COMMISSIONER OF INCOME TAX v. SANJIV KUMAR
[Citation -2008-LL-0204-4]

Citation 2008-LL-0204-4
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name SANJIV KUMAR
Court HC
Relevant Act Income-tax
Date of Order 04/02/2008
Assessment Year 1981-82
Judgment View Judgment
Keyword Tags concealment of income • reference application • issuance of notice • fresh assessment • original return • purchase price • advance tax
Bot Summary: Subsequently, the case was reopened under section 148 of the Act on certain information when it was noticed that the assessee had understated the purchase price of 810 shares of M/s. Angoora Wool Combers Pvt. Ltd. The Assessing Officer issued notice on May 10, 1985, to the assessee. Pursuant to the return filed by the assessee on February 19, 1986, the Assessing Officer initiated and levied penalty under section 271(1)(a) for late submission of return. Penalty under section 271(1)(c) was levied for concealment of income and also under section 273(2)(aa) for default in payment of advance tax and for filing untrue estimate of the advance tax. The Income-tax Appellate Tribunal vide order dated June 5, 1990, deleted the entire addition while relying upon its earlier decision dated April 4, 1990, passed in I. T. A. No. 175 of 1986 in the case of Shri Dharam Pal and it was held that the issue involved regarding the price of the share was squarely covered by the said decision. In view of the said order, the assessee went in appeal against the levy of aforesaid three penalties with the plea that when the entire addition stands deleted, there was no case whatsoever for levy of penalty under any of the three different provisions of the Act. After hearing counsel for the Revenue and going through the reference as well as the finding recorded by the Income-tax Appellate Tribunal pertaining to the deletion of the addition made by the Assessing Officer as also the order deleting the penalty, we are of the opinion that once the entire addition has been deleted, then there remains no case for penalty whatsoever. In our opinion, the Income-tax Appellate Tribunal has rightly come to the conclusion that after the entire addition was deleted, there was no case for sustaining the penalty under any of the three provisions of the Act.


JUDGMENT judgment of court was delivered by Satish Kumar Mittal J. Pursuant to directions given by this court, vide order dated February 26, 2001, passed in I. T. C. No. 157 of 1996 filed by Revenue, to draw up statement of case and refer following substantial question of law to this court, Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as ITAT ), has referred said question for opinion of this court: Whether, on facts and in circumstances of case, Income- tax Appellate Tribunal was right in law in cancelling penalties levied under section 271(1)(a), 273(2)(aa) and 271(1)(c) merely holding that since entire addition made by Assessing Officer has been deleted by Income-tax Appellate Tribunal, there is no case for sustaining penalties without appreciating fact that reference application under section 256(2) filed against deletion of addition is pending before hon ble High Court for adjudication. In present case, for assessment year 1981-82, assessee filed its original return of income on August 24, 1981, declaring income of Rs. 55,574. assessment was completed under section 143(3) of Income- tax Act (hereinafter referred to as Act ) on declared income on September 30, 1983. Subsequently, case was reopened under section 148 of Act on certain information when it was noticed that assessee had understated purchase price of 810 shares of M/s. Angoora Wool Combers Pvt. Ltd. Assessing Officer issued notice on May 10, 1985, to assessee. Pursuant to return filed by assessee on February 19, 1986, Assessing Officer initiated and levied penalty under section 271(1)(a) for late submission of return. Penalty under section 271(1)(c) was levied for concealment of income and also under section 273(2)(aa) for default in payment of advance tax and for filing untrue estimate of advance tax. Assessing Officer, after issuing notice under section 148 of Act, proceeded to make fresh assessment and made addition of Rs. 1,14,502 on account of undervaluation of purchase price of shares. value of each share was fixed at Rs. 149.36. Feeling aggrieved against aforesaid order, assessee went in appeal which was partly allowed by Commissioner of Income-tax (Appeals). Against that order, assessee further filed appeal before Income-tax Appellate Tribunal. Income-tax Appellate Tribunal vide order dated June 5, 1990, deleted entire addition while relying upon its earlier decision dated April 4, 1990, passed in I. T. A. No. 175 of 1986 in case of Shri Dharam Pal and it was held that issue involved regarding price of share was squarely covered by said decision. In view of said order, assessee went in appeal against levy of aforesaid three penalties with plea that when entire addition stands deleted, there was no case whatsoever for levy of penalty under any of three different provisions of Act. Commissioner of Income-tax (Appeals) allowed appeal and deleted all penalties. Revenue filed appeal against said order. same was also dismissed by Income-tax Appellate Tribunal while holding that after entire addition was deleted, there was no case for sustaining penalty under any of three provisions of Act. It has further held that since very basis had disappeared, levy of penalty was cancelled. During course of arguments, it has not been disputed that addition made by Assessing Officer on account of price of share was deleted by Income-tax Appellate Tribunal and that order has become final. After hearing counsel for Revenue and going through reference as well as finding recorded by Income-tax Appellate Tribunal pertaining to deletion of addition made by Assessing Officer as also order deleting penalty, we are of opinion that once entire addition has been deleted, then there remains no case for penalty whatsoever. very basis of issuance of notice had disappeared. Once addition was deleted, there was no requirement for assessee to file return showing higher income. Admittedly, present case is not case of concealment of income nor Revenue has been able to establish such fact. Therefore, in our opinion, Income-tax Appellate Tribunal has rightly come to conclusion that after entire addition was deleted, there was no case for sustaining penalty under any of three provisions of Act. Accordingly, reference is answered against Revenue and in favour of assessee. Disposed of accordingly. *** COMMISSIONER OF INCOME TAX v. SANJIV KUMAR
Report Error