TCA.No.985 of 2019 IN HIGH COURT OF JUDICATURE AT MADRAS Reserved on 08.7.2020 Delivered on 13.7.2020 CORAM HONOURABLE MR.JUSTICE T.S.SIVAGNANAM AND HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.985 of 2019 (heard through video conferencing) Smt.R.Mahalakshmi ...Appellant Vs Assistant Commissioner of Income Tax, Non Corporate Circle 17-1, Chennai. ...Respondent APPEAL under Section 260A of Income Tax Act, 1961 against order dated 10.9.2019 made in ITA.No.3106/Chny/2018 on file of Income Tax Appellate Tribunal, Chennai B Bench for assessment year 2008-09. For Appellant : Mr.G.Baskar For Respondent: Mrs.R.Hemalatha, SSC 1/9 http://www.judis.nic.in TCA.No.985 of 2019 JUDGMENT T.S.SIVAGNANAM,J This appeal by appellant assessee is directed against order dated 10.9.2019 passed by Income Tax Appellate Tribunal, Chennai B Bench (hereinafter called Tribunal) in ITA.No.3106/ Chny/2018 for assessment year 2008-09. 2. We have elaborately heard Mr.G.Baskar, learned counsel appearing for appellant assessee and Mrs.R.Hemalatha, learned Senior Standing Counsel appearing for respondent Revenue. 3. appeal has been admitted on 29.1.2020 on following substantial questions of law : i. Whether Income Tax Appellate Tribunal was right in law in holding that penalty levied under Section 271(1)(c) has to be sustained when in its earlier order dated 25.11.2016, assessee's appeal was allowed and Departmental appeal was dismissed ? And ii. Whether Income Tax Appellate Tribunal was right in law in reversing earlier order of Tribunal dated 25.11.2016 even after application under Section 254(2) by Department was dismissed vide order dated 01.2.2019 ? 2/9 http://www.judis.nic.in TCA.No.985 of 2019 4. assessee is aggrieved by order passed by Tribunal dismissing appeal filed by assessee by confirming order passed by Commissioner of Income Tax (Appeals)-5, Chennai-34 [for short, CIT(A)] dated 28.9.2018, who, in turn, confirmed order passed by Assessing Officer with regard to levy of penalty under Section 271(1)(c) of Income Tax Act, 1961 (for brevity, Act). 5. To test correctness of decision arrived at by Tribunal to enable us to answer substantial questions of law framed for consideration, following facts are to be taken note of : residential premises of assessee and her family members were subjected to search and seizure operations resulting in assessment of valuables and books of accounts. Thereafter, notice under Section 153A read with Section 153C of Act was served and in response thereto, assessee filed her return of income on 29.10.2010 admitting total income of Rs.2,02,62,800/-. Undoubtedly, notice under Section 143(2) of Act was served on assessee within period of limitation and thereafter, notice under Section 142(1) of Act was served along with questionnaire. 6. After considering submissions made by assessee, 3/9 http://www.judis.nic.in TCA.No.985 of 2019 assessment was completed under Section 153A read with Section 143(3) of Act by order dated 31.12.2010. Assessing Officer mentioned that penalty proceedings would be initiated and accordingly issued notice proposing to levy penalty under Section 271(1)(c) of Act. notice culminated in order of penalty dated 27.6.2011. 7. As against order dated 27.6.2011, assessee filed appeal before Commissioner of Income Tax (Appeals)-II in ITA.No. 20/2011-12/A-II. penultimate portion of order dated 06.3.2013 reads that appeal was partly allowed. Commissioner of Income Tax (Appeals)-II, while partly allowing appeal filed by assessee, held that provisions of Section 271AAA of Act would apply for assessment year 2007-08. Aggrieved by that order, assessee as well as Revenue preferred appeals before Tribunal. appeal filed by Revenue was heard along with assessee's appeal and other appeals and common order dated 25.11.2016 has been passed. entire case revolves around aspect as to what was ordered by Tribunal and what was ultimate decision of Tribunal. 8. Mr.G.Baskar, learned counsel for assessee has strenuously contended that in paragraph 10 of order of Tribunal dated 25.11.2016, it has been stated that appeal filed by assessee 4/9 http://www.judis.nic.in TCA.No.985 of 2019 was allowed and that appeal filed by Revenue was dismissed. Therefore, it is submitted that entire penalty stood completely vacated because appeal filed by assessee was allowed and there ends matter. 9. On 16.10.2017, CIT(A) sustained order of penalty under Section 271(1)(c) of Act levied by Assessing Officer vide order dated 27.6.2011. Challenging same, assessee preferred appeal before Tribunal in ITA.No.2784/Chny/2017 contending that assessee should be heard before appeal is disposed of and matter should be remitted back to CIT(A) for giving opportunity to assessee. Further, appeal was allowed by Tribunal on 08.2.2018 and on remittance, CIT(A), vide order dated 28.9.2018, dismissed assessee's appeal sustaining order of Assessing Officer dated 27.6.2011 levying penalty under Section 271(1)(c) of Act. 10. Aggrieved by such order, assessee preferred appeal to Tribunal contending that CIT(A) grossly misinterpreted order passed by Tribunal on 25.11.2016, which clearly showed that appeal filed by assessee was allowed and appeal filed by Revenue was dismissed and that CIT(A) failed to note that Tribunal did not restore or reinstate penalty order under Section 5/9 http://www.judis.nic.in TCA.No.985 of 2019 271(1)(c) of Act. However, Tribunal elaborately considered matter and dismissed appeal of assessee by order dated 10.9.2019, which is impugned in this appeal. 11. sheet anchor of argument of Mr.G.Baskar, learned counsel appearing for appellant assessee is on operative or decretal portion of order passed by Tribunal dated 25.11.2016. 12. Mr.G.Baskar, learned counsel for appellant assessee is right in his submission to extent that Tribunal stated that appeal filed by assessee was allowed and appeal filed by Revenue was dismissed. However, said interpretation of order is incorrect because order has to be read as whole and more particularly paragraphs 6 and 7 of order. If same is done, it is clear that Tribunal came to conclusion that assessee is liable to penalty under Section 271(1)(c) of Act. To support its conclusion, Tribunal referred to decision of Coordinate Bench in case of ACIT Vs. Smt.J.Mythili [ITA.Nos.235 and 236/ Mds/2013 dated 30.4.2013]. 13. After holding that assessee was liable to penalty under Section 271(1)(c) of Act, Tribunal proceeded to consider question as to whether CIT(A) was justified in giving direction to Assessing Officer to levy penalty under Section 271AAA of Act. 6/9 http://www.judis.nic.in TCA.No.985 of 2019 After considering effect of said provision, Tribunal held that CIT(A) does not have power to give direction to Assessing Officer to levy penalty under Section 271AAA of Act on undisclosed income and accordingly set aside that direction. Therefore, appeal filed by assessee stood allowed only to that extent and not in deleting penalty levied by Assessing Officer under Section 271(1)(c) of Act by order dated 27.6.2011. Hence, Tribunal, in impugned order, rightly observed that when Tribunal held that penalty could not be levied under Section 271AAA of Act, it is automatic that levy of penalty made under Section 271(1)(c) of Act was confirmed. Tribunal further observed that assessee had not challenged levy of penalty under Section 271(1)(c) of Act. 14. argument of Mr.G.Baskar, learned counsel appearing for appellant assessee is that assessee had no occasion to challenge same because appeal filed by assessee stood allowed. 15. We are not convinced with said argument because in paragraph 6 of order of Tribunal dated 25.11.2016, there is clear finding that assessee is liable to penalty under Section 271(1)(c) of Act. Hence, if assessee was aggrieved, she should 7/9 http://www.judis.nic.in TCA.No.985 of 2019 have challenged that portion of order of Tribunal, which held that assessee should be liable to penalty. 16. It is pointed out by Mr.G.Baskar, learned counsel appearing for appellant assessee that Revenue moved miscellaneous petition under Section 254 of Act before Tribunal, which was dismissed. 17. We find from order passed by Tribunal dated 01.2.2019 that miscellaneous petition filed by Revenue was dismissed as time barred and not on merits. In any event, finding rendered by Tribunal in its order dated 25.11.2016 having attained finality and order imposing penalty having been confirmed, decision arrived at by Tribunal in dismissing assessee's appeal does not call for any interference. 18. Accordingly, above tax appeal is dismissed, order passed by Tribunal stands confirmed and substantial questions of law framed for consideration are answered against assessee. No costs. 13.7.2020 8/9 http://www.judis.nic.in TCA.No.985 of 2019 T.S.SIVAGNANAM, J AND V.BHAVANI SUBBAROYAN, J RS To 1.The Assistant Commissioner of Income Tax, Non Corporate Circle 17-1, Chennai. 2.The Income Tax Appellate Tribunal, Chennai B Bench. T.C.A.No.985 of 2019 13.7.2020 9/9 http://www.judis.nic.in R.Mahalakshmi v. Assistant Commissioner of Income-tax, Non Corporate Circle 17-1, Chennai