By Mr. S. Annamalai, Adv., Withmr v. Chandrasekhar, Adv., For.mr. M. Lava, Adv

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF FEBRUARY 27027 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’‘’BLE MR. JUSTICE NATARAJ RANGASW A BETWEEN: ILT.A. NO.249 OF 2011 M/S. SSS PROJECTS LTDREP. BY ITS MANAGING DIRECTORSRI. K. SATHISH KUMAR|NO.4, SHIRDI SAI KRUPA COMPLEXIII FLOOR, NAGAPPA STREETSHESHADRIPURAM, BANGALORE-560020. (BY MR. S. ANNAMALAI, ADV., WITHMR. V. CHANDRASEKHAR, ADV., FOR.MR. M. LAVA, ADV.,) — ADPELLANT AND* THE DEPUTY COMMISSIONER OF INCOME-TAX.CIRCLE-12 (3), R.P. BHAVANOPP. RBI, NO.14/3 5TH FLOORNRUPATHUNGA ROADBANGALORE-56000 1. (BY MR. JEEVAN J. NEERALGI, ADV.,). .., RESPONDENT THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX|ACT 1961, ARISING OUT OF ORDER DATED 14.03.2011 PASSEDIN ITA NO.408/BANG/2010 FOR THE ASSESSMENT YEAR 2008-09,PRAYING TO: | (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW,STATED THEREIN. | (ii) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO.THE EXTENT AGAINST THE APPELLANT IN THE ORDER PASSED BY.THE TRIBUNAL IN ITA NO.408/BANG/2010 DATED 14.03.2011, IN’THE INTEREST OF JUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, | ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short) has|been filed by the assessee. The subject matter of the appealpertains to the Assessment Year 2008-09. Tne appeal wasadmitted by a Bench of this Court vide order dated|01.08.2012 on the following substantial question of law: "Whether.thefinancialincapacityOf|af)assessee to pay the tax does not warrant levyof penalty under Section 221 of the Income|Tax Act?" 2. Facts leading to filing of this appeal briefly stated arethat the assessee is a company. The assessee filed its returnof income for the Assessment Year 2008-09 declaring anincome of Rs.4,07,660/-. The tax payable on the aforesaidincome was assessed at Rs.1,37,619/- which was duly paidby the assessee. The Assessing Officer, however, vide order dated 09.02.2009, levied the penalty of Rs.50,00,000/- for|the Assessment Year 2008-09. The assessee further pleadedthat it appears that the Assessing Officer had considered thefacts of the case for the Assessment Year 2007-08 for levyingthe penalty for Assessment Year 2008-09 and passed an|order under Section 2271 of tne Act and raised a demand OtRs.50,00,000/-. The assessee thereupon filed an appeal.before the Commissioner of Income Tax (Appeals), who byan order dated 09.02.2010, dismissed the appeal preferredby the assessee. The assessee thereupon filed an appealbefore the Income Tax Appellate Tribunal (nereinafter|referred to as ‘the Tribunal’ for short). The Tribunal, by anorder dated 14.03.2011, dismissed the appeal preferred bythe assessee. In the aforesaid factual background, the|assessee has filed this appeal. 3 Learned counsel for the assessee submitted that.even though the assessee had taken a specific ground beforethe Commissioner of Income Tax (Appeals) as well as the|Tribunal that the assessee has not committed any default intne Assessment Year 2008-09, the aforesaid ground was not 3 Learned counsel for the assessee submitted that.even though the assessee had taken a specific ground beforethe Commissioner of Income Tax (Appeals) as well as the|Tribunal that the assessee has not committed any default intne Assessment Year 2008-09, the aforesaid ground was not adjudicated either by the Commissioner of Income Tax|(Appeals) or by the Tribunal and the order of the AssessingOfficer under Section 22721 of the Act has been maintained. Itis further submitted that the action against the assesseeunder Section 221 of the Act has been taken while takinginto account tne facts of tne case for tne Assessment Year2007-08 and the demand dated 09.02.7009 has been issuedin respect of Assessment Year 2008-09. It is submitted thatlevying of penalty under Section 221 of tne Act suffers fromthe vice of non-application of mind and since the specificground wnicn has been raised by the assessee nas not beenadjudicated by the Commissioner of Income Tax (Appeals) aswell as the Tribunal, the matter deserves to be remitted tothe authorities for decision afresh in accordance with law. Itis also urged that invoking the provisions of Section 221 oftne Act is witnout jurisdiction for non-payment of self-assessment tax partly, under Section 140A(3) of the Act. 4. On the other hand, learned counsel for the revenue|has invited our attention to paragraph 21(b) of the|memorandum of appeal and has submitted tnat infact in the memorandum of appeal itself, the assessee has admitted|that it had committed a default for the Assessment Year2007-08 in respect of demand of tax on account of paucity offunds. It is also submitted that on account of typograpnicalerror in the orders passed by the Assessing Officer,|Commissioner of Income Tax (Appeals) and the Tribunal,reference has been made to the Assessment Year 2008-09whereas on admitted facts, the penalty has been leviedunder Section 221 of the Act in respect of the Assessment|Year 2O0O7-O8. Learned counsel for the revenue has alsoreferred to Section 292B of tne Act and nas submitted tnatmerely because there is a mistake in mentioning the year ofassessment, the orders cannot be invalidated. In support ofaforesaid submission, reference has been made to Section292B of the Act as well as the decision of the Supreme CourtIn."SKY LIGHT HOSPITALITY LLP Vs. ASSISTANTCOMMISSIONER|OF|INCOME-TAX(2018)gQ)TAXMANN.COM 93(SC),decision of Delhi High Court in"‘'COMMISSTONER OF INCOME-TAX Vs. JAGAT NOVEEXHIBITORS (P) LTD. (2012) 18 TAXMANN.COM 138(DELHI)and.aecisionof|CalcuttaHighCourtin "COMMISSIONEROF|INCOMETAX,SILIGURIYs.SHYAMAL SARKAR’' (2017) 84 TAXMANN.COM 146(CALCUTTA). 5. We nave considered the SUDMISSIONS made on pbotnsides and have perused the record. Section 292B of the Acton which reliance has been placed by the learned counsel for.the revenue, has been reproduced below for the facility ofreference: "292B. Return of income, etc., not to be|invalid on certain grounds. No return of income, assessment, notice,|summons or other proceeding, furnished or madeor issued or taken or purported to nave beenfurnished or meade or {[ssued or taken Ipursuance of any of the provisions of this ActShall be Invalid or shall pe Geemed to be invealidmerely by reason of any mistake, defect oromission in sucn return of income, assessment,|notice, summons or other proceeding if sucn:return of income, assessment, notice, summons|or other proceeding is in substance and effect in.conformity witn or according to tne intent andpurpose of this Act.” "292B. Return of income, etc., not to be|invalid on certain grounds. No return of income, assessment, notice,|summons or other proceeding, furnished or madeor issued or taken or purported to nave beenfurnished or meade or {[ssued or taken Ipursuance of any of the provisions of this ActShall be Invalid or shall pe Geemed to be invealidmerely by reason of any mistake, defect oromission in sucn return of income, assessment,|notice, summons or other proceeding if sucn:return of income, assessment, notice, summons|or other proceeding is in substance and effect in.conformity witn or according to tne intent andpurpose of this Act.” From close scrutiny of Section 292 B of the Act, it is.evident that no return of income, assessment, notice,|summons or other proceeding, furnished or made or issuedor taken or purported to nave been furnished or made orissued or taken in pursuance of any of the provisions of thisAct snail be invalid or shall De deemed to be invalid merelyby reason of any mistake, defect or omission in such returnof income, assessment, notice, summons or other proceedingif such return of income, assessment, notice, Summons orother proceeding is in substance and effect in conformity withor according to the intent and purpose of this Act. In otherwords, any clerical or typograpnical error or omission in tnereturn of income, assessment, notice, Summons or otherproceeding shall not invalidate tne proceedings. TheSupreme Court dealt with the aforesaid provision inSk YLIGHT HOSPITALITY LLP, SUPFIaand held that merely|wrong mention of a name in the notice amounts to clericalerror whicn could be corrected under Section 292B of tneAct. Similarly, the Delhi High Court in the case of|COMMISSIONER OF INCOME TAX,SUPIdnas hneld tnat/when there is no confusion or prejudice caused due to non- observance of technical formalities, the proceedings cannotbe invalidated and therefore, a defective notice to an|assessee under Section 2927B of the Act Is not invalid. InCOMMISSIONER OF INCOME-TAXftSILGURI,SUPIad,theHigh Court of Calcutta has held that there is a presumption in.law that all official and judicial acts were regularly performedand presumption is reinforced by the admitted position in the|facts of that case. The aforesaid decisions have no)application to the facts of the case for the reasons stated|hereinafter. 6. From the order of penalty, it is evident that samerefers to Assessment Year 2008-09. The aforesaid order has|been affirmed by the Commissioner of Income Tax (Appeals), by which the penalty was levied by the Assessing Officer in respect of Assessment Year 2008-09. Similarly, the Tribunalvide order dated 14.03.2011, nas held tnat the penalty has|been levied in respect of Assessment Year 2008-09. From|perusal of Annexure-B annexed with the memorandum of.appeal, it is evident that the assessee has paid tax in respect|of Assessment Year 2008-09. It is also not in dispute that| admittedly the assessee has committed a default in respectof Assessment Year 2007-08 and did not pay the tax onaccount of financial hardship. However, the authorities undertne Act have taken into account the fact in respect of theAssessment Year 200/-0O8 and nave neld tne assessee to bein default in respect of Assessment Year 2008-09 and havecreated the penalty under Section 221 of the Act in respect|of Assessment Year 2008-09. The aforesaid mistake, if any,is not same under Section 292B of the Act under which onlyclerical error or accidental omissions can be_ protected.Therefore, the decisions on which reliance has been placed|by the learned counsel for the revenue, has no application tothe factual matrix of the case. 7. In view of preceding analysis, we have no option butto quash the order dated 14.03.2011 passed by the Tribunaland remit tne matter to the Tribunal. Needless to state tnatit will be open for the parties to urge their contentions beforethe Tribunal and all questions of law are kept open to beraised before the Tribunal. It Is also made clear that thisCourt has not expressed any opinion on the merits of the 7. In view of preceding analysis, we have no option butto quash the order dated 14.03.2011 passed by the Tribunaland remit tne matter to the Tribunal. Needless to state tnatit will be open for the parties to urge their contentions beforethe Tribunal and all questions of law are kept open to beraised before the Tribunal. It Is also made clear that thisCourt has not expressed any opinion on the merits of the case by either of the parties. Therefore, in the fact situationof the case, it is not necessary for us to answer thesubstantial question of law which has been framed by thisCourt. In the result, the appeal is disposed of. Sd/-JUDGE Sd/-—JUDGE