CIT, FARIDABAD V. M/S NUWARE INDIA LTD.

ITA/973/2008

AI Insights

The case involves the Commissioner of Income Tax, Faridabad as the appellant and M/s Nuware India Ltd. as the respondent. The appeal was filed against the order of the Income Tax Appellate Tribunal, Delhi, which had deleted a penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal's decision was based on the Supreme Court's judgment in Virtual Soft Systems Ltd v. CIT, which was later overruled by a larger bench of the Supreme Court in Commissioner of Income Tax v. Gold Coin Health Food Pvt Ltd. The High Court of Punjab and Haryana decided to remand the case back to the Tribunal for a fresh decision, considering the new precedent set by the Supreme Court.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 738003 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 31-07-2009
• Assessment Year: misc
• Other Referred Cases: Virtual Soft Systems Ltd v. CIT, Commissioner of Income Tax v. Gold Coin Health Food Pvt Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: VIBHAV JAIN
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Assessment; Income Tax; Penalty; Virtual Soft Systems Ltd v. CIT; Gold Coin Health Food Pvt Ltd
• Section: 271(1)(c); 268A; 260A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 973 of 2008 (O&M) Date of decision: 31.7.2009 The Commissioner of Income Tax, Faridabad ......Appellant Vs. M/s Nuware India Ltd., 20/6, Mathura Road, Faridabad. ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Mr.Rajesh Katoch, Advocate, for the appellant. Mr.Vibhav Jain, Advocate, for respondent. **** ADARSH KUMAR GOEL, J. (Oral) The revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 ( for short, “the Act”) against the order dated 7.12.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench”H” Delhi in ITA No. 1960 (DEL) of 2007 for the assessment year 1995-96, proposing to raise the following substantial questions of law: A “Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in holding that the judgment in Virtual Soft Systems Ltd v. CIT, 290-ITR 83 (SC) will apply eve after insertion of Explanation 4 to Section 271(1)(c) of the Income Tax Act, 1961 with effect from 1.4.1976?” B “ Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is right in ITA No. 973 of 2008 -2- deleting the penalty imposed under Section 271(1) (c) of the Income Tax Act, 1961 on the ground that the total income of the assessee has been assessed at a loss figure?” C “ Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT is right in confirming the deletion of penalty under Section 271(1)c) by relying on the Apex Court decision in the case of Virtual Soft Systems Ltd., (189-ITR-83) as the issue has now been finally resolved by the larger bench of the Hon'ble Supreme Court in the decision dated 18.8.2008 in the case of Commissioner of Income Tax Vs. Gold Coin Health Food (P) Ltd. [(2008) 218 CTR (SC) 359]?” D That the tax effect involved in this cae is Rs.10,70,000/- , which is more than the monetary limits prescribed by the DBDT in instruction No. 5 of 2008 dated 15.5.2008 issued under Section 268A of the Income Tax Act for filing appeal before the Hon'ble High Court.” The assessee declared loss but during assessment, the Assessing Officer did not accept the extent of loss claimed and addition was made to the income. Proceedings were also initiated for penalty. Finally, penalty was levied. On appeal, CIT(A) deleted the penalty while ITA No. 973 of 2008 -3- upholding the addition. The Tribunal dismissed the appeal of the revenue following the judgment of the Hon'ble Supreme Court in Virtual Soft Systems Ltd v. CIT (2007) 289 ITR 83. It is stated that the judgment relied upon by the Tribunal has been overruled by the Hon'ble Supreme Court in Commissioner of Income Tax v. Gold Coin Health Food Pvt Ltd., (2008) 304 ITR 308. This is not disputed by learned counsel for the assessee. In view of the above, this appeal is allowed. The order of the Tribunal is set aside and the matter is remanded to the Tribunal for fresh decision in accordance with law. Parties are directed to appear before the Tribunal for further proceedings on 7.12.2009. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) July 31, 2009 JUDGE raghav Note: Whether this case is to be referred to the Reporter? ........Yes/No ITA No. 973 of 2008 -4- "