Commissioner of Income Tax vs Bhatia Steel Products

G.S. Singhvi, J.—This is a petition u/s 256(2) of the Income Tax Act, 1961, for directing the Income Tax Appellate Tribunal (Delhi Bench A), New Delhi, to make reference of the following questions of law framed by the petitioner for opinion of this court :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law to hold that the assessee was not liable to penalty for concealment ?

Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law to hold that merely for non-invoking of the Explanation 1 to Section 271(1)(c) in the show-cause notice, the penalty levied stands vitiated especially when the jurisdictional High Court in the case of Capital Cinema Vs. Commissioner of Income Tax, has held that Explanation to Section 271(1)(c) is integral part of the section and there is no need to invoke it separately ?"

Notice of the petition was issued to the respondent, but despite service, none has appeared on its behalf to contest the prayer made by the petitioner.

We have heard Shri R. P. Sawhney, senior counsel, and have gone through the record. A perusal of the record shows that the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have concurrently held that it is necessary to invoke Explanation 1 appearing below Section 271(1)(c) of the 1961 Act while examining the issue relating to levy of penalty. Prima facie, this view is not correct and in our opinion, the following question of law arises for consideration by the court :

"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law to hold that merely for non-invoking of the Explanation 1 to Section 271(1)(c) in the show-cause notice, the penalty levied stands vitiated especially when the jurisdictional High Court in the case of Capital Cinema Vs. Commissioner of Income Tax, has held that Explanation to Section 271(1)(c) is integral part of the section and there is no need to invoke it separately ?"

Hence, we allow this petition and direct the Tribunal to make reference of the aforementioned question for the opinion of this court along with the statement of the case.