M/s. Padmini Infrastructure Developers India Ltd., New Delhi V. DCIT, New Delhi

ITA 1002/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4067 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 06-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 20-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Depreciation; Principle of natural justice; Earning of tax free income; Wrong claim; Assessment record; Reason to believe
• Section: 131; 27; 271(1)(c); 143(3); 115JB; 80IB; 143(1); 205

Judgement Text

ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI K.N. CHARY, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 1002/DEL/2014 ( ASSESSMENT YEAR: 2006-07) M/S PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD., LG-1 & 3, R-23, NEHRU ENCLAVE, NEW DELHI-110019. VS. DCIT, CIRCLE-14(1), NEW DELHI. PAN NO: AAACP 3561 G APPELLANT RESPONDENT ASSESSEE BY : DR. RAKESH GUPTA, FCA AND SHRI SOMIL AGARWAL, CA. REVENUE BY : SHRI SURENDER PAL, SR. DR ORDER PER: ANADEE NATH MISSHRA, AM THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE OR DER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XVII, DELHI-110092, [LD. C IT(A), FOR SHORT] DATED 25.11.2013 FOR ASSESSMENT YEAR 2006-07, ON THE FOLLOWING GROUN DS: I . THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY OF RS. 60,77,308/- U/S 271(1) (C) AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND WITHOU T APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 2 OF 21 II. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN LEVYING THE P ENALTY U/S 271(1)(C) IS BAD IN LAW AND AGAINST THE FACTS AND C IRCUMSTANCES OF THE CASE. III. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271(1)(C) IN AS MUCH AS T HE IMPUGNED ASSESSMENT ORDER U/S 143(3) DATED 26-09-2008 IS ALS O CONTRARY TO LAW AND FACTS, VOID AB INITIO AND NOT SUSTAINABLE O N VARIOUS LEGAL AND FACTUAL GROUNDS. IV. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY U/S 271(1)(C) WHICH IS BAD IN LAW BEING BEYOND JURISDICTION AND BARRED BY LIMITATION AND CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED BY RECORDING IN CORRECT FACTS AND FINDINGS AND WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE AND THE SAME IS NOT SUSTAINING ON VARIOUS LEGAL AND FACTUAL GROUNDS. V. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSI NG THE ACTION OF LD. AO IN IMPOSING A PENALTY OF RS. 60,77,308/- THA T TOO WITHOUT RECORDING MANDATORY SATISFACTION AS PER. VI. THAT THE ASSESSEE CRAVES THE LEAVE TO ADD, ALTE R OR AMEND THE GROUNDS OF APPEAL AT ANY STAGE AND ALL THE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. (2) THE ASSESSEE FILED RETURN OF INCOME ON 23.11.2006, WHEREIN DEDUCTION AMOUNTING TO RS. 3,44,56,419/- WAS CLAIMED U/S 80IB (10) OF THE INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT). VIDE ASSESSMENT ORDE R DATED 26.09.2008 PASSED U/S 143(3) OF I.T. ACT; THE DEDUCTION CLAIMED BY THE AS SESSEE U/S 80IB(10) OF THE I.T. ACT WAS DISALLOWED. IN THIS ASSESSMENT ORDER, THE BOOK PROFIT FOR THE PURPOSES OF SECTION 115JB WAS DETERMINED AT RS. 3,61,09,972/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF I.T. ACT WERE ALSO INITIATED BY THE AS SESSING OFFICER (AO, FOR SHORT). VIDE ORDER DATED 08.06.2010, IN APPEAL NO. 54/CIT(A )XVII/DEL/08-09, LD. CIT(A) ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 3 OF 21 DELETED THE ADDITION OF RS. 34456419/- WHICH WAS MA DE BY AO UNDER NORMAL PROVISIONS. HOWEVER, ADDITION MADE IN BOOK PROFIT (ASSESSED AT RS. 36109972/- AS AGAINST RETURNED BOOK PROFIT OF RS. NIL) WAS CONFIR MED BY CIT(A). INCOME WAS RECOMPUTED ON 07.09.2010 VIDE ORDER U/S 250/143(3) AT RS. 1959220/- UNDER NORMAL PROVISION AND OF RS. 36109972- U/S 115JB. V IDE ORDER DATED 25.10.2017 OF CO-ORDINATE BENCH OF INCOME TAX APPELLATE TRIBUNAL, DELHI (ITAT, FOR SHORT), IN ITA NO. 4065/DEL/2010, REVENUES APPEAL AGAINST THE AFORESAID ORDER DATED 08.06.2010 OF THE LD. CIT(A) WAS DISMISSED; AND THU S, THE ASSESSEES CLAIM U/S 80IB(10) OF I.T. ACT, WAS UPHELD. IN THE MEANTIME, HOWEVER, THE ASSESSING OFFICER PASSED ORDER U/S 271(1)(C) OF I.T. ACT, DATED 28.03 .2012, IMPOSING PENALTY AMOUNTING TO RS. 60,77,308/-. THIS PENALTY WAS LEVI ED IN RESPECT OF ADDITION U/S 115JB OF I.T. ACT. THE RELEVANT PORTIONS OF THE AF ORESAID ASSESSMENT ORDER DATED 26.09.2008 AND THE AFORESAID ORDER DATED 28.03.2012 U/S 271(1)(C) OF I.T. ACT, ON SECTION 115JB OF I.T. ACT, ARE REPRODUCED AS UNDER: RELEVANT PORTIONS OF ASSESSMENT ORDER DATED 26.09.2 008 TAXABILITY U/S 115JB VIDE ORDER SHEET ENTRY 10.07.08 ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ASSESSEE HAS NOT PAID TAX U/S 115JB AND AS TO H OW THE ASSESSEE HAS FILED BOOK PROFIT OF NIL IN ITS RETURN OF INCOME, WHEN THE COM PANY IS HAVING PROFIT AS PER COMPANIES ACT OF RS. 3,61,09,972 WHICH INCLUDES INC OME FROM BUSINESS AS PER INCOME TAX ACT OF RS. 3,44,56,419 AND INCOME FROM O THER SOURCES OF RS. 19,59,218 THEREBY SHOWING. GROSS TOTAL INCOME OF THE YEAR OF RS. 3,64,15,637. VIDE LETTER ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 4 OF 21 DATED 7.7.08, ASSESSEE REPLIED THAT ASSESSEE HAS NO T PAID ANY APPLICABLE TAX U/S 115JB. SUMMONS U/S 131 DATED 10.07.08 AND 18.07.08 WERE ISSUED TO SH. GIRISH BATRA, MD OF THE ASSESSEE COMPANY TO FILE DETAILS O F PAYMENT OF TAXES U/S 115JB FOR A.Y. 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2 007-08 AND TO EXPLAIN THE REASON FOR NON-PAYMENT OF TAXES. SH. GIRISH BATRA NEITHER APPEARED IN RESPONSE TO SUMMONS NOR ASSESSEE FILED ANY REASONS FOR NON-PAYM ENT OF TAX U/S 115JB. ON 27.08.08 SH. RAJEEV SHARMA COUNSEL APPEARED FOR THE ASSESSEE BUT COULD NOT EXPLAIN AS TO WHY TAXES U/S 115JB OF THE ACT HAVE NOT BEEN PAID FOR ALL THESE YEARS. ON PERUSAL OF ASSESSMENT RECORD, THE DETAILS OF INCOME , DEDUCTION U/S 80IB AND PAYMENT OF TAX U/S 115JB IS HEREBY PRODUCED. A.Y. GROSS TOTAL INCOME DEDUCTION U/S 80IB TAXABLE INCOME TAX PAYABLE AS PER MAT SHOWN BY ASSESSEE 2002-03 71,34,329 70,97,621 36,708 NIL 2003-04 11,04,978 11,04,978 NIL NIL 2004-05 88,77,733 86,38,298 2,39,435 NIL 2005-06 2,68,45,130 2,56,89,743 11,55,387 NIL 2006-07 3,64,15,637 3,44,56,419 19,59,218 NIL ON PERUSAL OF SECTION 115JB IT IS ABUNDANTLY CLEAR THAT DEDUCTION U/S 80IB(10) IS NOT ALLOWED TO BE REDUCED FROM BOOK PROFIT FOR COMPUTAT ION OF TAX U/S 115JB AND ASSESSEE WAS LIABLE TO PAY TAX U/S 115JB OF THE ACT . IN THE EVENT OF NON-FILING OF DETAILS AND NON-FILING OF REASONS FOR NOT PAYING TA XES U/S 115JB I HAVE REASON TO BELIEVE THAT ASSESSEE HAS CONCEALED/FILED INACCURAT E PARTICULARS OF INCOME LIABLE FOR PENAL ACTION U/S 271(1)(C) OF THE ACT. THE CONDUCT OF THE ASSESSEE PROVES THE MALAFIDE INTENTION OF EVADING TAXES. IN LIGHT OF TH E ABOVE BOOK PROFIT FOR COMPUTATION OF TAX U/S 115JB IS ASSESSED AT RS. 3,61,09,972 AS AGAINST NIL FILED BY ASSESSEE. RELEVANT PORTIONS OF ORDER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 1. ASSESSMENT IN THE CASE WAS MADE U/S. 143(3) OF THE INCOME TAX ACT, 1961, ON 26.09.2008 (READ WITH CORRIGENDUM ORDER DATED 07.11 .2068 ISSUED VIDE NO. .1393) ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 5 OF 21 ON TOTAL INCOME OF RS.36415637/- AS AGAINST RETURNE D INCOME OF RS. 1959220/- UNDER NORMAL PROVISIONS AND AT RS.36109972/- AS AGA INST RETURNED INCOME OF RS. NIL U/S 115JB. PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT WAS INITIATED BOTH IN RESPECT OF ADDITION UNDER NORMAL PROVISIONS AS WELL AS ADDI TION U/S 115JB DURING THE ASSESSMENT PROCEEDINGS AND NOTICE U/S. 274 READ WIT H SECTION 27I(L)(C) OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 26.09.2008 WHICH REMAINED UNCOMPLIED WITH. IN RESPONSE TO FURTHER SHOW CAUSE NOTICE DATED 05.1 2.2008, ASSESSEE VIDE HIS LETTER DATED 15.12.2008 REQUESTED FOR KEEPING THE PROCEEDI NGS IN ABEYANCE ON THE GROUND OF APPEAL BEING PENDING BEFORE CIT(A). 2. LD. CIT(A)-XVII VIDE ORDER DATED 08.06.2010 IN APPE AL NO. 54/CIT(A) XVII/DEL/08-09 DELETED THE ADDITION OF RS. 34456419/- WHICH WAS MA DE BY AO UNDER NORMAL PROVISIONS. HOWEVER, ADDITION MADE IN BOOK PROFIT (ASSESSED AT RS. 36109972/- AS AGAINST RETURNED BOOK PROFIT OF RS. NIL) WAS CONFIR MED BY CIT(A). INCOME WAS RECOMPUTED ON 07.09.2010 U/S 250/143(3) AT RS. 1959 220/- UNDER NORMAL PROVISION AND RS. 36109972/- U/S 115JB. 3. ACCORDINGLY, FURTHER SHOW CAUSE NOTICES DATED 18.01 .2012, 06.02.2012 AND 14.02.2012 WERE ISSUED BY SPEED POST WHICH ALSO REMAINED UNCOMPLIED WITH. IT SHOWS THE NON-COOPERATIVE AND RECALCITRANT ATTITUDE OF THE ASSESSEE. IT ALSO GOES TO SHOW THAT EITHER THE- ASSESSEE HAS ADMITTED HIS FAULT OR HAS NOTHING TO SAY IN THE MATTER. DURING THE COURSE OF ASSESSMENT PROCEEDING AS WELL AS APPEAL PROCEEDINGS ASSESSEE HAS NOT GIVEN ANY SUBMISSION/DE TAIL/EVIDENCE EXPLAINING THE REASONS FOR SHOWING THE BOOK PROFIT AT RS. NIL AND ALSO FOR NON-PAYMENT OF TAX U/S 115JB WHICH THE ASSESSEE WAS REQUIRED TO PAY BEFORE FILING OF RETURN. 4. THE DISCUSSION/FINDING ON THE ISSUE AS GIVEN IN ASS ESSMENT ORDER READS: VIDE ORDER SHEET ENTRY 10.07.08 ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ASSESSEE HAS NOT PAID TAX U/S 115JB AND AS TO HOW T HE ASSESSEE HAS FILED BOOK PROFIT OF NIL IN ITS RETURN OF INCOME, WHEN THE COMPANY IS HAVING PROFIT AS PER COMPANIES ACT OF RS.3,61,09,972 WHICH INCLUDES INCOME FROM BU SINESS AS PER INCOME TAX ACT OF RS.3,44,56,419 AND INCOME FROM OTHER SOURCES OF RS. 19,59,218 THEREBY SHOWING. GROSS TOTAL INCOME OF THE YEAR OF RS.3,64,15,637. V IDE LETTER DATED 7.7.08, ASSESSES REPLIED THAT ASSESSEE HAS NOT PAID ANY APPLICABLE T AX U/S 115J3. SUMMONS U/S 131 DATED 10.7.08 AND 18.7.08 WERE ISSUED TO SH. GIRISH BATRA, MD OF THE ASSESSEE COMPANY TO FILE DETAILS OF PAYMENT OF TAXES U/S 115JB FOR A.Y. 2002-03, 2003-04, 2004-05, 2005-06, 07, 2007-08 AND TO EXPLAIN THE REASON FOR NON-PAYMENT OF TAXES. SH. GIRISH BATRA NEITHER APPEARED IN RESPONSE TO SUMMONS MU ASSESSEE FILED ANY REASONS FOR NON-PAYMENT OF TAX U/S 115JB. ON SH. RAJEEV SHAR MA COUNSEL APPEARED FOR THE ASSESSEE B IT COULD NOT EXPLAIN AS TO WHY TAXES U/S 115JB OF THE ACT HAVE NOT BEEN PAI D FOR ALL THESE YEARS ON PERUSAL OF SECTION 115JB IT IS ABUNDANTLY CLEAR THAT DEDUCTION U/S 80IB IS NOT ALLOWED TO BE REDUCED FROM BOOK PROFIT FOR COMPUTATION OF T AX U/S 115JB AND ASSESSEE WAS LIABLE TO PAY TAX U/S 115JB OF THE ACT . IN THE EVENT OF NON- ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 6 OF 21 FILING OF DETAILS AND NON FILING OF REASON FOR NOT PAYING TAXES U/S 115JB I HAVE REASON TO BELIEVE THAT ASSESSEE HAS CONCEALED/F ILED INACCURATE PARTICULARS OF INCOME LIABLE FOR PENAL ACTION U/S 27 1(L)(C) OF THE ACT. THE CONDUCT OF THE ASSESSEE PROVES THE MALAFIDE INTENTI ON OF EVADING TAXES. IN LIGHT OF THE ABOVE BOOK PROFIT FOR COMPUTATION OF TAX U/S 115JB IS ASSE SSED AT RS. 3,61,09,972 AS AGAINST NIL FILED BY ASSESSEE . 5. ON THIS ISSUE THE ORDER OF CIT(A) ALSO READS THE APPELLANT HAS N-.A MADE ANY SUBMISSION IN RESPECT OF ABOVE GROUNDS THEREFORE, T HIS GROUND, OF APPEAL IS REJECTED. 6. THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION WITH REGARD TO THE ABOVE ADDITION/DISALLOWANCE (WHICH STOOD CONFIRMED BY CIT (A)) BEFORE THE AO AS WELL AS BEFORE CIT(A) EITHER DURING THE COURSE OF ASSESSMEN T PROCEEDING, APPEAL PROCEEDINGS OR EVEN DURING THE COURSE OF PENALTY PROCEEDINGS U /S 271(1). RATHER, THE REVERSE WAS PROVED I.E. SUCH AMOUNTS WERE REQUI RED TO BE SHOWN IN THE COMPUTATION OF BOOK PROFIT WHICH IT FAILED TO DO. H AD THE A.O MISSED OUT IN MAKING VARIOUS QUERIES AND IN SCRUTINIZING/ EXAMINING THE INFORMATION/DETAILS MINUTELY, THIS AMOUNTS COULD NOT HAVE BEEN BROUGHT TO TAX. IT IS F URTHER BORNE OUT FROM THE FACT THAT INCOME IS ASSESSED U/S 143(1) AT THE SAME FIGU RE AS DISCLOSED BY THE ASSESSEE. IT IS ONLY BECAUSE THAT CASE WAS TAKEN UP IN SCRUTI NY (AIL CASES ARE ASSESSED U/S 143(1) AND ONLY ABOUT 2% CASES ARE SCRUTINIZED) THA T SUCH ADDITION/DISALLOWANCE COULD BE MADE. THEREFORE, PENALTY U/S 271(L)(C) IS CLEARLY LEVIABLE IN SUCH CASES. 7. EXPLANATION 1 TO SECTION 271(1)(C) HAS INTRODUCED A DEEMING PROVISION WHICH MAKES AN ASSESSEE LIABLE FOR PENALTY IN RESPECT OF ANY AM OUNT WHICH IS ADDED OR DISALLOWED, IF THE EXPLANATION OFFERED BY THE ASSES SEE IS EITHER FALSE OR WHICH HE/IT IS NOT ABLE TO SUBSTANTIATE. IN THE PRESENT CASE, ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS CLAIM. RATHER THE FACT OF THE MATTER IS THAT NO EXPLANATION, AT ALL, HAS BEEN OFFERED BY THE ASSESS EE ON THIS ISSUE. 8. ALMOST EVERY TAX PAYER (EXCEPT A FEW SMALL TAXPAYE RS) IS AWARE OF THE FACT THAT ONLY ABOUT 2% RETURNS ARE TAKEN UP FOR SCRUTINY AND THIS FACT INDUCES THEM TO MAKE SUCH WRONG/INADMISSIBLE CLAIMS WITH THE INTENTION OF GOI NG SCOT-FREE, IF THE CASE IS NOT TAKEN UP FOR SCRUTINY, WHICH IS APPARENT FROM THE F ACT THAT ASSESSMENT U/S 143(1) IN THE CASE HAS BEEN MADE ON RETURNED INCOME. FURTHERM ORE, DISALLOWANCE/ADDITIONS IN SUE A CASES CAN BE MADE ONLY IF THE AO IS HAVING SU FFICIENT TIME 8S KNOWLEDGE IN CATCH HOLD OF SUCH DEFICIENCIES WHICH IS NOT POSSIB LE IN EACH AND EVE; V CASE. IN THE PRESENT-CASE, IT CAN BE SAFELY INFERRED THAT ASSESS EE TRIED I N EVADE TAX BY MAKING SUCH INADMISSIBLE/WRONG CLAIM. PENAL PROVISIONS A N MEANT ONLY TO HAVE DETERRENT EFFECT TO DISSUADE TAX PAYERS FOR MAKING SUE A CLAI MS AND WILL LOSE ITS IMPACT IF NOT APPLIED IN CASES OF SUCH VIOLATION 8.1 THE HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM C OMMUNICATION PVT. LTD. REPORTED IN 2010) 40 DTR (DEL) 249, DATED MAY 24, 2 010 HAVE OBSERVED AS UNDER THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMAL L PERCENTAGE OF THE INCOME TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASS ESSEE MAKES A CLAIM WHICH IS NOT ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 7 OF 21 ONLY INCORRECT THAT WOULD GIVE A LICENSE TO UNSCRUPULOUS ASSESSEE TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT T HERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NO T BE PICKED FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSM ENT UNDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRU TINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY T HEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALAFIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WO ULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE P ENALTY PROVISIONS IN THE ACT HAVE. 9. MERE SHOWING THE ITEM IN THE RETUN/ACCOUNTS/TAX AU DIT REPORT BUT NOT OFFERING THE SAME FOR TAXATION PURPOSE CANNOT BY ITSELF TAKE OUT THE CASE FROM THE PURVIEW OF FURNISHING INACCURATE PARTICULARS. THEREFORE, THE OMISSION ON THE PART OF ASSESSEE NOT TO INCLUDE AN ITEM OF RECEIPT/INCOME OR TO MAKE ANY PATENTLY WRONG CLAIM IN COMPUTATION OF TAXABLE INCOME THOUGH SHOWN IN THE R ETURN/ACCOUNTS CERTAINLY AMOUNTS TO CONCEALMENT OR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME AS SUCH OMISSION IS CLEARLY ATTRIBUTABLE TO AN INTE NTION OF DESIRE ON THE PART OF THE ASSESSEE TO AVOID THE IMPOSITION OF TAX THEREON. 9.1 EXPLANATION 1 TO SECTION 147, (THOUGH NOT DIRECTLY CONCERNED WITH THE PROVISION OF SECTION 271(1)(C), ALSO LAYS DOWN CLEARLY THAT MERE PRODUCTION/FURNISHING OF BOOKS OF ACCOUNTS/DETAILS/DOCUMENTS, ETC. (FROM WHICH A.O . COULD WITH DUE DILIGENCE DISCOVER SOMETHING) DOES NOT AMOUNT TO TRUE, FULL A ND CORRECT DISCLOSURE ON THE PART OF THE ASSESSEE SO FAR AS TAXING OF INCOME IS CONCERNED. 10. THE HONBLE SUPREME COURT IN THE CASE OF K.P.MADHUS UDAN VS. CIT', 251 ITR 99 HAS HELD THAT THE ONUS IS ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TI E HONBLE APEX COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSOR HAS HELD THAT THE PENALTY IS A CIVIL LIABILITY AND MENS REA IS NOT REQUIRED TO BE ESTABLISHED BY THE R EVENUE. SIMILARLY, HONBLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BIN DAL (2009) 225 CTR (SC) 248 HAS HELD THAT PENALTY U/S 271(1)(C) IS NEITHER CRIM INAL NOR QUASI CRIMINAL BUT, A CIVIL LIABILITY, ALBEIT A STRICT LIABILITY. SUCH LIABILITY BEING CIVIL IN NATURE, MENSREA IS NOT ESSENTIAL - EXPLANATION APPENDED TO S.271(1) INDICATES ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETURN. DILLIP N. SHRO FF HAS BEEN HELD TO BE NOT LAYING DOWN GOOD LAW. 11. IT VIEW OF THIS IT IS CLEAR THAT ASSESSEE HAS FURN ISHED INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE ADDITION/DISALLOWANCE ; S DISCUSSED ABOVE AND ACCORDINGLY, IT IS FOUND TO BE A FIT CASE FOR IMPOSITION OF PENA LTY U/S 271(L)(C) OF THE ACT R.W. EXPLANATIONS THERETO. HERE IT IS ALSO NOTED THAT TAX ON BOOK PROFIT HAS NOT SO FAR BEEN PAID BY HIM ASSESSEE. IT SHOWS NON COOPERATIVE AND ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 8 OF 21 RECALCITRANT ATTITUDE OF THE ASSESSEE. ITS CONDUCT FURTHER SHOWS THAT ITS INTENTION TO PAY THE DUE AND CORRECT TAXES IS NOT ABOVE DOUBT . CONSIDERING THE FACTS OF THE CASE AN L CONDUCT (FURNISHING OF THE REQUIRED I NFORMATION AND PAYMENT OF DUE TAXES-.) OF THE ASSESSEE, IT IS FOUND TO BE A CASE FIT FOR IMPOSITION OF PENALTY AT A RATE HIGHER THAN THE MINIMUM AMOUNT. (2.1) THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AGAINS T THE AFORESAID ORDER DATED 28.03.2012, PASSED U/S 271(1)(C) OF I.T. ACT BY THE AO. VIDE ORDER DATED 25.11.2013, THE LD. CIT(A) UPHELD THE PENALTY OF THE AFORESAID AMOUNT OF RS. 60,77,308/- AND DISMISSED THE ASSESSEES APPEAL. THE RELEVANT PORT ION OF ORDER OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 5. I SHALL NOW TAKE UP THE VARIOUS GROUNDS OF APP EAL WHICH ARE ALL IN RESPECT OF PENALTY OF RS.60,77,308/- IMPOSED U/S 271(L)( C). 5.1 THE APPELLANT HAD FILED RETURN OF INCOME DECLARING INCOME OF RS. 19,59,220/- . ADDITION U/S 143(3) WAS MADE VIDE ORD ER DATED 26.09.2008 ON TOTAL INCOME OF RS.3,64,15,637/- UNDER NORMAL PROVI SIONS AND AT RS.3,61,09,972/-- U/S 115JB. THE LD. CIT(A) DELETED THE ADDITION UNDER NORMAL PROVISIONS BUT CONFIRMED THE ADDITION U/S 115JB STA TING AS UNDER:- 'IN THE EVENT OF NON-FILING OF DETAILS AND NON-FILI NG OF REASON FOR NOT PAYING TAXES U/S 115JB, I HAVE REASON TO BELIEVE THAT ASSE SSEE HAS CONCEALED/FILED INACCURATE PARTICULARS OF INCOME LIABLE FOR PENAL A CTION 'U/S 271(I)(C) OF THE ACT. THE CONDUCT OF THE ASSESSEE PROVES THE MALA-FI DE INTENTION OF EVADING TAXES. IN LIGHT OF THE ABOVE BOOK PROFIT FOR COMPUT ATION OF TAX U/S 115JB IS ASSESSED AT RS.3,61,09,972/- AS AGAINST NIL FILED B Y ASSESSEE.' 5.2 PENALTY INITIATED U/S 271(1)(C) IN THE ORDER WAS T HEREFORE IMPOSED BY THE AO. PENALTY OF RS.60,77,308/- WAS IMPOSED ON RS.3610997 2/- TAX WAS SOUGHT TO BE EVADED. THE AO PASSED ORDER U/S 271(L)(C) AS UND ER:- 'IN VIEW OF THIS, IT IS DEAR THAT APPELLANT HAS FUR NISHED INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE ADDITION/DISALLOWANCE AS DISCUSSED A BOVE AND ACCORDINGLY, IT IS FOUND TO BE A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(L)(C) OF THE ACT R.W. EXPLANATION THERETO. HERE IT IS ALSO NOTED THAT TAX ON BOOK PROFIT HAS NOT SO FAR B EEN PAID BY THE APPELLANT. IT SHOWS NON COOPERATIVE AND RECALCITRANT ATTITUDE OF THE APPELL ANT. ITS CONDUCT FURTHER SHOWS THAT ITS INTENTION TO PAY THE DUE AND CORRECT TAXES IS NOT A BOVE DOUBT. CONSIDERING THE FACTS OF THE CASE AND CONDUCT (FURNISHING OF THE REQUIRED INFORM ATION AND PAYMENT OF DUE TAXED) OF THE APPELLANT, IT IS FOUND TO BE A CASE FIT FOR IMPOSIT ION OF PENALTY AT A RATE HIGHER THAN THE ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 9 OF 21 MINIMUM AMOUNT. 5.3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD NOTED THAT THE APPELLANT HAD NOT PAID TAX UNDER 115JB. ON A SPECIF IC QUERY BEING RAISED BY THE AO THE APPELLANT DID NOT GIVE ANY REASONS FOR NON PAYMENT OF TAXES U /S 115JB. EVEN DURING APPELLATE PROCEEDINGS THE LD. CIT(A) HAD STATED THAT THE APPELLATE HAD NOT GIVEN ANY DETAILS NOR ANY REASON FOR NOT PAYING TAXES U/S 115JB AND HAD DISPLAYED MALAFIDE INTENTIONS TO EVAD E TAX AND CONCEAL INCOME. THE APPELLANT HAS STATED THAT 115JB WAS LIA BLE ONLY WHEN THE COMPANY WAS OTHERWISE NOT LIABLE TO NORMAL TAX. 5.4 AS PER 115JB (1) & (2): '115JB. SPECIAL PROVISION FOR PAYMENT OF TAX BY CER TAIN COMPANIES.- (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, WHERE IN THE CASE OF AN ASSESSEE, BEING A COMP ANY, THE INCOME- TAX, PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THIS ACT IN RESPECT OF ANY PREVIOUS YEAR RELEVANT TO THE ASSESS MENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 2011, IS LESS EIGHTEEN PER CENT, OF ITS BOOK PROFIT, SUCH BOOK PROFIT SHAL L BE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE AND THE TAX PAYABL E BY THE ASSESSEE ON SUCH TOTAL INCOME SHALL BE THE AMOUNT OF INCOME- TAX. AT THE RATE OF EIGHTEEN PER CENT. (2) EVERY ASSESSEE, BEING A COMPANY, SHALL, FOR THE PURPOSES OF THIS SECTION, PREPARE ITS PROFIT AND LOSS ACCOUNT FOR TH E RELEVANT PREVIOUS YEAR IN ACCORDANCE WITH THE PROVISIONS OF PARTS U A ND III OF SCHEDULE VI TO THE COMPANIES ACT, 1956 (1 OF1956): PROVIDED THAT WHILE PREPARING THE ANNUAL ACCOUNTS I NCLUDING PROFIT AND LOSS ACCOUNT,- (F) THE ACCOUNTING POLICIES ; (II) THE ACCOUNTING STANDARDS ADOPTED FOR PREPARING SUC H ACCOUNTS INCLUDING PROFIT AND LOSS ACCOUNT; (HI) THE METHOD AND RATES ADOPTED FOR CALCULATING THE DEPRECIATION,...' 5.5 THEREFORE, FROM THE PROVISIONS IT IS CLEAR THAT EVE RY COMPANY HAS TO COMPUTE PROFITS AS PER NORMAL PROVISION OF THE A CT AND AS PER 115JB. SECTION 80IB (10) IS NOT RELATED TO THE ASP ECT OF 115JB. THE APPELLANT HAS BEEN ALLOWED DEDUCTION U/S 80IB(1 0) BY THE LD. CIT(A) FROM ITS NORMAL PROFITS. THE ASPECT OF COMP UTATION OF PROFIT U/S 115JB IS ENTIRELY DIFFERENT. 5.6 THE AO HAS THEREFORE ONLY INITIATED AND LEVIED PENA LTY ONLY IN RESPECT OF THE FACT THAT THE APPELLANT HAS NOT COMPUTED PROFIT S U/S 115JB AND PAID TAX HEREON. IF THE CASE OF THE APPELLANT HAD NOT B EEN SELECTED FOR SCRUTINY, THIS FACT WOULD NOT HAVE COME TO THE NOTI CE OF THE DEPARTMENT. THE EXPLANATION GIVEN BY THE APPELLANT FOR NOT COMP UTING PROFITS AS PER ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 10 OF 21 115JB HAS NO MERIT. THE APPELLANT HAS CLEARLY FURNI SHED INACCURATE PARTICULARS AND IS NOT GIVING A BONAFIDE EXPLANATIO N FOR DOING SO. THE APPELLANT HAS NOT COMPLIED WITH THE PROVISIONS OF L AW. IN MY VIEW THE APPELLANT IS LIABLE FOR PENALTY U/S 271(L)(C) FOR GIVING NACCURATE PARTICULARS WITH A VIEW TO CONCEALMENT OF INCOME AND FOR NOT GIVING A BONAFIDE EXPLANATION. 6. THE HON'BLE SUPREME COURT OF INDIA IN K. P. MADH USUDAN VS. CIT (2011) 118 TAXMAN 324 (SC) HELD THAT THE APPELLANT IS BY V IRTUE OF THE NOTICE U/S 271(L)(C) PUT TO NOTICE THAT IF HE DOES NOT PRO VE, IN THE CIRCUMSTANCES STATED IN THE EXPLANATION, THAT HIS FAILURE TO RETU RN HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE NOT DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULARS THEREOF AND CONSEQUENTLY BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. IN VIEW OF THE ABOVE, THE ONUS IS CLEARLY ON THE APPEL LANT TO PROVE THAT THERE WAS NO FRAUD OR NEGLECT IN FILING CORRECT INCOME, W HICH THE APPELLANT HAS FAILED TO PROVED. 6.1 THERE WAS A DELIBERATE ATTEMPT BY THE APPELLANT TO FILE INCORRECT RETURN OF INCOME. THE APPELLANT HAS FAILED TO SUBSTANTIATE IT S EXPLANATION, FAILED TO PROVE THAT ITS EXPLANATION IS BONAFIDE, THEREFORE, THE PENALTY IS CLEARLY LEVIABLE U/S 271(L)(C) AND THE AO IS FULLY JUSTIFIE D IN IMPOSING THE PENALTY. 6.2 AFTER DISTINGUISHING THE DECISION IN CIT VS. RELIA NCE PETROPRODUCTS (P) LTD. (2010) 322 ITR 158 WHERE HON'BLE APEX COURT DECISIO N WAS RENDERED BECAUSE TWO VIEWS WERE POSSIBLE IN THAT CASE, HON'B LE DELHI HIGH COURT VS. ZOOM COMMUNICATION (P) LTD. (2010) 191 TAXMAN 179(D ELHI), HAVE HELD: IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCO ME FO THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSES SEE NEEDS TO BE BONAFIDE. IT IS THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALAFIDE, EXPLANATION 1 TO SECTION 271(1) WOULD COME INTO PLA Y AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. THE COURT CANNOT OVER TOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME TAX RETURNS ARE PICK ED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFF ICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(L) (C) OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BO NAFIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITH OUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETUR N WOULD NOT BE PICKED UP ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 11 OF 21 FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASI S OF SELF ASSESSMENT UNDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR C ASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TAX, WHICH I N ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALAFIDE INTENTION TO EV ADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGAL LY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WO ULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE.'. 6.3 IN VIEW OF THE ABOVE FACTUAL AND LEGAL POSITION SIN CE THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND SINC E THE APPELLANT HAS FAILED TO SUBSTANTIATE ITS EXPLANATION, FAILED TO PROVE TH AT ITS EXPLANATION IS BONAFIDE, THEREFORE, THE AO IS FULLY JUSTIFIED IN I MPOSING THE PENALTY OF RS.60,77,308/- U/S 271(1 )(C) OF THE I. T. ACT, 196 1. 6.4 IN THE CASE OF K. C. BUILDERS, THE HON'BLE SUPREME COURT HAS HELD THAT: 'IT IS IMPLICIT IN THE WORD 'CONCEALED' THAT THERE HAS BEE N A DELIBERATE ACT ON THE PART OF THE ASSESSEE.' 6.5 THERE IS AN INTENTION AND DESIRE ON THE PART O F THE APPELLANT TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. THE APPELLANT HAS CONSCIOUSLY AND FRAUDULENTLY MADE THE CONCEALME NT AND FURNISHED INACCURATE PARTICULARS OF HER INCOME WITH A VIEW TO AVOID IMPOSITION OF TAX. 6.6 IN THE CASE OF CIT VS. GURBACHAN LAL 2001 (DELH I). IT WAS OBSERVED THAT BURDEN ON THE ASSESSEE TO PROVE THERE IS NO CONCEAL MENT. 6.7. IN THE CASE OF B. A. BALASUBRAMANIUM & BROS CO. VS CIT 236 ITR 977 (SC). IT WAS OBSERVED THAT FOR 'THE ASSESSEE TO PROVE THERE IS NO CONCEALMENT'. 6.8. IN THE CASE OF ADDITIONAL CIT VS. JEEVAN LAI SHAH 205 ITR 244 (SC), IT WAS OBSERVED THAT THE BURDEN REMAINS ON THE ASSESSEE, UNLESS DISCHARGED THAT FAILURE TO RETURN CORRECT INCOME DID NOT ARISE FROM FRAUD ON WILLFUL NEGLECT ON HIS PART'. 6.9. IN THE CASE OF CIT V ANWAR ALI (1970) 76 ITR 696 ( SC). IT WAS OBSERVED THAT 'FINDING GIVEN IN THE ASSESSMENT PROCEEDINGS IS A G OOD EVIDENCE'. 6.10. THE APPELLANT HAS FAILED TO PROVE THAT THERE WAS N O CONCEALMENT AND THAT INCORRECT PARTICULARS WERE NOT FILED. 6.11. THE APPELLANT HAS DELIBERATELY FURNISHED INACCURAT E PARTICULARS OF ITS INCOME WITH A VIEW TO CONCEALMENT OF INCOME. THE EXPLANATI ON OF THE APPELLANT IS NOT BONAFIDE. IN VIEW THEREOF, PENALTY OF RS.60,77,308/ -, IMPOSED U/S 271(L)(C) ON CONCEALED INCOME OF RS.3,61,09,972 IS CONFIRMED. TH E GROUND OF APPEAL IS THUS RULED AGAINST THE APPELLANT. 7. AS A RESULT, THE APPEAL IS DISMISSED.' (2.2) AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL IN I NCOME TAX APPELLATE TRIBUNAL ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 12 OF 21 (ITAT, FOR SHORT). DURING THE APPELLATE PROCEEDIN GS IN ITAT, THE ASSESSEE FILED A PAPER BOOK OF CASE LAWS COMPILATION CONSISTING OF TOTAL 188 P AGES, CONTAINING COPIES OF THE FOLLOWING DECIDED CASES: 1. ANANTHARAM VEERASINGHAIAH & CO. VS. CIT, (1980) 123 ITR 0457, SUPREME COURT OF INDIA. 2. TIDEWATER MARINE INTERNATIONAL INC. VS. DCIT, (2005 ) 96 ITD 0406, ITAT DELHI BENCH. 3. ACIT VS. SMT. SURINDER KAUR, (2009) 18 DTR 0038, IT AT LUCKNOW BENCH. 4. CIT VS. M/S METAL & CHROMIUM PLATER (P) LTD., 97 CC H 0080, HIGH COURT OF MADRAS. 5. M/S NEHA HOME BUILDERS (P) LTD., ITA NO. 2964/MUM/2 016, DATED 22.01.2016, ITAT DELHI BENCH. 6. ITO VS. FRIGSALES (INDIA) LTD, (2005) 4 SOT 0376, I TAT MUMBAI BENCH. 7. TRISTAR INTECH (P) LTD. VS. ACIT, (2015) 43 ITR (TR IB) 0279, ITAT DELHI BENCH. 8. SH. NAVNEET JHAMB VS. ACIT, ITA NO. 756/DEL/2016, D ATED 11.07.2016, ITAT DELHI BENCH. 9. CIT VS. DALMIA DYECHEM INDUSTRIES LTD., (2015) 0279 CTR 133, HIGH COURT OF BOMBAY. 10. CIT VS. M/S SSA/S EMERALD MEADOWS, SLP NO. 23272/20 16, DATED 05.08.2016, SUPREME COURT OF INDIA. 11. CIT VS. M/S SSAS EMERALD MEADOWS, ITA NO. 380/2015 , DATED 23.11.2015, HIGH COURT OF KARNATAKA. 12. PR. CIT VS. SMT. BAISETTY REVATHI, ITA NO. 684/2016 , DATED 13.07.2017, HIGH COURT OF ANDHRA PRADESH. 13. ADITYA CHEMICALS LTD. VS. ITO, ITA NO. 5006/DEL/201 3, DATED 21.11.2017, ITAT DELHI BENCH. (2.3) IN ADDITION, THE COPIES OF THE FOLLOWING JUDICIAL P RECEDENTS WERE ALSO FILED FROM ASSESSEES SIDE. ORDER OF COORDINATE BENCH OF ITAT, DELHI BENCH, IN THE CASE OF ACIT VS. M/S PADMINI INFRASTRUCTURE (P) LTD. IN ITA NO. 4065/DEL /2010, ORDER DATED 25/10/2017 FOR ASSESSMENT YEAR 2006-07, ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 13 OF 21 ORDER OF COORDINATE BENCH OF ITAT, DELHI BENCH, IN THE CASE OF MILLENNIUM AUTOMATION & SYSTEMS LTD. VS. DCIT, IN ITA NO. 5698 /DEL/2015, ORDER DATED 10.10.2017 FOR ASSESSMENT YEAR 2011-12, ORDER DATED 27.10.2017 OF CO-ORDINATE BENCH OF ITAT , DELHI BENCH, IN ITA NO.- 5988/DEL/2016 FOR ASSESSMENT YEAR 2006-07, IN THE C ASE OF SANRAJ ENGINEERING PVT. LTD. VS. ITO. ORDER OF COORDINATE BENCH OF ITAT, MUMBAI BENCH, IN THE CASE OF M/S NEHA HOME BUILDERS PVT. LTD. VS. CIT IN ITA NO. 2964/MUM /2016 FOR ASSESSMENT YEAR 2011-12 ORDER OF HONBLE HIGH COURT OF MADRAS IN THE CASE O F CIT VS. M/S METAL & CHROMIUN PLATER (P) LTD. A COPY OF NOTICE DATED 26.09.2008, U/S 274 READ WI TH SECTION 271 OF I.T. ACT, WAS ALSO FILED FROM ASSESSEES SIDE. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT, IN NOTICE U/S 271(1)(C) OF I.T. ACT, THE AO HAD NOT STATED THE SPECIFIC CHARGE AGAINST THE ASSESSEE - WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . FOR THIS PURPOSE, THE LD. COUNSEL FOR ASSESSEE R EFERRED TO THE AFORESAID NOTICE DATED 26.09.2008. THE LD. COUNSEL FOR ASSESSEE ALS O DREW OUR ATTENTION TO ASSESSMENT ORDER DATED 26.09.2008, WHEREIN, ALSO THE AO DID NO T MAKE SPECIFIC CHARGE AGAINST THE ASSESSEE - WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . THE LD. COUNSEL FOR ASSESSEE FURTHER CONTENDED THAT THE QUANTUM ADDITIO N IN RESPECT OF WHICH PENALTY HAS ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 14 OF 21 BEEN LEVIED U/S 271(1)(C) OF I.T. ACT WAS DISPUTABL E AND TWO VIEWS WERE POSSIBLE. THE LD. COUNSEL FOR ASSESSEE SUBMITTED THAT NO PENALTY U/S 271(1)(C) OF I.T. ACT SHOULD BE LEVIED, WHEN TWO VIEWS ARE POSSIBLE - ONE BEING IN FAVOUR OF ASSESSEE AND THE OTHER BEING AGAINST THE ASSESSEE - EVEN IF, THE VIEW FAVO URABLE TO ASSESSEE WAS TAKEN BY THE ASSESSEE; BUT WAS EVENTUALLY NOT ACCEPTED BY AUTHOR ITIES. LD. COUNSEL FOR ASSESSEE TOOK US THROUGH THE VARIOUS JUDICIAL PRECEDENTS REF ERRED TO IN THE AFORESAID PAPER BOOK OF CASE LAWS COMPILATION AND THE OTHER JUDICIAL PRE CEDENTS COPIES WHEREOF WERE FILED DURING APPELLATE PROCEEDINGS IN ITAT. THE LD. DEPA RTMENTAL REPRESENTATIVE (DR, FOR SHORT) SUPPORTED THE ORDER OF THE AO AND THE LD. CI T(A) ALSO PLACED RELIANCE IN THE CASE OF CIT VS. ESCORTS FINANCE LTD. 328 ITR 44 (DELHI). (3) WE HAVE HEARD BOTH SIDES PATIENTLY. WE HAVE PERUS ED ALL MATERIALS ON OUR RECORDS CAREFULLY. WE HAVE CONSIDERED ALL JUDICIAL PRECEDENTS BROUGHT TO OUR ATTENTION BY THE TWO SIDES. WE HAVE ALSO CONSIDERED THE JUDI CIAL PRECEDENTS MENTIONED IN THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT TH E PENALTY PROCEEDINGS U/S 271(1)(C) OF I.T. ACT WERE INITIATED ON TWO COUNTS. ONE OF THE TWO COUNTS WAS THE DISALLOWANCE MADE U/S 80IB(10) OF I.T. ACT UNDER NORMAL PROVISIO NS; AND THE OTHER WAS THE ADDITION MADE UNDER SPECIAL PROVISIONS OF I.T. ACT U/S 115J B OF THE I.T. ACT AS FAR AS COMPUTATION OF BOOK PROFIT IS CONCERNED. THE ASSES SEE SUCCEEDED IN THE APPELLATE PROCEEDINGS, AS FAR AS THE DISALLOWANCE U/S 80IB(10 ) OF I.T. ACT IS CONCERNED. THIS IS READILY INFERRED FROM THE ORDER OF CO-ORDINATE BENC H OF ITAT, DELHI, VIDE AFORESAID ORDER DATED 25/10/2017 IN ITA NO. 4065/DEL/2010 FOR ASSES SMENT YEAR 2006-07 IN ASSESSEES ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 15 OF 21 OWN CASE; THE COPY WHEREOF WAS FILED FROM ASSESSEE S SIDE DURING APPELLATE PROCEEDINGS. THEREFORE, THE ASSESSEES CLAIM U/S 8 0IB OF I.T. ACT HAS BEEN UPHELD BY CO-ORDINATE BENCH OF ITAT, DELHI. THEREFORE, NO PE NALTY U/S 271(1)(C) OF I.T. ACT IS LEVIABLE IN RESPECT OF QUANTUM ADDITIONS UNDER NORM AL PROVISIONS OF INCOME TAX ACT, UNDER WHICH THE AO HAD MADE ADDITION, ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IB OF I.T.ACT. AS FAR AS PENALTY LEVIED IN RESPE CT OF ADDITION MADE UNDER SPECIAL PROVISIONS OF SECTION 115JB OF I.T. ACT IS CONCERNE D; THE MOOT QUESTION WAS WHETHER THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB OF I .T. ACT WAS TO BE ADDED TO ASSESSEES BOOK PROFIT U/S 115JB OF I.T. ACT, OR NO T. THE ASSESSEE TOOK THE VIEW THAT THE AMOUNT OF DEDUCTION CLAIMED U/S 80IB OF I.T. AC T IS NOT TO BE ADDED IN BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF I.T. ACT. THE AO TOOK THE VIEW, ON THE OTHER HAND, THAT THIS AMOUNT IS TO BE ADDED TO BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF I.T. ACT. WHEN THE MATTER WAS CARRIED BY THE ASSESSEE TO THE LD. CIT(A), THROUGH APPEAL FILED BY THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ADDITION MADE TO BOOK PROFIT, AS FAR AS THE AMOUNT OF DEDUCTION U/S 80IB OF I.T. ACT IS CONCERNED. THEREFORE, THE ASSESSEE IS LIABLE TO PAY TAXES IN ACCORDANCE WITH THE QUANT UM ADDITION MADE UNDER SPECIAL PROVISION OF SECTION 115JB OF I.T. ACT. THE QUESTI ON BEFORE US, HOWEVER, IS WHETHER THE ASSESSEE IS ALSO LIABLE FOR PENALTY U/S 271(1)(C) O F I.T. ACT, IN RESPECT OF QUANTUM ADDITION ON ACCOUNT OF ADDITION TO BOOK PROFIT U/S 115JB OF I.T. ACT. (4) THE LD. COUNSEL FOR ASSESSEE HAS FILED COPY OF JUD ICIAL PRECEDENTS IN THE CASE OF M/S NEHA HOME BUILDERS (P) LTD. (SUPRA), IN WHICH V IEW WAS TAKEN THAT THE AMOUNT OF ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 16 OF 21 DEDUCTION U/S 80IB OF I. T. ACT IS NOT TO BE ADDED TO BOOK PROFIT U/S 115JB OF I.T. ACT. THE LD. COUNSEL FOR ASSESSEE ALSO FILED COPY OF JUD ICIAL PRECEDENTS IN THE CASES OF ITO VS. FRIGSALES (INDIA) LTD (SUPRA) [IN WHICH, VIEW WAS TAKEN THAT EXEMPT INCOME U/S 50 WOULD REMAIN EXEMPTED AS PER PROVISIONS OF SECTION 115JA(4) OF I.T. ACT]; AND CIT VS. M/S METAL & CHROMIUM PLATER (P) LTD. (SUPRA) [IN WH ICH, VIEW WAS TAKEN THAT CAPITAL GAINS WHICH FORMED PART OF THE NET PROFIT IN THE PR OFIT AND LOSS ACCOUNT OF THE ASSESSEE COMPANY, BUT WAS EXEMPT U/S 54EC OF I.T. ACT, IS NOT TO BE TAKEN IN ACCOUNT FOR CALCULATION OF BOOKS PROFIT U/S 115JB OF I.T ACT.] IN VIEW OF THESE JUDICIAL PRECEDENTS, WE ARE OF THE VIEW THAT THE ISSUE AS TO WHETHER AMO UNT OF DEDUCTION U/S 80IB OF I.T. ACT IS TO BE INCLUDED AS BOOK PROFIT FOR THE PURPOS E OF SECTION 115JB OF I.T. ACT WAS DISPUTABLE, ON WHICH TWO DIFFERENT VIEWS WERE LEGIT IMATELY POSSIBLE; ONE SUCH VIEW BEING IN FAVOUR OF THE ASSESSEE. (4.1) ON A THE DISPUTABLE ISSUE OF QUANTUM ADDITION, ON W HICH TWO DIFFERENT VIEWS ARE LEGITIMATELY POSSIBLE, OF WHICH THE ONE F AVOURABLE TO THE ASSESSEE HAS BEEN ADOPTED BY THE ASSESSEE; EVENTUALLY, THE A SSESSEE MAY OR MAY NOT SUCCEED IN THE QUANTUM PROCEEDINGS AND THE DISPUTAB LE ISSUE, ON WHICH TWO DIFFERENT VIEWS WERE POSSIBLE, MAY EVENTUALLY BE DE CIDED AGAINST THE ASSESSEE IN QUANTUM PROCEEDINGS. HOWEVER, THE ASSE SSEE CANNOT BE BURDENED WITH PENALTY U/S 271(1)(C) OF I.T. ACT, IF ON A DISPUTABLE ISSUE OF QUANTUM ADDITION, ON WHICH TWO DIFFERENT VIEWS WERE LEGITIMATELY POSSIBLE, THE ASSESSEE DECIDED TO ADOPT THE VIEW WHICH WAS FA VOURABLE TO THE ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 17 OF 21 ASSESSEE; IN A CASE IN WHICH ALL NECESSARY DETAILS WERE FILED BY THE ASSESSEE IN SUPPORT OF THE CLAIM AND WHEN NO MATERIAL INACCU RACIES WERE FOUND IN THESE DETAILS, AND WHEN THE ASSESSEE IS NOT GUILTY OF SUPPRESSION OF ANY MATERIAL FACTS . THUS, IN QUANTUM PROCEEDINGS, WHEN TWO DIFFERENT VIEWS AR E LEGITIMATELY POSSIBLE ON A DISPUTABLE CLAIM MADE BY THE ASSESSEE; ONE OF WHICH IS FAVOURABLE TO THE ASSESSEE, THE MULTIPLICI TY OF LEGITIMATE VIEWS AND DISPUTABILITY OF THE CLAIM HAS THE EFFECT OF EXCLUD ING THE SCOPE OF PENALTY U/S 271(1)(C) OF I.T. ACT IN RESPECT OF SUCH DISPUTABLE CLAIM EVEN IF THE DISPUTABLE CLAIM IS DECIDED AGAINST THE ASSESSEE IN QUANTUM PR OCEEDINGS; BECAUSE IN SUCH A CASE THE DISPUTABLE CLAIM MADE BY THE ASSESS EE NEITHER AMOUNTS TO CONCEALMENT OF PARTICULARS OF INCOME NOR TO FURN ISHING OF INACCURATE PARTICULARS OF INCOME. WE ARE, IN VIEW OF THE FOREGOING, OF THE OPINION THAT THE AO ERRED IN IMPOSING PENALTY U/S 271(1)(C) OF I.T. ACT AND THE LD. CIT(A) ERRED IN UPHOLDING THE LEVY OF THIS PENALTY. FOR COMING TO THIS CONCLUSION, WE TAKE SUPPORT FROM THE JUDICIAL PRECEDENTS IN THE CASES OF CIT VS. REL IANCE PETROPRODUCTS 322 ITR 158(SC) [IN WHICH THE HONBLE APEX COURT HELD THAT MERE MAK ING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, DOES NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS OF INCOME]; CIT VS. SAMURAI TECHNO TRADING (P) LTD. (2 016) 389 ITR 357 [IN WHICH IT WAS HELD THAT MERELY BECAUSE ASSESSEE HAD MADE CERTAIN CLAIMS, WHICH WERE NOT ACCEPTED OR WERE NOT ACCEPTABLE TO REVENUE, THAT DIFFERENCE WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF I.T. ACT]; PCIT VS. TORQUE PHARMACEUTI CALS (2016) 389 ITR 46 [IN WHICH IT WAS HELD THAT MERE DISALLOWANCE OF EXPENDITURE WITH OUT BRINGING ANY ADEQUATE MATERIAL ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 18 OF 21 AGAINST THE ASSESSEE TO PROVE THAT IT HAD CONCEALED THE PARTICULARS OF INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF THE INCOME WOUL D NOT LEAVE TO LEVY OF PENALTY U/S 271(1)(C) OF I.T. ACT]; AND CIT VS. MASTEK LTD. ( 2015) 53 TAXMAN.COM 142 (GUJ.)[IN WHICH IT WAS HELD THAT NO PENALTY IS TO BE LEVIED T O WRONG CLAIM OF DEDUCTION U/S 10A IF THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS]. THE RELIANCE PLACED BY THE LD. DR IN THE CASE OF CIT VS . ESCORTS FINANCE LTD. 328 ITR 44 (DELHI), IS NOT USEFUL TO ADVANCE THE CASE OF REVEN UE BECAUSE IN THE CASE OF CIT VS. ESCORTS FINANCE LTD. (SUPRA), THE FACTS WERE ENTIREL Y DIFFERENT. IN THE CASE OF CIT VS. ESCORTS FINANCE LTD., THE CLAIM MADE BY THE ASSESSEE U/S 35D OF I.T. ACT WAS EX-FACIE BOGUS. IT WAS NOT A CASE WHERE TWO OPINIONS ABOUT THE APPLICABILITY OF THE SECTION 35D WERE POSSIBLE AND IT COULD NOT BE SAID TO BE A CASE OF A BONAFIDE ERROR ON THE PART OF THE ASSESSEE. IN THE CASE BEFORE US, HOWEVER, AS WE HAVE ALREADY HELD EARLIER, TWO LEGITIMATE VIEWS WERE POSSIBLE ON WHETHER THE AMOUN T OF DEDUCTION U/S 80IB OF I.T. ACT IS TO BE INCLUDED AS BOOK PROFIT UNDER SPECIAL PROV ISIONS OF SECTION 115JB OF I.T. ACT. (4.2) IN VIEW OF THE FOREGOING DISCUSSIONS, WE CANCEL TH E PENALTY LEVIED U/S 271(1)(C) OF I.T. ACT BY THE AO AND WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A), WHEREIN THE LD. CIT(A) HAD CONFIRMED THE PENALTY. (5) AS REGARDS THE CONTENTION OF THE LD. COUNSEL FOR AS SESSEE, THAT THE AO DID NOT MAKE SPECIFIC CHARGE AGAINST THE ASSESSEE - WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME; WE FIND FROM PERUSAL OF ORDER DATED 28.03.2012 OF T HE AO, PASSED U/S ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 19 OF 21 271(1)(C) OF I.T. ACT, THAT THE ASSESSEE WAS ISSUED FOUR NOTICES U/S 271(1)(C) OF I.T. ACT, DATED 26.09.2008, 18.01.2012, 06.02.2012 AND 1 4.02.2012. ALTHOUGH COPY OF NOTICE DATED 26.09.2008 HAS BEEN FILED FROM ASSESSE ES SIDE DURING THE APPELLATE PROCEEDINGS IN ITAT, THE COPIES OF THE OTHER THREE NOTICES ARE NOT ON OUR RECORDS. WE ALSO FIND THAT THIS CONTENTION, THAT THE AO DID NOT MAKE THE SPECIFIC CHARGE AGAINST THE ASSESSEE - WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE ITAT AND THIS GROUND WAS NOT TAKEN BY THE ASSESSEE BEFORE LOWER AUTHORITIES, NAMELY AO AND CIT(A). THEREFORE, INFO RMATION REGARDING WHETHER THE SPECIFIC CHARGE AGAINST THE ASSESSEE - WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WAS MADE BY THE AO IN ONE OR MORE OF THE OTHER THRE E NOTICES IS NOT AVAILABLE FROM EITHER THE RECORDS OF THE TRIBUNAL OR FROM PER USAL OF THE ORDERS OF THE LOWER AUTHORITIES AS THIS CONTENTION WAS NOT RAISED BY TH E ASSESSEE BEFORE THE LOWER AUTHORITIES. MOREOVER, WE ALSO FIND THAT IN THE PR ESENT APPEAL IN ITAT, NO SPECIFIC GROUND HAS BEEN TAKEN BY THE ASSESSEE IN RESPECT OF THIS CONTENTION WHICH WAS ADVANCES AT THE TIME OF HEARING BEFORE US. BE THAT AS IT MAY, SINCE WE HAVE ALREADY DELETED THE PENALTY U/S 271(1)(C) OF I.T. ACT, IN T HE FORGOING PART OF THIS ORDER, THIS CONTENTION OF THE LD. COUNSEL FOR ASSESSEE IS MEREL Y ACADEMIC PRESENTLY AND NEED NOT BE ADJUDICATED. WHEN IT IS ALREADY FOUND THAT THE DISPUTABLE CLAIM MADE BY THE ASSESSEE NEITHER AMOUNTS TO CONCEALMENT OF PAR TICULARS OF INCOME NOR TO FURNISHING OF INACCURATE PARTICULARS OF INCOME ; IT IS IMMATERIAL WHETHER ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 20 OF 21 THE ASSESSING OFFICER MADE SPECIFIC CHARGE AGAINST THE ASSESSEE WHETHER THE PENALTY PROCEEDINGS WERE FOR CONCEALMENT OF THE PA RTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . THEREFORE, PRESENTLY WE DECLINE TO EXPRESS AN OPINION ON THIS CONTENTION OF THE LD. COUNSEL FOR ASSESSEE; BECAUSE THIS IS MERELY ANY ACADEMIC ISSUE AT PRESEN T. (5) IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 DAY OF FEBRUARY, 2019. SD/- SD/- (K.N. CHARY) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07.02.2019 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO- 1002/DEL/2014 PADMINI INFRASTRUCTURE DEVELOPERS INDIA LTD. PAGE 21 OF 21 DATE OF DICTATION 29/01/19 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31/01/19 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER