2020 (7) TMI 403 - HC - Income Tax

Penalty u/s 271(1)(c) - assessment was completed under Section 153A read with Section 143(3) - Tribunal held that the CIT(A) does not have power to give a direction to the Assessing Officer to levy penalty under Section 271AAA of the Act on the undisclosed income and accordingly set aside that direction - HELD THAT - Tribunal, in the impugned order, rightly observed that when the Tribunal held that the penalty could not be levied under Section 271AAA of the Act, it is automatic that the levy of penalty made under Section 271(1)(c) of the Act was confirmed. The Tribunal further observed that the assessee had not challenged the levy of penalty under Section 271(1)(c) of the Act. Argument of Mr.G.Baskar, learned counsel appearing for the appellant assessee is that the assessee had no occasion to challenge the same because the appeal filed by the assessee stood allowed. We are not convinced with the said argument because in paragraph 6 of the order of the Tribunal dated 25.11.2016, there is a clear finding that the assessee is liable to penalty under Section 271(1)(c) of the Act. Hence, if the assessee was aggrieved, she should have challenged that portion of the order of the Tribunal, which held that the assessee should be liable to penalty. As miscellaneous petition filed by the Revenue was dismissed as time barred and not on merits. In any event, the finding rendered by the Tribunal in its order dated 25.11.2016 having attained finality and the order imposing penalty having been confirmed, the decision arrived at by the Tribunal in dismissing the assessee's appeal does not call for any interference.- Decided against assessee.

Summary

Issues:
1. Interpretation of Tribunal's order regarding penalty under Section 271(1)(c) of the Income Tax Act.
2. Validity of Tribunal's decision in dismissing the assessee's appeal challenging the penalty.

Analysis:

Issue 1: Interpretation of Tribunal's order regarding penalty under Section 271(1)(c) of the Income Tax Act.
The appeal before the Madras High Court involved the interpretation of the Tribunal's order regarding the penalty under Section 271(1)(c) of the Income Tax Act. The Tribunal, in its order dated 25.11.2016, had held that the assessee was liable to penalty under Section 271(1)(c) of the Act. The Tribunal also discussed the applicability of Section 271AAA of the Act and set aside a direction given by the CIT(A) to levy penalty under that section. The Tribunal concluded that the penalty under Section 271(1)(c) was confirmed, as the assessee had not challenged it, and the Tribunal's decision was based on a previous case law. The appellant contended that since the appeal was allowed, the penalty should be vacated, but the Court disagreed, emphasizing that the Tribunal's finding on penalty was clear in its order.

Issue 2: Validity of Tribunal's decision in dismissing the assessee's appeal challenging the penalty.
The Court examined the validity of the Tribunal's decision in dismissing the assessee's appeal challenging the penalty. The appellant argued that the Tribunal's order dated 25.11.2016 indicated that the assessee's appeal was allowed, and the Revenue's appeal was dismissed, leading to the penalty being vacated. However, the Court noted that the Tribunal's order must be read in its entirety, and based on paragraphs 6 and 7, it was evident that the Tribunal found the assessee liable for the penalty under Section 271(1)(c) of the Act. The Court further highlighted that the Revenue's miscellaneous petition under Section 254 was dismissed as time-barred, and the Tribunal's decision on the penalty had attained finality. Consequently, the Court upheld the Tribunal's decision to dismiss the assessee's appeal, confirming the penalty under Section 271(1)(c) of the Act.

In conclusion, the Madras High Court upheld the Tribunal's decision, emphasizing the clarity of the Tribunal's findings on the penalty and dismissing the appellant's appeal challenging the penalty under Section 271(1)(c) of the Income Tax Act.