Patna High Court
Goberdhandhanri Infratech Private … vs The Union Of India on 17 June, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad, Ashok Kumar Pandey
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.1290 of 2025
======================================================
Goberdhandhanri Infratech Private Limited having its office at Ranjan
Construction, Garkha Road, Saran, Nehru Chowk, Chapra- 841301, Bihar
through its authorized signatory namely Shashi Ranjan (Male), aged about 41
years, Son of Chandrama Singh, a resident of Nehru Chowk, Chapra, Police
Station- Chapra, District- Saran.
... ... Petitioner
Versus
1. The Union of India through Secretary, Ministry of Finance, Income Tax
Department, New Delhi.
2. The Principal Chief Commissioner of Income Tax (Bihar and Jharkhand),
Patna.
3. The Principal Commissioner of Income Tax, PCIT, Patna-1.
4. The Assistant Commissioner of Income Tax, DC/AC Circle-1, Muzaffarpur.
... ... Respondents
======================================================
Appearance :
For the Petitioner : Mr. Sanjeev Kumar, Advocate
Mr. Pravashankar Mishra, Advocate
For the Respondents : Ms. Archana Sinha, Senior SC
Ms. Richa Rajiv Singh, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE ASHOK KUMAR PANDEY
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 17-06-2025
Heard Mr. Sanjeev Kumar, learned counsel for the
petitioner and Ms. Archana Sinha, learned Senior Standing
Counsel for the Department of Income Tax.
2. This writ application has been preferred seeking the
following reliefs:-
"i) To issue a Writ in nature of Certiorari
for quashing of the followings:-
a) Order dated 15.09.2022 passed
under Section 271(1)(c) of Income Tax
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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Act whereby penalty of Rs.13,92,221/-
for the assessment year 2015-16 has
been imposed upon the petitioner
company.
b) Demand Notice under Section
156 of Income Tax Act whereby demand
of Rs.13,92,221/- for the assessment
year 2015-16 has bee determined to be
payable to the petitioner company.
c) Order dated 19.03.2024 passed
in Revision Case No. being PCIT, Patna-
1/Revision-264/100000392035/23
whereby the order passed by the
Assessing Officer has been affirmed and
Revision petition has been dismissed.
ii) To issue a Writ in nature of
Mandamus directing the respondents not
to take any coercive action against the
petitioner during pendency of this writ
application.
iii) To any other relief or reliefs to which
the petitioner is entitled in the facts and
circumstances of the case."
Brief Facts of the Case
3. The petitioner is a private limited company registered
under the provisions of the Companies Act, 1956. It is engaged in
civil construction works. The case of the petitioner is that the
company was continuously filing its Income Tax Returns (ITRs)
since its incorporation. The present case arose on account of a
bonafide mistake which took place due to inadvertence and human
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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error in not uploading its ITR for the assessment year 2015-16
even as the audited financial statement along with audit report had
been duly furnished and all due taxes were paid in full.
4. The petitioner received a demand notice under
Section 156 of the Income Tax Act, 1961 (hereinafter referred to as
the 'Act') whereby a demand of Rs.13,92,221/- was raised against
him for the assessment year 2015-16. A copy of the demand notice
is Annexure 'P/6' to the writ application. The petitioner preferred a
revision petition under Section 264 of the Act against the demand
notice, before the Principal Commissioner of Income Tax-1, Patna.
The revision petition, however, came to be dismissed vide
impugned order dated 19.03.2024 on the following grounds:-
(i) The petitioner company did not file its return of income for
assessment year 2015-16 voluntarily in spite of having taxable income.
(ii) Only after the issuance of notice under Section 148 of the
Act, the petitioner company filed its return of income showing taxable
income at Rs.45,05,567/-.
(iii) The petitioner company did not make compliance during
penalty proceedings before Assessing Officer nor it submitted any reply
during the revision proceedings. During the revision proceedings, online
reply was furnished, but failed to explain as to how the penalty order
passed by the Assessing Officer is prejudicial to the petitioner company,
and
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(iv) The impugned order has been passed taking recourse to
Explanation '3' to Section 271 (1)(c) of the Act.
Submissions on behalf of the Petitioner
5. Mr. Sanjeev Kumar, learned counsel for the petitioner
has assailed the impugned orders dated 15.09.2022 (Annexure
'P/5') passed by the Assessing Officer and 19.03.2024 (Annexure
'P/7') passed by the Revisional Authority on various grounds. One
of the grounds taken by and on behalf of the petitioner is that the
Assessing Officer has erred in levying penalty under Section 271
(1)(c) of the Act because it is not a case of concealment of income
by the petitioner. The Assessing Officer could not appreciate that
the petitioner company had already uploaded the audited financial
statement together with tax audit report. It was a case of an
inadvertent omission on the part of the petitioner company that it
missed to upload the ITR.
6. It is submitted that the petitioner company filed its
ITR under Section 148 immediately after the company got the
opportunity. The returned income was exactly as per the financial
statement uploaded along with the tax audit report. The assessment
was completed on returned income and no addition was made as
no concealment was ascertained. During the assessment
proceedings, it was established that the petitioner company had
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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already discharged the tax liability during the financial year itself
and there was a 'Nil' demand on assessment.
7. Learned counsel submits that the Assessing Officer
has levied penalty in terms of Explanation 3 to Section 271 (1)(c),
however, he failed to apply the provision of clause (c) of
Explanation 4 to Section 271 (1)(c). It is submitted that this clause
deals with quantification of tax sought to be evaded and resultant
penalty where penalty is proposed to be levied in terms of
Explanation 3 to Section 271 (1)(c). Even the calculation made by
the Assessing Officer has been sought to be challenged on the
ground that the Assessing Officer has not provided any credit for
prepaid taxes as specified in clause (c) of Explanation 4 to Section
271 (1)(c). It is stated that had the credit been provided, there
would have been no penalty. A comparative calculation has been
shown in paragraph '16(iii)' of the writ application.
8. It is submitted that concealment of income and
furnishing of incorrect particulars as occurring under Section 271
(1)(c) of the Act are the sine qua non for attracting a penalty under
Section 271 (1)(c) of the Act. Since in this case, no concealment of
particulars of income and no incorrect particulars of income have
been furnished, the penal provision would not be attracted.
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9. Lastly, it is submitted that each case has to be
considered on its own facts and so far as the facts of the present
case are concerned, it would be evident from the averments
present in the counter affidavit of the respondent that they have
admitted in paragraph '9' of their counter affidavit that " there was
no concealment of income made by the assessee in terms of the
provisions laid down in para (c) of Explanation 4 of section 271 of the
I.T. Act." It is further stated in the counter affidavit that the
Assessing Officer seems to have failed to consider the provision of
clause (c) of Explanation 4 to Section 271 (1)(c) while imposing
penalty under this Section.
10. Learned counsel submits that on the face of the
admission on the part of the respondents that it is not a case of
concealment of income, the imposition of penalty by invoking
clause (c) of sub-section (1) of Section 271 and Explanation 4 of
the Act is in the teeth of the statute and the same is liable to be
struck out.
Stand of the Respondents
11. A counter affidavit has been filed on behalf of the
respondents which is sworn by the Assistant Commissioner of
Income Tax, Circle-1, Muzaffarpur who is the Assessing Officer.
12. Ms. Archana Sinha, learned Senior Standing Counsel
for the Department has contested the writ application. In the
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counter affidavit, a plea has been taken that the assessee filed its
ITR only in response to the notice under Section 148 dated
31.03.2021
for the assessment year 2015-16 on 16.04.2021
showing income of Rs.45,05,567/-. It is admitted by the
respondents that on perusal of the ITR, it was observed that there
was prepaid taxes and the assessee had claimed TDS amounting to
Rs.14,04,525/- which resulted into refund claim of Rs.12,304/-.
13. Learned Senior Standing Counsel, however, submits
that this case would be falling under Section 271 (1)(c) of the Act
and the Assessing Officer has rightly imposed a penalty of Rs.
13,92,221/- i.e. 100% of the tax sought to be evaded, under
Section 271 (1)(c) of the Act. Drawing the attention of this Court
towards the said provision of the Act, learned Senior Standing
Counsel has submitted that because the petitioner did not file its
ITR within the prescribed period, the non-filing of ITR alone is
sufficient to attract Section 271 (1)(c) of the Act.
14. Reliance has also been placed on the judgment of the
Hon’ble Allahabad High Court in case of Addl. Commissioner of
Income-tax v. Mewa Lal Sankatha Prasad reported in (1979)
116 ITR 356 and on a judgment of the Income Tax Tribunal,
Visakhapatnam Bench in case of Meka Ranganayakamma v.
Income Tax Officer reported in [2024] 159 taxmann.com 1621 to
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submit that where the assessee had failed to file return of income
under Section 139 (1) and then filing the same only in response to
notice under Section 148 would amount to concealment of income.
The counter affidavit does not controvert the statements made in
paragraph ’16 (iii)’ of the writ application.
Consideration
15. Having heard learned counsel for the parties and on
perusal of the records, this Court finds that there are some
admitted facts in the case. It is an admitted position that for the
financial year 2015-16, the petitioner company had furnished
audited financial statement and the tax audit report within the
prescribed period under Section 44AB of the Act on 30.09.2015
vide acknowledgment. Admittedly, the petitioner company did not
file the ITR which the company filed only after receipt of notice
under Section 148 of the Act.
16. It is further an admitted position that the return filed
by the petitioner under Section 148 of the Act was showing taxable
income at Rs.45,05,567/- and the petitioner had discharged its
liability on account of taxes in full within the due date. After the
assessment of the ITR filed by the petitioner, no addition was
made to its income, no additional tax was levied and the petitioner
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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was found entitled for refund of Rs.12,304/-. The refund was
allowed.
17. In the above factual matrix of the present case, a
question arises for consideration as to whether the impugned order
dated 15.09.2022 as contained in Annexure ‘P/5’ is in accordance
with law. For this purpose, this Court would first of all notice the
order as contained in Annexure ‘P/5’ passed by the Assessing
Officer. On perusal, it appears that the Assessing Officer claims to
have served show cause notices upon the petitioner but the
petitioner did not submit any response to those show cause notices.
In these circumstances, it is stated that the Assessing Officer was
left with no option but to pass the penalty order on the basis of the
materials available on the record. In the concluding paragraph, the
Assessing Officer has recorded as under:-
“In view of the discussions made above, the assessee is liable for
penalty u/s 271(1)(c) of the Income Tax Act, 1961 which is calculated as
under:-
A Tax liability at returned income (NIL) NIL (No ITR filed)
B Tax liability at assessed income Rs. 13,92,221/-
(Rs.51,00,811)
C Difference (B-A) Rs.13,92,221/-
D Tax sought to be evaded Rs.13,92,221/-
Minimum penalty imposable (100% of E) Rs.13,92,221/-
Maximum penalty imposable (300% of E) Rs. 41,76,663/-
In view of the facts and circumstances of the case as discussed
above, I impose a penalty of Rs.13,92,221/- i.e. 100% of the tax sought to be
evaded u/s 271(1)(c) of the Income Tax Act, 1961.”
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18. It is evident that the Assessing Officer is not taking
into consideration the taxes already paid by the petitioner. The
concluding paragraph gives an impression as if the petitioner
evaded the payment of tax amounting to Rs.13,92,221/- which is
not a correct position. The column ‘D’ in the tabular form gives a
wrong impression.
19. It appears that when the petitioner company
preferred revision before the Principal Commissioner of Income
Tax-1, Patna, a plea was taken that it is not a case of concealment
and the learned Assessing Officer had ignored the provision of
clause (c) of Explanation ‘4’ to Section 271 (1)(c) of the Act that
deals with quantification of penalty where penalty is leviable
under Explanation ‘3’ to Section 271 (1)(c). As regards the order
passed by the Revisional Authority, the petitioner has assailed the
assertion on the revisional order that “no reply was received from
the end of the assessee”. The petitioner has asserted that the
company through it’s Chartered Accountant had appeared
physically or online on each and every date which can be verified
from the records and the ordersheet as well as from the online
portal of the Income Tax Department.
20. In paragraph ’18’ of the writ application, specific
assertions have been made by the petitioner that the petitioner
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company had applied for copy of the ordersheet but the same was
not supplied till this date. Paragraph ’18’ of the writ application
has not at all been denied by the respondents. In fact, the counter
affidavit says in reply to paragraphs ’16 (xiv)’ to ’25’ of the writ
petition that “…it requires no comments”. This Court, therefore,
finds that the assertion made in paragraph ’18’ of the writ
application having not been denied, is required to be considered as
being claimed by the petitioner.
21. At this stage, this Court deems it just and proper to
reproduce the relevant part of paragraph ‘9’ of the counter affidavit
hereunder for a ready reference:-
“Hence, although the assessee had
concealed the particulars of income in
terms of Explanation 3 of section 271(1)
(c) of the I.T. Act, but since there was no
tax payable after giving the credit of
TDS, there was no concealment of
income made by the assessee in terms of
the provisions laid down in para (c) of
the Explanation 4 of section 271 of the
I.T. Act. The Assessing Officer seems to
have failed to consider the provision of
clause (c) of explanation 4 to Section
271(1)(c) while imposing penalty under
this section. This clause deals with
quantification of tax sought to be evaded
and resultant penalty where penalty is
proposed to be levied in terms of
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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said provision reads as under:-
“Where in any case to which explanation
3 applies the amount of tax sought to be
evaded shall be the tax on total income
assessed as reduced by the amount of
advance tax, tax deducted at source, tax
collected at source and self-assessment
tax paid before the issue of notice under
Section 148.””
22. Thus, a bare reading of paragraph ‘9’ of the counter
affidavit makes the position in law clear. It is their own stand that
the Assessing Officer seems to have failed to consider the
provision laying down the manner in which quantification is to be
done. In this case, there is no ‘evasion’ of tax. It is crystal clear
that even the respondents have in so many words admitted that
since there were no tax payable after giving the credit of TDS,
there was no concealment of income made by the assessee in terms
of the provision laid down in clause (c) of the Explanation ‘4’ of
Section 271 of the Act.
23. Section 271 (1)(c) of the Act and its Explanation ‘3’
are quoted hereunder:-
“271 (1)(c) has concealed the particulars
of his income or 4[* * *] furnished
2
inaccurate particulars of [such
4. Omitted by Act 5 of 1964, S.40 (w.r.e.f. 1-4-1964).
2. [ Substituted by Act 18 of 2005, S.58, for certain words (w.e.f. 1-4-2006).]
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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3
[Explanation 3. -Where any person 4[* *
*] fails, without reasonable cause, to
furnish within the period specified in
sub-section (1) of section 153 a return of
his income which he is required to
furnish under section 139 in respect of
any assessment year commencing on or
after the 1st day of April, 1989, and until
the expiry of the period aforesaid, no
notice has been issued to him under
clause (i) of sub-section (1) of section
142 or section 148 and the Assessing
Officer or the 5[* * *] Commissioner
(Appeals) is satisfied that in respect
of such assessment year such person
has taxable income, then, such person
shall, for the purposes of clause (c) of
this sub-section, be deemed to have
concealed the particulars of his
income in respect of such assessment
year, notwithstanding that such
person furnishes a return of his
income at any time after the expiry of
the period aforesaid in pursuance of a
notice under section 148.”
24. The present case is standing on a completely
different footing. The bonafide and inadvertent human error is
apparent on the face of it in as much as financial statements and
tax audit report were duly filed and all taxes stood paid within the
presented period but the ‘ITR’ could not be filed/uploaded.
Explanation ‘3’ does not envisage this situation.
3. Substituted by Act 3 of 1989, S.50, for Explanation 3 (w.e.f. 1-4-1989).
4. Certain words omitted by Act 20 of 2002, S.101 (w.e.f 1-4-2003).
5. Certain words omitted by Act 21 of 1998, S.65 (w.e.f 1-10-1998).
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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25. Explanation ‘4’ provides the method of calculation
with reference to clause (iii) of this sub-section. Clause (c) to
Explanation ‘4’ is required to be taken note of in the present case
because the penalty has been imposed by the Assessing Officer
taking recourse to this provision. It reads as under:-
“(c) where in any case to which
Explanation 3 applies, the amount of
tax sought to be evaded shall be the
tax on the total income assessed as
reduced by the amount of advance
tax, tax deducted at source, tax
collected at source and self-
assessment tax paid before the issue
of notice under section 148.”
26. Keeping in view clause (c) of Explanation ‘4’ of
Section 271 (1)(c) of the Act, this Court finds that the statements
made by the petitioner in paragraph ’16(iii)’ of the writ petition
wherein calculations have been shown have not been denied and
that would be important to take a view that the Assessing Officer
has not applied his judicious mind even while calculating the
penalty amount.
27. This Court finds on appreciation of the scheme of
Section 271 (1)(c) read with Explanation ‘3’ that it essentially
covers a case where there is a concealment of the particulars of
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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income or where the assessee has furnished incorrect particulars
of his income.
28. This Court has no difficulty in recording that it is
not a case of concealment of particulars of income or furnishing
of incorrect particulars of income. Even the respondents have
admitted it in paragraph ‘9’ of their counter affidavit which this
Court has already quoted hereinabove. Explanation ‘3’ clearly
talks of a satisfaction to be reached by the Assessing Officer or
the Joint Commission (Appeals) or the Commissioner (Appeals)
that in respect of such assessment year, such person has taxable
income and if he has not filed his return, then he will be deemed
to have concealed his particulars of income in respect of such
assessment year. In the present case, no such satisfaction has
been recorded by the Assessing Officer in the peculiar facts of
this case where admittedly, the petitioner had uploaded the
financial statements and the tax audit report and had paid all the
taxes.
29. According to this Court, the provisions of law as
discussed above have been incorporated in the statute book to
catch hold of a dishonest person who fails to file his return and
conceals his particulars of income in order to evade taxes. In the
present case, the facts are glaring and showing on the face of it
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
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with an admission on the part of the respondents that it was not a
case of concealment of income by the assessee. In fact, the
petitioner has been found entitled to refund.
30. So far as the two judgments cited by Ms. Archana
Sinha, learned Senior Standing Counsel for the Department are
concerned, in the considered opinion of this Court, those are not
at all applicable in the facts of the present case. In the case of
Mewa Lal Sankatha Prasad (supra), the Hon’ble Allahabad
High Court was answering two questions which were referred
by the Tribunal for the opinion of the High Court. Those two
questions were as under:-
“1. Whether, on the facts and in the
circumstances of the case, the
Tribunal was legally correct in
holding that for the purposes of
calculating penalty under s. 271(1)(c),
the provisions of s. 271(1)(c) as
amended by the Finance Act, 1968,
with effect from April 1, 1968, were
not applicable and that the penalty
has to be calculated according to the
provisions of the Act which was
applicable as per the provisions in
force prior to April 1, 1968?
2. Whether, on the facts and in the
circumstances of the case, the
Tribunal was legally correct in
Patna High Court CWJC No.1290 of 2025 dt.17-06-2025
17/18reducing the amount of penalty
imposed under s. 271(1)(c) from Rs.
18,000 to minimum imposable with
reference to the tax sought to be
evaded?”
31. In course of argument, learned Senior Standing
Counsel for the Department has ultimately submitted that those
two questions are not involved in the present writ application.
32. So far as the judgment of the Tribunal in case of
Meka Ranganayakamma (supra) is concerned, again in the
said case, the assessee who had sold a piece of land had not filed
return and it was found that he had concealed his particulars of
income. The present case stands on a completely different
footing and the judicial pronouncements placed before this
Court on behalf of the Department would not help it.
33. For the reasons stated hereinabove, we are of the
considered opinion that the Assessing Officer as well as the
Revisional Authority both have failed to take a correct view in
the facts and circumstances of this case. The Assessing Officer
has not only committed error in applying clause (c) of sub-
section (1) of Section 271 read with Explanation ‘3’ of the Act
but has also failed to calculate the penalty amount by duly
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appreciating clause (c) attached to Explanation ‘4’. Thus, on
both counts, he has committed wrong.
34. In ultimate analysis, the impugned orders cannot
sustain the test of law. Those are liable to be set aside.
35. Accordingly, this Court sets aside the impugned
orders and allow this writ application.
(Rajeev Ranjan Prasad, J)
(Ashok Kumar Pandey, J)
lekhi/-
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