ORIENTAL SHOPPING COMPLEX,KOCHI-16 V. ASST.COMMR.OF INCOME TAX,CIRCLE-2,EKM.

ITA/156/2008

AI Insights

The case involves the Oriental Shopping Complex, represented by its managing partner, Mr. Dilip Kumar R. Lakhani, who appealed against the penalty imposed by the Income Tax Department under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was based on the non-disclosure of an amount of \'4,50,000 in the balance sheet and return, despite its reflection in the profit and loss account. The Tribunal's decision to uphold the penalty was challenged, leading to this appeal. The High Court, after reviewing the submissions and precedents, concluded that the Tribunal had not adequately considered the implications of the certificate under Section 230A, which could have influenced the penalty's applicability.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 699685 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 22-11-2016
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Reliance Petroproducts Pvt.Ltd [322 ITR 158 (SC)], T.Ashok Pai v. CIT [292 ITR 11 (SC)], P.C.Joseph & Bros v. CIT [243 ITR 818 (Ker.)], India Cine Agencies v. Dy. CIT [275 ITR 430 (Mad.)], Mohd. Ibrahim Azimulla v. CIT [131 ITR 680 (All.)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: PREETHA NAIR
• Keywords: Appeal; Assessment; Concealment; Income Tax; Penalty; Tribunal; Inaccuracy
• Section: 271(1)(c); 230A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY, THE 22ND DAY OF NOVEMBER 2016/1ST AGRAHAYANA, 1938 ITA.No. 156 of 2008 ( ) ------------------------ AGAINST THE ORDER/JUDGMENT IN ITA 260/COCH/2005 (1992-93) of I.T.A.TRIBUNAL,COCHIN BENCH DATED 14-08-2008 APPELLANT(S)/RESPONDENT IN ITA:: ------------------------------- ORIENTAL SHOPPING COMPLEX, NO.38/567, CHOICE TOWERS, MANORAMA JUNCTION, KOCHI-16, REPRESENTED BY ITS MANAGING PARTNER, MR.DILIP KUMAR R.LAKHANI. BY ADV. SMT.PREETHA S.NAIR RESPONDENT(S)/APPELLANT IN ITA:: -------------------------------- ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, DIVISION (2), ERNAKULAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPT. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22-11-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA 156/08 APPENDIX APPELLANT'S ANNEXURES ANNEXURE-A : COPY OF ASSESSMENT ORDER FOR 1992-93 ISSUED BY THE ASSISTANT COMMISSIONER, DEPARTMENT TO THE APPELLANT DATED 27.11.1998. ANNEXURE-B : COPY OF ORDER ISSUED BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE APPELLANT DATED 10.11.2004. ANNEXURE-C : COPY OF THE ORDER OF THE TRIBUNAL DATED 14.08.2008 ISSUED TO THE APPELLANT. ANNEXURE-D : COPY OF ORDER ALONG WITH THE CHALAN AND LETTER DATED 05.11.2008. (PRODUCED ALONG WITH IA 2857/2008) //TRUE COPY// PA TO JUDGE. jg-30/11 THOTTATHIL B.RADHAKRISHNAN & DEVAN RAMACHANDRAN, JJ. .................................................................... ITA No.156 of 2008 .................................................................... Dated this the 22nd day of November, 2016. J U D G M E N T Thottathil B.Radhakrishnan, J. 1.We have heard the learned counsel for the appellant and the learned Senior counsel for Government of India (Taxes). 2.In modification of the questions of law on which notice has been issued at the time of admission, we recast the following as the only substantial question of law arising for decision in this case: “On the facts and in the circumstances of the case, was the Tribunal justified in holding that ingredients of Section 271(1)(c) of the Income Tax Act, 1961 have been satisfied to sustain the penalty imposed on the assessee, more particularly in view of the certificate issued under Section 230A of the said Act, as if then stood?” ITA156/08 -2- 3.During the course of assessment proceedings, it was noticed that an amount of `4,50,000/- was found reflected in the profit and loss account, but was not shown in the balance sheet or included in the return. This was the basis for issuance of proceedings with reference to Section 271(1)(c) of the Income Tax Act, 1961, 'the Act', for short. After the assessment proceedings were concluded through an appellate proceedings therefrom, penalty proceedings were decided adverse to the interest of the assessee mulcting the assessee with liability by way of penalty fixed at the minimum possible. 4.Going by the submissions on behalf of the assessee and the Revenue, we see that the plea of the assessee is built on the admitted position, where the assessee does not dispute the addition made in the assessment. The question whether the assessee was eligible to any lenience in the penalty proceedings on account of certificate issued under Section 230A of the Act as ITA156/08 -3- if then stood, was essentially a moot point. Fundamentally, the question whether there was concealment or inaccuracy in relation to particulars to bring the allegations against the assessee under the canopy of Section 271(1)(c) of the Act also had to be considered. 5.Having regard to the precedents governing the field, including Commissioner of Income Tax v. Reliance Petroproducts Pvt.Ltd [322 ITR 158 (SC)], T.Ashok Pai v. CIT [292 ITR 11 (SC)], P.C.Joseph & Bros v. CIT [243 ITR 818 (Ker.)], India Cine Agencies v. Dy. CIT [275 ITR 430 (Mad.)] and Mohd. Ibrahim Azimulla v. CIT [131 ITR 680 (All.)], and taking note of the fact that the CIT (Appeals) had taken a view in favour of the assessee, we are of the considered opinion that the learned Tribunal ought to have weighed the effect of the certificate issued under Section 230A as well as the material facts and particulars to determine as to whether there is any concealment or inaccuracy in the particulars furnished to render a final decision on the appeal filed by the ITA156/08 -4- Revenue against the decision of the CIT (Appeals). We are afraid that such consideration has not come true. Therefore, it is a situation where the decision has been rendered without appropriately appreciating the facts, materials and evidence, in accordance with law, which would in turn give rise to substantial question of law when the issue is deliberated in this appeal under Section 260A of the Act. The substantial question of law formulated as above is answered accordingly. We are, therefore, of the view that this is an eminently fit case for an order of remit to the Tribunal for re-consideration of the matter in the light of what is stated above. In the result, the impugned order of the Income Tax Appellate Tribunal is set aside and the Tribunal is directed to re-consider ITA No.260/Coch/2005 (1992-93). Parties are directed to mark appearance before the Tribunal on 21.12.2016. The interim order dated 18.12.2008 on I.A.No.2857 of 2008 granting stay on condition of furnishing of Bank Guarantee will continue until the ITA156/08 -5- Tribunal takes a final decision as above. The appeal is ordered accordingly. (THOTTATHIL B.RADHAKRISHNAN, JUDGE) (DEVAN RAMACHANDRAN, JUDGE) jg-22/11 "