| COURT: | Gujarat High Court |
| CORAM: | K. J. Thaker J, K. S. Jhaveri J |
| SECTION(S): | 271(1)(c), 273(2)(a) |
| GENRE: | Domestic Tax |
| CATCH WORDS: | concealment of income, furnishing inaccurate particulars of income, penalty |
| COUNSEL: | R. K. Patel |
| DATE: | November 11, 2014 (Date of pronouncement) |
| DATE: | December 1, 2014 (Date of publication) |
| AY: | 1986-87 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 271(1)(c) & 273(2)(a): Penalty cannot be mechanically levied. Cogent reasons have to be given | |
Sections 271(1)(c) and 273(2)(a) empower the AO to impose penalty on an assessee in a case, where, (1) there is concealment of income or (2) conscious attempt to provide the particulars of income which is untrue. Meaning thereby, the AO cannot impose penalty in case of an assessee mechanically, merely on the ground of addition of certain amount, over and above the amount already declared by the assessee, and that he has to record reasons specifying that there was either concealment of income or supplying of untrue particulars of taxable income for the relevant year.
judgement is 100% right. AO has to prove the concealment of cash and the like he has to have clean hands before imposing the penalty under his so called s/271(1)(c) etc;
say for example if AO lost jurisdiction on Return due to limitation stipulated u.s 143(2)(ii), naturally AO cannot go on with his sec 144 rw 271(1)(c) and if he does it is arbitrary function by AO, if Revenue supports him then revenue is equally liable as they have to go by mandatory CBDT circular on scrutiny assessments, for dept of revenue cannot function why even CIT(A) as he is a quasi judicial body working under CBDT unlike ITAT. in my next post i may post what is correct definition of quasi judicial body and yet that quasi judicial body need to function judiciously only not by whims and fancies.
judgement is 100% right. AO has to prove the concealment of cash and the like he has to have clean hands before imposing the penalty under his so called s/271(1)(c) etc;
say for example if AO lost jurisdiction on Return due to limitation stipulated u.s 143(2)(ii), naturally AO cannot go on with his sec 144 rw 271(1)(c) and if he does it is arbitrary function by AO, if Revenue supports him then revenue is equally liable as they have to go by mandatory CBDT circular on scrutiny assessments, for dept of revenue cannot function why even CIT(A) as he is a quasi judicial body working under CBDT unlike ITAT. in my next post i may post what is correct definition of quasi judicial body and yet that quasi judicial body need to function judiciously only not by whims and fancies.
Quasi judicial body is by an evolution of the law; authority other than court was declared or described as Administrative and when required to make determination affecting rights of parties it was stated in earlier cases that it must proceed or act ‘judiciously’ e.g justice Byles held in Cooper v Wandsworth Board (1893) 14 CB (N.S) 180, as also CJ Erle, ..’matter in question must be decided , ‘according to judicial reforms’.
In 1878 PC described the function of governor to declare lease forfeited on the ground of abandonment as ‘function of principles of natural justice’ (smith v the Queen, (1878)3 App. cas 624.
In 1915, it was held the house of Lords that the ‘duty of deciding an appeal’ must be performed ‘judicially'” (Local Govt Bd v Arlidge (1915) AC 120;
even though the authority vested with the appellate power was an administrative body. this is enough for you to understand.
Privy council held in Dunlop v Woollahra municipal council(1982)AC 158; For the possibility of an action for negligence in such a case.
The local authority had failed to comply with certain requirements, including a requirement of notice and hearing the PC said…
‘ THE EFFECT OF THE FAILURE IS TO RENDER THE EXERCISE OF POWER VOID, AND THE PERSON COMPLAINING OF THE FAILURE IS IN AS GOOD IN A POSITION AS THE PUBLIC AUTHORITY TO KNOW THAT IT IS SO. HE CAN IGNORE THE PURPORTED EXERCISE OF THE POWER. IT IS INCAPABLE OF AFFECTING HIS LEGAL RIGHT.
THE court of appeal has similarly held that the maintenance that the maintenance payments made by a husband under the justices order could not be recovered in an action against the justices (‘order ) when the order waslater found to have been made without jurisdiction,and there was no obligation to obey the void order. (O’Conner v Issacs, (1956)2QB 288.
it is well settled legal position
that way Guj HC did give a right judgement, no one can complain about.