Delhi High Court
Commissioner Of Income Tax vs Ushabh Metals Ltd. on 2 August, 2005
Bench: T Thakur, B D Ahmed
ORDER
1. The respondent-company appeared through Shri Daya Chand, its director, to submit that on account of the poor financial condition of the assessed-company, the Court may provide free legal aid to it. We, accordingly, requested Shri Prakash Kumar, advocate, to appear for the respondent-company as an amices curiae and to assist the Court. Mr. Kumar has, after going through the order of the Division Bench of this Court, passed in a batch of cases, i.e., ITA 205/2001 and others, entitled CIT v. Aditya Chemicals and Ors. reported at (2005) 197 CTR (Del) 241--Ed., fairly conceded that the questions that were raised in this appeal for the determination of this Court stand answered by the said judgment in favor of the Revenue. A reading of the said decision shows that the Court had formulated the following two questions for determination :
(1) Whether the Tribunal was right in deleting the penalty imposed under Section 271(1)(c) of the IT Act, 1961, on the ground that the total income of the assessed has been assessed at a minus figure/loss ?
(2) Whether the Tribunal was justified in holding that the judgments in CIT v. Prithipal Singh and Co. : will apply even after insertion of Expln. 4 to Section 271(1)(c) of the IT Act, 1961 w.e.f. 1st April, 1976?
2. The questions were then answered in the following words :
18. Hence, answering question 1 in favor of the Revenue, we hold that the Tribunal was not right in deleting the penalty imposed under Section 271(1)(c) of the IT Act, 1961, merely on the ground that the total income of the assessed has been assessed at a minus figure/loss. Question 2 has already been answered in the negative by us.
19. In all these appeals the Tribunal decided against the Revenue and in favor of the assessed without going into the merits of the question in each case so as to return a positive finding of fact that the assessed in each case had "concealed the particulars of his income or furnished inaccurate particulars of such income". Nor did it examine the quantum of penalty in each case. The Tribunal decided the appeals before it on the understanding that where there was a returned loss and a reduced loss was assessed, there could be no question of imposition of penalty under Section 271(1)(c) of the Act. This understanding, we have indicated above, does not hold good for the period between the said 1976 and 2003 amendments. This being the position, answering the questions as indicated above and allowing all the appeals, we remand all these cases to the Tribunal for, disposal on merits. No Costs.
3. In the light of the above, we have no difficulty in holding that the CIT(A) as also the Tribunal were both in error in deleting the penalty imposed on the company under Section 271(1)(c) of the IT Act, 1961, merely on the ground that the total income of the assessed has been assessed at a minus figure/loss. We further hold that CIT(A) and the Tribunal were not justified in holding that the judgment in CIT v. Prithipal Singh and Co. and CIT v. Prithipal Singh and Co. would apply even after insertion of Expln. 4 to Section 271(1)(c) of the IT Act, 1961, w.e.f. 1st April, 1976.
4. Consequently, we set aside the order dt. 18th April, 2004 passed by the Tribunal and remand the matter back to it for fresh disposal on merits in accordance with law.
