The Commissioner Of Income Tax – 22, Navi Mumbai v. M/S.rajesh Builders

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.5998 OF 2010 The Commissioner of Income Tax – 22, Navi Mumbai..Appellant. Versus M/s.Rajesh Builders ..Respondent. Ms.S.V. Bharucha with Mr.N.A. Kazi for the appellant.Mr.Aditya Bhatt with Mr.Sameer Dalal for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 25[th] March 2013 P.C. : 1.In this appeal by the Revenue for assessment year 2004-05, following question of law has been framed for our consideration. “Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that there is no existence of quantum addition, in spite of the facts that the appeal under Section 261A of quantum addition is pending before Hon'ble High Court, Bombay ? And further justified in confirming order of the CIT (A) 22 Mumbai bearing No.22/60/708 dated 14-03-2008 who have deleted the minimum penalty amounting to Rs.4,62,48,231/- levied by the Assessing Officer ?” 2.By the impugned order, the Tribunal upheld the order of the Commissioner of Income Tax (A) holding that no penalty under Section 271(1)(c) of the Income Tax Act, 1961 ('Act' for short) is leviable upon the respondent – assessee. The issue before the Tribunal was whether the profits arising on sale of plot of land is chargeable to tax under the head capital gains or under the head business income. The impugned order deleted the penalty as in quantum proceedings, the respondent – assessee had succeeded and there was no quantum addition. Besides upholding the finding of the Commissioner of Income Tax (A) that there is no dispute that facts with regard to sale and purchase of land was not concealed by the respondent – assessee and in any event in the facts of the case two views are possible, thus, no penalty is imposable. 3.The submission of the Revenue is that as this Court has entertained its appeal from the order of the Tribunal in quantum proceedings, the appeal from the impugned order of the Tribunal with regard to penalty must also be entertained. No submission independent of the above submission is made for admission of this appeal. 4.It is well settled that the penalty proceedings are independent and separate from quantum proceedings. Therefore, mere rejection of a claim in quantum proceedings would not ipso facto lead to levy of penalty under Section 271(1)(c) of the Act. For imposition of penalty, the ingredients of Section 271(1)(c) of the Act must be satisfied. In this case, it is not the submission of the Revenue that penalty is imposable as there has been concealment of income or furnishing of inaccurate particulars. At the very highest, it can only be a case of a claim of being taxed under a particular head of income being not accepted. The Supreme Court in the matter of Commissioner of Income Tax V/s. Reliance Petroproducts (P) Limited reported in 322 ITR 158 has held that mere rejection of a claim would not lead to imposition of penalty. In the above circumstances, we see no reason to entertain the proposed question of law. 5. Accordingly, the appeal is dismissed with no order as to costs.(M.S. Sanklecha, J.)(J.P. Devadhar, J.)