Research › Search › Judgment

Gujarat High Court · body

2016 DIGILAW 1727 (GUJ)

Commissioner of Income Tax-I v. N. Suseelan

2016-08-11

G.R.UDHWANI, K.S.JHAVERI

body2016
JUDGMENT : K.S. Jhaveri, J. 1. By way of this Appeal, the Appellant - Department has challenged the order dated 19.03.2010 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'D' in ITA No. 2389/Ahd/2006 whereby the Tribunal reversed the findings of CIT(Appeals) and allowed the Appeal preferred by the assessee. 2. While admitting the matter on 24.04.2012, the following substantial question of law was framed by the Court for consideration:- "Whether the Tribunal below committed substantial error of law in deleting penalty of Rs. 23,42,010/- imposed under section 27(1)(c) of the Income Tax Act by the Assessing Officer and confirmed by the appellate Commissioner by totally overlooking the fact that the ingredients of section 27(1)(c) of the Act were established and was also referred by the Assessing Officer." 3. The facts of the case are as under:- "The assessee filed the return of income on 30.12.2004 for the Assessment Year : 2004-2005 and claimed the status of a non-resident Indian. The return was processed u/s. 143(1) of the Income Tax Act, 1961 (hereinafter referred to in short as 'the Act') and the same was selected for scrutiny assessment and notice u/s. 143(2) of the act and notice u/s. 142(1) of the Act was issued. It was also found that an amount of Rs. 69.97 Lakhs was brought by the assessee on different dates by visiting Dubai during the said financial year. Further, the Assessing Officer also found that the assessee was in India for about 180 days during the relevant financial year and therefore, the details of his stay outside India during the last four years were called for as also the remittance of the amount of Rs. 69.97 Lakhs. Pursuant to issuance of letter by the Department dated 24.08.2005, the assessee filed revised return on 31.08.2005, wherein he offered an amount of Rs. 69.97 Lakhs of foreign remittance as income from other sources stating that revised return of income is filed since the residential status of the assessee was wrongly considered as a non-resident instead of a resident. Therefore the above amount was added to the total income as per original return of income and an amount of Rs. 1,00,000/- on account of low household expenses was also added to the total income. For these additions, proceedings u/s. 274 r.w.s. 27(1)(c) of the Act were initiated. Therefore the above amount was added to the total income as per original return of income and an amount of Rs. 1,00,000/- on account of low household expenses was also added to the total income. For these additions, proceedings u/s. 274 r.w.s. 27(1)(c) of the Act were initiated. After considering the explanation submitted by the assessee and the evidence on record, a penalty of Rs. 23,42,010/- was imposed on the assessee being the minimum penalty u/s. 27(1)(c) of the Act. Being aggrieved, the assessee preferred an appeal before the CIT(Appeals), wherein the appeal was dismissed. Therefore, an appeal before Income Tax Appellate Tribunal was preferred, whereby the Tribunal allowed the appeal of the assessee and deleted the penalty." 4. Learned Counsel for the appellant - Department has taken us to the findings of the CIT (Appeals), Tribunal and has submitted that the Assessing Officer has recorded a categorical finding that the assessee was guilty of concealing particulars of income and the assessee also furnished inaccurate particulars of such income. It is further submitted that the CIT (Appeals) has extensively considered the matter and confirmed the said finding of the Assessing Officer by a well reasoned order. Learned Counsel for the appellant has placed reliance on the decision of the Karnataka High Court in the case of The Commissioner of Income tax v. M/s. Vega Auto Accessories Pvt. Ltd. reported in 330 ITR 93 and submitted that in the facts and circumstances of the case, the order of the Tribunal needs to be upturned by this Court. 5. On the other hand, learned Counsel for the respondent-assessee has relied on Paragraph 6 of the findings of the Tribunal which are reproduced hereunder:- "In view of the aforesaid discussion, in our considered opinion, for levy of penalty under section 27(1)(c) of the Act, the AO has to arrive at a positive finding as to whether the assessee was guilty of concealment of income in respect of particular amount or the assessee was guilty of furnishing of inaccurate particulars of income in respect of an amount. In the instant case, it is observed from the order of the AO that he has not arrived at a final conclusion as to whether the assessee was guilty of concealment of income, or the assessee was guilty of furnishing inaccurate particulars of income. In the instant case, it is observed from the order of the AO that he has not arrived at a final conclusion as to whether the assessee was guilty of concealment of income, or the assessee was guilty of furnishing inaccurate particulars of income. The word "and" used in the order levying penalty clearly indicates that the AO could not clearly specify that assessee was guilty of either concealment of income or of furnishing of inaccurate particulars of income. Therefore, in view of the decision of the jurisdictional high court in the case of New Sorathia Engineering Co. (supra), the order of the AO suffers from a legal error and therefore, bad in law. We therefore, set aside the order of the lower authorities and delete the penalty of Rs. 23,42,010/-." Learned Counsel for the respondent has also relied on the following decisions:- "Decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Ahmedabad v. Reliance Petroproducts (P.) Ltd. reported in [2010] 322 ITR 158 (SC) and Decision of this Court in the case of New Sorathia Engineering Co. v. Commissioner of Income-tax reported in [2006] 282 ITR 642 (Guj)." 6. We have heard learned Counsel for the respective parties and perused the records of the case. Taking into consideration the order of the Assessing Officer, CIT (Appeals) and the Tribunal (especially the findings at Paragraph 6 as reproduced hereinabove as well as the decision in the case of Commissioner of Income-tax, Ahmedabad v. Reliance Petroproducts (P.) Ltd. (supra)), and the evidence which has surfaced on record, we are of the view that the findings of the Tribunal are just and proper and therefore, the issue raised in this Appeal is to be answered in favour of the assessee and against the Department. 7. Accordingly, the above matter stands disposed of.