Commissioner Of Income Taxkarnal v. Deep Chand, Panipat

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 3 of 2007Date of decision: 25.2.2011 Commissioner of Income TaxKarnal --- Appellant Versus Deep Chand, Panipat --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Yogesh Putney, Senior Standing Counselfor the appellant-Revenue. Mr. D.K. Goyal, Advocatefor the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961(for short “the Act”) has been filed by the Revenue against the order dated2.3.2006, passed by the Income Tax Appellate Tribunal New Delhi Bench‘SMC’, New Delhi (in short “the Tribunal”) in ITA No. 4892/DEL/2005,relating to the assessment year 1993-94. The appeal was admitted on 26.3.2007 for determination ofthe following substantial question of law: “Whether on the facts and in the circumstances of the case,the learned ITAT was right in law in confirming the order of CIT(A) in cancelling the penalty levied under Section 271(1)(c) byplacing reliance upon the case of CIT Vs. Munish Iron Store(263 ITR 484), whereas facts of the two are entirely different.”The facts, in brief, necessary for adjudication as narrated inthe appeal, are that during the assessment year under consideration, theassessee had received a gift amounting to Rs.1,75,000/- on payment ofthe equal amount in cash, along with premium for arranging that gift.During proceedings under Section 148 of the Act initiated against theassessee, the amount equal to the amount of the gift, i.e. Rs. 1,75,000/-and Rs. 17,500/- on account of premium at the rate of 10% were added tothe income of the assessee. The Commissioner of Income-tax (Appeals){in short “the CIT(A)”}, confirmed the order of the assessing officerwhereas the Tribunal accepted the appeal of the assessee and deletedthe penalty vide order dated 22.9.2005. Meanwhile proceedings underSection 271(1)(c) of the Act were also initiated against the assesseewhereby a penalty of Rs. 82,000/- was imposed on the assessee. Theassessee preferred appeal against imposition of penalty. The CIT(A)cancelled the penalty imposed, vide order dated 26.10.2005. The appealcarried by the Revenue was dismissed by the Tribunal vide order underappeal and it was observed that since the assessing officer had notrecorded his satisfaction before initiating the penalty proceedings, theorder of penalty could not be sustained. Hence, this appeal at the instance of the Revenue. We have heard learned counsel for the parties and haveperused the record. The point for consideration in this case is, whether theTribunal was justified in deleting the penalty levied against the assesseeunder Section 271(1)(c) of the Act. The gift amounting to Rs. 1,75,000/- said to have beenreceived by the assessee was held to be bogus. Once that is so, the onlyconclusion is that the assessee had furnished inaccurate particulars of hisincome and the order of the Tribunal deleting the penalty is unsustainablein law. Accordingly, it is held that the assessee had concealed theparticulars of income and, thus, penalty was liable to be levied againsthim under Section 271(1)(c) of the Act. Further, the issue regardingrecording of satisfaction for initiation of penalty proceedings in the courseof assessment proceedings stands concluded against the assessee in thejudgment of this Court reported in Commissioner of Income Tax v.Peareyt Lal & Sons (EP) Ltd. [2009] 308 ITR 438. In view of the above, the substantial question of law isanswered in favour of the Revenue and the appeal is allowed accordingly. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE