2020 (7) TMI 629 - HC - Income Tax

Penalty u/s 271D - violation of Section 269SS - reasonable cause to be entitled to the benefit of Section 273B - HELD THAT - We find that the Tribunal did not examine the nature of transaction and the issue as to whether the CIT(A) was justified in accepting the cause shown by the assessee to be a reasonable cause to be entitled to the benefit of Section 273B - The decision, which has been referred to in paragraph 8 of the impugned order, does not relate to the assessee. Tribunal referred to the said decision and allowed the Revenue s appeal and affirmed the penalty imposed by the Assessing Officer. We find that there is no discussion as to why those two decisions rendered by the Coordinate Bench of the Tribunal in the assessee s own case respectively dated 31.10.2013 2013 (10) TMI 1327 - ITAT CHENNAI and 22.7.2014 2014 (7) TMI 1329 - ITAT CHENNAI could not be applied to the facts and circumstances of the present case. In the instant case, there are two decisions of the Coordinate Bench of the Tribunal, which held that the assessee had a reasonable cause and consequently entitled to the benefit of Section 273B of the Act. Therefore, in our considered view, the decision in the case of the assessee s brother M.Sougoumarin 2018 (5) TMI 1731 - MADRAS HIGH COURT is distinguishable on facts and this decision cannot be applied to the facts and circumstances of the case on hand. We are not inclined to examine the merits of the matter nor make an attempt to answer the substantial questions of law, as we are of the considered view that the matters require to be reconsidered by the Tribunal for the reasons we have set out in the preceding paragraphs. It is for the Tribunal to take note of the fact and deal with the earlier orders passed by its Coordinate Bench which ended in favour of the assessee. - substantial questions of law are left open.

Summary

Issues:
- Imposition of penalty under Sections 271D and 271E of the Income Tax Act without applying Section 273B.
- Tribunal's decision to reverse orders of penalty imposed by the Assessing Officer.

Analysis:

Issue 1: Imposition of penalty under Sections 271D and 271E without applying Section 273B
The appeals were filed against the common order made by the Income Tax Appellate Tribunal, Chennai, regarding the imposition of penalties under Sections 271D and 271E of the Income Tax Act for the assessment years 2006-07 to 2012-13. The primary contention was whether the Tribunal correctly restored the penalties without considering the provisions of Section 273B of the Act. The appellant argued that in similar cases, the Tribunal had ruled in favor of the assessee by applying Section 273B, which provides for reasonable cause as a defense against penalties. However, the Tribunal in this case chose to follow a different decision related to the appellant's father, failing to provide reasons for not applying the earlier decisions in the appellant's favor.

Issue 2: Tribunal's decision to reverse orders of penalty
The Tribunal's decision to uphold the penalties imposed by the Assessing Officer was challenged on the grounds that it did not adequately consider the appellant's submissions regarding the applicability of earlier decisions in the appellant's favor. The Tribunal failed to provide reasoning for disregarding the previous rulings that favored the appellant and did not justify why those decisions could not be applied to the current case. The appellant cited other cases where the Tribunal remanded matters for fresh consideration based on principles of judicial discipline, emphasizing the need for consistency in decision-making. The High Court concluded that the Tribunal should have reconsidered the matter in light of the earlier decisions that supported the appellant, leading to the allowance of the appeals and remand of the matters to the Tribunal for fresh consideration, leaving the substantial questions of law open for review.

In summary, the High Court allowed the appeals, set aside the impugned orders, and remanded the matters to the Tribunal for a fresh consideration based on the observations made in the judgment. The Court emphasized the importance of applying consistent legal principles and considering previous rulings in similar cases to ensure fair and just decisions.