2007 (10) TMI 223 - HC - Income Tax

Dt. Commissioner imposed penalty u/s 271(1)(c) for concealment of income Tribunal uphold the order of CIT of setting aside the order of deputy commissioner even after giving sufficient opportunity assessee failed to discharged his burden as to why penalty cannot be imposed on him revenue s appeal against order of ITAT is allowed order passed by commissioner & tribunal is accordingly set aside - matter is remitted back to the Deputy Commissioner of Income-tax

Summary

Issues:
1. Challenge to order passed by Income-tax Appellate Tribunal regarding penalty under section 271(1)(c) of the Income-tax Act.
2. Failure of the assessee to respond to show-cause notices and subsequent penalty imposition.
3. Appeal against orders of Commissioner of Income-tax (Appeals) and Income-tax Appellate Tribunal.
4. Interpretation of burden of proof in penalty proceedings under section 271(1)(c) of the Act.

Analysis:

1. The Revenue challenged the order of the Income-tax Appellate Tribunal regarding the penalty imposed under section 271(1)(c) of the Income-tax Act. The Tribunal had confirmed the orders of the Commissioner of Income-tax (Appeals-II), who had set aside the penalty imposed by the Deputy Commissioner of Income-tax. The issue was whether the penalty was correctly levied on the assessee.

2. The Deputy Commissioner issued show-cause notices to the assessee under section 274 read with section 271 of the Act, but the assessee did not respond. Despite multiple opportunities for a personal hearing, the assessee failed to provide any explanation. Consequently, a penalty of Rs. 7,97,000 was imposed on the assessee, which was challenged before the Commissioner of Income-tax (Appeals-II), leading to the current appeal.

3. The Commissioner of Income-tax (Appeals) found no basis for the penalty as there was no concealment of income. The Income-tax Appellate Tribunal also upheld this decision, leading to the present appeal by the Revenue. The substantial question of law raised was whether the penalty could be levied when the assessee failed to furnish information to discharge the burden placed on them.

4. The High Court held that while the initial burden was on the Revenue, it ultimately had to be discharged by the assessee by showing cause. The Court noted that the assessee had failed to provide any cause before the Deputy Commissioner, despite ample opportunities. Both the Commissioner of Income-tax (Appeals) and the Tribunal held that the Revenue failed to discharge its initial burden, but the Court disagreed.

5. The Court opined that the Deputy Commissioner had given sufficient opportunities to the assessee to show cause, and in the absence of any response, was justified in levying the penalty. Therefore, the appeal was allowed, setting aside the orders of the Commissioner of Income-tax (Appeals-II) and the Income-tax Appellate Tribunal. The matter was remitted back to the Deputy Commissioner for reconsideration, with directions to provide a reasonable opportunity to the respondent to present their case and pass an appropriate order in accordance with the law.