Continental Infrastructure Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2246/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7064 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Bonafide mistake

Judgement Text

ITA NO. 2246/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2246/DEL/2011 A.Y. : 2006-07 CONTINENTAL INFRASTRUCTURE PRIVATE LIMITED, B-5/9, SAFDARJUNG ENCLAVE, NEW DELHI 110 029 (PAN : AAACC4021E) VS. INCOME TAX OFFICER, WARD 3(4), CR BUILDING, NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. KVSR KRISHNA, CA DEPARTMENT BY : SH. ROHIT GARG, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 17.2.2 011 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER OF ` 2,34,534/-.. 3. IN THIS CASE ASSESSING OFFICER NOTED THAT IT IS EVIDENT FROM THE AIR DATA RECEIVED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS RECEIVED RENT OF ` 6,96,774/- FOR M M/S GATEWAY FOR INDIA AIRPORT P. LTD., BUT THE SAME HAD NOT BEEN SHO WN AS INCOME BY THE ASSESSEE. ON ENQUIRY ASSESSEE SUBMITTED THAT I T WAS ACCOUNTED AS ITA NO. 2246/DEL/2011 2 HOUSING LOAN RECEIVED FROM M/S H.S. DURIA (HUF) WH ICH WAS SAID TO BE MISTAKE OF THE ACCOUNTANT IN THIS REGARD. HOWEVER, ASSESSING OFFICER WAS NOT SATISFIED. HE IMPOSED PENALTY U/S. 271(1) (C) ON THIS ACCOUNT ALSO. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY. HE HELD THAT ASSE SSEES SUBMISSIONS IS NOT SUPPORTED BY ANY EVIDENCE. HE FURTHER HE LD THAT IT WAS ONLY DUE TO EFFORTS MADE BY THE ASSESSING OFFICER THAT T HE RENTAL INCOME COULD BE BROUGHT TO TAX. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. ASSESSEES C OUNSEL SUBMITTED THAT IT WAS DUE TO MISTAKE THAT THE SAID INCOME WAS NOT ACCOUNTED FOR. IT REPRESENTED ONLY 26 DAYS RENT FOR THE MONTH OF M ARCH AND IT WAS A BONAFIDE MISTAKE AND THE ASSESSEE HAD NOT CLAIMED TH E TDS OF ` 1,56,356/- ON THE RENTAL INCOME. HENCE, IT WAS CLA IMED THAT THERE WAS BONAFIDE MISTAKE AND NO PENALTY U/S 271(1)(C) IS LEV IABLE IN THIS REGARD. 6.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULATES THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEA LMENT OF INCOME. IN THIS CASE WE FIND THAT THERE WAS BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE IN NOT ACCOUNTING FOR THE RENTAL INCOME. THIS IS FURTHER SUPPORTED BY THE FACT THAT ASSESSEE HAD NOT CLAIMED THE TDS OF ` ITA NO. 2246/DEL/2011 3 1,56,356/- ON THIS RENTAL RECEIPT. HENCE, WE FIND CONSIDERABLE COGENCY IN THE PLEA THAT THE MISTAKE WAS BONAFIDE AND PENALT Y U/S 271(1)(C) IS NOT LEVIABLE IN THIS REGARD. 7.1 IN THIS REGARD, WE WOULD LIKE TO REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODU CTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER D ATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SH EROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AN D INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQU IREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVE D THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY R EASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 7.2 WE WOULD ALSO LIKE TO REFER THE DECISION OF TH E HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMIN AL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PA RTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE ITA NO. 2246/DEL/2011 4 EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL T HE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AN D PRECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AN D DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/10/2011. SD/- SD/- [ [[ [I.P. BANSAL I.P. BANSAL I.P. BANSAL I.P. BANSAL] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 28/10/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES