Commissioner of Income Tax vs Vinodkumar Maheshwari

J.P. Devadhar, J.—All these applications filed by the Revenue u/s 256(2) of the Income Tax Act, 1961 relating to the assessment years 1984-85 and 1985-86 were admitted on the questions of law set out in the respective applications.

The respondents (hereinafter referred to as "the assessee") were partners of M/s. Nav Bharat Press, Nagpur. On dissolution of the said firm amounts credited to the capital accounts in the respective assessment year were claimed by the assessee as capital in nature. The Assessing Officer rejected the claim of the assessee by holding that the receipts were revenue receipts and taxable u/s 176(3A) of the Act. Accordingly, the assessment orders were passed and penalties were levied u/s 271(1)(c) of the Act.

On appeal filed by the assessee, the Commissioner of Income Tax (Appeals) deleted the penalty by holding that there was no concealment of income. Against the said order, the Revenue filed appeals before the Income Tax Appellate Tribunal. The Tribunal by the impugned order without considering the issue of concealment of income deleted the penalty only on the ground that the quantum addition has already been deleted by the Tribunal. Thus the Tribunal has dismissed the appeals filed by the Revenue without considering the grounds raised in the appeal. Even the applications filed by the Revenue u/s 256(1) were rejected.

In these applications it is contended by Mr. Jaiswal, learned Counsel for the Revenue that, without considering the issues specifically raised in the appeal, the Tribunal could not have dismissed the appeals filed by the Revenue on the ground that the quantum additions have been deleted, especially when application u/s 256(1) against the deletion of quantum additions were pending. Mr. Dewani, relying upon the decision of the Delhi High Court in the case of Commissioner Of Income Tax, Delhi Vs. M/s. Popular Jewellers, , submitted that the orders passed by the Tribunal are in accordance with law and hence the applications are liable to be dismissed.

It is not in dispute that Section 256(2) applications filed by the Revenue against the order of the Tribunal deleting the quantum addition have been allowed by us by calling for a statement of case from the Tribunal. In these applications since the Tribunal has deleted the penalty, not on the merits but only on the ground that the quantum additions have been deleted, we have no option but to call for the statement of case. Applicability of the order passed by the Delhi High Court in the case of Commissioner Of Income Tax, Delhi Vs. M/s. Popular Jewellers, can be considered after the statement of the case is forwarded by the Tribunal. Accordingly, all these applications are allowed on the following question of law modified by consent of parties:

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the Commissioner of Income Tax (Appeals) in deleting the penalty levied u/s 271(1)(c) not on the grounds set out by the Commissioner of Income Tax (Appeals) but on the grounds that the quantum additions have already been deleted by the Tribunal, even though the applications filed by the Revenue u/s 256(2) of the Act against the deletion of quantum additions were pending ?

The Tribunal is directed to forward the statement of case as expeditiously as possible. All the applications are accordingly disposed of, with no order as to costs.