Skip to main content

On admission of appeal by HC, penalty cannot survive

Schrader Duncan Limited vs. ACIT (ITAT Mumbai)

S. 271(1)(c): If the High Court admits the appeal u/s 260A, it means that the issue is debatable and penalty cannot survive

Decided:.....Without going into much deliberation and merits of the case, now question arises since the substantial question of law “whether on the facts in the circumstances of the case and in law, the Tribunal was justified in holding that the appellant was not entitled to claim the loss of Rs.6.34 crore arising on conversion of UTI US 64 units in to 6.75% Tax Free Bonds of UTI?” has been admitted by the Hon’ble jurisdictional High Court, vide order dated 19th September, 2014, now question arises whether penalty u/s 271(1)(c) of the Act survives when the addition has become debatable? We note that the Hon’ble jurisdictional High court vide order dated 08/07/2014 in the case of CIT vs M/s Nayan Builders & Developers (ITA No.415/2012) held that no penalty is imposable u/s 271(1)(c) of the Act. Likewise, the Tribunal, in the case of M/s Nayan Builders & Developers Pvt. Ltd. (ITA No.2379/Mum/2009) order dated 18th March 2011, deleted the penalty. In another case Advaita Estate Development (P.) Ltd. vs ITO (2013) 409 Taxman.com 142 (Mumbai-Trib.) vide order dated 27/08/2013 deleted the penalty. In view of these facts, when the Hon’ble jurisdictional High Court has admitted substantial question of law on the addition, it becomes apparent that the addition so made has become debatable. The penalty was imposed on the basis of addition so made, therefore, when the addition on the basis of which the penalty was imposed has become doubtful/debatable, therefore, penalty imposed u/s 271(1)(c) of the Act cannot survive. Respectfully following the Hon’ble jurisdictional High Court, the appeal of the assessee is allowed. However, it is made clear that if at any stage, the order of the Tribunal on quantum addition is upheld by the Hon’ble High Court, the Department is free to proceed in accordance with law on penalty proceedings.

Comments

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...

Owner of vehicle is not expected to verify the genuineness of the driving license before appointing a driver

Cause Title : Rishi Pal Singh Versus New India Assurance Co. Ltd & Ors., Civil Appeal No. 4919 Of 2022, The Supreme Court Of India Date of Judgment/Order : July 26, 2022 Corum : Hemant Gupta; J., Vikram Nath; J. Background the truck owned by the appellant met with an accident. The owner deposed before the court that before employing the driver, he had taken his driving test and that he was driving the vehicle satisfactorily and  that the driver was employed with him for 3 years before the date of the accident. He produced his driving license. This was reaffirmed by the driver who deposed that the driving license was obtained from the driver and it was issued from Nagaland, but no such license was produced on record. Both the Motor Accident Claims Tribunal and the High Court have held that the owner has alleged that the driver had a driving license from Nagaland but the same was not produced and therefore, the Insurance Company is entitled to recover the awarded amount...

Person Being Prosecuted To Be Provided With All Relevant Documents

The Delhi High Court, in the case of Poonam Jain vs Union of India & Ors, noted that a person being prosecuted against has a right to be provided with all the material relied upon by the prosecuting agency to prosecute her/ him. In the instant case, a search was conducted at the residences of the petitioners and their statements were recorded and several documents were seized. They were issued show cause notices under Section 276 C(1) and Section 277 of the Income Tax Act, Section 181 of the Indian Penal Code and Sections 50 and 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act. They sought to be provided with a copy of their statements and the documents seised. However, the same was denied to them.