Commissioner Of Income Tax Chennai Appellant/Respondent v. M/S Chakiat Agencies P Ltd 40, Rajaji Salai Chennai 1. Respondent/Appellant

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 01.12.2009 Coram : THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE M.M.SUNDRESH Tax Case (Appeal)No.2174 of 2006 Commissioner of Income TaxChennai Appellant/Respondentv. M/s Chakiat Agencies P Ltd40, Rajaji SalaiChennai 1.Respondent/Appellant Tax Case Appeal filed under section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate Tribunal,Madras 'A' Bench, Chennai, dated 30.11.2005 passed in ITANo.1185/Mds/2002. Against the order of the Commissioner of IncomeTax (Appeals)-III, Chennai-34 dated 20.4.02 in ITA No.Tr.476/2001-02/A.III against the order of the Joint commissioner of Income TaxSpecial Range IV, Chennai-34 dated 28.4.2000 in GIR No.62-C/96-97. (Judgment of the Court was delivered by K.RAVIRAJA PANDIAN, J.) The correctness of the order of the Tribunal dated 30[th]November 2005 made in I.T.A.No.1185/Mds/2002 relating to theassessment year 1996-97 wherein and whereby the penalty levied bythe assessing officer under Section 271 (1)(c) of the Income TaxAct and upheld by the Commissioner of Income Tax (Appeals) hasbeen directed to be deleted by the Tribunal on the premise that theTribunal by its order dated 30.04.2003 made in I.T.A.No.57 of 2000allowed the quantum appeal of the assessee. 2. Facts: The assessee is a shipping agent. For theassessment year 1996-97, the assessee had claimed deduction underSection 80-0 of the Income Tax Act on the ground that the assesseerendered service to foreign shipping company and also do certaintechnical services like booking of cargos and gathering andsupplying the details of Market condition to foreign shippingcompanies. The Assessing Officer found that there was no actualhttps://hcservices.ecourts.gov.in/hcservices/receipt of foreign exchange by the assessee and thus levied penalty under Section 271(1)(c) in a sum of Rs.30,30,430/-. Theassessee filed an appeal before the Commissioner of Income Tax(Appeals) who upheld the order of the Assessing Officer. Onfurther appeal, the Income Tax Appellate Tribunal decided the issuein favour of the assessee on the ground that when the assessee'sclaim of deduction u/s 80.0 had been allowed by the Tribunal inits order dated 30.04.2003, in ITA.No.57/Mds/2000, the very basisfor the levy of penalty has gone. The correctness of the same isnow canvassed before this Court by framing the following questionof law:- "Whether in the facts and circumstances ofthe case, the Tribunal was right in cancelling thepenalty levied u/s 271(1)(c) when the assessee hasnot produced any evidence, convincing the servicesrendered to foreign principle fell within thesection 80 O?" 3. The learned counsel for the revenue submitted that therevenue not accepting the order of the Tribunal dated 30.04.2003granting the relief u/s 80.0 made in quantum appeal filed tax caseappeal. When the tax case appeal was pending before this Court, thepresent appeal in respect of penalty is filed. The quantum taxcase appeal has been decided by this Court in the case ofCommissioner of Income Tax vs. Chakiat Agencies Pvt. Limitedreported in [2009] 314 ITR 200, wherein the order of the Tribunalgranting the relief in favour of the assessee has been upheld. 4. In view of the fact that the quantum appeal has beendecided in favour of the assessee, virtually the basis forimposition and levy of penalty under Section 271(1)(c) is notavailable. When such is the position, the imposition of penalty isnot in accordance with law. Hence the question of law is answeredin affirmative and in favour of the assessee. The appeal isdismissed. Sd/-Asst. Registrar //true copy// rg To 1. The Assistant Registrar, Income Tax Appellate Tribunal, Chennai 'A' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals) III Chennai-34. https://hcservices.ecourts.gov.in/hcservices/ 4. In view of the fact that the quantum appeal has beendecided in favour of the assessee, virtually the basis forimposition and levy of penalty under Section 271(1)(c) is notavailable. When such is the position, the imposition of penalty isnot in accordance with law. Hence the question of law is answeredin affirmative and in favour of the assessee. The appeal isdismissed. Sd/-Asst. Registrar //true copy// rg To 1. The Assistant Registrar, Income Tax Appellate Tribunal, Chennai 'A' Bench, Chennai. 2. The Commissioner of Income Tax (Appeals) III Chennai-34. https://hcservices.ecourts.gov.in/hcservices/ 3. The Joint Commissioner of Income Tax, Special Range-IV, Chennai-34. Special Range-IV, Chennai-34. 4. The Commissioner of Income Tax, Chennai. Chennai. T.C.(A)No.2174 of 2006 BV {CO}TP/16.12.2009.