Heard Through Video Conferencing v. The Assistant Commissioner Of

IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on 08.7.2020Delivered on 13.7.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM AND THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.985 of 2019 (heard through video conferencing) Smt.R.Mahalakshmi Vs ...Appellant/Appellant The Assistant Commissioner of Income Tax, Non Corporate Circle17-1, Chennai. ...Respondent/Respondent APPEAL under Section 260A of the Income Tax Act, 1961against the order dated 10.9.2019 made in ITA.No.3106/Chny/2018on the file of the Income Tax Appellate Tribunal, Chennai ‘B’Bench for the assessment year 2008-09 against the order dated28.09.2018 made in ITA No.188/CIT(A)-5/2016-17 on the file ofthe Commissioner of Income Tax,(Appeals)-5, Chennai-600034. Against the order dated 31.12.2010 made in PAN/GIRNo.AGQPIY8406N on the file of the Assistant Commissioner ofIncome Tax, Central Circle III(3), Chennai-34. T.S.SIVAGNANAM,J This appeal by the appellant – assessee is directedagainst the order dated 10.9.2019 passed by the Income TaxAppellate Tribunal, Chennai ‘B’ Bench (hereinafter called theTribunal) in ITA.No.3106/ Chny/2018 for the assessment year2008-09. https://hcservices.ecourts.gov.in/hcservices/ 2. We have elaborately heard Mr.G.Baskar, learned counselappearing for the appellant – assessee and Mrs.R.Hemalatha,learned Senior Standing Counsel appearing for the respondent –Revenue. 3. The appeal has been admitted on 29.1.2020 on thefollowing substantial questions of law : “i. Whether the Income Tax AppellateTribunal was right in law in holding thatthe penalty levied under Section 271(1)(c)has to be sustained when in its earlierorder dated 25.11.2016, the assessee'sappeal was allowed and the Departmentalappeal was dismissed ? Andii. Whether the Income Tax AppellateTribunal was right in law in reversing theearlier order of the Tribunal dated25.11.2016 even after the application underSection 254(2) by the Department wasdismissed vide order dated 01.2.2019 ?” 4. The assessee is aggrieved by the order passed by theTribunal dismissing the appeal filed by the assessee byconfirming the order passed by the Commissioner of Income Tax(Appeals)-5, Chennai-34 [for short, the CIT(A)] dated 28.9.2018,who, in turn, confirmed the order passed by the AssessingOfficer with regard to levy of penalty under Section 271(1)(c)of the Income Tax Act, 1961 (for brevity, the Act). 5. To test the correctness of the decision arrived at by theTribunal to enable us to answer the substantial questions of lawframed for consideration, the following facts are to be takennote of : The residential premises of the assessee and her familymembers were subjected to search and seizure operationsresulting in the assessment of valuables and books of accounts.Thereafter, a notice under Section 153A read with Section 153Cof the Act was served and in response thereto, the assesseefiled her return of income on 29.10.2010 admitting a totalincome of Rs.2,02,62,800/-. Undoubtedly, the notice underSection 143(2) of the Act was served on the assessee within theperiod of limitation and thereafter, the notice under Section142(1) of the Act was served along with a questionnaire. 6. After considering the submissions made by the assessee,the assessment was completed under Section 153A read withSection 143(3) of the Act by order dated 31.12.2010. TheAssessing Officer mentioned that penalty proceedings would beinitiated and accordingly issued the notice proposing to levypenalty under Section 271(1)(c) of the Act. The noticeculminated in an order of penalty dated 27.6.2011. 6. After considering the submissions made by the assessee,the assessment was completed under Section 153A read withSection 143(3) of the Act by order dated 31.12.2010. TheAssessing Officer mentioned that penalty proceedings would beinitiated and accordingly issued the notice proposing to levypenalty under Section 271(1)(c) of the Act. The noticeculminated in an order of penalty dated 27.6.2011. 7. As against the order dated 27.6.2011, the assessee filedan appeal before the Commissioner of Income Tax (Appeals)-II inITA.No. 20/2011-12/A-II. The penultimate portion of the orderdated 06.3.2013 reads that the appeal was partly allowed. TheCommissioner of Income Tax (Appeals)-II, while partly allowingthe appeal filed by the assessee, held that the provisions ofSection 271AAA of the Act would apply for the assessment year2007-08. Aggrieved by that order, the assessee as well as theRevenue preferred appeals before the Tribunal. The appeal filedby the Revenue was heard along with the assessee's appeal andother appeals and a common order dated 25.11.2016 has beenpassed. The entire case revolves around the aspect as to whatwas ordered by the Tribunal and what was the ultimate decisionof the Tribunal. 8. Mr.G.Baskar, learned counsel for the assessee hasstrenuously contended that in paragraph 10 of the order of theTribunal dated 25.11.2016, it has been stated that the appealfiled by the assessee was allowed and that the appeal filed bythe Revenue was dismissed. Therefore, it is submitted that theentire penalty stood completely vacated because the appeal filedby the assessee was allowed and there ends the matter. 9. On 16.10.2017, the CIT(A) sustained the order of penaltyunder Section 271(1)(c) of the Act levied by the AssessingOfficer vide order dated 27.6.2011. Challenging the same, theassessee preferred an appeal before the Tribunal inITA.No.2784/Chny/2017 contending that the assessee should beheard before the appeal is disposed of and the matter should beremitted back to the CIT(A) for giving an opportunity to theassessee. Further, the appeal was allowed by the Tribunal on08.2.2018 and on remittance, the CIT(A), vide order dated28.9.2018, dismissed the assessee's appeal sustaining the orderof the Assessing Officer dated 27.6.2011 levying penalty underSection 271(1)(c) of the Act. 10. Aggrieved by such order, the assessee preferred anappeal to the Tribunal contending that the CIT(A) grossly https://hcservices.ecourts.gov.in/hcservices/ misinterpreted the order passed by the Tribunal on 25.11.2016,which clearly showed that the appeal filed by the assessee wasallowed and the appeal filed by the Revenue was dismissed andthat the CIT(A) failed to note that the Tribunal did not restoreor reinstate the penalty order under Section 271(1)(c) of theAct. However, the Tribunal elaborately considered the matter anddismissed the appeal of the assessee by order dated 10.9.2019,which is impugned in this appeal. 11. The sheet anchor of the argument of Mr.G.Baskar, learnedcounsel appearing for the appellant – assessee is on theoperative or decretal portion of the order passed by theTribunal dated 25.11.2016. 12. Mr.G.Baskar, learned counsel for the appellant –assessee is right in his submission to the extent that theTribunal stated that the appeal filed by the assessee wasallowed and the appeal filed by the Revenue was dismissed.However, the said interpretation of the order is incorrectbecause the order has to be read as a whole and moreparticularly paragraphs 6 and 7 of the order. If the same isdone, it is clear that the Tribunal came to the conclusion thatthe assessee is liable to penalty under Section 271(1)(c) of theAct. To support its conclusion, the Tribunal referred to thedecision of the Coordinate Bench in the case of ACIT Vs.Smt.J.Mythili [ITA.Nos.235 and 236/ Mds/2013 dated 30.4.2013]. 12. Mr.G.Baskar, learned counsel for the appellant –assessee is right in his submission to the extent that theTribunal stated that the appeal filed by the assessee wasallowed and the appeal filed by the Revenue was dismissed.However, the said interpretation of the order is incorrectbecause the order has to be read as a whole and moreparticularly paragraphs 6 and 7 of the order. If the same isdone, it is clear that the Tribunal came to the conclusion thatthe assessee is liable to penalty under Section 271(1)(c) of theAct. To support its conclusion, the Tribunal referred to thedecision of the Coordinate Bench in the case of ACIT Vs.Smt.J.Mythili [ITA.Nos.235 and 236/ Mds/2013 dated 30.4.2013]. 13. After holding that the assessee was liable to penaltyunder Section 271(1)(c) of the Act, the Tribunal proceeded toconsider the question as to whether the CIT(A) was justified ingiving a direction to the Assessing Officer to levy penaltyunder Section 271AAA of the Act. After considering the effect ofthe said provision, the Tribunal held that the CIT(A) does nothave power to give a direction to the Assessing Officer to levypenalty under Section 271AAA of the Act on the undisclosedincome and accordingly set aside that direction. Therefore, theappeal filed by the assessee stood allowed only to that extentand not in deleting the penalty levied by the Assessing Officerunder Section 271(1)(c) of the Act by order dated 27.6.2011.Hence, the Tribunal, in the impugned order, rightly observedthat when the Tribunal held that the penalty could not be leviedunder Section 271AAA of the Act, it is automatic that the levyof penalty made under Section 271(1)(c) of the Act wasconfirmed. The Tribunal further observed that the assessee hadnot challenged the levy of penalty under Section 271(1)(c) ofthe Act. 14. The argument of Mr.G.Baskar, learned counsel appearingfor the appellant – assessee is that the assessee had nooccasion to challenge the same because the appeal filed by theassessee stood allowed. 15. We are not convinced with the said argument because inparagraph 6 of the order of the Tribunal dated 25.11.2016, thereis a clear finding that the assessee is liable to penalty underSection 271(1)(c) of the Act. Hence, if the assessee wasaggrieved, she should have challenged that portion of the orderof the Tribunal, which held that the assessee should be liableto penalty. 16. It is pointed out by Mr.G.Baskar, learned counselappearing for the appellant – assessee that the Revenue moved amiscellaneous petition under Section 254 of the Act before theTribunal, which was dismissed. 17. We find from the order passed by the Tribunal dated01.2.2019 that the miscellaneous petition filed by the Revenuewas dismissed as time barred and not on merits. In any event,the finding rendered by the Tribunal in its order dated25.11.2016 having attained finality and the order imposingpenalty having been confirmed, the decision arrived at by theTribunal in dismissing the assessee's appeal does not call forany interference. 18. Accordingly, the above tax appeal is dismissed, theorder passed by the Tribunal stands confirmed and thesubstantial questions of law framed for consideration areanswered against the assessee. No costs. Assistant Registrar(AD I)MDU //True Copy// To 1.The Assistant Commissioner of Income Tax, Non Corporate Circle 17-1, Chennai-6. 2.The Income Tax Appellate Tribunal, Chennai ‘B’ Bench. https://hcservices.ecourts.gov.in/hcservices/ 3.The Commissioner of Income Tax (Appeals)-5, Chennai-34. Chennai-34. 4.The Assistant Commissioner of Income Tax, Central Circle III(3, Chennai - 34. Central Circle III(3, Chennai - 34. +2ccs to Mr.G.Baskar , Advocate, S.R.No.24658 T.C.A.No.985 of 2019LN(CO)KKV/05/08/2020