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TAXAP/1602/2009 3/ 3 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1602 of 2009
=========================================================
COMMISSIONER
OF INCOME TAX-III - Appellant(s)
Versus
PURNIMA
ADVERTISING AGENCY PVT LTD - Opponent(s)
=========================================================
Appearance :
MR
M.R.BHATT SR. ADVOCATE WITH MS MAUNA M BHATT for Appellant(s) :
1,
None for Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
and
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 28/03/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
Revenue
is in appeal against the judgment of the Tribunal dated 23rd
February, 2009 raising following substantial question of law for
consideration.
“Whether the
Appellate Tribunal is right in law and on facts in confirming the
order passed by the CIT (A) in deleting the penalty levied
U/s.271(1)(c) of the Act when the quantum additions made were
confirmed?”
From
the record, it emerges that Assessing Officer had imposed penalty of
Rs.7,62,426/- against the assessee under Section 271(1)(c) after
disallowing certain expenses claimed by the assessee by way of
deduction. The assessee went in appeal. CIT (A) deleted the penalty
on the ground that there was no mis-declaration on part of the
assessee. The CIT (A) observed as under:
“5.1 It is
seen that the assessing officer while levying the penalty
U/s.271(1)(c) of the I.T.Act, 1961. In respect of the above expenses,
is of the opinion that the appellant’s claim was totally without
legal basis or the intention was malafide. The assessing officer,
however, has not established any mensrea on the part of the
appellant. The penalty proceedings are penal in nature and therefore,
there should be conscious concealment.
5.2 It is also seen
in the instant case the items of dis-allowance, on which the
assessing officer has levied penalty, are already been disclosed by
the appellant. However, the said expenses have not been accepted by
the A.O. and also by the CIT (A) as they are claimed. These expenses
have been claimed by the appellant buttey are disallowed by the A.O.
Hence, mere disallowance does not attract penalty proceeding under
Section 271(1)(c) of the I.T. Act, 1961″.
Revenue
aggrieved by the order of the CIT (A), approached the Tribunal.
Tribunal by impugned judgment rejected the appeal of the revenue on
the ground that the quantum additions which were the basis for
imposing penalty have been deleted. In that view of the matter,
question of penalty would not survive.
Having
heard the learned counsel for the revenue, we find that since the
revenue is in further appeal against the quantum additions made by
the Assessing Officer but subsequently deleted in further appeals,
this cannot be sole ground for deleting the penalty. We would have
considered the revenue’s appeal against the penalty had this been
the sole ground.
In
the present case, however, we find that CIT (A) had come to the
conclusion that there was no concealment by the assessee. In fact,
it was found that the Assessing Officer found the claim of the
assessee without basis. It was held that the expenses were claimed
by the assessee but disallowed by the Assessing Officer which would
not attract the penal provision. When we find that on facts, the
grounds for imposing the penalty under Section 271(1)(c) are found
to be absent, this appeal is not required to be entertained.
Irrespective of the outcome on the issue of quantum additions, this
appeal is dismissed.
(AKIL
KURESHI,J.)
(Ms.
SONIA GOKANI,J.)
(ashish)
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