2022 (6) TMI 669 - HC - Income Tax

Penalty u/s 271(1)(c) - Period of limitation - denial of deduction u/s 11 - HELD THAT - As per the proviso to the Section 275(1), an order imposing penalty shall be passed before the expiry of the financial year, in which proceedings, in the course of which an action for imposition of penalty has been initiated, are completed within 1 year from the end of the financial year, in which the order of the Deputy Commissioner (Appeals) or the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever is later. The facts on record indicate that the petitioner is well aware of the fact that the petitioner was not entitled to claim exemption under Sections 11 and 12 of the Income Tax Act, 1961, once the registration under Section 12A of the Act had been cancelled on 30.12.2010. The Tribunal has also affirmed the views and therefore, the petitioner is in appeal. As on date, the petitioner is not entitled to claim exemption as a charitable institution. Therefore, while filing the successive returns under Section 139 of the said Act, the petitioner has to arrived at the correct taxable income and pay the tax thereon. Even if the petitioner wants to claim exemption, it is for the petitioner to have arrived at the correct tax that was payable by the petitioner as ordinary tax assessee, who does not enjoy the exemption and file returns. As the petitioner was well aware of the fact that this is the case of filling of inaccurate particulars in the returns and the petitioner has also replied to the same in the notices issued to the petitioner. The petitioner had earlier filed writ petition long after the notices were issued, after the assessment orders were passed by the Assessing Officer. It is only by way of an afterthought the petitioner had challenged the notices. There is no merits in the present writ petitions. The petitioner has to workout the remedy against the orders passed under Section 274 r/w Section 271 (1) (C) of the Income Tax, Act 1961 before the Appellate Commissioner.

Summary

Issues:
Challenging impugned orders under Section 274 r/w Section 271 (1) (c) of the Income Tax Act, 1961 for various assessment years.

Analysis:
1. The petitioners challenged the impugned orders passed under Section 274 r/w Section 271 (1) (c) of the Income Tax Act for different assessment years. The challenge primarily focused on the vagueness of the notices issued, not clearly specifying whether there was concealment of income or furnishing inaccurate details, citing precedents from the High Court of Karnataka.

2. The petitioners argued that being a charitable institution, there was no inaccurate detail or income concealment. They highlighted ongoing legal proceedings related to their charitable status and pending appeals against assessment orders. They emphasized that even if unsuccessful in appeals, the Department could still initiate proceedings under the Act, referencing a Supreme Court decision in a similar context.

3. The petitioners contended that only the CIT appeal is competent to issue notices under the Act, and the impugned orders and notices lacked merit. They distinguished a previous court decision, asserting that the notices issued were vague and should be withdrawn based on Karnataka High Court judgments.

4. The respondent opposed the petitions, arguing they should be dismissed. They claimed the issues were covered by previous court decisions and emphasized the petitioner's awareness of ineligibility for tax exemptions due to canceled registration. The respondent highlighted the petitioner's delayed tax payments post-assessment orders as a lack of merit in the writ petitions.

5. The court examined the provisions of Section 271 (1) (c) of the Income Tax Act, empowering penalty imposition for concealing income or furnishing inaccurate particulars. It noted the petitioner's awareness of ineligibility for tax exemptions and the need to declare correct income. The court found the petitions lacking merit, advising the petitioner to seek remedies through the Appellate Commissioner and await further orders on the impugned notices.

6. The court dismissed the writ petitions, granting the petitioner liberty to pursue remedies before the Appellate Commissioner and submit to further orders. It allowed the petitioner to file a statutory appeal within six weeks, urging expedited consideration and disposal by the Appellate Commissioner. The court directed the 2nd respondent to act promptly on the impugned notice, leaving the petitioner to address any adverse orders through the Appellate Commissioner. No costs were awarded, and connected miscellaneous petitions were closed.