2018 (2) TMI 672 - HC - Income Tax

Penalty u/s 271(1)(c) - concealment of income and for furnishing inaccurate particulars of income - disclosure of the capital gain tax - order of penalty passed by the AO came to be set aside by the Commissioner in exercise of his revisional powers under section 264 - Held that - In terms of clause (a) of subsection (4) of section 264, revisional powers would not be exercised, inter alia, in a case where the period of limitation for filing appeal has not expired and the assessee has not waived the right of appeal. This is essentially to ensure that at the hands of the same assessee a single issue does not receive consideration at the hands of two separate and independent authorities, one exercising appellate jurisdiction and the other revisional jurisdiction. We find that the assessee had clearly made a choice to persuade the Commissioner of Income Tax to exercise his revisional powers under section 264 and not pursue his appeal before the Appellate Commissioner. The revisional authority therefore correctly proceeded to decide the revision petition of the assessee and on facts correctly allowed the same. This later observation needs no elaboration since the order of the Commissioner is self explanatory and eloquent. The assessee had made full disclosure of the capital gain tax and there was no failure on his part to give necessary details thereof.

Summary

Issues:
Challenge to order of penalty passed by Assessing Officer before Commissioner of Income Tax, exercise of revisional powers under section 264 of the Income Tax Act, 1961, withdrawal of appeal by the assessee, setting aside of penalty order by Commissioner, jurisdiction of the revisional authority vis-a-vis pending appeal before the Appellate Commissioner, adherence to quasijudicial discipline by the Appellate Commissioner.

Analysis:
The petitioner, an Assessing Officer, challenged an order dated 15.03.2017 passed by the Commissioner of Income Tax, where the Revision Petition filed by the assessee against the penalty order was allowed. The respondent, a sales agency proprietor, faced penalty proceedings under section 271(1)(c) of the Act for concealment of income. The Assessing Officer imposed a penalty of ?10,00,399 under his order dated 23.02.2016. The assessee filed a Revision Petition against the penalty order, withdrawing the appeal made earlier. The Commissioner allowed the revision petition, noting the absence of willful concealment by the assessee, and directed the refund of the penalty amount. Subsequently, the Appellate Commissioner dismissed the appeal, leading the assessee to approach the Tribunal, which set aside the penalty order, emphasizing the inclusion of long term capital gain in the gross income.

The main contention in the petition was that the Commissioner should not have exercised powers under section 264 when the appeal was pending before the Appellate Commissioner. The court observed that the assessee had clearly chosen to pursue the revision petition over the appeal, and the revisional authority correctly decided the matter. The court emphasized that the Appellate Commissioner should have respected the revisional order setting aside the penalty, avoiding parallel orders by separate authorities. The court found it unnecessary for the department to bring such matters to the High Court, adding to unnecessary litigation. The petition was disposed of accordingly.