International Tractors Ltd., Delhi V. DCIT (LTU), New Delhi

ITA 6098/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4937 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Assessee Lawyers: SUMIT KR BANSAL
• Keywords: Bonafide mistake
• Section: 271(1)(c); 274; 73; 22

Judgement Text

1 ITA NO. 6098/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. NO. 6098/DEL/20 16 (A.Y. 2006-07) INTERNATIONAL TRACTORS LTD., SONALIKA HOUSE, 283, AGCR ENCLAVE KARKARDOOMA, DELHI 110 092 (AAACI 2270 H) (APPELLANT) VS DEPUTY COMMISSIONER OF INCOME TAX, LTU, SAKET, NEW DELHI ( RESPONDENT) APPELLANT BY SHRI SUMIT KR. BANSAL, C.A. RESPONDENT BY SHRI S. N. MEENA, SR. D.R. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX [APPEALS]-22, NEW DELHI DATED 16.09.2016 FOR ASSESSMENT YEAR 2006-07. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LD CIT(A) HAS ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) WITHOUT PROPERLY APPRECIATING THE FACTS A ND IN CIRCUMSTANCES OF THE CASE. THE APPELLANT OFFERED THE INCOME VOLUNTARILY WHICH WAS DUE TO THE BONAFIDE MISTAKE AND THE LD CIT(A) HAS NOT CONSIDER ED THE EXPLANATION & HAS WRONGLY CONFIRMED THE ADDITION. 2. THAT THE PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE PENALTY HAS BEEN IMPO SED FOR THE CONCEALMENT OF INCOME. THUS, THE PENALTY HAS BEEN IMPOSED AGAIN ST THE PROVISIONS OF THE INCOME TAX ACT & ALSO WITHOUT APPLICATION OF MIND O N THE DIFFERENT REASONS DATE OF HEARING 22.01.2020 DATE OF PRONOUNCEMENT 21.02.2020 2 ITA NO. 6098/DEL/2016 THAT WERE RECORDED HENCE DESERVE TO BE QUASHED. 3. THE APPELLANT CRAVES LEAVES TO, ADD, ALTER, AMEN D OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 4. PRAYER:- THAT THE ABOVE MENTIONED ADDITIONS OR D ISALLOWANCES MAY PLEASE BE ALLOWED. 3. THE ASSESSEE IS A MANUFACTURING UNIT OF TRACTORS . THE ASSESSING OFFICER MADE ADDITIONS ON VARIOUS ACCOUNT IN ASSESSEES CAS E AND COMPUTED THE TOTAL INCOME AT RS.139,15,65,418/-. SUBSEQUENTLY, THE PEN ALTY U/S 271(1)(C) WAS ISSUED AND VIDE ORDER DATED 31.03.2015 THE ASSESSIN G OFFICER IMPOSED MINIMUM PENALTY OF RS.60,77,367/- U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 WHICH WAS LATER RECTIFIED VIDE ORDER DATED 26.12.20 16 BY IMPOSING PENALTY OF RS. 2,54,300/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD AR SUBMITTED THAT THE PENALTY NOTICE U/S 274 HAS NOT GIVEN ANY LIMB UNDER WHICH THE PENALTY U/S 271(1)(C) HAS BEEN IMPOSED. THUS, THE PENALTY ORDER ITSELF IS BAD IN LAW. THE LD. AR RELI ED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CIT VS. SSAS EMER ALD MEADOWS (2016) 73 TAXMAN.COM 248 (SC) AND CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR). THE LD AR FURTHER SUBMITTED THAT THE HONBLE DELHI HIGH COURT IN CASE OF PR. CIT VS. M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (ITA NO.475/2019 VIDE ORDER DATED 02.08.2019) HELD THAT NOTICE ISSUED BY THE ASSESSING OFFICER WOULD BE BAD IN LAW IF IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) THE PENALTY PROCEEDINGS HAD BEEN INITIATED. BESIDES THAT THE LD AR SUBMITTED THAT ON MERIT PENALTY HAS BEEN IMPO SED DUE TO IMPUGNED DISALLOWANCES OF EXPENDITURE/CLAIM ON ACCOUNT OF BO NAFIDE CLERICAL HUMAN ERROR. THE ASSESSEE HAS SHOWN A RETURNED INCOME OF RS.94.74 CRORES, AGAINST WHICH PENALTY HAS BEEN IMPOSED ON DISALLOWANCES OF 0.08 CRORES CONSTITUTING ONLY 0.08% OF THE RETURNED INCOME, WHICH WAS ONLY D UE TO BONAFIDE INADVERTENT HUMAN ERROR WHILE PREPARING DATA OF ITR/ TAX AUDIT. THE LD AR RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF PR ICE WATERHOUSE COOPERS (P.) 3 ITA NO. 6098/DEL/2016 LTD. VS. CIT, KOLKATA 348 ITR 306 (SC). THE LD. AR RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PRIVATE LIMITED (2011) 11 SCC 762: 322 ITR 158 WHEREIN IT I S HELD THAT SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOUNT TO FURNI SHING INACCURATE PARTICULARS OF INCOME OF ASSESSEE OR CONCEALMENT. 6. THE LD DR RELIED UPON THE ASSESSMENT ORDER, PENA LTY ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. THE PENALTY NOTICE DATED 10.03 .2008 HAS NOT MENTIONED THE SPECIFIC LIMB OF SECTION 271(1)(C) AS TO WHETHE R THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE I NCOME. SINCE IN THE INSTANT CASE THE INAPPROPRIATE WORDS IN THE PENALTY NOTICE HAS NOT BEEN STRUCK OFF AND THE NOTICE DOES NOT SPECIFY AS TO UNDER WHICH LIMB OF THE PROVISIONS, THE PENALTY U/S 271(1)(C) HAS BEEN INITIATED, THEREFORE , WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY LEVIED U/S 271(1)(C) IS NO T SUSTAINABLE AND HAS TO BE DELETED. ALTHOUGH THE LD. DR SUBMITTED THAT MERE N ON-STRIKING OFF OF THE INAPPROPRIATE WORDS WILL NOT INVALIDATE THE PENALTY PROCEEDINGS, HOWEVER, THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SSAS EMERALD MEADOWS (SUPRA) WHERE THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED IS DIRECTLY ON THE ISSUE CONTESTED HEREIN BY THE ASSES SEE. FURTHER, WHEN THE NOTICE IS NOT MENTIONING THE CONCEALMENT OR THE FUR NISHING OF INACCURATE PARTICULARS, THE RATIO LAID DOWN BY THE HONBLE HIG H COURT IN CASE OF M/S. SAHARA INDIA LIFE INSURANCE COMPANY LTD. (SUPRA) WI LL BE APPLICABLE IN THE PRESENT CASE. THUS, THE PENALTY ORDER ITSELF IS VOI D AB INITIO. BESIDES THAT AS HELD IN THE CASES OF PRICE WATERHOUSE COOPERS (P.) LTD. (SUPRA) AND RELIANCE PETROPRODUCTS (SUPRA) SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF ASSE SSEE OR CONCEALMENT. THUS, THE PENALTY ORDER DOES NOT SURVIVE ON MERIT AS WELL . HENCE, APPEAL OF THE ASSESSEE IS ALLOWED. 4 ITA NO. 6098/DEL/2016 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF FEBRUARY, 2020 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 21/02/2020 PRITI YADAV, SR. PS /R.N* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 22 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2 3 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER .01 .20 20 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS .01.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .0 2 .2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 1 .0 2 .2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 1 .0 2 .2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 1 .0 2 .2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK