DCIT, New Delhi V. M/s. Quantrro BPO Solutions Pvt.Ltd., New Delhi

ITA 6137/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90920 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 10-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: LALITA KRISH NAMURTY
• Section: 143(3)

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI G .C. GUPTA , HON BLE VICE PRESIDENT AND SHRI I NTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 6137 /DEL/201 3 ASSESSMENT YEAR 200 6 - 0 7 DCIT, CIRCLE - 14(1), VS. M/S QUATRRO BPO SOLUTIONS PVT. LTD. NEW DELHI A - 16/9, VASANT VIHAR, NEW DELHI - 110057 (PAN AAFCA 4469 B ) ( APPELLANT) (RESPONDENT) DATE OF HEARING : 10 .0 4 .2015 DATE OF PRONOUNCEMENT : 22. 0 4 .2015 APPELLANT BY : S RI VIKRAM SAHAY, SR. D.R. RESPONDENT BY : SMT. LALITA KRISHNAMURTY, CA ORDER PER SHRI I NTURI RAMA RAO , A M : 1. THIS IS AN APPEAL FILED BY THE REVENUE FOR THE AY 2006 - 07 CHALLENGING THE DELETION OF PENALTY OF RS.7,53,253/ - LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT ) BY THE COMMISSIONER OF INCOME TAX (APPEALS) - XVII, NEW DELHI DATED 01.08.2013. 2. THE GROUNDS OF APPEAL RAISED ARE AS FOLLOWS: - 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING PENALTY OF RS.7, 53,253/ - IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. IT A NO. 6137 /DEL /201 3 2 1.1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ADDITION WAS CONFIRMED BYTHE FIRST APPELLATE AUTHORITY AND ASSESSEE DID NOT CONT EST THE ORDER BY FILING APPEAL IN ITAT. 2. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUNDS OF APPEAL AND/ OR DELETE OR AMEND ANY OTHER GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT - ASSESSEE IS A COMPANY INCORPORAT ED UNDER THE PROVISIONS OF THE COMPANIES ACT. THE ASSESSMENT YEAR WHICH IS UNDER APPEAL IS 2006 - 07, FOR WHICH RETURN OF INCOME WAS FILED ON 15.12.2006, DECLARING A LOSS OF RS.90,19,244/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 26.12.2008 AT A LOSS OF RS.53,58,708/ - . THE DISPARITY BETWEEN RETURNED AND ASSESSED LOSS WAS ON ACCOUNT OF DISALLOWANCE OF LEGAL AND PROFESSIONAL CHARGES, RATES AND TAXES AMOUNTING TO RS.42,66,327/ - . HOWEVER, ON THE AMOUN T OF DISALLOWANCES, DEDUCTION U/S 35D OF THE ACT WAS ALLOWED. BEING AGGRIEVED BY THIS ORDER OF ASSESSMENT AN APPEAL WAS FILED BEFORE THE CIT(A) - XVII, NEW DELHI, WHO VIDE ORDER DATED 26.02.2010 PARTLY ALLOWED THE APPEAL. WHILE DOING LD. CIT(A) HAD DELETED T HE AMOUNT OF RS.20,22,500/ - OUT OF RATES AND TAXES OF RS.27,28000/ - SINCE THE ASSESSEE COMPANY ITSELF DISALLOWED THE SAME BY RESTRICTING THE CLAIM UNDER THE PROVISIONS OF SECTION 35D OF THE ACT. THEREBY CONFIRMING THE ADDITION TO THE TUNE OF RS.22,37,827/ - . THE ASSESSEE HAD NOT CARRIED THE MATTER FURTHER. WHILE MATTER STOOD THUS, THE ASSESSING OFFICER HAD INITIATED THE PROCEEDINGS U/S 271(1)(C) BY ISSUING SHOW CAUSE NOTICE IN RESPONSE TO WHICH THE ASSESSEE COMPANY FILED THE REPLY VIDE IT A NO. 6137 /DEL /201 3 3 ITS LETTER DATED 18.08 .2010, WHEREIN IT WAS PLEADED THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF ADDITIONS SUSTAINED BY CIT(A) IN AS MUCH AS THE ADDITIONS AS CONFIRMED BY CIT(A) ARE NOT FREE FROM DOUBT AND DIFFERENT VIEW IS POSSIBLE AND THEREFORE, THE QUESTION OF LEVY OF PENA LTY DOES NOT ARISE AND IN SUPPORT OF THIS PROPOSITION HE HAS RELIED UPON THE FOLLOWING JUDICIAL DECISIONS : I) THE HON BLE CALCUTTA HIGH COURT IN THE CASES OF CALCUTTA CREDIT CORPORATION VS. CIT, 166 ITR 29 AND IN THE CASE OF JAGABANDHU PRASANNA KUMAR RUPL AL SEN PODDAR VS. CIT REPORTED IN 133 ITR 156. II) THE HON BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS AND MINERAL LTD. REPORTED IN 133 TAXMAN 320. III) THE ITAT DELHI BENCH IN THE CASE OF DCIT VS. RAHOUL SIEMSSEN ENGG. P. LTD. R EPORTED IN 91 TTJ 62. 4. THE ASSESSING OFFICER AFTER CONSIDERING THE EXPLANATION FILED BY THE ASSESSEE COMPANY HAD HELD THAT THE ASSESSEE COMPANY HAD FAILED TO SUBSTANTIATE ITS CLAIM OF LEGAL AND PROFESSIONAL EXPENSES AND PLACING THE RELIANCE ON THE DECI SION OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. REPORTED IN [2010] 327 ITR 510 HAD LEVIED THE PENALTY OF RS. 7,53,253 / - . AGGRIEVED BY THIS ORDER OF PENALTY, THE APPEAL WAS FILED BEFORE THE CIT(A) - XVII, NEW DELHI WHO VIDE ORDER DATED 01.08.2013 DELETED THE PENALTY BY HOLDING THAT THE EXPLANATION OF THE ASSESSEE COMPANY IS BONA FIDE AND ASSESSEE IS NOT GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THIS ORDER, THE REVENUE HAD COME UP WITH THE PRESENT AP PEAL. IT A NO. 6137 /DEL /201 3 4 5. IT WAS ARGUED BY LD. DR THAT THE CIT(A) WAS NOT JUSTIFIED DELETING THE PENALTY IN AS MUCH AS THE APPELLANT HAD MADE A CLAIM WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW AND HE HAS PLACED RELIANCE ON THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LTD. (SUPRA). ON THE OTHER HAND, LD. AR HAD RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE ORDER OF CIT(A) IS WELL REASONED ORDER AND SUPPORTED BY THE SEVERAL JUDICIAL DECISIONS AND THEREFORE, THERE IS NO SCOPE FOR T HE INTERFERENCE IN ORDER OF THE CIT(A) BY THIS HON BLE TRIBUNAL. 6. WE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT DATED 16.03.2011, WE FIND THAT TH E PENALTY WAS LEVIED ON THE ITEM OF LEGAL AND PROFESSIONAL CHARGES OF RS.15,37,827/ - ALONE AND WHEREAS WHILE WORKING OF THE PENALTY LEVIABLE, THE CONCEALED INCOME WAS ADOPTED AT RS.22,37,827/ - . OBVIOUSLY, IT MEANS THAT THE ASSESSING OFFICER ALSO TAKEN THE DISALLOWANCE OF RS.7,00,000/ - BEING THE AMOUNT PAID TO STPI WITHOUT ASSIGNING ANY REASONS. IT IS CLEAR FROM THE PENALTY ORDER THAT THE PENALTY WAS LEVIED FOR MERE DISALLOWANCE OF THE CLAIM. THE ASSESSING OFFICER HAD FAILED TO GIVE A FINDING AS TO WHY THE E XPLANATION OFFERED BY THE ASSESSEE COMPANY IS NOT BONA FIDE . THE ASSESSING OFFICER HAD NOT EVEN GIVEN ANY FINDING AS TO WHICH PARTICULARS FILED BY THE ASSESSEE COMPANY ARE FOUND TO BE FALSE THEREBY CALLING FOR THE ADDITION. T HE HON BLE SUPREME COURT IN THE CASE OF IT A NO. 6137 /DEL /201 3 5 CIT VS. RELIANCE PETROPRODUCTS P. LTD. REPORTED IN [2010] 322 ITR 158 (SC) (HEAD NOTE) HELD AS FOLLOWS : A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS.' 7 . FURTHER , WE FIND THAT THERE ARE PLETHORA OF DECISIONS IN SUPPORT OF THE PROPOSITION THAT MERE ADDITIONS TO THE RETURNED INCOME WOULD NOT PER SE TANT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO AS TO ATTRACT UNDER SECTION 271(1)(C). A. IN THE CASE OF TRANSPORT CORPORATION OF INDIA LTD. V. ASSTT. CIT [IT APPEAL NO. 195(HYD.) OF 2013, DATED 27 - 9 - 2013] THIS TRIBUNAL HAS HELD THAT UNLESS THE CLAIM O F THE ASSESSEE WAS PROVED TO BE BOGUS OR THAT ANY AMOUNT WAS RECEIVED BACK BY THE ASSESSEE, THE DISALLOWANCE OF EXPENDITURE BY ITSELF CANNOT BE REASON FOR LEVY OF PENALTY. B . THE DELHI HIGH COURT IN THE CASE OF KARAN RAGHAV EXPORTS (P.) LTD. V. CIT [2012 ] 349 ITR 112/21 TAXMANN.COM 8/[2013] 212 TAXMAN 55 (MAG.) HAS HELD THAT CLAIM MADE BY THE ASSESSEE MIGHT HAVE BEEN REJECTED, BUT IT WOULD NOT BE SAID THAT CLAIM WAS NOT PLAUSIBLE OR LEGALLY TENABLE AND THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS FUR NISHED INACCURATE PARTICULARS OF INCOME. C . IN THE CASE OF CIT V. BALAJI DISTILLERIES LTD. [2013] 31 TAXMANN.COM 55/214 TAXMAN 96 (MAD.) (MAG.) IT HAS BEEN HELD THAT WHEN ADDITIONS WERE CONFIRMED NOT FOR LACK OF BONA FIDES BUT FOR REJECTING THE EXPLANATI ON OF THE ASSESSEE THE PENALTY CANNOT BE LEVIED UNDER SECTION 271(1)(C). D . IN THE CASE OF CIT V. INTERNATIONAL AUDIO VISUAL CO. [2007] 288 ITR 570 (DELHI) IT HAS BEEN HELD THAT WHEN ALL FACTS RELATING TO CLAIM WERE DISCLOSED, BUT CLAIM WAS NOT ALLOWED, IT DOES NOT SUGGEST THAT IT A NO. 6137 /DEL /201 3 6 PARTICULARS OF INCOME OF THE ASSESSEE OR CONCEALMENT OF HIS TRUE INCOME HAS BEEN MADE. E . THE DELHI HIGH COURT IN THE CASE OF CIT V. DCM LTD. [2013] 359 ITR 101/37 TAXMANN.COM 447 HELD THAT (PAGE 105) : 'LAW DOES NOT BAR OR PROHI BIT AN ASSESSEE FOR MAKING A CLAIM, WHICH HE BELIEVES MAY BE ACCEPTED OR IS PLAUSIBLE. WHEN SUCH A CLAIM IS MADE DURING THE COURSE OF REGULAR OR SCRUTINY ASSESSMENT, LIBERAL VIEW IS REQUIRED TO BE TAKEN AS NECESSARILY THE CLAIM IS BOUND TO BE CAREFULLY SCR UTINISED BOTH ON FACTS AND IN LAW ... THREAT OF PENALTY CANNOT BECOME A GAG AND/OR HAUNT ON ASSESSEE FOR MAKING A CLAIM WHICH MAY BE ERRONEOUS OR WRONG WHEN IT IS MADE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. NORMALLY PENALTY PROCEEDINGS IN SUCH CA SES SHOULD NOT BE INITIATED UNLESS THERE ARE VALID OR GOOD GROUNDS TO SHOW THAT FACTUAL CONCEALMENT HAS BEEN MADE OR INACCURATE PARTICULARS ON FACTS WERE PROVIDED IN THE COMPUTATION'. 8 . THE RATIO LAID DOWN IN THE ABOVE JUDICIAL DECISIONS IS SQUARELY APPL ICABLE TO THE FACTS OF THE PRESENT CASE AND, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE CIT(A). 9 . HENCE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. TH E ORDER PRONOUNCED IN THE OP EN COURT ON 2 2 ND APRIL , 201 5 . SD/ - SD/ - ( G.C. GUPTA ) ( I NTURI RAMA RAO ) V ICE PRESIDENT ACCOUNTANT MEMBER DATED: 2 2 ND APRIL , 201 5 . AKS/ - DCOM COPY FORWARDED TO 1 . APPELLANT IT A NO. 6137 /DEL /201 3 7 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST . REGISTRAR, ITAT, NEW DELHI