M/s. First City Publications Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2250/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65241 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S AHLAWAT
• Keywords: Depreciation; Wrong claim
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.D. RANJAN ITA NO. 2250/DEL/12 A.YR. 2006-07 M/S FIRST CITY PUBLICATIONS PVT. LTD. VS. INCOME-T AX OFFICER, 10, RAJDOOT MARG, CHANAKYAPURI, COY. WARD-11(2), NEW DELHI. NEW DELHI. PAN: AAACF-1805-H ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI GAUTAM JAIN CA RESPONDENT BY : SHRI J.S. AHLAWAT SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER D ATED 24-02-2012, CHALLENGING THE SUSTENANCE OF PENALTY LEVIED U/S 27 1(1)(C) OF THE INCOME-TAX ACT, 1961, RELATING TO A.YR. 2006-07. 2. BRIEF FACTS ARE: ASSESSEE FILED RETURN DECLARING INCOME OF RS. 7,29,554/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS, ASSESSING OFFICER FOUND THAT AN AMOUNT OF RS. 7,55,653/- WAS DEBITED UNDER THE HEAD LOSS ON SALE OF OLD COMPUTERS AND RS. 22,718 /- UNDER THE HEAD LOSS ON SALE OF OLD PAINTINGS. BOTH THESE ITEMS W ERE DEBITED AS INDIRECT EXPENSES IN ITS P&L A/C. ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ACCEPTED THAT THE AMOUNTS WERE DEBITED BY WAY OF MISTAKE AND WERE OFFERED TO BE ADDED BACK AS INCOME. ITA 2250/DEL/12 FIRST CITY PUBLICATIONS P. LTD. 2 ASSESSING OFFICER FRAMED THE ASSESSMENT ACCORDINGL Y AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 2.1. DURING THE COURSE OF PENALTY PROCEEDINGS IT WA S PLEADED THAT: (I) CLAIM WAS INADVERTENT MISTAKE, ALTHOUGH PARTICU LARS IN BEHALF OF ASSETS ALONG WITH SALE OF OLD COMPUTERS AND PAIN TS WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. (II) A BONA FIDE INADVERTENT ERROR CANNOT BE A BASI S FOR IMPOSITION OF PENALTY AS THE SAME CANNOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. 2.2. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEELS LTD. VS. STATE OF ORISSA 8 3 ITR 26. VARIOUS OTHER CASE LAWS WERE ALSO RELIED ON. ASSESSING OFFICER , HOWEVER, IMPOSED PENALTY OF RS. 2,62,000/- U/S 271(1)(C) OF THE ACT. 2.3. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE ASSESSEE PLACED RELIANCE ON HONBLE SUPREME COURT JUDGMENT IN THE C ASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) A ND OTHER JUDGMENTS WHICH ARE MENTIONED IN THE ORDER OF CIT(A). CIT(A ), HOWEVER, RELIED ON HONBLE DELHI HIGH COURT JUDGMENTS IN THE CASES OF CIT VS. ESCORTS FINANCE PVT. LTD. 183 TAXMAN 453; AND CIT VS. ZOOM COMMUNICATION PVT. LTD. 191 TAXMAN 179 (DEL.). IT WAS HELD THAT CAPITA L LOSS WAS CLAIMED AS REVENUE LOSS TO DEFRAUD THE INTEREST OF REVENUE AND THE INCOME WAS OFFERED TO TAX ONLY WHEN IT WAS FOUND DURING THE COURSE OF SCR UTINY ASSESSMENT. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT ALL THE RELEVANT PARTICULARS ABOUT THE FIXED ASSETS, DEPRECIATION, S ALE AND PURCHASE OF NEW ITA 2250/DEL/12 FIRST CITY PUBLICATIONS P. LTD. 3 ASSETS HAVE BEEN FULLY DESCRIBED IN THE RELEVANT ST ATEMENTS WHICH ARE ALL FILED DURING THE COURSE OF RETURN AND ASSESSMENT PROCEEDI NGS. ASSESSING OFFICER POINTED OUT THIS AMOUNT ONLY ON THE BASIS OF THIS V ARIATION. HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA ) HAS SQUARELY HELD THAT IF THE DETAILS ARE FURNISHED BY ASSESSEE IN THE RETURN OF INCOME, IN SUBSEQUENT DISPUTE ABOUT LEGAL CLAIM CANNOT BE CONSIDERED CONC EALMENT OF INCOME. FURTHER RELIANCE IS PLACED ON HONBLE PUNJAB & HARY ANA HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. SIDHARTHA ENTERPRIS ES 322 ITR 80 (P&H), WHICH HAS CONSIDERED THE JUDGMENT OF HONBLE SUPRE ME COURT IN DHARMENDRA TEXTILE 306 ITR 277, AS REPRODUCED BELOW : WE ARE UNABLE TO ACCEPT THE SUBMISSION. THE JUDGME NT OF THE HONBLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PAR TICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HA S BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINA L LIABILITY UNDER SECTION 276C AND PENALTY UNDER SECTION 271(1) (C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TRIAL O F A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHAN GE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ONL Y WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A MER E MISTAKE, THIS BEING THE POSITION, THE FINDING HAVING BEEN RE CORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPTS TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE . 3.1. AS SOON AS THE MISTAKE WAS POINTED OUT BY THE ASSESSING OFFICER , ASSESSEE HAS AGREED TO. ASSESSING OFFICER HAS REC ORDED THE STATEMENT OF THE ASSESSEE THAT THE AMOUNT WAS MISTAKENLY CLAIMED IN P&L A/C. THIS HAS NOT BEEN REFUTED BY THE ASSESSING OFFICER IN THE ASSES SMENT ORDER. ITA 2250/DEL/12 FIRST CITY PUBLICATIONS P. LTD. 4 3.2. IT IS NOT A CASE OF EX FACIE WRONG CLAIM. THE COMPANY FUNCTIONS ON THE BASIS OF PROFESSIONAL ADVICE. THE ACCOUNTS ARE AUDI TED BY THE CHARTERED ACCOUNTANTS AND THE RETURN IS PREPARED BY THEM. THE MISTAKES IN QUESTION ARE NOT FROM ASSESSEES SIDE BUT ON THE BASIS OF ACCOU NTING STATEMENT PREPARED BY THE QUALIFIED CHARTERED ACCOUNTANTS AND RETURN P REPARED BY THEM, THE SAME WAS FILED. THEREFORE, IT CANNOT BE CALLED A DELIBER ATE MISTAKE TO DEFRAUD THE INTEREST OF REVENUE INASMUCH AS ALL THE PRIMARY FAC TS WERE DISCLOSED IN THE ACCOUNT ACCOUNTING STATEMENT IN THE RETURN OF INCOM E. THE ASSESSEES CASE IS COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA); AND THAT OF HONBL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF SIDHARTHA ENTERPRISES (SUPRA). IT IS TRITE LAW, LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN S TEELS LTD. (SUPRA) THAT PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO AND TECHNICAL AND VENIAL BREACH SHOULD NOT BE VISITED W ITH CONCEALMENT PENALTY. RETURN FILED ON THE BASIS OF PROFESSIONAL ADVICE GI VING ALL THE PARTICULARS IS EXPLAINED BY ASSESSEE. SUBSEQUENT QUESTION ABOUT AL LOWABILITY OF A CLAIM IN THE HEAD OF INCOME CANNOT BE CALLED EX FACIE BOGUS CLAIM. PENALTY SHOULD BE DELETED. 4. LD. DR, ON THE OTHER HAND, SUPPORTS THE ORDER OF ASSESSING OFFICER AND RELIED ON THE JUDGMENTS OF HONBLE DELHI HIGH C OURT IN THE CASES OF ESCORTS FINANCE PVT. LTD. (SUPRA); AND ZOOM COMMU NICATION PVT. LTD. (SUPRA). 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS FACTS EMERGE, ASSE SSING OFFICER IN HIS ASSESSMENT ORDER HAS RECORDED THE ASSESSEES STATEM ENT ABOUT THE OFFERING OF THIS AMOUNT TO TAX. CLAIM OF THE ASSESSEE HAS NOT BEEN REFUTED OR CLAIMED TO BE BOGUS OR ONE TO DEFRAUD THE REVENUE. ACCOUNTS AR E PREPARED BY CHARTERED ITA 2250/DEL/12 FIRST CITY PUBLICATIONS P. LTD. 5 ACCOUNTANTS AND THE ITEMS OF REVENUE OR CAPITAL ARE ACCORDINGLY IDENTIFIED; DEPRECIATION CHARTS AND SCHEDULE OF ASSETS; ADDITIO N AND DELETION THEREOF IS IDENTIFIABLE BY THE CHARTERED ACCOUNTANT. THE ASSES SEE GOT HIS ACCOUNTS AUDITED AND FILED RETURN OF INCOME ON THE BASIS OF PROFESSIONAL HELP, HA SNOT BEEN DISPUTED. IN VIEW OF THESE FACTS, WE HAVE TO A SCERTAIN WHETHER THE CLAIM OF THE ASSESSEE WAS EX FACIE ILLEGAL. ALL RELEVANT PARTICULARS WERE FILED ALONG WITH THE RETURN OF INCOME AND THE CLAIM WAS BY WAY OF AN ADVERTENT MISTAKE. IN OUR VIEW, LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE ASSESSEE HAS FILED ALL THE PARTICULARS OF INCOME, D EPRECIATION, ACQUISITION AND SALE OF FIXED ASSETS CHART, IT CANNOT BE HELD THAT THE ASSESSEE HAS NOT DISCLOSED RELEVANT DETAILS IN THE RETURN OF INCOME. BESIDES, NOTHING HAS BEEN BROUGHT TO OUR NOTICE THAT THE CLAIM WAS BOGUS OR I NADVERTENT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, FOLLOWING HONBLE SU PREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SU PRA), WE ARE INCLINED TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09-08-2012. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09-08-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 2250/DEL/12 FIRST CITY PUBLICATIONS P. LTD. 6