DCIT, New Delhi V. M/s. Jain Studio Ltd., New Delhi

ITA 6548/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98032 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Initiation of penalty proceedings
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D , NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO.6548 /DEL/2013 ASSESSMENT YEAR : 2009-10 DCIT, CIRCLE 4(1), VS. M/S. JAIN STUDIO LTD., NEW DELHI JAIN STUDIO CAMPUS, SCINDIA VILLA, SAROJINI NAGAR, NEW DELHI-110 023 GIR / PAN:AAACJ2909C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. S. NEGI, SR. DR RESPONDENT BY : SHRI KAPIL GOEL, ADV. DATE OF HEARING : 02.11.2015 DATE OF PRONOUNCEMENT : 04.12.2015 ORDER PER KULDIP SINGH, JM: THE APPELLANT, DCIT, CIRCLE 4(1), NEW DELHI (HEREI NAFTER REFERRED AS THE REVENUE), BY FILING THE PRESENT APPEAL, SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 30.09.2013 PASSED BY LD. CIT(A) VIII, N EW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUND INTER ALIA TH AT:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PE NALTY U/S 271(1)(C) OF RS.33,99,000/-. 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS A ND IS NOT TENABLE ` ON FACTS AND IN LAW. ITA NO.6548/DEL/2013 2 2. BRIEFLY STATED, THE FACTS OF THIS CASE ARE: DURI NG THE COMPLETION OF ASSESSMENT U/S 143(3) ON 12.12.2011, ASSESSEE RETUR NED LOSS OF RS.251,12,957/- AND THE ONLY DISALLOWANCE ON ACCOUN T OF INTEREST CAPITALIZED OF RS.1,00,00,000/- WAS MADE BY THE A.O. IN THE AS SESSMENT ORDER DATED 12.12.2011, THE A.O. ASSESSED LOSS OF RS.1,51,12,95 7/- AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 3. DURING PENALTY PROCEEDINGS, IT WAS NOTED THAT TH E INTEREST OF RS.1 CRORES HAD BEEN CAPITALIZED NOT ACTUALLY PAID BY TH E ASSESSEE AND THIS FACT WAS BROUGHT TO THE NOTICE OF A.O. DURING THE ASSESS MENT PROCEEDINGS. FOR CONCEALMENT OF INCOME, NOTICE WAS ISSUED FOR FILING INACCURATE PARTICULARS. FINDING REPLY OF THE ASSESSEE COMPANY NOT TENABLE A S IT WAS A CASE OF MISREPRESENTATION OF FACTS, PENALTY OF RS.33,99,00 0/- HAS BEEN IMPOSED. 4. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A ), WHO HAS ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COM E UP BEFORE THE TRIBUNAL BY FILING THE PRESENT APPEAL. 5. LD. D.R. CHALLENGING THE IMPUGNED ORDER, CONTEND ED THAT WHEN THERE IS NO DISPUTE REGARDING QUANTUM PROCEEDINGS THAT TH E ASSESSEE HAS MISREPRESENTED THE FACTS, LD. CIT(A) HAS ERRED IN Q UASHING THE PENALTY ORDER. 6. ON THE OTHER HAND, LD. A.R. REPELLED THE ARGUMEN TS ADDRESSED BY LD. D.R. BY CONTENDING THAT WHEN THE A.O. HAS HIMSELF R ECORDED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HIMSELF HAS ADM ITTED THAT INTEREST ACTUALLY PAID AT RS.1 CRORES IS NOT ALLOWABLE EXPEN DITURE AND AS SUCH, THE SAME IS DISALLOWED AS DEDUCTION, THERE IS NO CONCEA LMENT OF INCOME AND RELIED UPON THE ORDER PASSED BY ITAT, DELHI BENCH G IN I.T.A. NO.1423/ DEL/2013 IN CASE OF SIMRAN SINGH GAMBHIR VS DDIT DATE OF ORDER 21.07.2015. ITA NO.6548/DEL/2013 3 7. UNDISPUTEDLY, PENALTY PROCEEDINGS AS WELL AS ASS ESSMENT PROCEEDINGS ARE TO BE DECIDED INDEPENDENTLY AND THE PENALTY PRO CEEDINGS ARE NOT TO BE INFLUENCED BY THE ASSESSMENT PROCEEDINGS. 8. HON'BLE SUPREME COURT IN A CASE CITED AS CIT VS RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (S.C.) HAS DECIDED THE ISSUE IN CONTROVERSY AND OPERATIVE PART OF WHICH IS REPRODUC ED AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE I. T. ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MAD E. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RE TURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH P ARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCU RATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN C ANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 9. UNDISPUTEDLY, THE PENALTY PROCEEDINGS HAVE BEEN INITIATED AGAINST THE ASSESSEE ON THE BASIS OF ASSESSMENT ORDER DATED 12. 12.2011, THE OPERATIVE PART OF WHICH IS REPRODUCED AS UNDER:- ITA NO.6548/DEL/2013 4 3.1. ON PERUSAL OF THE ABOVE NOTES, IT IS NOTICED THAT THE INTEREST OF RS.1 CRORE HAS BEEN CAPITALIZED AND NOT ACTUALLY PA ID BY THE ASSESSEE. THE ABOVE OBSERVATION WAS BROUGHT TO THE NOTICE OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AS SESSEE VIDE LETTER DATED 29.11.2011 HAS SUBMITTED AS BELOW: - 'STATEMENT OF INCOME HAS BEEN RECOMPUTED ON FINDING AN ERROR AS PER WHICH THE AMOUNT OF INTEREST OF RS.100.00 LAC WHICH WAS PERMITTED FOR CAPITALIZATION WITH THE PRINCIPAL AMOUNT OF SA SF, WAS TREATED AS THE AMOUNT PAID AND CLAIMED AS DEDUCTION. THIS ERROR WA S WORKED IN UNDER THE GENUINE AND BONA FIDE BELIEF THAT THIS IN TEREST AMOUNT HAS BEEN TAKEN THE SHAPE OF THE PRINCIPAL REPAYABLE. ' 3.2. THUS, THE ASSESSEE ITSELF HAS ADMITTED THAT TH E INTEREST NOT ACTUALLY PAID OF RS.1 CRORE IS NOT AN ALLOWABLE EXPENSE. HEN CE, THE AMOUNT OF INTEREST CAPITALIZED OF RS.1,00,00,000/- IS DISALLO WED AS A DEDUCTION. I AM SATISFIED THAT THE ASSESSEE FILED INACCURATE P ARTICULARS OF ITS INCOME AND THEREBY CONCEALED ITS INCOME TO THE TUNE OF RS.1,00,00,000/-. PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PART ICULARS OF INCOME. 10. BARE PERUSAL OF THE AFORESAID FINDINGS RETURNED BY THE A.O. IN MAKING ADDITION TO THE TUNE OF R.1,00,00,000/- GOES TO PR OVE THAT THERE IS NO ELEMENT OF CONCEALMENT OF FACTS AT THE END OF ASSESSEE. IN ITIALLY, ASSESSEE HAS CAPITALIZED THE AMOUNT OF RS.1,00,00,000/- ON ACCOU NT OF INTEREST WHICH HE HAS NOT ACTUALLY PAID, BUT WHEN HE WAS CONFRONTED D URING ASSESSMENT PROCEEDINGS, HE HIMSELF HAS ADMITTED HIS ERROR, REC OMPUTED HIS STATEMENT OF INCOME AND STATED THAT THE ERROR IS UNDER THE GENUI NE AND BONA FIDE BELIEF THAT THIS INTEREST AMOUNT HAS TAKEN THE SHAPE OF PR INCIPAL REPAYABLE. 11. HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. IN PARA 12 HELD AS UNDER: IT WAS TRIED TO BE SUGGEST THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITU RE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL ITA NO.6548/DEL/2013 5 INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT T HAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTION KNOWING THAT THEY ARE INCORRECT; IT AMOUN TED TO CONCEALMENT OF INCOME. IT W AS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) A N ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDI TURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYP ES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPE S AMOUNT TO CONCEALMENT OF PARTICULARS OF ONES INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP T O THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECA USE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RET URN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR A NY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C ) . THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 12. THE COORDINATE BENCH OF ITAT, DELHI BENCH G I N THE CASE CITED AS SIMRAN SINGH GAMBHIR VS DDIT (SUPRA) HAS ALSO DECID ED THE IDENTICAL ISSUE BY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY AND OT HERS REPORTED IN 359 ITR 565, IN FAVOUR OF ASSESSEE, THE RATIO OF WHICH IS EXISTENCE OF CONDITION STIPULATED IN SECTION 271(1)(C) IS A SINE QUA NON F OR A.O. FOR INITIATION OF PENALTY PROCEEDINGS AND THE IMPOSITION OF PENALTY E VEN IF TAX LIABILITY IS ADMITTED, IS NOT AUTOMATIC. EVEN OTHERWISE, WHEN T HE BONA FIDE MISTAKE OF THE ASSESSEE IN CLAIMING THE NON SUSTAINABLE DEDUCT ION HAS BEEN ADMITTED BY THE FACT FINDING AUTHORITIES BELOW, THE QUESTION OF CONCEALMENT OF INCOME OR ITA NO.6548/DEL/2013 6 MISREPRESENTATION OF FACT DOES NOT ARISE. SO, ME RE REJECTION OF ANY CLAIM OF THE ASSESSEE THAT TOO ON THE BASIS OF ADMISSION OF HIS BONA FIDE MISTAKE, DOES NOT AMOUNT TO CONCEALMENT OF FACTS OF INCOME OR FUR NISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 13. SO AS A SEQUEL TO THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY CONCLUDED THAT HERE IS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE RATHER IT IS A CASE OF MAKING A CLAIM OF A N ALLOWANCE OF BENEFIT UNDER THE LAW UNDER BONA FIDE BELIEF. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY LD. CIT(A) IN THE IMPUG NED ORDER, WE HEREBY DISMISS THE PRESENT APPEAL. 14. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH DEC., 2015. SD./- SD./- ( J. S. REDDY) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 04.12.2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.6548/DEL/2013 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23/11 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 26,30,30/11,1,2/12 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 4/12/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 4/12 SR. PS/PS 7 FILE SENT TO BENCH CLERK 7/12 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER