Ita/4/2007 Of M/S Kamakhya Photo Lab Pvt. Ltd v. Commissioner Of Income Tax

ITA 4/2007BEFOREHON’BLE MR. JUSTICE RANJAN GOGOIHON’BLE MR. JUSTICE B.K.SHARMA Ranjan Gogoi, J This appeal is directed against the judgment and order dated 10.10.2006 passed by the learned Income Tax Appellate Tribunal, Gauhati Bench, Guwahati in ITA No. 54 (Gau) of 2006. The learned Tribunal by the aforesaid order had set aside the order of the learned Commissioner of Income Tax (Appeals) affirming an order of penalty passed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. Thereafter, the learned Tribunal had remanded the matter to the Assessing Officer for a fresh consideration in accordance with the directions contained in the order of the learned Tribunal. Aggrieved, the assessee has instituted the present appeal under Section 260 of the Income Tax Act, 1961. 2.We have heard Sri A Goyal, learned counsel for the appellant-assessee and Sri U Bhuyan, learned Standing Counsel of the Income Tax Department. 3.The brief facts that will be required to be noticed for the purposes of the present adjudication may now be set out hereunder: In the course of computation of the income of the assessee for the assessment year 2002-2003 under the provisions of Section 143(3) of the Act, the Assessing Officer found a list of sundry creditors against whom different amounts were mentioned in the balance sheet of the assessee. Specifically, againstone M/s Phil Corporation an amount of Rs. 9,31,022/- was shown by the assessee whereas against two other creditors i.e. Agfa India Pvt. Ltd and one M/s Indian Jogi a sum of Rs. 51,276/- and Rs. 3260/- respectively was shown by the assessee. The Assessing Officer issued letters dated 8.2.2005 by registered post to the three creditors seeking confirmation. While M/s Agfa India Pvt. Ltd had replied indicating that it had shown a sum of Rs. 31,163/- in its balance sheet as duefrom the assessee, M/s India Jogi had pointed out that their closing balance was nil. No reply was received from M/s Phil Corporation. Notice, therefore, was issued to the assessee asking for its explanation by 28.3.2005. The authorized representative of the assessee appeared before the Assessing Officer on 29.3.2005and submitted a account confirmation of M/s Phil Corporation to the extent of Rs. 3,68,857/-. The authorized representative of the assessee wanted further timeto effectively reconcile the accounts of the creditors which was, however, refused by the Assessing Officer as the assessment had to be completed by 31.3.2005.Accordingly, the difference between the amounts shown by the assessee and thoseconfirmed by the creditors totaling Rs. 5,85,537/- was treated as the undisclosed income of the assessee. By the assessment order dated 31.3.2005, penalty proceedings were directed to be initiated against the assessee. 4.In the course of the penalty proceedings the asessee appeared before the Assessing Officer and, inter alia, contended that the Director of the assessee-Firm had no knowledge of accountancy and that the mistake in question was committed by the Accountant of the Firm. It was also contended that mere failure on the part of the assessee to explain the situation would not be sufficient for the levy of penalty. Additionally, it was contended that the major addition made in the assessment pertained to M/s Phil Corporation Ltd. which was so done by rejecting the prayer for time made by the authorized representative of the assessee. Consequently, it was contended that adequate opportunity was not given to the assessee before imposition of penalty. 4.In the course of the penalty proceedings the asessee appeared before the Assessing Officer and, inter alia, contended that the Director of the assessee-Firm had no knowledge of accountancy and that the mistake in question was committed by the Accountant of the Firm. It was also contended that mere failure on the part of the assessee to explain the situation would not be sufficient for the levy of penalty. Additionally, it was contended that the major addition made in the assessment pertained to M/s Phil Corporation Ltd. which was so done by rejecting the prayer for time made by the authorized representative of the assessee. Consequently, it was contended that adequate opportunity was not given to the assessee before imposition of penalty. 5.The learned Tribunal, after an elaborate consideration of the contentions advanced by the contesting parties, took the view that imposition of penalty on the facts and materials brought on record of the present case was not justified. The learned Tribunal held that to impose penalty under the provisionsof the Act, the Assessing Officer had to be satisfied that the assessee had concealed particulars of his income. In the present case, no such finding was recorded by the Assessing Officer and penalty was imposed merely because the assesseehad accepted the anomalies in its balance sheet and, thereafter, had paid the additional tax that was demanded. Accordingly, the learned Tribunal took the viewthat the order of the first appellate authority confirming the penalty should be interfered with and the matter remanded to the Assessing Officer for a fresh consideration. 6.Sri Goyal, learned counsel for the appellant-assessee has vehemently contended that if the learned Tribunal was satisfied that the order imposing penalty was not justified on the materials available, the penalty should have been set aside without causing remand of the matter to the Assessing Officer. Sri Goyal has contended that from the discussions available in para 5 of the orderof the learned Tribunal it clearly transpires that the learned Tribunal found the imposition of penalty to be not tenable. The learned counsel has submitted that that should have been the end of the matter and the learned Tribunal could not have required the Assessing Officer to repeat the exercise all over again. Consequently, according to the learned counsel, the aforesaid part of the order of the learned Tribunal i.e. remanding the matter to the Assessing Officer would call for the Court’s interference. 7.Opposing the contentions advanced on behalf of the assessee, SriBhuyan, learned Standing Counsel of the Department has contended that it was within the power and discretion of the learned Tribunal to require the Assessing Officer to re-do the exercise. In this regard, Sri Bhuyan has placed before the Court Rule 28 of the Income Tax (Appellate Tribunal) Rules, 1963 which empower the learned Tribunal to remand a matter with such directions as may be considerednecessary. Sri Bhuyan has further submitted that as the Tribunal had found thatcertain relevant facts and materials have not been brought on record, the matter should be re-determined by the Assessing Officer. Accordingly, the learned Tribunal ordered remand of the case to the Assessing Officer. Accordingly, it is submitted that there is no infirmity in the order passed by the learned Tribunal so as to require the Court’s interference. 8.We have considered the submissions advanced on behalf of the parties. In the present case, initiation of the penalty proceedings against the assessee is not an issue before the Court. The assesee had taken part in the said proceedings and is basically aggrieved by the merits of the order imposing penalty. The learned Tribunal took the view that the facts and materials germane to the issue were not brought on record of the penalty proceedings by the parties thereto and, therefore, though the penalty order is liable to be set aside, the matter should be re-decided by the primary authority after affording both the parties full opportunity to bring such materials as are relevant to the issue. The power of remand of a case with necessary directions has been conferred on the Tribunal by Rule 28 of the Income Tax (Appellate Tribunal) Rules, 1963. 9.The power of remand vested in an appellate forum is to be exercised on a satisfaction that the issue needs to be re-decided in the light of additional materials that are not on record. If materials are already available on record to enable the appellate forum to decide the matter finally the question ofremand may not arise. However, if such materials had not been brought on recordby either of the parties and the appellate forum is of the view that such materials should be brought on record and thereafter the matter re-decided, the powerof remand may be exercised. In the present case, the learned Tribunal took the view that the relevant facts and materials had not been brought on the record of the penalty proceedings by either of the parties to the said proceeding. The materials available not being adequate for a conclusive determination of the issue, the question of imposition of penalty on the assessee, therefore, was open andneeded to be determined afresh. Accordingly, the learned Tribunal remanded the matter to the primary authority. Before the said authority the assessee would have full opportunity to justify its stand that in the facts of the case no penalty is required to be imposed. In the above facts, we do not see how the order of the learned Tribunal can be said to suffer from any error giving rise to a substantial question of law which will justify this Court’s interference in exercise of powers under Section 260 of the Income Tax Act. 10.Consequently and in the light of the foregoing discussions, thisappeal has to fail. It is, accordingly, dismissed. However, in the facts and circumstances of the case, we make no order as to costs.