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Commissioner Of Income Tax (International Taxation) vs. Gracemac Corporation - (High Court of Delhi) (15 Mar 2022)

Penalty can only be levied in cases where concealment of income has been proven


Direct Taxation

Present appeal has been filed challenging the order passed by Delhi Bench of the ITAT ('Tribunal'). The Appellant states that, the charging of interest under Section 234B of the Income Tax Act, 1961 (IT Act) is consequential and mandatory. He submits that, since the Assessing Officer in the original assessment order had given a specific direction to charge interest, non-levy of interest under Section 234B of the IT Act while computing tax demand was a mistake apparent on the record and was therefore rectifiable under the provisions of Section 154 of the IT Act.

The penalty can only be levied in such cases where concealment of income has been proven. If the quantum order itself has been set aside in an appeal preferred by the respondent/assessee, there is no question of penalty being levied.

In Pr. Commissioner of Income Tax (Central) -2 vs. Harsh International Pvt. Ltd., this Court has held that, levy of penalty cannot be a matter of course, as sought to be contended by the Revenue. It can only be levied in cases where the concealment of income has been proven. If the quantum order itself has been challenged and this Court has framed substantial questions of law in the appeal preferred by the respondent-assessee, it shows that the alleged concealment is not final and the issue is disputable. Consequently, the penalty levied by the assessing officer cannot survive in such a case.

Present Court is of the view that no substantial question of law arises for consideration in the present appeal. Appeal dismissed.


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