Commissioner Of Income Tax Chennai v. M/S. Tarapore & Co

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 03.12.2007 CORAM THE HONOURABLE MR. JUSTICE K. RAVIRAJA PANDIANANDTHE HONOURABLE MRS. JUSTICE CHITRA VENKATARAMAN TAX CASE (APPEAL) NO. 1462 OF 2007 Commissioner of Income TaxChennai.... AppellantVs. M/s. Tarapore & Co No.827, Anna Salai Dhun Building Chennai – 600 002. ... Respondent Tax Case (Appeal) filed under Section 260-A of the Income TaxAct, 1961 against ITA.No.2753/Mds/2004, dated 25.1.2007 by theIncome Tax Appellate Tribunal, Madras 'C' Bench against the orderdated 17.8.2004 on the file of the Commissioner of Income Tax(Appeals) IX order in ITA.No.66 / 2003-2004 u/s 271 (1) (C)against the order dated 4.3.2004 on the file of the Commissionerof income Tax (Appeals) IX order in ITA. NO.66/03-04 u/s 143 (3) asagainst the assessment order of the Assistant Commissioner ofIncome Tax , Circle VII, Chennai dated 31.3.2003 in PAN/GINo.51318-1. J U D G M E N T (Judgment of the Court was made by K. Raviraja Pandian, J.) This appeal is filed against the order of the Income TaxAppellate Tribunal in I.T.A.No.2753/Mds/2004, dated 25.1.2007. Theassessment year is 2000-2001. 2. The appellant is a partnership firm doing civil engineeringcontracts and hotel business. For the assessment year 2000-2001,the assessee admitted income from service charges amounting toRs.48,71,536/- under the head income from the house property. Inthe earlier years, this income was assessed under other sources andthe same has been confirmed by the Income Tax Appellate Tribunal.Therefor,e the Assessing Officer imposed the penalty under Section271(1)(c) of the Income Tax Act. The Commissioner of Income Tax https://hcservices.ecourts.gov.in/hcservices/ (Appeals) while adjudicating the assessee's appeal against theassessment order, upon hearing the assessee's explanation that theassessee had filed a reference application before the High Courtand therefore, the assessee had a bona-fide belief that its claimfor service charges should not be taxed as income from houseproperty. Accepting the assessee's explanation, the Commissioner ofIncome Tax (Appeals) dropped the penalty proceedings on the groundthat the assessee had admitted income from the service charges andthere is no deliberate and malicious conduct on the part of theassessee for speculation of the Act. Aggrieved by the said order ofthe Commissioner of Income Tax (Appeals), an appeal was filedbefore the Income Tax Appellate Tribunal and the Tribunal confirmedthe order of the Commissioner of Income Tax (Appeals). Hence thepresent appeal at the instance of the Revenue by formulating thequestion of law with the following effect:- " Whether, in the facts and circumstances of thecase, the Tribunal was right in holding that nopenalty under Section 271(1)(c) was leviable in thiscase, as the assessee had challenged the Tribunal'sorder on merits for the earlier years by filing aReference application before this Court, when suchreference had been dismissed even before passing ofthe assessment order?"3. We heard the arguments of the learned counsel for theRevenue. " Whether, in the facts and circumstances of thecase, the Tribunal was right in holding that nopenalty under Section 271(1)(c) was leviable in thiscase, as the assessee had challenged the Tribunal'sorder on merits for the earlier years by filing aReference application before this Court, when suchreference had been dismissed even before passing ofthe assessment order?"3. We heard the arguments of the learned counsel for theRevenue. 4. The only contention that has been raised by the learnedcounsel for the Revenue is that even after the disposal of the caseagainst the assessee in the reference application, the assessee hasnot brought to the same to the notice of the authorities concernedwhile framing the assessment for the year 2000-01. The ultimatefact finding authority has recorded a finding to that effect thatthe assessee had made a reference against the decision of theTribunal before the High Court and therefore, the assessee had abona fide belief that its claim for service charges should not betaxed as income from the house property. All the particularsregarding the service charges were duly furnished along with thereturn. Therefore, it could not be said that the assessee hadfurnished inaccurate particulars of income or concealed its income.The Commissioner of Income Tax (Appeals) in his order has extractedthe letter of the assessee dated 12.8.2004, and also recorded afinding that all the particulars were available in the file andthat the appellant stated that it had not made any deliberateattempt on its part to conceal the particulars of income and thatit had cooperated in agreeing with the view of the Department afterTribunal and the High Court order and also paid the taxes. TheCommissioner of Income Tax (Apeals) also recorded a finding to the effect that there was no deliberate and melicious conduct ofcealing the income and the reason offered by the assessee wasacceptable. 5. When that being the factual position, we are not able totake a different view than the one taken by the statutoryauthorities under the Act and also the Tribunal. Useful referencecan be made to the judgement of the Supreme Court in T. ASHOK PAIVS. COMMISSIONER OF INCOME TAX reported in (2007) 292 ITR 11.Hence, the tax case appeal is dismissed. No costs. Sd/-Asst. Registrar. /true copy/ Sub Asst. Registrar. kb1. The Assistant Registrar,Income Tax Appellate TribunalRajaji Bhavan, Besant Nagar, Chennai.2. The Commissioner of Income TaxChennai.3. The Commissioner of Income Tax (Appeals)IX121, Mahatma Gandhi road, Nungambakkam, Chennai-34.4. The Assistant Commissioner of Income TaxCircle VII, Chennai.1 cc to M/s. Pushya Sitaraman, Advocate, Sr. 71342 T.C.(A)No.1462 of 2007 KSJ (CO)kk 17/12 https://hcservices.ecourts.gov.in/hcservices/