M/s. Petro IT Ltd., New Delhi V. DCIT, New Delhi

ITA 6311/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3978 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.6311/DEL/2016 ASSESSMENT YEAR : 2012-13 PETRO IT LTD., 17-18, NEHRU PLACE, NEW DELHI. VS. DCIT, CIRCLE- 19(2), NEW DELHI. PAN : AADCP2646K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAHUL KHARE, ADV. DEPARTMENT BY : SHRI ATIQ AHMAD, SR.DR DATE OF HEARING : 02-01-2018 DATE OF PRONOUNCEMENT : 11-01-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 08.11.2016 OF CIT(A)- 11, NEW DELHI RELATING TO ASS ESSMENT YEAR 2012-13. 2. LEVY OF PENALTY OF RS.2,12,692/- U/S 271(1)(C) O F THE I.T. ACT, 1961 MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LD. CIT( A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING SOFTWARE SOLUTION SERVICE S AND TRADING IN VARIOUS ITEMS OF CONSTRUCTION MATERIAL AND SHARE DERIVATIVE TRADI NG. IT FILED ITS RETURN OF 2 ITA NO.6311/DEL/2016 INCOME ON 29.09.2012 DECLARING LOSS OF RS.26,88,887 /-. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON A TOTAL LOSS OF RS.20,0 0,560/- BY MAKING ADDITION OF RS.11,763/- ON ACCOUNT OF INTEREST ON DELAYED PA YMENT OF TDS AND AN AMOUNT OF RS.6,76,562/- ON ACCOUNT OF PROVISION FOR DERIVATIVE LOSS. IT MAY BE PERTINENT TO MENTION HERE THAT THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAD ACCEPTED THE MISTAKE ON ACCOUNT OF DERIVATIVE LOSS AND HAD FILED REVISED COMPUTATION VIDE LETTER DATED 19.12.2 014. 4. THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST T HE ABOVE TWO ADDITIONS. THE ASSESSING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT. REJECTING THE VARIOUS EXPLANATIONS G IVEN BY THE ASSESSEE AND FOLLOWING VARIOUS DECISIONS INCLUDING THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LTD. R EPORTED IN (2010) 40 DTR (DELHI) 249, THE ASSESSING OFFICER LEVIED PENALTY O F RS.2,12,692/- U/S 271(1)(C) ON THE GROUND THAT THE ASSESSEE HAS CONCEALED ITS I NCOME ON ACCOUNT OF INCORRECT CLAIM OF EXPENSES OF DERIVATIVE LOSS AND INTEREST P AID TOWARDS LATE PAYMENT OF TDS AND FURNISHED INACCURATE PARTICULARS THEREOF. 5. IN APPEAL, LD. CIT(A) UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. WHILE DOING SO, HE RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NG TECHNOLOGIES LTD. REPORTED I N 370 ITR DATED 01.12.2014 AND THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TERA 3 ITA NO.6311/DEL/2016 CONSTRUCTION PVT. LTD. VS. ITO VIDE ITA NO.1435/DEL /2008 ORDER DATED 19.03.2015. 6. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMI TTED THAT THE ASSESSEE HAS ACCEPTED BOTH THE MISTAKES DURING THE ASSESSMENT PR OCEEDINGS AND NO APPEAL HAS BEEN FILED. REFERRING TO THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT VIDE CIVIL APPEAL NO.6924/2012 ORDER DATED 25.09.2012, COPY OF WHICH WAS FILED DUR ING THE COURSE OF APPEAL PROCEEDINGS, HE SUBMITTED THAT THE HON'BLE SUPREME COURT IN THE SAID DECISION WHILE CANCELLING THE PENALTY HAS HELD THAT THE ASSE SSEE HAS COMMITTED INADVERTENT AND BONA-FIDE ERROR AND HAD NOT INTENDE D TO ATTEMPT EITHER CONCEAL ITS INCOME OR FURNISHING INACCURATE PARTICULARS. H E SUBMITTED THAT WHEN SUCH A BIG ACCOUNTING FIRM COULD MAKE SUCH A MISTAKE, THER EFORE, IN THE CASE OF THE ASSESSEE, THE MISTAKE WHICH IS AN INADVERTENT ERROR ON THE PART OF THE AUDITORS, PENALTY SHOULD NOT HAVE BEEN LEVIED. 8. REFERRING TO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF GOPALRATNAM SANTHA MOSUR VS. ITO REPORTED IN (2017) 88 TAXMANN.COM 13, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT WHERE ASSESSEE HAD INADVERTENTLY CLAIMED A REBATE OF 50 P ER CENT ON TOTAL TAX PAYABLE 4 ITA NO.6311/DEL/2016 AND ON BEING QUESTIONED HAD SUBMITTED A REVISED COM PUTATION WITHDRAWING SUCH REBATE CLAIMED AND THERE WAS NO ALLEGATION AGAINST THE ASSESSEE OF FURNISHING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME, IM POSITION OF PENALTY U/S 271(1)(C) WAS NOT JUSTIFIED. 9. REFERRING TO THE DECISION OF THE HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF CHEAP CYCLE STORES VS. CIT REPORTED IN (2006) 15 4 TAXMANN.COM 284, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID D ECISION HAS HELD THAT WHERE THE ASSESSEE HAS FILED REVISED RETURN OF INCOME DEC LARING HIGHER INCOME AND STATED THAT REVISED RETURN WAS FILED ON DETECTING M ISTAKE IN CLOSING STOCK VALUATION AND THERE WAS NO INTENTION TO CONCEAL ITS INCOME WHEN IT ORIGINALLY FILED ITS RETURN OF INCOME DECLARING LESSER CLOSING STOCK, PENALTY SO LEVIED IS NOT JUSTIFIED. HE ACCORDINGLY SUBMITTED THAT THE LEVY OF PENALTY U/S 271(1)(C) IN THE INSTANT CASE BY ASSESSING OFFICER AND UPHELD BY THE LD. CIT(A) SHOULD BE DELETED. 10. LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE ASSESSEE ACCEPTED THE MISTAKE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAD FILED A REVISED COMP UTATION STATEMENT BY WITHDRAWING THE LOSS ON ACCOUNT OF PROVISION OF DER IVATIVE. SIMILARLY, INTEREST PAID ON DELAYED PAYMENT OF TDS IS NOT AN ALLOWABLE EXPENDITURE. DESPITE THIS THE ASSESSEE CLAIMED THE SAME AS AN EXPENDITURE IN THE PROFIT & LOSS ACCOUNT. 5 ITA NO.6311/DEL/2016 MERELY BECAUSE THE ASSESSEE HAS ACCEPTED THE MISTAK E AND PAID TAXES THEREON, THE ASSESSEE CANNOT BE ABSOLVED FROM LEVY OF PENALT Y U/S 271(1)(C). HE SUBMITTED THAT THE LD. CIT(A) HAS THOROUGHLY DISCUS SED THE ISSUE AND HAS UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. HE AC CORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) BEING IN CONSONANCE WITH LA W SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE BE DISMISSED. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE LD. CIT (A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT TH E ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAD DETECTED THE LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF PROVISION OF DERIVATIVE LOSS. ON BEI NG CONFRONTED BY THE ASSESSING OFFICER, THE ASSESSEE ADMITTED THE MISTAK E AND FILED THE REVISED COMPUTATION. SIMILARLY, ON BEING DETECTED BY THE A SSESSING OFFICER REGARDING THE NON-ADMISSIBILITY OF INTEREST PAID TOWARDS DELA YED PAYMENT OF TDS, THE ASSESSEE AGREED AND ACCEPTED FOR THE DISALLOWANCE. UNDER THESE CIRCUMSTANCES, IT IS TO BE SEEN AS TO WHETHER PENALTY U/S 271(1)(C ) HAS TO BE LEVIED OR NOT. WE FIND THE ASSESSING OFFICER RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LTD. ( SUPRA) AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF K.P. MADHU SUDAN VS. CIT REPORTED IN 6 ITA NO.6311/DEL/2016 251 ITR 99 AND VARIOUS OTHER DECISIONS LEVIED PENAL TY OF RS.2,12,962/- U/S 271(1)(C) OF THE I.T. ACT. WE FIND THE LD. CIT(A) RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NG TECHNOLO GIES LTD. (SUPRA) AND TERA CONSTRUCTION PVT. LTD. (SUPRA) UPHELD THE PENALTY L EVIED BY THE ASSESSING OFFICER. IT IS THE SUBMISSION OF THE LD. COUNSEL F OR THE ASSESSEE THAT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUPRA) AND THE VARIOUS OTHER DEC ISIONS CITED BEFORE ME, THE MISTAKE BEING INADVERTENT AND BONA-FIDE ERROR DOES NOT CALL FOR THE VISIT OF PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. 12. WE FIND SOME FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUPRA), THE ASSESSEE HAD CLAIMED PROVISIONS TOWARDS PAYMENT OF GRATUITY ALTHOUGH THE SAME WAS NOT ALLOWABLE. ALTHOUGH THE ASSESSING OFFICER INITIALLY ALLOWED THE SAME IN THE ORDER PASSED U/S 143(3), HOWEVER, SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED BY ISSUE OF NOTICE U/S 148. THEREAFTER, A FTER OBTAINING THE REASONS FROM THE ASSESSING OFFICER REGARDING SUCH REOPENING AND REALIZING THE MISTAKE COMMITTED BY IT, THE ASSESSEE FILED REVISED RETURN AND THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ACCEPTING SUCH REVISED RET URN. THEREAFTER PENALTY U/S 271(1)(C) WAS LEVIED AND THE ASSESSING OFFICER LEVI ED PENALTY AT 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE BY FURNISHI NG INACCURATE PARTICULARS. 7 ITA NO.6311/DEL/2016 THE LD. CIT(A) REJECTED THE APPEAL OF THE ASSESSEE. THE TRIBUNAL ALSO DISMISSED THE APPEAL FILED BY THE ASSESSEE. THE HONBLE KARN ATAKA HIGH COURT DISMISSED THE APPEAL FILED BY THE ASSESSEE. THEREAFTER, WHEN THE MATTER TRAVELLED TO HONBLE SUPREME COURT, THE HONBLE APEX COURT HELD THAT THE ASSESSEE HAD COMMITTED INADVERTENT AND BONA-FIDE ERROR AND HAD N OT INTENDED OR ATTEMPTED EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PAR TICULARS OF INCOME. IN OUR OPINION, THE CASE OF THE PRESENT ASSESSEE IS MORE O R LESS SIMILAR TO THAT OF THE CASE DECIDED BY THE HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUPRA). FURTHER, THE HONBLE MA DRAS HIGH COURT IN THE CASE OF GOPALRATNAM SANTHA MOSUR (SUPRA) WHILE DELETING THE PENALTY CONFIRMED BY THE TRIBUNAL RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. REPORTE D IN 322 ITR 158 HAS HELD THAT WHERE THE ASSESSEE HAD INADVERTENTLY CLAIMED A REBATE OF 50% ON TOTAL TAX PAYABLE AND ON BEING QUESTIONED HAD SUBMITTED A REV ISED COMPUTATION WITHDRAWING REBATE CLAIMED AND THERE WAS NO ALLEGAT IONS AGAINST THE ASSESSEE ON FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME, IMPOSITION OF PENALTY U/S 271(1)(C) WAS NOT JUSTIFIED. 13. IN VIEW OF THE ABOVE DISCUSSION AND CONSIDERING THE SUBMISSION OF THE ASSESSEE THE INADVERTENT MISTAKE COMMITTED BY THE A SSESSEE WAS A BONA-FIDE ONE, WE ARE OF THE CONSIDERED OPINION THAT LEVY OF PENALTY U/S 271(1)(C) IN THE 8 ITA NO.6311/DEL/2016 INSTANT CASE IS NOT JUSTIFIED. WE, THEREFORE, SET- ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENA LTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH JANUARY, 2018. SD/- SD/- (SUCHITRA KAMBLE) (R. K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11-01-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI