Century Metal Recycling Private Ltd., New Delhi V. DCIT, New Delhi

ITA 3212/DEL/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7357 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHA KUMARI
• Assessee Lawyers: GS AGARWAL CHAIRMAN; DEEPAK GOEL
• Keywords: Principle of natural justice; Bonafide belief; Wrong claim
• Section: 143(3)

Judgement Text

ITA NO. 3212/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3212/DEL/2014 A.Y. : 2007-08 CENTURY METAL RECYCLING PVT. LTD., F-170B, WESTERN AVENUE, SAINIK FARMS, NEW DELHI 110 070 (PAN: AAACB3682J) VS. DCIT, CIRCLE - 3(1), 3 RD FLOOR, CR BUILDING, NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. GS AGARWAL (CHAIRMAN) AND SH. DEEPAK GOEL, CA DEPARTMENT BY : MS. SUDHA KUMARI, CIT(DR) DATE OF HEARING: 02 DATE OF HEARING: 02 DATE OF HEARING: 02 DATE OF HEARING: 02- -- -9 99 9- -- -2014 2014 2014 2014 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 05 0505 05- -- -9 99 9- -- -2014 2014 2014 2014 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU, H.S. SIDHU, H.S. SIDHU, H.S. SIDHU, J JJ JM MM M THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, NEW DEL HI DATED 25.4.2014 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED SO MANY GROUNDS CHALLENGI NG THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) DATED 25.4. 2014 WHEREIN HE HAS CONFIRMED THE PENALTY OF RS. 8,05,000/- LEVIED U/S. 271(1)(C) OF THE I.T. ACT IMPOSED BY THE AO. ITA NO. 3212/DEL/2014 2 3. IN THIS CASE THE ASSESSMENT ORDER U/S. 143(3) OF THE I.T. ACT, 1961 WAS PASSED FOR THE ASSTT. YEAR 2007-08 ON 24.12.200 9. THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED AS CORRECT AND T HE ASSESSMENT ORDER WAS PASSED ON THE RETURNED INCOME. THE AO, H OWEVER, DISALLOWED CARRY FORWARD LOSS OF RS. 23,09,722/- U/ S. 79 OF THE ACT ON THE GROUND THAT THERE WAS A CHANGE IN MAJORITY SHARE HOLDING OF THE COMPANY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSME NT YEAR UNDER CONSIDERATION. THE CAPITAL LOSS THOUGH WAS SOUGHT TO THE CARRIED FORWARD TO SUBSEQUENT YEARS AGAINST CAPITAL GAIN WHENEVER ACCRUING OR ARISING BUT THERE WAS NO IMPACT ON THE RETURNED OR ASSESSED INCOME DETERMINED BY THE ASSESSING OFFICER. THE ASSESSE E FILED AN APPEAL BEFORE THE CIT(A)-I, NEW DELHI AGAINST THE SO CALLE D DISALLOWANCE OF CARRY FORWARD LOSS AT SUCH LATER DATE AS PER CLAIM I N TERMS OF INCOME TAX ACT, 1961, WHICH WAS DISMISSED BY THE APPELLATE AUTHORITY VIDE ORDER DATED 9.2.2012 DISAGREEING WITH THE ASSESSEE . AFTER RECEIVING THE ORDER PASSED BY THE APPELLATE AUTHORITY DATED 9.2.2012, THE ASSESSEE DID NOT CARRY FORWARD THE SAID CAPITAL LOS S OF RS. 23,90,722/- IN THE RETURN FILED FOR A.Y. 20012-13. THE AO PASSE D THE ORDER DATED 21.3.2013 LEVYING PENALTY OF RS. 8,05,000/- AGAINST THE ASSESSEE UNDER SECTION 271(1)(C). ITA NO. 3212/DEL/2014 3 4. AGAINST THE ABOVE PENALTY ORDER DATED 21.3.2013 PASSED BY THE ASSESSING OFFICER, ASSESSEE APPEALED BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 25.4.2014 UPHELD THE PENALTY OF RS. 8,05,000/-. 5. AGAINST THE ABOVE ORDER OF THE LD. CIT(A) DATED 25.4.2014, ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE ORDERS PASSED BY THE REVENUE AUTHORITIES ALONGWITH DOCUMENTARY E VIDENCES FILED BY THE ASSESSEE. 6.1 LD. COUNSEL OF THE ASSESSEE IN SUPPORT OF HI S CONTENTION RAISED THROUGH VARIOUS DETAILED GROUNDS MENTIONED IN THE A PPEAL BEFORE THE TRIBUNAL SUBMITTED THAT THE LD. CIT(A) HAS FAILED AN D NEGLECTED TO TAKE ANY COGNIZANCE THAT THE AO HAD PASSED THE EX-PARTE ORDER IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE, WITH OUT ISSUING ANY SHOW CAUSE NOTICE FOR IMPOSITION OF PENALTY FOR AY 2007-0 8 AND WITHOUT GIVING ANY OPPORTUNITY OF HEARING TO THE ASSESSEE. HE ALSO SUBMITTED THAT LD. COMMISSIONER (APPEAL VI) HAS WRONGLY MENTION ED IN THE IMPUGNED ORDER THAT AN EARLIER PENALTY NOTICE DATED 24/12/2009 WAS ISSUED TO THE ASSESSEE, WHEREAS NO PENALTY NOTICE D ATED 24/12/2009 WAS ISSUED NOR THE SAME HAS BEEN PLACED ON RECORD. IT WAS ALSO ITA NO. 3212/DEL/2014 4 SUBMITTED THAT THE LD. CIT(A) HAS ALSO WRONGLY NOTE D THAT A SHOW CAUSE NOTICE DATED 13/3/2013 WAS FOR A.Y. 2007-08 ISSUED FIXING THE DATE OF HEARING AS 18/3/2013. AS ALREADY STATED ABOVE, THE SHOW CAUSE NOTICE DATED 13/3/2013 WAS FOR AY 2009-10 AND NOT FOR AY 2 007-08. HE ALSO SUBMITTED THAT THE FINDING OF THE CIT(A) THAT THE A O AFFORDED SUFFICIENT OPPORTUNITY TO THE ASSESSEE IS THUS PERVERSE AND WI THOUT ANY BASIS WHATSOEVER. WE FIND THAT LD. COUNSEL OF THE ASSES SEE HAS STATED THAT THE LD. CIT(A) HAS GIVEN A WRONG AND PERVERSE FIN DING THAT THE APPELLANT HAD CONCEALED INCOME AND FURNISHED INACCU RATE RECORD OF INCOME IN RESPECT OF THE ADDITION OF RS.23,90,722/- MADE TO THE RETURNED INCOME OF THE ASSESSEE. IT WAS ALSO SUBMITT ED BY THE ASSESSEE THAT THE LD. CIT(A) FAILED TO NOTICE THAT THE PRESENT CASE WAS NOT A CASE OF CONCEALMENT OF PARTICULARS OF INCOME NOR A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME AS THE RETURN FILED BY THE APPELLANT WAS ACCEPTED BY AO. IT WAS ALSO NOT A CAS E OF ADDITION OF RS.23,90,722/- TO THE RETURNED INCOME OF THE APPELLA NT AS NO ADDITION TO THE RETURNED INCOME WAS MADE BY THE AO. IT WAS SI MPLY A CASE OF CARRY FORWARD OF LONG TERM CAPITAL LOSS, WHICH CLAIM WAS ULTIMATELY GIVEN UP BY THE ASSESSEE. IT WAS ALSO THE CONTENTIO N OF THE ASSESSEES CASE IS THAT NO PREJUDICE WHATSOEVER HAS BEEN CAUSED TO THE REVENUE BY DISALLOWANCE OF CARRY FORWARD LOSS OF RS. 23,90, 722/- IN AS MUCH AS ITA NO. 3212/DEL/2014 5 THE SAID LOSS WAS NOT ADJUSTED AGAINST ANY TAXABLE G AIN. WITHOUT ANY LOSS TO THE REVENUE, NO PENALTY CAN BE IMPOSED. IF A T ALL ANY LOSS HAS BEEN CAUSED, IT IS TO THE ASSESSEE AS THE ASSESSEE HAS BEEN DEPRIVED OF SETTING OFF THE LOSS AGAINST FURTURE TAXABLE GAI NS. IT IS UNDISPUTED THAT THE AO DISALLOWED THE CLAIM OF THE APPELLANT F OR CARRY FORWARD OF LONG TERM CAPITAL LOSS U/S 79 OF IT ACT ON THE BASIS THAT THE MAJORITY SHARE HOLDING HAD UNDERGONE A CHANGE IN THE PREVIOU S YEAR RELEVANT TO AY IN QUESTION, WHICH IS APPARENT FROM THE FOLLOWING OBSERVATION OF THE AO:- 'ACCORDING TO SECTION 79, WHERE A CHANGE IN THE MAJORITY SHAREHOLDING HAS TAKEN PLACE IN THE PREVIOUS YEAR, IN CASE OF A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC IS SUBSTANTIALLY INTERESTED, NO LO SS INCURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHA LL BE CARRIED FORWARD AND SET OFF AGAINST THE INCOME OF T HE PREVIOUS YEAR UNLESS ON THE LAST DAY OF THE PREVIOU S YEAR THE SHARES OF THE COMPANY CARRYING NOT LESS THA N 51 % OF THE VOTING SHARE WAS BENEFICIALLY HELD BY T HE PERSON WHO BENEFICIALLY HELD SHARES OF THE COMPANY CARRYING NOT LESS THAN 51 % OF THE VOTING POWER ,?N THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED. HENCE THE ASSESSEE IS NOT ENTITLED TO CAR RY FORWARD THE LOSS OF RS. 23,90,722/-.' ITA NO. 3212/DEL/2014 6 6.2 LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE CARRY FORWARD OF LONG TERM CAPITAL LOSS OR A Y 2005-06 AND 2006-07 HAD BEEN DULY ACCEPTED AS CORRECT AS PER RETURNS FILED AND A SSESSMENT ORDERS PASSED BY THE AO IN THE RELEVANT YEARS. IN THE ASSE SSMENT YEAR 2006- 07 THE AO SPECIFICALLY MENTIONED THAT CARRY FORWARD OF LONG TERM CAPITAL LOSS IS ALLOWED. IT WAS ALSO MENTIONED THAT THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER PASSED BY THE AO FOR A Y 200708 THAT THE APPELLANT HAD FURNISHED ANY INACCURATE PAR TICULARS OF INCOME OR HAD MADE ANY WRONG CLAIM OF CARRY FORWARD OF LONG TERM CAPITAL LOSS. ON THE CONTRARY, THE AO HAD OBSERVED THAT EVE N THOUGH THE APPELLANT WAS OTHERWISE ENTITLED TO THE CARRY FORWA RD OF THE LONG TERM CAPITAL LOSS, BUT SINCE THERE WAS A CHANGE IN THE M AJORITY SHARE HOLDING IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R IN QUESTION, THEREFORE, THE LOSS RELATED TO THE PREVIOUS YEAR WA S DISALLOWED TO BE CARRIED FORWARD UNDER THE PROVISION OF SECTION 79. THUS, THE DISALLOWANCE OF CARRY FORWARD OF THE LONG TERM CAPIT AL LOSS WAS ON TECHNICAL GROUND AND NOT ON ACCOUNT OF ANY CONCEALM ENT OF ANY PARTICULAR OF INCOME. IN THE CASE OF MAK DATA P LTD. VS . CIT-II, (CIVIL APPEAL NO. 9772 OF 2013 DATED 30.10.2013) THE HONB LE SUPREME COURT WHILE CONSIDERING THE EXPLANATION TO SECTION 271(1) HELD AS UNDER:- ITA NO. 3212/DEL/2014 7 'THE QUESTION WOULD BE WHETHER THE ASSESSEE HAD OFFERED AN EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER BETWEEN THE REPORTED AND ASSESSED INCOME. THE BURDEN IS THAN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE AND WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HAS BEEN DISCHARGED BY THE ASSESSEE, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT AMOUNT IN QUESTION IS CONSTITUTED THEIR INCOME AND NOT OTHERWISE. FACTUALLY WE FIND THAT ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED BY GIVING A COGENT AND RELIABLE EXPLANATION. THEREFORE IF THE DEPARTMENT DID NOT AGREE WITH THE EXPLANATION, THE ONUS WAS ON THE DEPARTMENT TO PROVE THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE SUCH ONUS WAS SHIFTED ON THE DEPARTMENT HAS NOT BEEN DISCHARGED.' 6.3 LD. COUNSEL OF THE ASSESSSEE SUBMITTED THAT THE PRESENT CASE IS FULLY COVERED BY THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (2010 ) 322 ITR 0158 (SC) AS UNDER 'A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO ITA NO. 3212/DEL/2014 8 FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AD FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271 (1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE.' 6.4 LD. COUNSEL OF THE ASSESSEE HAS FURTHER S UBMITTED THAT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AF ORESAID CASES HAS BEEN FOLLOWED IN THE FOLLOWING FURTHER CASES THE FA CTS OF WHICH ARE SIMILAR TO THE PRESENT CASE:- A. COMMISIONER OF INCOME TAX-14 (MUMBAI) AND NALIN P. SHAH(HUF), NALIN P. SHAH AND MANAN P. SHAH BOMBAY HIGH COURT (INCOME TAX APPEAL (LOD) NO. 49 OF 2013). B. RUBBER UDYOG VIKAS (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, DELHI F BENCH VIMAL GANDHI, PRESIDENT AND RC SHARMA, AM ITA NO. 4435/DEL/2009; ASST. YEAR 1994-95 ORDER DATED 31.3.2010 (2011) 10 ITR (TRIB) 418 (DEL.) ITA NO. 3212/DEL/2014 9 IN NALIN P. SHAH (HUF) CASE, THE RESPONDENT- ASSESSEE HAD DECLARED LONG TERM CAPITAL LOSS OF RS.4.39 CRORES WHICH WERE INCLUSIVE OF LOSS INCURRE D ON THE SALE OF US 64 UNITS. THE ASSESSING OFFICER DISALLOWED THE LOSS ON SALE US 64 UNITS ON THE GROU ND THAT WHERE INCOME FROM PARTICULAR SOURCE WAS EXEMPT FROM TAX THEN THE LOSS FROM SUCH SOURCE COULD NOT BE SET OFF FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX AC T, 1961. IN APPEAL, CIT (A) UPHELD THE ORDER OF ASSESS ING OFFICER LEVYING PENALTY. ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THE RESPONDENT-ASSESSEE HAD IN ITS RETURN OF INCOME DISCLOSED ALL DETAILS ABOUT THE SALE OF US 64 UNITS , THE LOSS AND RESULTANT CARRY FORWARD. THE TRIBUNAL HELD THAT FROM THE AFORESAID FACTS AT THE HIGHEST IT CAN BE SAID THAT THE CLAIM OF THE ASSESSEE WAS NOT SUSTAINABLE IN LAW BUT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME ON THE PART OF THE RESPONDENT-ASSESSEE. THUS, THE FROM RETURN FILED BY THE RESPONDENT-ASSESSEE. PENALTY WA S SET ASIDE, RELYING UPON THE APEX COURT JUDGEMENT (SUPRA) IN THE MATTER OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. ITA NO. 3212/DEL/2014 10 IN THE RUBBER UDHYOG VIKAS PVT. LTD. CASE ASSESSEE CLAIMED SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST THE INCOME UNDER THE HEAD CAPITAL GAINS. TH E AO DECLINED THE CLAIM OF SET OFF AS NOT PERMISSIBLE UNDER S. 71/72 OF THE IT ACT. THE AO ALSO LEVIED PENALTY UNDER S. 271 (1 )(C). AGAINST THE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHO DELETED THE PENALTY. THE ORDER OF CIT(A) FOR CANCEL LING THE PENALTY WAS UPHELD BY THE TRIBUNAL. THE REVENUE CARRIED THE MATTER TO THE HIGH COURT WHICH REMANDED THE CASE BACK TO THE TRIBUNAL FOR DECIDING THE IMPOSITION OF PENALTY ON MERITS. THE TRIBUNAL HELD TH AT ASSESSEE HAD DISCLOSED ALL THE PARTICULARS RELATING TO HIS INCOME AND CLAIM OF SET OFF OF BUSINESS LOSS AGA INST THE CAPITAL GAIN, THERE WAS A BONA FIDE DISCLOSURE OF ALL THE PARTICULARS AND MERE DENIAL OF ASSESSEE'S CLAIM O F SET OFF WILL NOT ATTRACT THE PENAL PROVISIONS AS CONTAINED UNDER S. 71 (1 )(C). THE TRIBUNAL PLACED RELIANCE ON THE RECENT DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (SUPRA). 6.5 IT WAS THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT THE LD. CIT(A) HAS WRONGLY RELIED ON THE CASE OF UOI VS . DHARMENDRA TEXTILES (2007) 295 ITR 244 (SC) AS THE SAID CASE W AS UNDER CENTRAL EXCISE. ITA NO. 3212/DEL/2014 11 6.6 IT WAS ALSO SUBMITTED THAT LD. CIT(A) WRONGLY DID NOT APPLY THE RATIO OF THE LAW LAID DOWN IN THE RELIANCE PETROPRO DUCTS CASE (SUPRA) ON THE BASIS OF THE DILIP N. SAROFFS CASE AND DHARMEN DRA TEXTILES CASE AS THE SAID CASES ARE NOT APPLICABLE TO THE FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE. HE ALSO POINTED OUT THAT LD. CIT (A) HAS NOT REFERRED TO ANY CASE WHEREIN PENALTY UNDER SECTION 271(1)(C) HAS BEEN HELD TO BE JUSTIFIED SIMPLY ON THE BASIS THAT THE ASSESSEE H AD MADE A WRONG CLAIM OF CARRY FORWARD OF LONG TERM CAPITAL LOSS WHER E THE SAME HAS BEEN DISALLOWED ON THE TECHNICAL GROUND, EVEN THOUG H IT WAS FOUND TO BE ADMISSIBLE ON MERITS, AS IN THE PRESENT CASE. LAST LY, IT WAS THE PRAYER OF THE LD. COUNSEL OF THE ASSESSEE THAT I N ORDER TO PREVENT IRREPARABLE LOSS AND INJURY TO ASSESSEE, THE ORDER PASSED BY THE LD. CIT(A)-VI, NEW DELHI DATED 25.4.2014 MAY BE SET ASIDE . 6.7 LD. DEPARTMENTAL REPRESENTATIVE CONTROVERTED THE ARGUMENTS ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE AND SHE RELIED UPON THE ORDER OF LD. CIT(A). 7. WE FIND THAT THE CONTENTION OF THE ASSESSEE IS CORRECT THAT THE CARRY FORWARD OF LONG TERM CAPITAL LOSS FOR A Y 200 5-06 AND 2006-07 HAD BEEN DULY ACCEPTED AS CORRECT AS PER RETURNS FI LED AND ASSESSMENT ORDERS PASSED BY THE AO IN THE RELEVANT YEARS. IN T HE ASSESSMENT YEAR 2006-07 THE AO SPECIFICALLY MENTIONED THAT CARRY FO RWARD OF LONG TERM ITA NO. 3212/DEL/2014 12 CAPITAL LOSS IS ALLOWED. IT WAS ALSO MENTIONED THAT THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER PASSED BY THE AO FOR A Y 200708 THAT THE ASSESSEE HAD FURNISHED ANY INACCURATE PART ICULARS OF INCOME OR HAD MADE ANY WRONG CLAIM OF CARRY FORWARD OF LONG TERM CAPITAL LOSS. ON THE CONTRARY, THE AO HAD OBSERVED THAT EVE N THOUGH THE APPELLANT WAS OTHERWISE ENTITLED TO THE CARRY FORWA RD OF THE LONG TERM CAPITAL LOSS, BUT SINCE THERE WAS A CHANGE IN THE M AJORITY SHARE HOLDING IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R IN QUESTION, THEREFORE, THE LOSS RELATED TO THE PREVIOUS YEAR WA S DISALLOWED TO BE CARRIED FORWARD UNDER THE PROVISION OF SECTION 79. THUS, THE DISALLOWANCE OF CARRY FORWARD OF THE LONG TERM CAPIT AL LOSS WAS ON TECHNICAL GROUND AND NOT ON ACCOUNT OF ANY CONCEALM ENT OF ANY PARTICULAR OF INCOME AND HAS RIGHTLY REFERRED THE CA SE OF MAK DATA P LTD. VS. CIT-II, (CIVIL APPEAL NO. 9772 OF 2013 DAT ED 30.10.2013) WHERIN THE HONBLE SUPREME COURT WHILE CONSIDERING THE EX PLANATION TO SECTION 271(1) HELD AS UNDER:- 'THE QUESTION WOULD BE WHETHER THE ASSESSEE HAD OFFERED AN EXPLANATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE ASSESSING OFFICER BETWEEN THE REPORT ED AND ASSESSED INCOME. THE BURDEN IS THAN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE AND WHEN THE INITIAL ONUS PLACED BY THE ITA NO. 3212/DEL/2014 13 EXPLANATION, HAS BEEN DISCHARGED BY THE ASSESSEE, T HE ONUS SHIFTS ON THE REVENUE TO SHOW THAT AMOUNT IN QUESTION IS CONSTITUTED THEIR INCOME AND NOT OTHERWISE. FACTUALLY WE FIND THAT ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED BY GIVING A COGENT AND RELIABLE EXPLANATION. THEREFORE IF THE DEPARTMENT D ID NOT AGREE WITH THE EXPLANATION, THE ONUS WAS ON THE DEPARTMENT TO PROVE THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE SUCH ONUS WAS SHIFTED ON THE DEPARTMENT HAS NOT BEEN DISCHARGED.' 7.1 WE ALSO FIND THAT SECTION 271(1)(C) POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AN D CONCEALMENT OF INCOME. ON THE FACTS AND CIRCUMSTANCES OF THIS CA SE THE ASSESSEES CONDUCT CANNOT BE SAID TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY. 7.2 IN THIS REGARD, WE FIND THAT ASSESSEES COUNSE L RELIANCE FROM THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO CIT VS. RELIANCE PETRO CIT VS. RELIANCE PETRO CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 IS SQUARELY APPLICABLE IN THE PRESENT CASE OF THE ASSESSEE. IN THIS CASE VI DE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN I N THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CO NCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WH AT WAS OVERRULED IN ITA NO. 3212/DEL/2014 14 THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DI LIP 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 ASSESSING OF FICER FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 2 71(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 7.3 WE PLACE RELIANCE FROM THE APEX COURT DECISI ON RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUST HINDUST HINDUST HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 AN STEEL VS. STATE OF ORISSA IN 83 ITR 26 AN STEEL VS. STATE OF ORISSA IN 83 ITR 26 AN 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-CRIMINAL PROCEED INGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED E ITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A ST ATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EX ERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES . EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENAL TY, WHEN THERE IS A ITA NO. 3212/DEL/2014 15 TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDE R IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND PRECEDENTS, WE FIND THAT THE LEVY OF PENALTY IN THIS CASE IS NO T JUSTIFIED. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND DELETE THE LEVY OF PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/9/2014. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [G.D. AGRAWAL] [G.D. AGRAWAL] [G.D. AGRAWAL] [G.D. AGRAWAL] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] [H.S. SIDHU] VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR 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 ITA NO. 3212/DEL/2014 16