CIT Vs S.Kumar Tyres Manufacturing Co. Ltd. (Madhya Pradesh High Court)
Madhya Pradesh High Court held that penalty u/s 271(1)(c) of the Income Tax Act not leviable in absence of deliberate intention to either conceal income or to furnish inaccurate particulars
Facts-
Vide notice dated 13.07.1997 issued u/s 148 certain income was found to escape from assessment. During this assessment proceeding, the Assessment Officer considered the disclosure made by the respondent/assessee about the receipt of the amount of US $ 11,18,000/- in two instalments paid due to the termination of the agreement. Since the respondent/assessee was maintaining the book of account on the mercantile basis in the Tax Audit report, hence, the first instalment of US $ 11,18,000/- received on 05.12.1991 was disclosed in the return of the Assessment Year, 1992 – 93 and the second instalment of US $ 8,00,000/- received on 13.11.1992 was disclosed in Assessment Year, 1993 – 94. That the entire receipts amount of compensation of Rs.5,18,02,396/- has been taxed as an income of Assessment Year, 1992 – 93.
On the basis of the substantial addition of income in the reassessment proceeding, a penalty proceeding under Section 271(1)(c) of the Income Tax was initiated in respect of all the issues. The respondent/assessee filed a reply to the show-cause notice and vide order dated 31.03.2000, penalty @ 100% i.e. Rs.3,53,38,900/- has been imposed.
Being aggrieved aforesaid order, an appeal was filed before the CIT which was partly allowed vide order dated 15.03 .2002. An appeal filed before ITAT was also partly allowed. Being aggrieved, the present appeal is filed.
Conclusion-
Apex court in the case of Price Waterhouse Coopers Private Limited v. Commissioner of Income Tax Kolkata-1 and another has held that the assessee had committed inadvertent and bona fide error and had not intended to attempt to either conceal its income or furnish inaccurate particular, hence, not liable to pay penalty under Section 271 (1) (c).
Held that the Appellate Tribunal of IT has not committed any error while setting aside the order passed by the Assessment Officer as well as CIT in respect of the imposition of penalty under Section 271 (1) (c) of the Income Tax Act.
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
The appellant / Commissioner of Income Tax – I has filed the present appeal under Section 260-A of the Income Tax Act, 1961 being aggrieved by the order dated 30.04.2003 passed by the Income Tax Appellate Tribunal in ITA Nos.284/IND/02 and 339/IND/02 for the Assessment Year, 1992-93.
2. The facts of the case in short are as under:-
2.1 Respondent / Company was established in the year 1985 and thereafter entered into the manufacturing of tyers and trading of fabrics. The respondent filed an IT return on 31/12/1992 showing the loss of Rs. 1,02,86,772/- with a Tax Audit Report both for the Tyer Division and Fabric Division. During the assessment proceedings, it was noticed that the respondent started its commercial production on 4/5/1988 with business losses claimed in the AY 1989-90. Letter on the respondent claimed that commercial production was started on 1/31992 but the Assessment Officer did not accept the claim of the petitioner in respect of capitalizing the amount of Rs.6,00,91 ,886/- in respect of expenses and loss incurred up to 01.03.1992. The assessment was completed on 28.02.1995 determining total income of Rs.2,42,17,558/- with following conditions: –
