Assistant Commissioner of Vs. Satinder Puri - Court Judgment

SooperKanoon Citationsooperkanoon.com/63925
CourtIncome Tax Appellate Tribunal ITAT Amritsar
Decided OnNov-22-1989
JudgeS Grover
Reported in(1990)32ITD732(Asr.)
AppellantAssistant Commissioner of
RespondentSatinder Puri
Excerpt:
1. in this revenue's appeal the order of deputy commissioner of income-tax (appeals), amritsar range, amritsar, cancelling penalty of rs. 4,390 which had been levied by the ito under section 27 l(l)(a) of the income-tax act, 1961,hereinafter referred as the act, in respect of assessment year 1980-81 is contested.2. the assessee's loss return of rs. 11,038 came to be accepted by order dated 22-11 -1982. the returned loss was as per the assessee's version, on the ground, that his share of loss from the firm m/s ravi solvex amounted to rs. 56,431.3. later the ito passed an order captioned under section 154/155 of the act by which he determined the taxable income at a positive figure of rs. 40,040 because there was no loss determined in the case of ravi solvex and, therefore, the figure of.....
Judgment:
1. In this Revenue's appeal the order of Deputy Commissioner of Income-tax (Appeals), Amritsar Range, Amritsar, cancelling penalty of Rs. 4,390 which had been levied by the ITO under Section 27 l(l)(a) of the Income-tax Act, 1961,hereinafter referred as the Act, in respect of assessment year 1980-81 is contested.

2. The assessee's loss return of Rs. 11,038 came to be accepted by order dated 22-11 -1982. The returned loss was as per the assessee's version, on the ground, that his share of loss from the firm M/s Ravi Solvex amounted to Rs. 56,431.

3. Later the ITO passed an order captioned under Section 154/155 of the Act by which he determined the taxable income at a positive figure of Rs. 40,040 because there was no loss determined in the case of Ravi Solvex and, therefore, the figure of Rs. 56,431 came to be adjusted. In view of the positive assessable income as per order under Section 155 dated 31-7-1985, the ITO initiated penalty proceedings under Section 271 (1 )(a) & 273( 1 )(b) of the Act and also levied interest under Section 139(8) and 217(1) of the Act because against the due date of 31-7-1980 return had been submitted on 24-5-1982. Rejecting the assessee's plea that since no penalty proceedings had been initiated in the order passed under Section 143(1) of the Act, it could not be done in the order under Section 154 of the Act and also that there was reasonable cause for late filing, levied the penalty of Rs. 4,390.

4. In the first appeal the assessee raised two-fold separate distinct contentions. First; that the provisions of Section 154/155 of the Act could not be invoked to initiate penalty proceedings under Section 27 l(l)(a) of the Act and second that in any case the assessee entertained bona fide belief that there being loss share from M/s Ravi Solvex his income was not taxable and, therefore, obliged to file the return under the statutory period.

5. The Deputy Commissioner, as the first appellate authority, allowed the assessee's appeal on both the counts.

6. Shri R.P. Kapur, D.R., in addition to the judgment of the Honourable Patna High Court in the case of Bihar State Road Transport Corpn. v.CIT [1986] 162 ITR 114 on which reliance was placed by the ITO for justifying his action pressed into service a recent judgment of the Honourable Madhya Pradesh High Court in the case of 677" v. Prem Kumar Sethia [1988] 171 ITR 66 and very effectively asserted that the provisions of Section 271(l)(a) were very clear that late filing penalty proceedings can be initiated in the course of any proceedings under the Act and, therefore, it made no difference if these had not been initiated in the order under Section 143(1) of the Act and these came to be initiated in the order under Section 154/155 of the Act when the later order has not even been contested as wrongly passed or suffering from any infirmity.

6. As faras the legal contention of Shri Kapur, D.R., is concerned, I accept the same because of his appropriate reference to the provisions of Section 271(l)(a) of the Act in which there is no constraint or restrictions that these must be initiated in the assessment order under Section 143(1) or 143(3) of the Act. Mr. Kapur was right in his contention that in addition to the judgment of the Patna High Court in which it has been held that rectification orders are part of the assessment proceedings, the penalty proceedings particularly under Section 271(l)(a) can validly be started in any proceedings under the Act.

7. However, the Revenue cannot succeed in getting the order reversed because the AAC's findings that the assessee entertained bona fide belief that his income was not taxable in view of his loss share from M/s Ravi Solvex cannot be said to be wrong or vague decision.

8. If the assessee had wrongly showed loss share while filing the return it could be a case for penalising the assessee for concealment under Section 271(l)(a) of the Act for which even proceedings were not initiated. Therefore by holding that though the proceedings were validly initiated under Section 271(l)(a) of the Act in the order under Section 154/155 but the facts of the case did not warrant imposition of penalty, I dismiss the Revenue's appeal.

9. For the purposes of statistics, however, the appeal is treated as partly allowed because the A.A.C. 's order in cancelling the penalty on legal ground stands reversed.