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Commissioner of Income-tax Vs. Jayantilal Meghani - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 96 of 1990
Judge
Reported in[2000]244ITR468(Cal)
ActsIncome Tax Act, 1961 - Section 271(1)
AppellantCommissioner of Income-tax
RespondentJayantilal Meghani
Excerpt:
- .....of concealed income, the proceeding under section 271(1)(c) of the act has been initiated and the income-tax officer levied the penalty on hundred per cent of the tax evaded. but there was no quantification of penalty in the penalty order. in the appeal before the appellate assistant commissioner,as the penalty was not quantified in the order, he deleted the penalty. in the appeal before the tribunal, the tribunal has also deleted penalty on that basis following the decision of the bombay high court in the case of n.n. kotak v. cit : [1952]21itr18(bom) .2. heard learned counsel for the revenue. none appeared for the assessee, though the matter was listed 4/5 times.3. the facts are not in dispute that the addition was sustained in the quantum appeal. the penalty has been deleted on the.....
Judgment:

1. On an application under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question set out at page 3 of the application for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that non-mention of penalty amount will vitiate the entire order ?'

The assessee is an individual and is a proprietor of Meghani Motors, Calcutta. The assessment year under reference is 1979-80. The return was filed on June 27, 1975, declaring an income of Rs. 41,550. The search was carried out on August 19, 1981. The Department seized certain books of account and documents and on the basis of that seizure, addition to the tune of Rs. 29,851 was made. That addition was confirmed by the Appellate Assistant Commissioner in the quantum appeal. On the basis of concealed income, the proceeding under Section 271(1)(c) of the Act has been initiated and the Income-tax Officer levied the penalty on hundred per cent of the tax evaded. But there was no quantification of penalty in the penalty order. In the appeal before the Appellate Assistant Commissioner,as the penalty was not quantified in the order, he deleted the penalty. In the appeal before the Tribunal, the Tribunal has also deleted penalty on that basis following the decision of the Bombay High Court in the case of N.N. Kotak v. CIT : [1952]21ITR18(Bom) .

2. Heard learned counsel for the Revenue. None appeared for the assessee, though the matter was listed 4/5 times.

3. The facts are not in dispute that the addition was sustained in the quantum appeal. The penalty has been deleted on the ground that in the order of penalty, the amount of penalty has not been quantified.

4. A similar issue has been considered by the Gauhati High Court in the case of Assam Frontier Veneer and Saw Mills v. CIT , the Gauhati High Court has followed its earlier view in the case of CIT v. Smt. Ratna Kanti Bhuyan , and discussed the issue as under :

'The next question relates to quantification of the amount of penalty. It is contended by the assessee that the Income-tax Officer did not mention the amount of penalty in the penalty order and, as such, the order is defective and inoperative. We are, however, of the opinion that, although it would have been more appropriate if the amount of penalty had been quantified in the order passed by the Income-tax Officer, failure to do so, by itself, would not invalidate the said order, as long as it is computable by a mere reference to the relevant provisions of the Act. Under Section 271(1)(i) of the Act, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate 50 per cent. of the tax, is leviable as penalty for a default under Section 271(1)(a). The admitted position in this case is that the assessee was required to file a return by June 28, 1963, whereas the return was, in fact, filed on April 30, 1964. Thus, the period of default comes to ten complete months, which fact is also not in dispute. The tax due on the basis of the assessment order is also not in dispute. The amount of penalty, therefore, is a simple matter of calculation, on the basis of the relevant law applicable thereto. As such, we hold that mere failure specifically to quantify the amount of penalty in the order cannot invalidate the same.'

5. The facts are not in dispute that in the penalty order, the Income-tax Officer has imposed the penalty in the following terms referred to at page 14 of the statement of case which reads as under :

'I, therefore, impose 100 per cent of the tax sought to be evaded as penalty under Section 271(1)(c) which comes to Rs. . . .'

The computation of penalty under Section 271(1)(c) is given in Sub-clause (iii) of Clause (c) of the Act which provides that 'in cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times the amount of tax sought to be evaded by reason of the concealment of particulars of his income.' When in the penalty order, the Income-tax Officer has imposed penalty on 100 per cent. tax evaded--the calculation provision is there. Therefore, by not calculating the penalty amount in the order, in our view, it does not vitiate the penalty order and we are in agreement with the view taken by the Gauhati High Court in the case of Assam Frontier Veneer and Saw Mills ,

6. In the result, we answer the question in the negative, that is, in favour of the Revenue and against the assessee.

7. The reference application is, accordingly, disposed of.

8. All parties are to act on a xerox signed copy of this dictated order on the usual undertaking.


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