THE COMMISSIONER OF INCOME TAX - II AMRITSAR V. BAL KISHAN DHAWAN

ITA/209/2013

AI Insights

The case revolves around an appeal by the Commissioner of Income-tax-II, Amritsar against the decision of the Income Tax Appellate Tribunal, which had deleted a penalty imposed on Bal Kishan Dhawan, HUF, for claiming a deduction under Section 80IB. The revenue contended that the assessee's claim was mala fide as the basic conditions for the deduction were not fulfilled. However, both the Commissioner of Income Tax (Appeals) and the Tribunal found that the assessee's previous deductions for earlier assessment years and the lack of mala fide intent justified the deletion of the penalty. The Supreme Court's precedent in CIT versus Reliance Petro Products Pvt. Ltd. was pivotal in the Tribunal's decision, emphasizing that a mere rejection of a deduction claim does not automatically lead to a penalty.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 676119 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 08-10-2013
• Assessment Year: misc
• Other Referred Cases: CIT versus Reliance Petro Products Pvt. Ltd. 322 ITR 158
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: DANESH GOYAL
• Keywords: Bonafide mistake; Deduction; Mala fide; Penalty; Reliance Petro Products Pvt. Ltd.
• Section: 271(1)(c); 139(1); 80IB

Judgement Text

"Income Tax Appeal No.209 of 2013 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Income Tax Appeal No.209 of 2013 Date of Decision: 8.10.2013 The Commissioner of Income-tax-II, Amritsar ..Appellant versus Bal Kishan Dhawan, HUF, Prop.M/s B.K.D. Enterprises, Amritsar ..Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr. Danesh Goyal, Advocate, for the appellant. RAJIVE BHALLA, J. The revenue challenges order dated 08.03.2013 passed by the Income Tax Appellate Tribunal on the following questions of law:- “ (i) Whether the Hon'ble ITA T was correct in upholding the deletion of penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 of Rs.19,88,401/-by applying the ratio of Reliance Petro Products Pvt. Ltd.322 ITR 158 while the facts of the case and the questions involved in the present case are completely different from the said case. (ii) Where the basic conditions of claiming a deduction is not fulfilled, whether the act of claiming a deduction by an assessee in full knowledge of facts would affect penalty U/s 271(1)(c) of the Act; and Varinder Kumar 2013.10.23 14:59 I attest to the accuracy and integrity of this document High Court Chandigarh Income Tax Appeal No.209 of 2013 2 (iii) Whether wrong claim for deduction u/s 80IB could be attributed to a bonafide mistake and therefore penalty u/s 271(1)(c) is not attracted against the assessee.” Counsel for the appellant submits that as the assessee did not fulfil the basic conditions for claiming deduction, his claim for deduction was clearly mala fide, thereby rightly inviting penalty. Therefore, order passed by the Income Tax Appellate Tribunal, setting aside the penalty by placing reliance upon a judgment of the Hon'ble Supreme Court, in CIT versus Reliance Petro Products Pvt. Ltd.322 ITR 158, is clearly misplaced. We have heard counsel for the appellant and find no reason to hold that any substantial question of law arises for consideration. The Assessing Officer rejected the assessee's claim for deduction under Section 801B and simultaneously imposed penalty. Aggrieved by the said order, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) dismissed the appeal, but set aside the penalty. The appellant and the revenue filed separate appeals before the Income Tax Appellate Tribunal. The appeal filed by the revenue, challenging deletion of penalty, was dismissed. The Commissioner of Income Tax as well as the Income Tax Appellate Tribunal have recorded concurrent findings of fact that as the assessee was allowed deduction under section 801B of the Act for assessment years 2004-05 and 2005-06, but disallowed similar deduction for assessment year 2006-07 as the assessee's returns were beyond the period prescribed by Section 139(1) of the Act, it Varinder Kumar 2013.10.23 14:59 I attest to the accuracy and integrity of this document High Court Chandigarh Income Tax Appeal No.209 of 2013 3 cannot be said that the claim for deduction under section 801B of the Act was mala fide or raised with an object to evade tax. The Commissioner of Income Tax (Appeals) as well as the Income Tax Appellate Tribunal have rightly placed reliance upon a judgment of the Hon'ble Supreme Court in CIT versus Reliance Petro Products Pvt. Ltd.322 ITR 158, wherein, while considering the question of levy of penalty, it was held that the mere fact that an assessee's claim for deduction is not accepted, does not automatically invite penalty. The revenue has not been able to establish any fact that would enable us to hold that deduction claimed by an assessee was mala fide or raised with the object of evading tax. In view of what has been stated hereinabove, as no substantial question arises for adjudication, the appeal is dismissed. ( RAJIVE BHALLA ) JUDGE ( DR. BHARAT BHUSHAN PARSOON ) 08.10.2013 JUDGE VK Varinder Kumar 2013.10.23 14:59 I attest to the accuracy and integrity of this document High Court Chandigarh "