T.C.A.No.856 of 2019 IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 09.09.2020 CORAM HONOURABLE Mr.JUSTICE T.S.SIVAGNANAM and HONOURABLE Mrs.JUSTICE V.BHAVANI SUBBAROYAN T.C.A.No.856 of 2019 Commissioner of Income Tax Chennai. Appellant Versus R.Anbuvel Rajan Respondent Prayer:- Tax Case Appeal filed under Section 260-A of Income Tax Act, 1961, against order of Income Tax Appellate Tribunal, ''A'' Bench, Chennai, dated 21.12.2012 in I.T.A.No.2040/Mds/2010 For Appellant : Ms.R.Hemalatha Senior Standing counsel JUDGMENT [Order of Court was made by T.S.SIVAGNANAM, J.] This appeal, filed by Revenue, under Section 260A of Income Tax Act, 1961 ('the Act' for brevity) is directed against order 1/8 http://www.judis.nic.in T.C.A.No.856 of 2019 dated 21.12.2012 passed by Income Tax Appellate Tribunal 'A' Bench, Chennai ('the Tribunal' for brevity), in I.T.A.No.2040/Mds/2010 for assessment year 2007-08. 2. appeal was admitted on 13.11.2019 on following substantial questions of Law: (i) Whether on facts and in circumstances of case, Income Tax Appellate Tribunal was right in holding that levy of penalty u/s.271(1)(c) in respect of advances shown as purchases amounting to Rs.1.25 crores? (ii) Whether finding arrived by Tribunal was proper especially when there was gross negligence in not making necessary adjustments, additions and disallowance in accounts which resulted in incorrect income being shown which will clearly show that assessee had furnished inaccurate particulars of income in return filed? 3. Heard Mrs.R.Hemalatha, learned Senior Standing Counsel for appellant-Revenue. 2/8 http://www.judis.nic.in T.C.A.No.856 of 2019 4. Of two issues which are being raised as substantial questions of law, first one is with regard to correctness of decision of Tribunal in holding penalty imposed on assessee u/s.271(1)(c) of Act. second issue is whether Tribunal was right in not making necessary adjustments, additions and disallowance in accounts, which resulted in incorrect income being shown and that assessee has furnished inaccurate particulars of income in returns filed. 5. Mrs.R.Hemalatha, learned Senior Standing Counsel placed reliance on decision of Hon'ble Supreme in Mak Data P. Ltd., Vs. Commissioner of Income Tax-II reported in [2013 38 taxmann.com 448(SC)] and it is submitted that in cases where assessee makes voluntary disclosure to buy peace with department and to avoid litigation and to bring about amicable settlement, cannot be fact to release assessee from mischief of penalty proceedings under Section 271(1)(c) of Act. Reliance was also placed on decision of this Court in Sundaram Finance Ltd., Vs. Assistant Commissioner of Income-tax, Co. Circle VI(4), Chennai, reported in [(2018) 93 taxmann.com 250 3/8 http://www.judis.nic.in T.C.A.No.856 of 2019 (Madras)] and challenging said order, assessee therein (Sundaram Finance Ltd.,) have preferred Special Leave Petition before Supreme Court and same was dismissed, as reported in [(2018) 99 taxmann.com 152 (SC)]. Reliance was also placed on decision of this Court in Commissioner of Income Tax Vs. S.I.Paripushpam [(2001) 118 Taxman.844 (Mad)] and decision in case of K.P.Madhusudanan Vs. Commissioner of Income Tax reported in [(2001) 118 Taxman 324 (SC)]. decision in case of Mak Data was rendered by Hon'ble Supreme Court on 30.12.2013, i.e., much after impugned decision of Tribunal dated 21.12.2012. 6. Mrs.R.Hemalatha, learned Senior Standing Counsel is right in her submission that Court has to take note of law prevailing as on date, and law relied on in Mak Data case if applied to case on hand, then order of Tribunal calls for interference. 7. We have perused reasons assigned in impugned order of Tribunal and Tribunal took note of decision of Hon'ble 4/8 http://www.judis.nic.in T.C.A.No.856 of 2019 Supreme Court in case of Hindustan Steel Ltd., Vs. State of Orissa, reported in [1972] 83 ITR 26; and decision of this Court in case of CIT Vs. Geetha Ramakrishna Mills P. Ltd., in [2007] 288 ITR 489 (Mad). Thus, decisions rendered for preposition is that for order imposing penalty for failure to carry out statutory obligation is result of quasi- criminal proceedings and penalty will not ordinarily be imposed, unless party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. No doubt at that relevant point of time, law on subject was as held by Hon'ble Supreme Court in Hindustan Steel Ltd., Vs. State of Orissa. On facts, CIT(A) and Tribunal held in favour of assessee by examining his conduct. assessment was under Section 143(3) of Act. Tribunal, on facts, found that assessee during course of assessment proceedings, brought to notice of Assessing Officer, advance amounts received. This was taken note of and assessment was completed and case on hand is not case where assessment was re-opened under Section 147 of Act. On taking note of factual position, CIT(A) exercised its discretion and granted relief to 5/8 http://www.judis.nic.in T.C.A.No.856 of 2019 assessee. factual situation was examined by Tribunal and it came to conclusion that CIT(A) was right in deleting penalty. With regard to non-inclusion of Rs.22 lakhs in closing stock, Tribunal remanded matter to Assessing Officer for proper verification and fresh adjudication as per law. Thus, taking into consideration that entire issue before us is factual, we decline to exercise our jurisdiction under Section 260-A of Act, as we are not expected to examine correctness of order of Tribunal, as being third Appellate Authority. 8. For above reasons, we do not find any questions of law, much less substantial questions of law arises in this appeal. Accordingly, this Tax Case Appeal is dismissed and order of Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai, dated 18.07.2019, passed in ITA.No.2099/Chny/2017, is hereby confirmed. No costs. (T.S.S.,J) (V.B.S.,J) 09.09.2020 ds Index: Yes / No Speaking Order/Non-Speaking Order 6/8 http://www.judis.nic.in T.C.A.No.856 of 2019 To Commissioner of Income Tax Chennai. 7/8 http://www.judis.nic.in T.C.A.No.856 of 2019 T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN.J., ds T.C.A.No.856 of 2019 09.09.2020 8/8 http://www.judis.nic.in Commissioner of Income-tax Chennai v. R.Anbuvel Rajan