The Commissioner of Income Tax Amritsar V. Sh. Kesho Dass, HUF, Pathankot

ITR/18/2000

AI Insights

The case involves the Commissioner of Income Tax, Amritsar, as the petitioner, and Sh. Kesho Dass, HUF, Pathankot, as the respondent. The core issue was the cancellation of penalties levied under Section 271(1)(c) of the Income Tax Act for the assessment years 1976-77 and 1977-78 due to late filing of income tax returns and concealment of income. The Income Tax Appellate Tribunal had earlier cancelled these penalties, a decision upheld by the Commissioner of Income Tax (Appeals). The Revenue's appeal to the High Court led to a reference question about the legality of the Tribunal's decision on penalty cancellation. The High Court, considering the minimal penalty amounts and the circumstances, chose not to answer the reference question, effectively closing the penalty proceedings.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 799660 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 06-12-2010
• Assessment Year: misc
• Other Referred Cases: Income Tax Reference Nos. 15 to 17 of 2000
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: SALIL KAPOOR; SAURABH KAPOOR; ANKIT GUPTA
• Assessee Lawyers: SUKANT GUPTA
• Keywords: Assessment Year; Concealment of income; HUF; Income Tax; Penalty
• Section: 148; 271(1)(c); 139; 271(1)(a); 256(2); 147(a)

Judgement Text

" Income Tax Reference Nos. 18 & 19 of 2000 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Reference Nos. 18 & 19 of 2000 Date of decision: 6.12.2010 The Commisisoner of Income Tax Amritsar --- Petitioner Versus Sh. Kesho Dass, HUF, Pathankot --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Sukant Gupta, Standing Counsel for the petitioner. Mr. Salil Kapoor, Saurabh Kapoor and Ankit Gupta, Advocates for the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of two references, Income Tax Reference Nos. 18 and 19 of 2000. In these references filed under Section 256(2) of the Income Tax Act, 1961 (for short “the Act”), the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, (for brevity “the Tribunal”) on the direction of this Court, has referred the following question of law for its opinion: “Whether on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961?” Income Tax Reference Nos. 18 & 19 of 2000 2 The references relate to the levy of penalty of Rs. 24,860/- for the assessment year 1976-77 and Rs. 19,509/- for the assessment year 1977-78, under Section 271(1)(c) of the Act. The background in which the above question came to be referred is that the assessee did not file returns of income for the assessment years 1976-77, 1977-78 and 1978-79 within the time stipulated under Section 139 of the Act. The Income Tax Officer having come to know that some income chargeable to tax had escaped assessment relating to the aforesaid assessment years initiated proceedings against the assessee under Section 148 and issued notice to the assessee under Section 147(a) of the Act. The assessee having been found to have violated the relevant provisions, proceedings for levy of penalty were also initiated. Consequently, penalties were levied on the assessee by the assessing officer under Sections 271(1)(a)/271(1)(c) of the Act on account of delay in filing the returns and concealment of income. When the matter came up in appeal at the instance of the assessee before the Commissioner of Income Tax (Appeals), for short [“CIT(A)”], it was noticed by the said appellate authority that the assessment orders, which had given rise to initiation of proceedings for levy of penalties, had itself been cancelled by the Tribunal. The CIT(A), thus, cancelled the penalties as well. The above order passed by the CIT(A) was upheld by the Tribunal in appeal carried by the Revenue. The Tribunal by order dated 22.8.1994, rejected the Reference Application filed by the CIT under Section 256(1) of the Act and held that no referable question of law arose out of its order. The Revenue thereafter filed a petition under Section 256(2) before this Court and it was on the direction of Income Tax Reference Nos. 18 & 19 of 2000 3 this Court that the above mentioned question came to be referred for the opinion of this Court. Income Tax Reference Nos. 15 to 17 of 2000, arise from the order of the Tribunal whereby the Tribunal had annulled the assessment proceedings holding that the notice under Section 148 of the act had not disclosed the status of the assessee as HUF and, therefore, the proceedings in pursuance to such notice were invalid. Accordingly, the penalty had also been cancelled. However, vide order of even date, the aforesaid references have been answered in favour of the revenue and now the matter shall be required to be adjudicated on merits. Learned counsel for the assessee submitted that the original Karta of the assessee HUF, Shri Kesho Dass has expired and his son is now the Karta of Kesho Dass HUF who is now defending the proceedings. He submitted that keeping in view the quantum of Rs. 24,860/- and 19,509/- only, involved and that the penalty proceedings are relating to assessment years 1976-77 and 1977-78, more so, the issue being debatable as to whether there had been deliberate concealment on the part of the assessee or not so as to hold it liable under Section 271(1)(c) of the Act, the matter requires to be dealt with leniently and with compassion. Learned counsel for the revenue contended that in view of the decision of even date of this Court in Income Tax Reference Nos. 15 to 17 of 2000, the question of law deserves to be answered in favour of the revenue and the matter requires to be examined by the Tribunal. We have given our thoughtful consideration to the respective submissions made by the learned counsel for the parties. Income Tax Reference Nos. 18 & 19 of 2000 4 Ordinarily, in view of the decision in Income Tax Reference Nos. 15 to 17 of 2000, the question of law has to be answered in favour of revenue but keeping in view the totality of peculiar facts and circumstances of the case, namely, that the penalty amount involved is just Rs. 24,860/- and Rs.19,509/- only, relating to assessment years 1976-77 and 1977-78; the question of levy of penalty under Section 271(1)(c) in the present facts is debatable, and that the original Karta of the assessee-HUF has since expired, we are inclined to leave the question of law unanswered and close the penalty proceedings under Section 271(1)(c) of the Act. The References stand disposed of accordingly. A photo copy of this order be placed on the file of Income Tax Reference No. 19 of 2000. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) December 6, 2010 JUDGE *rkmalik* "