2021 (2) TMI 682 - HC - Income Tax

Penalty u/s 271 (1)(c) - addition under Section 50C - HELD THAT - We are of the view that as the issue with regard to Section 50C of the Act is to be decided afresh by the Principal Commissioner, the issue with regard to penalty also should be decided afresh by the Principal Commissioner. Writ application succeeds in part. The impugned order is hereby quashed and set aside and the matter is remitted to the Principal Commissioner of Income Tax, Ahmedabad. The Principal Commissioner shall decide both the issues with respect to Section 50C of the Act as well as the issue with regard to the penalty.

Summary

Issues:
Challenge to order imposing penalty under Section 271 (1)(c) of the Income Tax Act, 1965 on addition made under Section 50C of the Act.

Analysis:
The High Court addressed the challenge to an order imposing a penalty under Section 271(1)(c) of the Income Tax Act, 1965, on an addition made under Section 50C of the Act. The Court referred to a previous decision where the matter was remitted to the Principal Commissioner for reconsideration. The petitioner sought relief through a writ application under Article 226 of the Constitution of India, focusing on the addition under Section 50C. The Court noted the delay in filing the revision petition under Section 264 of the Act, which was beyond the time limit, but the Principal Commissioner proceeded to decide the matter on merits. The petitioner argued for the application of a proviso to Section 50C, emphasizing that the revised Jantri rates should have been considered. The Court highlighted the need for the Principal Commissioner to address the issue of Section 50C afresh.

The Principal Commissioner's order was deemed unusual as it rejected the revision application due to a delay in filing, yet proceeded to consider the matter on merits. The Court emphasized the importance of addressing the issue of Section 50C specifically. The petitioner's counsel focused solely on Section 50C, urging for a reconsideration of this aspect by the Principal Commissioner. The Court ultimately quashed the impugned order and remitted the matter to the Principal Commissioner for adjudication on Section 50C. It clarified that the issue of limitation was not to be revisited during this reconsideration. The Court directed the Principal Commissioner to decide both the Section 50C issue and the penalty issue afresh.

In conclusion, the High Court partially allowed the writ application, setting aside the penalty order and remitting the matter to the Principal Commissioner for fresh consideration on both the Section 50C issue and the penalty issue. The Court emphasized the need for a reevaluation of the Section 50C matter and clarified the limitation issue's finality.