JCIT, Special Range- 1, New Delhi V. Airport Authority of India, New Delhi

ITA 369/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8589 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHOOP SINGH SENIOR
• Assessee Lawyers: ANIL KATHURIA
• Keywords: Question of law; Difference of opinion; Revised return; Set aside
• Section: 271(1)(c); 143(3); 274; 73; 13; 27; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.369/DEL./2018 (ASSESSMENT YEAR : 2014-15) ADDL.CIT, SPL. RANGE 1, VS. M/S. AIRPORTS AUTHORIT Y OF INDIA, NEW DELHI. RAJIV GANDHI BHAWAN, SAFDARJUNG AIRPORT, NEW DELHI 110 003. (PAN : AAACA6412D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL KATHURIA, ADVOCATE REVENUE BY : SHRI BHOOP SINGH, SENIOR DR DATE OF HEARING : 04.08.2021 DATE OF ORDER : 13.08.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ADDL.CIT, SPL. RANGE 1, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 11.09.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-32, NEW DELHI CONFIRMING THE PENALTY ORDER DATED 23.06.2017 PASSED UNDER SEC TION 271(1)(C) ITA NO.369/DEL./2018 2 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2014-15 ON THE GROUNDS INTER ALIA T HAT :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING PENALTY OF RS.1,65,52,880 /- IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ON THE BASIS OF ASSESSME NT FRAMED UNDER SECTION 143(3) OF ACT, PENALTY PROCEEDINGS HAVE BEE N INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME TO T HE TUNE OF RS.4,86,99,262/- WHILE CLAIMING RESEARCH & DEVELOPM ENT (R&D) EXPENDITURE, WHICH THE ASSESSING OFFICER (AO) HAS T REATED TO BE CAPITAL IN NATURE BY DISALLOWING THE SAME. DECLINI NG THE CONTENTIONS RAISED BY THE ASSESSEE THAT NONE OF THE INACCURATE PARTICULARS HAVE BEEN FURNISHED WHILE CLAIMING DEDU CTION OF RS.4,86,99,262/- ON ACCOUNT OF R&D EXPENSES AND THE REBY LEVIED THE PENALTY TO THE TUNE OF RS.1,65,52,880/-. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING APPEAL WHO HAS DELETED THE PENALTY BY ALLOWI NG THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ITA NO.369/DEL./2018 3 ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE IS A PUBLIC SECTOR UN DERTAKING AND MAINTAINING 125 AIRPORTS COMPRISING 68 OPERATIONAL AIRPORTS, 25 CIVIL ENCLAVES I.E. CIVIL AIR TERMINALS AT DEFENSE CONTROLLED AIRPORTS AND 31 NON-SERVICES AT ALL CIVIL AIRPORTS IN THE COUNTRY. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS CLAIMED T O HAVE INCURRED EXPENDITURE OF RS.5.41 CRORES AS EXPENSES ON R&D. IT IS ALSO NOT IN DISPUTE THAT ASSESSEE HAS SET UP R&D CENTRE AT H YDERABAD DURING THE YEAR UNDER ASSESSMENT. AO TREATED THE PAYMENT MADE FOR R&D EXPENDITURE AS PART OF SETTING UP THE SAID R&D CENT RE AT HYDERABAD. IT IS ALSO NOT IN DISPUTE THAT THE AO T REATED ALL THE EXPENDITURE CLAIMED BY THE ASSESSEE TO BE CAPITAL I N NATURE BY ALLOWING AN AMOUNT OF RS.54,11,029/- I.E. 10% AS DE PRECIATION AND MADE ADDITION OF THE REMAINING AMOUNT OF RS.4,86,99 ,262/-. 6. TAKING INTO ACCOUNT THE AFORESAID UNDISPUTED FAC TS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) DELETED THE PENALTY BY RETURNING FOLLOWING FINDINGS :- 5.3 IT IS ALSO OBSERVED FROM THE AVAILABLE RECORDS THAT THE INITIATION OF THE PENALTY U/S 271 (1)(C) WAS MADE I N THE ORDER U/S 143(3) UNDER THE LIMB 'FURNISHING INACCURATE PARTIC ULARS OF INCOME'. IN FACT, IT IS GATHERED FROM THE APPELLANT 'S SUBMISSIONS FILED DURING THE COURSE OF THE PRESENT APPEAL THAT PENALTY U/S 271 (1)(C) WAS IMPOSED BY THE IMPUGNED ORDER ALTHOUGH T HE APPELLANT HAD SUBMITTED ALL DETAILS REGARDING ITS CLAIM OF DE DUCTION OF EXPENSES. IT IS ALSO OBSERVED FROM THE PLETHORA OF JUDICIAL ITA NO.369/DEL./2018 4 PRECEDENTS RELIED UPON BY THE APPELLANT THAT COMPLE TE DETAILS FILED IN THE RETURN OF INCOME AND ITS ACCOMPANYING DOCUME NTS IN A BONA FIDE MANNER WOULD TAKE A CASE AWAY FROM THE CL UTCHES OF PENALTY U/S 271 (1)(C) ESPECIALLY THE LIMB - 'FURNI SHING INACCURATE PARTICULARS OF INCOME' IN SPITE OF THE FACT THAT TH E CLAIM OF DEDUCTION IS NOT LEGALLY TENABLE. THE PRINCIPLE BEH IND THIS LIMB, U/S 271(1)(C), IS THE NECESSITY OF CONTUMACIOUS CON DUCT OF THE ASSESSEE, WHICH IN MY VIEW, IS ABSENT IN THE PRESEN T CASE. THE APPELLANT HAS DISCLOSED ITS CLAIM AND HAS ALSO REVI SED IT IN ITS REVISED RETURN FILED WELL IN TIME. AGAIN, THE FACT THAT THE APPELLANT IS A GOVERNMENT OF INDIA ENTERPRISE AND IN MY VIEW, THE RATIO AS LAID IN CIT V. SENIOR ACCOUNTS OFFICER, MADHYA PRAD ESH ELECTRICITY BOARD [2005J 276 ITR 84 (MP)(SUPRA)ALSO SQUARELY APPLIES TO THE FACTS OF THE PRESENT CASE. ALSO, IN STEEL AUTHORITY OF INDIA LTD. VS. ITO [ITD 100, 029/ TTJ 107, 372, ITA T NAGPUR (SUPRA) RELIED UPON BY THE APPELLANT, IT IS HELD IN TER ALIA, 'THERE COULD BE NO PERSONAL GAIN TO ASSESSEE AS IT IS A GO VERNMENT COMPANY AND THEREFORE, ALLEGATION IN THE ORDERS OF LOWER AUTHORITIES AS TO MALA FIDE INTENTION ARE NOT JUSTI FIED ... '. FURTHER, DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT'S AR RELIED ON THE ORDERS OF THE FIRST AP PELLATE AUTHORITY IN ITS OWN CASE FOR THE AY 2010-11 VIDE APPEAL ORDE R NO. 254/16- 17 (DATED 161082017), WHEREIN PENALTY LEVIED U/S 27 1(1)(C) HAS BEEN CANCELLED FOLLOWING THE REASONING THAT 'SINCE, APPELLANT HAS DISCLOSED NECESSARY FACTS' 5.4 IT IS ALSO OBSERVED FROM THE AVAILABLE RECORDS THAT THE INITIATION OF THE PENALTY U/S 271(1)(C) WAS MADE IN THE ORDER U/S 143(3) UNDER THE LIMB 'FURNISHING INACCURATE PARTIC ULARS OF INCOME' WHILE IN THE NOTICE U/S 274 THERE IS NO TIC K MARK ON THE APPROPRIATE LIMB (OR STRIKING OFF OF THE INAPPROPRI ATE LIMB) AS REQUIRED U/S 271 (1 )(C) AND FINALLY, THE PENALTY I S IMPOSED FOR 'FURNISHING INACCURATE PARTICULARS OF INCOME' (AS U NDERSTOOD FROM THE IMPUGNED ORDER). 5.5 THUS, FROM THE ABOVE PARAS IT CAN BE INFERRED T HAT THE DISALLOWANCES OF THE APPELLANT'S CLAIMS OF EXPENDIT URE WERE ON NOT SATISFYING THE STIPULATED CONDITIONS FOR THEIR ALLOWABILITY UNDER THE ACT, I.E. U/S 37 OF THE ACT. SUCH DISALLO WANCES, IN MY OPINION, CAN HARDLY COME UNDER THE AMBIT OF SECTION 271(1)(C) OF THE ACT AS THESE ARE MERE DISALLOWANCES OF CLAIMS- THE PRESENT CASE FALLS NEITHER UNDER THE LIMB 'CONCEALMENT OF P ARTICULARS OF INCOME' NOR UNDER THE LIMB 'FURNISHING INACCURATE P ARTICULARS OF SUCH INCOME'. FURTHER, IN VIEW OF SIMILAR CIRCUMSTA NCES IN THE AY 2010-11, I AM IN AGREEMENT WITH THE REASONING OF THE DECISION OF THE CIT (A) IN HIS APPELLATE ORDER REFE RRED TO ABOVE. AS THE AR'S SUBMISSION AT THE APPELLATE STAGE IS BO RNE OUT FROM RECORDS AND IS IN SYNC WITH THE EXTANT LAW ON THE I SSUE, I AM IN AGREEMENT WITH THE ARGUMENTS ADDUCED BY THE APPELLA NT AGAINST THE IMPOSITION OF PENALTY U/S 271(1 )(C). ACCORDIN GLY, WITH DUE ITA NO.369/DEL./2018 5 DEFERENCE TO THE DECISION OF THE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) AND IN CI T VS. SSA'S EMERALD MEADOWS (SC) [2016]73 TAXMANN.COM 248 WHERE IN SLP OF THE DEPARTMENT AGAINST THE DECISION OF THE H ON'BLE KARNATAKA HC IN CIT VS SSA'S EMERALD MEADOWS (ITA N O. 380/2015) WAS DISMISSED VIDE ITS ORDER DATED 26.09. 2016, THE PENALTY (OF RS.1,65,52,880/-) LEVIED VIDE THE IMPUG NED ORDER IS CANCELLED. 7. PERUSAL OF THE ORDER PASSED BY THE LD. CIT (A) S HOWS THAT THE LD. CIT(A) DELETED THE PENALTY ON TWO GROUNDS : (I) THAT NO VALID NOTICE U/S 274 OF THE ACT HAS BEEN ISSUED TO THE AS SESSEE SO AS TO INFORM THE ASSESSEE AS TO UNDER WHICH LIMB OF SECTI ON 271(1)(C) PENALTY PROCEEDINGS HAVE BEEN INITIATED; AND (II) T HAT DISALLOWANCES OF CLAIM MADE BY THE ASSESSEE FOR INCURRING EXPENDI TURE ON ACCOUNT OF R&D DOES NOT COME UNDER THE PURVIEW OF SECTION 2 71(1)(C) OF THE ACT AND RELIED UPON THE DECISIONS RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) AND CIT VS. SSAS EMERAL D MEADOWS (2016) 73 TAXMANN.COM 24 8. 8. LD. DR FOR THE REVENUE EXCEPT FOR RELYING UPON T HE ORDER PASSED BY THE AO HAS FAILED TO BRING ON RECORD IF V ALID NOTICE U/S 271(1)(C) READ WITH SECTION 274 OF THE ACT WAS ISSU ED TO THE ASSESSEE AND THAT MERE CLAIM OF EXPENDITURE BY THE ASSESSEE IF DISALLOWED DOES NOT AMOUNT TO FURNISHING OF INACCUR ATE PARTICULARS OF INCOME OR CONCEALING PARTICULARS OF INCOME DURIN G ASSESSMENT PROCEEDINGS. ITA NO.369/DEL./2018 6 9. HONBLE APEX COURT IN CASE OF CIT VS. SSAS EMERALD MEADOWS - (2016) 73 TAXMANN.COM 248 (SC) WHILE DISMISSING THE SLP FILED BY THE REVENUE QUASHING THE PENALTY B Y THE TRIBUNAL AS WELL AS HONBLE HIGH COURT ON GROUND OF UNSPECIF IED NOTICE HAS HELD AS UNDER:- SECTION 274, READ WITH SECTION 271(1)(C), OF THE I NCOME-TAX ACT, 1961 - PENALTY - PROCEDURE FOR IMPOSITION OF (CONDITIONS P RECEDENT) - ASSESSMENT YEAR 2009-10 - TRIBUNAL, RELYING ON DECI SION OF DIVISION BENCH OF KARNATAKA HIGH COURT RENDERED IN CASE OF C IT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 1TR 565/218 TAXMAN 423/35 TAXMANN.COM 250, ALLOWED APPEAL OF AS SESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER UNDER SECTI ON 274 READ WITH SECTION 271 (1 )(C) WAS BAD IN LAW, AS IT DID NOT S PECIFY UNDER WHICH LIMB OF SECTION 271 (1 )(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME - HIGH COURT HELD THAT MATTER WAS COVERED BY AFORESAID DECISION OF DIVISION BENCH AND , THEREFORE, THERE WAS NO SUBSTANTIAL QUESTION OF LAW ARISING FOR DETE RMINATION - WHETHER SINCE THERE WAS NO MERIT IN SLP FILED BY REVENUE, S AME WAS LIABLE TO BE DISMISSED - HELD, YES [PARA 2] [IN FAVOUR OF ASSESS EE] 10. HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA) WHILE DECIDING THE IDENTICAL ISSUE HELD AS UNDER :- 21. THE RESPONDENT HAD CHALLENGED THE UPHOLDING OF THE PENALTY IMPOSED UNDER SECTION 271 (1) (C) OF THE ACT, WHICH WAS ACCEPTED BY THE ITAT. IT FOLLOWED THE DECISION OF THE KARNATAKA HIGH COURT IN CIT V. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR) AND OBSERVED THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW IF IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1) (C) THE PE NALTY PROCEEDINGS HAD BEEN INITIATED UNDER I.E. WHETHER FOR CONCEALME NT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE KARNATAKA HIGH COURT HAD FOLLOWED THE ABOVE JUDGMEN T IN THE SUBSEQUENT ORDER IN COMMISSIONER OF INCOME TAX V. S SA'S EMERALD MEADOWS (2016) 73 TAXMAN.COM 241 (KAR) , THE APPEAL AGAINST WHICH WAS DISMISSED BY THE SUPREME COURT OF INDIA IN SLP NO. 11485 OF2016 BY ORDER DATED 5TH AUGUST, 2016. ITA NO.369/DEL./2018 7 11. FOLLOWING THE DECISIONS RENDERED IN THE CASES O F CIT VS. SSAS EMERALD MEADOWS AND PR. CIT VS. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT WHEN THE NOTICE ISSUED BY THE AO IS BAD IN LAW BEING VAGUE AND AMBIGUOUS HAVING NOT SPECIFIED UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE ACT THE SAME HAS BEEN ISSUED, THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) ARE NOT SUSTAIN ABLE. 12. HONBLE APEX COURT IN CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. - 322 ITR 158 (S.C.) HELD THAT, BY NO STRETCH OF IMAGINATION CAN MAKING AN INACCURATE CLAIM TANTAMOUNT TO FURNIS HING OF INACCURATE PARTICULARS WHEN NONE OF THE INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE. IN THE INSTANT CASE, IT WAS A MERE CASE OF DIFFERENCE OF OPINION TAKEN B Y THE AO. 13. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THERE IS NO PERVERSITY OR INFI RMITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), HENCE APP EAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 13 TH DAY OF AUGUST, 2021. SD/- SD/- (O.P. KANT) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 13 TH DAY OF AUGUST, 2021 TS ITA NO.369/DEL./2018 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-22, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.