9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 1082 - HC - Income TaxPenalty u/s 271(1)(c) - Debatable assessment - HELD THAT - This Court is of the view that the ITAT was right in deleting the penalty levied under Section 271(1)(c) of the Act. It has to be noted that penalty proceedings are an outcome of assessment and if the assessment itself is debatable, the penalty proceedings cannot survive. Levy of penalty cannot be a matter of course, as sought to be contended by the Revenue. It can only be levied in cases where the concealment of income has been proven. If the quantum order itself has been challenged and this Court has framed substantial questions of law in the appeal preferred by the respondent-assessee, it shows that the alleged concealment is not final and the issue is disputable. Consequently, the penalty levied by the assessing officer cannot survive in such a case. This Court in CIT Vs. Liquid Investment Ltd 2010 (10) TMI 1021 - DELHI HIGH COURT has upheld the deletion of the penalty on the same ground i.e. the fact that appeals were admitted proved that the issue was debatable - No question of law.
Issues Involved:
1. Delay condonation. 2. Legitimacy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. 3. Whether the ITAT erred in confirming the assessment under Section 153A. 4. Whether the ITAT correctly upheld the addition to the returned income. 5. The validity of penalty proceedings in light of pending quantum appeals. Detailed Analysis: 1. Delay Condonation: The applications for condoning the delay in filing the appeals were accepted for the reasons stated therein, and the applications were disposed of accordingly. 2. Legitimacy of Penalty under Section 271(1)(c): The appeals challenged the ITAT's order, which deleted the penalty imposed under Section 271(1)(c) for the assessment years 2004-05 and 2005-06. The ITAT's decision was based on the fact that the High Court had admitted the quantum appeals, indicating that the issues were debatable. The penalty was deemed unsustainable as the assessment itself was under dispute. 3. ITAT's Confirmation of Assessment under Section 153A: The High Court had previously admitted the assessee's appeal on whether the ITAT erred in confirming the assessment under Section 153A in the absence of any incriminating material. This admission suggested that the assessment was debatable. 4. ITAT's Upholding of Addition to Returned Income: The High Court also admitted appeals questioning the ITAT's decision to uphold significant additions to the returned income based on estimated profits and rejection of books of accounts under Section 145(3). This indicated that the additions were not conclusively established and were subject to legal scrutiny. 5. Validity of Penalty Proceedings: The penalty proceedings were initiated following the confirmation of additions by the CIT(A) and ITAT. However, the ITAT deleted the penalties, citing precedents where the admission of quantum appeals by the High Court indicated that the issues were debatable and not final, thus rendering the penalty proceedings unsustainable. The ITAT also noted procedural deficiencies in the penalty notices, where specific charges were not clearly stated. Court's Opinion and Decision: The High Court concurred with the ITAT, emphasizing that penalty proceedings are contingent on the outcome of the assessment. If the assessment is debatable, the penalty cannot be justified. The Court referenced similar cases where penalties were deleted due to the debatable nature of the issues, as indicated by the admission of appeals. Consequently, the appeals were dismissed for lacking merit, affirming that no substantial question of law arose for consideration. Conclusion: The High Court upheld the ITAT's decision to delete the penalties under Section 271(1)(c), reinforcing that penalties cannot be imposed when the underlying assessment is under legal dispute and debatable. The appeals were dismissed, affirming the ITAT's judgment.
|
