COMMISSIONER OF INCOME TAX AHMEDABAD IV V. WHITEFORD INDIA LTD

TAXAP/498/2013

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax, Ahmedabad IV, challenging the decision of the Income Tax Appellate Tribunal, which had set aside the penalty imposed on Whiteford India Ltd. under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially imposed by the Assessing Officer and confirmed by the CIT(A), but was later quashed by the Tribunal. The main legal contention was whether the Tribunal erred in its decision by ignoring the provisions related to the furnishing of inaccurate particulars of income. The High Court, referencing previous judgments, concluded that the Assessing Officer's order lacked a definitive finding on the nature of the offense (concealment of income vs. furnishing inaccurate particulars), leading to the dismissal of the appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 703008 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 24-06-2013
• Assessment Year: misc
• Other Referred Cases: CIT Vs. Manu Engineering Works, New Sorathia Engineering Co. Vs. Commissioner of Income-Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: VARUN PATEL
• Keywords: Assessing Officer; CIT(A); Concealment of income; Inaccurate particulars of income; Income tax appellate tribunal; Penalty
• Section: 271(1)(c); 271(b)

Judgement Text

"O/TAXAP/498/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 498 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ====================================== COMMISSIONER OF INCOME TAX AHMEDABAD IV....Appellant(s) Versus WHITEFORD INDIA LTD....Opponent(s) ====================================== Appearance: MR.VARUN K.PATEL, ADVOCATE for the Appellant(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI Date : 24/06/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 6 O/TAXAP/498/2013 JUDGMENT 1. The present appeal has been preferred by the appellant- revenue challenging the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’, Ahmedabad dated 09/08/2012 by which the learned Income Tax Appellate Tribunal has allowed the said appeal preferred by the assessee by quashing and setting aside the order passed by the CIT(A) confirming the order passed by the Assessing Officer imposing penalty under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. In the appeal, the following substantial questions of law are proposed by the revenue; (I) Whether, in the facts and circumstances of the case, the learned ITAT has erred in allowing the appeal filed by the respondent assessee against the order of penalty under Section 271(1)(c) of the Income Tax Act, 1961 passed by the Assessing Officer as confirmed by the CIT(A) and thereby ignoring explanation 1 to Section 271(1)(c) of the Act that assessee’s explanation was not proved to be bonafide? (II) Whether the Tribunal is right in law and on facts to ignore the provisions of Section 271(B) of the Act inserted by finance Act, 2008, w.e.f 01/04/1989 and delete the concealment penalty levied where furnishing of inaccurate particular of income is evident? (III) Whether the Tribunal is right in law and on facts to delete the penalty when the disallowance on which penalty levied was the only one in the assessment order and Assessing Officers initiating the penalty under Page 2 of 6 O/TAXAP/498/2013 JUDGMENT Section 271(1)(c) of the Act for furnishing of inaccurate particulars of income.” 3. At the outset, it is required to be noted and it cannot be disputed that while passing the order under Section 271(1)(c) of the Act and imposing penalty upon the assessee the Assessing Officer used the words “inaccurate particulars of income/concealment of income”. The order passed by the Assessing Officer imposing penalty came to be confirmed by the CIT(A) by interpreting the observations made by the Assessing Officer as under; “In view of the facts and circumstances of the case, the Assessing Officer used expressing “inaccurate particulars of income/concealment of income” thereby the meaning that is inaccurate particulars of income which relates to concealment of income”. 3.1. Being aggrieved and dissatisfied with the order passed by the CIT(A) confirming the order passed by the Assessing Officer imposing penalty under Section 271(1)(c) of the Act, the assessee preferred appeal before the Income Tax Appellate Tribunal and relying upon the decisions of this Court in the case of CIT Vs. Manu Engineering Works reported in (1980) 122 ITR 306 and in the case of New Sorathia Engineering Co. Vs. Commissioner of Income-Tax reported in (2006) 282 ITR 642 (Guj.) the Income Tax Appellate Tribunal has allowed the appeal by quashing and setting aside the orders passed by the CIT(A) as well as the Assessing Officer imposing penalty under Section 271(1)(c) of the Act. Page 3 of 6 O/TAXAP/498/2013 JUDGMENT 4. Having heard Shri Varun Patel, learned advocate appearing on behalf of the appellant and considering the observations made by the Assessing Officer, while passing the order of penalty, it is not in dispute and/or cannot be disputed that there was no clear finding by the Assessing Officer whether the assessee was guilty of concealing the income or furnishing inaccurate particulars of the income. While considering the similar situation, the Division Bench in the case of Manu Engineering Works (Supra) has observed and held as under; “We find from the order of the Inspecting Assistant Commissioner, in the penalty proceedings, that is, the final conclusion as expressed in para. 4 of the order; ‘I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income’. Now, the language of ‘and/or’ may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi- criminal case, but it was incumbent upon the Inspecting Assistant Commissioner to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the Inspecting Assistant Commissioner and, on that ground alone, the order of penalty passed by the Inspecting Assistant Commissioner was liable to be struck down.” Page 4 of 6 O/TAXAP/498/2013 JUDGMENT 4.1. Similar view has been subsequently expressed by another Division Bench in the case of New Sorathia Engineering Co. (Supra). Considering the ratio laid down by this Court in the aforesaid two decisions and the facts of the case on hand, more particularly, when it is observed that there was no clear finding by the Assessing Officer whether the assessee is guilty of concealing the income and/or furnishing inaccurate particulars of the income and the learned Income Tax Appellate Tribunal has set aside the order passed by the CIT(A) confirming the order passed by the Assessing Officer imposing penalty under Section 278(1)(c) of the Act, it cannot be said that the Income Tax Appellate Tribunal has committed any error. 4.2. Reliance placed upon Section 271(1)(b), which has been inserted by the finding of the Finance Act, 2005 with effect from 01/04/2006 is neither here nor there. Still the requirement while imposing the penalty under Section 271(1) (c) are required to be complied with. It cannot be disputed that while imposing the penalty under Section 271(1)(c) of the Act, two conditions are required to be satisfied i.e. (i) the assessee has concealed the particulars of his income (ii) the assessee has furnished incorrect particulars of such income. As held by the Division Bench in the case of Manu Engineering Works (Supra) the Assessing Officer is required to give clear finding whether the assessee is guilty of concealing the income and/or furnishing incorrect particulars of income. 5. In view of the above, we see no reason to interfere with Page 5 of 6 O/TAXAP/498/2013 JUDGMENT the impugned order passed by the learned Income Tax Appellate Tribunal and no substantial question of law arises. The present appeal is dismissed. (M.R.SHAH, J.) (MS SONIA GOKANI, J.) Siji Page 6 of 6 "