Case Law Details
Whether the ITAT was correct in law in deleting the penalty ignoring the material fact that the transaction was treated as sham by ITAT as well as by this court (227 ITR 536) in the quantum proceedings?”
If we take the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not acting bonafide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self Assessment under Section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature, actuated by a malafide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have.” The explanation given by the assessee for the depreciation claim, is neither bonafide, nor substantiated. Therefore, the cancellation of penalty was unwarranted.
HIGH COURT OF DELHI
PRONOUNCED ON: 19.10.2012
ITA No. 58/2008
Please become a Premium member. If you are already a Premium member, login here to access the full content.
