Keystone Developers Pvt. Ltd., New Delhi V. Addl. CIT, Special Range- 5, New Delhi

ITA 2558/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3549 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Rule 8D
• Section: 271(1)(c); 244A; 14A; 201; 274; 73; 11

Judgement Text

1 ITA NO. 2558/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 2558/DEL/20 18 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) KEYSTONE DEVELOPERS PVT. LTD. B-29, SHEIKH SARAI, PHASE-1, NEW DELHI AACCK1431C (APPELLANT) VS ADDL. CIT, SPECIAL RANGE-5, NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 02/01/2018 PASSED BY CIT(A), GHAZIABAD FOR ASSESSMENT YEAR 201 3-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD.CIT(A) -36, HAS ERRED IN LAW AND FACTS B Y CONFIRMING THE LEVY OF PENALTY OF RS.1,48,782/- IMPOSED U/S 271(1)(C) OF T HE ACT BY THE ASSESSING OFFICER . THE ACTION OF THE LD.CIT(A)-36 IS ARBITRARY, UNJUS TIFIED AND AGAINST THE PROVISIONS OF THE LAW. 3. THE ASSESSEE IS ENGAGED IN BUSINESS OF CONSTRUCT ION ACTIVITIES. THE RETURN DECLARING TOTAL INCOME OF RS. 3,28,88,242/- WAS FIL ED ON 25/09/2013. THE APPELLANT BY SH. PRADEEP BATRA, CA RESPONDENT BY SH. VIVEK VARDHAN, SR. DR DATE OF HEARING 07.10.2021 DATE OF PRONOUNCEMENT 14.10.2021 2 ITA NO. 2558/DEL/2018 ASSESSING OFFICER ASSESSED THE INCOME AT RS. 3,34,6 6,490/- AFTER MAKING THE FOLLOWING ADDITIONS:- (I) DISALLOWANCE AMOUNTING TO RS 42,484/- OUT OF VEHICLE RUNNING & MAINTENANCE TRAVELLING AND CONVEYANCE AND DIWALI EXPENSES (II) DISALLOWANCE AMOUNTING TO RS 40,400/- UNDER SECTION 14A READ RULE 8D (III) ADDITION AMOUNTING TO RS. 4,95,941/- ON ACCOUNT OF INTEREST U/S 244A NOT SHOWN IN ITR, DUE TO AN INADVERTENT MISTAKE. THE A SSESSING OFFICER HAS IMPOSED PENALTY OF RS. 1,48,782/- I.E. @ 100% OF TH E TAX ON THE ABOVE ADDITION RELATING TO INTEREST U/S 244A NOT REFLECTED IN ITR U/S 27(1)(C) OF THE ACT. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASS ESSEE. 5. THE LD AR SUBMITTED THAT THE PENALTY NOTICE U/S 274 HAS NOT GIVEN ANY LIMB UNDER WHICH THE PENALTY U/S 271(1)(C) HAS BEEN IMPOSED. THUS, THE PENALTY ORDER ITSELF IS BAD IN LAW. THE LD. AR RELI ED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMER ALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSING OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED. BESIDES THAT THE LD AR SUBMITTED THAT ON MERIT PENALTY HAS BEEN IMPO SED DUE TO IMPUGNED ADDITION RELATING TO INTEREST U/S 244A NOT REFLECTE D IN ITR ON ACCOUNT OF BONAFIDE CLERICAL HUMAN ERROR. THE ASSESSEE HAS NOT SHOWN THE SAME WHICH WAS ONLY DUE TO BONAFIDE INADVERTENT HUMAN ERROR WH ILE PREPARING DATA OF ITR/ TAX AUDIT. THE LD AR RELIED UPON THE DECISION OF TH E HONBLE SUPREME COURT IN CASE OF PRICE WATERHOUSE COOPERS (P.) LTD. VS. CIT, KOLKATA 348 ITR 306 (SC). THE LD. AR RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PRIVATE LIMITED (2011) 11 SC C 762: 322 ITR 158 3 ITA NO. 2558/DEL/2018 WHEREIN IT IS HELD THAT SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF A SSESSEE OR CONCEALMENT. 6. THE LD DR RELIED UPON THE ASSESSMENT ORDER, PENA LTY ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. THE PENALTY NOTICE U/S 274 R.W .S 271(1)(C) DATED 29.03.2016 ALONG WITH ASSESSMENT ORDER HAS NOT MENT IONED THE SPECIFIC LIMB OF SECTION 271(1)(C) AS TO WHETHER THE ASSESSEE FURNIS HED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME. SINCE IN THE INSTAN T CASE THE INAPPROPRIATE WORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, T HE PENALTY U/S 271(1)(C) HAS BEEN INITIATED, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY LEVIED U/S 271(1)(C) IS NOT SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAP PROPRIATE WORDS WILL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DE CISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD M EADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTESTED HEREIN BY THE ASSESSEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONCEALMENT OR THE FURNISHING OF INACCURATE PAR TICULARS, THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN CASE OF M/S. SAHARA IN DIA LIFE INSURANCE COMPANY LTD. (SUPRA) WILL BE APPLICABLE IN THE PRES ENT CASE. THUS, THE PENALTY ORDER ITSELF IS VOID AB INITIO. BESIDES THAT AS HEL D IN THE CASES OF PRICE WATERHOUSE COOPERS (P.) LTD. (SUPRA) AND RELIANCE P ETROPRODUCTS (SUPRA) SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOU NT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF ASSESSEE OR CONCEALMENT. T HUS, THE PENALTY ORDER DOES NOT SURVIVE ON MERIT AS WELL. HENCE, APPEAL OF THE ASSESSEE IS ALLOWED. 4 ITA NO. 2558/DEL/2018 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 14/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI