2018 (5) TMI 148 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - set off unabsorbed depreciation of an earlier assessment year i.e., 2001-02, in computing the income as originally returned for the assessment year 2006-07 - Held that - It is not in dispute that the substantial question of law raised by the appellant, in this appeal requires to be examined in the light of the judgment in the case of Commissioner of Income Tax and another vs. Manjunath Cotton and Ginning Factory (2013 (7) TMI 620 - KARNATAKA HIGH COURT) No arguments being advanced and the present issue not being adjudicated by the Tribunal, in the light of the judgment referred to above, we find it appropriate to remand the matter to the Tribunal to reconsider the matter in the light of the judgments of this Court referred to above. Appeal is allowed. The order impugned herein is set aside and remanded to the Tribunal to reconsider the matter afresh

Issues:
Challenge to penalty under Section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2006-07.

Analysis:
The appellant filed an appeal challenging the order of the Income Tax Appellate Tribunal regarding the levy of penalty under Section 271(1)(c) of the Income Tax Act for the assessment year 2006-07. The issue arose from the appellant's claim of set off unabsorbed depreciation from an earlier assessment year, 2001-02, in the income computation for 2006-07, potentially resulting in a double benefit. The Tribunal found this claim as the basis for penalty imposition. The appellant's return for 2001-02 indicated entitlement to carry forward unabsorbed depreciation, which was not initially approved during assessment but was later resolved in favor of the appellant through a Tribunal order. Subsequently, the assessment for 2006-07 was reopened to disallow the claim for carry forward of unabsorbed depreciation, leading to the penalty under Section 271(1)(c). The Commissioner of Income Tax (Appeals) and the Tribunal upheld the penalty, prompting the appellant's appeal.

The appellant argued that the issue was covered by Division Bench judgments of the Court, which the revenue did not dispute. However, it was noted that the appellant did not raise this argument before the authorities or the Tribunal, and the lower authorities did not provide any factual findings on this matter. After hearing both parties, the Court observed that the substantial legal question raised by the appellant required examination in light of the Court's previous judgments. Since no arguments were presented and the issue was not addressed by the Tribunal, the Court decided to remand the matter back to the Tribunal for reconsideration in line with the relevant judgments. Consequently, the appeal was allowed, the impugned order was set aside, and the Tribunal was directed to review the matter in accordance with the Court's observations, emphasizing the need for an expedited decision.

In conclusion, the High Court's judgment focused on the challenge to the penalty under Section 271(1)(c) of the Income Tax Act for the assessment year 2006-07, highlighting the appellant's claim of unabsorbed depreciation set off and the subsequent penalty imposition. The Court emphasized the need for a reconsideration of the matter by the Tribunal in light of relevant legal precedents, underscoring the importance of a prompt resolution in accordance with the law.

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