M/s Mac Overseas Pvt. Ltd, New Delhi V. ITO, New Delhi

ITA 1560/DEL/2011

• Counselvise Citation: 156020114 RSA 2011
• Duration Of Justice: 4 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-11-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 31-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Business income; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1560/DEL/2011 ASSESSMENT YEAR: 2004-05 M/S MAC OVERSEAS PVT. LTD., VS. ITO, WARD 6(1), D-193, OKHLA INDUSTRIAL AREA, CR BUILDING, PHASE-I, NEW DELHI 20 NEW DELHI (PAN: AADCM1175E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL MATHUR, A.R. REVENUE BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING ON : 26/11/2015 ORDER PRONOUNCED ON : 01/12/20 15 PER H.S. SIDHU, JM ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 13.12.2010 PASSED BY THE LD. CIT(A), NEW DELHI RELA TING TO ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS:- 1. THE ORDER IS BAD IN LAW, AS IT HAS BEEN PASS ED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE PENAL TY U/S. 271(1)(C) LEVIED BY THE AO. 3. THE APPELLANT MAY BE PERMITTED TO ADD, ALTER OR AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 WAS COMPLETED ON 8.12.2006, AT AN INCOME OF RS. 14,96,270/- AGAINST THE RETURNED INCO ME AT NIL (BY SETTING OFF THE B/F BUSINESS LOSSES). PENALTY PROC EEDINGS U/S. 271(1)(C) WERE INITIATED BY ISSUING NOTICE DATED 8.12.2006 U/ S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 AND ASSESSE E WAS ASKED TO SHOW CAUSE AS TO WHY THE PENALTY INITIATED MAY NOT BE IMPOSED. HE OBSERVED THAT ASSESSEE DID NOT FILE ANY REPLY. HE FURTHER OBSERVED THAT IT IS APPARENT THAT THE ASSESSEE HAS NOTHING TO STA TE IN THE MATTER. THEREFORE, THE PROCEEDINGS ARE BEING COMPLETED ON T HE BASIS OF THE MATERIAL AVAILABLE ON THE RECORD. HE FURTHER OBSERV ED THAT THE ASSESSEE CATEGORIZED ITS RENTAL AND HIRING CHARGES UNDER THE HEAD BUSINESS INCOME AND CLAIMED SUCH EXPENSES TO WHICH THE ASSESSEE WAS NOT ELIGIBLE. IN THE ASSESSMENT ORDER, THE AO R EGROUPED THE INCOMES AND DISALLOWED THE INELIGIBLE EXPENSES. I N LIGHT OF THE ABOVE, ALL, AO WAS SATISFIED THAT THE ASSESSEE FURNISHED I NACCURATE PARTICULARS OF ITS INCOME IN ITS RETURN OF INCOME , HENCE, IN VIEW OF EXPLANATION 1 TO SECTION 271(1), HE WAS SATISFIED T HAT PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IS IM POSABLE IN THIS CASE AND ACCORDINGLY, IMPOSED THE PENALTY OF RS. 5,06,1 00/- U/S. 271(1)(C) OF THE I.T. ACT, 1961 VIDE HIS ORDER DATED 31.3.200 9. 3. AGAINST THE ABOVE PENALTY ORDER DATED 31.3.2009 PASSED BY THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 13.12.2010 DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT SINCE THE QUANTUM APPEAL HAS BEEN DISMISSED BY THE ITAT, HE HAS NO HESITATIO N IN DISMISSING THE PRESENT APPEAL FILED BY THE APPELLANT U/S. 271( 1)(C) OF THE ACT. 4. AGAINST THE ABOVE ORDER OF THE LD. CIT(A) DATED 13.12.2010, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3 5. LD. AR STATED THAT LD. CIT(A) HAS PASSED THE OR DER IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE, HENCE T HE ACTION OF CONFIRMING THE PENALTY U/S. 271(1)(C) MAY BE QUASHE D. 6. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT DURING THE PENALTY PROCEEDINGS, THE AO VIDE PARA NO. 3 TO 4 HA S OBSERVED AS UNDER:- 3. VIDE NOTICE DATED 5.3.2009, THE ASSESSEE DID N OT FILE ANY REPLY. IT IS APPARENT THAT THE ASSESSEE HAS NOT HING TO STATE IN THE MATTER. THEREFORE, THE PROCEEDINGS ARE BEING COMPLETED ON THE BASIS OF MATERIAL AVAILABLE ON THE RECORD. 4. THE ASSESSEE CATEGORIZED ITS RENTAL AND HIRING CHARGES UNDER THE HEAD BUSINESS INCOME AND CLAIMED SUCH EXPENSES TO WHICH THE ASSESSEE WAS NOT ELIGIBLE. I N THE ASSESSMENT ORDER, THE AO REGROUPED THE INCOMES AND DISALLOWED THE INELIGIBLE EXPENSES. IN LIGHT OF THE ABOVE ALL, I AM SATISFIED THAT IN THIS CASE, THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME IN ITS RETURN OF INCOME. KEEPING IN VIEW THE ABOVE FACTS AND HENCE IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C), I AM SATISFIED THAT PENALTY UNDE R SECTION 27(1)(C) OF THE INCOME TAX ACT, 1961 IS IMPOSABLE IN THIS CASE. 4 7.1 WE FURTHER FIND THAT LD. CIT(A) HAS ADJUDICATED THE PENALTY IN DISPUTE VIDE PARA NO. 5.0 TO 6.0 IN HIS IMPUGNED O RDER, WHICH READ AS UNDER:- 5.0 DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE, THE LD. AR FILED A LETTER STATING THAT THE ASSESSEE HAD FILED AN APPEAL BEFORE THE HONBLE ITAT AGAINST THE ORDER PASSED U/S. 143(3) WHICH STOOD CONFIRMED BY THE CIT(A). NOTICE IN RESPECT OF HEARING OF APPEAL FROM ITAT WAS NOT RECEIVED BY THE APPELLANT AND THE APPEAL WAS DISMISSED BY THE HONBLE ITAT. 5.1 SINCE THE QUANTUM APPEAL HAS BEEN DISMISSED BY THE HONBLE ITAT, I HAVE NO HESITATION IN DISMISSING THE PRESENT APPEAL FILED BY THE APPELLANT U/S. 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL IS DISMISSED. 8. AFTER PERUSING THE FINDING OF THE AO MADE IN HIS PENALTY ORDER AS WELL AS FINDING IN IMPUGNED ORDER OF THE LD. CIT(A) , WE ARE NOT IN AGREEMENT WITH THE FINDING OF THE LD. CIT(A), BECAU SE THE MERE FACT THAT AN ADDITION IS CONFIRMED IN QUANTUM PROCEEDING S CANNOT BE CONCLUSIVE OF THE IMPOSITION OF PENALTY. THE HONB LE CALCUTTA HIGH COURT IN DURGA KAMAL RICE MILL VS. CIT (2004) 265 ITR 25 (CA L), HAS HELD THAT QUANTUM PROCEEDINGS ARE DIFFERENT FROM PE NALTY PROCEEDINGS. THE HONBLE KERALA HIGH COURT IN CIT VS. P.K. NARAYANAN (1999) 238 ITR 905 (KER.) , HAS HELD THAT DESPITE THE ADDITION BEING CONFIRME D BY THE TRIBUNAL IN QUANTUM PROCEEDINGS, THE PENALTY CA N STILL BE DELETED BY THE TRIBUNAL, IF THE FACTS JUSTIFY. 8.1 WE FURTHER FIND THAT AO OBSERVED THAT ASSESSEE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND IS LIABLE FOR PENALTY U/S 5 271(1)(C), WHICH DID NOT ESTABLISH THAT HOW THE ASS ESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IN OUR VIEW, AS REGARDS THE FURNISHING OF INACCURATE PARTICULARS, NO INFORMATIO N GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. WE FURTHER FIND THAT SECTION 271(1)(C) POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN THIS REGARD, WE DRAW OUR SUPPORT FROM THE DECISION OF THE HON'BLE C IT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR-158 (SC) WHE REIN THE HON'BLE SUPREME COURT HAS HELD THAT 'WHERE THERE IS NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE ISNO QUESTION OF INVITING THE PENALTY U/SEC. 271(1)(C) OF THE ACT. A MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT OF FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO FURNISHING A INACCURATE PARTICULAR S OF INCOME. AS THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS 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 REVEN UE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY U/SE C. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFF ICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/SEC. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE'. 8.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENTS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HA S NOT FURNISHED INACCURATE PARTICULARS OF INCOME AND THERE ARE NO F INDINGS OF THE ASSESSING OFFICER AND THE CIT (APPEALS) THAT THE DE TAILS FURNISHED BY 6 THE ASSESSEE IN HIS RETURN ARE FOUND TO BE INACCURA TE OR ERRONEOUS OR FALSE. UNDER THESE CIRCUMSTANCES, IN OUR VIEW THE P ENALTY IN DISPUTE IS TOTALLY UNWARRANTED AND DESERVE TO BE DELETED. ACC ORDINGLY, WE DELETE THE PENALTY OF RS. 5,06,100/- MADE U/S. 271(1)(C) O F THE I.T. ACT AND QUASHED THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE IN DISPUTE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 01/12/2015 . SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/12/2015 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES