The Pr. Commissioner of Income Tax-2 v. M/s.Zenotech Laboratories Limited

Telangana HC16 Oct 2023ITTA/311/2022

Case brief

AI extract

What is this about?

The High Court of Telangana rejected the Special Leave Petition filed by the Principal Commissioner of Income Tax challenging the issuance of relief letters. The petition was scrutinized regarding the constitutionality of Section 271(1)(c) and the procedural requirements for penalty notices.

What the court decided

AI extract

The Pr. Commissioner of Income Tax-2 Vs… — Service and Employment | Telangana HC (2023)

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[³³⁸⁶ ]

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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MONDAY, THE SIXTEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HON'BLE SRI JUSTICE P.SAM KOSHY

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AND

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THE HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY

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INCOME TAX TRIBUNAL APPEAL Nos: 254 and 31'l of 2022

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l.T.T.A.No.254 of 2022

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lncome Tax Tribunal Appeal Under Section 260-4 of the lncome Tax Act, against the order of the lncome Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad in ITA No.843/Hydl2019 dated 03-O9-2021 preferred against the Order of the Commissioner of lncome Tax (Appeals)-7, Hyderabad, Appeal No.00g1/CtT (A)7/2018-19 dated 26-02-2019, preferred against the Order of the Deputy Commissioner of lncome-tax Central Circle 3(3), Hyderabad, PAN/G lR No. AAFC5661 7R d ated 31-12-2008.

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Between:

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The Pr. Commissioner of lncome Tax-2, 6h Floor, Signature Towers, Kondapur, Opp. Botanical Gardens, Hyderabad.

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...Appellant

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AND

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M/s. ZENOTECH LABORATORIES LIMITED, Sy No 250-252, Turkapally Village, Shameerpet Mandal, Rangareddy Dist Hyderabad -500 078 PAN AAFC56617R:

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...Respondent

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Counsel for the Appellant: SRI A. RADHA KRISHNA (Sr. SC FOR lT DEPT)

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Counsel for the Respondent: SRI DUNDU MANMOHAN

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-i.

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Scctior.r 271 read^rt ith Sectron^{27 l(t)(cl} of^{the Income Tax nct,} 1961 (hercinafter^{rclerreclto as 'the Act) cannotbe rcnderedas} in va licl

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From the submissions^{macle bY the learned counsel for the} parties and particLrlarly that ol^{the appellant,it stands admittcd} that the noLice that^{was issucdunder Section21l(ll(clof the Act,} the irrclevant portion^{was not slruck down.It $'as nol the specific} case of thc respondc^{n t} /^{asse ssce showing as [o whethertherewas} concealment of facts,^{particularly on} the^{parL of the assesseeor} u,hether there u,a s submission of inaccurate details^bythc assesscc and in thc absencc of^{which, according to the assessee,} the penal provisron cannot be^{invoked. Since it is apenal} provision, the asscssee must be specifically^informed as to^the specific lapse on thcir^part for^{ivhich the pcnal provision has been} initiated which in the instant case,^{had to be eitherconcealment} of facts or submission of inaccurate^details.

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Perusal of thc said impugned order^{would go to showthat} the Tribunal when it had considered the case of the^appellant while hearing thc appeal, found that the^{jurisdictional} High Court itself in a recent matter i.e. in the case of The Princlpal Comtnissioner oJ Income-tax-I, Visakhapatno,m us. Smt.

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Baisetty Reudthi which got decidcd on 13.07.2017, in its

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judgment held as under:

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"On pincipte, tuhen penaltg proceedings are sought to be initiated bA the reuenue under Section 271(l)(c) oy ine act o1 196 1 , the speciftc ground which forms the Jound.ation therefor has to be spelt out in clear terms. Otherutise:, an assessee utould not haue proper opportunitA to put forth hb tlefence. When the proceedings are penaL in nature, resulting in imposition of penaltg ranging from l OO% to 300% of the tax liability, the charge must be unequiuocal and umambiguous_ When tLe charge is either ancialment of parliculars of income or furnishing of inaccurate particuLars thereoJ, the reuenue must specifg as to tDhich one of the two is sought to be pressed into sentice and. cannot be pe rmitted to club both by interjectlng an^,or' between the two, as in the present co_s,e. This a^biguitg in the shou.t cause notice is further compounded presintlg bg the confused ftnding of the Assessjng Officer thnt he u..tos satisrted that the as.ses.see utas gailtg of both

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We are thereJore of the opinion tLnt the ord"er under appeal does not hnue brook interkrence on ang ground.. We lind^{no question} of law, much less a substantiil one, ari-sing for^{constderattontuaranting} admission of the appeal. The oppeal is accordinglg djsmissed. No ord.er as to costs".

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We further find that a similar matter came up before the Honlcle Supreme Court of India also in. the case of principat Contmissioner of Income Tax, (Central) a. Gold.en peace Hotels and Resorts (P.) Ua." decided on November 20, 2O2O, wherein the Honble Supreme Court has upheld the decision of the Division Bench of the High Court of Bombay wherein the Division Bench had held that recording of satisfaction by the Assessing Officer as to whether there was concealment of income l

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3 12021) 124 taxmann.com 249 (SC)

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^^-f:,AFF.E!l:

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or rvhethcr there^{u'its inacr:ttl:rtepi'tl't icularslurnished by the} assessee^u I-iich u,as sine^{rTua lloll Ibrinitiation ofpenalty} proceedings. The High Court ol Bombay^{had categoricallyin the} said case lteld that in the^{absr:nceol atry such satisfaction, the} order of Comtnissiorrc'r^{(Appeals)as rvellas the Tribunal had been} correctly ordered to be held^{bad and the penalty proceedingswere} ordered to be droppcd. It^{u,as thc SpccialLeavcPetition(SLP) of} the respondcnt against^{the saiddecisionol the Higir Courtof} I3ombay n'hir:h was dismissccl^{in the saidSLP. The HighCourt of} Bombay in the said^czrse i.e.^{Pr. CIT u. GoldenPea.ce Hotels and}

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Resorfs (P.) Ltd.4 in paragraph^{Nos.6to 8 heldas under:}

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"6. Besides, LUe note thzt the Diuision^{Bench oJ this} Cc,turt in Sarn-son (supra)^{as utell cts in NeutEroSoua} Mhe (supra) hos held that the nottce^{u.thichis issued to} lhe assessee must irtdicate uhether^{the Assessing} OJfcer is satisfied that thc^case of^{the ossessee inuotues} concealment of particulars of income^or [urnishing^of [naccurate particulars oJ rncome or^{botlt-,tL)ith cLaritA.If} thc notice is issued in the^pinted Jorm,^{then, the} necessary portions which are not applicable^are required to be stntck off, so as to^{indicatetuith clantg} the nature of the salisfaction^{recorded.In both Samson} Peinchery and^{NeuL EraSoua Mine (supra),th-e notices} issued had tlot^{struckoffthe portionuthich u.tere} inupplicabte. From^{this, the Diuision Bench concluded} thot there Luas^no Proper^{record of satisJaction or proper} application of mind^{in ntatter of initiotionof penallg} proceedinqs. 7. In the present cQSe, os^welt if^{the noticedated} 30/ 09/ 16 (ot page 32)^{ts perused-,it is apparent that} the itapplicabte portions^{hauenot beenstntck off. This} coupled ulith the fact aduerted^{to in paragraph (5) of this} ortler, leaues no ground Jor^{interference with the} impugned order. The impugnedoder^{is quite consistent}

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1l2o2ll 124 Laxmann.com 24a (Bombay)

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tLitlt Lhe lau taid doun in the case of Samson Pennchery and New Era Soua ui"" - t'^r'4, ti'"prJ Znavtl lhcreforc, Luanattrs no irtterference. 1,-T::::,ll:,on^{has.ed uponMAK Data(p.) ttd. (supra)} atso docs not opfcal to us in the peculiar facts oi the present case. 'lhe notice in. the piesent .is" is 'its"ty defectiue. and further, there is no jind.t"g "; iiir!"'"ii," l::rrl"d _^{in rekttionto conceatient i,} n^X-iW"""f tnaca) rete parlian lars. "

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a. Similar analog, has also been recently reiterated by the High Court of Dclhi in the case of principal Comrnissloner of Income-tq.x. a. Gopa.l Kumar Gogals wherein again the Division Bench of High Courr of Dclhi in paragraph Nos.15 to 18 held as under:

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"15- Hauing heard Mr Kumar and. perused. the record, in our uiew, there cannot be any dispute, that the iO tailed to cleartg rcJlect his satisfaclion tn ni pe,iatti n;i;. "" to uhich timb of thc proisio,ts i-;";;;';;'f(liii"iTi rn" Act u_to s triggered uis a uis the reZpondent/ a..;::Z;

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As indicated aboue, tn a giuen case, both timbs may get attracted, but euen in sich situatiin the i.O iouta need ,.to set fort_h his pima facie, satisjiail"" t"'tn" penaltu nolLce. The reason, perhagts, uthy lhe Legislature has prouided_ for tuo circumstancis'tn sJct;oiiTil lfe "f the..Act,. .to- our minds, emanates. from the n'eei, to asttngush betLueen the grauitg and consequences uthich maA. accompang concealment of partiatlari of -fii.Jrotincome, a_s against a case u.thich inuolieZ fumshing partict tlars. The quantum of penaltg, tii in"'iO'rrr_g \t!y, _utoutd^{dependon rahich-stot} "{atuiiiiii."ii." 271( 1)(c) of the Act, rhe assessee,s infraAton yati! in.-^---'

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17^. .Furthetmore,. hau,ing regard. to tLe doctrine of stare ae.xs,"s - .whtch impels courls not to d.isturb settled ?ro,Oosittons^oy^{points of laut, tt.te} are of the uieu, that tLLe Juagment oJ the coordinate bench of this Court rend.ered noirung

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