Commissioiner of Income Tax-III V. Shri Ravi Teja Restaurant AND Resorts Private Limited

ITTA/356/2013

AI Insights

The case involves the Commissioner of Income Tax-III, Hyderabad as the appellant and Shri Ravi Teja Restaurant & Resorts Pvt., Ltd., Hyderabad as the respondent. The core issue was the levy of a penalty under Section 271(1)(c) of the Income Tax Act for alleged concealment of income by the respondent. The Assessing Officer had imposed the penalty based on a comparison of trial balances from different periods, suspecting inflation of expenses. However, the Tribunal overturned this decision, finding no substantial evidence of concealment. The High Court, upon reviewing the Tribunal's decision, agreed with the Tribunal's findings and dismissed the appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719093 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 22-08-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: B SARMA
• Keywords: Assessment; Concealment of income; Income Tax; Penalty; Search and seizure
• Section: 271(1)(c)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. No. 356 of 2013 DATE: 22.08.2013 Between: Commissioner of Income Tax-III, Hyderabad. … Appellant And Shri Ravi Teja Restaurant & Resorts Pvt., Ltd., Hyderabad. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. No. 356 of 2013 JUDGMENT: (Per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) We have heard Sri B. Narasimha Sarma, learned counsel for the appellant and have gone through the impugned judgment and order of the learned Tribunal. This appeal is sought to be admitted on the following suggested questions of law. “i) In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law in holding that penalty under Section 271(1)(c) of the Act is not leviable, even though the concealment of income is deliberate and willful in as much as the respondent-assessee suppressed the income which could not have surfaced but for the material seized during search and seizure/survey operations conducted, on the basis of which the correct income has been arrived at in the assessments? ii) In the facts and circumstances of the case, whether the Hon’ble Tribunal (ITAT) is correct in law deleting the penalty levied under Section 271(1)(c) of the Act, oblivious of the fact that mere acceptance by the respondent-assessee of estimation of income, for its culpable act of suppression of income, would not absolve the respondent-assessee from penal provisions and penalty under Section 271(1)(c) of the Act is very much leviable?” The learned Tribunal has discarded the findings and decision of the Assessing Officer on a clear-cut finding, which is reproduced as follows: “On a careful perusal of the findings given by the Assessing Officer would show that the Assessing Officer has arrived at the conclusion about the concealment of income by comparing the trial balance of two different periods of the same financial year viz., 2006- 07 relevant to the assessment year 2007-08. The Assessing Officer has not brought on record any material to show that the expenses booked in the second half of the year was either bogus or inflated. Thus, it is evident that he has reached conclusions about the inflation of expenses on the basis of surmises and conjectures. Further, the Assessing Officer has arrived at the above said conclusions for the assessment year 2007-08 and he has applied the same for all the four years under consideration. It is well settled that the income tax proceedings of each year is distinct and separate and hence the decision has to be taken on each of the issue on the basis of facts prevailing in each year. Hence, we are of the view that the Assessing Officer was not right in law in applying the conclusions reached by him for the assessment year 2007-08, that too on the basis of surmises and conjectures, to the four years under consideration. Thus, in effect, the Assessing Officer has not proved that there was concealment of particulars of income or furnishing of inaccurance particulars of income in all the four years under consideration.” In view of the aforesaid fact finding, this Court is not obliged to reach further fact finding, as there is no allegation against the aforesaid finding as being perverse. The learned Tribunal has also found that the penalty proceedings is not justified, as the assessee has satisfied the deeming provision given in Explanation 1 to Section 271 of the Act. It was also recorded that the assessee did not conceal any particulars. In view of the aforesaid situation, we dismiss the appeal. _____________________ K.J. SENGUPTA, CJ ________________ K. C. BHANU, J Date: 22.08.2013 ES "