This article discusses the final tribunal order for the income tax appeal filed by Riyasat Palaces Limited against the Assistant Commissioner of Income Tax, Central Circle-19, New Delhi. The case highlights the impact of administrative delays caused by the COVID-19 pandemic and the subsequent legal interpretations of penalty provisions under the Indian Income Tax Act, specifically section 271(1)(c).
Riyasat Palaces Limited, a subsidiary of Raheja Developers, faced a disallowance of a claim and subsequent penalty which it challenged through ITA No. 167/DEL/2021 for the assessment year 2015-16. The appeal was noted for its delay, partially excused by pandemic-related disruptions as recognized by the Hon’ble Supreme Court. The central issue revolved around the penalty for ‘furnishing inaccurate particulars of income’.
The case was heard by Shri Girish Agrawal, Accountant Member, who noted significant delays in the appeal’s filing, acknowledged the pandemic’s effect on statutory deadlines, and explored the substantive legal arguments around the imposition of penalties for inaccurate particulars. The absence of representatives for the appellant in multiple hearings and the administrative challenges posed by the insolvency proceedings of the parent company added complexity to the case.
The tribunal, after reviewing the submissions and the legal frameworks, sided with the appellant, Riyasat Palaces Limited. The decision detailed how the claims made by the company, though later found to be unsubstantiated, did not amount to the ‘furnishing of inaccurate particulars’, as their original submissions were based on a reasonable interpretation of the law, aligning with precedents set by the Supreme Court in similar cases.
The tribunal’s decision to rescind the penalty based on the arguments presented and the circumstances surrounding the delays serves as a significant precedent on how procedural justice is served in times of unprecedented disruptions. This case illustrates the importance of considering contextual realities in legal proceedings and reinforces the standards for what constitutes the furnishing of inaccurate particulars under the Income Tax Act.
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