Improvement Trust Dr. Mela Ram Road, Bathinda through its Chairman, Shri Varinder Kumar Sharma, IAS V. The Assistant Commissioner of Income Tax, Circle I, Bathinda

ITA/79/2014

AI Insights

The case involves the Improvement Trust Dr. Mela Ram Road, Bathinda, which appealed against the penalties imposed under various sections of the Income Tax Act, 1961, related to the assessment year 2005-06. The trust, a government entity, argued that the penalties were unjustified as the income in question was under appeal and that the trust's status as a government undertaking negated any personal interest or mens rea. The ITAT had upheld the penalties, leading to the trust's appeal in the High Court. The High Court decided to remand the case back to the ITAT, pending a decision on the trust's taxability, which is being reconsidered for years prior to 2009-10.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 674540 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 06-08-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Punjab Town Improvement Act, 1922
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: G S HOODA
• Assessee Lawyers: K L GOYAL; RAJIV SHARMA
• Keywords: Income Tax; Natural Justice; Penalty; Taxability; Government trust
• Section: 143(2); 143(1); 271(1)(c); 12AA; 271(1)(b); 260A; 234A; 10(20A); 271(b)

Judgement Text

"ITA No.79 of 2014 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.79 of 2014 (O&M) Date of decision: 06.08.2014 Improvement Trust Dr. Mela Ram Road, Bathinda through its Chairman, Shri Varinder Kumar Sharma, IAS ……Appellant Vs. The Assistant Commissioner of Income Tax, Circle I, Bathinda …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. K.L.Goyal, Sr. Advocate with Mr. Rajiv Sharma, Advocate for the appellant. Mr. G.S.Hooda, Advocate for the revenue. Ajay Kumar Mittal,J. 1. This order shall dispose of ITA Nos.17, 19, 20, 21, 23 and 79 of 2014 as according to the learned counsel for the parties, the issue regarding penalty under Sections 271(1) (c)/271(1)(b)/271-B of the Act is involved in these appeals except in ITA No.23 of 2014 where imposition of interest under Section 234A of the Act is involved. However, the facts are being extracted from ITA No.79 of 2014. 2. ITA No.79 of 2014 has been preferred by the appellant trust under section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 15.10.2013, Annexure A.5 passed by the Income Tax GURBAX SINGH 2014.11.11 12:32 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.79 of 2014 (O&M) 2 Appellate Tribunal, Amritsar Bench, Amritsar (in short, \"the Tribunal) in ITA No.409(ASR)/2013 for the assessment year 2005-06, claiming following substantial questions of law:- \"i) Whether on the facts and circumstances of the case, the learned ITAT was justified in upholding the penalty in a mechanical manner? ii) Whether on the facts and circumstances of the case, the imposition of penalty under Section 271(1)(c) is justified as the addition in the income had been made on account of attribution of certain expenses to the closing stock, which is already in appeal? iii)Whether on the facts and circumstances of the case, the imposition of penalty under Section 271(1)(c) is justified as the appellant Trust is a Government of Punjab Undertaking and question of mens rea is totally ruled out as no personal interest is involved? iv)Whether the order passed by the learned ITAT is violative of principles of natural justice as proper opportunity of hearing had not been granted? 3. A few facts relevant for the decision of the controversy involved as narrated in ITA No.79 of 2014 may be noticed. The appellant is a trust constituted by the Government of Punjab under the Punjab Town Improvement Act, 1922 (in short, \"the 1922 Act\"). It is a semi government body and its income was exempt upto 1.6.2003 under Section 10(20A) when the income tax Act was modified and exemption of the appellant was withdrawn. Instructions in this regard were received from the Department of Local Government vide letter dated 19.10.2005 to pursue the matter and get the books audited and also apply for registration under Section 12AA of showing loss of ` 10,13,370/- on 27.1.2006. The return was initially GURBAX SINGH 2014.11.11 12:32 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.79 of 2014 (O&M) 3 processed under section 143(1) of the Act and later on the case was taken up in scrutiny by issuance of notice under Section 143(2) of the Act. The Assessing Officer calculated the total income at ` 4,15,50,455/- by adding certain income on valuation of closing stock on account of difference in receipts and bank reconciliations. The Assessing Officer initiated proceedings under Section 271(1)(c) of the Act and imposed a penalty to the tune of ` 1,39,85,883/- vide order dated 31.3.2011, Annexure A.1. Feeling aggrieved, the appellant filed appeal before the first appellate authority which was dismissed vide order dated 19.3.2013, Annexure A.3. The appellant filed further appeal before the Tribunal which was also dismissed vide order dated 15.10.2013, Annexure A.5. Hence the instant appeals by the appellant. 4. We have heard learned counsel for the parties and perused the record. 5. Learned counsel for the appellant submitted that since the issue whether the appellant trust is exempt from payment of income tax under the Act has been remitted to the Tribunal to decide afresh in respect of assessment years prior to 2009-10, in the interest of justice, issues of imposition of penalty in ITA Nos.79, 17,19, 20 and 21 of 2014 and interest in ITA No.23 of 2014 be also sent back so as to decide the same afresh by the Tribunal after the adjudication of the appeals relating to taxability of the income of the trust. No serious objection was raised by learned counsel for the revenue to the aforementioned submission. 6. In view of the above, the impugned orders in all the appeals are set aside and the matter is remanded to the Tribunal to decide the same with GURBAX SINGH 2014.11.11 12:32 I attest to the accuracy and integrity of this document High Court Chandigarh ITA No.79 of 2014 (O&M) 4 law after the issue regarding taxability of income of the appellant is decided by it. Needless to say, anything observed hereinbefore shall not be taken to be expression of opinion on the merits of the controversy. Sincere efforts shall be made to decide the matter expeditiously. As a result, all the appeals stand disposed of. (Ajay Kumar Mittal) Judge August 06, 2014 (Fateh Deep Singh) Judge ‘gs’ GURBAX SINGH 2014.11.11 12:32 I attest to the accuracy and integrity of this document High Court Chandigarh "