2017 (11) TMI 393 - HC - Income Tax

Penalty u/s 271(1)(c) - benefits of the Voluntary Disclosure Scheme dishonoured - Held that - Admittedly the cheque issued by the petitioner which was a condition precedent for availing the benefits of the Voluntary Disclosure Scheme was dishonoured. Perhaps this led to service of notice under Section 148 of the Income Tax Act. It appears that the petitioner filed returns under protest. Subsequently, after assessing the amounts, a notice was issued under Section 158BFA r.w.s. 158 BFA(2) of the Income Tax Act. The Assessment order under Section 143(3) was passed on 1st December, 2000 under which penalty proceedings under clause (c) of Sub-Section (1) of Section 271 were initiated apart from imposing penalty and interest. The application made by the petitioner for rectification under Section 154 of the Income Tax Act was rejected on the ground that applications were filed belatedly after gap of 13 years. This observation was made on the ground that though the relevant assessment order was made on 1st December, 2000 the rectification application was made on 21st January, 2014. That is the reason why there is an observation by the CIT Appeal that the order passed on 1st December, 2000 had attained finality.

Summary

Issues:
1. Application under Voluntary Disclosure Scheme
2. Notice under Section 148 of the Income Tax Act, 1962
3. Assessment orders and penalty imposition
4. Appeal process and subsequent orders
5. Nonapplication of mind in passing orders
6. Delay in filing the present Petition
7. Rejection of rectification application under Section 154 of the Income Tax Act

Analysis:

1. The petitioner applied for benefits under the Voluntary Disclosure Scheme by issuing a cheque, which was later dishonored due to a bank error.

2. A notice under Section 148 of the Income Tax Act was issued in December 2000 for the Assessment Years 1996-97 and 1997-98, leading to assessment orders and imposition of tax and penalty.

3. The petitioner's appeals against the assessment orders were dismissed, and subsequent orders were passed imposing penalties under Section 271(1)(c) of the Income Tax Act.

4. Appeals were made to the Income Tax Appellate Tribunal, resulting in remand orders and a final order in 2007 by the Commissioner of Income Tax under Section 143(3) and 271(1)(c).

5. The petitioner argued nonapplication of mind in passing the orders mechanically and requested penalty to be taxed on a protective basis, citing the Voluntary Disclosure Scheme declaration.

6. The court noted a gross and unexplained delay in filing the present Petition, leading to a rejection solely based on the delay. However, the court briefly discussed the merits of the controversy.

7. The petitioner's application under Section 154 of the Income Tax Act for rectification was rejected due to being filed belatedly, 13 years after the relevant assessment order, leading to a lack of locus standi for the petitioner.

In conclusion, the court found no merit in the contentions raised in the Petition, emphasizing the lack of substance in the arguments presented. The court dismissed the Writ Petition based on the delay and the absence of merit in the petitioner's claims.