2022 (4) TMI 913 - SC - Income Tax

Maintainability of appeal before the High Court against Penalty u/s 271(1)(c) - HC allowed the said appeal preferred by the Revenue and has set aside the order passed by ITAT deleting the penalty under Section 271(1)(c) - appeal preferred by the Revenue was not maintainable as the penalty amount was reduced to ₹ 6,00,000/(approximately) and therefore when the tax effect would be less than ₹ 20,00,000/, in view of the CBDT Circular dated 10.12.2015 the appeal preferred by the Revenue before the High Court was not maintainable - jurisdiction of the Additional Commissioner of Income Tax to allow imposing penalty -- HELD THAT - We see no reason to interfere with the findings recorded by the High Court on merits on the powers of the Additional Commissioner to grant the approval sought by the AO for imposing penalty under Section 271(1)(c) of the Income Tax Act. What was assailed by the Revenue was the penalty Imposed and not the penalty reduced by the CIT(A). Before the Tribunal, both the Revenue, as well as the assessee, preferred the appeals and the entire penalty amounting to ₹ 29,02,743/was an issue before the Tribunal as well as before the High Court. The subsequent reduction in penalty in view of the subsequent order cannot oust the jurisdiction. What is required to be considered is what was under challenge before the Tribunal as well as the High Court. What was challenged by the Revenue was the penalty amounting to ₹ 29,02,743/and not the subsequent reduction of penalty by the CIT(A). The aforesaid aspect has been dealt with by the High Court in paragraph 17 of the impugned judgment and order. We are in complete agreement with the view taken by the High Court. Therefore, it cannot be said that the appeal before the High Court at the instance of the Revenue challenging the order passed by the ITAT was not maintainable in view of CBDT circular dated 10.12.2015. Appeal dismissed.

Summary

Issues:
1. Maintainability of the appeal before the High Court based on CBDT Circular No.21 of 2015.
2. Jurisdiction of the Additional Commissioner of Income Tax in granting approval for imposing penalty under Section 271(1)(c) of the Income Tax Act.
3. Challenge to the penalty amount by the Revenue and subsequent reduction by the CIT(A) affecting the appeal's maintainability.

Analysis:

1. The appellant contended that the appeal by the Revenue before the High Court was not maintainable due to the CBDT Circular No.21 of 2015, which stated that no appeal can be filed for nonpayment of taxes where the tax effect is less than ?20,00,000. The penalty amount was reduced to approximately ?6,00,000, falling below the threshold. However, the High Court held that the appeal challenging the penalty of ?29,02,743 was maintainable as the original amount was contested, not the reduced penalty. The court agreed with this interpretation, emphasizing that the subsequent reduction does not impact the appeal's maintainability as the original penalty was the subject of dispute.

2. The appellant also raised concerns about the jurisdiction of the Additional Commissioner of Income Tax in approving the penalty under Section 271(1)(c) of the Income Tax Act. The court noted that as per the definitions in the Act, the Additional Commissioner falls under the term 'Joint Commissioner' and has the authority to grant such approvals. The court found no reason to interfere with the High Court's decision on this matter, affirming the Additional Commissioner's jurisdiction in granting the approval sought by the Assessing Officer for imposing the penalty.

3. Lastly, the court dismissed the appeal, stating that there was no substance in the appellant's arguments. The court emphasized that the appeal challenging the original penalty amount was maintainable, despite subsequent reductions, as the initial amount was the subject of dispute. Consequently, the court upheld the High Court's decision and dismissed the appeal without costs.

In conclusion, the Supreme Court upheld the High Court's decision, affirming the maintainability of the appeal challenging the original penalty amount and confirming the jurisdiction of the Additional Commissioner in granting approval for imposing the penalty under the Income Tax Act.