Ujjal Bhuyan JUDGMENT
B.V. Nagarathna, J.
1. This appeal has been filed assailing the judgment dated 06.07.2012, passed by the High Court of Karnataka at Bangalore, in Writ Appeal No. 2458 of 2010 whereby the judgment of the learned Single Judge dated 20.05.2010 passed in Writ Petition No. 12239 of 2008, remanding the matter to the Settlement Commission to determine afresh, the question as to immunity from levy of penalty and prosecution, was affirmed and the aforesaid Writ Appeal filed by the Appellant herein, was dismissed.
2. The facts giving rise to the present appeal, in a nutshell are that the Appellant-Assessee, Kotak Mahindra Bank Limited (formerly, "M/s. ING Vysya Bank Limited") is a Public Limited Company carrying on the business of banking and is assessed to tax in Bangalore where its registered office is located. Apart from the business of banking, the Appellant also carries out leasing business on receiving approval from the Reserve Bank of India (hereinafter "RBI" for short) vide Circular dated 19.02.1994. Thus, the Appellant derives its income, inter alia, from banking activities as well as from leasing transactions.
2.1. The Appellant filed its income tax returns for the assessment years 1994-1995 to 1999-2000 and assessment orders were passed up to assessment year 1997-1998 and the assessment for the subsequent years was pending. During the assessment proceedings for the assessment year 1997-1998, the Assessing Officer made certain additions and disallowances based on which the assessment already concluded for the assessment years 1994-1995 to 1996-1997 were proposed to be reopened. The Assessing Officer then passed an Assessment Order dated 30.03.2000 for the Assessment Year 1997- 1998. The main issue pertained to the income in respect of the activity of leasing. As per the Assessment Order, the Appellant had been accounting for lease rental received, by treating the same as a financial transaction. As a result, the lease rental was bifurcated into capital repayment portion and interest component. Only the interest component was offered to tax. In other words, the Appellant treated such leases as loans granted to the "purported" lessees to purchase assets. In such cases, the ownership of the assets is vested with the lessees. However, the Appellant claimed depreciation on those assets Under Section 32 of the Income Tax Act, 1961 (hereinafter referred to as "the Act" for the sake of convenience) though the Appellant was not the owner of the assets for the purpose of the said transactions.
2.2. On 09.06.2000 the Assessing Officer issued a notice Under Section 148 of the Act for the reassessment of income for the aforesaid assessment years. The Assessing Officer also passed a penalty order dated 14.06.2000 levying a penalty Under Section 271(1)(c) of th........