TMI Blog2014 (2) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) of the Act – Held that:- The Tribunal had allowed the Department's appeal only on the question of jurisdiction under Section 154 of the Income-tax Act – thus, it would be proper to remit back the matter for decision on the question of levy of penalty – The appeal allowed only on the aspect of jurisdiction of the CIT(A)Decided partly in favour of Assessee. - Tax Case (Appeal) No. 125 of 2007 - - - Dated:- 13-2-2014 - Chitra Venkataraman And T. S. Sivagnanam,JJ. For the Appellant : Mr. S. Kumar for Mr. T. N. Seetharaman For the Respondent : Mr. Arun Kurian Joseph JUDGMENT (Judgment of the Court was delivered by T. S. Sivagnanam,J.) This Tax Case Appeal is filed by the assessee questioning the Order dated 31.8.2006 passed by the Income-tax Appellate Tribunal Madras 'A' Bench in I.T.A.No.2662/Mds/2004 for the assessment year 1996-97 and the same was admitted on the following questions of law: "1. Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that the Commisioner (Appeals) was not justified in cancelling the penalty levied under Section 271(1)(c)? 2 Whether on the facts and circumstances of the case the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied forward. Separate proceedings were initiated for levy of penalty under Section 271(1)(c). The assessee contested the penalty proceedings by stating that they were not aware that the lease transactions were bogus. The Assessing Officer rejected the explanation offered by the assessee and imposed penalty of Rs.5,00,000/-. Aggrieved by such order, the assessee preferred appeal before the Commissioner of Income-tax. The first appellate authority by Order dated 17.3.2004 held that the assessee is guilty of concealment of income and furnishing of inaccurate particulars of income so far as its claim for depreciation and the assessee has claimed bogus depreciation for the assessment years 1995-96 and 1996-97 and the claims have been subsequently withdrawn and treated as income and the particulars of which have been concealed in each of the assessment years. Therefore, the first appellate authority confirmed the order of penalty imposed under Section 271(1)(c) of the Act. After the appeal was disposed of, the assessee filed miscellaneous petition in M.P.No.1 of 2004-05/A.III contending that the Honourable Supreme Court in the case of Commissioner of Income-tax Vs. Prithipal Singh Co., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2006 the appeal filed by the assessee as against the order confirming the penalty for the assessment year 1995-96 was dismissed by observing that the assessee has not been able to prove that there was no negligence or fraud on the part of the assessee and as a matter of fact the assessee entered into an agreement fraudulently with BSAL with a view to claim 100% depreciation on steel rollers and therefore they are guilty of concealing income and had made liable for levy of penalty. Aggrieved by the order passed by the Tribunal, the assessee has preferred this appeal, which has been admitted on the above mentioned substantial questions of law. 3. Before we proceed to consider the contentions raised by Mr.S.Kumar, learned counsel appearing for the assessee, it is to be pointed out that as against the order passed by the Tribunal relating to the assessment year 1995-96 confirming the order of levying penalty the assessee has come before this Court by way of Tax Case in T.C. (A) No.124 of 2007 in the case of CRN Investments P. Ltd., Vs. Commissioner of Income-tax, reported in (2008) 300 ITR 342 and the Division Bench of this Court confirmed the levy of penalty and thereby rejected th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax Vs. Gold Coin Health Food (P) Ltd., reported in (2008) 304 ITR 308 (SC). 7. Mr.Arun Kurian Joseph, learned Standing counsel appearing for the revenue contended that the reliance placed on the decision of the Honourable Supreme Court in the case of Prithipal Singh, (supra) and the decision of the Division Bench of this Court in CIT Vs. C.R.Niranjan (supra) are misconceived in the light of the recent decisions of the Honourable Supreme Court in the case of Commissioner of Income-tax Vs. Moser Baer India Limited, reported in (2009) 315 ITR 460 and Joint Commissioner of Income-tax Vs. Saheli Leasing and Industries Limited reported in (2010) 324 ITR 170. It is therefore contended that the assessee cannot place reliance on the earlier decisions of the Honourable Supreme Court for the reason that in the case of Saheli (supra), the Honourable Supreme Court has held that even if no tax was payable penalty was still leviable. 8. We have heard the learned counsel for the parties and perused the material placed on record. 9. The first question to be considered is as to the scope and power of rectification under Section 154 of the Act. To decide this question, we may straight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). It is not in dispute that on the date when the first appellate authority passed order dated 17.3.2004, the decision in the case of Prithipal Singh, (Supra), was very much available. Therefore, the first appellate authority rightly entertained the application under Section 154 and rectified the error solely on the ground that as per the law, which holds the land, at the relevant point of time, no penalty was imposable when a loss has been incurred by the assessee. In other words, the term "income" in Section 271(1)(c) was interpreted to mean "prospective income". As far as the present case is concerned, the assessment order disclose loss to be carried forward. Therefore, by applying the decision in Honda Seil Power Products Limited (supra), the Commissioner was justified in entertaining the application and rectifying the mistake. To that extent we agree with the submission made by the learned counsel for the assessee. 11. In the light of our discussion and considering the limited question raised in this Tax case Appeal as to the rectification of the order by the Commissioner of Income-tax (Appeals), we hold that in the light of the decision of the Apex Court in Honda Seil's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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