Commissioner Of Income Tax And Another ………… v. M/S Hill Grange Preparatory School .…………

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 26 of 2008 Commissioner of Income Tax and another ………….. Appellants Versus M/s Hill Grange Preparatory School .…………. Respondent Present: Mr. H.M. Bhatia, Advocate for the appellants. Mr. P.R. Mullick, Advocate for the respondent. JUDGMENT Coram: Hon’ble Barin Ghosh, C.J.Hon’ble Alok Singh, J. BARIN GHOSH, C.J. (Oral) During the relevant assessment year, two sums of monies shown as capital expenditure were, at the time of assessment, considered as revenue expenditure. Another figure was shown as liability to the parents, but was also taken as income. In consequence thereof, the assessable income increased. The Assessing Officer, after issuing a notice, initiated proceedings for imposition of penalty under Section 271 (1)(c) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).The Assessing Officer, upon completion of the proceeding, imposed penalty under the said Section. The matter went before the Commissioner of Appeals. The Commissioner of Appeals found that there was neither concealment of particulars of income, nor inaccurate particulars of income were furnished by the assessee. He further held that explanation offered could not be said to be false, nor the same could be said to be not given bona fide. The Commissioner of Appeals, accordingly, allowed the appeal and set aside the order of the Assessing Officer imposing penalty under the said Section. The matter went before the Tribunal at the instance of the revenue, when the Tribunal refused to interfere with the order of the Commissioner of Appeals only on the ground that the Assessing Officer failed to record his satisfaction that there was either concealment of income, or furnishing of inaccurate particulars of income. It is now not in dispute that by the Finance Act, 2008, sub-section (1B) has been added to Section 271 of the Act with effect from 1[st] April, 1989, whereby and under, a deeming provision has been introduced and, in terms thereof, the order of assessment or re-assessment, adding or disallowing any amount in computing total income, has been directed to be deemed satisfaction of the Assessing Officer for initiation of penalty proceedings under clause (c) of sub-section(1) of Section 271 of the Act. Therefore, the order of the Tribunal is now not sustainable. 2. The question is, whether it would at all be right for this Court to remit back the matter to the Tribunal to find out, whether, in fact, or, in law, the order of the Commissioner of Appeals, setting aside the order of the Assessing Officer, is inteferable. There being no contention before us that there was no concealment of the expenses incurred and there being also no case of furnishing inaccurate particulars in respect thereof, it is an accepted position that particulars of the expenses as well as of income were already furnished, but those expenses were shown as revenue expenses; whereas the same were accepted as capital expenses and the income was shown as liability to be paid to the parents of the students, whereas the same was treated to be no longer liability and, accordingly, an income. In the matter of coming to such conclusion, it is not the case of the Assessing Officer that the assessee failed to offer explanation, or that, the explanation that was offered by him was found to be false. Similarly, the explanation, which was given, was not held by the Assessing Officer as not bona fide. There is no question, in the instant case, that there was any shortcomings pertaining to disclosure required to be made by the assessee. On the above facts and circumstances of the case, there is no scope of interference with the order of the Commissioner of Appeals. 3. We, accordingly, while set aside the judgment and order of the Tribunal and, to that extent, allow the appeal, refuse to remit back the matter to the Tribunal and, instead, uphold the order of the Commissioner of Appeals. 3. We, accordingly, while set aside the judgment and order of the Tribunal and, to that extent, allow the appeal, refuse to remit back the matter to the Tribunal and, instead, uphold the order of the Commissioner of Appeals. (Alok Singh, J.) (Barin Ghosh, C.J.) 14.03.2013 14.03.2013 P. Singh