M/s. Hindustan Coca- Cola Marketing Company Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3256/DEL/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4782 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Wrong claim
• Section: 143(3); 147; 68; 148

Judgement Text

ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.3256/DEL/2013 ASSESSMENT YEAR : 2006-07 HINDUSTAN COCA-COLA MARKETING VS DY.COMMISSION ER OF INCOME TAX, COMPANY PRIVATE LTD., CIR CLE-12(1), NEW DELHI. 13, ABDUL FAZAL ROAD, BENGALI MARKET, NEW DELHI. (PAN: AABCH1541D) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI SACHIT JOLLY, RAHUL SAT IJA, MS TARINEE SUDAN RESPONDENT BY : SHRI SATPAL SINGH, SR. DR O R D E R PER CHANDRAMOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-VIII, NEW DELHI IN AP PEAL NO.156/09-10 DATED 18.03.2013 FOR AY 2006-07 BY WHICH THE PENALT Y ORDER PASSED U/S 271(1)(D) OF THE ACT HAS BEEN UPHELD. 2. THE MAIN GROUNDS RAISED BY THE ASSESSEE READ AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E THE COMMISSIONER OF INCOME TAX(A) ERRED IN UPHOLDIN G THE PENALTY LEVIED BY ASSESSING OFFICER ('AO') U/S 271( L)(D) OF THE INCOME TAX ACT, 1961 ('ACT') WITHOUT APPRECIATI NG THE FACT DISALLOWED EXPENSES WAS SU-MOTO OFFERED BY APP ELLANT. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 2 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE CIT (A) ERRED IN HOLDING THAT APPELLANT ADMITTED THE MISTAK E ON BEING POINTED OUT BY AO WITHOUT APPRECIATING THE FA CT THAT THE CORRECT FIGURE WAS SUO MOTO OFFERED BY APPELLAN T DURING THE COURSE OF HEARING AND THE FACT HAS ALSO NOT BEEN DISPUTED BY AO IN ITS ORDER PASSED U/S 271(L)(D) OF THE ACT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE FACT CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY AO ON THE GROUNDS THAT WRONG CLAIM OF EXPENSES WERE OFFERED D URING THE COURSE OF INVESTIGATION U/S 115WE(3) OF THE ACT AND IF ASSESSMENT WOULD NOT HAVE INITIATED APPELLANT MIGHT NOT HAVE ADMITTED ITS MISTAKE. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT DURING THE QUANTUM ASSESSMENT PROCEEDINGS, THE ASSESSING OFFIC ER OBSERVED THAT AN AMOUNT OF RS.11,55,634/- ON ACCOUNT OF CONVEYANCE W AS NOT INCLUDED IN THE VALUE OF FRINGE BENEFIT. ACCORDINGLY, THE ASSESSIN G OFFICER DISALLOWED 20% OF THESE EXPENSES WHICH WAS ADDED TO THE TOTAL VALU E OF FRINGE BENEFIT. ON BEING INFORMED BY THE ASSESSING OFFICER, THE ASSESS EE AGREED THAT THIS WAS A MISTAKE IN CALCULATING THE VALUE OF FBT. THE ASSES SING OFFICER RELIED UPON THE VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT HIS ARGUMENT THAT THE ASSESSEE HAD WRONGLY MADE THE CLAIM OF FBT AND ACCO RDINGLY PENALTY U/S 271(1)(D) OF THE ACT WAS IMPOSABLE IN VIEW OF THE D ECISIONS OF COMMISSIONER OF INCOME TAX VS GURBACHAN LAL 258 ITR 157 (DEL) AND UOI VS DHARMENDRA TEXTILE PROCESSORS (2008) 166 TAX MAN 65 (SC) . DURING THE PENALTY PROCEEDINGS, THE ASSESSING OFFIC ER ALSO TOOK COGNIZANCE ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 3 OF THE FACT THAT THE ASSESSEE HAD NOT FILED ANY APP EAL AGAINST THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE A SSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND AFTER PROVIDING D UE OPPORTUNITY OF HEARING, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FI LED INACCURATE PARTICULARS OF ITS INCOME, THEREFORE, THE ASSESSING OFFICER LEV IED PENALTY U/S 271(1)(D) OF THE ACT. 4. BEING AGGRIEVED BY THE ABOVE PENALTY ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A). D URING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE PENALTY SHOULD NOT BE LEVIED ON THE APPELLANT AS THE DISALLOWANCE IN QUESTION WAS SUO MOTO OFFERED DURING THE COURSE OF HEARING AND WAS NOT DU E TO THE DETECTION OF ANY CONCEALMENT OF FACTS OR INACCURATE PARTICULARS BY T HE ASSESSING OFFICER. IT WAS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE THAT T HE SAID CALCULATION MISTAKE WAS DONE BONAFIDELY IN CALCULATING THE VALUE FOR TH E PURPOSE OF FBT AND THE SAME WAS A CASUAL MISTAKE WHICH WAS NOT COMMITTED D ELIBERATELY OR FRAUDULENTLY FOR CONCEALING PARTICULARS OF FBT. TH E COMMISSIONER OF INCOME TAX(A) REJECTED THE ABOVE CONTENTIONS AND SU BMISSIONS OF THE ASSESSEE AND UPHELD THE PENALTY ORDER BY OBSERVING THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS ON THE BASIS OF WH ICH A FALSE CLAIM HAS BEEN ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 4 MADE. NOW, THE ASSESSEE IS BEFORE THIS TRIBUNAL IN THE SECOND APPEAL WITH THE GROUNDS AS MENTIONED HEREINABOVE. GROUND NOS. 1, 2 & 3 5. APROPOS THESE GROUNDS, LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) ERRED IN UPHOLDING TH E PENALTY LEVIED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE EXPENSES WAS SUO MOTO OFFERED TO TAX BY THE APPELLA NT AND THE APPELLANT DID NOT CARRY THE MATTER IN FURTHER LITIGATION. THE CO UNSEL ALSO SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) UPHELD THE PENALTY OR DER WITHOUT APPRECIATING AND IGNORING THE FACT THAT THE CORRECT FIGURE WAS SUO MOTO OFFERED BY THE ASSESSEE DURING THE COURSE OF HEARIN G AND THIS FACT HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER IN THE PENAL TY ORDER. THE COUNSEL OF THE ASSESSEE ALSO POINTED OUT THAT THE COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE PENALTY ORDER ON THE GROUND THAT WRONG CLAIM OF EXPENSES WAS OFFERED DURING THE COURSE OF INVESTIGATION U/S 115WE(3) OF THE ACT AND IF THE ASSESSMENT HAD NOT BEEN INITIATED, THE ASSES SEE MIGHT NOT HAVE ADMITTED ITS MISTAKE. 6. THE COUNSEL OF THE ASSESSEE ALSO SUBMITTED THAT AS PER ASSESSMENT ORDER PASSED U/S 143(3) R/W 115WE(3) OF THE ACT, TH E ASSESSEE DECLARED THE VALUE OF FRINGE BENEFIT AT RS.2,52,54,088/- AND THE AMOUNT OF RS.11,55,634/- ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 5 ON ACCOUNT OF IMPUGNED CONVEYANCE EXPENSES WAS NOT CONSIDERED IN THE VALUE OF FBT DUE TO CASUAL ERROR WHICH WAS SUO MOTO RECTIFIED DURING THE COURSE OF ASSESSMENT HEARING. THE COUNSEL CONTENDE D THAT THE ASSESSEE IS AN HONEST TAXPAYER AND THE IMPUGNED AMOUNT IS VERY MEA GER IN COMPARISON TO THE VALUE OF FRINGE BENEFIT ALREADY DECLARED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES. THEREFORE, THE AUTHORITIES BEL OW WERE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. 7. THE COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF ITAT DELHI G BENCH IN ITA NO. 3194/DEL/2012 FOR A Y 2008-09 IN THE CASE OF MR. SAKET AGARWAL VS ITO AND POINTED OUT RE LEVANT PARAS 7 & 8 OF THIS ORDER WHICH READ AS UNDER:- 7. AFTER CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE ALSO OBSERVE THAT IN THE CASE OF COMMISSIONER OF INCOME TAX VS UPENDRA V. MITHANI (SUPRA), THE HONBLE HIGH COURT OF BOMBAY HAS HELD THAT IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPRO VED BUT NOT DISPROVED I.E. IT IS NOT ACCEPTED BUT CIRCUMSTA NCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE T HAT THE ASSESSEES CASE IS FALSE, THEN THE PENALTY IS NOT I MPOSABLE. IN THE PRESENT CASE, THE ASSESSEE VOLUNTARILY SURRE NDERED BEFORE THE TAX AUTHORITIES AND CONSENTED TO PAY THE TAX AND THE EXPLANATION OF THE ASSESSEE REMAINED UNPROVED B UT IT CANNOT BE SAID AS DISPROVED. FURTHER IN THE CASE O F NATIONAL TEXTILE VS COMMISSIONER OF INCOME TAX(SUPR A), THE HONBLE HIGH COURT OF GUJARAT HAS HELD THAT THE PROVISIONS OF SECTION 68 ARE ENABLING PROVISIONS FO R MAKING ADDITIONS WHERE THE ASSESSEE FAILS TO GIVE A N EXPLANATION REGARDING CASH CREDIT OR WHERE THE EXPLANATION IS NOT TO THE SATISFACTION OF THE ASSES SING ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 6 OFFICER. THEIR LORDSHIPS FURTHER HELD THAT SUCH AD DITION WOULD NOT AUTOMATICALLY JUSTIFY IMPOSITION OF PENAL TY U/S 271(1)(C) R/W EXPLANATION 1 THERETO OF THE ACT. IT WAS ALSO HELD THAT IN ORDER TO JUSTIFY LEVY OF PENALTY, THER E MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO A REASONA BLE CONCLUSION THAT THE AMOUNT DOES NOT REPRESENT ASSES SEES INCOME AND THE CIRCUMSTANCES MUST SHOW THAT THERE W AS A CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS. FROM A BARE READING OF SECTION 271, IT IS CLEAR THAT THE PROVISIONS OF EXPLANATION 1 TO SECTION 271 OF THE ACT DO NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVI DENCE THAT THE AMOUNT ASSESSED WAS, IN FACT, THE INCOME O F THE ASSESSEE AND THAT THE ASSESSEE DID NOT SATISFACTORI LY EXPLAIN THE CASH CREDITS BY PRODUCING EVIDENCE AND DOCUMENT S. 8. IN THE CASE IN HAND, WE OBSERVE THAT THE ASSESSE E CONSENTED TO PAY TAX TO AVOID FURTHER LITIGATION AN D TO BUY MENTAL PEACE AND INSTEAD OF OFFERING FURTHER EXPLAN ATION, THE ASSESSEE VOLUNTARILY SURRENDERED BEFORE THE TAX AUTHORITIES AND PAID THE TAX IMPOSED BY THE ASSESSI NG OFFICER IN REGARD TO THE IMPUGNED ADDITION. IN ABS ENCE OF FURTHER APPEAL TO THE COMMISSIONER OF INCOME TAX(A) OR TO THE TRIBUNAL, THE QUANTUM ASSESSMENT ORDER HAS REAC HED TO ITS FINALITY BUT THE ASSESSMENT ORDER IS NOT CONCLU SIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE I NCOME OF THE ASSESSEE AND IT CANNOT BE PRESUMED THAT THER E WAS A CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS BY THE ASSESSEE. ACCORDINGLY, RESPECTF ULLY FOLLOWING THE JUDGEMENT OF HONBLE HIGH COURT OF GU JARAT IN THE CASE OF NATIONAL TEXTILE VS COMMISSIONER OF INCOME TAX(SUPRA) WE HOLD THAT THE PENALTY IS NOT IMPOSABL E IN THE PRESENT CASE AND THE ASSESSING OFFICER IMPOSED PENA LTY ON ERRONEOUS ASSUMPTIONS WHICH WAS WRONGLY CONFIRMED B Y THE COMMISSIONER OF INCOME TAX(A). 8. ON ABOVE CONTENTIONS AND SUBMISSIONS OF THE ASSE SSEE, LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF K.P. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 7 MADHUSUDAN VS COMMISSIONER OF INCOME TAX(2001) 251 ITR 99 (SC), DECISION OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF COMMISSIONER OF INCOME TAX VS MOHD. FARUKHI (2003) 259 ITR 132 (RAJ) AND DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS KRISHNA & CO. 120 ITR 144 (MADRAS) . TO SUPPORT THIS PROPOSITION THAT IN CASE WHERE THE ASSESSEE HIMSELF HAD ADMITTED THAT THE AMOUNT REPRESENTED HIS OWN INCOME , NO FURTHER EVIDENCE WOULD BE NECESSARY TO SHOW THAT IT REPRESENTED ITS CONCEALED INCOME. THE DR HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF UOI VS DHARMENDRA TEXTILE (SUPRA), AND DECI SION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOM E TAX VS GURBACHAN LAL (SUPRA) AND JASWANT RAI VS CBDT 133 ITR 19 (DEL ) TO SUPPORT HIS CONTENTION THAT WHERE THE ASSESSEE HAS CONCEALED IN COME, ANY SUBSEQUENT ACT OF VOLUNTARY DISCLOSURE WOULD NOT AFFECT IMPOSITION OF PENALTY FOR CONCEALMENT. THE DR SUPPORTED ORDERS OF THE AUTHOR ITIES BELOW AND SUBMITTED THAT THE ASSESSEES PRESENT CASE WAS FOR LEVY OF PENALTY U/S 271(1)(D) OF THE ACT BECAUSE THE ASSESSEE HAD FURNI SHED INACCURATE PARTICULARS ON THE BASIS OF WHICH A FALSE CLAIM HAD BEEN MADE BY THE ASSESSEE. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 8 9. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US AND LEGAL PROPO SITIONS AND CITATIONS RELIED BY BOTH THE PARTIES. AT THE OUTSET, ADMITTE DLY, THE ASSESSEE COMPANY SUO MOTO OFFERED IMPUGNED AMOUNT OF ADDITION AND TH E ASSESSEE COMPANY HAS NOT PREFERRED ANY APPEAL AGAINST THE AFORESAID ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. AS PER DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS GURBACHAN LAL (SUPRA), AFTER THE INSERTION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, THE ONUS IS ON THE ASSESSEE TO SHOW THAT THERE WAS NO INTENTION OF CON CEALMENT. BEFORE THIS TRIBUNAL AND ALSO BEFORE THE AUTHORITIES BELOW, THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE OFFERED IMPUGNED AMOU NT SUO MOTO FOR TAXATION. ANOTHER CONTENTION OF THE ASSESSEE IS THAT THE ASSE SSEE HAS DECLARED A HUGE SUM OF RS. 2.54 CRORE AS VALUE OF FRINGE BENEFIT AN D OFFERED THE SAME FOR TAXATION AND THE AMOUNT OF RS. 11,55,634/- PERTAINI NG TO CONVEYANCE EXPENSES COULD NOT BE TAKEN INTO ACCOUNT DUE TO CAS UAL MISTAKE WHICH WAS NOT COMMITTED DELIBERATELY OR FRAUDULENTLY FOR THE PURPOSE OF CONCEALING THE PARTICULARS OF FBT. THE CONTENTION OF THE REVENUE IS THAT THIS WRONG CLAIM WOULD NOT HAVE COME TO LIGHT IF THE CASE HAD NOT BE EN TAKEN UP FOR SCRUTINY AND SUO MOTO OR VOLUNTARY SURRENDER OF INCOME DOES NOT AVOID PENALTY. IT WAS ALSO CONTENDED BY THE DR THAT THE ASSESSEE HAD NOT DISCHARGED ITS ONUS ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 9 TO ESTABLISH THAT HE HAD NOT FURNISHED INACCURATE P ARTICULARS DELIBERATELY DUE TO FRAUD OR NEGLIGENCE. 10. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS, WE ENLIGHTEN OURSELVES BY THE DECISION OF HONBLE APEX COURT IN THE CASE O F K.P. MADHUSUDAN VS COMMISSIONER OF INCOME TAX (SUPRA) WHEREIN IT HAS B EEN HELD THAT THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF UNLESS THE ASSESSEE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR NEGLECT ON HIS PART. IN THE PRESENT CASE, DURING THE ASSES SMENT PROCEEDINGS U/S 143(3) R/W 115WE(3) OF THE ACT, WHEN A CALCULATION MISTAKE WAS POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE SUO MOTO OFFERED THE SAME FOR TAXATION WITHOUT AGITATING THE ISSUE FURTHER AND TH E ASSESSEE DID NOT CARRY OUT THE ISSUE IN FURTHER APPEAL. IN THIS SITUATION, WH EN THE ASSESSEE IS OFFERING A HUGE AMOUNT OF VALUE OF FRINGE BENEFIT AMOUNTING TO RS.2.55 CRORE FOR TAXATION, THEN CALCULATION MISTAKE MADE BY THE ASSE SSEE FOR THIS PURPOSE, CANNOT BE SAID TO BE AN ACT OF FURNISHING OF INACCU RATE PARTICULARS TO MAKE A FALSE CLAIM. THE ASSESSEE HAS SHOWN ITS BONA FIDE ON TWO COUNTS, FIRSTLY WHEN THE CALCULATION MISTAKE WAS POINTED OUT BY THE AO, THE ASSESSEE CAME FORWARD TO VOLUNTARILY SURRENDER THE SAME FOR TAXAT ION AND SECONDLY, THE ASSESSEE DID NOT CARRY OUT THE ISSUE IN FURTHER LIT IGATION. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 10 11. THE COUNSEL OF THE ASSESSEE POINTED OUT LAST PA RA OF THE IMPUGNED ORDER AND SUBMITTED COPIES OF THE DECISIONS OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF USHA INTERNATIONAL (2012) 348 ITR 485(DEL), RAJAT EXPORTS PVT. LTD. (2012) 341 ITR 135 (DEL) AND DALMIA PVT. LTD. VS C.I.T. (2012) 348 ITR 469 (DEL) AND CONTENDED THAT THE DECISIONS AND LEGAL PROPOSITIONS RELIED BY THE LD. COMMISSIONER O F INCOME TAX(A) ARE RELATED TO CASES OF SECTION 147 AND 148 OF THE ACT WHICH HAVE NO RELATION WITH PENALTY ORDERS. THE COUNSEL SUBMITTED THAT TH E COMMISSIONER OF INCOME TAX(A) HAS DEALT THE ISSUE IN A CASUAL MANNE R ON WRONG SURMISES AND ON THE BASIS OF IRRELEVANT CITATIONS. ON CAREF UL PERUSAL OF THESE DECISIONS, WE OBSERVE THAT THESE ARE RELATED TO THE ISSUE OF REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT AND COMMISSIONER OF INCOME TAX(A) WRONGLY PLACED RELIANCE IN DECIDING THE ISSUE OF IM POSITION OF PENALTY. 12. THE DR PLACED RELIANCE ON THE RECENT DECISION O F HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD. VS C.I.T. (20 13) 358 ITR 593(SC) WHEREIN IT HAS BEEN HELD THAT VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM MISCHIEF OF PENAL PROCEEDINGS. T HE DR CONTENDED THAT VOLUNTARY DISCLOSURE BY THE ASSESSEE DOES NOT IMMUN E THE ASSESSEE FROM PENALTY. THE COUNSEL OF THE ASSESSEE REPLIED THAT EXPLANATION-1 TO SECTION 271(1) HAS RELEVANCE TO THE CASE OF THE ASSESSEE AN D EXPLANATION OF THE ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 11 ASSESSEE WAS NOT FOUND TO BE FALSE AND ASSESSEE WAS ABLE TO SUBSTANTIATE THE EXPLANATION. THEREFORE, THE RATIO OF THE ABOVE DEC ISION OF HONBLE APEX COURT IN THE CASE OF MAK DATA P. LTD. VS C.I.T.(SUP RA) IS NOT IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 13. UNDER ABOVE RIVAL CONTENTIONS OF BOTH PARTIES, WE ARE OF THE VIEW THAT ADMITTEDLY THE CASE OF THE ASSESSEE WAS TAKEN UP FO R SCRUTINY AND DURING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE AMOUNT OF RS.11,55,634/- ON ACCOUNT OF CONVEYANCE IS NOT CONS IDERED IN THE VALUE OF FRINGE BENEFIT TAX (FBT) AND THE ASSESSING OFFICER MADE ADDITION OF TOTAL VALUE OF THE SAME TO THE INCOME OF THE ASSESSEE. D URING PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED FOLLOWING EXPLA NATION BEFORE THE ASSESSING OFFICER:- 2.1 IN THIS REGARD WE RESPECTFULLY SUBMIT THAT THE PROCEEDINGS U1S SECTION 271 OF THE ACT ARE QUASI- CRIMINAL PROCEEDINGS AND PENALTY WILL ORDINARILY BE IMPOSED IF THE PARTY OBLIGED EITHER ACTED DELIBERAT ELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CON-TUMACI OUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD TO IT S OBLIGATION. 2.2 IN THE INSTANT CASE YOUR GOODSELF, WILL APPRE CIATE FROM THE PERUSAL OF THE ABOVE FACT THAT THE ASSESS EE DIDN'T HAVE ANY INTENTION TO CONCEAL ANY FACTOR FUR NISH ANY INACCURATE PARTICULAR, THE MISTAKE COMMITTED BY ASSESSEE AT THE TIME OF PREPARATION OF RETURN OF IN COME WAS JUST AN ERROR OF OMISSION WHICH WAS IDENTIFIED BY ASSESSEE AT THE TIME OF PREPARATION OF DETAILS FOR THE ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 12 ASSESSMENT AND THEREFORE WAS DULY ADMITTED SUO MOTO DURING THE COURSE OF HEARING. 2.3 IN THIS REGARD RELIANCE MAY BE PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K. C. BUILDERS AND ANR. VS ACIT: (2004) 135 TAXMAN 461, WHEREIN APEX COURT HAS HELD AS UNDER: 'THE WORD 'CONCEALMENT' AS USED IN SECTION 271(1)(C ) INHERENTLY CARRIED WITH IT THE ELEMENT OF MENS REA, THEREFORE, THE MERE FACT THAT SOME FIGURE OR SOME PARTICULARS HAVE BEEN DISCLOSED BY ITSELF, EVEN IF TAKES OUT THE CASE FROM THE PURVIEW OF NON-DISCLOSURE, IT CAN NOT BY ITSELF TAKE OUT THE CASE FROM THE PURVIEW OF FURNIS HING IN-ACCURATE PARTICULARS. MORE OMISSION FROM THE RET URN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALME NT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO S HOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. IN ORDER THAT A PENALTY UNDER SECTION 271 (1)(III) MAY BE IMPOSED, IT HAS TO BE PROVED THAT THE ASSESS EE CONSCIOUSLY MADE THE CONCEALMENT OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 2.4. IN THIS REGARD KIND ATTENTION IS ALSO INVITED TO THE FACT THAT THERE IS NO MOTIVE BEHIND CONCEALING THE EXPEN SE IN QUESTION AND IT IS JUST A CASUAL MISTAKE COMMITTED DUE TO OMISSION THE AS THE TAX IMPACT OF THE ADDITION ON A CCOUNT OF CONVEYANCE EXPENSES IS ONLY RS. 77,800/- (INCLUD ING INTEREST), IS QUITE INSIGNIFICANT IN VIEW OF THE SI ZE OF THE ASSESSEE COMPANY AND THE AMOUNT OF FBT PAID BY THE ASSESSEE. 2.5 IN VIEW OF THE ABOVE FACTS, PROVISIONS OF LAW A ND THE ABOVE DECISION OF APEX COURT, WE RESPECTFULLY SUBMI T THAT CAPTIONED PROCEEDINGS U/S 271(1) (D) OF THE ACT BE DROPPED AS THE ADDITION MADE BY LD. AO WAS CONSEQUE NT ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 13 TO THE SUO MOTO ACCEPTANCE OF THE ASSESSEE THAT THE ABOVE SAID MISTAKE WAS A CASUAL MISTAKE MADE WHILE CALCULATING THE VALUE FOR THE PURPOSE OF FBT AND WA S NOT DUE TO THE DETECTION OF ANY CONCEALMENT OF FACTS OR THE INACCURATE PARTICULARS BY THE LD. AO. 14. THE ASSESSING OFFICER DECIDED THE ISSUE OF PENA LTY AGAINST THE ASSESSEE WITH FOLLOWING OBSERVATIONS:- THE FACTS OF THE CASE ARE THAT AN AMOUNT OF RS. 1155634/- ON ACCOUNT OF CONVEYANCE WAS NOT INCLUDED IN THE VALUE OF FRINGE BENEFIT AS THE SAME WAS TAXABLE . THEREFORE, THE A.O. DISALLOWED THE 20% OF THE SAID EXPENSES AMOUNTING TO RS. 2311268/- WAS ADDED TO TH E TOTAL VALUE OF THE FRINGE BENEFIT. IN VIEW OF ABOVE, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 04-06-2009, FIXING THE CASE FOR 15-06- 2009. IN RESPONSE, ASSESSEE VIDE ITS REPLY DATED 23 -06- 2009 HAS SUBMITTED THAT THE ADDITION MADE BY THE A. O. WAS CONSEQUENT TO THE SUO MOTO ACCEPTANCE OF THE ASSESSEE THAT THE ABOVE SAID MISTAKE WAS A CASUAL MISTAKE MADE WHILE CALCULATING THE VALUE FOR THE PU RPOSE OF FBT AND WAS NOT DUE TO THE DETECTION OF ANY CONCEALMENT OF FACTS OR THE INACCURATE PARTICULARS BY THE A.O. THE ASSESSEE ALSO RELIED UPON THE VARIOUS CASE LAWS AND PRAYED THAT THE PENALTY PROCEEDINGS MAY PLEASE BE DROPPED. THE SUBMISSIONS OF THE ASSESSEE HAVE DULY BEEN CONSIDERED AND I DO NOT FIND ANY MERIT IN THE SAME. MOREOVER, THE FACTS OF THE CASES RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 14 15. DURING THE FIRST APPELLATE PROCEEDINGS AGAINS T THE PENALTY ORDER, THE COMMISSIONER OF INCOME TAX(A) OBSERVED AND HELD AS UNDER:- 4. AFTER CONSIDERING THE FACTS OF THE CASE, OBSE RVATIONS OF THE A.O., SUBMISSIONS OF THE A.R. OF THE APPELLA NT IT IS OBSERVED THAT IN THIS CASE THE FALSE CLAIM MADE BY THE APPELLANT HAD BEEN DETECTED ONLY AFTER THE CASE WA S BEING INVESTIGATED U/S 143(3) OF THE LT. ACT. IT IS , THEREFORE, CLEAR THAT THIS WRONG CLAIM WOULD NOT HA VE COME TO LIGHT IF THE CASE HAD NOT BEEN TAKEN UP FOR SCRUTINY. THE VARIOUS JUDICIAL PRONOUNCEMENTS RELAT ED UPON BY THE A.R. OF THE APPELLANT ARE BASED ON THE ARGUMENT THAT NO INACCURATE PARTICULARS HAD BEEN PROVIDED BY THE ASSESSEE. HOWEVER, IN THE PRESENT C ASE, THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS ON THE BASIS OF WHICH A FALSE CLAIM HAD BEEN MADE. ON THE OTHER HAND, THE A.R. OF THE APPELLANT HAS SUBMITTED THAT THE COMPUTATION OF THE PENALTY WAS A MISTAKE APPARENT FROM RECORD AND THE SAME COMPUTATI ON SHOULD BE RECTIFIED. IN THIS REGARD, THE SUBMISSIO NS OF THE A.R. OF THE APPELLANT APPEAR TO BE JUSTIFIED AND TH E A.O. IS DIRECTED TO RECTIFY THE AMOUNT OF PENALTY IMPOSE D AS PER THE PROVISIONS OF LAW. HOWEVER, WITH REGARD TO THE MERITS OF THE PENALTY, I PLACE RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDI NG USHA INTERNATIONAL (DELHI), 348 ITR 485 (DEL)(2012) , RAJAT EXPORTS IMPORTS P. LTD. 341 ITR 135 (DEL)(201 2) AND DALMIA PVT LTD. V. CIT 348 ITR 469 (DEL)(2012) WHEREIN IT HAS BEEN HELD THAT PENALTY SHOULD BE IMP OSED ONLY IN CASES WHERE WRONG CLAIM HAD BEEN MADE BY TH E APPELLANT. IN VIEW OF THESE JUDICIAL PRONOUNCEMENTS AND THE FACTS OF THE PRESENT CASE, I UPHOLD THE IMPOSIT ION OF PENALTY U/S 271(1)(D). THE A.O. IS, THEREFORE, DIRE CTED TO RECTIFY ANY MISTAKE IN, THE COMPUTATION OF THE PENA LTY WHICH IS UPHELD. ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 15 16. IN THE CASE IN HAND, THE ASSESSING OFFICER POI NTED OUT MISTAKE OF THE ASSESSEE THAT THE VALUE OF THE AMOUNT OF EXPENSES O N ACCOUNT OF CONVEYANCE HAS NOT BEEN CONSIDERED IN THE VALUE OF FBT. AS PE R PENALTY ORDER THE ASSESSEE OFFERED THIS AMOUNT SUO MOTO OR VOLUNTARIL Y AND DID NOT AGITATE THE ISSUE FURTHER IN APPEAL. THE EXPLANATION BEFORE ASS ESSING OFFICER DURING PENALTY PROCEEDINGS WAS TWOFOLD, FIRST, THE MISTAKE COMMITTED BY THE ASSESSEE AT THE TIME OF PREPARATION OF RETURN OF IN COME WAS JUST AN ERROR OF OMISSION WHICH WAS IDENTIFIED BY THE ASSESSEE AT TH E TIME OF PREPARATION OF DETAILS FOR THE ASSESSMENT AND SECONDLY, IT WAS JUS T A CASUAL MISTAKE COMMITTED DUE TO OMISSION AS THE TAX IMPACT OF THE ADDITION ON ACCOUNT OF CONVEYANCE EXPENSES IS ONLY RS.77,800 (INCLUDING IN TEREST) WHICH IS QUITE INSIGNIFICANT IN VIEW OF SIZE OF THE ASSESSEE COMPA NY AND THE AMOUNT OF FBT PAID BY THE ASSESSEE. 17. THE ASSESSING OFFICER REJECTED THE ABOVE EXPLAN ATION AND HELD THAT VOLUNTARY SURRENDER OF INCOME DOES NOT AVOID PENALT Y. THE COMMISSIONER OF INCOME TAX(A) HELD THAT THE WRONG CLAIM WOULD NO T HAVE COME TO LIGHT IF THE CASE HAD NOT BEEN TAKEN FOR SCRUTINY BUT AS PER PENALTY ORDER AND DISCUSSIONS MADE HEREINABOVE, WE CLEARLY OBSERVE TH AT THE PRESENT CASE IS NOT RELATED TO THE WRONG CLAIM OF THE ASSESSEE. HE NCE, THE COMMISSIONER OF INCOME TAX(A) UPHELD THE PENALTY ON WRONG BASIS AND RELYING ON IRRELEVANT ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 16 CITATIONS. AS PER FACTUAL MATRIX, THE ASSESSEE DID NOT INCLUDE VALUE OF CONVEYANCE EXPENSES TO THE VALUE OF FBT. OBVIOUSLY , THE VOLUNTARY SURRENDER DURING ASSESSMENT PROCEEDINGS DOES NOT CR EATE ANY IMMUNITY FROM PENALTY FOR THE ASSESSEE BUT AS PER EXPLANATION 1 T O SECTION 271(1) OF THE ACT, THE PENALTY CAN ONLY BE IMPOSED WHEN (I) THE A SSESSEE FAILS TO OFFER EXPLANATION OR, (II) THE EXPLANATION OF THE ASSESSE E IS FOUND TO BE FALSE OR (III) THE ASSESSEE OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE OR (IV) THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION I S BONA FIDE AND THAT ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. 18. IN THE CASE IN HAND, THE ASSESSEE HAS OFFERED A BOVE EXPLANATION WHICH WAS NOT FOUND TO BE FALSE AND THE AUTHORITIES BELOW HAVE NOT ADJUDICATED THE EXPLANATION IN A PROPER WAY BECAUSE AS PER DECISION OF HONBLE APEX COURT IN THE CASE OF MAC DATA (P) LTD. VS C.I.T., VOLUNTARY SURRENDER IS NOT A COVER TO PROVIDE IMMUNITY FROM PENALTY BUT AT THE S AME TIME, EXPLANATION OF THE ASSESSEE IS TO BE CONSIDERED AND IF THE SAME IS FOUND TO BE CONSIDERABLE AND BONAFIDE, THEN PENALTY WILL NOT BE IMPOSABLE AS PER EXPLANATION 1 TO SECTION 271(1) OF THE ACT. 19. IN THE INSTANT CASE, THERE IS NO FINDING FR OM THE AUTHORITIES BELOW THAT IT WAS NOT A MISTAKE OF OMISSION AND ON THE OTHER H AND, THE MISTAKE OF ITA NO. 3256/DEL/2013 ASSTT.YEAR: 2006-07 17 OMISSION WAS IDENTIFIED BY THE ASSESSING OFFICER AN D THE ASSESSEE ACCEPTED THE SAME WITHOUT ANY DISPUTE. IN THIS SITUATION, W E ARE UNABLE TO ACCEPT THE CONTENTION OF THE COMMISSIONER OF INCOME TAX(A) THA T THE ASSESSEE MADE A WRONG CLAIM WHICH WAS DETECTED AND DISALLOWED BY TH E ASSESSING OFFICER. ACCORDINGLY, WE HOLD THAT THE EXPLANATION OFFERED B Y THE ASSESSEE DURING PENALTY PROCEEDINGS WAS ACCEPTABLE WHICH WAS WRONGL Y REJECTED BY THE AO AND THE COMMISSIONER OF INCOME TAX(A) AND PENALTY W AS NOT IMPOSABLE ON THE ASSESSEE IN THIS REGARD AND WE CANCEL THE PENAL TY ORDERS. THUS, GROUND NOS. 1, 2 AND 3 OF THE ASSESSEE ARE ALLOWED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2013. SD/- SD/- (SHAMIM YAHYA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 13TH DECEMBER 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR