2008 (2) TMI 366 - SC - Income Tax

Whether Tribunal was right in cancelling the penalty levied under section 271(1)(a) and 273(2)(a), on the ground that benefit under the Amnesty Scheme was available to the Assessee, particularly when subsequent to search operation, the Assessee itself had revised its returns on a number of occassions, which would go to show that the return was not voluntary held that impugned question is a substantial question of law and HC ought to have considered the appeal of dept. on this question

Summary

Issues involved: High Court's failure to address a substantial question of law under section 260A of the Income Tax Act, 1961 regarding the cancellation of penalties under sections 271(1)(a) and 273(2)(a) due to the availability of benefits under the Amnesty Scheme, based on the revised returns filed by the Assessee post a search operation.

Analysis:

1. The Supreme Court condoned the delay and granted leave to consider the case. The Court found that the High Court had erred in not addressing a crucial question of law under section 260A of the Income Tax Act, 1961. The question pertained to the cancellation of penalties under sections 271(1)(a) and 273(2)(a) due to the availability of benefits under the Amnesty Scheme. The Assessee had revised its returns multiple times post a search operation, raising doubts about the voluntary nature of the initial return.

2. The Court presented a detailed chart showcasing the various returns filed for different Assessment years in question, highlighting the significant changes in the declared income through multiple revisions. The revisions raised concerns about the voluntary nature of the initial return and the Assessee's eligibility for benefits under the Amnesty Scheme. The Court emphasized the need for the High Court to reexamine the case in light of these complexities.

3. After thorough consideration of the presented chart and relevant documents, the Supreme Court concluded that the High Court needed to address the substantial question of law regarding the cancellation of penalties under the specified sections. Consequently, the Court set aside the impugned order and remitted the matters back to the High Court for a fresh consideration in accordance with the law.

4. As a result of the decision, the Tax Appeal Nos. 281-288 of 2005 were restored to the file of the High Court for reevaluation. The appeal was disposed of with no specific order as to costs, indicating the Court's focus on the legal complexities and the need for a detailed reconsideration by the High Court to address the core legal issues raised in the case.