Cwjc/1290/2025 Of Goberdhandhanri Infratech Private Limited v. The Union Of India Through Secretary, Ministry Of Finance, Income Tax Department, New Delhi

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.1290 of 2025 ====================================================== Goberdhandhanri Infratech Private Limited having its office at RanjanConstruction, Garkha Road, Saran, Nehru Chowk, Chapra- 841301, Biharthrough its authorized signatory namely Shashi Ranjan (Male), aged about 41years, Son of Chandrama Singh, a resident of Nehru Chowk, Chapra, PoliceStation- Chapra, District- Saran. ... ... Petitioner Versus 1.The Union of India through Secretary, Ministry of Finance, Income TaxDepartment, New Delhi.Department, New Delhi. 2.The Principal Chief Commissioner of Income Tax (Bihar and Jharkhand),Patna.Patna. 3.The Principal Commissioner of Income Tax, PCIT, Patna-1. 4.The Assistant Commissioner of Income Tax, DC/AC Circle-1, Muzaffarpur. ... ... Respondents ====================================================== Appearance :For the Petitioner For the Petitioner: Mr. Sanjeev Kumar, Advocate Mr. Pravashankar Mishra, AdvocateFor the Respondents: Ms. Archana Sinha, Senior SC Ms. Richa Rajiv Singh, Advocate ====================================================== CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD and HONOURABLE MR. JUSTICE ASHOK KUMAR PANDEYORAL JUDGMENT(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD) Date : 17-06-2025 Heard Mr. Sanjeev Kumar, learned counsel for thepetitioner and Ms. Archana Sinha, learned Senior StandingCounsel for the Department of Income Tax. 2. This writ application has been preferred seeking thefollowing reliefs:- “i) To issue a Writ in nature of Certiorarifor quashing of the followings:- a) Order dated 15.09.2022 passedunder Section 271(1)(c) of Income Tax Act whereby penalty of Rs.13,92,221/-for the assessment year 2015-16 hasbeen imposed upon the petitionercompany. b) Demand Notice under Section156 of Income Tax Act whereby demandof Rs.13,92,221/- for the assessmentyear 2015-16 has bee determined to bepayable to the petitioner company. c) Order dated 19.03.2024 passedin Revision Case No. being PCIT, Patna-1/Revision-264/100000392035/23whereby the order passed by theAssessing Officer has been affirmed andRevision petition has been dismissed.ii) To issue a Writ in nature ofMandamus directing the respondents notto take any coercive action against thepetitioner during pendency of this writapplication. iii) To any other relief or reliefs to whichthe petitioner is entitled in the facts andcircumstances of the case.” Brief Facts of the Case 3. The petitioner is a private limited company registered under the provisions of the Companies Act, 1956. It is engaged incivil construction works. The case of the petitioner is that thecompany was continuously filing its Income Tax Returns (ITRs)since its incorporation. The present case arose on account of abonafide mistake which took place due to inadvertence and human error in not uploading its ITR for the assessment year 2015-16even as the audited financial statement along with audit report hadbeen duly furnished and all due taxes were paid in full. 4. The petitioner received a demand notice underSection 156 of the Income Tax Act, 1961 (hereinafter referred to asthe ‘Act’) whereby a demand of Rs.13,92,221/- was raised againsthim for the assessment year 2015-16. A copy of the demand noticeis Annexure ‘P/6’ to the writ application. The petitioner preferred arevision petition under Section 264 of the Act against the demandnotice, before the Principal Commissioner of Income Tax-1, Patna.The revision petition, however, came to be dismissed videimpugned order dated 19.03.2024 on the following grounds:- (i) The petitioner company did not file its return of income forassessment year 2015-16 voluntarily in spite of having taxable income. (ii) Only after the issuance of notice under Section 148 of theAct, the petitioner company filed its return of income showing taxableincome at Rs.45,05,567/-. (i) The petitioner company did not file its return of income forassessment year 2015-16 voluntarily in spite of having taxable income. (ii) Only after the issuance of notice under Section 148 of theAct, the petitioner company filed its return of income showing taxableincome at Rs.45,05,567/-. (iii) The petitioner company did not make compliance duringpenalty proceedings before Assessing Officer nor it submitted any replyduring the revision proceedings. During the revision proceedings, onlinereply was furnished, but failed to explain as to how the penalty orderpassed by the Assessing Officer is prejudicial to the petitioner company,and (iv) The impugned order has been passed taking recourse toExplanation ‘3’ to Section 271 (1)(c) of the Act. Submissions on behalf of the Petitioner 5. Mr. Sanjeev Kumar, learned counsel for the petitionerhas assailed the impugned orders dated 15.09.2022 (Annexure‘P/5’) passed by the Assessing Officer and 19.03.2024 (Annexure‘P/7’) passed by the Revisional Authority on various grounds. Oneof the grounds taken by and on behalf of the petitioner is that theAssessing Officer has erred in levying penalty under Section 271(1)(c) of the Act because it is not a case of concealment of incomeby the petitioner. The Assessing Officer could not appreciate thatthe petitioner company had already uploaded the audited financialstatement together with tax audit report. It was a case of aninadvertent omission on the part of the petitioner company that itmissed to upload the ITR. 6. It is submitted that the petitioner company filed itsITR under Section 148 immediately after the company got theopportunity. The returned income was exactly as per the financialstatement uploaded along with the tax audit report. The assessmentwas completed on returned income and no addition was made asno concealment was ascertained. During the assessmentproceedings, it was established that the petitioner company had already discharged the tax liability during the financial year itselfand there was a ‘Nil’ demand on assessment. 7. Learned counsel submits that the Assessing Officerhas levied penalty in terms of Explanation 3 to Section 271 (1)(c),however, he failed to apply the provision of clause (c) ofExplanation 4 to Section 271 (1)(c). It is submitted that this clausedeals with quantification of tax sought to be evaded and resultantpenalty where penalty is proposed to be levied in terms ofExplanation 3 to Section 271 (1)(c). Even the calculation made bythe Assessing Officer has been sought to be challenged on theground that the Assessing Officer has not provided any credit forprepaid taxes as specified in clause (c) of Explanation 4 to Section271 (1)(c). It is stated that had the credit been provided, therewould have been no penalty. A comparative calculation has beenshown in paragraph ‘16(iii)’ of the writ application. 8. It is submitted that concealment of income andfurnishing of incorrect particulars as occurring under Section 271(1)(c) of the Act are the sine qua non for attracting a penalty underSection 271 (1)(c) of the Act. Since in this case, no concealment ofparticulars of income and no incorrect particulars of income havebeen furnished, the penal provision would not be attracted. 9. Lastly, it is submitted that each case has to beconsidered on its own facts and so far as the facts of the presentcase are concerned, it would be evident from the avermentspresent in the counter affidavit of the respondent that they haveadmitted in paragraph ‘9’ of their counter affidavit that “there wasno concealment of income made by the assessee in terms of theprovisions laid down in para (c) of Explanation 4 of section 271 of theI.T. Act.” It is further stated in the counter affidavit that theAssessing Officer seems to have failed to consider the provision ofclause (c) of Explanation 4 to Section 271 (1)(c) while imposingpenalty under this Section. 9. Lastly, it is submitted that each case has to beconsidered on its own facts and so far as the facts of the presentcase are concerned, it would be evident from the avermentspresent in the counter affidavit of the respondent that they haveadmitted in paragraph ‘9’ of their counter affidavit that “there wasno concealment of income made by the assessee in terms of theprovisions laid down in para (c) of Explanation 4 of section 271 of theI.T. Act.” It is further stated in the counter affidavit that theAssessing Officer seems to have failed to consider the provision ofclause (c) of Explanation 4 to Section 271 (1)(c) while imposingpenalty under this Section. 10. Learned counsel submits that on the face of theadmission on the part of the respondents that it is not a case ofconcealment of income, the imposition of penalty by invokingclause (c) of sub-section (1) of Section 271 and Explanation 4 ofthe Act is in the teeth of the statute and the same is liable to bestruck out. Stand of the Respondents 11. A counter affidavit has been filed on behalf of therespondents which is sworn by the Assistant Commissioner ofIncome Tax, Circle-1, Muzaffarpur who is the Assessing Officer. 12. Ms. Archana Sinha, learned Senior Standing Counselfor the Department has contested the writ application. In the counter affidavit, a plea has been taken that the assessee filed itsITR only in response to the notice under Section 148 dated31.03.2021 for the assessment year 2015-16 on 16.04.2021showing income of Rs.45,05,567/-. It is admitted by therespondents that on perusal of the ITR, it was observed that therewas prepaid taxes and the assessee had claimed TDS amounting toRs.14,04,525/- which resulted into refund claim of Rs.12,304/-. 13. Learned Senior Standing Counsel, however, submitsthat this case would be falling under Section 271 (1)(c) of the Actand the Assessing Officer has rightly imposed a penalty of Rs.13,92,221/- i.e. 100% of the tax sought to be evaded, underSection 271 (1)(c) of the Act. Drawing the attention of this Courttowards the said provision of the Act, learned Senior StandingCounsel has submitted that because the petitioner did not file itsITR within the prescribed period, the non-filing of ITR alone issufficient to attract Section 271 (1)(c) of the Act. 14. Reliance has also been placed on the judgment of theHon’ble Allahabad High Court in case of Addl. Commissioner ofIncome-tax v. Mewa Lal Sankatha Prasad reported in (1979)116 ITR 356 and on a judgment of the Income Tax Tribunal,Visakhapatnam Bench in case of Meka Ranganayakamma v.Income Tax Officer reported in [2024] 159 taxmann.com 1621 to submit that where the assessee had failed to file return of incomeunder Section 139 (1) and then filing the same only in response tonotice under Section 148 would amount to concealment of income.The counter affidavit does not controvert the statements made inparagraph ‘16 (iii)’ of the writ application. Consideration 15. Having heard learned counsel for the parties and onperusal of the records, this Court finds that there are someadmitted facts in the case. It is an admitted position that for thefinancial year 2015-16, the petitioner company had furnishedaudited financial statement and the tax audit report within theprescribed period under Section 44AB of the Act on 30.09.2015vide acknowledgment. Admittedly, the petitioner company did notfile the ITR which the company filed only after receipt of noticeunder Section 148 of the Act. 16. It is further an admitted position that the return filedby the petitioner under Section 148 of the Act was showing taxableincome at Rs.45,05,567/- and the petitioner had discharged itsliability on account of taxes in full within the due date. After theassessment of the ITR filed by the petitioner, no addition wasmade to its income, no additional tax was levied and the petitioner was found entitled for refund of Rs.12,304/-. The refund wasallowed. 16. It is further an admitted position that the return filedby the petitioner under Section 148 of the Act was showing taxableincome at Rs.45,05,567/- and the petitioner had discharged itsliability on account of taxes in full within the due date. After theassessment of the ITR filed by the petitioner, no addition wasmade to its income, no additional tax was levied and the petitioner was found entitled for refund of Rs.12,304/-. The refund wasallowed. 17. In the above factual matrix of the present case, aquestion arises for consideration as to whether the impugned orderdated 15.09.2022 as contained in Annexure ‘P/5’ is in accordancewith law. For this purpose, this Court would first of all notice theorder as contained in Annexure ‘P/5’ passed by the AssessingOfficer. On perusal, it appears that the Assessing Officer claims tohave served show cause notices upon the petitioner but thepetitioner did not submit any response to those show cause notices.In these circumstances, it is stated that the Assessing Officer wasleft with no option but to pass the penalty order on the basis of thematerials available on the record. In the concluding paragraph, theAssessing Officer has recorded as under:- “In view of the discussions made above, the assessee is liable forpenalty u/s 271(1)(c) of the Income Tax Act, 1961 which is calculated asunder:- above, I impose a penalty of Rs.13,92,221/- i.e. 100% of the tax sought to beevaded u/s 271(1)(c) of the Income Tax Act, 1961.” 18. It is evident that the Assessing Officer is not takinginto consideration the taxes already paid by the petitioner. Theconcluding paragraph gives an impression as if the petitionerevaded the payment of tax amounting to Rs.13,92,221/- which isnot a correct position. The column ‘D’ in the tabular form gives awrong impression. 19. It appears that when the petitioner companypreferred revision before the Principal Commissioner of IncomeTax-1, Patna, a plea was taken that it is not a case of concealmentand the learned Assessing Officer had ignored the provision ofclause (c) of Explanation ‘4’ to Section 271 (1)(c) of the Act thatdeals with quantification of penalty where penalty is leviableunder Explanation ‘3’ to Section 271 (1)(c). As regards the orderpassed by the Revisional Authority, the petitioner has assailed theassertion on the revisional order that “no reply was received fromthe end of the assessee”. The petitioner has asserted that thecompany through it’s Chartered Accountant had appearedphysically or online on each and every date which can be verifiedfrom the records and the ordersheet as well as from the onlineportal of the Income Tax Department. 20. In paragraph ‘18’ of the writ application, specificassertions have been made by the petitioner that the petitioner company had applied for copy of the ordersheet but the same wasnot supplied till this date. Paragraph ‘18’ of the writ applicationhas not at all been denied by the respondents. In fact, the counteraffidavit says in reply to paragraphs ‘16 (xiv)’ to ‘25’ of the writpetition that “...it requires no comments”. This Court, therefore,finds that the assertion made in paragraph ‘18’ of the writapplication having not been denied, is required to be considered asbeing claimed by the petitioner. 21. At this stage, this Court deems it just and proper toreproduce the relevant part of paragraph ‘9’ of the counter affidavithereunder for a ready reference:- 20. In paragraph ‘18’ of the writ application, specificassertions have been made by the petitioner that the petitioner company had applied for copy of the ordersheet but the same wasnot supplied till this date. Paragraph ‘18’ of the writ applicationhas not at all been denied by the respondents. In fact, the counteraffidavit says in reply to paragraphs ‘16 (xiv)’ to ‘25’ of the writpetition that “...it requires no comments”. This Court, therefore,finds that the assertion made in paragraph ‘18’ of the writapplication having not been denied, is required to be considered asbeing claimed by the petitioner. 21. At this stage, this Court deems it just and proper toreproduce the relevant part of paragraph ‘9’ of the counter affidavithereunder for a ready reference:- “Hence, although the assessee hadconcealed the particulars of income interms of Explanation 3 of section 271(1)(c) of the I.T. Act, but since there was notax payable after giving the credit ofTDS, there was no concealment ofincome made by the assessee in terms ofthe provisions laid down in para (c) ofthe Explanation 4 of section 271 of theI.T. Act. The Assessing Officer seems tohave failed to consider the provision ofclause (c) of explanation 4 to Section271(1)(c) while imposing penalty underthis section. This clause deals withquantification of tax sought to be evadedand resultant penalty where penalty isproposed to be levied in terms of explanation 3 to Section 271(1)(c). Thesaid provision reads as under:- “Where in any case to which explanation3 applies the amount of tax sought to beevaded shall be the tax on total incomeassessed as reduced by the amount ofadvance tax, tax deducted at source, taxcollected at source and self-assessmenttax paid before the issue of notice underSection 148.”” 22. Thus, a bare reading of paragraph ‘9’ of the counteraffidavit makes the position in law clear. It is their own stand thatthe Assessing Officer seems to have failed to consider theprovision laying down the manner in which quantification is to bedone. In this case, there is no ‘evasion’ of tax. It is crystal clearthat even the respondents have in so many words admitted thatsince there were no tax payable after giving the credit of TDS,there was no concealment of income made by the assessee in termsof the provision laid down in clause (c) of the Explanation ‘4’ ofSection 271 of the Act. 23. Section 271 (1)(c) of the Act and its Explanation ‘3’ are quoted hereunder:- “271 (1)(c) has concealed the particularsof his income or [4][* * *] furnishedinaccurate particulars of[2][such 4. Omitted by Act 5 of 1964, S.40 (w.r.e.f. 1-4-1964). 2. [ Substituted by Act 18 of 2005, S.58, for certain words (w.e.f. 1-4-2006).] income, or] 3[Explanation 3. -Where any person 4[* **] fails, without reasonable cause, tofurnish within the period specified insub-section (1) of section 153 a return ofhis income which he is required tofurnish under section 139 in respect ofany assessment year commencing on orafter the 1st day of April, 1989, and untilthe expiry of the period aforesaid, nonotice has been issued to him underclause (i) of sub-section (1) of section142 or section 148 and the AssessingOfficer or the [5][* * *] Commissioner(Appeals) is satisfied that in respectof such assessment year such personhas taxable income, then, such personshall, for the purposes of clause (c) ofthis sub-section, be deemed to haveconcealed the particulars of hisincome in respect of such assessmentyear, notwithstanding that suchperson furnishes a return of hisincome at any time after the expiry ofthe period aforesaid in pursuance of anotice under section 148.” 24. The present case is standing on a completelydifferent footing. The bonafide and inadvertent human error isapparent on the face of it in as much as financial statements andtax audit report were duly filed and all taxes stood paid within thepresented period but the ‘ITR’ could not be filed/uploaded.Explanation ‘3’ does not envisage this situation. 24. The present case is standing on a completelydifferent footing. The bonafide and inadvertent human error isapparent on the face of it in as much as financial statements andtax audit report were duly filed and all taxes stood paid within thepresented period but the ‘ITR’ could not be filed/uploaded.Explanation ‘3’ does not envisage this situation. 3. Substituted by Act 3 of 1989, S.50, for Explanation 3 (w.e.f. 1-4-1989). 4. Certain words omitted by Act 20 of 2002, S.101 (w.e.f 1-4-2003). 5. Certain words omitted by Act 21 of 1998, S.65 (w.e.f 1-10-1998). 25. Explanation ‘4’ provides the method of calculationwith reference to clause (iii) of this sub-section. Clause (c) toExplanation ‘4’ is required to be taken note of in the present casebecause the penalty has been imposed by the Assessing Officertaking recourse to this provision. It reads as under:- “(c) where in any case to whichExplanation 3 applies, the amount oftax sought to be evaded shall be thetax on the total income assessed asreduced by the amount of advancetax, tax deducted at source, taxcollected at source and self-assessment tax paid before the issueof notice under section 148.” 26. Keeping in view clause (c) of Explanation ‘4’ ofSection 271 (1)(c) of the Act, this Court finds that the statementsmade by the petitioner in paragraph ‘16(iii)’ of the writ petitionwherein calculations have been shown have not been denied andthat would be important to take a view that the Assessing Officerhas not applied his judicious mind even while calculating thepenalty amount. 27. This Court finds on appreciation of the scheme ofSection 271 (1)(c) read with Explanation ‘3’ that it essentiallycovers a case where there is a concealment of the particulars of income or where the assessee has furnished incorrect particularsof his income. 28. This Court has no difficulty in recording that it isnot a case of concealment of particulars of income or furnishingof incorrect particulars of income. Even the respondents haveadmitted it in paragraph ‘9’ of their counter affidavit which thisCourt has already quoted hereinabove. Explanation ‘3’ clearlytalks of a satisfaction to be reached by the Assessing Officer orthe Joint Commission (Appeals) or the Commissioner (Appeals)that in respect of such assessment year, such person has taxableincome and if he has not filed his return, then he will be deemedto have concealed his particulars of income in respect of suchassessment year. In the present case, no such satisfaction hasbeen recorded by the Assessing Officer in the peculiar facts ofthis case where admittedly, the petitioner had uploaded thefinancial statements and the tax audit report and had paid all thetaxes. 29. According to this Court, the provisions of law asdiscussed above have been incorporated in the statute book tocatch hold of a dishonest person who fails to file his return andconceals his particulars of income in order to evade taxes. In thepresent case, the facts are glaring and showing on the face of it with an admission on the part of the respondents that it was not acase of concealment of income by the assessee. In fact, thepetitioner has been found entitled to refund. 30. So far as the two judgments cited by Ms. ArchanaSinha, learned Senior Standing Counsel for the Department areconcerned, in the considered opinion of this Court, those are notat all applicable in the facts of the present case. In the case ofMewa Lal Sankatha Prasad (supra), the Hon’ble AllahabadHigh Court was answering two questions which were referredby the Tribunal for the opinion of the High Court. Those twoquestions were as under:- with an admission on the part of the respondents that it was not acase of concealment of income by the assessee. In fact, thepetitioner has been found entitled to refund. 30. So far as the two judgments cited by Ms. ArchanaSinha, learned Senior Standing Counsel for the Department areconcerned, in the considered opinion of this Court, those are notat all applicable in the facts of the present case. In the case ofMewa Lal Sankatha Prasad (supra), the Hon’ble AllahabadHigh Court was answering two questions which were referredby the Tribunal for the opinion of the High Court. Those twoquestions were as under:- “1. Whether, on the facts and in thecircumstances of the case, theTribunal was legally correct inholding that for the purposes ofcalculating penalty under s. 271(1)(c),the provisions of s. 271(1)(c) asamended by the Finance Act, 1968,with effect from April 1, 1968, werenot applicable and that the penaltyhas to be calculated according to theprovisions of the Act which wasapplicable as per the provisions inforce prior to April 1, 1968? 2. Whether, on the facts and in thecircumstances of the case, theTribunal was legally correct in reducing the amount of penaltyimposed under s. 271(1)(c) from Rs.18,000 to minimum imposable withreference to the tax sought to beevaded?” 31. In course of argument, learned Senior StandingCounsel for the Department has ultimately submitted that thosetwo questions are not involved in the present writ application. 32. So far as the judgment of the Tribunal in case ofMeka Ranganayakamma (supra) is concerned, again in thesaid case, the assessee who had sold a piece of land had not filedreturn and it was found that he had concealed his particulars ofincome. The present case stands on a completely differentfooting and the judicial pronouncements placed before thisCourt on behalf of the Department would not help it. 33. For the reasons stated hereinabove, we are of theconsidered opinion that the Assessing Officer as well as theRevisional Authority both have failed to take a correct view inthe facts and circumstances of this case. The Assessing Officerhas not only committed error in applying clause (c) of sub-section (1) of Section 271 read with Explanation ‘3’ of the Actbut has also failed to calculate the penalty amount by duly appreciating clause (c) attached to Explanation ‘4’. Thus, onboth counts, he has committed wrong. 34. In ultimate analysis, the impugned orders cannot sustain the test of law. Those are liable to be set aside. 35. Accordingly, this Court sets aside the impugnedorders and allow this writ application. (Rajeev Ranjan Prasad, J) (Ashok Kumar Pandey, J) lekhi/- AFR/NAFRAFRCAV DATEUploading Date23.06.2025Transmission Date