Karnataka High Court
The Commissioner Of Income Tax And The ... vs Altron Electronics (India) Ltd. on 24 October, 2007
Equivalent citations: [2008]301ITR66(KAR), [2008]301ITR66(KARN)
Author: K.L. Manjunath
Bench: K.L. Manjunath
JUDGMENT K.L. Manjunath, J.
Page 2487
1. Revenue has filed this appeal challenging the order passed by the Income Tax Appellate Tribunal, Bangalore Bench in ITA 748/Bang/95 dated 29.6.2001 wherein the tribunal has confirmed the orders of the Commissioner of Income-Tax (Appeals-II), Bangalore dated 31.3.1995 in Appeal No. ITA. 16/dcsr-5/cit(a)-ii/93-94. Deputy Commissioner of Income-Tax ((Assessments), Special Range-V, Bangalore, issued a show cause notice to the assessee under Section 274 R/w Section 271 of the Income Tax Act calling upon the assessee why penalty on assessee should not be levied under Section 271(I)(c) of the Income-Tax Act. Though notice was served, assessee did not send any response. Again one more show cause notice was issued for which also there was no response. Thereafter, a personal hearing was given for more than 7 times. Chartered accountant of the assesses appeared before the Deputy Commissioner requested time to file details in respect of the notice issued. On 3.9.1992 Chartered Accountant of the assessee ultimately made submissions that was unable to file his response as he was not getting response from the assessee. In the circumstances, Deputy Commissioner of Income-Tax (Asst.), Special Range-5, Bangalore as per Page 2488 Annexure-C passed an order levying penalty of Rs. 7,97,000/-. This order was questioned by the assessee by filing an appeal before the commissioner of Income-Tax (Appeals-II), Bangalore.
2. Commissioner of Income-Tax after examining the records produced by the assessee, being satisfied that there was no difficulty for the revenue to identify M/s Altron Marketing Agency from whom a sum of Rs. 10,52,711/- was received and also in respect of another transaction amounting to Rs. 2,87,840/-. While allowing the appeal, appellate authority has observed that there was no scope or basis for the Deputy Commissioner to levy penalty of Rs. 7,97,000/- under Section 271(I)(c) of the Act when there is no concealment. Aggrieved by the orders of the Commissioner of Income-Tax, department filed an appeal before the Income-Tax Appellate Tribunal which appeal has also been dismissed on 29.6.2001 confirming the orders of the appellate authority. Being aggrieved by these two orders, present appeal is filed raising the following substantial question of law:
Whether the appellate authorities were correct in arriving at a conclusion that penalty under Section 271(1)(c) of the Act cannot be levied despite assessee fails to furnish any information in accordance with the provisions to discharge the burden placed on him?
3. We have heard the counsel for the parties. After hearing the counsel for both the parties, we are of the opinion that though initial burden was on the department, ultimately it has to be discharged by the assessee by showing the cause that revenue cannot levy penalty under Section 271(1)(C) of the Act. so far as the present case is concerned, in the earlier proceedings, assessee accepting the tax levied on the addition made in the regular assessment has failed to show cause before the deputy Commissioner when several opportunities were given. Even if the assessee has shown cause before the Income-Tax Commissioner in appeal, if the Commissioner was of the opinion that the cause shown by the assessee was acceptable, it was for him to remand the matter to the Deputy Commissioner to consider the case of the assessee on merits and in accordance with law and it was also open for the Commissioner of Income-Tax to allow the appeal if the cause shown to the Deputy Commissioner by the respondent-assessee was sufficient provided the Deputy Commissioner had failed to consider the cause shown by the assessee.
4. In the instant case, both the Commissioner of Income-Tax as well as the Income-Tax Appellate Tribunal have held that the revenue has failed to discharge its initial burden and that Section 271(1)(c) of the Act is not attracted. But we are unable to subscribe to the view expressed by the Commissioner of Appeals and the tribunal. As a matter of fact, sufficient opportunities were given to the assessee by the Deputy Commissioner of Income-Tax, it was open for the respondent to show cause before him. If he had produced documents before the Deputy Commissioner, it was open for the Deputy Commissioner to close the penalty proceedings then and there only. Having failed to show cause, Deputy Commissioner was left with no other option than to levy penalty.
Page 2489
5. In the circumstances, we are of the opinion that the appeal has to be allowed and the order passed by the Commissioner of Income-Tax (Appeals) and the order passed by the Income-tax Appellate Tribunal are required to be set aside and in view of the findings of both the authorities, matter has to be re-considered by the Deputy Commissioner of Income-Tax by giving reasonable opportunity to the respondent and if the respondent wishes to show cause to the penalty notice received by him in addition to what has been contended by the assessee before the Commissioner of Income-Tax, he is entitled to file the same before the Deputy Commissioner and thereafter Deputy Commissioner shall pass an appropriate orders in accordance with law.
6. Accordingly, this appeal is allowed. Orders passed by the Commissioner of Income-Tax (Appeals-II) and the order passed by the Income-Tax Appellate Tribunal are hereby set aside and the matter is remitted back to the Deputy Commissioner of Income-Tax with a direction to give reasonable opportunity to the respondent and pass an appropriate orders in accordance with law.