FRESENIUS KABI ONCOLOGY LIMITED,WEST DELHI V. DEPUTY COMMISSIONER OF INCOME-TAX/ NATIONAL FACELESS ASSESSMENT CENTRE, DELHI

ITA 176/DEL/2025

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The case involves Fresenius Kabi Oncology Limited appealing against a penalty imposed by the Commissioner of Income Tax (Appeals)-26, New Delhi, which confirmed the levy of a substantial penalty for alleged concealment of income and inaccurate particulars related to long-term capital loss claims in the assessment year 2012-13. The primary legal contention revolved around the procedural validity of the penalty under section 271(1)(c) of the Income Tax Act, 1961, with the appellant arguing that the penalty was incorrectly applied and that all material facts had been disclosed during the assessment proceedings. The Tribunal's decision focused on the discrepancies in the charges as articulated during the penalty proceedings compared to those during the assessment, leading to the conclusion that the penalty was improperly levied.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711590 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2012-2013
• Other Referred Cases: CIT Vs. Samson Perichery, CIT Vs. Manjunatha Cotton & Ginning Factory, Multivision Infotech (P) Ltd. Vs. ACIT, Fairdeal Tradelink Company Vs. ITO, CIT Vs. SSA's Emerald Meadows, Mohd. Farhan A Shaikh Vs. DCIT, PCIT Vs. Sahara India Life Insurance Co. Ltd., PCIT Vs. Minu Bakshi, PCIT Vs. Gragerious Projects (P) Ltd., CIT Vs. Reliance Petroproducts (P) Ltd., Dilip N Shroff VS. JCIT, T Ashok Pai Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDER SINGH
• Assessee Lawyers: ADITYA VOHRA
• Keywords: Set aside; Cost of acquisition; Capital Gains; Initiation of penalty proceedings; Agreed addition
• Section: 271(1)(c)

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”, DELHI BEFORE SH. M. BALAGANESH, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.176/DEL/2025 Assessment Year: 2012-13 Fresenius Kabi Oncology limited b-310 Somdatt Chambers I R K Puram (Main) south West Delhi 110006 PAN No. AABCD7720L Vs. DCIT/ National Faceless Assessment Centre New Delhi (APPELLANT) (RESPONDENT) Appellant by Sh. Aditya Vohra, Advocate Ms. Aakriti Bansal, CA Respondent by Sh. Jitender Singh, CIT DR Date of hearing: 22 /07/2025 Date of Pronouncement: 25/07/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-26 New Delhi [hereinafter referred to as “CIT(A)”] vide order dated 12.11.2024 pertaining to A.Y. 2012-13 confirming the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961, (in short ‘the Act’). Printed from counselvise.com 2 2. The assessee has raised the following grounds in appeal: 1. That the order dated 12.11.2024 passed by the Commissioner of Income-tax (Appeals) [\"CIT(A)\"] upholding levy of penalty of Rs.19,66,59,439 on the Appellant under section 271(1)(c) of the Income-tax Act, 1961 (\"the Act\") for assessment year 2012-13 is invalid, bad in law and liable to be set aside. 2. That the CIT(A) erred on facts and in law in upholding the levy of penalty of Rs. 19,66,59,439 on the Appellant for concealment of income in respect of alleged excess claim of long-term capital loss amounting to Rs.60,61,31,728. 3. That the CIT(A) erred on facts and in law in upholding levy of penalty for concealment of income in the penalty order passed under section 271(1)(c) of the Act, not appreciating that in the assessment order passed for the subject assessment year, penalty proceedings were initiated for furnishing of inaccurate particulars. 4. That the CIT(A) erred on facts and in law in upholding levy of penalty for concealment of income, without appreciating that the show cause notice(s) issued under section 274 read with section 271(1)(c) of the Act, did not specify the exact limb under which penalty was proposed to be levied on the Appellant for the subject assessment year. 5. That the CIT(A) erred on facts and in law in upholding levy of penalty, not appreciating that the Appellant had truly and fully disclosed all material facts în respect of the disputed claim of long-term capital loss, in the return of income and during the course of assessment proceedings. Printed from counselvise.com 3 6. That the CIT(A) erred on facts and in law in upholding levy of penalty despite the Appellant submitting detailed explanation regarding the manner of computation of long- term capital loss, which was bona fide and legally tenable. 7 That the CIT(A) erred on facts and in law in upholding levy of penalty on the Appellant, without appreciating that, at best, restriction in the claim of long-term capital loss made in the assessment order qua which impugned penalty has been levied, was a debatable issue. 8.That on the merits of long-term capital loss disallowed/ restricted in the assessment order, the CIT(A) erred on facts and in law in not appreciating that there is no specific provision in the Act for calculating cost of acquisition in the case of cross-currency transactions; ergo, computation method adopted by the Appellant could not be said to be incorrect and did not warranty imposition of penalty. 9 That the CIT(A) erred on facts and in law in upholding levy of penalty on the erroneous ground that since the Appellant did not contest the restriction of long-term capital loss before the CIT(A) in quantum proceedings, presumption could be drawn that the Appellant had no explanation to offer in respect of the claim made. 10. That even otherwise, the CIT(A) erred on facts and in law in upholding levy of penalty, not appreciating that the claim made by the Appellant was based on professional advice taken at the time of filing return of income. Printed from counselvise.com 4 11. That without prejudice, the CIT(A) erred on facts and in law in erroneously upholding excess levy of penalty at Rs.19,66,59,439, which was wrongly calculated by the assessing officer at 100% of tax computed at slab rate, instead of 20% tax rate applicable to long term capital gains. The Appellant craves leave to add, alter, delete, modify or vary the above grounds of appeal at or before the time of the hearing. 3. The ld. Authorized representative of the assessee submitted that in the assessment proceedings disallowance of Long- Term capital gain, Capital subsidy and addition on Arm’s Length price adjustment were made. The penalty proceedings under section 271(1)(c) of the Act were initiated in respect of the above said additions. The ld. Authorized Representative of the assessee submitted that a perusal of assessment order would show that penalty proceedings were initiated for filing inaccurate particulars of income. However, while levying penalty under section 271 (1) (c) of the Act vide order dated 29-03-2022, the Assessing officer mentioned the charge of section 271(1)(c) of the Act, ‘concealment’ of income. He also submitted that the first notice dated 29-04-2016 would show that the penalty proceedings were initiated for filing of concealed the particulars of income or furnished inaccurate particulars of such income but in the notice dated 06-03-2020 mentioned that assessee Printed from counselvise.com 5 have concealed the particulars of income. He further submitted that notice dated 08-03-2022 and 09-03-2022 the reasons were mentioned for furnishing inaccurate particulars of income. He also submitted that the AO did not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated. Reliance has placed on the following decisions: 1. CIT Vs. Samson Perichery : {2017} 392 ITR 4 (Bom) 2. CIT Vs. Manjunatha Cotton & Ginning Factory : {2013} 359 ITR 565 3. Multivision Infotech (P) Ltd. Vs. ACIT {2017} 88 taxmann.com 874 4. Fairdeal Tradelink Company Vs. ITO ITA No.3445/Mum/2016 (Mum) 5. CIT Vs. Manjunatha Cotton & Ginnin Factory {2013} 359 ITR 565 6. CIT Vs. SSA’s Emerald Meadows {2016} 73 taxmann.com 241 (Kar) 7. Mohd. Farhan A Shaikh Vs. DCIT {2021} 434 ITR 1 (Bom) 8. PCIT Vs. Sahara India Life Insurance Co. Ltd. {2021} 432 ITR 84 (Del) 9. PCIT Vs. Minu Bakshi : ITA 57/2021 10. PCIT Vs. Gragerious Projects (P) Ltd. {2025} 475 TIR 546 (Del) 11. CIT Vs. Reliance Petroproducts (P) LTd. : {2010} 322 ITR 158 (SC) 12. Dilip N Shroff VS. JCIT : {2007} ITR 519 (SC) 13. T Ashok Pai Vs. CIT {2007} 292 ITR 11 (SC) Printed from counselvise.com 6 4. The Ld. Departmental Representative defended the validity of penalty proceedings. 5. We have heard the parties and gone through the material available on record. The assessee has challenged the validity of penalty proceedings under section 271(1)(c) of the Act on the legal issue in ground no. 2. 6. Perusal of the assessment order reveals that the penalty under section 271(1)(c) of the Act has been levied by Assessing Officer by observing as under: “Assessed at net taxable income of Rs. 43,62,34,300/-. Since, tax on book profit is more than tax under normal provision, therefore charge tax at book profit of Rs. 71,57,92,161/-. Charge interest u/s 234A, 234 B & 234C. Issue penalty under section 271(1)(c ) of the Act for furnishing inaccurate particulars.” 7. At the time of passing order under section 271(1)(c) of the Act the Assessing Officer observes as under: “In view of the facts enumerated above, it is concluded that the assessee had willfully concealed his income particulars to the tune of Rs. 60,61,31,728/- and thereby rendering him self liable for penal provisions under section 271(1)(c ) of the Income Tax Act 1961. Therefore, I am satisfied that this is a fit case for levy of penalty on the assessee on the concealment of income.” Printed from counselvise.com 7 8. A bare perusal of satisfaction recorded for initiating penalty proceedings at the time of passing assessment order and the order levying penalty shows incoherence of charges invoked under section 271(1)(c) of the Act. 9. At the time of recording satisfaction, the Assessing Officer has initiated penalty for furnishing ‘inaccurate particulars’. However, at the time of levy of penalty, the Assessing Officer mentioned issued the notice mentioning both the charges of section 271(1)(c) of the Act i.e. furnishing ‘inaccurate particulars’ and concealment of income. In the penalty order the Assessing Officer levied the penalty on the concealment of income. The ambiguity in the mind of the Assessing Officer with regard to charging for levy of penalty is apparent from the order dated 29-03-2022 passed under section 271(1)(c) of the Act. 10. In the case of Commissioner of Income -Tax v. Samson Perinchery {2017} 58 taxmann.com 413 (Bombay) the Hon’ble Bombay High Court has held as under :- 6. The above submission on the part of the Revenue is in the face of the decision of the Supreme Court in T. Ashok Pai v. CIT[2007] 292 ITR 11/161 Taxman 340 [relied upon in Manjunath Cotton & Ginning Factory (supra)] wherein it is observed that concealment of income Printed from counselvise.com 8 and furnishing of inaccurate particulars of income in Section 271(1)(c) of the Act, carry different meanings/connotations. Therefore, the satisfaction of the Assessing Officer with regard to only one of the two breaches mentioned under Section 271(1)(c) of the Act, for initiation of penalty proceedings will not warrant/permit penalty being imposed for the other breach. This is more so, as an Assessee would respond to the ground on which the penalty has been initiated/notice issued. It must, therefore, follow that the order imposing penalty has to be made only on the ground of which the penalty proceedings has been initiated, and it cannot be on a fresh ground of which the Assessee has no notice. 11. In the case of the Commissioner of Income Vs. Manjunatha Cotton & Ginning Factory {2013} 35 taxmann.com 250(Karnataka) the Hon’ble Karnataka High Court has held as under :- “Section 271(1)(c), read with section 274, of the Income-tax Act, 1961 Penalty For concealment of income [Agreed additions, effect off-Assessment years 2000-01, 2003-04 and 2004-05-Whether, where assessee had not challenged order of assessment levying tax and interest, that by itself would not be sufficient to impose penalty under section 271(1)(c), unless it was discernible from assessment order that addition was on account of Printed from counselvise.com 9 concealment of income Held, yes Whether, only when no explanation was offered by assessee or it was found to be false or not bona fide, penalty could be imposed - Held, yes-Whether, however, where explanation offered was not substantiated by assessee, but it was found to be bona fide and all facts relating to same had been disclosed by assessee, penalty could not be imposed Held, yes Whether, where appellate authority deleted additions made by Assessing Officer as undisclosed investments, but sustained such additions on ground of under valuation of stock, penalty proceedings were required to be initiated by appellate authority and not by Assessing Officer, as subject matter of penalty proceedings was appellate authority's order Held, yes Whether, therefore, in such circumstances penalty proceedings initiated by Assessing Officer, in absence of appellate authority's direction to initiate penalty proceedings under section 271(1)(c), were unsustainable - Held, yes [Para 63] [In favour of assessee].” 12. In the light of the above discussion of the Hon’ble Bombay and Karnataka High Court in the facts and circumstances of the case we find merit in the legal ground raised by the assessee. The order passed u/s. 271(1)(c) of the Act dated 29.03.2022 suffers legal infirmity and hence, is void. The legal ground raised by the assessee is allowed. Printed from counselvise.com 10 13. Since we have decided the appeal on legal issue raised by the assessee, the other ground raised by the assessee have become academic and hence, not adjudicated. Hence, the impugned order is set aside. 14. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25.07.2025. Sd/- Sd/- (M. BALAGANESH) (SUDHIR KUMAR) ACCOUNTANT MEMBER (JUDICIAL MEMBER) Neha, Sr. PS Date:25.07.2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT DELHI Printed from counselvise.com "