Case Law Details
PCIT Vs J & K Power Development Corporation Limited (Jammu & Kashmir High Court)
Jammu Kashmir High Court held that Tribunal rightly set aside penalty under section 271(1)(c) as AO not clear whether it was case of concealment of particulars of income or failure to furnish correct particulars of income. Penalty not leviable as AO not clear about applicability of particular limb.
Facts- The present appeal is filed by PCIT mainly raising the substantial question of law that whether the proceedings for imposition of penalty u/s. 271(1)(c) of the Income Tax Act, 1961, can be vitiated if the satisfaction be derived by the Assessing Authority or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner/ Commissioner, as the case may be, during the course of any proceedings under the Income Tax Act, is referable to both the limbs of clause (c) i.e., concealment of the particulars of the income and furnishing of incorrect particulars of such income together and in the alternative.
Conclusion- Held that the Assessing Authority was itself not clear, whether it was a case of concealment of particulars of income by the Assessee or his failure to furnish correct particulars of such income. The Assessee too was deprived of a clear opportunity to give the explanation in view of the confusion created by the Assessing Authority itself. It is in these circumstances, the Tribunal, after relying upon the several precedents, came to the conclusion that it was a case where the Assessee had not given the proper opportunity to offer his explanation and, therefore, the impugned order of imposition of penalty was vitiated being in violation of the principles of natural justice. The Tribunal also found fault with the requisite satisfaction which the Assessing Authority was required to arrive at before initiating the penalty proceedings. We fully concur with the view taken by the Tribunal. We, however, find that the Tribunal while accepting the appeal of the respondent and setting aside the impugned order of penalty did not give liberty to the Income Tax Authorities to issue fresh notice in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF JAMMU & KASHMIR HIGH COURT
1. This appeal, filed by the Principal Commissioner of Income Tax, Jammu, under Section 260-A of the Income Tax Act, 1961, is directed against an order dated 27th July, 2019, passed by the Income Tax Appellate Tribunal, Amritsar Bench (the “Tribunal”) in ITI No. 339(ASR)/2016, filed by the respondent, for the assessment year 2011-12
2. From the perusal of the proceedings sheet, it transpires that this appeal is not formally admitted. However, this Court vide order dated 12th July, 2023, had proposed to take substantial questions of law for consideration at the time of final hearing, are proposed by the appellant in the Memo of Appeal.
3. Having heard learned counsel for the parties and perused the material on record, we are of the considered opinion that the questions of law proposed in the Paragraph No. 3 of the Memo of Appeal are not the substantial questions of law which require determination in the instant appeal. Most of the questions framed are questions of fact. We, however, find that the only question of law that needs determination in this case is as under:
“Whether the proceedings for imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961, can be vitiated if the satisfaction be derived by the Assessing Authority or the Joint Commissioner (Appeals) or the Commissioner (Appeals) or the Principal Commissioner/ Commissioner, as the case may be, during the course of any proceedings under the Income Tax Act, is referable to both the limbs of clause (c) i.e., concealment of the particulars of the income and furnishing of incorrect particulars of such income together and in the alternative.”
4 We have heard learned counsel for the parties on the aforesaid issue and have gone through the judgment under appeal. In terms of Section 271(1) (c) of the Income Tax Act, 1961, penalty proceedings can be initiated provided the Assessing Officer or the Joint Commissioner (Appeals) or Commissioner (Appeals) etc., as the case may be, is satisfied that any person has inter alia concealed the particulars of the income or furnished the incorrect particulars of such income. Before taking the penalty proceedings to logical end, the Assessee is also required to be put on notice for offering his explanation to such concealment or furnishing incorrect particulars of such income etc.
5. The Tribunal has on facts found that the notice which was served upon the Assessee for seeking his explanation was not clear and unambiguous. The Assessing Authority concerned had not recorded its satisfaction with regard to one of the two limbs or on both the limbs indicated in clause (c) of sub-section 1 of Section 271. The notice issued to the Assessee was a composite notice intimating the Assessee that he was liable to be proceeded for imposition of penalty for having concealed the particulars of his income/ for having furnished incorrect particulars for such income.
6. The Assessing Authority was itself not clear, whether it was a case of concealment of particulars of income by the Assessee or his failure to furnish correct particulars of such income. The Assessee too was deprived of a clear opportunity to give the explanation in view of the confusion created by the Assessing Authority itself. It is in these circumstances, the Tribunal, after relying upon the several precedents, came to the conclusion that it was a case where the Assessee had not given the proper opportunity to offer his explanation and, therefore, the impugned order of imposition of penalty was vitiated being in violation of the principles of natural justice. The Tribunal also found fault with the requisite satisfaction which the Assessing Authority was required to arrive at before initiating the penalty proceedings. We fully concur with the view taken by the Tribunal. We, however, find that the Tribunal while accepting the appeal of the respondent and setting aside the impugned order of penalty did not give liberty to the Income Tax Authorities to issue fresh notice in accordance with law.
7. Be that as it may, the order impugned before us does not suffer from any illegality and, therefore, there is no case made out for interference with the judgment of the Tribunal. This appeal is, therefore, found without any merit and the same is accordingly dismissed. However, we leave it open to the appellants to proceed against the respondent, if it is required, strictly in accordance with law.
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