ACIT, New Delhi V. M/s. Cellcap Invofin India Pvt. Ltd., New Delhi

ITA 4364/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90942 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Assessee Lawyers: ROHIT JAIN
• Keywords: Wrong claim; Difference of opinion; Onus to prove
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER ITA NO. 4364/DEL/2013 A.Y. 2009-10 ACIT, CENTRAL CIRCLE 2, VS. M/S CELLCAP INVOFIN I NDIA PVT. LTD., NEW DELHI. A-60, NARAINA INDL. AREA, PHASE-I, NEW DELHI. PAN: AAACC 4102 A AND ITA NO. 4365/DEL/2013 A.Y. 2009-10 ACIT, CENTRAL CIRCLE 2, VS. M/S CELLPHONE CREDIT & NEW DELHI. SECURITIES PVT. LTD. A-60, NARAINA INDL. AREA, PHASE-I, NEW DELHI. PAN: AAACC 4101 D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SMT. PARVINDER KAUR SR. DR RESPONDENT BY : SHRI ROHIT JAIN ADV. DATE OF HEARING : 25/03-2015 DATE OF ORDER : 17-04-2015. O R D E R PER S.V. MEHROTRA, A.M:- THESE APPEALS, PREFERRED BY THE REVENUE IN RESPECT OF AFOREMENTIONED ASSESSEES ASSAILING THE ORDERS OF CIT(A), CANCELLI NG PENALTY LEVIED U/S 271(1)(C) OF THE ACT WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA 4364 & 4365/DEL/2013 ITA NO. 4364/DEL/2013 :- 2. THE ASSESSEE IS A NON-BANKING FINANCE COMPANY. T HE MAIN SOURCE OF INCOME BEING FROM CAPITAL GAIN, INTEREST INCOME, RE NTAL INCOME, DIVIDEND FROM SALE OF MUTUAL FUNDS. THE ASSESSEE HAD FILED R ETURN OF INCOME DECLARING TOTAL INCOME AT RS. 2,83,25,511/-. THE AO NOTICED T HAT ASSESSEE HAD SHOWN DIVIDEND INCOME TO THE TUNE OF RS. 2,43,67,057/- BU T NO SEPARATE EXPENSES INCURRED BY IT IN LIEU OF THIS INCOME HAD BEEN SHOW N. THE ASSESSEE FURTHER SUBMITTED THAT THE EXPENDITURE HAD BEEN INCURRED AS ADMINISTRATIVE EXPENSES AND THEY WERE STATUTORY OR NECESSARY EXPENSES, HENC E SHOULD NOT BE DISALLOWED. THE AO COMPUTED THE DISALLOWANCE U/S 14 A AT RS. 35,71,608/- AND AFTER REDUCING THE DISALLOWANCE OF RS. 2,43,670 /- MADE BY ASSESSEE IN ITS COMPUTATION, DISALLOWED RS. 32,27,938/-. HE, ACCORD INGLY, INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). 2.1. IN PENALTY PROCEEDINGS THE ASSESSEE, INTER ALI A, RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PE TRO PRODUCTS PVT. LTD. 189 TAXMAN 322. THE AO POINTED OUT THAT THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. L TD. (SUPRA) IS OF NO RESCUE TO THE ASSESSEE FOR THE REASON THAT RULE 8D WAS INS ERTED BY THE IT (FIFTH AMENDMENT) RULES, 2008 W.E.F. 24-03-2008 AND HE REL IED UPON JUDGMENT PERTAINED TO AY 2001-02 I.E. WHEN RULE 8D WAS NOT I NSERTED. THE AO OBSERVED THAT ASSESSEE COMPANY HAD NOT CORRECTLY DI SALLOWED THE EXPENSES REQUIRED TO BE DISALLOWED U/S 14A OF THE ACT AS PER RULE 8D. THEREFORE, ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DH ARMENDRA TEXTILE PROCESSOR HE LEVIED PENALTY OF RS. 11,31,162/-. 3 ITA 4364 & 4365/DEL/2013 2.2. LD. CIT(A) FOLLOWING THE DECISION OF HONBLE S UPREME COURT IN THE CASES OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA), DELETED THE PENALTY, INTER ALIA, OBSERVING THAT SINCE ASSESSEE ITSELF HAD MADE DISALLOWANCE OF RS. 2,43,670/-, THIS WAS ONLY A CASE OF DIFFERENCE OF O PINION, AS ACCORDING TO AO RULE 8D WAS APPLICABLE WHEREAS AS PER ASSESSEE RULE 8D WAS NOT APPLICABLE. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. ADMITTEDLY THE ASSE SSEE ON ITS OWN HAD DISALLOWED A SUM OF RS. 2,43,670/- U/S 14A BUT THE AO COMPUTED THE DISALLOWANCE AS PER RULE 8D AT RS. 35,71,608/-. THE PROVISION OF RULE 8D COMES INTO PLAY ONLY WHEN AO RECORDS A FINDING THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN R ELATION TO INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS A CT. THERE ARE DECISIONS AS PER WHICH UNLESS THE NECESSARY SATISFACTION IS RECO RDED BY AO RULE 8D CANNOT BE INVOKED. THEREFORE, ONCE ASSESSEE HAS ADV ANCED ITS CLAIM, THE AO MAY REJECT THE SAME BUT THAT DOES NOT LEAD TO THE C ONCLUSION THAT THE CLAIM ADVANCED BY ASSESSEE WAS A FALSE CLAIM. THE AO IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER NOWHERE STATES THAT THE ASSESS EES CLAIM WAS FALSE AND HE HAS INVOKED RULE 8D FOR COMPUTING THE DISALLOWANCE U/S 14A. THEREFORE, THIS WAS MERELY A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT ON THE COMPUTATION OF DISALLOWANCE U/S 1 4A. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETR O PRODUCTS PVT. LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE, WHEREIN IT HAS BEEN HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAIL S SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE, THERE IS NO QUESTION OF INVITING PENALTY U/S 271(1)(C). MERE MA KING OF A CLAIM, WHICH IS 4 ITA 4364 & 4365/DEL/2013 NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. IT IS NOT THE CLAIM OF THE DEPARTMENT THAT ANY OF THE DETAILS FURNISHED BY ASSESSEE IN THE RETURN ON THE BASIS OF WHICH COMPUTATION MADE UNDER RULE 8 D WAS MADE BY AO WAS FALSE. WE FURTHER FIND THAT LD. CIT(A) IN PARA 5.1 TO PARA 5.4 OF HIS ORDER HAS HELD AS UNDER: 5.1 SECTION 271(1)(C), PROVIDES FOR IMPOSITION OF PENALTY IN CASE THE ASSESSING OFFICER, IN THE COURSE OF ANY PR OCEEDING UNDER THE ACT, IS SATISFIED THAT: (I) ANY PERSON HAD CONCEALED PARTICULARS OF HIS INCOME OR (II) HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FURTHER, AFTER INSERTION OF EXPLANATION 1 TO SECTIO N 271(L)(C), THE ONUS IS ON THE ASSESSEE TO SHOW THAT THERE WAS NO INTENTION OF CONCEALMENT AND NOT ON THE REVENUE. 5.2 MENS REA WAS CONSIDERED TO BE A NECESSARY INGRE DIENT FOR LEVY OF PENALTY AS LAID DOWN BY THE SUPREME COURT I N CIT VS ANWAR ALI (1970) 76 ITR 696. BUT AFTER THE INTRODUC TION OF EXPLANATION 1 TO SECTION 271(1)(C), THE SUPREME COU RT HELD THAT THE REQUIREMENT OF PROOF OF MENS REA ON THE PA RT OF THE REVENUE, WOULD NO LONGER BE NECESSARY AS HELD IN AD DL, CIT VS JEEVAN LAL SHAH (1994) 205 ITR 244 (SC) AND B.A. BALASUBRAMANIAM AND BROS. CO. VS CIT (1999) 236 ITR 977 (SC). THE ROLE OF THE EXPLANATION IT WAS POINTED OU T, WAS ONLY TO PLACE THE BURDEN OF PROOF SQUARELY ON THE TAXPAY ER. 5.3 IN THIS CONTEXT TWO LANDMARK JUDGMENTS WERE GIV EN BY APEX COURT IN DILIP N. SHROFF VS JOINT CIT (2007) 291 IT R 519 (SC) AND T. ASHOK PAI VS CIT (2007) 292 ITR 11 (SC), WHI CH SPELL OUT MAINLY THE FOLLOWING RULES FOR THE PURPOSE OF P ENALTY IMPOSABLE: 5 ITA 4364 & 4365/DEL/2013 (I) BOTH THE EXPRESSIONS 'CONCEALMENT OF INCOME' AN D ''FURNISHING OF INACCURATE PARTICULARS' INDICATE SO ME DELIBERATION ON THE PART OF THE ASSESSEE, THOUGH TH E WORD DELIBERATELY AND THE WORD WILLFULLY ARE NO LONG ER PART OF THE STATUE. (II) MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTIT UTE A DELIBERATE ACT OF SUPPRESSIIO VERI OR SUGGESTIO F ALSI. (III) PRIMARY BURDEN OF PROOF IS ON THE REVENUE: TH E STATUTE REQUIRES SATISFACTION ON THE PART OF THE AS SESSING OFFICER. HE IS REQUIRED TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT THERE IS PRIMARY EVIDENCE TO ESTABLISH TH AT THE ASSESSEE HAD CONCEALED THE AMOUNT OR FURNISHED INACCURATE PARTICULARS AND THIS ONUS IS TO BE DISCH ARGED BY THE DEPARTMENT. (IV) THE ASSESSING OFFICER WHILE CONSIDERING LEVY O F PENALTY SHOULD CONSIDER WHETHER THE ASSESSEE HAS BE EN ABLE TO DISCHARGE HIS PART OF THE BURDEN. HE SHOULD NOT BEGIN WITH THE PRESUMPTION THAT THE ASSESSEE IS GUI LTY. (IV) THOUGH PENALTY PROCEEDINGS UNDER THE INCOME-T AX LAW MAY NOT BE CRIMINAL IN NATURE, THEY ARE STILL Q UASI- CRIMINAL REQUIRING THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAS CONCEALED HIS INCOME. {V} IT HAS TO BE UNDERSTOOD THAT THE EXPLANATION TO SECTION 271{L)(C} IS AN EXCEPTION TO THE GENERAL RU LE RAISING A LEGAL FICTION BY WHICH THE BURDEN WHICH I S ORDINARILY WITH THE DEPARTMENT IS SOUGHT TO BE PLAC ED ON THE ASSESSEE. THIS BURDEN ON THE ASSESSEE IS SUBJEC T TO 'CONDITIONS PRECEDENT', WHICH ARE REQUIRED TO BE SATISFIED BEFORE THE EXPLANATION COULD BE APPLIED. IT WAS ALSO POINTED OUT AS HELD BY SUPREME COURT IN K.C. BUILDERS VS ACIT {2004} {265 ITR 562} {SC} THAT 'DELIBERATENESS' IS IMPLIED IN THE CONCEPT OF CONCE ALMENT. 6 ITA 4364 & 4365/DEL/2013 5.4 HOWEVER AFTER THE DECISION LAID DOWN IN DILIP N . SHROFF (SUPRA), T. ASHOK PAI (SUPRA) IN A DISPUTE UNDER CE NTRAL EXCISE LAW THE APEX COURT IN THE CASE OF UOI VS DHARAMENDR A TEXTILE PROCESSORS (2008) (306 ITR 277) (SC) HELD T HAT 'DEFAULT MERITED PENALTY WITHOUT HAVING TO CONSIDER ANY INTE ND OF THE ASSESSEE TO EVADE TAX. THE MENS REA IS ESSENTIAL ON LY FOR MATTERS OF PROSECUTOR AND NOT PENALTY.' THUS AFTER THE DECISION IN THE CASE OF DHARAMENDRA TEXTILE PROCESSOR (SUPRA ) 'MENS REA IS NOT NECESSARY TO BE PROVED BY REVENUE FOR CI VIL PENALTIES.' 3.1. WE ARE IN AGREEMENT WITH THE FINDINGS RECORDED BY LD. CIT(A) ON THE IMPORT OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSOR (SUPRA). IN VIEW OF ABOVE, THE OR DER OF LD. CIT(A), DELETING THE PENALTY IN QUESTION IS UPHELD. 4. SAME FACTS ARE INVOLVED IN ITA NO. 4365/DEL/2013 . THEREFORE, FOR THE SAME REASONS AS GIVEN BY US IN ITA NO. 4364/DEL/201 3, THE ORDER OF LD. CIT(A) DELETING THE PENALTY IN QUESTION IS UPHELD. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17-04-2015. SD/- SD/- (C.M. GARG ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17-04-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR