This legal case involves the dispute between DCIT Central Circle-29, New Delhi (Appellant) and Dharampal Satyapal Ltd, located in Okhla Industrial Estate, New Delhi (Respondent) regarding the assessment year 2010-11. The case number ITA 162/DEL/2021 was adjudicated by the Income Tax Appellate Tribunal, Delhi Bench ‘H’. The final tribunal order was pronounced on May 18, 2023.
The dispute centers on the initiation and imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 (the Act). The appellant, DCIT, challenges the CIT(A)’s decision which sided with the respondent, Dharampal Satyapal Ltd, by deleting the penalty initiated and imposed under section 271(1)(c).
The Tribunal in its detailed order discusses the application of judicial precedents and the principles of consistency. The Tribunal refers to its earlier decisions, notably relating to the respondent’s own cases from previous years where similar issues were addressed and resolved in favor of the taxpayer. The Tribunal emphasized the importance of consistency in judicial decisions, especially when dealing with recurring issues in tax litigation.
The Tribunal dismissed the appeal by the Revenue, upholding the CIT(A)’s order. It ruled that the penalties proposed by the DCIT under section 271(1)(c) of the Act were not sustainable in the eyes of the law. Additionally, the Tribunal highlighted that the jurisdictional High Court in the case of CIT vs. Nalwa Sons Investments Ltd had held that no penalty under section 271(1)(c) could be imposed on the additions/disallowances made while computing income under normal provisions of the Act if the final assessment was made under the MAT provisions.
This case exemplifies the intricate nature of penalty disputes and the role of judicial precedents in achieving consistent and equitable outcomes in tax litigation. The decision reaffirms the Tribunal’s approach towards the treatment of penalties under section 271(1)(c), providing a clear guideline for similar cases.
These two appeals are filed by the Revenue against different orders of the Commissioner of Income Tax (Appeals)-30, New Delhi dated 28.01.2021 for assessment years 2010-11 and 2011-12 in sustaining the penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (the Act).
Brief facts of the case: The Revenue raised several common grounds in both these appeals, which primarily focus on the initiation and imposition of penalty under section 271(1)(c) of the Act. The DCIT issued penalty notices under section 271(1)(c) following the assessment orders passed under section 144C/143(3) of the Act, which included various additions and disallowances. The respondent, Dharampal Satyapal Ltd, challenged these penalties before the CIT(A), who subsequently deleted the penalties, citing the decisions of higher judicial authorities.
The Revenue’s primary grounds of appeal included:
After hearing the rival submissions and perusing the orders of the authorities below, the Tribunal gave thoughtful consideration to the issues at hand. The Tribunal referred to its earlier decision in the case of M/s. Samin Tekmindz India Pvt. Ltd. vs. ACIT, where it followed the jurisdictional High Court’s decision in the case of CIT vs. Nalwa Sons Investments Ltd., which held that no penalty under section 271(1)(c) could be imposed on the additions/disallowances made while computing income under normal provisions if the final assessment was made under the MAT provisions.
The Tribunal concluded that the ratio of the decision of the jurisdictional High Court in the case of CIT vs. Nalwa Sons Investments Ltd. squarely applied to the facts of the assessee’s case. Thus, following the decision of the jurisdictional High Court, the Tribunal sustained the order of the CIT(A) in deleting the penalty levied under section 271(1)(c) of the Act for both assessment years 2010-11 and 2011-12.
Ground No. 3 being general in nature required no adjudication. In the result, the appeal filed by the Revenue in ITA No. 162/Del/2021 is dismissed. The Tribunal dismissed the Revenue’s Grounds of Appeal by disposing of the above Appeals as decided in ITA No. 162/Del/2021.
In the result, ITA No. 162/Del/2021 (AY 2010-11) filed by the Revenue is dismissed. Order pronounced in the open court on May 18, 2023.
Signatories:
C. N. PRASAD (JUDICIAL MEMBER)
M. BALAGANESH (ACCOUNTANT MEMBER)
Dated: 18/05/2023
Assistant Registrar, ITAT New Delhi
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