ITO, New Delhi V. M/s. Omniglobe Unformation Technologies (India) Pvt. Ltd., Delhi

ITA 3808/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98064 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-11-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA

Judgement Text

APPEAL NO ITA 3808/DEL/2013 ITO V OMNIGLOBE INFORMATION TECHNOLOGIES (INDIA) LIMITED A Y 2005 - 06 1 | P A G E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO. 3808 /DEL/ 2013 (ASSESSMENT YEAR: 2005 - 06 ) ITO, WARD - 13(4), ROOM NO.219, C.R.BUILDING, NEW DELHI VS. OMNIGLOBE INFORMATION TECHNOLOGIES (INDIA) PVT. LTD, E - 11, RAJOURI GARDEN, DELHI PAN:AAACO6606M ( ASSESSEE ) (REVENUE) ASSESSEE BY : SH. NEERAJ JAIN, CA REVENUE BY : SH.P. DAM KANUNJNA, SR. DR DATE OF HEARING 24.11.2015 DATE OF PRONOUNCEMENT 2 3 . 12 .2015 O R D E R PER PRASHANT MAHARISHI , A . M . 1 . THE PRESENT APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XVI, DELHI DATED 22.03.2013, DELETING THE PENALTY OF RS.21,68,037/ - U/S 271(1)(C) OF THE INCOME TAX - ACT, 1961 , IMPOSED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE COMPANY. THE ONLY ISSUES IN APPEAL OF THE REVENUE COVERED IN TWO GROUNDS OF APPEAL IS THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.21,68,037/ - FOR FURNISHING PARTICULARS OF THE ASSESSEE COMPANY. THOUGH , HONBLE ITAT HAS SUSTAINED THE QUANTUM OF ADDITION TAKEN FOR CLAIMING EXPENSES WHICH THE COMPANY WAS NOT ENTITLED. 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAS CLAIMED EXPENSES OF RS.59,24,809/ - PERTAINING FOR APRIL AND MAY 2004. THE LD ASSESSING OFFICER DISALLOWED THIS EXPENSES BY HOLDING THAT N O SERVICE S WERE GENERATED OR PROVIDED DURING THE MONTH OF APRIL AND MAY 2004 AND THE EXPENSES ARE RELATING TO RECRUITMENT OF EMPLOYEES AND THEIR TRAINING. THEREFORE , THE PAGE 2 OF 3 ASSESSING OFFICER WAS OF THE VIEW THAT THE BUSINESS OF THE ASSESSEE COMPANY WAS SET UP NOT DURING APRIL AND MAY 2004 BUT W.E.F. 1 ST JUNE 2004. THE ASSESSEE CARRIED THE MATTER BEFORE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), WHO DELETED THE ADDITION BY HOLDING THAT RECRUITMENT AND TRAINING EXPENSES OF EMPLOYEE IS NECESSARY FOR COMMENCEME NT OF THE BUSINESS AND THEREFORE HE DELETED THE DISALLOWANCE. 3 . REVENUE CARRIED THE MATTER BEFORE THE HONBLE ITAT, WHO REVERSED THE DECISION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND UPHELD THE ORDER OF THE ASSESSING OFFICER BY HOLDING THAT T HESE EXPENSES WERE INCURRED BEFORE THE COMMENCEMENT OF BUSINESS AND THEREFORE THESE EXPENSES WERE ELIGIBLE TO BE ALLOWED AS REVENUE EXPENSES. ON THIS BASIS PENALTY U/S 271(1)(C) WERE FINALIZED AND AO LEVIED A PENALTY OF RS.21,68,370/ - . AGAINST THE PENALTY THE ASSESSEE PREFERRED AN APPEAL BEFORE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WHO IN TURN DELETED THE PENALTY HOLDING THAT CLAIM OF THE ASSESSEE WAS BONAFIDE AND THE ASSESSEE HAS DISCLOSED ALL PARTICULARS OF INCOME AND FACTS REGARDING THE CLAIM OF T HE ASSESSEE. HE WAS ALSO OF THE VIEW THAT MERELY BECAUSE THE ASSESSEES CLAIM OF EXPENSES WAS NOT ACCEPTABLE TO REVENUE THAT BY ITSELF CANNOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE US CONTESTING THE DELETION OF PENALTY IMPOSED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS). 4 . BEFORE US THE LD DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT BEFORE SETTING UP OF THE BUSINESS THE ASSESSEE HAS CLAIMED THOSE EXPENSES WHICH ARE NOT ALLOWABLE AND THEREFORE THE AO HAS RIGHTLY LEVIED THE PENALTY ON THIS ISSUE. 5 . BEFORE US THE LD AR SUBMITTED THAT REGARDING QUANTUM ADDITION THE ASSESSEE PREFERRED AN APPEAL BEFORE THE HONB LE DELHI HIGH COURT, THE HONBLE HIGH COURT BY ORDER DATED 11 TH AUGUST 2014 , IN ITA 257/2012 HAS HELD THAT THE BUSINESS OF THE ASSESSEE WAS SET UP W.E.F. 01.04.2004 AND NOT W.E.F 01.06.2004 AS HELD BY ITAT. HE SUBMITTED THAT AS THE QUANTUM ADDITION ITSELF DOES NOT SURVIVE ANY MORE IN VIEW OF THE DECISION OF THE HONBLE DELHI HIGH COURT AS STATED ABOVE THE PENALTY CANNOT SURVIVE. PAGE 3 OF 3 6 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION AS WELL AS PERUSED THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF THE ASSESSEE IN QUANTUM MATTER WHEREAS HONBLE HIGH COURT HAS HELD THAT THE BUSINESS OF THE ASSESSEE HAS BEEN SET UP W.E.F. 01.04.2004 AND NOT FROM 01.06.2004 AS HELD BY ITAT. THEREFORE, IN VIEW THE ABOVE ON WHICH PENALTY U/S 271(1)(C) IN THE IMPUGNED ORDER I S BASED CANNOT SURVIVE. FURTHERMORE, A . MERELY BECAUSE THE ADDITION IS CONFIRMED ASSESSEE CANNOT BE BURDEN WITH THE PENALTY U/S 271(1)(C) . B . AS THE ISSUE IS NOW DECIDED BY HONOURABLE HIGH COURT IT SUGGESTS THAT THE DISALLOWANCE ON WHICH THE PENALTY IS LEVIED IS HIGHLY DEBATABLE. ON DEBATABLE DISALLOWANCES PENALTY U/S 271(1) (C) CANNOT BE LEVIED. C . FURTHER REVENUE COULD NOT SUBMIT THAT ANY EXPLANATION OFFERED BY ASSESSEE WAS NOT BONA FIDE OR ANY MATERIAL PARTICULARS WERE FURNISHED BY THE ASSESSEE WAS INACCURATE . ON TH ESE COUNTS ALSO APPEAL OF REVENUE CANNOT SURVIVE. THEREFORE, WE CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND DELETE THE PENALTY IMPOSED U/S 271(1) (C) OF THE ACT. THEREFORE , WE DISMISS BOTH THE GROUNDS OF THE APPEAL OF REVENUE. 7 . IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 . 12 . 2015 . - S D / - - S D / - ( H. S. SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /12 / 2015 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI