2009 (7) TMI 36 - HC - Income Tax

Penalty u/s 271(1)(c) Claim of Interest u/s 132B(4) amounts of rectification u/s 154 Held that - even going by the assessing authority s order itself none of the basic ingredients of Section 271(1)(c) gets attracted and therefore the question of levy of penalty did not arise at all. when the assessing authority having passed its order of and the assessee is entitled for grant of interest and when the same did not find a place in the order of refund it is nothing but a mistake apparent on the face of the record which could have been rectified either on its own motion by the assessing authority himself under Section 154(2)(a) and in the absence of any such rectification carried out the assessee was fully entitled to invoke Section 154(2)(b) and seek for necessary rectification.

Summary

Issues:
1. Penalty under Section 271(1)(c) - Whether Tribunal was right in holding it cannot be levied?
2. Claim of interest under Section 132B(4)(a) in a rectification petition under Section 154.
3. Entitlement for interest under Section 132B(4)(a) without a search under Section 132.

Analysis:

1. The Revenue appealed against the ITAT order regarding the penalty under Section 271(1)(c). The Tribunal held that the penalty cannot be levied. The search conducted under Section 132 yielded cash, Indira Vikas Patras, and jewelry from the assessee's safe deposit vault. The assessing authority concluded the assessment and determined the tax liability. The subsequent order of assessment mentioned the seizure from the vault belonging to the assessee. The first appellate authority and the Tribunal upheld that there was no concealment or undisclosed income, hence no penalty under Section 271(1)(c) was justified.

2. The assessee sought rectification under Section 154 for interest under Section 132B(4)(a). The assessing authority's order of refund did not include the interest. The first appellate authority directed the assessing authority to rectify the mistake and grant interest. The Tribunal confirmed this decision. The Tribunal and the first appellate authority's conclusions were deemed justified as the interest was a legitimate claim under Section 132B(4)(a).

3. The Revenue contended that since no seizure was made under Section 132 at the assessee's premises, the interest claim under Section 132B(4)(a) was invalid. However, the Tribunal and the first appellate authority found that the seizure from the safe deposit vault linked to the assessee validated the interest claim. The Tribunal's decision in favor of the assessee's entitlement to interest under Section 132B(4)(a) was upheld. The assessing authority's failure to include the interest in the refund order was considered a mistake apparent on record, justifying rectification under Section 154.

In summary, the Tribunal's decisions on the penalty under Section 271(1)(c) and the interest claim under Section 132B(4)(a) were upheld based on the facts and legal provisions. The assessing authority's actions were scrutinized, and the Tribunal's conclusions were found to be legally sound, resulting in the dismissal of the Revenue's appeals.