Kundu Cold Storage Pvt. Ltd vs Commissioner Of Income Tax (Central)

[Cites 3, Cited by 1]

Calcutta High Court

Kundu Cold Storage Pvt. Ltd vs Commissioner Of Income Tax (Central) - ... on 27 June, 2018

Bench: I. P. Mukerji

                        ITA No. 360 of 2007
                 IN THE HIGH COURT AT CALCUTTA
                SPECIAL JURISDICTION (INCOME TAX)
                          ORIGINAL SIDE



                                          Kundu Cold Storage Pvt. Ltd.
                                                                  Versus
                      Commissioner of Income Tax (Central) - III, Kolkata



Before:
The Hon'ble Justice I. P. MUKERJI
            And
The Hon'ble Justice AMRITA SINHA
Date: 27th June 2018

                                                              Appearance:
                                          Mr. J. P. Khaitan, Sr. Advocate
                                                     Ms. S. Roy, Advocate
                                                         for the appellant
                                             Mr. Ranjan Sinha, Advocate
                                                      for the respondent

The Court: This is a section 260A appeal.

The question involved is whether the Tribunal exercised its discretion correctly under Section 158BFA(2) of the Income Tax Act, 1961 in imposing a penalty of Rs.10 lakhs on the assessee? The reasons of the Tribunal are to be found in paragraphs 16, 17 and 18 of its order dated 19th January 2007.

The only ground on which it has justified imposition of this penalty is the alleged delay of 13 months on the part of the assessee to disclose the income after the search and seizure operation.

There are two reasons why this order of the Tribunal cannot be supported. On 1st October 2004, a letter was written on behalf of the assessee to the Assistant Commissioner of Income Tax recording that photocopies of the seized documents of the whole Kundu group were recently taken. On 14th December 2004 the assessee filed their return showing the increased income.

We do not think that this aspersion of "13 months delay" was correct. Moreover, the initial imposition of penalty by the Assessing 2 Officer was reversed by the Commissioner of Income Tax (Appeals), on appeal, on 31st August 2005. The Commissioner (Appeals) came to the specific finding that there was no mala fide conduct on the part of the assessee in disclosing this additional income. This finding of fact should not have been so ordinarily interfered with by the Tribunbal on appeal. There had to be strong factual basis available to the Tribunal to do so.

The Tribunal failed to appreciate that the imposition of penalty was discretionary and that this discretion had to be judiciously used as held by a Division Bench of the Bombay High Court in Commissioner of Income-Tax v. Dodsal Ltd. reported in (2009) 312 ITR 112 (Bom) and also by a Division Bench of the Gujarat High Court in Commissioner of Income-Tax v. Becharbhai P. Parmar reported in (2012) 341 ITR 499 (Guj).

For these reasons, the impugned order of the Tribunal is set aside. We restore the order of the Commissioner (Appeals) dated 31st August 2005.

This appeal is accordingly allowed.

Certified photocopy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.

(I. P. MUKERJI, J.) (AMRITA SINHA, J.) R. Bose

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