2023 (5) TMI 364 - HC - Income Tax

Penalty u/s 271AAB(1)(c) - reasonable cause for the said failure - ITAT held that penalty u/s. 271AAB of the Income Tax Act, 1961 is not mandatory and is discretionary - HELD THAT - Tribunal had followed the decision of the coordinate Bench of the Tribunal in the case of DCIT vs. A.K. Logistics Pvt. Ltd 2019 (3) TMI 209 - ITAT KOLKATA We are required to examine the matter on merits and render finding as to whether the Tribunal was right in dismissing the revenue s appeal. On going through the order passed by the learned Tribunal, we find no finding has been recorded by the learned Tribunal as to how the decision in AKA Logistics Pvt. Ltd. (supra) would apply to the case on hand and there is no discussion on the factual aspect. That apart, the learned Tribunal has also not given any finding as to how the decision relied on by the revenue in the case of Sandeep Chandak vs. PCIT, Kanpur, 2018 (6) TMI 106 - SC ORDER is not applicable to the case on hand or it is factually distinguishable. Though such may be the factual position, in the absence of any independent reasoning by the learned Tribunal with regard to the merits of the matter of the respondent/assessee, it will not be possible for us to test the correctness of the order passed by the learned Tribunal, more particularly, when we are to ascertain as to whether any substantial question of law arises for consideration. Thus, for such reason alone we are inclined to interfere with the order passed by the learned Tribunal and remand the matter to the Tribunal for a fresh decision on merits. Substantial questions of law are left open.

Summary

Issues:
Delay in filing appeal, substantial questions of law regarding penalty under Income Tax Act, 1961, interpretation of previous judgments by the Tribunal, remand for fresh decision on merits.

Delay in Filing Appeal:
The High Court of Calcutta addressed a delay of 502 days in filing an appeal under Section 260A of the Income Tax Act, 1961. The Court, after reviewing the reasons provided in the affidavit supporting the condonation of delay petition, decided to condone the delay and allowed the application for condonation of delay.

Substantial Questions of Law Regarding Penalty:
The appeal was filed by the revenue challenging orders passed by the Income Tax Appellate Tribunal for the assessment year 2013-14. The revenue raised substantial questions of law related to the imposition of penalty under Section 271AAB of the Income Tax Act, 1961. The questions revolved around the conditions for imposing the penalty and the discretionary nature of the penalty as per the provisions of the Act.

Interpretation of Previous Judgments by the Tribunal:
The High Court observed that the Tribunal had based its decision on a previous judgment in the case of DCIT vs. A.K. Logistics Pvt. Ltd. The Court directed the department to confirm if an appeal had been filed regarding the mentioned case. Since no appeal was filed due to low tax effect, the Court proceeded to examine the matter on its merits. The Court noted the lack of findings by the Tribunal on the applicability of the previous judgments and the absence of discussion on factual aspects, leading to the decision to remand the matter for a fresh decision on merits.

Remand for Fresh Decision on Merits:
Due to the insufficient reasoning provided by the Tribunal and the need to ascertain the presence of substantial questions of law, the High Court decided to set aside the Tribunal's order and remand the matter for a fresh decision. The Court emphasized the importance of considering the merits of the case and the judgments relied upon by both parties in the litigation. Consequently, the substantial questions of law were left open, and the applications for stay were closed.