M/s Expert Capital Services Ltd., Ghaziabad V. ITO, New Delhi

ITA 4610/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91078 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Wrong claim; Difference of opinion
• Section: 15

Judgement Text

ITA NO. 4610/DEL/2013 AY: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 4610/DEL/2013 ASSESSMENT Y EAR: 2006-07 M/S EXPERT CAPITAL SERVICES LTD., VS INCO ME TAX OFFICER, C-22, THIRD FLOOR, RDC, WARD 11(2), RAJ NAGAR, GHAZIABAD. NEW DELHI. (PAN: AAACE1426F) (APPELLANT) (RESPOND ENT) APPELLANT BY: SHRI TARUN KUMAR, ADV. RESPONDENT BY: SHRI K.K. JAISWAL, S R. DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF THE CIT(A), NEW DELHI DATED 22.05.2013 IN APPEAL NO. 11 /2012-13 FOR AY 2006- 07 BY WHICH PENALTY ORDER PASSED BY THE AO DATED 15 .03.2012 U/S 271(1)(C) R/W SECTION 274 OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) HAS BEEN UPHELD CONFIRMING THE PENALTY. 2. THE ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS I N THIS APPEAL BUT EXCEPT GROUND NO.1, OTHER GROUNDS ARE ARGUMENTATIVE AND SU PPORTIVE TO THE MAIN GROUND WHICH READS AS UNDER:- ITA NO. 4610/DEL/2013 AY: 2006-07 2 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN LEVYING PENALTY OF RS.50,490/- AND THAT TOO WITHOUT ASSUMING JURISDICTION AS PER LAW AND THE IM PUGNED PENALTY ORDER BEING ILLEGAL AND VOID AB-INITIO. 3. APROPOS SOLE GROUND OF THE ASSESSEE, WE HAVE HEA RD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE QUANTUM ASSESSM ENT ORDER, PENALTY ORDER AND IMPUGNED ORDER. 4. LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT THE ASSESSEE FURNISHED PROPER AND PLAUSIBLE EXPLANATION BEFORE THE AO BUT THE AO IMPOSED THE IMPUGNED PENALTY MERELY OBSERVING THAT THE ASSESSEES REPLY IS SILENT ON THE ISSUE OF ADDITION ON ACCOUNT OF PAYMENT OF ROC. LD. COUNSEL FURTHER POINTED OUT THAT THE ASSESSEE COMPANY HAS NEITHER CONCEALED PARTICUL ARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. THE PENALTY WAS LEVIED ON THE BASIS OF DISALLOWANCE OF ROC, FILING EXPENSES MERELY BECAUSE OF DIFFERENCE OF OPINION TAKEN BY LD. AO. LD. AR ALSO CONTENDED THAT THE AS SESSEE COMPANY HAS NOTHING TO DO WITH THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME. LD. COUNSEL ALSO POINTED OUT THAT THE CIT(A) WRONGLY RELIED ON THE IRRELEVANT CITATIONS TO UPHOLD THE PENALTY WHILE TH E CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) . LD. ADVOCATE HAS FURTHER DRAWN OUR ATTENTION TOWARDS DECISION OF ITAT A BENCH DATED 14.12.2012 IN ITA NO. 5112/DEL/2012 FOR AY 2008-09 IN THE CASE OF M/S ITA NO. 4610/DEL/2013 AY: 2006-07 3 BAKERS CIRCLE INDIA (P) LTD. VS DCIT AND SUBMITTED THAT IN THE SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE TRIBUNAL, FOLLOWING TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA), DELETED THE PENALTY. 5. REPLYING TO THE ABOVE, LD. DR SUPPORTED THE IMPU GNED ORDER AND SUBMITTED THAT WHEN THE IMPUGNED CLAIM OF THE ASSES SEE WAS CAPITAL IN NATURE, THEN FURNISHING OF SUCH CLAIM AMOUNTS TO MAKING A W RONG CLAIM WHICH ATTRACTS PENALTY U/S 271(1)( C) OF THE ACT. 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF BOTH THE SIDES, WE NOTE THAT IN THE SIMILAR SET OF FACTS AND CIRCUMSTANCES, ITAT DELHI A BENCH, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE APE X COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS DELETED THE PENALTY BY OB SERVING AS UNDER:- 12. WE FURTHER PLACE RELIANCE UPON THE HONBLE APE X COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETR O PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANI NG OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GO OD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDER TEXTIL E CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS H ELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CO NTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETUR N WHERE THE CLAIM IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THI S IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. ITA NO. 5112/DEL/201 2 10 13. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRE CEDENTS, WE FIND THAT THE LEVY OF PENALTY IN THIS CASE IS NOT J USTIFIED. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND ITA NO. 4610/DEL/2013 AY: 2006-07 4 DELETE THE LEVY OF PENALTY. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. IN VIEW OF ABOVE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE HOLD THAT THE ASSESSEE PLACED CLAIM OF ROC FEE EXPE NSES WHICH WAS DISALLOWED BY THE AO. SUBSEQUENTLY, THE AO PROCEEDED TO LEVY PENALTY U/S 271(1) (C) OF THE ACT BY HOLDING THAT THE ASSESSEE PLACED A WRONG CLAIM AND HIS REPLY IS SILENT ON THIS ISSUE BUT FROM THE IMPUGNED ORDER, WE CLEAR LY OBSERVE THAT THE ASSESSEE MADE DETAILED SUBMISSIONS WHICH HAVE BEEN REPRODUCE D BY THE CIT(A) IN PARA 5.1 OF THE IMPUGNED ORDER. THE CRUX OF THE EXPLANA TION OF THE ASSESSEE IS THAT THE AO HAS IMPOSED PENALTY DUE TO MERELY DISALLOWAN CE OF EXPENSES OF PAYMENT MADE TO ROC FOR ENHANCEMENT OF CAPITAL BASE WITHOUT PROVING IT AS A CONSCIOUS ACT OF CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE. IN THE CASE OF RELIANCE PETROPRODUCTS, THEIR LORDSHIPS CONCLUDED T HAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. IN VIEW OF ABOVE, WE REACH TO A CONCLUSIO N THAT THE AO IMPOSED PENALTY ON WRONG PREMISE MERELY BECAUSE THE CLAIM O F THE ASSESSEE TOWARDS ROC FEES WAS NOT FOUND TO BE ACCEPTABLE BY THE REVE NUE. AT THE SAME TIME, UNDISPUTEDLY, WE NOTE THAT IT IS NOT THE CASE OF TH E REVENUE THAT EITHER AMOUNT OF ROC FEES CLAIMED BY THE ASSESSEE WAS NOT ACTUALLY I NCURRED OR WAS NOT CORRECT AND THE SAME WAS FULLY DISCLOSED BY THE ASSESSEE IN THE STATEMENT OF ACCOUNTS FILED ALONG WITH RETURN OF INCOME. THE ADDITION MA DE DURING THE COURSE OF ITA NO. 4610/DEL/2013 AY: 2006-07 5 ASSESSMENT PROCEEDINGS, BY ITSELF, CANNOT BE SUFFIC IENT TO INITIATE AND IMPOSE PENALTY U/S 271(1)(C) OF THE ACT, MERELY DISALLOWAN CE OF EXPENSES PER SE CANNOT MEAN THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF ITS INCOME. 8. IT IS PERTINENT TO MENTION THAT CONCEALMENT INVO LVES PENAL ACTION AND THE ONUS IS ON THE AO THAT THERE WAS A CONSCIOUS CONCEA LMENT BEYOND THE AMBIT OF BONAFIDE BY THE ASSESSEE AND THE EXPLANATION OFFERE D BY THE ASSESSEE IS NOT SATISFACTORY AS REQUIRED BY EXPLANATION 1 TO SECTIO N 271(1) (C) OF THE ACT, THEN ONLY IT CAN BE INFERRED THAT THE ASSESSEE HAS FURNI SHED INCORRECT OR INACCURATE PARTICULARS OF ITS INCOME WHICH ATTRACTS PENALTY. UNDER ABOVE NOTED FACTS AND CIRCUMSTANCES, WE REACH TO A CONCLUSION THAT THE PE NALTY LEVIED BY THE AO AND UPHELD BY THE CIT(A) IS NOT SUSTAINABLE AND IN ACCO RDANCE WITH LAW. THEREFORE, WE ARE INCLINED TO DEMOLISH THE CONCLUSION OF THE A UTHORITIES BELOW. WE ORDER ACCORDINGLY. FINALLY, SOLE GROUND OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.5.2015. SD/- SD/- ( N.K. SAINI ) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 29 TH MAY 2015 GS ITA NO. 4610/DEL/2013 AY: 2006-07 6 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR