PCIT (Central) Vs Golden Peace Hotels And Resorts Pvt. Ltd. (Bombay High Court)
Summary: The Revenue sought admission of the appeal on the substantial question whether the Tribunal was correct in law and on facts in deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961.
The Revenue contended that the revised returns filed by the assessee indicated that disclosures had been made only piecemeal. Relying upon MAK Data (P.) Ltd. Vs. Commissioner of Income Tax, the Revenue submitted that such disclosure did not relieve the assessee from payment of penalty. It was also submitted that the assessment order referred to concealment and/or furnishing of inaccurate particulars and, therefore, a substantial question of law arose for consideration.
Read SC Judgment in this case: SC Dismisses SLP Against Bombay HC Ruling on Section 271(1)(c) Penalty
On behalf of the assessee, it was submitted that there was no finding regarding concealment or furnishing of inaccurate particulars. The assessee further pointed out that the notice dated 30/09/2016 issued by the Deputy Commissioner was in printed form and the relevant portion had not been struck off to indicate whether the satisfaction concerned concealment of particulars or furnishing of inaccurate particulars. Reliance was placed on Commissioner of Income Tax-11 v/s. Shri Samson Perinchery and Principal Commissioner of Income Tax v/s. New Era Sova Mine.
The Bombay High Court examined the record and found that both the Commissioner (Appeals) and the ITAT had categorically held that there was no record of satisfaction by the Assessing Officer that there had been concealment of income or furnishing of inaccurate particulars by the assessee. The Court held that such satisfaction was a sine qua non for initiation of penalty proceedings. In its absence, the Court found that the two authorities had correctly ordered the dropping of penalty proceedings.
The Court further observed that, in Samson Perinchery and New Era Sova Mine, the Division Bench had held that a penalty notice must clearly indicate whether the Assessing Officer was satisfied that the case involved concealment of particulars of income or furnishing of inaccurate particulars of income, or both. Where a printed form was used, the inapplicable portions were required to be struck off so that the nature of the satisfaction was clear.
In the present case, the Court noted that the notice dated 30/09/2016 had not struck off the inapplicable portions. This defect, coupled with the absence of a finding or satisfaction regarding concealment or furnishing of inaccurate particulars, left no ground for interference with the impugned order.
The Court also declined to accept the Revenue’s reliance on MAK Data (P.) Ltd. Vs. Commissioner of Income Tax in the peculiar facts of the case. It observed that the notice itself was defective and that there was no finding or satisfaction recorded concerning concealment or furnishing of inaccurate particulars.
The Court also noted that, in Tax Appeal No. 24 of 2019, arising on identical facts, it had declined to admit an appeal in which the same substantial question of law had been urged. Following that order as well, the Court declined to admit the present appeal.
Accordingly, the Bombay High Court held that no substantial question of law arose and dismissed the appeal.
Cases Discussed
- MAK Data (P.) Ltd. Vs. Commissioner of Income Tax, (2013) 38 Taxman.com 448 (SC) — considered in relation to the Revenue’s contention that piecemeal disclosure did not absolve the assessee from penalty; the Court declined to apply the contention in the peculiar facts because the notice was defective and there was no finding or satisfaction regarding concealment or furnishing of inaccurate particulars.
- Commissioner of Income Tax-11 v/s. Shri Samson Perinchery, (2017) 392 ITR 4 — followed for the requirement that the penalty notice clearly identify whether the charge is concealment of particulars of income or furnishing of inaccurate particulars of income.
- Principal Commissioner of Income Tax v/s. New Era Sova Mine, 2019 SCC OnLine Bom 1032 — considered and applied for the principle that a printed penalty notice must have the inapplicable portion struck off so as to clearly indicate the nature of the satisfaction.
- PCIT v. Goa Coastal Resorts & Recreation Pvt. Ltd., Tax Appeal No. 24 of 2019 — followed as an earlier order involving identical facts and the same substantial question of law, in which the Court declined to admit the appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
Heard Ms Razaq, learned Advocate for the Appellant and Mr. Rao, learned Advocate for the Respondent.
2. Ms. Razaq, learned Advocate for the Appellant urges admission of this appeal on the following substantial question of law:-
i) Whether on the facts and in the circumstances of the case, the Tribunal is right in law and fact, in deleting the penalty levied u/s. 271(1)(c) of the Income Tax Act, 1961?
3. Ms Razaq, learned Advocate submits that in this case the revised returns filed by the Respondents indicated that the disclosures were made only by piecemeal. Relying upon Mak Data (P.) Ltd v/s. Commissioner of Income Tax she submits that such disclosure does not relieve the assessee of the requirement of paying penalty. She submits that the assessment order in the present case makes reference to concealment and/or inaccurate particulars. In this view of the matter, she submits that the substantial question of law as aforesaid will arise and the view taken by the Commissioner (Appeals) as well as the ITAT in relation to deletion of penalty, warrants interference.
4. Mr Rao, learned Advocate for the assessee points out that there is absolutely no finding as regards concealment or furnishing of inaccurate particulars. He further points out that in the notice issued to the assessee on 30/09/2016, the Deputy Commissioner had not even bothered to strike down the relevant portion of the printed form in order to indicate whether the satisfaction is based upon the concealment of particulars or furnishing of inaccurate particulars. He relies onCommissioner of Income Tax-11 v/s. Shri Samson Perinchery2 and Principal Commissioner of Income Tax v/s. New Era Sova Mine3 to submit that on the basis of such a defective notice, award of penalty can never be sustained.
5. We have carefully examined the record as well as duly considered the rival contentions. Both the Commissioner (Appeals) as well as the ITAT have categorically held that in the present case, there is no record of satisfaction by the Assessing Officer that there was any concealment of income or that any inaccurate particulars were furnished by the assessee. This being a sine qua non for initiation of penalty proceedings, in the absence of such satisfaction, the two authorities have quite correctly ordered the dropping of penalty proceedings against the assessee.
6. Besides, we note that the Division Bench of this Court in Samson (supra) as well as in New Era Sova Mine (supra) has held that the notice which is issued to the assessee must indicate whether the Assessing Officer is satisfied that the case of the assessee involves concealment of particulars of income or furnishing of inaccurate particulars of income or both, with clarity. If the notice is issued in the printed form, then, the necessary portions which are not applicable are required to be struck off, so as to indicate with clarity the nature of the satisfaction recorded. In both Samson Perinchery and New Era Sova Mine (supra), the notices issued had not struck off the portion which were inapplicable. From this, the Division Bench concluded that there was no proper record of satisfaction or proper application of mind in matter of initiation of penalty proceedings.
7. In the present case, as well if the notice dated 30/09/16 (at page 32) is perused, it is apparent that the inapplicable portions have not been struck off. This coupled with the fact adverted to in paragraph (5) of this order, leaves no ground for interference with the impugned order. The impugned order is quite consistent with the law laid down in the case of Samson Perinchery and New Era Sova Mine (supra) and therefore, warrants no interference.
8. The contention based upon MAK Data (P.) Ltd.(supra) also does not appeal to us in the peculiar facts of the present case. The notice in the present case is itself defective and further, there is no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars.
9. In Tax Appeal No.24 of 2019, based upon the identical facts, we decline to admit the appeal, in which, the same substantial question of law was urged. Therefore, following our order in Tax Appeal No.24 of 2019 as well, we are not inclined to admit this appeal.
10. For the aforesaid reasons, we hold that no substantial question of law arises in this appeal. Consequently, this appeal is dismissed.
Notes:
1 [(2013) 38 Taxman.com 448 (SC)
2 [(017) 392 ITR 4]
3 [2019 SCC OnLine Bom 1032]
