Capital Plastics, New Delhi V. ITO, New Delhi

ITA 2479/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53093 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 25-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GOPAL SHARMA ACCOUNTANT
• Keywords: Bonafide belief

Judgement Text

ITA NO. 2479/DEL/2010 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. 2479/DEL/2010 A.Y. : 2001-02 CAPITAL PLASTICS, D-1004, NEW FRIENDS COLONY, NEW DELHI 110 065 (PAN : AAAFC6286G) VS. INCOME TAX OFFICER, WARD 22(3), NEW DELHI - 110002 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. GOPAL SHARMA, ACCOUNTANT 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 05.2.2 010 PERTAINING TO ASSESSMENT YEAR 2001-02. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED U/ S. 271(1)(C) AMOUNTING TO ` 1,31,296/- 3. IN THIS CASE ADDITION WAS MADE AMOUNTING TO ` 12 ,21,148/-. THIS REPRESENTED ADVANCE TAKEN FOR SUPPLY OF GOODS FROM S EVEN PARTIES. THE ADDITION WAS MADE FOR LACK OF CONFIRMATION. TH E MATTER TRAVELLED TO THE ITAT AND THE ITAT CONFIRMED THE ADDITION FO R ADVANCES RELATING TO A.Y. 2001-02 AMOUNTING TO ` 334942/-. ON THIS AM OUNT PENALTY U/S 271(1)(C) AMOUNTING TO ` 1,31,296/- WAS IMPOSED. ITA NO. 2479/DEL/2010 2 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE PENALTY. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT SECTION 271(1)(C) OF THE INCOME TAX ACT POSTULATES THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULAR S OR CONCEALMENT OF INCOME. IN THIS CASE THE ADDITION WAS MADE FOR ADV ANCE RECEIVED FOR SUPPLY OF GOODS AS THE CONFIRMATION FROM THE PARTIES WERE NOT RECEIVED. WE FIND THAT FAILURE TO FURNISH THE CONF IRMATION HAS ALREADY RESULTED IN ADDITION OF THE IMPUGNED AMOUNT. HAD THE CONFIRMATION BEEN GIVEN, THERE WOULD HAVE BEEN NO ADDITION AT A LL. IN OUR CONSIDERED OPINION, THE ACTION OF THE ASSESSEE IS N OT CONTUMACIOUS SO AS TO WARRANT THE LEVY OF PENALTY U/S 271(1)(C). 7. 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 ITA NO. 2479/DEL/2010 3 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. 7.1 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 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 ITA NO. 2479/DEL/2010 4 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 04/11/2011. 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 04/11/2011 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