M/s. Mitutoyo South Asia Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6051/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4178 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 28-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; Wrong claim; Revised return; Bonafide mistake; Revenue expenditure; Capital expenditure; Capital Gains
• Section: 271(1)(c); 14A; 143(1); 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E, NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6051/DEL./2016 ASSESSMENT YEAR: 2008-09 M/S. MITUTOYO SOUTH ASIA PVT. LTD., C-122, OKHLA INDUSTRIAL AREA, PHASE-I, ] NEW DELHI VS. DCIT, CIRCLE-6(1), NEW DELHI PAN :AAACM6682R (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 29/09/2016 PASSED BY THE LD. CIT(APPEALS)-20, NEW D ELHI, IN [SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2008-0 9, IN RELATION TO PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT). THE GROUNDS RAISED IN THE APPEAL ARE REPRODUCED AS UNDER: 1. THAT THE ORDER OF LEARNED CIT APPEALS -20 IS AG AINST LAW & FACTS OF THE CASE. 2. THAT ALL THE ADDITION OF RS. 5,61,200/ WAS CONT ROVERSIAL & THERE WERE POSSIBILITY OF HAVING TWO OPINIONS ON THE MATT ER HENCE THERE APPELLANT BY SHRI VINOD K. NAGPAL, CA SHRI BALRAM SHARMA, CA RESPONDENT BY MS. RAKHI VIMAL, SR.DR DATE OF HEARING 15.01.2020 DATE OF PRONOUNCEMENT 27.02.2020 2 ITA NO. 6051/DEL./2016 COULD NOT BE PENALTY ON THE SAME AND THE EXPENSES W AS ALLOWED IN RESPECTIVE SUBSEQUENT YEARS. 3. THAT OTHER TWO ADDITIONS WERE (TOTALING TO RS 1 ,87,804/-) CLERICAL MISTAKES. 4. THAT ASSESSEE FROM THE TIME OF START OF ITS ACC OUNTING YEAR HAS ALREADY BEEN SUBJECT TO REGULAR SCRUTINY & TRANSFER PRICING CHECKING HENCE THE CASE RELIED UPON BY THE LEARNED AO & LEARNED CIT (PARTICULARLY ZOOM COMMUNICATION) IS NOT STRICT LY APPLICABLE IN THE CASE. 5. THE PENALTY CONFIRMED BY LEARNED CIT IS AGAINST IS AGAINST LAW & FACTS. 2. BRIEFLY FACTS OF THE CASE ARE AS UNDER: (I) THE ASSESSMENT UNDER SECTION 147/143(3) OF THE ACT WAS COMPLETED ON 31/03/2008 AT ASSESSED INCOME OF 24,41,88,630/- AS AGAINST INCOME OF 24,09,12,462/- AFTER MAKING FOLLOWING ADDITIONS: 1. ADDITION ON ACCOUNT OF DISALLOWANCE U/S 14A RS.25,27,167/ - 2. DISALLOWANCE U/S 94(7) RS. 1,20,304/- 3. DISALLOWANCE OF PREPAID EXPENSES RS. 5,61,200/- 4. DISALLOWANCE OF EXCESS EXPENSES CLAIMED RS. 67,500/ - (II) BEFORE THE LD. CIT(A), THE ASSESSEE CHALLENGED ADDI TION UNDER SECTION 14A OF THE ACT, WHICH WAS DELETED BY THE LD. CIT(A) IN HIS ORDER DATED 18/02/2013. THE ASSESSEE HAD NOT CHALLENGED THE OTHER THREE ADDITIO NS MENTIONED ABOVE BEFORE THE LD. CIT(A). (III) THE LEARNED ASSESSING OFFICER AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR DEFA ULT OF FURNISHING INACCURATE PARTICULARS OF ITS INCOME, IN RESPECT OF THE THREE ADDITIONS. 3 ITA NO. 6051/DEL./2016 (IV) THE LD. CIT(A) UPHELD THE SAID PENALTY LEVIED BY TH E ASSESSING OFFICER RELYING ON THE DECISION OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION PRIVATE LIMITED, 372 ITR 510 AND DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF MAK DATA LTD. ( 31 TAXMANN.COM 448) . 3. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE FILE D A PAPER- BOOK CONTAINING PAGES 1 TO 50. HE REFERRED TO PAGE 14 OF THE PAPER-BOOK AND SUBMITTED THAT THE SHORT-TERM CAPITA L LOSS WAS ADJUSTED AGAINST THE SHORT TERM CAPITAL GAINS ON SA LE OF MOTOR CARS BY OVERSIGHT & OFFERED FOR TAX AND THIS BEING IN THE NATURE OF MISTAKE, NO PENALTY SHOULD BE LEVIED. REGARDING THE PENALTY ON THE PREPAID EXPENSES DISALLOWED OF 5,61,200/- AND EXPENSES OF 67,500/- THE LEARNED COUNSEL REFERRED TO PAGE NO. 17 OF THE PAPER-BOOK AND SUBMITTED THAT EXPENSES WERE CLAIMED WRONGLY WITHOUT ANY INTENTION AND DUE TO CALCULATION ERROR. HE SUBMITTED THAT THE ASSESSEE HAS VOLUNTARILY OFFERED THE SAID AMOUNT FOR TAXATION. HE FURTHER SUBMITTED THAT THOUGH THE PREP AID EXPENSES WERE ALLOWABLE BUT THE ASSESSEE DID NOT WISH TO LIT IGATE THE ISSUE AND OFFERED THE SAME FOR TAXATION. IN VIEW OF THE L EARNED COUNSEL THERE EXIST TWO OPINIONS IN RESPECT OF THE ADDITION ON THE DISPUTE. ACCORDINGLY, HE SUBMITTED THAT, NO PENALTY SHOULD HAVE BEEN LEVIED BEING BONAFIDE AND UNINTENTIONAL MISTAKE THA T TOO ON THE ISSUE WHERE TWO OPINIONS EXIST. IN SUPPORT OF THE C ONTENTION HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER COOPERS P. LTD. VS CIT (2012) 348 ITR 30 6 (SUPREME COURT). 4 ITA NO. 6051/DEL./2016 4. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESS EE HAS OFFERED THE AMOUNTS IN DISPUTE ONLY AFTER POINTED OUT BY TH E ASSESSING OFFICER AND THERE WAS NO SUO-MOTU SURRENDER OR OFFE R BY THE ASSESSEE. HE REFERRED TO PAGE 6 OF THE ASSESSMENT O RDER WHEREIN THE ASSESSEE ACCEPTED THE MISTAKES AFTER BEING POIN TED OUT BY THE ASSESSING OFFICER. ACCORDING TO LD. DR, THE LEARNED COUNSEL HAS FAILED TO SUPPORT THAT THE TWO OPINION EXIST, ON TH E ISSUE OF SHORT- TERM CAPITAL LOSS NOT ALLOWABLE UNDER SECTION 94(7) OF THE ACT AND EXPENDITURE DISALLOWED BY THE ASSESSING OFFICER. HE , ACCORDINGLY, SUBMITTED THAT THE ORDER OF LEARNED CIT(A) ON THE I SSUE IN DISPUTE MIGHT BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE. THE LD. CIT(A) HAS UPHELD THE PEN ALTY OBSERVING AS UNDER : {6.1} GROUND 2 IS DIRECTED AGAINST PENALTY ON ACCO UNT OF SHORT TERM CAPITAL LOSS U/S 94(7) OF RS.120304/- AND EXCESS CL AIM OF EXPENSE OF RS. 64500/-. GROUND 3 IS DIRECTED AGAINST PENALT Y ON ACCOUNT OF PREPAID EXPENSES OF RS.5,61,200/- 1 HAVE CAREFULLY CONSIDERED THE PENALTY ORDER AND S UBMISSIONS OF THE APPELLANT IN THIS REGARD. IT IS APPARENT FROM T HE ASSESSMENT ORDER THAT THE ISSUE OF ADDITION U/S 94(7) OF RS. 1 ,20,304/- ON ACCOUNT OF SHORT TERM CAPITAL LOSS INCURRED BY THE APPELLANT HAS BEEN WRONGLY CLAIMED AND WAS SURRENDERED BEFORE THE ASSE SSING OFFICER DURING THE COURSE OF SCRUTINY PROCEEDINGS AFTER MAK ING SPECIFIC QUERY BY THE ASSESSING OFFICER REGARDING ADJUSTMENT OF LO SS. THE ASSESSING OFFICER HAS CLEARLY MENTIONED IN THE ASSE SSMENT ORDER THAT APPELLANT HAS CLAIMED DIVIDEND INCOME OF RS. 7 3,11,218/- WHICH INCLUDES DIVIDEND RECEIPTS FROM CERTAIN SHARE S, ON SALE OF WHICH LOSSES HAVE BEEN BOOKED BY THE APPELLANT WHIC H IS NOT ALLOWABLE U/S 94(7) OF THE ACT. THE PROVISIONS OF SECTION 94(7) STATES AS UNDER. 'WHERE- 5 ITA NO. 6051/DEL./2016 (A) ANY PERSON BUYS OR ACQUIRES ANY SECURITIES OR UNIT WITHIN A PERIOD OF 3 MONTHS PRIOR TO THE RECORD DAT E; (B) SUCH PERSONS SELLS OR TRANSFER (I) SUCH SECURITIES WITHIN A PERIOD OF 3 MONTHS AF TER SUCH DATE; OR (II) SUCH UNIT WITHIN A PERIOD OF 9 MONTHS AFTER S UCH DATE; (III) THE DIVIDEND OR INCOME ON SUCH SECURITIES OR UNIT RECEIVED OR RECEIVABLE BY SUCH PERSON THEN, THE LOSS, IF ANY, ARISING TO HIM ON ACCOUNT O F SUCH PURCHASE AND SALE OF SECURITIES OR UNIT, TO THE EXT ENT SUCH LOSS DOES NOT EXCEED THE AMOUNT OF DIVIDEND OR INCOME RE CEIVED OR RECEIVABLE ON SUCH SECURITIES OR UNIT, SHALL BE IGN ORED FOR THE PURPOSE OF COMPUTING OF ITS INCOME CHARGEABLE TO TA X.' FROM THE ABOVE, IT IS APPARENT THAT APPELLANT ON TH E ONE HAND HAS CLAIMED INCOME OF RS. 73,11,218/- AS EXEMPT BUT ON THE OTHER HAND BOOKED LOSS ON SUCH SALE FOR SET OFF AGAINST THE IN COME OF SALE ON MOTOR CAR. AS PER ASSESSMENT ORDER SPECIFIC QUERY N O. 43 OF THE QUESTIONNAIRE DATED 28.09.2011 WAS MADE BY THE ASSE SSING OFFICER REGARDING DETAILS OF LOSS ON SALE OF SHARES AND AFT ER THAT APPELLANT HAS SUBMITTED THE FOLLOWING DURING THE COURSE OF AS SESSMENT PROCEEDINGS AND SURRENDERED THE AMOUNT FOR TAXATION .] 'THE WORKING OF LOSS AS PER PROVISIONS OF SECTION 94( 7) IS ENCLOSED ENCLOSURE NO. '10'. BECAUSE OF AN OVERSIGH T WE HAVE ADJUSTED THIS LOSS AGAINST THE SHORT CAPITAL GAINS O N SALE OF MOTORCARS, ACTUALLY THIS LOSS WAS NOT ALLOWABLE AS PER PROVISIONS OF SECTION 94(7). WE OFFER TAX ON THIS AM OUNT OF SHORT TERM CAPITAL LOS WRONGLY ADJUSTED AGAINST REFU ND DUE TO THE ASSESSEE FOR THIS YEAR'. THE DETAILS OF ENCLOSURE 10 AS UNDER: SHORT TERM LOSS FROM HDFC FIXED MATURITY (INST.) RS.1,20,304/- SHORT TERM GAIN ON SALE OF CAR- RS.5,02,222/- NET DISCLOSED SHORT TERM CAPITAL GAIN RS.3,81,918 /- BUT DURING THE COURSE OF PENALTY PROCEEDINGS APPELL ANT HAS FILED THE WRITTEN SUBMISSION DATED 20.04.2012 THAT THIS AMOUN T OF INCOME OF RS. 1,20,304/- U/S 94(7) WAS SURRENDERED VOLUNTARIL Y AND WAS OFFERED FOR TAXATION. THE STAND OF THE APPELLANT IS CONTRADICTORY AS ON THE ONE HAND IT IS CLAIMED THAT THE SURRENDER WAS M ADE VOLUNTARILY AND ON THE OTHER HAND IT IS ACCEPTED THAT IT IS OFF ERED FOR TAXATION ON SPECIFIC QUERY MADE BY ASSESSING OFFICER. DURING TH E COURSE OF APPELLATE PROCEEDINGS ALSO THE APPELLANT HAS ACCEP TED THIS FACT THAT 6 ITA NO. 6051/DEL./2016 THIS SURRENDER WAS MADE AFTER MAKING SPECIFIC QUERY BY THE ASSESSING OFFICER. THE OTHER AMOUNT ON WHICH PENALTY WAS IMPOSED BY AS SESSING OFFICER WAS THE ADDITION MADE BY THE ASSESSING OFFI CER ON THE GROUND THAT APPELLANT HAS MADE INCORRECT CLAIM OF R S. 5,61,200/- ON ACCOUNT OF CORPORATE ENTRANCE FEE FOR 5 YEARS AND A FTER MAKING A SPECIFIC QUERY BY THE ASSESSING OFFICER ON THIS ISS UE APPELLANT HAS SURRENDERED THIS AMOUNT WHICH IS DISALLOWABLE AS PE R THE MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY THE APPELLANT. DUR ING THE PENALTY PROCEEDINGS BEFORE ASSESSING OFFICER, APPELLANT VID E LETTER DATED 20.04.2012 HAS CLAIMED THAT THIS WAS DUE TO AN OVER SIGHT AND CLERICAL MISTAKE. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS EXPLAINED THAT TWO VIEWS WERE POSSIBLE ON ACCOUNT O F ENTRY FEE EXPENSE IN VIEW OF THE DECISION OF GUJARAT HIGH COU RT IN THE CASE OF GUJARAT STATE EXPORT CORPORATION LTD. 209 ITR 49 WH EREIN IT WAS HELD THAT ENTRY FEE IS A REVENUE EXPENDITURE AND AL LOWABLE IN THE YEAR OF PAYMENT. THE REPLY OF THE APPELLANT WAS CON SIDERED, HOWEVER, IT IS FOUND THAT BEFORE THE ASSESSING OFFI CER IN THE PENALTY PROCEEDINGS APPELLANT VIDE LETTER DATED 20.04.2016 HAS CONCEDED THAT THIS MISTAKE WAS A CLERICAL MISTAKE BEFORE ASS ESSING OFFICER AND DUE TO OVERSIGHT THIS WAS WRONGLY CLAIMED. HOWE VER, BEFORE ME DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPE LLANT HAS CHANGED ITS STAND AND RELIED ON THE ABOVE MENTIONED DECISION OF HONBLE GUJARAT HIGH COURT AND EXPLAINED THAT APPEL LANT WAS PERFECTLY CORRECT IN CLAIMING FULL AMOUNT OF ENTRY FEE AS AN EXPENSE IN THE YEAR OF PAYMENT. HOWEVER, IT DID NOT PRESS FOR THE SAME AS THERE COULD HAVE BEEN A DISPUTE ON THE MATTER WITH THE DE PARTMENT. THIS CLEARLY SHOWS THE CONDUCT OF THE APPELLANT AND THE CHANGE OF STAND THAT EVEN BY ACCEPTING THE ADDITION AND CLAIMING IT AS CLERICAL MISTAKE BEFORE ASSESSING OFFICER LATER ON DURING TH E APPELLATE PROCEEDINGS APPELLANT HAS CHANGED ITS STAND AND CLA IMED THAT THIS WAS AN ALLOWABLE EXPENDITURE RIGHTLY CLAIMED BY THE APPELLANT. THE RELIANCE IN THE CASE THE HON'BLE GUJARAT HIGH COURT IS HIGHLY MISPLACED AS IN THIS VERY CASE HONBLE GUJARAT HIGH COURT HAS HELD THAT PAYMENT OF ENTRANCE FEE TO A SPORT CLUB IS REV ENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE AS HELD BY THE TRIBUNAL . IN THE INSTANCE CASE OF THE APPELLANT THE ASSESSING OFFICER HIMSELF HAS TREATED THE PAYMENT OF ENTRY FEE AS REVENUE EXPENDITURE AS CLAI MED BY THE APPELLANT AND THERE IS NO DISPUTE ON THIS ISSUE. TH E ONLY DISPUTE IS IN RELATION TO THE CLAIM OF THE AMOUNT OF EXPENDITU RE AS THE APPELLANT HAS PAID THIS FEE FOR 5 YEARS IN ONE TIME AND FULL AMOUNT HAS BEEN CLAIMED IN ONE YEAR WHICH CANNOT BE ALLOWED AS DEDU CTION IN ONE YEAR AS APPELLANT HAS MAINTAINED MERCANTILE SYSTEM OF ACCOUNTING. HENCE, EXPENDITURE OF RS. 112240/- WAS ALLOWED AND REMAINING AMOUNT OF RS. 561200/- WAS DISALLOWED BY ASSESSING OFFICER AND ALSO ACCEPTED BY THE APPELLANT. HENCE, THERE IS NO MERIT IN THE 7 ITA NO. 6051/DEL./2016 SUBMISSION OF THE APPELLANT THAT PENALTY IMPOSED BY THE ASSESSING OFFICER SHOULD BE DELETED. ASSESSING OFFICER HAS ALSO IMPOSED PENALTY ON THE A DDITION OF RS. 67,000/- ON THE GROUND THAT ASSESSING OFFICER HAS M ENTIONED IN THE ASSESSMENT ORDER THAT DURING THE COURSE OF ASSESSME NT PROCEEDINGS NO SPECIFIC QUERY WAS MADE ON ACCOUNT OF FEE AND SU BSCRIPTION AND AFTER MAKING SUCH CLAIM THE APPELLANT HAS SURRENDER ED THE AMOUNT OF RS. 67,500/- AND CLAIMED THAT DUE TO AN OVERSIGH T THE ENTRY WAS WRONGLY CALCULATED IN VOUCHER NO. 6 & 7 DURING THE COURSE OF PENALTY PROCEEDINGS ALSO APPELLANT HAS MENTIONED THAT THIS WRONG CLAIM WAS MADE DUE TO CLERICAL MISTAKE VIDE LETTER DATED 20.0 4.2012. HOWEVER, BEFORE ME DURING THE COURSE OF APPELLATE PROCEEDING S THE APPELLANT HAS CHANGED THE STAND AND CLAIMED THAT THE APPELLAN T HAS CORRECTED THE CALCULATION MISTAKE ON HIS OWN ACCORD WHICH WAS OBSERVED BY THE APPELLANT & CA WHILE CHECKING THE ACCOUNT OF FE E AND SUBSCRIPTION BEFORE SUBMITTING THE SAME BEFORE LD. ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. PLEA O F THE APPELLANT WAS CONSIDERED AND FOUND NOT ACCEPTABLE AS WHEN SPE CIFIC QUERY WAS MADE TO THE APPELLANT TO PRODUCE THE DETAILS OF FEE AND SUBSCRIPTION ACCOUNT, THIS MISTAKE WAS CORRECTED AN D CLEARLY THIS WAS NOT A BONAFIDE CORRECTION ON ITS OWN ACCORD AS CLAIMED BY THE APPELLANT. HENCE, THERE IS NO MERIT IN THE SUBMISSI ON OF THE APPELLANT THAT THE ACT WAS SUO-MOTU. THE RELIANCE BY THE APPELLANT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS (SC) IS NOT APPLICABLE ON THE FACTS O F THE CASE AS IN THIS CASE ON HON'BLE SUPREME COURT HAS HELD THAT ' IT WA S AN ADMITTED POSITION IN THE INSTANT CASE THAT NO INFORMATION GI VEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESS EE COULD NOT BE HELD GUILTY OFFUNISHING INACCURATE PARTICULARS'. IN THE INSTANT CASE OF THE APPELLANT HAS THE ADDITION MADE BY THE ASSESSIN G OFFICER WAS SURRENDERED AND THERE IS NO DISPUTE ON THE ADDITION MADE BY ASSESSING OFFICER ON LEGAL GROUNDS. BESIDES, THIS T HE CASE OF HON'BLE DELHI HIGH COURT OF KARAN RAGHAV EXPORTS PVT. LTD. ALSO IS NOT FAVORABLE TO THE APPELLANT WHERE HON'BLE DELHI HIGH COURT HAS HELD THAT WHEN THE LEGAL PROVISIONS ARE DEBATABLE, PENAL TY SHOULD NOT BE IMPOSED. FURTHER IN THIS CASE THE ASSESSEE HAS MADE A NOTE IN THE COMPUTATION OF INCOME FILED IN THE RETURN OF INCOME THAT ON THE BASIS OF LEGAL ADVICE IT HAD CLAIMED DEPRECIATION. HENCE, THERE WAS NO CONCEALMENT OF FACTS. WHEREAS, IN THE CASE OF THE A PPELLANT THERE IS NO SUCH DEBATABLE ISSUE AND WRONG CLAIM WAS MADE IN THE RETURN OF INCOME WHICH APPELLANT HAS ACCEPTED AND SURRENDERED FOR TAXATION AFTER SPECIFIC QUERY WAS MADE BY ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER THE RELIA NCE OF THE APPELLANT ON THE CASE OF SOMANI EVERGREE KNITS LTD. (BOM) IS ALSO 8 ITA NO. 6051/DEL./2016 NOT APPLICABLE AS IN THIS CASE ASSESSEE ITSELF HAS POINTED OUT MISTAKE TO THE ASSESSING OFFICER WHICH WAS FOUND BY HON'BLE TRIBUNAL AS BONAFIDE AND INADVERTENT WHICH IS NOT T HE CASE OF THE APPELLANT. THE ASSESSING OFFICER HAS RELIED IN HIS ORDER ON TH E JURISDICTIONAL DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. ZO OM COMMUNICATIONS PVT. LTD. (327 ITR 510) WHERE HON'BL E DELHI HIGH COURT HAS HELD THE FOLLOWING: 'THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMA LL PERCENTAGE OF THE INCOME TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NO T 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 SECTION 271(L)(C] OF THE ACT. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOL LY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION O N WHICH IT WOULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BO NA FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIV E A LICENSE TO UNSCRUPULOUS ASSESSES TO MAKE WHOLLY UNTENABLE A ND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NO T BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE B ASIS OF SELF ASSESSMENT UNDER SECTION 143(1) OF THE INCOME- TAX ACT, 1961 AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTIN Y, THE CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CAS E, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALAF IDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WO ULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM , IF THEIR CASES ARE. NOT PICKED UP FOR SCRUTINY. THIS WOULD T AKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISION S IN THE ACT HAVE AT OF THE COMPANY' HENCE, IT IS APPARENT THAT THE OBSERVATIONS OF THE HONBLE HIGH COURT IN THE ABOVE MENTIONED CASE IS SQUARELY APPLICABLE WHERE THE APPELLANT WAS GUIDED BY A GOOD TEAM OF AUDITORS AND HAS FAILED TO POINT OUT WHO HAS ERRED IN MAKING SUCH WRONG CLAIM IN THE RETURN OF INCOME BEFORE ASSESSING OFFICER DURING ASSESSMENT A ND PENALTY PROCEEDINGS AND BEFORE ME DURING APPELLATE PROCEEDI NGS. THE DECISION OF THE CASE OF ZOOM COMMUNICATIONS IS AGAIN REITERATED BY HON'BLE' DELHI HIGH COURT IN THE CASE OF ESCORT FINANCE LTD. (328 ITR 044). 9 ITA NO. 6051/DEL./2016 BESIDES THIS IN THIS VERY CASE THE APPELLANT HAS AC CEPTED THE ADDITION AND SURRENDERED THE AMOUNT ONCE A SPECIFIC QUERY WAS MADE BY THE ASSESSING OFFICER. THE RATIO OF JUDGMEN T OF HONBLE DELHI HIGH COURT IN THE CASE OF MAK DATA LTD. (31 T AXMANN.COM 448) IS FULLY APPLICABLE IN THE CASE OF THE APPELLA NT WHERE HONBLE HIGH COURT HAS HELD AS UNDER- THERE WAS ABSOLUTELY NO EXPLANATION FROM THE ASSESS EE IN RESPECT OF THE AMOUNT SURRENDERED. WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE THE EVIDENCE AS TO THE NATURE A ND SOURCE OF THE AMOUNT RECEIVED AS SHARE CAPITAL, THE CREDITWORTHIN ESS OF THE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS, THE ASSESSEE SIMPLY FOLDED UP AND SURRENDERED A SUM. THE ASSESSE E MERELY STATED THAT WITH A VIEW TO AVOID LITIGATION AND BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCT IVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEP ARTMENT, IT SURRENDERED THE INCOME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. IN THE ABSENCE OF ANY EXPLANATION IN RESPECT OF THE SURRENDERED INCOME, THE FIRST PART OF CLAUSE (A) OF EXPLANATION TO SECTION 271(1) (C) IS ATTRACTED. THIS DECISION OF HON'BLE' DELHI HIGH COURT HAS BEEN CONFIRMED BY HON'BLE' SUPREME COURT IN THE CASE OF MAK DATA LTD( 38 TAXMANN.COM 448) WHERE HONBLE SUPREME COURT HELD A S UNDER- THE ASSESSING OFFICER, SHALL NOT BE CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEACE', 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CON DUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED AN Y EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SECTION 271(1 ) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NO TICED BY THE ASSESSING OFFICER, BETWEEN REPORTED AND ASSESSED IN COME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWIS E, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HA S BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE T O SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT O THERWISE. [PARA 7] ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED TH E ADDITIONAL SUM WITH A VIEW TO AVOID LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICABLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. 10 ITA NO. 6051/DEL./2016 STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER THE EXPLANATION 1 TO SECTION 271(L)(C). IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE M ISCHIEF OF PENAL PROCEEDINGS UNDER SECTION 271(L)(C). THE LAW DOES N OT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HI S CONCEALED INCOME, HE HAS TO BE ABSOLVED FROM PENALTY. [PARA 7 ] FURTHER, HON'BLE' 1TAT DELHI BENCH HAS ALSO GIVEN S IMILAR VIEW IN THE CASE OF NG TECHNOLOGIES LTD. (57 TAXMANN.COM 38 9) AND HELD THAT WHERE AGAINST BASIC PRINCIPLE OF; ACCOUNTANCY, ASSESSEE CLAIMED CAPITAL LOSS ON SALE OF FIXED ASSETS IN PRO FIT AND LOSS ACCOUNT AND HAD NOT REVISED RETURN VOLUNTARILY, PENALTY FOR CONCEALMENT OF INCOME WAS JUSTIFIED HONBLE' ITAT IN PARA 20 HAS H ELD AS UNDER- 'THEREFORE, IT IS CLEAR TO US THAT THE ASSESSEE HAD NOT FILED REVISED RETURN VOLUNTARILY BUT HAD FILED THE REVISED RETURN AFTER THE ASSESSING OFFICER CONFRONTED THE ASSESSEE AND THEY WERE ASKED TO EXPLAIN HOW AND WHY THE LOSS ON ACCOUNT OF SALE OF FIXED ASSETS WAS CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE SAID LO SS, CAPITAL IN NATURE AND COULD NOT HAVE BEEN CLAIMED IN THE PROFI T AND LOSS ACCOUNT'. THE CASE OF NG TECHNOLOGIES LTD. IS FURTHER RELIED UPON BY HON'BLE' ITAT DELHI BENCH IN THE CASE OF TERA CONSTRUCTION PVT. LTD. (61 TAXMANN.COM 317) IT IS RELEVANT TO POINT OUT THAT HON'BLE' ITAT HAS CONFIRMED THE PENALTY ORDER EVEN IN THE CASE WHERE REVISED RETURN HAS BEEN FILED BY THE ASSESSEES WHEREAS IN THE CASE OF THE APPELLA NT NO REVISED RETURN WAS FILED AND THE AMOUNT WAS SURRENDERED AT THE TIME OF ASSESSMENT PROCEEDINGS. AFTER SPECIFIC QUERY MADE BY THE ASSESSING OFFICER. HENCE, 1 FIND NO INFIRMITY IN THE PENALTY ORDER OF ASSESSING OFFICER AND PENALTY IMPOSED BY THE ASSESSING OFFICER IS CON FIRMED. {5}. IN THE RESULT, THE APPEAL IS DISMISSED. 6. WE FIND THAT, THE PENALTY HAS BEEN LEVIED IN RESPE CT OF THE THREE ADDITIONS/DISALLOWANCES. THE FIRST DISALLOWAN CE IS UNDER SECTION 94(7) OF THE ACT. ACCORDING TO SECTION, WHE RE ANY DIVIDEND IS RECEIVED BY THE ASSESSEE ON PARTICULAR SHARES, A NY SHORT-TERM CAPITAL LOSS ON SALE OF THOSE SHARES WITHIN SPECIFI ED PERIOD, IS NOT ALLOWABLE TO THE ASSESSEE. THE ASSESSEE IN THE RETU RN OF INCOME 11 ITA NO. 6051/DEL./2016 CLAIMED SUCH SHORT TERM CAPITAL LOSS OF 1,20,304/- AND ADJUSTED THE SAME AGAINST SHORT-TERM CAPITAL GAIN ON SALE OF THE MOTOR CARS. WHEN THE ASSESSING OFFICER POINTED OUT THIS E RROR TO THE ASSESSEE, THE ASSESSEE AGREED TO THE SAID AMOUNT FO R TAX. THE CONTENTION OF THE ASSESSEE THAT THIS WAS A BONAFIDE ERROR ON THE PART OF THE ASSESSEE, WHEREAS CONTENTION OF THE REV ENUE IS THAT HAD THIS ERROR NOT POINTED OUT OF BY THE ASSESSING OFFICER, THIS WOULD HAVE REMAINED UNNOTICED AND THE ASSESSEE WOUL D HAVE TAKEN BENEFIT OF THE ERROR. IT IS EVIDENT THAT IN T HE RETURN OF INCOME, THE ASSESSEE CLAIMED SHORT TERM CAPITAL LOS S OF 1,20,304/-, WHICH WAS NOT ALLOWED IN TERMS OF SECTI ON 94(7) OF THE ACT. THIS IS ALSO A MATTER OF FACT THAT THIS ERROR CAME TO LIGHT ONLY WHEN THE ASSESSING OFFICER ASKED FOR JUSTIFICATION OF THE CLAIM OF CERTAIN CAPITAL LOSS IN VIEW OF THE CLEAR PROVISION S OF SECTION 94(7) OF THE ACT. IN OUR OPINION, THERE IS NO DOUBT THAT IN THE RETURN OF INCOME PARTICULARS FILED BY THE ASSESSEE IN RESPECT OF SHORT-TERM CAPITAL LOSS, WHICH HAS BEEN ADJUSTED AGAINST THE S HORT-TERM CAPITAL GAIN, ARE INACCURATE. 6.1 THE SECOND DISALLOWANCES IN RESPECT OF THE EXCESS CLAIM OF EXPENSES OF 67,500/- AND PREPAID EXPENSES OF 5,61,200/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER FROM THE DETAILS OF THE FEE AND SUBSCRIPTIO N ACCOUNT FOUND THE TWO INCORRECT AND EXCESS CLAIM OF 27,000/- AND RS. 40,500/-, TOTALLING TO 67,500. ON BEING POINTED OUT, THE ASSESSEE ADMITTED THAT IN VOUCHER ENTRY REFERENCE N O. 6 DATED 31/12/2007, THE AMOUNT OF FEES AND SUBSCRIPTION WAS WRONGLY CALCULATED AT 63,000/- INSTEAD OF RS.36,000/- AND SIMILARLY IN VOUCHER ENTRY REFERENCE NO. 7, DATED 31/12/2007, TH E AMOUNT OF 12 ITA NO. 6051/DEL./2016 FEE AND SUBSCRIPTION WAS WRONGLY CALCULATED AT 57,375/- INSTEAD OF 16,875/-. 6.2 SIMILARLY, THE ASSESSING OFFICER OBSERVED ONE-TIME PAYMENT OF 6,73,440/- ON 30/05/2007 TO M/S. JAYPEE GREENS FOR CORPORATE ENTRANCE FEE FOR FIVE YEARS FROM JUNE, 20 07 TO MAY, 2012. THE PREPAID AMOUNT OF 5,61,200/- WAS NOT ALLOWABLE AS PER THE MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE ASSESSEE ADMITTED THAT IT HAS WRONGLY CLAIMED D EDUCTION OF THE WHOLE OF THE AMOUNT OF 6,73,440/- INSTEAD OF 1,12,240/- PERTAINING TO THE YEAR UNDER CONSIDERATION. 6.3 THE CONTENTION OF THE ASSESSEE IN ALL THE THREE CA SES IS THAT, THE ERROR WAS UNINTENTIONAL AND WAS DUE TO CALCULAT ION ERROR, AND TAX THEREON HAS BEEN OFFERED VOLUNTARILY FOR TAXATI ON. THE CONTENTION OF THE REVENUE IS THAT, HAD THE MISTAKE NOT POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE WOULD HA VE TAKEN THE BENEFIT. IN OUR OPINION, OBVIOUSLY THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME IN THE RETURN OF I NCOME FILED, THOUGH LATER ON ASSESSEE HAS ACCEPTED ITS MISTAKE. THE ASSESSING OFFICER CANNOT ABSOLVE THE ASSESSEE FOR FILING INAC CURATE PARTICULARS IN THE RETURN OF INCOME AND PARDON HIM, IF THE ASSESSEE EXCEPT THE MISTAKE AND PAY THE TAX ON THE SAME. THIS ACTION OF THE ASSESSEE CANNOT BE SAID TO BE VOLUNTA RY. FURTHER, THE LEARNED COUNSEL COULD NOT SUBSTANTIATE BEFORE US AS HOW TWO OPINION EXISTS ON THE ISSUE OF PREPAID EXPENSES OF CORPORATE ENTRANCE FEE OF 5,61,200/- DISALLOWED BY THE LEARNED ASSESSING OFFICER. 6.4 THE LD. CIT(A) HAS RELIED ON THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF MAK DATA LTD. (SUPRA), WH EREIN IT IS 13 ITA NO. 6051/DEL./2016 HELD THAT THE STATUTE DOES NOT RECOGNIZE DEFENCES O N ACCOUNT OF VOLUNTARY DISCLOSURE, BUY PEACE, AVOID LITIGAT ION, AMICABLE SETTLEMENT ETC. TO EXPLAIN AWAY OF ITS CONDUCT UNDE R THE EXPLANATION -1 TO SECTION 271(1)(C) OF THE ACT. THE HONBLE HIGH COURT HAS FURTHER HELD THAT IT IS TRITE LAW THAT TH E VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE M ISCHIEF OF THE PENAL PROCEEDINGS UNDER SECTION 271(1)(C) OF THE AC T AND THE LAW DOES NOT PROVIDE THAT WHEN ASSESSEE MAKES VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAS TO BE ABSOLVED FROM THE PENALTY. 6.5 THE LD. CIT(A) HAS ALSO SUPPORTED HIS FINDING WITH THE ORDER OF THE TRIBUNAL IN THE CASE OF NG TECHNOLOGIES LTD. (SUPRA) ALSO. 6.6 IN OUR OPINION, THE LD. CIT(A) HAS FOLLOWED THE BI NDING PRECEDENTS ON THE ISSUE IN DISPUTE AND THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDING LY, WE UPHOLD THE SAME. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH FEBRUARY, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH FEBRUARY, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI