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The Commissioner of Income Tax, Chennai Versus M/s Tube Investments of India Ltd.

2015 (9) TMI 1121 - MADRAS HIGH COURT

Penalty under Section 271(1)(c) - ITAT deleted penalty - Held that:- Our answer to the question of law raised in this appeal would be that when the Commissioner of Income Tax (Appeals) is satisfied, on the basis of clear and cogent reasonings given in his order, not to levy penalty and when the Tribunal finds such satisfaction on the part of the Commissioner of Income Tax (Appeals) to have been correctly arrived at, the orders do not suffer from any error of law. Therefore, we hold that the Comm .....

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amasubramanian, J. This appeal is by the Revenue, challenging a common order passed by the Income Tax Appellate Tribunal, Madras, "D" Bench, on an appeal and a cross appeal. 2. Heard Mr.T.Ravikumar, learned counsel for the appellant. 3. The respondent/Assessee filed its return of income tax for the Assessment year 1998-99 on 30.11.1998 declaring a total income of ₹ 1,46,86,704/- and a profit under Section 115J of ₹ 4,04,28,085/-. The original assessment was completed on 27. .....

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Ltd., of ₹ 1,20,00,000/- and (c) unaccounted lease syndication amount of DLWL Company of ₹ 1,20,00,000/-. 5. As against the order of the Commissioner of Income Tax (Appeals), confirming only three additions and deleting three additions, the Revenue as well as the assessee filed further appeals to the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal dismissed the appeal of the assessee by an order dated 9.1.2009. 6. Thereafter, the Assessing Officer levied penalty und .....

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ssioner of Income Tax (Appeals). 8. By an order dated 19.8.2010, the Commissioner of Income Tax (Appeals) allowed the appeal partly. The effect of the said order of the Tribunal was (i) the deletion of the penalty in entirety, in so far as the addition relating to unaccounted lease syndication amount of DLWL Company of ₹ 1,20,00,000/-; and (ii) the reduction of the penalty from 150% to 125% in so far as the other two items of addition are concerned. 9. Aggrieved by the total deletion of pe .....

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n of penalty from 150% to 125% in respect of two items of addition. The present appeal is confined only to the deletion of penalty in entirety in respect of one item. Therefore, the question of law arising for our consideration is: As to whether the Commissioner of Income Tax (Appeals) and the Tribunal were right in deleting the penalty proceedings in entirety, under Section 271(1)(c), when the assessee was not able to 4 substantiate the explanation offered by him, in the light of Explanation (1 .....

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able to penalty. The learned counsel also invited our attention to the decision of the Supreme Court in Mak Data P.Ltd., v. Commissioner of Income Tax [(2013) 358 ITR 593 (SC)] and contended that even in cases where the assessee pleads voluntary disclosure, amicable settlement etc., to explain its conduct, a presumption of concealment is raised under the Explanation to Section 271(1). Therefore, the only question to be answered is as to whether the assessee offered any explanation for concealmen .....

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oncealment of the particulars of income. The second is the furnishing of inaccurate particulars of such income. 14. What is concealment, is also explained to some extent in Explanation (1). Under this Explanation, there are three contingencies under the amount added or disallowed in computing the total income of a person shall be deemed to represent a concealed income. These contingencies are: (i) failure to offer explanation (ii) offering explanation that is found to be false and (iii) offering .....

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case is as to whether the power conferred upon the Assessing Officer or the Commissioner of Income Tax (Appeals) has been properly exercised or not. Section 271(1) goes as follows:- "If the Assessing Officer or the Commissioner of Income Tax (Appeals) or the Principal Commissioner or Commissioner, in the course of any proceedings under this Act, is satisfied that any person..........." Therefore, an element of discretion is conferred upon the Assessing Officer as well as Commissioner o .....

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issioner of Income Tax (Appeals) gave cogent and convincing reasons in para 6.4.1 of his order dated 19.8.2010. Para 6.4.1 of the order of the Commissioner of Income Tax (Appeals) reads as follows:- "6.4.1 Based on the facts submitted by the appellant, I am of the considered opinion that only because the appellant has not substantiated the relationship of DLWL with the M/s. Arun Pipes Ltd. or because no confirmation was filed by M/s.Arun Pipes Ltd. regarding payment by DLWL on its behalf, n .....

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