PCIT Vs Shashank Harshadrai Shah (Bombay High Court)
Bombay High Court holds deletion of Income Tax penalty by appellate authorities does not raise substantial question of law
The Bombay High Court dismissed the Revenue’s appeals against the Income Tax Appellate Tribunal’s order deleting penalties imposed under Section 271(1)(c) of the Income Tax Act, 1961. The case involved reassessment proceedings where the Assessing Officer had made minor additions on alleged bogus purchases, which the assessee accepted. However, penalty proceedings were initiated for alleged concealment of income. Both the Commissioner (Appeals) and the ITAT found that the additions were estimation-based and did not justify the imposition of penalty. The High Court concurred, holding that when the appellate authorities have deleted a penalty and the findings are factual in nature, no substantial question of law arises. Referring to its earlier rulings in Colo Colour Pvt. Ltd. and SVD Resins & Plastics Pvt. Ltd., the Court reaffirmed that penalty cannot be sustained merely because of estimated additions. Hence, the Revenue’s appeals were dismissed, and the case decided in favor of the assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. These two appeals are filed by the Revenue to challenge the orders passed by the Income Tax Appellate Tribunal. The order is a common order for the assessment years 2009-10 and 2010-11. By the impugned order the Tribunal has rejected the appeals filed by Revenue assailing the orders passed by the Commissioner of Appeals, whereby the orders of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 against the Petitioner, were set aside by the Commissioner of Appeals, is upheld.
