI 1439 - HC - Income Tax

Penalty u/s 271(1)(c) - Whether the Tribunal was justified in holding that the prior approval taken for levy of penalty from Additional Commissioner does not fulfill the mandate under Sec.274 which provide for taking approval from Joint Commissioner in complete defiance of the definition of Joint Commissioner of Income Tax provided u/S.2 (28C) of the Act which includes Additional Commissioner of Income Tax ? - HELD THAT - On a bare perusal of the above definitions and sec. 2(28C) read with 274(2) in particular it is clear that Joint Commissioner means a person appointed to the post of Joint Commissioner of Income-Tax and includes Addl. Commissioner of Income-Tax and granting approval by the Addl. Commissioner of Income-Tax u/sec. 274(2)(b) of the Act on a permission sought by the AO before imposing penalty u/sec. 271(1)(c) in our view is accorded by the authority competent under the law. Taking into consideration above the Tribunal in our view erred in quashing the penalty order merely on the premise that Addl. CIT does not find place in Sec. 274(2)(b) and imposition of penalty is bad and void ab initio. Also contention raised by the learned counsel for the assessee about the Circular dated 10.12.2015. In our view the said Circular may not be applicable for the reason that the Revenue has assailed the penalty amounting to Rs.29, 02, 743/- and not only the penalty reduced by the CIT(A). Before the Tribunal both the Revenue as well as the assessee preferred appeals and the entire penalty as referred to hereinbefore was in issue before the Tribunal and now before this Court. Therefore we reject the contention of the learned counsel for the assessee as the Circular has no application. The judgments relied upon by the assessee basically are the principles of interpretation of the provisions of law before us when the provision is self explicit clear and plain language is unambiguous need no interpretation. The judgment in the case of Brij Mohan 1979 (8) TMI 2 - SUPREME COURT was a case relating to the change of law before and after amendment made in sec. 271(1)(c) clause (iii) of the Finance Act 1968. In our view this case is not relevant for the present purpose. - Decided against assessee.

Summary

Issues:
1. Penalty imposed under section 271(1)(c) of the Income Tax Act.
2. Validity of penalty approval obtained from the Addl. Commissioner of Income Tax.
3. Interpretation of the term "Joint Commissioner" in relation to penalty approval under section 274(2)(b).
4. Applicability of Circular No.21/2015 issued by the Central Board of Direct Taxes.

Analysis:

1. The case involved an appeal against the deletion of a penalty under section 271(1)(c) of the Income Tax Act for the assessment year 1998-99. The original assessment was set aside due to discrepancies in expenses claimed by the assessee, leading to penalty proceedings initiated by the Assessing Officer.

2. The Assessing Officer found that the assessee had concealed income, leading to the imposition of a penalty. The CIT(A) upheld the penalty but limited it to specific income components. Both parties appealed to the Tribunal.

3. Before the Tribunal, the assessee raised a legal ground challenging the validity of the penalty order due to the lack of prior approval from the Joint Commissioner as required under section 274(2)(b). The Tribunal quashed the penalty order on this basis, stating that approval from the Addl. Commissioner was not sufficient.

4. The High Court analyzed the relevant sections of the Income Tax Act, particularly sections 2(28C) and 274(2), to determine the meaning of "Joint Commissioner" in the context of penalty approval. The Court held that the Addl. Commissioner of Income Tax could grant approval under section 274(2)(b), rejecting the assessee's argument that approval had to come only from the Joint Commissioner.

5. The Court also addressed the applicability of Circular No.21/2015, stating that it did not apply as the penalty amount in question exceeded the threshold mentioned in the circular. The Court dismissed the assessee's arguments based on previous judgments, emphasizing that when statutory provisions are clear, no interpretation is required.

6. Ultimately, the High Court ruled in favor of the Revenue, quashing the Tribunal's decision and upholding the penalty imposed under section 271(1)(c). The appeal succeeded, with the Court finding no merit in the assessee's contentions.