Pr. Commissioner of Income-tax-II v. Hariom Steels (P) Ltd - 2017-LL-0703-6

Citation	2017-LL-0703-6
Appellant Name	Pr. Commissioner of Income-tax-II
Respondent Name	Hariom Steels (P) Ltd.
Court	HIGH COURT OF ALLAHABAD
Relevant Act	Income-tax
Date of Order	03/07/2017
Assessment Year	2006-07
Judgment	View Judgment
Keyword Tags	discretionary jurisdiction • concealment of income • penalty
Bot Summary:	The only point arising in this appeal is regarding the levy of penalty under Section 271(1)(c) of the Act in respect of sales to parties covered under Section 40A(b) of the Income Tax Act. Thus, the value of the difference of the scrap sold was added to the income of the assessee and accordingly, penalty of Rs. 46,25,000/- was imposed under Section 271(c) of the Act. The Tribunal by the impugned order has held that the assessee cannot be held guilty for non-disclosure of income, which was determined by invoking discretionary jurisdiction under Section 40A(b) of the Act. In S.V. Kalyanam Vs. Income Tax Officer 237 CTR 491, the Division Bench of the Madras High Court has held that where additions are made in the income by applying the deeming provisions the department cannot presume that there is concealment of income so as to attract penalty proceedings. In other words, where income is assessed on the basis of deeming provisions it would not amount to non-disclosure and as such it is not proper to impose penalty under Section 271 of the Act. In the aforesaid decision, reliance was placed upon the decision of the Supreme Court in C.I.T. vs. Reliance Petroproducts Pvt.Ltd 230 CTR 320 in which it was observed that in order to bring the case under Section 271(c) of the Act there has to be concealment of particulars of the income of the assessee and the assessee must have furnished inaccurate particulars of his income. In view of the aforesaid facts and circumstances, as in the present case, there is no concealment of income or furnishing of an incorrect particulars of the income, the penalty cannot be imposed on account of addition of income by applying the deeming provisions.

Court No. - 3 Case :- INCOME TAX APPEAL No. - 1 of 2016 Appellant :- Pr. Commissioner Of Income Tax-Ii Respondent :- M/S Hariom Steels (P) Ltd. Counsel for Appellant :- Shubham Agarwal Hon'ble Pankaj Mithal,J. Hon'ble Siddhartha Varma,J. appeal is directed against order of Tribunal dated 20 August 2015. only point arising in this appeal is regarding levy of penalty under Section 271(1)(c) of Act in respect of sales to parties covered under Section 40A (2)(b) of Income Tax Act. It appears that in assessment year 2006-07 certain scrap was sold by assessee to parties not covered under Section 40A (2)(b) of Act @ Rs. 17,340/- per metric tone whereas it was sold @ Rs. 5000/- per metric ton to parties covered under Section 40A (2)(b) of Act. Thus, value of difference of scrap sold was added to income of assessee and accordingly, penalty of Rs. 46,25,000/- was imposed under Section 271 (1)(c) of Act. Tribunal by impugned order has held that assessee cannot be held guilty for non-disclosure of income, which was determined by invoking discretionary jurisdiction under Section 40A (2)(b) of Act. In this view of matter, Tribunal held that where deeming provisions are applied in assessing income, provisions of imposing penalty would not be attracted. In S.V. Kalyanam Vs. Income Tax Officer (2011) 237 CTR (Mad) 491, Division Bench of Madras High Court has held that where additions are made in income by applying deeming provisions department cannot presume that there is concealment of income so as to attract penalty proceedings. In other words, where income is assessed on basis of deeming provisions it would not amount to non-disclosure and as such it is not proper to impose penalty under Section 271 of Act. In Commissioner of Income Tax Vs P. Rojes (2013) 260 CTR (Mad) 397, again Division Bench of Madras High Court has held that penalty under Section 271 (1)(c) of Act cannot be imposed on basis of estimation of income. In aforesaid decision, reliance was placed upon decision of Supreme Court in C.I.T. vs. Reliance Petroproducts Pvt.Ltd (2010) 230 CTR (SC) 320 in which it was observed that in order to bring case under Section 271 (1)(c) of Act there has to be concealment of particulars of income of assessee and assessee must have furnished inaccurate particulars of his income. It further held that making incorrect claim in law cannot tantamount to furnishing of incorrect particulars so as to attract penalty provisions. In view of aforesaid facts and circumstances, as in present case, there is no concealment of income or furnishing of incorrect particulars of income, penalty cannot be imposed on account of addition of income by applying deeming provisions. Accordingly, we are of opinion that Tribunal has not committed any error of law in removing penalty imposed by Assessing Authority. appeal has no merit and is, accordingly, dismissed. Order Date :- 3.7.2017 praveen. Pr. Commissioner of Income-tax-II v. Hariom Steels (P) Ltd

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