The Commissioner Of Income Tax – 5, Mumbai v. M/S.algid Investments & Finance Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2438 OF 2009 The Commissioner of Income Tax – 5, Mumbai ..Appellant. Versus M/s.Algid Investments & Finance Limited ..Respondent. Mr.Suresh Kumar for the appellant. Mr.P.J. Pardiwala, senior Advocate i/by Roys’ Law Firm for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 7[th] January, 2010. P.C. : 1.The dispute in the present case relates to the deletion of the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The assessment year in question is 2001-02. The Commissioner of Income Tax (Appeals) directed deletion of penalty on the following grounds. “4........On the facts of the present case it can be seen that the Appellant has given the complete details during the course of assessment proceedings with regard to the legal expenditure incurred by the Appellant. The Appellant has also explained that the legal expenditure incurred by the Appellant is in order to protect the investment of the Appellant. The disallowance of expenditure would not ipso facto bring the case for imposition of penalty u/s 271(1)(c) of Income Tax Act, 1961. The claim of the Appellant may not have been allowed by A.O. as deduction but nevertheless no charge of concealment can be leveled against the Appellant. The written submission as submitted by the Appellant demonstrates that Appellant has neither concealed the income nor has furnished any inaccurate particulars of income. Thus, on facts, no penalty u/s.271(1)(c) of Income Tax Act, 1961 is exigible. On above stated facts, I am of the considered opinion that there is no case for imposition of penalty u/s. 271(1)(c) of Income Tax Act, 1961. The penalty levied u/s 271(1)(c) of Income Tax Act, 1961 is directed to be cancelled.” 2.The Tribunal by its judgment dated 17[th] July 2008 held, following the judgment of the Supreme Court in Virtual Soft Systems Limited V/s. Commissionerof Income Tax [289 ITR 83] that in the absence of any positive income and no tax being levied, penalty for concealment of income could not be levied prior to the amendment made by the Finance Act of 2002. The judgment of the Supreme Court inVirtual Soft Systems has, in respect of the aforesaid finding, been held in the subsequent judgment of the Supreme Court in Commissioner of Income Tax V/s.Gold Coin Health Food Private Limited [304 ITR 308] not to lay down the correct principle of law. Since the Tribunal has not dealt with the merits of the case, both the learned counsel appearing on behalf of the revenue and the learned counsel appearing on behalf of the assessee have agreed to a remand of the proceedings to the Tribunal for a fresh decision on merits. 3.In these circumstances, the impugned order dated 17[th] July 2008 is by consent set aside and the proceedings shall stand restored to the Income Tax Appellate Tribunal for a fresh decision on merits. The Appeal is accordingly disposed of. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)