M/s. RIC Projects Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5206/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3768 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KAPOOR

Judgement Text

ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5206/DEL /2014 ASSESSMENT YEAR: 2010-11 RIC PROJECTS PVT. LTD., D-66, NARAINA VIHAR, NEW DELHI. (PAN: AABCA1246Q) VS DCIT, CENTRAL CIRCLE-15(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.S. KAPOOR, CA RESPONDENT BY : SHRI ATIQ AHMAD, SR. DR DATE OF HEARING : 06.09.2017 DATE OF PRONOUNCEMENT: 31.10.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) XVIII, NEW DELHI FOR ASSESSMENT YEAR 2010 11 WHERE IN, VIDE ORDER DATED 22 ND OF AUGUST 2014, THE LD. CIT (APPEALS) HAS PARTLY CONFIRMED THE PENALTY IMPOSED UNDER SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961. ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARING A TOTAL INCOME OF RS. 2,78,26,960/-. THE CASE WAS SELECTED FOR SCRUTI NY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVE D THAT IN CERTAIN LEDGER ACCOUNTS LUMP SUM DEBIT ENTRIES HAD BEEN PASSED ON 31/03/2010. THE AO FOUND THAT EXPENSES AMOUNTING TO RS. 6 LACS DEBITED UNDER VARIOUS HEADS WERE NOT SUPPORTED BY PROPER EVIDENCES AND HE PROCEEDED TO DISALLOW 50% OUT OF T HE SAME AND MADE AN ADDITION OF RS. 3 LACS. THE AO FURTHER DISA LLOWED 25% OF EXPENSES INCURRED ON BUSINESS PROMOTION AND TELEPHO NE ON THE GROUND THAT PERSONAL ELEMENT COULD NOT BE RULED OUT . HE PROCEEDED TO MAKE AN ADDITION OF RS. 1,61,800/- ON THIS ACCOUNT. THE AO ALSO OBSERVED THAT THE ASSESSEE HAD NOT SHOW N ACCRUED INTEREST OF RS. 7,52,341/- IN ITS COMPUTATION OF I NCOME ALTHOUGH THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING. THE AO PROCEEDED TO ADD THIS AMOUNT ALSO TO THE INCOME OF THE ASSESSEE AND THE ASSESSMENT WAS COMPLETED AT A TOTA L INCOME OF RS. 2,90,41,101/-. 2.1 PENALTY PROCEEDINGS UNDER SECTION 271 (1) (C) O F THE INCOME TAX ACT, 1961 WERE ALSO INITIATED AGAINST THE ASSES SEE AND SUBSEQUENTLY A PENALTY OF RS. 4,12,690/- WAS IMPOSE D FOR ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME. THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO DELETED TH E PENALTY IMPOSED ON AD HOC ADDITIONS/DISALLOWANCES OF RS. 3 LACS AND RS. 1,61,800/- BUT CONFIRMED THE PENALTY IMPOSED ON THE ADDITION OF RS. 7,52,341/- WHICH PERTAINED TO ACCRUED INTEREST NOT DECLARED BY THE ASSESSEE. 2.2 NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT A ND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL 1. (A) THAT THE ORDER OF LD. ASSESSING OFFICER, IS BA D IN LAW AND FACTS OF THE CASE; (B) THAT THE ORDER OF LD. ASSESSING OFFICER IS BAD IN LAW AS NO SPEAK ORDER HAS BEEN MADE AND EXPLANATION OFFERE D BY ASSESSEE IS NOT CONSIDERED WHILE IMPOSING PENALT Y U/S 271(L)(C). (C ) THAT THE ORDER IS BAD IN LAW AS NO JUSTIFICAT ION HAS BEEN PROVIDED FOR IMPOSITION OF PENALTY U/S 271 (C). 2. THAT THE IMPOSITION OF PENALTY OF RS.7,52,341/- IS BAD IN LAW AND LIABLE TO BE DELETED. 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IT HAD COME TO THE NOTICE OF THE AO DURING THE COURSE OF A SSESSMENT PROCEEDINGS THAT THE INTEREST ACCRUED AS PER FORM 2 6 AS WAS MORE THAN THE INTEREST BOOKED IN THE PROFIT AND LOS S ACCOUNT. IT ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 WAS SUBMITTED THAT THE INTEREST AS PER FORM 26 AS W AS RS. 16,85,525/- WHEREAS THE INTEREST DECLARED IN THE PR OFIT AND LOSS ACCOUNT WAS RS. 8,91,770/-. IT WAS SUBMITTED THAT W HEN THE AO POINTED OUT THE DISCREPANCY, THE ASSESSEE TOOK UP T HE MATTER WITH PUNJAB NATIONAL BANK, NARAINA VIHAR BRANCH WHI CH HAD ISSUED THE TDS CERTIFICATES ONLY FOR RS. 8,91,770/ - I.E. IS THE AMOUNT WHICH WAS DULY DECLARED IN THE ASSESSEES RE TURN OF INCOME. IT WAS SUBMITTED THAT THE ASSESSEE HAD DECL ARED INTEREST INCOME AS PER THE TDS CERTIFICATE PROVIDED BY THE B ANK. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD DECLARED TH E INCOME FROM INTEREST BASED ON THE CERTIFICATE ISSUED BY TH E BANK AND IT WAS ONLY AFTER THE DISCREPANCY WAS NOTICED BY THE A O, THAT THE ASSESSEE CAME TO KNOW THAT ACCRUED INTEREST HAD NOT BEEN ACCOUNTED FOR CORRECTLY. IT WAS SUBMITTED THAT THIS WAS THE FIRST YEAR IN WHICH FORM 26 AS WAS AVAILABLE ONLINE AND T HE ASSESSEE, AT THE TIME OF FILING OF RETURN, WAS UNAWARE OF SUC H A FACILITY HAVING BEEN INTRODUCED BY THE TAX DEPARTMENT. IT WA S FURTHER SUBMITTED THAT THE ERROR WAS BONA FIDE AND, ACCORDINGLY, IT WAS NOT A FIT CASE FOR IMPOSITION OF PENALTY. RELIANCE WAS PLACED ON A NUMBER OF CASE LAWS AND IT WAS PRAYED THAT THE PENA LTY AS SUSTAINED BY THE LD. CIT (APPEALS) BE ALSO DELETED. ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 4. IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT IT WAS ASSESSEES RESPONSIBILITY TO DECLARE ITS TRUE INCOME AND THE ASSESSEE HAD FAILED TO DO SO. THE LD . SENIOR DR VEHEMENTLY ARGUED THAT THE PENALTY IMPOSED SHOULD B E CONFIRMED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. IT IS CLEAR THAT IN THE I NSTANT CASE IT CANNOT BE SAID THAT THE ASSESSEE HAD WITHHELD ANY R ELEVANT INFORMATION REGARDING ACCRUED INTEREST OUT OF ITS O WN VOLITION OR MALA FIDE INTENTION. THE ASSESSEE HAD DULY DISCLOSED THE AMO UNT OF INTEREST AS REFLECTED IN THE TDS CERTIFICATE ISS UED BY PUNJAB NATIONAL BANK AND THE OMISSION OCCURRED ONLY DUE TO INCORRECT TDS CERTIFICATE HAVING BEEN ISSUED BY THE BANK. THU S, THE BONA FIDES OF THE ASSESSSEE CANNOT BE DOUBTED IN SUCH CIRCUMS TANCES. WITH REGARD TO THE PROVISIONS OF SECTION 271(1)(C ) OF THE ACT PERTAINING TO PENALTY, THE HONBLE APEX COURT HAS A UTHORITATIVELY LAID DOWN THAT MAKING OF A CLAIM BY THE ASSESSEE WH ICH IS NOT SUSTAINABLE WILL NOT TANTAMOUNT TO FURNISHING INACC URATE PARTICULARS. IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC), THE HONBLE APEX COURT HAS HELD AS FOLLOW S: ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE PRESENT IS NOT A CASE OF CONCEALMEN T OF INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LD. COUNSEL FOR THE REVENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FOR THE EXPENDITURE ON IN TEREST, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENS E); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACC OUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTI ON 271 (1) (C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESE NT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FO UND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STA TEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUAL LY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESS EE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE LEARNED COUNSEL ARGUED THAT 'SUBMI TTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON IN TEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SU CH INCOME.' WE DO NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS AR E PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE T O THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLA IM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 5.1 ALTHOUGH BOTH THE LOWER AUTHORITIES HAVE HELD T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND C ONCEALED PARTICULARS OF INCOME, ON A CONSIDERATION ON THE FA CTS, SUCH A VIEW IS NOT TENABLE IS THE PRESENT APPEAL. THEREFOR E, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF ITA 5206/DEL/2014 ASSESSMENT YEAR 2010-11 RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) WE SET ASI DE THE ORDER OF THE LD. CIT (APPEALS) AND DIRECT THE AO TO DELETE T HE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 31ST OCTOBER, 2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR