DCIT, New Delhi V. M/s. SMS Iron Technology Pvt. Ltd., New Delhi

ITA 5818/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69535 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 31-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH CHANDRA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G: NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTAN T MEMBER ITA NO. 5818/DEL/2012 ASSESSMENT YEAR 2006-07 DCIT, CIRCLE, 9(1), VS. M/S. SM S IRON TECHNOLOGY PVT. LTD. ROOM NO. 163, (EARLIE R KNOW AS SMS DEMAG PVT. C.R. BUILDING, LTD .) M-402, SOMDUTT CHAMBERS-1 NEW DELHI. 5, BHIKAJI CAMA PLACE, NEW DELHI. (APPELLANT) (RESPO NDENT) APPELLANT BY : SHR I RAMESH CHANDRA, CIT(DR) RESPONDENT BY : SHRI RAJAN BHATIA, ADVOCATE ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELL ATE ORDER SOLELY ON THE GROUND THAT THE LD. CIT(A) HAS ERRED IN DELETING THE PENAL TY OF RS. 1,13,49,250/- U/S 271(1)(C) LEVIED BY THE AO ON ADDITION OF RS. 15,00 ,000/- BEING PROVISION FOR CONTRACTUAL OBLIGATIONS AND RS. 3,22,17,327/- BEING PROVISION FOR DOUBTFUL DEBTS. AT THE OUTSET OF HEARING THE LD. AR FOR THE ASSESSE E POINTED OUT THAT VIDE ORDER DATED 23.8.2013 THE TRIBUNAL IN THE CASE OF ASSESSE E FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 VIDE ITA NO. 1910/D/2012, ITA N O. 1814, 1815/D/2010 IN THE CASE OF ASSESSEE ITSELF HAS SET ASIDE THE ISSUE S RELATING TO THE VALIDITY OF ADDITIONS MADE ON ACCOUNT OF PROVISION FOR CONTRACT UAL OBLIGATION AND DOUBTFUL DEBTS TO THE FILE OF THE AO FOR FRESH CONSIDERATION OF THE ISSUE. IN THIS REGARD LD. ITA NO. 5818/DEL/12 2 AR REFERRED PARA NO. 21 OF THE ORDER OF THE TRIBUNA L ON THE ISSUE RELATING TO THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSTT. YEA R 2006-07 (ITA NO. 1815/D/2010). 2. LD. DR ON THE OTHER HAND TRIED TO JUSTIFY T HE PENALTY ORDER WITH THIS SUBMISSION THAT THE ASSESSEE COMPANY HAD CONCEALED AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME REGARDING PROVISION FOR C ONTRACTUAL OBLIGATION AMOUNTING TO RS. 15,00,000/- AND PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS. 3,22,17,327/-. THE AO WAS THUS JUSTIFIED IN IMPOSIN G PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ON THE SAID AMOUNT ADDED BY THE AO. 3. HAVING GONE THROUGH THE ORDERS OF THE AUT HORITIES BELOW WE FIND THAT THE AO HAD LEVIED THE PENALTY AT RS. 1,13,49,250/- U/S 271(1)(C) BY THE AO ON THE ADDITION OF RS. 15,00,000/- BEING PROVISION FOR CON TRACTUAL OBLIGATION AND RS. 3,22,17,327/- BEING PROVISION FOR DOUBTFUL DEBTS ON THE BASIS THAT BY CLAIMING AN AMOUNT OF RS. 15,00,000/- BEING PROVISION FOR CONTR ACTUAL OBLIGATION AND RS. 3,22,17,327/- BEING PROVISION FOR DOUBTFUL DEBTS, O N THE BASIS THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME TO T HE EXTENT OF RS. 3,37,17,327/-. THE LD. CIT(A) HAS DELETED THE SAME WITH THIS FINDI NG THAT THERE WAS NO CONCEALMENT NOR FILING OF INACCURATE PARTICULARS BY THE ASSESSEE REGARDING THE CLAIMED PROVISION FOR CONTRACTUAL OBLIGATION OF RS. 15,00,000/- AND PROVISION FOR DOUBTFUL DEBTS RS. 3,22,17,327/-. IN THIS REGARD WH ILE DISCUSSING THE MERITS OF ITA NO. 5818/DEL/12 3 THE ADDITIONS FOR EXAMINING THE CONCEALMENT OR FURN ISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE FOR THE INVOCAT ION OF THE PENAL PROVISION OF SECTION 271(1)(C) OF THE ACT, THE LD. CIT(A) HAS AL SO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CO MMISSIONER OF INCOME TAX, AHMEDABAD VS. RELIANCE PETROPRODUCTS (P) LTD. (2010 ) 189 TAXMAN 322 (SC) REPRODUCING RELEVANT PARA NO. 7 THEREOF, WHICH IS A S UNDER :- 7 IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TOBE INCORRECT OR INA CCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESS EE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE LEARNED C OUNSEL ARGUED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEN DITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INC OME. WE DO NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE CONCERNE D WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESS EE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION MA KING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCU RATE PARTICULARS 4. THERE IS NO REBUTTAL BY THE REVENUE ON TH E FINDING OF THE LD. CIT(A) THAT INCOME IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE OR ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUAL LY INCORRECT. THE ONLY ISSUE REGARDING THE ADDITIONS IN QUESTION WHICH WAS CLAIM ED BY THE ASSESSEE ON ACCOUNT OF PROVISION FOR CONTRACTUAL APPLICATION AN D DOUBTFUL DATES WAS ABOUT ENTITLEMENT OF THE ASSESSEE IN MAKING SUCH A CLAIM, WHICH IN CASE OF DENIAL BY THE A.O CANNOT BE INFERRED AS IF THERE WAS CONCEALM ENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TO ATTRACT PENAL PROVISIONS U/S 271(1)(C) OF THE ACT. THUS WE DO NOT FIND REASON TO INTERFERE ITA NO. 5818/DEL/12 4 WITH THE FIRST APPELLATE ORDER ON THE QUESTION OF H IS ACTION IN DELETING THE PENALTY UNDER CONSIDERATION LEVIED U/S 271(1)(C) OF THE ACT . THE SAME IS UPHELD. EVEN OTHERWISE SINCE THE VERY ISSUE OF THE VALIDITY OF ADDITIONS IN QUESTION IN QUANTUM APPEAL WHICH REMAINED THE SUBJECT MATTER OF THE PEN ALTY LEVIED HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE FILE OF THE AO VIDE OR DER DATED 23.8.2013 (SUPRA),THE PENALTY LEVIED U/S 271(1)(C) IN QUESTION DOES NOT S URVIVE ON THIS COUNT ALSO. THE GROUND IS ACCORDINGLY REJECTED. 5. IN THE RESULT APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2013. SD/- SD/- (B.C. MEENA) ( I .C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 28 TH NOVEMBER, 2013 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT