IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY WEDNESDAY, THE 12TH JANUARY 2011 / 22ND POUSHA 1932 ITA.No. 185 of 2010() --------------------- ITA.343/COCH/2009 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT ------------------------ JAYAPRAKASH N., PACAGE INDIA TIN FABRICATORS, BEACH ROAD, KOLLAM. ADV. SRI.S.ARUN RAJ THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 12/01/2011, THE COURT ON 12/01/2011 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. .................................................................... I.T. Appeal No.185 of 2010 .................................................................... Dated this the 12th day of January, 2011. JUDGMENT Ramachandran Nair, J. This is an appeal filed by the Revenue against the order of the Tribunal cancelling penalty levied under Section 271(1)(c) that was confirmed in first appeal. After hearing both sides and after going through the Tribunal's order, we are unable to sustain the order for the reason that they have not considered any of the facts or conclusions drawn by the original authority or the first appellate authority. The Tribunal has only laid down one principle of law on which there can be no controversy because penalty under Section 271(1)(c) is an independent proceeding and it does not automatically follow from an assessment. However, unfortunately the Tribunal has not cared to consider the nature of additions sustained in assessment and in our view, it was the duty of the Tribunal to consider each and every component of assessment and the way the assessee handled it. There may be suppression, omission or mistake or even deliberate attempt of I.T.A. 185/2010 2 evasion. Unless the income assessed is split identifying the conceded part, suppression detected and the way assessee behaved, it would not be possible for the Tribunal to decide a penalty appeal. The Tribunal should have realised that the lower authorities are also familiar with the statutory provisions and when the penalty order is sustained by the first appellate authority, it was the duty of the Tribunal to bestow attention on the nature of addition sustained in assessment and to consider whether there is concealment within the meaning of Section 271(1)(c) in respect of each and every component of the assessed income. Since we are dissatisfied with the order issued by the Tribunal, we have to necessarily conclude the Tribunal did not exercise the jurisdiction fairly or properly. We, therefore, allow the appeal by setting aside the order of the Tribunal and restore the appeal back to the Tribunal for deciding the matter afresh, particularly with specific reference to the facts and the provisions of Section 271(1)(c) after giving opportunity to both sides. The Tribunal is directed to repost and decide the matter afresh within a period of three months from the date of production of copy of this judgment. Even though we have restored the appeal by which the I.T.A. 185/2010 3 CIT (Appeal)'s order revives, we direct the Revenue not to proceed with recovery until disposal of the appeal by the Tribunal and thereafter recovery should be based on orders of the Tribunal. C.N.RAMACHANDRAN NAIR Judge BHABANI PRASAD RAY Judge pms