Commissioner of Income Tax-II vs Rajendra Kumar Singh Modi

S.K. Kulshrestha, J.—The above appeals have been filed by the revenue against the judgment dated 18-7-2006, passed in ITA Nos. 188,189,190,191, 192 and 193/Ind./2004 for the assessment years 1991-92, 1992-93, 1993-94, 1994-95,1995-96 and 1996-97. For convenience, facts have been taken from ITA No. 17/2006.

The issue raised by the revenue is with regard to the deletion of penalty u/s 271(l)(c) of the Income Tax Act. It is alleged that the assessee concealed the particulars of the reimbursement of expenses made to him by his employer in the return filed by the assessee. Accordingly, an additional demand was raised which was satisfied by the assessee in order to buy peace. However, the assessing officer levied penalty of Rs. 62,000 for the assessment year 1991-92, Rs. 24,000 for assessment year 1992-93; Rs. 38,000 for assessment year 1993-94, Rs. 1,33,000 for assessment year 1994-95, Rs. 70,000 for assessment year 1995-96; and Rs. 54,000 for assessment year 1996-97. The; Commissioner (Appeals), on appeals being filed, set aside the penalty and allowed the appeals.

Against the order of the Commissioner (Appeals), the revenue filed appeal before the Income Tax Appellate Tribunal. The ITAT was of the view that the circular of CBDT applied to the case and on that score the appeal deserves to be dismissed. However, despite the above view, the ITAT considered the cases on merits. In paragraph 5 of its order, it observed as under :

Even on merits, revenue has no case because assessee bona fidely filed the original return of income on the basis of Form No. 16 issued by the employer. The assessing officer has also not recorded his satisfaction in the assessment order in initiating penalty u/s 271(1)(c) of the n Income Tax Act, which is necessary ingredient for initiating the penalty u/s 271(1)(c). We are fortified in our view by the decision of Delhi High Court in the following cases :

Commissioner of Income Tax Vs. Ram Commercial Enterprises Ltd., ) ,

Commissioner of Income Tax Vs. Auto Lamps Ltd., , and

Commissioner of Income Tax Vs. B.R. Sharma, .

It is, therefore, not a case where the appeals of the department have g been jettisoned mainly on account of the fact that because of the circular issued by CBDT subsequently, the appeals, were also not maintainable where the tax effect was less than Rs. 2,00,000.

Learned counsel submits that in view of the fact that the ITAT has taken into consideration the circular- of the CBDT restraining filing of the appeals where tax effect is less than Rs. 2,00,000, the appeals give rise to the question of law to the effect that whether on the basis of such circular, the ITAT could have dismissed the appeal of the revenue, much less the appeal filed prior to the Circular when the instructions were different. Since we find that despite the said position stated by the Tribunal, the Tribunal has decided the cases on merits, it is not a case where the question with regard to the CBDT circular survives in these appeals. The merits have been discussed on facts which do not give rise to any question of law. Accordingly, these appeals are dismissed summarily.