Commissioner Of Income Tax-I, Ludhiana v. Sh. Ravinder Kumar Jain

ITA No. 488 of 2005 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Commissioner of Income Tax-I, Ludhiana Versus Sh. Ravinder Kumar Jain ITA No. 488 of 2005 Date of Decision: 12.1.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. Mr. Pankaj Jain, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.The appeal was admitted by this Court vide order datedMay 4, 2006 for determination of the following substantial question oflaw:- “Whether the Commissioner while exercisingjurisdiction under Section 263 of the Income Tax Act,1961 (for short 'the Act') can direct for initiation ofproceedings for levy of penalty under Section 271(1)(c) of the Act?” 2.The facts necessary for adjudication as mentioned in theinstant appeal are that the assessee filed his return on 14.12.1994declaring an income of Rs.48,415/-. His assessment was framed under Section 143(3) of the Income Tax Act, 1961 (in short “the Act”) videorder dated 18.4.1996 at a total income of Rs.10,20,023/- after makingan addition of Rs.9,71,608/- on account of agricultural income. As theassessee failed to explain the agricultural income, enquiries were gotconducted from the Inspector who submitted his report pointing outvarious defects in the documents furnished by the assessee.Thereafter, the assessee made an offer to surrender Rs.9,71,608/-subject to no penal action under Section 271(1)(c). Accordingly, theassessment was framed by the Assessing Officer. Commissioner ofIncome Tax (in short “the CIT”) vide order dated 11.1.1999 in exerciseof power under Section 263 of the Act set aside the assessment orderholding that the same was erroneous and prejudicial to the interest ofthe revenue. The CIT directed the Assessing Officer to frame freshassessment after taking into account the facts attracting penal actionunder Section 271(1)(c) of the Act. Feeling aggrieved, the matter wastaken up in appeal by the assessee and the Tribunal vide order dated11.3.2005 set aside the order of the CIT holding that the CIT cannotdirect the Assessing Officer to initiate penalty proceedings underSection 271(1)(c) as the same were not part of the assessmentproceedings. Hence the present appeal by the revenue. 3.We have heard learned counsel for the parties. 4.Learned counsel for the assessee submitted that the issueraised in this appeal stands concluded by the decision of this Court inITA No. 225 of 2003 (Commissioner of Income Tax-I, Ludhiana v.Shri Subhash Kumar Jain) decided on 10.9.2010. He furthersubmitted that the aforesaid view is supported by the amendment made by Finance Act, 2002 which has been made effective from 1.6.2002,whereby Section 271(1) itself has been amended and theCommissioner has been empowered to levy penalty. According to thelearned counsel, it is only after 1.6.2002 that the CIT would havejurisdiction to order for initiating penalty proceedings while passing anorder under Section 263 of the Act whereas the present case isgoverned by the unamended provision of Section 271(1) of the Act. 5.We find considerable force in the submission made by thelearned counsel for the assessee. The issue in the present case stands answered by the decision in Subhash Kumar Jain's case (supra). 6.In view of the above, the substantial question of law isanswered against the revenue. Accordingly, there is no merit in thisappeal and the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE January 12, 2011gbs (ADARSH KUMAR GOEL)JUDGE