2023 (4) TMI 750 - HC - Income Tax

Levying penalty u/s 273(2)(aa) or u/s 273(2)(a) - Section mentioned in the assessment order of the first notice issued under Section 273(2)(a) while actual charge by subsequent notice issued under Section 273(2)(aa) - HELD THAT - Tribunal observed that the penalty was imposed after allowing proper opportunity to the assessee with respect to specific default under Section 273(2)(aa). Tribunal held that the mistake in mentioning wrong section in the assessment order and the first notice was only of a clerical nature which was subsequently rectified. Senior Manager, Taxation had given an affidavit and tendered unconditional apology before the Court and his apology was accepted. Tribunal held that the penalty had been imposed by the Assessing Officer after due application of mind and on the technical ground and that the initial notice given under Section 273(2)(a) cannot be made a ground for quashing the penalty levied under Section 273(2)(aa). CIT(A) had rightly set aside the order and directed the Assessing Officer to recompute the penalty @ 10% of the difference in tax by taking the assessed income. No substantial question of law arises for consideration in the present appeal and the same is dismissed.

Summary

Issues Involved:
The judgment involves the issue of penalty imposition under Section 273(2)(aa) of the Income Tax Act based on a clerical error in mentioning the wrong section in the assessment order and the first notice.

Summary:
The High Court of Punjab and Haryana heard two income tax appeals, ITA No. 12 of 2003 and ITA No. 13 of 2003, with identical issues. The appellant, M/s. Industrial Cables (India) Ltd., challenged the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', regarding penalty imposition under Section 273(2)(aa) for the assessment year 1988-89.

The Tribunal found that the Assessing Officer had issued a notice under Section 273(2)(aa) and the appellant responded to the default mentioned under this section. Despite a clerical error in mentioning the wrong section in the initial notice, the Tribunal held that the penalty was imposed after providing the appellant with a proper opportunity to address the specific default under Section 273(2)(aa). The mistake in the initial notice was considered of a clerical nature and subsequently rectified.

Moreover, Mr. Arun Kaushal, Senior Manager, Taxation, apologized for the error, and the Tribunal accepted his apology. The Tribunal concluded that the penalty was imposed correctly by the Assessing Officer and that the initial notice under Section 273(2)(a) should not invalidate the penalty under Section 273(2)(aa).

The High Court upheld the decision of the CIT(A) to set aside the order and directed the Assessing Officer to recompute the penalty. As no substantial question of law arose, the appeal was dismissed, and the pending application was disposed of.