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Citation Codes
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citation codes
Case Number
Attorney(S)
  • Assessee by: Shri M.V Venugopal, CA
  • Revenue by: Shri K.K John, Sr. DR
Judges
  • N.R.S Ganesan, J.M
  • B.R Baskaran, A.M
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Assessee by: Shri M.V Venugopal, CA
  • Revenue by: Shri K.K John, Sr. DR
Judges
  • N.R.S Ganesan, J.M
  • B.R Baskaran, A.M
See more information ...
Smart Summary

Factual and Procedural Background

The assessee filed an appeal challenging the order dated 14.3.2013 passed by the Learned Commissioner of Income Tax (Appeals), Kozhikode, concerning the block period ending 1999-2000. The penalty imposed by the Assessing Officer under section 158BFA(2) of the Income Tax Act was partially confirmed by the CIT(A). The Assessing Officer had passed the penalty order based on additions sustained by the Tribunal. Subsequently, the revenue filed an appeal before the Hon'ble High Court of Kerala, which decided the issues in favor of the revenue, thereby enhancing the quantum of income. The assessee then filed the present appeal against the penalty order.

Legal Issues Presented

  1. Whether the penalty order passed by the Assessing Officer under section 158BFA(2) can be revised upward in accordance with the enhancement of income by the Hon'ble High Court of Kerala.
  2. Whether the provisions of section 158BFA permit upward revision of penalty consequent to an upward revision of income by a higher authority.

Arguments of the Parties

Revenue's Arguments

  • The penalty order was passed after the Tribunal's order, based on the additions confirmed by the Tribunal.
  • The Hon'ble High Court of Kerala subsequently enhanced the quantum of income in favor of the revenue.
  • Accordingly, the penalty order should be revised to reflect the enhanced income as per the High Court's decision.

Assessee's Arguments

  • The appeal is against the penalty order passed by the Assessing Officer.
  • The provisions of section 158BFA do not allow for upward revision of penalty to align with an upward revision of income by the High Court.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
2012 (207 Taxman 193) (Kerala) Validity of the quantum of income as enhanced by the Hon'ble High Court of Kerala. The court accepted the High Court's decision enhancing the income and held that the penalty order must be revised accordingly.

Court's Reasoning and Analysis

The court noted that the penalty order was passed by the Assessing Officer after the Tribunal's order and was based on the additions confirmed by the Tribunal. However, the Hon'ble High Court of Kerala later decided the appeal filed by the revenue in favor of the revenue, thereby enhancing the quantum of income. Given this enhancement, the court found merit in the revenue's contention that the penalty order should be revised to align with the High Court's decision. The court acknowledged the assessee's contention that section 158BFA does not provide for upward revision of penalty but emphasized that since the matter is being remanded for fresh consideration, the assessee is free to raise all legal and factual issues before the Assessing Officer. Consequently, the court set aside the CIT(A)'s order and restored the matter to the Assessing Officer for fresh examination of the penalty issue in light of the High Court's decision.

Holding and Implications

The court's final decision was to set aside the order of the Learned Commissioner of Income Tax (Appeals) and restore the matter to the file of the Assessing Officer for fresh consideration of the penalty in accordance with the High Court's order.

Implications: The penalty order is to be re-examined afresh, allowing the Assessing Officer to consider all relevant legal and factual issues, including the effect of the enhanced income determined by the High Court. The appeal filed by the assessee is treated as allowed for statistical purposes. No new precedent was established by this decision; it primarily affects the parties by remanding the matter for reconsideration.

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    O. Abdul Razak v. Cit

    Per B.R.BASKARAN, Accountant Member: The assessee has filed this appeal challenging the order dated 14.3.2013 passed by Ld CIT(A), Kozhikode and it relates to the block period ending 1999-2000.

    2. The penalty levied by the assessing officer u/s 158BFA(2) of the Act, having been confirmed by Ld CIT(A) partially, the assessee has filed this appeal before us.

    3. At the time of hearing, the Ld D.R submitted that the assessing officer has passed the impugned penalty order on the additions sustained by the Tribunal, i.e. the impugned penalty order was after the receipt of order passed by the Tribunal. However, the revenue preferred appeal before the Honble High Court of Kerala challenging the order passed by the Tribunal and the Honble High Court has decided the issues in favour of revenue. The Ld D.R also furnished a copy of order dated 21.12.2011 passed by the Honble High Court in the hands of the assessee reported in (2012)(207 Taxman 193)(Kerala). Accordingly, the Ld D.R submitted that the penalty order passed by the assessing officer needs to be revised in accordance with the decision rendered by Honble High Court. IT(SS)A No.02/Coch/2013

    4. On the contrary, the Ld A.R submitted that the present appeal is filed against the penalty order passed by the AO. He further submitted that the provisions of sec. 158BFA do not provide for upward revision of penalty to bring it in line with the upward revision of income consequent to the order of High Court.

    5. We have heard rival contentions. Admittedly, the impugned penalty order was passed by the assessing officer after the receipt of order passed by the Tribunal. Hence the AO has imposed penalty on the additions confirmed by the Tribunal. Thereafter, the Honble High Court of Kerala has decided the appeal filed by the revenue challenging the order of the Tribunal. We notice that the High Court has decided the issues in favour of revenue, meaning thereby, the quantum of income has got enhanced by the order of Honbe High Court. Accordingly, we find merit in the contentions of the revenue that the penalty order needs to be revised in terms of the order of High Court.

    6. In view of the foregoing discussions, we are of the view that the issue relating to penalty needs to be examined afresh at the end of the assessing officer. Accordingly, we set aside the order of Ld CIT(A) and restore the matter to the file of the assessing officer for fresh consideration. Before us, the Ld A.R contended that the provisions of sec. 158BFA do not provide for enhancement of penalty. Since we have set aside all the matters relating to the penalty to the file of the AO, the assessee is free to urge all issues, both on legal points and on merits, before him.

    7. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Pronounced accordingly on 14-03-2014. sd/- sd/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Place: Kochi Dated: 14th March, 2014 IT(SS)A No.02/Coch/2013 Copy to:

    1. O.Abdul Razak, Emirates Residence, Kodinhi P.O., Chemmad, Malappuram District.

    2. The Assistant Commissioner of Income-tax, Circle-1, Tirur.

    3. The Commissioner of Income-tax(Appeals), Kozhikode.

    4. The Commissioner of Income-tax, Kozhikode.

    5. D.R., I.T.A.T., Cochin Bench, Cochin.

    6. Guard File. By Order (ASSISTANT REGISTRAR)

    I.T.A.T, COCHIN

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    Comments

    O. Abdul Razak v. Cit
    (Mar 14, 2014)