The Commisisoner Of Income Tax Amritsar v. Sh. Kesho Dass, Huf, Pathankot

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Reference Nos. 18 & 19 of 2000Date of decision: 6.12.2010 The Commisisoner of Income TaxAmritsar --- Petitioner VersusSh. Kesho Dass, HUF, Pathankot--- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL---Present:Mr. Sukant Gupta, Standing Counsel for the petitioner. Mr. Salil Kapoor, Saurabh Kapoor and Ankit Gupta,Advocates for the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of two references, Income TaxReference Nos. 18 and 19 of 2000. In these references filed underSection 256(2) of the Income Tax Act, 1961 (for short “the Act”), theIncome Tax Appellate Tribunal, Amritsar Bench, Amritsar, (for brevity“the Tribunal”) on the direction of this Court, has referred thefollowing question of law for its opinion: “Whether on the facts and in the circumstances of thecase, the Tribunal was right in law in cancelling thepenalty levied under Section 271(1)(c) of the Income TaxAct, 1961?” The references relate to the levy of penalty of Rs.24,860/- for the assessment year 1976-77 and Rs. 19,509/- for theassessment year 1977-78, under Section 271(1)(c) of the Act. The background in which the above question came to bereferred is that the assessee did not file returns of income for theassessment years 1976-77, 1977-78 and 1978-79 within the timestipulated under Section 139 of the Act. The Income Tax Officerhaving come to know that some income chargeable to tax hadescaped assessment relating to the aforesaid assessment yearsinitiated proceedings against the assessee under Section 148 andissued notice to the assessee under Section 147(a) of the Act. Theassessee having been found to have violated the relevant provisions,proceedings for levy of penalty were also initiated. Consequently,penalties were levied on the assessee by the assessing officer underSections 271(1)(a)/271(1)(c) of the Act on account of delay in filingthe returns and concealment of income. When the matter came up inappeal at the instance of the assessee before the Commissioner ofIncome Tax (Appeals), for short [“CIT(A)”], it was noticed by the saidappellate authority that the assessment orders, which had given riseto initiation of proceedings for levy of penalties, had itself beencancelled by the Tribunal. The CIT(A), thus, cancelled the penaltiesas well. The above order passed by the CIT(A) was upheld by theTribunal in appeal carried by the Revenue. The Tribunal by orderdated 22.8.1994, rejected the Reference Application filed by the CITunder Section 256(1) of the Act and held that no referable question oflaw arose out of its order. The Revenue thereafter filed a petitionunder Section 256(2) before this Court and it was on the direction of this Court that the above mentioned question came to be referred forthe opinion of this Court. Income Tax Reference Nos. 15 to 17 of 2000, arise fromthe order of the Tribunal whereby the Tribunal had annulled theassessment proceedings holding that the notice under Section 148 ofthe act had not disclosed the status of the assessee as HUF and,therefore, the proceedings in pursuance to such notice were invalid.Accordingly, the penalty had also been cancelled. However, videorder of even date, the aforesaid references have been answered infavour of the revenue and now the matter shall be required to beadjudicated on merits. this Court that the above mentioned question came to be referred forthe opinion of this Court. Income Tax Reference Nos. 15 to 17 of 2000, arise fromthe order of the Tribunal whereby the Tribunal had annulled theassessment proceedings holding that the notice under Section 148 ofthe act had not disclosed the status of the assessee as HUF and,therefore, the proceedings in pursuance to such notice were invalid.Accordingly, the penalty had also been cancelled. However, videorder of even date, the aforesaid references have been answered infavour of the revenue and now the matter shall be required to beadjudicated on merits. Learned counsel for the assessee submitted that theoriginal Karta of the assessee HUF, Shri Kesho Dass has expiredand his son is now the Karta of Kesho Dass HUF who is nowdefending the proceedings. He submitted that keeping in view thequantum of Rs. 24,860/- and 19,509/- only, involved and that thepenalty proceedings are relating to assessment years 1976-77 and1977-78, more so, the issue being debatable as to whether there hadbeen deliberate concealment on the part of the assessee or not so asto hold it liable under Section 271(1)(c) of the Act, the matter requiresto be dealt with leniently and with compassion. Learned counsel forthe revenue contended that in view of the decision of even date ofthis Court in Income Tax Reference Nos. 15 to 17 of 2000, thequestion of law deserves to be answered in favour of the revenueand the matter requires to be examined by the Tribunal. We have given our thoughtful consideration to therespective submissions made by the learned counsel for the parties. Ordinarily, in view of the decision in Income Tax Reference Nos. 15 to17 of 2000, the question of law has to be answered in favour ofrevenue but keeping in view the totality of peculiar facts andcircumstances of the case, namely, that the penalty amount involvedis just Rs. 24,860/- and Rs.19,509/- only, relating to assessmentyears 1976-77 and 1977-78; the question of levy of penalty underSection 271(1)(c) in the present facts is debatable, and that theoriginal Karta of the assessee-HUF has since expired, we areinclined to leave the question of law unanswered and close thepenalty proceedings under Section 271(1)(c) of the Act. The References stand disposed of accordingly. A photo copy of this order be placed on the file of IncomeTax Reference No. 19 of 2000. (AJAY KUMAR MITTAL) JUDGE December 6, 2010*rkmalik* (ADARSH KUMAR GOEL) JUDGE