M/S Societex vs Commissioner Of Income Tax ...
2008 Latest Caselaw 1703 Del

           THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Judgment delivered on: 22.09.2008

+            ITA No. 1332/2006

COMMISSIONER OF INCOME TAX
DELHI-XI, NEW DELHI                                     ... Appellant


                                  - versus -


M/S SOCIETEX                                           ... Respondent

Advocates who appeared in this case:

For the Appellant     : Mr J. R. Goel
For the Respondent    : Mr Kaanan Kapur



                                    AND

ITA No. 1497/2006

M/S SOCIETEX                                            ... Appellant

                                  - versus -


COMMISSIONER OF INCOME TAX
DELHI-XI, NEW DELHI                                    ... Respondent

Advocates who appeared in this case:
For the Appellant     : Mr Kaanan Kapur
For the Respondent    : Mr J. R. Goel


CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. These appeals have been preferred by the revenue as well as

the assessee against the order passed by the Tribunal on 28.10.2005 in

ITA 1397/Del/2002 pertaining to the assessment year 1997-1998. The

proceedings relate to the imposition of penalty under Section 271(1)(c)

of the Income Tax Act, 1961 (hereinafter referred to as the 'said Act').

2. By virtue of the impugned order the Tribunal has set aside

the imposition of penalty on the ground that the satisfaction, which was

necessary to be recorded prior to initiation of penalty proceedings, has

not been so recorded, following the view taken by this Court in several

decisions starting from CIT v. Ram Commercial Enterprises: 246 ITR

568. The Tribunal, however, on merits had found in favour of the

revenue in respect of the assessee's claim of deduction of

Rs 23,50,000/-. According to the assessee the said amount had

mistakenly been claimed in the return whereas in the Profit & Loss

Account and Balance Sheet it had been appropriately indicated.

According to the revenue this was not a bona fide mistake but it

amounted to the assessee intentionally not furnishing accurate

particulars and/ or making a false statement. The Tribunal accepted the

submissions of the revenue and held against the assessee on this aspect

of the matter. While doing so, we note that the Tribunal was

influenced by the fact that the assessee had not paid any advance tax on

the income of this magnitude nor did the assessee produce any working

to show that such a provision was considered while estimating the

advance tax. The learned counsel for the assessee submitted that the

assessee did, in fact, pay the advance tax in respect of the deduction

which it had claimed in the return for the sum of Rs 23,50,000/-. He

pointed out that this fact finds mention in the penalty order passed by

the Assessing Officer. He submitted that, therefore, the Tribunal has

returned a finding on merits against the assessee on the basis of the

understanding that the assesee had not paid any advance tax on the said

amount, which is factually incorrect according to the learned counsel

for the assessee.

3. In view of the submissions made by the counsel for the

parties, we feel that insofar as the plea of validity of proceedings under

Section 271 (1)(c) of the said Act are concerned, the revenue's appeal

to that extent requires to be allowed inasmuch as the Finance Act, 2008

has introduced sub-section (1B) with retrospective effect from

01.04.1989. However, with regard to the cross-objections filed by the

assessee and the assessee's separate appeal, we feel that the decision of

the Tribunal on merits requires re-consideration. This is so because the

assessee has been able to demonstrate, prima facie, that it had taken the

plea that it had paid advance tax on the said amount of Rs 23,50,000/-

also and that the Tribunal had wrongly noted that the assessee had not

paid any advance tax on this amount. Since this aspect of the matter

was found to be a material consideration by the Tribunal in coming to

the conclusion that the so-called mistake on the part of the assessee

amounted to intentional non-furnishing of accurate particulars, we feel

that it would be appropriate that the matter on this aspect is remanded

to the Tribunal for consideration afresh.

4. Consequently, we dispose of the appeals as well as the cross-

objections by setting aside the impugned order both on the question of

recording of satisfaction as well as on merits. However, insofar as the

question on merits is concerned, we remand the matter to the Tribunal

for a fresh consideration. The parties shall be allowed to make all

submissions as are available to them under law. The Tribunal shall

reconsider the matter on all such points which may be raised by the

parties with regard to the merits. It is made clear that we have not

expressed any view on the merits of the matter.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J September 22, 2008 SR