2014 (7) TMI 999 - HC - Income Tax

Imposition of penalty u/s 271(1)(c) Held that - Merely because the Assessee raised a claim which was eventually disallowed, does not mean that ingredients of clause(c) are satisfied or fulfilled so as to justify imposition of penalty - Tribunal followed the decision in Commissioner of Income Tax v/s Reliance Petro products Pvt Ltd 2010 (3) TMI 80 - SUPREME COURT - Revenue officers must realize that just like other powers an executive power conferred in them is in the nature of a Trust - They hold office as trustees of the public at large - They deal with public revenue and public money and that cannot be wasted in such frivolous litigation appeal dismissed with costs Decided against Revenue.

Summary

Issues:
1. Imposition of penalty under Section 271(1)(c) of the I. T. Act.
2. Justification for filing appeals by Revenue.
3. Dismissal of appeals with costs.

Analysis:
1. The High Court addressed the issue of the imposition of penalty under Section 271(1)(c) of the Income Tax Act. The Tribunal had set aside the penalty based on the finding that the Assessee's claim, although disallowed, did not meet the criteria for penalty imposition. The Court upheld the Tribunal's decision, citing the Supreme Court's precedent in Commissioner of Income Tax v/s Reliance Petroproducts Pvt Ltd, emphasizing that the penalty was rightly deleted due to the lack of fulfillment of clause (c) requirements.

2. The Court expressed concern over the justification for filing appeals by the Revenue in such matters. It criticized the wastage of judicial time on appeals that do not raise substantial legal questions, especially when based on settled legal principles. The Court highlighted the importance of Revenue officers accepting Tribunal findings based on established legal norms, urging them to avoid pursuing frivolous litigation. The Court imposed costs on the appeals, emphasizing the need for higher officials to make informed decisions and act in the public interest, rather than being influenced by the status or financial position of the Assessee.

3. In concluding the judgment, the Court dismissed the appeals with costs amounting to Rs. 1,00,000 each, payable to the Maharashtra State Legal Services Authority. The Court emphasized that executive powers entrusted to Revenue officers are akin to a trust, requiring responsible handling of public revenue and money. The judgment highlighted the need for each case to be assessed on its merits, cautioning against routine exercises based solely on revenue impact or Assessee status. The Court empowered competent authorities to recover costs from responsible officers and take disciplinary action if the filing of appeals is deemed abusive or harassing innocent Assessees.