2017 (2) TMI 35 - HC - Income Tax

Imposition of penalty under Section 271(1)(c) - Held that - The grounds that were highlighted before the Tribunal pertain to the confirmation of levy of penalty by the Commissioner of Income Tax (Appeals). The error in that confirmation was highlighted by the assessee s representative and during the course of his arguments, the assessee s representative referred to the Tribunals views on the merits and in quantum proceedings. That is how he would support the contention that there was no case made out for imposition of penalty. Once such was the lis before the Tribunal, then the above quoted findings, which are derived from the Tribunal s order, do not raise any substantial questions of law, particularly, in the light of the argument of the Revenue s counsel as noted in paragraph 4 of the impugned order. Thus, whether the facts and circumstances justify deletion of penalty as prayed, or that the ingredients enabling imposition of penalty under that particular statutory provision are satisfied or not, was the real issue involved. That is evidently a mixed issue. We do not see, in light of the factual findings rendered by the Tribunal, that any substantial question of law arises for determination and consideration in these Appeals. We must see that the approach of the Tribunal in deleting penalty. On the date of that exercise undertaken, and to delete the penalty, the Tribunal had before it, its factual findings in quantum proceedings. On the date when the impugned orders were passed, those factual findings were not reversed or disturbed in any manner. In the circumstances, the Tribunal was justified in deleting the penalty - Decided in favour of assessee

Summary

Issues:
Appeal against order passed by Income Tax Appellate Tribunal for three assessment years - 2001-2002, 2002-2003, and 2004-2005. Challenge regarding the imposition of penalty under Section 271(1)(c) of the Income Tax Act.

Analysis:
The appeals were filed by the Revenue against the order of the Income Tax Appellate Tribunal for the three assessment years. The primary issue raised in the grounds of appeal was the imposition of penalty, specifically related to the levy of penalty on the basis of income tax including surcharge. The Tribunal considered the arguments presented by both parties and noted that the share transactions entered into by the assessee were genuine, leading to the deletion of certain additions. However, to address the revenue's apprehension, the Tribunal directed the Assessing Officer to levy penalty only on the surviving additions after considering the Tribunal's order. Regarding interest for the assessment year 2002-2003, the Tribunal deleted the penalty as the quantum had been deleted. The Tribunal's decision was based on factual findings in the quantum proceedings, which were not reversed or disturbed at the time of the impugned orders. Consequently, the Tribunal was justified in deleting the penalty, and no substantial question of law was found to arise. Therefore, all three appeals were dismissed.

The appellant argued that questions other than penalty issues survived and referred to other appeals admitted for the same assessee. However, the respondent contended that the grounds highlighted before the Tribunal pertained specifically to the confirmation of the levy of penalty under Section 271(1)(c) of the Income Tax Act. The court found merit in the respondent's contentions, emphasizing that the real issue involved was whether the ingredients enabling the imposition of penalty were satisfied. The court concluded that no substantial question of law arose considering the factual findings and the Tribunal's deletion of penalty based on the existing circumstances and evidence in the quantum proceedings. The court dismissed all three appeals based on these considerations.