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2019 (8) TMI 1063 - HC - Income TaxPenalty u/s 271(1)(c) - depreciation on a property which it did not own, but utilized for its business - AY 2002- 2003 - HELD THAT - As in own case 2018 (7) TMI 1259 - CALCUTTA HIGH COURT where this particular issue regarding depreciation for the said assessment year was remanded to the tribunal for reconsideration. Now, if the main issue has been remanded to the tribunal, it is required to decide it afresh. That part of its order is set aside. The question of penalty would only arise after its decision. The order setting aside the penalty based on the earlier adjudication is also of no consequence. Therefore, in our considered opinion, there is no merit in the appeal with regard the order of the tribunal with regard to the assessment year 2002- 2003. We dismiss the same with regard to that assessment year. Admit the appeal in relation to the assessment year 2003-2004 on the following substantial questions of law 1. Whether on the facts and in the circumstances of the case, the tribunal has interpreted and applied Section 271 1 c of the Income Tax Act, 1961 correctly? 2. Whether on the facts and in the circumstances of the case, the tribunal has applied the ratio of the judgment of the Supreme Court in Union of India Ors. Versus- Dharmendra Textile Processors Ors., 2008 (9) TMI 52 - SUPREME COURT correctly?
Issues Involved:
1. Assessment years 2002-2003 and 2003-2004 - Depreciation claim on a property not owned. 2. Penalty imposition under Section 271[1][c] of the Income Tax Act, 1961. 3. Remand of the issue to the tribunal for reconsideration. 4. Interpretation and application of Section 271[1][c] for the assessment year 2003-2004. 5. Application of the ratio of a judgment of the Supreme Court correctly. Analysis: 1. Assessment Year 2002-2003: The appeal involved a dispute regarding the depreciation claim on a property not owned by the assessee but utilized for business purposes. The tribunal set aside the penalty imposed by the assessing officer under Section 271[1][c] of the Income Tax Act, 1961, stating that the assessee's declaration of income was considered "bonafide," thus preventing the imposition of a penalty. A previous decision by the Division Bench of the Court had remanded a similar issue regarding depreciation for reconsideration by the tribunal. The High Court noted that if the main issue was remanded, it needed fresh consideration. Consequently, the order setting aside the penalty based on the earlier adjudication was deemed inconsequential, leading to the dismissal of the appeal for the assessment year 2002-2003. 2. Assessment Year 2003-2004 - Penalty Imposition: The High Court found that the issue concerning the assessment year 2003-2004 was still relevant, with a substantial question of law raised. The primary question revolved around whether the natural element was pertinent in applying Section 271[1][c] of the Income Tax Act, 1961. The Court admitted the appeal for this assessment year based on substantial questions of law related to the correct interpretation and application of Section 271[1][c] and the application of a specific judgment of the Supreme Court. The respondent was represented by counsel, and the issuance and service of the notice of appeal were dispensed with, with directions for filing paper books by a specified date and listing the appeal for a hearing. 3. Procedural Directions: The High Court provided procedural directions for the appeal related to the assessment year 2003-2004, including the filing of informal paper books by a set deadline and the scheduling of the appeal for a hearing on a specified date. Additionally, the Court acknowledged a current circular and granted the respondent the liberty to file an application for dismissal of the appeal if the circular or any modifications were found to be applicable to pending cases, ensuring procedural fairness and compliance with relevant regulations. This detailed analysis summarizes the judgment of the Calcutta High Court concerning the issues involved in the assessment years 2002-2003 and 2003-2004, focusing on the depreciation claim, penalty imposition, remand for reconsideration, and the interpretation and application of Section 271[1][c] for the relevant years.
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