M/s. Moderate Leasing & Capital Services Ltd, New Delhi V. DCIT, New Delhi

ITA 1123/DEL/2009

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2712 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 26-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Question of law; Wrong claim; Difference of opinion
• Section: 143(3)

Judgement Text

ITA NO. 1123/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 1123/DEL/2009 A.Y. : 2004-05 M/S MODERATE LEASING & CAPITAL SERVICES LTD., 415, MODI TOWERS, 98, NEHRU PLACE, NEW DELHI 110 019 (PAN:: AAACM6945K) VS. DCIT , CIRCLE 5(1), NEW DELHI (APPELLANT ) (RESPONDENT ) ASSESSEE BY : SH. RAJ KUMAR GUPTA, CA DEPARTMENT BY : SH. T. VASANTHAN, SR. DR DATE OF HEARING: 10-12-2015 DATE OF ORDER : 04-1-2016 ORDER PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, NEW DELH I DATED 03.5.2006 PERTAINING TO ASSESSMENT YEAR 2004-05 ON THE FOLLOW ING GROUNDS:- 1. THAT ON THE FACTS AND IN LAW IMPOSING THE PENAL TY UNDER SECTION 271(1)(C) FOR RS. 50,00,000/- IS TOTALLY WR ONG, UNJUSTIFIED AND ILLEGAL. THE APPELLANT COMPANY HAD NEVER FURNI SHED ANY INACCURATE PARTICULARS AT ANY STAGE OF ASSESSMENT P ROCEEDINGS AS WELL IN PENALTY PROCEEDINGS. AS THE HONBLE ITAT H AS ALREADY ALLOWED THE QUANTUM APPEAL IN FAVOUR OF APPELLANT COMPANY. THE PENALTY IMPOSED U/S. 271(1) BE DELETED IN FULL. ITA NO. 1123/DEL/2009 2 2. THAT THE APPELLANT COMPANY CRAVES LEAVE TO ADD, AMEND, ALTER OR WITHDRAW ANY OF THE GROUND OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSMENT WAS COMPLETED U/S. 143(3) DATED 30.9.2005 AND AO ASSESSED THE INCOME AT RS. 2,44,62,910/- AND PROPOSED THE PENALTY U/S. 271(1)(C) FOR THE FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE TRUE PARTICULARS OF INCOME REGARDING TH E WRONG CLAIM OF CAPITAL LOSS AMOUNTING TO RS. 1,34,06,274/- AS BUSINESS LOSS FOR THE REASONS ENUMERATED IN THE BODY OF THE ASSESSMENT ORDER. AGAINST THE SAID ASSESSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE I MPUGNED ORDER 3.5.2006 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WI TH, IN THE FIRST ROUND ASSESSEE CAME UP BEFORE THE TRIBUNAL IN THE QUANTUM APPEAL WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 2701/D EL/2006 VIDE ORDER DATED 6.3.2009 BY HOLDING THAT THE TRANSACTION WAS ON REV ENUE ACCOUNT AND, THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCT THE L OSS FROM ITS BUSINESS LOSSES. AGAINST THE TRIBUNAL ORDER DATED 6.3.2009, REVENUE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT OF DELHI AT NEW DELHI VIDE ITA N O. 137 OF 2010 WHEREIN THE HONBLE COURT VIDE ITS JUDGMENT DATED 18.11.2011 IN THE CASE OF CIT VS. MODERATE LEASING & CAPITAL SERVICES LTD. HAS ALLOW ED THE APPEAL OF THE REVENUE HOLDING THAT THE SHARES IN QUESTION WERE HE LD AS INVESTMENTS AND LOSS ON THE SALE THEREOF WAS CAPITAL LOSS AND NOT REVENUE LOSS AND SET ASIDE THE ORDER OF THE TRIBUNAL. 2.1 THE AO IN THE PENALTY PROCEEDINGS VIDE HIS OR DER DATED 31.3.2008 HAS IMPOSED THE MINIMUM PENALTY OF RS. 50,00,000/- U/S. 271(1)(C) OF THE I.T. ACT, 1961. LD. CIT(A) IN APPEAL HAS UPHELD THE PENALT Y OF RS. 50,00,000/- VIDE HIS ORDER 2.1.2009. AGGRIEVED, THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE ITAT AND THE ITAT VIDE ORDER DATED 3.6.2009 DELETED THE PENALTY BY HOLDING THAT AS THE ADDITION WHICH FORMS THE BASIS OF IMPOSING OF P ENALTY BY THE AO HAS BEEN DELETED BY THE ITAT IMPUGNED PENALTY AMOUNT IMPOSED BY THE AO AND SUSTAINED BY THE CIT(A) CANNOT SURVIVE AND ACCORDIN GLY THE SAME WAS CANCELLED ITA NO. 1123/DEL/2009 3 AND THE ORDERS OF THE REVENUE AUTHORITIES WERE SET ASIDE. AGGRIEVED WITH THE TRIBUNAL ORDER DATED 3.6.2009, THE REVENUE PREFERRE D AN APPEAL NO. 440/2010 IN THE CASE OF CIT VS. MODERATE LEASING & CAPITAL S ERVICES LTD. VIDE ORDER DATED 6.2.2012 HAS ADJUDICATED THE ISSUE OF PENALTY AS UN DER:- LD. COUNSEL FOR THE PARTIES ADMIT THAT AN ORDER OF REMIT IS REQUIRED TO BE PASSED IN THE PRESENT CASE AS THE O RDER OF THE TRIBUNAL IN THE QUANTUM PROCEEDINGS HAS BEEN SET ASIDE BY THIS COURT IN JUDGMENT DATED 18.11.2011 PASSED IN CIT-II VS. MODERATE LEAVING AND CAPITAL SERVICES LTD. FOR ASS ESSMENT YEAR 2004-05. IN VIEW OF THE STATEMENT MADE BY THE COUNSEL FOR TH E PARTIES, FOLLOWING SUBSTANTIAL QUESTION OF LAW IS FRAMED:- WHETHER THE INCOME TAX APPELLATE TRIBUNAL WAS RIGH T IN DELETING PENALTY UNDER SECTION 271(1)(C) OF THE INC OME TAX ACT, 1961 IN VIEW OF THE ORDER PASSED IN QUANTUM PROCEED INGS?? THE AFORESAID QUESTION OF LAW IS ACCORDINGLY ANSWER ED IN NEGATIVE I.E. IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ORDER OF REMIT IS PASSED AND TRIBUNAL WI LL DECIDE THE PLEA OF RESPONDENT ASSESSEE ON MERITS. IT IS CLARIFIED THAT WE HAVE NOT EXPRESSED ANY OPINION ON THE MERITS. 3. PURSUANT TO THE ABOVE DIRECTIONS OF THE HONBLE HIGH COURT OF DELHI, THE APPEAL OF PENALTY OF THE ASSESSEE HAS BEEN RE-FIXED BEFORE THE TRIBUNAL TO DECIDE THE SAME ON MERITS. 4. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE HAS FILED A PAPER BOOK-I CONTAINING PAGES 1 TO 31 HAVING THE COPY OF THE ASSESSMENT ORDER U/S. 143(3) DATED 30.9.2005; COPY OF THE LD. CIT(A) OR DER DATED 3.5.2006 (QUANTUM); COPY OF HONBLE HIGH COURT OF DELHI ORD ER DATED 18.11.2011 (QUANTUM); ITAT ORDER DATED 3.6.2009 (PENALTY) AND THE HONBLE HIGH COURT OF ITA NO. 1123/DEL/2009 4 DELHI ORDER DATED 6.2.2012 (PENALTY). HE ALSO FIL ED THE COPY OF THE BRIEF SYNOPSIS AND FIRSTLY STATED THAT NO PENALTY ON DEB ATABLE ISSUE AND IN A CASE OF DIFFERENCE OF OPINION; CLAIM MADE BY THE ASSESSEE I S BONAFIDELY; ALL RELEVANT FACTS AND INFORMATION CORRECTLY SUPPLIED AND AMOUN T CLAIMED UNDER ONE HEAD BUT ASSESSED UNDER A DIFFERENT HEAD IS NOT CONCEALM ENT AND LASTLY SUBMITTED THAT IN THE ABSENCE OF STRIKING OUT THE IRRELEVANT PORTION ON THE PRINTING SCN, THE SPECIFIC CHARGE REMAINS UN-SPECIFIED WHICH MEAN S THE SCN IS INVALID AND UN-SUSTAINABLE. IN ORDER TO SUPPORT HIS AFORESAID S UBMISSIONS, HE REFERRED PLETHORA OF JUDGMENTS ON EACH POINT AND REQUESTED T HAT THE PENALTY IN DISPUTE MAY BE DELETED. 5. LD. DEPARTMENTAL REPRESENTATIVE CONTROVERTED T HE ARGUMENTS ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE AND HE RELIED UP ON THE ORDERS OF THE REVENUE AUTHORITIES AND STATED THAT SINCE THE HONBLE HIGH COURT OF DELHI VIDE ITS ORDER DATED 18.11.2011 IN QUANTUM APPEAL HAS ALLOW ED THE APPEAL IN FAVOR OF THE REVENUE AND AGAINST THE ASSESSEE HOLDING THAT T HE SHARES IN QUESTION WERE HELD AS INVESTMENTS AND LOSS ON THE SALE THEREOF WA S CAPITAL LOSS AND NOT REVENUE LOSS AND IMPUGNED ORDER OF THE TRIBUNAL WAS SET ASIDE, HENCE, THE PENALTY IN DISPUTE MAY BE SUSTAINED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES, SUBMISSIONS MADE BY BOTH THE PARTIES AND THE CASE LAWS RELIED UPON BY THE ASSESSEES COUNSEL THROUGH HIS BRIEF SYNOPSIS. WE FIND THAT EARLIER PENALTY WAS DELETED BY THE ITAT VIDE ORDER DATED 3.6.2009, AS CONSEQUENTIAL TO DELETION OF QUANTUM BY ITAT. HOWE VER, THE HONBLE HIGH COURT OF DELHI, IN PENALTY APPEAL, RESTORED BACK T O ITAT FOR DECIDING ON MERITS, AS THE QUANTUM WAS SUSTAINED BY THE HONBLE HIGH COURT. 6.1 WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF THE LD. DR THAT SINCE THE QUANTUM APPEAL HAS BEEN DECIDED BY THE HIGH COU RT OF DELHI IN FAVOUR OF THE REVENUE, THE PENALTY MAY BE SUSTAINED. BECAUSE THE MERE FACT THAT AN ADDITION IS CONFIRMED IN QUANTUM PROCEEDINGS CANNOT BE CONCLUSIVE OF THE ITA NO. 1123/DEL/2009 5 IMPOSITION OF PENALTY. THE HONBLE CALCUTTA HIGH C OURT IN DURGA KAMAL RICE MILL VS. CIT (2004) 265 ITR 25 (CAL), HAS HELD THAT QUANTUM PROCEEDINGS ARE DIFFERENT FROM PENALTY PROCEEDINGS. 6.2 HOWEVER, WE FIND FORCE IN THE ASSESSEES COUNSE L SUBMISSIONS THAT THE CLAIM OF THE ASSESSEE IS BONAFIDELY, BECAUSE THE SH ARES OF SBEC SUGAR LTD. WERE SOLD FROM WHICH BROUGHT THE SAID LOSS. IT WAS ALSO SUBMITTED BEFORE US THAT THE PART SHARES OUT OF TOTAL SHARES OF SBEC SU GAR LTD. WERE SOLD IN EARLIER YEAR AY 2003-04, RESULTED INTO LOSS OF RS. 46.35 LA CS WHICH WAS CLAIMED IN AY 2003-04 AS A REVENUE LOSS AND WAS ALLOWED. ACCORDIN GLY, IN AY 2004-05 ALSO, ASSESSEE BONAFIDELY CLAIMED THE LOSS AS A REVENUE L OSS. HE SUBMITTED THIS ALSO SHOWS THAT THE CLAIM WAS TOTALLY BONAFIDELY, BUT T HE TRIBUNAL WAS ALSO OF THE VIEW THAT THE SAID IS CAPITAL LOSS. FROM THE ABO VE, IT IS ESTABLISHED THAT SINCE THE CLAIM MADE BONAFIDELY, BUT DISALLOWED IS NOT A SITUATION OF CONCEALMENT OF INCOME. TO SUPPORT THIS VIEW, WE DRAW SUPPORT FR OM THE DECISION OF THE HON'BLE CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2 010) 322 ITR-158 (SC) WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT 'WHERE THERE IS NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVI TING THE PENALTY U/SEC. 271(1)(C) OF THE ACT. A MERE MAKING A CLAIM, WHICH IS NOT SUS TAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT OF FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO FURNISHING A INACCURATE PARTICULARS OF INCOME. AS THE ASSESSEE H AS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WH ICH DETAILS, IN THEMSELVES, WERE ITA NO. 1123/DEL/2009 6 NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS T HE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT IT S CLAIM IN THE RETURN OR NOT. MERELY, BECAUSE THE ASSESSEE HAD CLAIMED THE EXPEND ITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY U/SEC. 271(1)(C). IF W E ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAI M MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/SEC. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF TH E LEGISLATURE'. 6.3 MOREOVER, WE ALSO FIND THAT IN THIS CASE ALL TH E RELEVANT FACTS AND INFORMATION CORRECTLY SUPPLIED AMOUNT. IN THIS CAS E THE ASSESSEE HAS CLAIMED REVENUE LOSS BONAFIDELY. THE LOSS HAS BEEN ACCEPTE D AS IT IS BUT ONLY AS A CAPITAL LOSS. NON-ACCEPTANCE OF A CLAIM BONAFIDELY MADE UNDER ONE HEAD BUT ASSESSED UNDER DIFFERENT HEAD IS NOT A SITUATION OF CONCEALMENT OF INCOME. IN THIS REGARD, WE DRAW SUPPORT FROM THE DECISION IN THE CASE OF HMA UDYOG (P) LTD. 211 CTR (DEL.) 543, WHERE IT EXPENSES CLAIMED AS REVENUE EXPENSES BUT HELD AS CAPITAL EXPENSES. IT HAS BEEN HELD TO BE A CASE OF DEBATABLE ISSUE AND NO PENALTY U/S. 271(1)(C) OF THE I.T. ACT. 7. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS O F INCOME OR CONCEALED THE INCOME AND THERE ARE NO FINDINGS OF THE ASSESSING O FFICER AND THE CIT (APPEALS) THAT THE DETAILS FURNISHED BY THE ASSESSEE IN HIS R ETURN ARE FOUND TO BE ITA NO. 1123/DEL/2009 7 INACCURATE OR ERRONEOUS OR FALSE. UNDER THESE CIRC UMSTANCES, IN OUR VIEW THE PENALTY IN DISPUTE IS TOTALLY UNWARRANTED AND DESER VE TO BE DELETED. ACCORDINGLY, WE DELETE THE PENALTY OF RS. 50,00,000 /- MADE U/S. 271(1)(C) OF THE I.T. ACT AND CANCEL THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/1/2016. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 04-1-2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR