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| DATE: | July 24, 2014 (Date of publication) |
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| Click here to download the judgement (nayan_builders_HC_penalty_271_1_c.pdf) |
Mere admission of Appeal by High Court sufficient to disbar s. 271(1)(c) penalty
In quantum proceedings, the Tribunal upheld the addition of three items of income. The assessee filed an appeal to the High Court which was admitted. The AO levied penalty u/s 271(1)(c) in respect of the said three items. The penalty was upheld by the CIT (A). The Tribunal deleted the penalty on the ground that when the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable. In such circumstances penalty cannot be levied u/s 271(1) (c). It held that the admission of substantial question of law by the High Court lends credence to the bona fides of the assessee in claiming deduction. It added that once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty. On appeal by the department to the High Court HELD dismissing the appeal:
This Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee’s Appeal in Quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated 27.09.2010 admitting Income Tax Appeal No.2368 of 2009. In our view, there was no case made out for imposition of penalty and the same was rightly set aside.
Without going into the factual matrix , special or otherwise, of the given case, generally, any view of an authority, including of a judicial authority, is mostly a -‘subjective’ view; at best, even if intelligently analyzed with an open mind, may qualify as a ‘better’ view. To be true to a righteous conscience, in the ultimate analysis, the line of distinction /demarcation has increasingly tended to be very thin, -so thin and faded to be visible to even an honest naked eye. In that view of the matter, according to a school of thought, lately gaining currency, the concept of ‘penalty’ itself should be disbanded, and replaced by a higher levy of ‘interest’ in special circumstances. As such, the reported opinion of the court can only be commended to be quite sensible.
Likewise, the rationale behind sentence of imprisonment for an economic offense , ostensibly serving, in the ultimate analysis, no useful purpose to the society or its welfare, except a negative impact, may warrant a rethinking over the times, except in abnormally detestable instances, on the ground of humane treatment. May be, utmost the considered enlightened view of ‘humanists’ might influence and be the guiding factor for the final decision- as to what is right or wrong – de hors/ as divorced from the often canvassed so called ‘ deterrent punishment ‘ !
Rider; Historically, the concept of ‘deterrent’ itself has lost its original rigor and veracity, having palpably turned out to be a farce. It might be worthwhile also looking into and devoutly considering what the ideal fundamentals on which “human rights” are founded/established,
Add-on (to record a confession):
Just realized that while posting the comment(s), what influenced my mind is perhaps that i recently read (for the ‘nth time) from the book – We, the Nation THE LOST DECADES. one of the memorable speeches of the renowned towering humanist, Nani A Palkhivala , – delivered at international conferences, first, in 1986, later in 1990 , titled – Human rights and Legal Responsibilities.
As he said: “There are two gleams of hope. The concept of human rights -the new gospel – has worked its way through the subsoil of human consciousness with speed and strength, and has become one of the great driving forces of our time. But we must be reconciled to the inevitability of gradualness. ”
Truly, one of the very few great thinkers of our times, nay a prophet, the Nation cannot ever afford not to be proud of !
Very Judicious view taken by ITAT ON DOCTRINE OF MITIGATION OF INFRUCTUOS PROCEEDING LEADING TO MULTIPLICATION OF PROCEEDINGS WHICH IS THE OBJECT OF NATIONAL LITIGATION POLICY
Poddar