THE COMMISSIONER OF INCOME TAX V. THE ESTATE

ITA/588/2008

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Income Tax Officer against M/s. The Estate Sheriff Centre concerning a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was initially confirmed by the Assessing Authority and the Commissioner of Income Tax Appeals but was later quashed by the Tribunal. The Tribunal's decision was based on their findings, which differed from the detailed examination and findings of the lower authorities. The High Court found that the Tribunal did not provide adequate reasons for interfering with the concurrent findings of fact by the lower authorities and thus remanded the case back to the Tribunal for a thorough re-evaluation.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 728025 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 23-06-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S PARTHASARATHI
• Assessee Lawyers: K V ARAVIND
• Keywords: Audit; Concealment of income; Income Tax; Incorrect particulars; Penalty
• Section: 271(1)(c); 142(2A); 260-A

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 23RD DAY OF JUNE, 2014 PRESENT THE HON’BLE MR.JUSTICE N.KUMAR AND THE HON’BLE MR.JUSTICE B.MANOHAR INCOME TAX APPEAL NO.588 OF 2008 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX C.R.BUILDING QUEENS ROAD BANGALORE 2. THE INCOME TAX OFFICER WARD – 1 (1) C.R.BUILDING QUEENS ROAD BANGALORE … APPELLANTS (BY SRI.K.V.ARAVIND, ADVOCATE) AND: M/S. THE ESTATE SHERIFF CENTRE 5TH FLOOR, 73/1 ST. MARKS ROAD BANGALORE … RESPONDENT (BY SRI.S.PARTHASARATHI, ADVOCATE) - 2 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT, 1961 ARISING OUT OF ORDER DATED 12.12.2007 PASSED IN ITA NO.578/BNG/2006, FOR THE ASSESSMENT YEAR 2000- 01, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, BANGALORE IN ITA NO.578/BNG/2009 DATED 12.12.2007 AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, WARD-1(1), BANGALORE. THIS APPEAL COMING ON FOR HEARING THIS DAY, N.KUMAR J., DELIVERED THE FOLLOWING:- JUDGMENT The Revenue has preferred this appeal against the order passed by the Tribunal, which has set aside the order passed by the Assessing Authority imposing penalty under Section 271(1)(c) which was confirmed by the Commissioner of Income Tax Appeals. 2. The assessee is a real estate developer. He filed return of income tax for the assessment year 2000-01 on 18.3.2002 showing income of Rs.32,232/-. He has - 3 - followed the method of revenue recognition on project completion basis. The case was selected for scrutiny. The statement of accounts were not audited and analysis of the accounts were complex in nature. The Assessing Authority recommended to the Commissioner of Income Tax that this case deserves to be audited in view of the provisions contained in Section 142(2A), the Commissioner approved this proposal. One M/s. Radhakrishna and Associates, Chartered Accountants were appointed to conduct the audit under Section 142(2A) of the Act. They completed the audit and submitted the audit report on 29.8.2003. The auditors recommended that there was under statement of income under the various counts totaling to Rs.98,69,674/-. The Assessing Officer forwarded the detailed comments of the Chartered Accountants to the assessee for their comment. The assessee accepted all the recommendations of the auditors and expressed their - 4 - agreement for the additions to the total income recommended by the Chartered Accountants. On that basis, the assessment was completed on a total income of Rs.99,04,910/- on 5.9.2003. 3. During the course of such assessment, penalty proceedings under Section 271(1)(c) were initiated. The assessee contested the penalty proceedings. The Assessing Authority on careful examination of the audit report item wise, found that had the Department not sought for expert opinion of the said auditor, the said amount would have escaped taxation. It is a clear case of concealment of income as well as furnishing incorrect particulars and therefore he confirmed the penalty. Aggrieved by the said order, the assessee preferred an appeal which came to be dismissed. Aggrieved by these orders, the assessee preferred an appeal to the Tribunal. - 5 - 4. The Tribunal only took into consideration, the deposit of the BWSSB and the amount shown as amount recoverable from M/s. Titan Industries and came to the conclusion that there are certain mistakes and it was pointed out, the assessee has accepted the same. Therefore, in those circumstances penalty was uncalled for. Accordingly, they have quashed the entire order. 5. We have heard the learned counsel for the parties. 6. The material on record discloses that the penalty was imposed on careful examination of the detailed report under various heads: (i) salary and wages debited to the Profit and Loss account (ii) sales tax debited to project expenses account (iii) BWSSB Deposit (iv) under statement of stock (v) residual inflation - 6 - 7. The Assessing Authority as well as the First Appellate Authority have dealt with these items in detail and they have recorded their finding. It is a concurrent finding. The Tribunal were to interfere with the said concurrent finding, it has to come out with better reasons and point out where the lower authorities have gone wrong. The said exercise has not been done by the Appellate Authority. Unless that exercise is done by the Tribunal, it gets no jurisdiction to interfere with concurrent finding of fact recorded by two authorities. In that view of the matter, the impugned order cannot be sustained. Hence, we pass the following ORDER The appeal is allowed. The order passed by the Tribunal is set aside. The entire matter is remanded back to the Tribunal for fresh consideration in - 7 - accordance with law and in the light of the observations made above. The parties to bear their own cots. Sd/- JUDGE Sd/- JUDGE AHB "