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CaseIQ

Commissioner Of Income v. M/S Ssa S Emerald

Karnataka High Court

Nov 23, 2015

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

This appeal arises from a penalty proceeding under the Income Tax Act, 1961, involving the Commissioner of Income Tax and the Income Tax Officer as appellants, and M/s SSA's Emerald Meadows as respondent. The appellants challenge the order dated 31/03/2015 passed by the Income Tax Appellate Tribunal ('ITAT'), 'A' Bench, Bangalore, in appeal proceedings ITA No. 433/Bang/2014 for the assessment year 2009-10. The ITAT had allowed the respondent's appeal by holding that the penalty notice issued under Section 274 read with Section 271(1)(c) of the Income Tax Act was invalid. The present appeal under Section 260-A of the Income Tax Act seeks to set aside the ITAT order.

Legal Issues Presented

Whether the omission by the assessing officer to explicitly mention that penalty proceedings are being initiated either for furnishing inaccurate particulars or for concealment of income renders the penalty order liable for cancellation, even when concealment of income is proven beyond reasonable doubt.
Whether the Tribunal was justified in law in holding the penalty notice under Section 274 read with Section 271(1)(c) invalid despite the retrospective amendment of Section 271(1B), which allows initiation of penalty proceedings upon proper recording of satisfaction by the assessing officer.
Whether the Tribunal was justified in deciding the appeals against the Revenue solely on the basis of the penalty notice under Section 274 without considering the assessment order specifying that the assessee concealed particulars of income.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565	Requirement that penalty proceedings specify the limb under Section 271(1)(c) for which they are initiated; omission renders penalty notice invalid.	The Court held that since the matter is covered by this Division Bench judgment, no substantial question of law arises, leading to dismissal of the appeal.

Court's Reasoning and Analysis

The Tribunal had allowed the assessee's appeal on the ground that the penalty notice under Section 274 read with Section 271(1)(c) was invalid because it failed to specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The Tribunal relied on the Division Bench judgment in Commissioner of Income Tax vs. Manjunatha Cotton and Ginning Factory, which established that such omission invalidates the penalty notice. The High Court agreed that the issue was conclusively covered by the earlier Division Bench decision and found no substantial question of law to be decided. Consequently, the appeal was dismissed without further examination of the facts.

Holding and Implications

DISMISSED

The Court dismissed the appeal filed by the Revenue against the ITAT's order allowing the assessee's appeal. The direct effect is that the penalty notice under Section 274 read with Section 271(1)(c) remains invalid due to the omission specified. The Court did not set any new precedent but adhered to the binding Division Bench decision cited.

Show all summary ...

- 1 -

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 23^RDDAY OF NOVEMBER 2015

PRESENT

THE HON'BLE MR.JUSTICE VINEET SARAN

AND

THE HON'BLE MRS. JUSTICE S. SUJATHA

I.T.A. NO. 380 OF 2015

BETWEEN:

1. COMMISSIONER OF INCOME TAX,

CENTRAL REVENUE BUILDINGS,

QUEENS ROAD,

BANGALORE-560 001

2. THE INCOME TAX OFFICER,

WARD-6 (3),

BANGALORE

... APPELLANTS

(BY SRI. E I SANMATHI, ADV.)

AND

M/S SSA'S EMERALD MEADOWS,

GOPALAPURA VILLAGE,

BAGALUR POST JALA HOBLI,

BANGALORE NORTH TALUK 562 157,

PAN:AAACQ369B

... RESPONDENT

THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX

ACT 1961 PRAYING TO DECIDE THE FOREGOING QUESTION OF

LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND

SET ASIDE THE APPELLATE ORDER DATED 31/03/2015 PASSED BY THE ITAT, 'A' BENCH, BANGALORE, IN APPEAL PROCEEDINGS IN ITA NO. 433/BANG/2014 FOR ASSESSMENT YEAR 2009-10, AS SOUGHT FOR IN THIS APPEAL AND GRANT

SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF

JUSTICE.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET

SARAN J. DELIVERED THE FOLLOWING:

JUDGMENT

Heard Sri E.I.Sanmathi, learned counsel for the appellants and perused the record.

2. This appeal has been filed raising the following substantial questions of law:

(1) Whether, omission if assessing officer to explicitly mention that penalty

proceedings are being initiated for furnishing of inaccurate particulars or that for concealment of income makes the penalty order liable for cancellation even when it has been proved beyond

reasonable doubt that the assessee had concealed income in the facts and circumstances of the case?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty notice under Section 274 r.w.s. 271(1)(c) is bad in law and invalid despite the amendment of Section 271(1B) with retrospective effect and by virtue of the amendment, the assessing officer has initiated the penalty by properly recording the satisfaction for the same?

(3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in deciding the appeals against the Revenue on the basis of notice issued under Section 274 without taking into consideration the assessment order when the assessing officer has specified that the assessee has concealed particulars of income?

3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (for short 'the Act') to be bad

in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee, has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX -VS- MANJUNATHA COTTON

AND GINNING FACTORY (2013) 359 ITR 565.

4. In our view, since the matter is covered by judgment of the Division Bench of this Court, we are of the opinion, no substantial question of law arises in this appeal for determination by this Court. The appeal is accordingly dismissed.

Sd/-

J UDGE