COMMISSIONER OF INCOME TAX-VI V. MILAN S PATEL

TAXAP/1388/2011

AI Insights

The case involves an appeal by the Commissioner of Income Tax-VI against Milan S Patel concerning a penalty imposed under section 271D of the Income Tax Act, 1961, for contravention of section 269SS. The penalty was initially set at Rs. 13,00,000 but was later reduced to Rs. 1,00,000 by the CIT(A). The Tribunal dismissed the department's appeal, affirming the deletion of the penalty based on the earlier deletion of the related additions in the assessee's income. The High Court of Gujarat, in its judgment, agreed with the Tribunal's findings and dismissed the appeal, stating that the substantial question of law raised by the Revenue did not hold merit as the penalty was based on additions that had been set aside.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 729359 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 06-09-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: PAURAMI SHETH
• Keywords: Block period; Penalty; Quantum appeal; Search and seizure; Unexplained expenditure
• Section: 69C; 271D; 260A; 269SS

Judgement Text

"TAXAP/1388/2011 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1388 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX-VI - Appellant(s) Versus MILAN S PATEL – Opponent(s) ========================================================= Appearance : MS PAURAMI B SHETH for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 06/09/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) This appeal filed by the Revenue under section 260A of the Income T ax Act, 1961, is directed against common order dated TAXAP/1388/2011 2/4 JUDGMENT 29/04/2011 of the Income T ax Appellate T ribunal , Ahmedabad B Bench in IT (SS) A No. 38/2008 with Cross Objection No. 85/200. The appeal relates in so far as the common order is referable to IT SS AO. 38 of 2008. 1.1 The following question is raised by the revenue as substantial question of law. “Whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied u/s 271D of the act amounting to Rs. 12,00,000/- out of Rs. 13,00,000/- being in contravention of the provisions of section 269SS of the act?” 2. We heard learned advocate Ms. Paurami B. Sheth for the applicant. 3. The relevant facts in the background are that assessment for the block period 1.4.95 to 12.7.01 was undertaken in assessee's case pursuant to a search carried out at his premises on 12.7.2001. The Assessing Officer treated certain transactions as an unexplained expenditure under section 69C of the Income T ax Act, 1961 (hereinafter referred to ‘the Act’ for sake brevity) In the income of the assessee, an addition was made for Rs. 89,500 as unexplained interest paid in cash in respect of loan from three parties, namely one Amrutbhai Patel, Shri Dipakbhai patel and Dr. Bharat J. Mehta. TAXAP/1388/2011 3/4 JUDGMENT 3.1 The aforesaid additions came to be deleted by the Commissioner of Income T ax (Appeal) and the deletion was confirmed by the T ribunal. The Assessing Officer initiated penalty proceedings at the relevant time. He imposed penalty of Rs. 13 lacs under section 271D of the Act by his order dated 23.3.2006. The assessee preferred an appeal before CIT(A) challenging the penalty order. The CIT(A) restricted penalty amount to Rs. 1 lac and the balance was deleted by order dated 11.12.2007. 3.2 The department preferred appeal before Income T ax Appellate T ribunal against the order of CIT(A). The T ribunal dismissed the appeal by observing and holding as under : “The AO had also made certain other additions for unexplained interest and the total addition for unexplained interest was Rs. 89,500/- . In the quantum appeal, the CIT(A) deleted the addition vide order dated 20/10/2003. The Revenue had filed the appeal against the order of the CIT(A) which was dismissed by the ITAT in IT(SS)A No. 432/Ahd/2003 dated 27/7/2007. By these facts, in the quantum appeal, the CIT(A) deleted the penalty with the finding that in the quantum appeal, the CIT(A) as well as the Tribunal has deleted the addition made under Section 69C. The finding by the CIT(A) in the penalty order is based upon the finding of the ITAT in the quantum appeal. On the facts, we find no infirmity in the order of the CIT(A) whereby he deleted the penalty levied under Section 271D in respect of borrowing from S/Shri Dipakbhai Amrutbhai and Bharat Mehta. The same is sustained and the Revenue's appeal is dismissed.” 4. The findings of the T ribunal were eminently justified in view of the fact that the Assessing Officer had imposed penalty on the basis TAXAP/1388/2011 4/4 JUDGMENT of the additions he had originally made in his assessment order. Those additions were already deleted, and the deletion was confirmed by the Income T ax T ribunal. Therefore, when the quantum appeal itself was allowed and the additions made were set aside, the whole premise on which imposition of penalty was based, ceased to exist. In the circumstances, no ground could survive to sustain the penalty. The appeal does not raise any substantial question of law and is devoid of merit. 5. The appeal is accordingly dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi "