M.Palani Adaicalam v. The Assistant Commissioner of Income-tax, Circle-I, Puducherry
[Citation -2020-LL-0713-16]

Citation 2020-LL-0713-16
Appellant Name M.Palani Adaicalam
Respondent Name The Assistant Commissioner of Income-tax, Circle-I, Puducherry
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 13/07/2020
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags substantial question of law • nature of transaction • reasonable cause • imposition of penalty
Bot Summary: The assessee contended before the Tribunal that in his own case in respect of identical transactions for the same and other assessment years, the Tribunal held in favour of the assessee while coming to the conclusion that the provisions of Section 273B of the Act could be applied to the assessee s case and penalty was vacated. The sheet anchor of the argument of the assessee before the Tribunal was requesting the Tribunal to apply the decisions in the assessee s own case and grant the relief. The Tribunal, though referred to the decisions cited by the assessee before it, thought fit to follow the case of the assessee s father in ITA.Nos. On a reading of the common order passed by the Tribunal, we find that the Tribunal did not render any finding as to why the decisions in the assessee s own case in ITA.Nos. The third and last being would be to consider the findings given by the Coordinate Bench of the Tribunal and assign reasons that in the opinion of the Tribunal, the decisions do not lay down the correct legal principle or there is any error of law committed by the Coordinate Bench prompting the Tribunal to take a different decision and after abiding by the cardinal principles of judicial discipline, the Tribunal ought to have referred the matter to the Principal Bench to be referred to a Larger Bench for a decision. The Tribunal, as the last fact finding Authority/Forum, had held that the assessee had a reasonable cause to be entitled to the benefit of Section 273B of the Act, which states that notwithstanding anything contained in the provisions of Sections 271D and 271E of the Act, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. These decisions are referred to in support of his submission that the Tribunal ought to have applied the decision in the assessee s own case and should not have dismissed the assessee s appeal.


TCA.Nos.34 to 40 of 2018 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.7.2020 CORAM HONOURABLE MR. JUSTICE T.S.SIVAGNANAM AND HONOURABLE MRS. JUSTICE V.BHAVANI SUBBAROYAN TAX CASE APPEAL NOS.34 TO 40 OF 2018 & ALL CONNECTED PENDING CMPS (heard through video conferencing) Sri.M.Palani Adaicalam ...Appellant in all appeals Vs Assistant Commissioner of Income Tax, Circle-I, D.P.Thottam, Muthialpet, Puducherry-3. ...Respondent in all appeals APPEALS under Section 260A of Income Tax Act, 1961 against common order dated 31.3.2016 made in ITA.Nos. 264 to 270/Mds/2015 on file of Income Tax Appellate Tribunal, Chennai B Bench respectively for assessment years from 2006-07 to 2012-13. For Appellant : Mr.A.S.Sriraman For Respondent : Mr.J.Narayanaswamy, SSC http://www.judis.nic.in1/10 TCA.Nos.34 to 40 of 2018 COMMON JUDGMENT (Judgment was delivered by T.S.SIVAGNANAM,J) We have heard Mr.A.S.Sriraman, learned counsel appearing for appellant assessee and Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for respondent Revenue. 2. Totally there are seven appeals. This bunch of seven appeals filed by assessee under Section 260A of Income Tax Act, 1961 (for short, Act) are directed against common order dated 31.3.2016 made in ITA.Nos.264 to 270/Mds/2015 on file of Income Tax Appellate Tribunal, Chennai B Bench (for brevity, Tribunal) respectively for assessment years from 2006-07 to 2012- 13. 3. appeals are entertained to decide following substantial questions of law : i. Whether Appellate Tribunal is correct in law in restoring action of Original Authority/Assessing Officer in imposing penalty under Section 271D of Act for assessment years 2006-07 and 2012-13 on presumption of violation of Section 269SS of Act while overlooking provisions of Section 273B of Act ? and ii. Whether Appellate Tribunal is correct in law in restoring action of Original Authority/Assessing Officer in http://www.judis.nic.in2/10 TCA.Nos.34 to 40 of 2018 imposing penalty under Section 271E of Act for assessment years 2006-07, 2007- 08, 2008-09, 2009-10 and 2010-11 on presumption of violation of Section 269T of Act while overlooking provisions of Section 273B of Act? 4. common issues involved in all these appeals are as to whether Assessing Officer was justified in imposing penalty under Sections 271D and 271E of Act for violation of Section 269SS of Act and Section 269T of Act respectively without applying provisions of Section 273B of Act and as to whether Tribunal was right in reversing orders dated 14.11.2014 passed by Commissioner of Income Tax (Appeals)-VI, Chennai [hereinafter called CIT(A)] restoring orders of penalty as passed by Assessing Officer. 5. We have carefully gone through common order passed by Tribunal. 6. assessee contended before Tribunal that in his own case in respect of identical transactions for same and other assessment years, Tribunal held in favour of assessee while coming to conclusion that provisions of Section 273B of Act could be applied to assessee s case and penalty was vacated. http://www.judis.nic.in3/10 TCA.Nos.34 to 40 of 2018 7. Interestingly, in orders relied upon by assessee namely ITA.Nos.1820 to 1825/Mds/13 dated 31.10.2013 and ITA.Nos. 2047 to 2051/Mds/2013 dated 22.7.2014, very same assessment years, which are under consideration in this bunch of appeals were also involved and cases were decided in favour of assessee. 8. Therefore, sheet anchor of argument of assessee before Tribunal was requesting Tribunal to apply decisions in assessee s own case and grant relief. Tribunal, though referred to decisions cited by assessee before it, thought fit to follow case of assessee s father in ITA.Nos.220 to 228/ Mds/2014 dated 29.5.2014 and sustained penalty imposed by Assessing Officer. 9. On reading of common order passed by Tribunal, we find that Tribunal did not render any finding as to why decisions in assessee s own case in ITA.Nos.1820 to 1825/Mds/ 2013 dated 31.10.2013 and ITA.Nos.2047 to 2051/Mds/ 2013 dated 22.7.2014 were not applicable. 10. It is seen that Tribunal noted submissions made by assessee that his case was covered by those two decisions. If such is submission made by assessee before Tribunal, Tribunal is enjoined upon duty to consider said orders and upon consideration, to our mind, three options are available to Tribunal, http://www.judis.nic.in4/10 TCA.Nos.34 to 40 of 2018 firstly, to apply decisions and decide case in favour of assessee. second option being to distinguish decision in assessee s earlier case on factual grounds and set out reasons as to how they do not apply to assessment year under consideration and distinguishable. third and last being would be to consider findings given by Coordinate Bench of Tribunal and assign reasons that in opinion of Tribunal, decisions do not lay down correct legal principle or there is any error of law committed by Coordinate Bench prompting Tribunal to take different decision and after abiding by cardinal principles of judicial discipline, Tribunal ought to have referred matter to Principal Bench to be referred to Larger Bench for decision. We find that Tribunal did not follow any one of above three principles. 11. Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for respondent Revenue has relied upon judgment of Hon ble First Bench of this Court in case of assessee s brother M.Sougoumarin Vs. ACIT [TCA.Nos.838 & 839 of 2017 dated 13.3.2018]. It is submitted by learned Senior Standing Counsel that penalty, which was imposed on appellant - assessee was affirmed by Tribunal as confirmed by Division Bench of this Court by dismissing assessee s appeal. Therefore, it is also submitted that Court should follow said decision in http://www.judis.nic.in5/10 TCA.Nos.34 to 40 of 2018 case of M.Sougoumarin and sustain order passed by Tribunal in instant case. 12. admitted legal principle is that Tribunal is last fact finding Authority in hierarchy of remedies under Act. scope of adjudication by this Court has been clearly circumscribed under Statute, which can be culled out by reading provisions of Section 260A of Act and other related provisions. Tribunal, as last fact finding Authority/Forum, had held that assessee had reasonable cause to be entitled to benefit of Section 273B of Act, which states that notwithstanding anything contained in provisions of Sections 271D and 271E of Act, no penalty shall be imposable on person or assessee, as case may be, for any failure referred to in said provisions if he proves that there was reasonable cause for said failure. It is further submission of Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for respondent Revenue that there was no reasonable cause brought out by assessee to be entitled to benefit of said provision. 13. However, we find that Tribunal did not examine nature of transaction and issue as to whether CIT(A) was justified in accepting cause shown by assessee to be reasonable cause to be entitled to benefit of Section 273B of Act. decision, which has been referred to in paragraph 8 of http://www.judis.nic.in6/10 TCA.Nos.34 to 40 of 2018 impugned order, does not relate to assessee. Tribunal referred to said decision and allowed Revenue s appeal and affirmed penalty imposed by Assessing Officer. We find that there is no discussion as to why those two decisions rendered by Coordinate Bench of Tribunal in assessee s own case respectively dated 31.10.2013 and 22.7.2014 could not be applied to facts and circumstances of present case. 14. In case of assessee s brother said M.Sougoumarin, which was relied upon by Revenue before us, Hon ble First Bench of this Court held that Tribunal, on consideration of facts, was of view that there was no such reason for regular loan transactions of borrowing and repayment in cash of amounts exceeding Rs.20,000/- so as to escape penal liability under Sections 271E and 271D of Act and that there was no question of law, not to speak of any substantial question of law, involved in those appeals. 15. However, in instant case, there are two decisions of Coordinate Bench of Tribunal, which held that assessee had reasonable cause and consequently entitled to benefit of Section 273B of Act. Therefore, in our considered view, decision in case of assessee s brother M.Sougoumarin is distinguishable on facts and this decision cannot be applied to facts and http://www.judis.nic.in7/10 TCA.Nos.34 to 40 of 2018 circumstances of case on hand. 16. Mr.A.S.Sriraman, learned counsel appearing for appellant assessee has referred to decisions of this Division Bench in case of Sarvodaya Mutual Benefit Trust Vs. PCIT [TCA.No.682 of 2018 dated 03.7.2019] and in case of A.S.Shipping Agencies Private Limited Vs. DCIT [TCA.Nos.596 to 600 of 2019 dated 09.8.2019]. These decisions are referred to in support of his submission that Tribunal ought to have applied decision in assessee s own case and should not have dismissed assessee s appeal. 17. In both these cases, there were earlier orders passed by Tribunal, which were neither noted nor dealt with by Tribunal. In decision in case of Sarvodaya Mutual Benefit Trust, we had referred to decision of Hon ble Supreme Court in case of Union of India & Others Vs. Kamlakshi Finance Corporation [reported in (1992) 1 SCC 648] wherein principle of judicial discipline was pointed out as well as decision of Division Bench of this Court in case of CIT Vs. L.G.Ramamurthi And Ors. [reported in (1977) 110 ITR 453]. Accordingly, without venturing into merits of matter nor attempting to answer substantial questions of law, matters were remanded to Tribunal for fresh consideration. http://www.judis.nic.in8/10 TCA.Nos.34 to 40 of 2018 18. It is argued by Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for respondent Revenue that factual circumstances involving assessee will clearly show that they are not entitled to benefit under Section 273B of Act. 19. We are not inclined to examine merits of matter nor make attempt to answer substantial questions of law, as we are of considered view that matters require to be reconsidered by Tribunal for reasons we have set out in preceding paragraphs. It is for Tribunal to take note of fact and deal with earlier orders passed by its Coordinate Bench respectively dated 31.10.2013 and 22.7.2014, which ended in favour of assessee. 20. For above reasons, these appeals are allowed, impugned orders are set aside and matters are remanded to Tribunal for fresh consideration bearing in mind observations made by us in this common judgment. substantial questions of law are left open. No costs. Consequently, all connected pending CMPs are closed. 13.7.2020 RS http://www.judis.nic.in9/10 TCA.Nos.34 to 40 of 2018 T.S.SIVAGNANAM, J AND V.BHAVANI SUBBAROYAN, J RS To 1.The Income Tax Appellate Tribunal, Chennai B Bench. 2.The Assistant Commissioner of Income Tax, Circle-I, D.P.Thottam, Muthialpet, Puducherry-3. TCA.Nos.34 to 40 of 2018 & All connected pending CMPs 13.7.2020 http://www.judis.nic.in10/10 M.Palani Adaicalam v. Assistant Commissioner of Income-tax, Circle-I, Puducherry
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