THE CHIEF COMMISSIONER OF INCOME TAX V. BHARTO DEVI

ITA/392/2006

AI Insights

This case involves an appeal by the Chief Commissioner of Income-Tax against Smt. Bharto Devi concerning the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially levied by the Assessing Officer on grounds of non-declaration of income by the assessee, which was claimed to be exempt. The CIT(A) and the Tribunal both upheld the assessee's position, leading to the current appeal. The main legal questions revolved around the correctness of the Tribunal's decision in dismissing the revenue's appeal against the penalty and the interpretation of the satisfaction required for initiating penalty proceedings.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 679767 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 25-02-2011
• Assessment Year: misc
• Other Referred Cases: Munish Iron Store (2003) 263 ITR 484, Commissioner of Income Tax Vs Pearey Laland sons (EP) Ltd. (2009) 308 ITR 438 (P&H)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAVI SHANKER
• Assessee Lawyers: URVASHI DHUGGA
• Keywords: Appeal; Assessment; Capital Gain; Concealment; Exemption; Income Tax; Penalty; Tribunal
• Section: 148; 271(1)(c); 54B; 54F; 260A

Judgement Text

"Income-tax Appeal No. 392 of 2006 -1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No. 392 of 2008 Date of decision: 25.2.2011 The Chief Commissioner of Income-Tax, (OSD), Faridabad ...Appellant Versus Smt. Bharto Devi ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant. Mr. Ravi Shanker, Advocate for the respondent **** ADARSH KUMAR GOEL, J ( Oral) . 1. Since Registry has not been able to send the file on account of fire in the Court premises, learned counsel for the revenue has furnished copy of paper-book which is taken on record. We proceed to decide the matter after hearing learned counsel for the parties. 2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 against order dated 16.9.2005 passed by the Income Tax Appellate Tribunal, Delhi Bench 'A',Delhi in ITA No.3873/DEL/2004, for the assessment year 1996-97, claiming following substantial questions of law:- “i). Whether on the facts and in the circumstances of Income-tax Appeal No. 392 of 2006 -2- *** the case, the Hon'ble ITAT was right in law in dismissing the appeal of the Revenue against the order of the CIT(A) in deleting the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act despite of the fact that the assessee failed to file her return of income even in response to notice u/s 148 and no details as required by the Assessing Officer were furnished? ii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in following the judgment of the Hon'ble Punjab and Haryana High Court in the case of Munish Iron Store (2003) 263 ITR 484 even though the facts of the present case are entirely different than the case of M/s Munish Irong Store (supra)? iii) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was correct in not deciding the issue of levy of penalty u/s 271(1)(c) of the Income Tax Act on merits of the case and in cancelling the penalty merely on the issue of recording of satisfaction?” 3. The assessee was sought to be taxed on the capital gain received on account of sale of land. The assessee claimed exemption under Section 54B and 54F on the ground that amount received by way of capital gain was utilized in purchase of Income-tax Appeal No. 392 of 2006 -3- *** agricultural land and for construction of a new house. The said plea was not accepted by the Assessing Officer. On appeal, the CIT(A) affirmed the finding of the Assessing Officer that the land purchased was not after the date of sale of land and claim under Section 54F could not be fully accepted as the investment by the assessee was in two residential houses and not in one. However, for one residential house claim for exemption under Section 54F was allowed. On further appeal, the Tribunal upheld the claim of the assessee. It was held that investment by the assessee was only in one residential house and investment in land was after the sale. 4. Learned counsel for the assessee states that no appeal has been filed by the revenue against the order of the Tribunal whereby plea of the assessee for exemption was upheld. The assessee having succeeded in quantum proceedings and present appeal being on the question of penalty, the same was liable to dismissed. 5. The Assessing Officer had levied penalty under Section 271(1)(c) on the ground that the assessee failed to declare her income and the plea of the assessee that income was exempted from tax was not correct. The CIT(A) held that the concealment was not proved and therefore, set aside the penalty which view was upheld by the Tribunal. The Tribunal has given additional reason that in the order of assessment due satisfaction was not recorded for initiating penalty proceedings. 6. We have heard learned counsel for the parties. Income-tax Appeal No. 392 of 2006 -4- *** 7. Learned counsel for the revenue submits that even if due satisfaction for initiating penalty proceedings was not specifically recorded in the order of assessment, such satisfaction could be discerned from the said order and thus, levy of penalty was valid. Reliance has been placed on Commissioner of Income Tax Vs Pearey Laland sons (EP) Ltd. (2009) 308 ITR 438 (P&H). She, however, expressed ignorance about success of the assessee in quantum matter. 8. In view of the statement made by the learned counsel for the assessee that in quantum proceedings, the issue had become final in favour of the assessee, we are of the view that it is not necessary to go into the question of penalty. Accordingly, this appeal is dismissed. (Adarsh Kumar Goel) Judge February 25, 2011 (Ajay Kumar Mittal) Pka Judge "