National Projects Construction Corporation Ltd., New Delhi V. DCIT, New Delhi

ITA 4294/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6271 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 02-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA SENIOR
• Assessee Lawyers: RAKESH GUPTA; SOMIL AGARWAL S

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH E EE E : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SMT. BEENA A. PILLAI SMT. BEENA A. PILLAI SMT. BEENA A. PILLAI SMT. BEENA A. PILLAI, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 4294/DEL/2015 4294/DEL/2015 4294/DEL/2015 4294/DEL/2015 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2004 2004 2004 2004 - -- - 05 0505 05 M/S NATIONAL PROJECTS M/S NATIONAL PROJECTS M/S NATIONAL PROJECTS M/S NATIONAL PROJECTS CONSTRUCTION CORPORATION CONSTRUCTION CORPORATION CONSTRUCTION CORPORATION CONSTRUCTION CORPORATION LIMITE LIMITE LIMITE LIMITED, D,D, D, 30 3030 30- -- -31, RAJA HOUSE, 31, RAJA HOUSE, 31, RAJA HOUSE, 31, RAJA HOUSE, NEHRU PLACE, NEHRU PLACE, NEHRU PLACE, NEHRU PLACE, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 019. 110 019. 110 019. 110 019. PAN : AAACR6117Q. PAN : AAACR6117Q. PAN : AAACR6117Q. PAN : AAACR6117Q. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -13(1), 13(1), 13(1), 13(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GUPTA AND SHRI SOMIL AGARWAL, ADVOCATES. RESPON DENT BY : SHRI P. DAM KANUNJNA, SENIOR DR. DATE OF HEARING : 28.03.2016 28.03.2016 28.03.2016 28.03.2016 DATE OF PRONOUNCEMENT : 29.03.2016 29.03.2016 29.03.2016 29.03.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2004-05 IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-6, NEW DELHI DATED 24 TH MARCH, 2015. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASS ESSEE IS AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 AMOUNTING TO `1,20,26,717/-. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ASSESSEE IS A GOVERNMENT OF INDIA ENTERPRISE. THE ASSESSING OFFICER MADE THE ADDITION OF `3,35,23,951 /- U/S 36(1)(VA) BECAUSE OF DELAY IN DEPOSIT OF EMPLOYEES SHARE OF PROVIDENT FUND. ITA-4294/DEL/2015 2 THAT EVEN AFTER THE ADDITION, THE ASSESSED LOSS WAS `54,23,00,000/-. THAT ALL THE FACTS RELATING TO THE NON-DEPOSIT OF E MPLOYEES CONTRIBUTION TO THE PROVIDENT FUND WERE DULY DISCLOSED IN THE AS SESSEES AUDITED BALANCE SHEET. THAT NO FACT RELATING TO THE ABOVE PAYMENT WAS EITHER CONCEALED NOR ANY WRONG PARTICULARS OF FACT WERE FU RNISHED BY THE ASSESSEE. THAT ON ACCOUNT OF ABOVE DISALLOWANCE, T HE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) AMOUNTING TO ` 1,20,26,717/-. HE STATED THAT ON THESE FACTS, THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. ( 2010) 322 ITR 158 (SC) WOULD BE SQUARELY APPLICABLE. HE FURTHER POIN TED OUT THAT IN THE CASE OF ANOTHER ASSESSEE, SIMILAR PENALTY WAS LEVIE D FOR NON-DEPOSIT OF PROVIDENT FUND WHICH WAS CANCELLED BY THE ITAT IN T HE CASE OF THE COOPERATIVE TEXTILES MILLS LTD. VS. ADDL.CIT [201 5] 43 CCH 0164 (DEL- TRIB). 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW AND HE ALSO RELIED UPON THE DECIS ION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIO N P.LTD. [2010] 327 ITR 510 (DELHI). 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED MATERIAL PLACED BEFORE US. IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA), HONBLE APEX COURT HELD AS UNDER:- WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 6. HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ZOOM COMMUNICATION P.LTD. (SUPRA) HELD AS UNDER:- ITA-4294/DEL/2015 3 IN THE CASE OF RELIANCE PETROPRODUCTS P.LTD. [2010 ] 322 ITR 158 (SC), THE ADDITION MADE BY THE ASSESSING OF FICER IN RESPECT OF THE INTEREST CLAIMED AS A DEDUCTION UNDE R SECTION 36(1)(III) OF THE ACT WAS DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) THOUGH IT WAS LATER RESTORED, BY THE TRIBUNAL, TO THE ASSESSING OFFICER . THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF T HE TRIBUNAL WAS ADMITTED BY THE HIGH COURT. IT WAS, I N THESE CIRCUMSTANCES, THAT THE TRIBUNAL CAME TO THE CONCLU SION THAT THE ASSESSEE HAD NEITHER CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS THEREOF. IN RECORDING THIS FINDING, THE TRIBUNAL FELT THAT IF TWO VIEWS OF THE CLAIM OF THE ASSESSEE WERE POSSIBLE, THE EXPLANATION OFFERED BY IT COULD NOT BE SAID TO BE FALSE. THIS, HOWEVER, IS N OT THE FACTUAL POSITION IN THE CASE BEFORE US. THE FACTS OF THE PRESENT CASE THUS ARE CLEARLY DISTINGUISHABLE. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT C ANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSES SEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMAL L PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS N OT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BAS IS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAI M IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A C LAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FO UNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT B E LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WH OLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BE ING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR R ETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF-ASSESSMENT UNDER SECT ION 143(1) OF THE ACT AND EVEN IF THEIR CASE IS SELECTE D FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TA X, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAI MS OF THIS NATURE, ACTUATED BY A MALA FIDE INTENTION T O EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOU T ITA-4294/DEL/2015 4 PAYING THE TAX LEGALLY PAYABLE BY THEM, IF THEIR CA SES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY T HE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. WE FIND THAT THE ASSESSEE BEFORE US DID NOT EXPLAI N EITHER TO THE INCOME-TAX AUTHORITIES OR TO THE INCO ME-TAX APPELLATE TRIBUNAL AS TO IN WHAT CIRCUMSTANCES AND ON ACCOUNT OF WHOSE MISTAKE, THE AMOUNTS CLAIMED AS DEDUCTIONS IN THIS CASE WERE NOT ADDED, WHILE COMPU TING THE INCOME OF THE ASSESSEE-COMPANY. WE CANNOT LOSE SIGHT OF THE FACT THAT THE ASSESSEE IS A COMPANY WH ICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN COMPUTATI ON OF ITS INCOME, AND ITS ACCOUNTS ARE COMPULSORILY SUBJE CTED TO AUDIT. IN THE ABSENCE OF ANY DETAILS FROM THE ASSE SSEE, WE FAIL TO APPRECIATE HOW SUCH DEDUCTIONS COULD HAVE B EEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE-COMP ANY AND HOW IT COULD ALSO HAVE ESCAPED THE ATTENTION OF THE AUDITORS OF THE COMPANY. 7. THUS, AFTER CONSIDERING THE DECISION IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA), IT WAS STATED BY THE HONBLE JURISDICTIONAL HIGH COURT THAT MERE SUBMITTING A CL AIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE BUT IF THE CLAIM, BESIDE S BEING INCORRECT IN LAW IS MALA FIDE , EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INT O PLAY. IF THE ASSESSEES CLAIM IS BONA FIDE, THEN H E WILL NOT BE LIABLE FOR PENALTY. THEREFORE, THE PRECISE QUESTION TO BE ADJ UDICATED BY US IS WHETHER THE ASSESSEES CLAIM WAS BONA FIDE OR MALA FIDE . 8. ON THE FACTS OF THE ASSESSEES CASE, WE FIND THA T THE ASSESSEE IS A GOVERNMENT OF INDIA UNDERTAKING WHICH FILED THE R ETURN DISCLOSING A LOSS OF `57.58 CRORES. EVEN AFTER THE ADDITION MAD E BY THE ASSESSING OFFICER, THE ASSESSED LOSS IS `54.23 CRORES. THE L EARNED COUNSEL FURNISHED BEFORE US A CHART SHOWING THAT IN ALL THE PRECEDING AS WELL AS SUBSEQUENT YEARS ALSO, THERE IS HUGE ASSESSED LOSS. THUS, THE ASSESSEE IS NOT EVEN ENTITLED FOR CARRY FORWARD OR SET OFF OF THE LOSS. IN THE ABOVE CIRCUMSTANCES, THERE CANNOT BE ANY MALA-F IDE IN NOT MAKING SUO MOTU DISALLOWANCE U/S 36(1)(VA) BY THE ASSESSEE. THER EFORE, IN ITA-4294/DEL/2015 5 THE FACTS OF THE CASE, THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD. (SUPRA) WOULD BE SQ UARELY APPLICABLE. RESPECTFULLY FOLLOWING THE SAME, WE CANCEL THE PENA LTY IMPOSED U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 29.03.2016 . SD/- SD/- (BEENA A. PILLAI (BEENA A. PILLAI (BEENA A. PILLAI (BEENA A. PILLAI ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S NATIONAL PROJECTS CONSTRUCTI ON M/S NATIONAL PROJECTS CONSTRUCTION M/S NATIONAL PROJECTS CONSTRUCTION M/S NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED, 30 CORPORATION LIMITED, 30 CORPORATION LIMITED, 30 CORPORATION LIMITED, 30- -- -31, RAJA HOUSE, 31, RAJA HOUSE, 31, RAJA HOUSE, 31, RAJA HOUSE, NEHRU PLACE, NEW DELHI NEHRU PLACE, NEW DELHI NEHRU PLACE, NEW DELHI NEHRU PLACE, NEW DELHI 110 019. 110 019. 110 019. 110 019. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -13(1), NEW DELHI. 13(1), NEW DELHI. 13(1), NEW DELHI. 13(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR