The Commissioner of Income Tax-II V. M/s.Grand Ville Realtors (P) Ltd

ITTA/385/2013

AI Insights

The case involves an appeal by the Commissioner of Income Tax-II Hyderabad against M/s. Grand Ville Realtors (P) Ltd., concerning the deletion of a penalty under section 271(1)(c) of the Income Tax Act by the ITAT. The primary legal questions revolved around whether the ITAT was justified in its decision to delete the penalty, despite the presence of incriminating evidence and estimated assessments based on seized documents during a search operation under section 132 of the Income Tax Act. The High Court examined the ITAT's judgment and the legal precedents cited, including landmark judgments from the Supreme Court, to determine the appropriateness of the penalty's deletion.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 719091 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 30-08-2013
• Assessment Year: misc
• Other Referred Cases: K.P. Madhusudhanan (251 ITR 99), Dharmendra Textiles (306 ITR 277)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Concealment of income; Inaccurate particulars of income; Penalty; Search operation; Estimated assessment
• Section: 271(1)(c); 132

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU INCOME TAX APPELLATE TRIBUNAL APPEAL NO.385 OF 2013 DATED:30.8.2013 Between: The Commissioner of Income Tax-II Hyderabad … Appellant And M/s. Grand Ville Realtors (P) Ltd., 6-3-1186/7/2, Near Hotel Grand Kakatiya Begumpet Hyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. NO.385 OF 2013 JUDGMENT: (per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) We have heard the learned counsel appearing for the appellant and gone through the judgment and order of the learned Tribunal. This appeal is sought to be admitted on the following suggested questions of law: (A) “Whether, on the facts and in the circumstances of case, the ITAT is justified in deleting the penalty levied u/s.271(1)(c) of the Income Tax Act, by holding that the assessments were estimated ones – thereby ignoring the material facts of incriminating evidence seized during the search? (B) Whether, on the facts and in the circumstances of case, the ITAT is justified in ignoring the landmark judgments of the Apex Court in the case of K.P. Madhusudhanan (251 ITR 99) and Dharmendra Textiles (306 ITR 277) which judgments would support and warrant the levy of penalty u/s.271(1)(C) in respect of all assessment years involved? (C) Whether, on the facts and in the circumstances of case, the ITAT is justified in ignoring the material fact that the estimated assessments were based on documents, loose sheets viz. Annexure A/GVC/BPT/2, A/GVC/BPT/28, A/YRR/2, 4 & 5 and A/SVKR/2 seized in the course of search operation U/s.132 of the Income Tax Act? (D) Whether, on the facts and in the circumstances of case, the ITAT is justified in ignoring the material fact that the assessee had disclosed Rs.2.80 crores on account of various seized materials viz. Annexure A/GVC/BPT/2, A/GVC/BPT/28, A/YRR/2, 4 & 5 and A/SVKR/2? (E) Whether, on the facts and in the circumstances of case, the ITAT is justified in ignoring the material fact that the assessee had not disputed the post-search assessments for the assessment years 2001-02 to 2007-08? (F) Whether, on the facts and in the circumstance of case, the ITAT is justified in holding that the assessee had not disputed the assessment with a view to maintain good relation with the Department – when the Hon’ble Supreme Court had categorically held in K.P. Madhusudhanan (251 ITR 99) that an assessee’s consent to addition to buy peace was no longer validly applicable plea subsequent to the introduction of Explanation to Section 271(1)(c)? (G) Whether, on the facts and in the circumstance of case, the ITAT is justified in holding that estimated assessment would not automatically lead to conclusion of commission of fraud, gross/wilful neglect on part of the assessee, thereby importing mens rea into consideration, which is contrary to the decision of Hon’ble Supreme Court in the case of Dharmendra Textiles 306 ITR 277?” It appears, the learned Tribunal has not upheld the initiation of the penalty proceedings. The learned Tribunal found that the Assessing Officer has not accepted the books of account and come to an estimated profit. When there is an estimation of profit, we are of the view, as correctly held by the learned Tribunal, there is no scope for concealment of income or furnishing inaccurate particulars of income. Under the circumstances, the learned Tribunal, on fact, found that there was no justification to initiate penalty proceedings. Accordingly, we dismiss this appeal. There will be no order as to costs. ________________________ K.J. SENGUPTA, CJ ______________________ K.C. BHANU, J 30.8.2013 bnr "