Veda Overseas Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 665/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2794 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPTI
• Assessee Lawyers: ASHISH TIWARI
• Keywords: Bonafide belief; Wrong claim
• Section: 80HHC; 14A; 147

Judgement Text

1 ITA NO. 665/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 665/DEL/2016 ( A.Y 2004-05) VEDA OVERSEAS PVT. LTD. C/O. MR. ASHISH TIWARI, ADVOCATE, B-5, LGF, ASHADEEP BUILDING, 9, HAILEY ROAD, CONNAUGHT PLACE NEW DELHI AABCV2102J (APPELLANT) VS ITO WARD-17(2) NEW DELHI (RESPONDENT) APPELLANT BY SH. ASHISH TIWARI, ADV RESPONDENT BY SH. S. R. SENAPTI, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 20/11/2015 PASSED BY CIT(A)-9, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. BECAUSE THE IMPUGNED ORDER DATED 20.11.2015 PASS ED BY LD.CIT(A) SUFFERS FROM COMPLETE NON-APPLICATION OF MIND, IS ARBITRARY, UNJUSTIFIED AND CAPRICIOUS IN NATURE. 2. BECAUSE THE LD. CIT (A) HAS ERRED IN UPHOLDING T HE DEMAND OF PENALTY UNDER SECTION 271(L)(C) OF ACT WITHOUT ANY JUSTIFIC ATION AND CONTRARY TO EVERY CONCEIVABLE PRINCIPLES OF LAW, ESPECIALLY WHEN THER E WAS NO CONCEALMENT OF INCOME. DATE OF HEARING 13.02.2018 DATE OF PRONOUNCEMENT 22.03.2018 2 ITA NO. 665/DEL/2016 3. BECAUSE THE LD. CIT (A) HAS FAILED TO APPRECIA TE THAT ASSESSMENT PROCEEDINGS ONCE COMPLETED IN YEAR 2005-06, SAME CA NNOT BE RE-OPENED BY THE DEPARTMENT AFTER A PERIOD OF MORE THAN 6 YEARS FROM THE DATE OF ASSESSMENT BEING CLEARLY BARRED BY LIMITATION. 4. BECAUSE THE LD. CIT (A) HAS FAILED TO APPRECIA TE THAT IN THE PRESENT CASE THERE IS NO CONCEALMENT OF INCOME. THE APPELLANT CL AIMED DEDUCTION UNDER SECTION 80HHC ON THE BONAFIDE BELIEF THAT IT IS ENT ITLED TO SUCH DEDUCTION ON THE BASIS OF DOCUMENTS, WHICH IT WAS ENTITLED TO DO UNDER THE LAW. IT DID NOT CONCEAL ANY INCOME OR PARTICULARS FROM THE DEPARTME NT. NOW IT WAS FOR THE DEPARTMENT TO EITHER ACCEPT OR REJECT HIS CLAIM. HO WEVER SAME WOULD NOT AMOUNT TO CONCEALMENT OF INCOME. 5 BECAUSE THE LD. CIT (A) HAS FAILED TO APPRE CIATE THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLA IM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF W OULD NOT, ATTRACT THE PENALTY UNDER SECTION 271 (L)(C). IT WAS FIRMLY HEL D BY THE HON'BLE SUPREME COURT OF INDIA THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PART ICULARS. 6. BECAUSE THE LD, CIT (A) HAS FAILED TO APPRECIATE THAT THE CONDITIONS PROVIDED U/S 271(1) (C) I.E. CONCEALMENT OF INCOME MUST EXIST, BEFORE ANY PENALTY IS IMPOSED. IT IS SUBMITTED THAT IN THE PRESENT CASE, WHEREIN THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELV ES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN TH E RETURN OR NOT. 7. BECAUSE THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT AO HAD INITIALLY ACCEPTED THE DEDUCTION CLAIMED UNDER SECT ION 80HHC, BASED UPON THE DOCUMENTS SUBMITTED BY THE APPELLANT, INCLUDING CERTIFICATE OF THE CHARTERED ACCOUNTANT AND NECESSARY ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(1) OF THE ACT. HOWEVER THE ASSESSMENT W AS REOPENED AFTER CONSIDERABLE DELAY OF MORE THAN SIX YEARS, WHICH WA S NOT PERMITTED UNDER THE LAW. 8. BECAUSE THE LD. CIT (A) TRAVELLED BEYOND THE MAN DATE OF THE ACT AND NOT ONLY REJECTED THE LAWFUL CLAIM OF THE APPEL LANT BUT ALSO IMPOSED PENALTY UNDER SECTION 271(L)(C) OF THE ACT, WHICH A RE NOT PERMISSIBLE UNDER THE LAW. 9. BECAUSE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN UPHOLDING THE PENA LTY UNDER SECTION 271(L)(C) OF THE ACT. 3 ITA NO. 665/DEL/2016 3. IN THIS CASE RETURN OF INCOME WAS FILED ON 31.10 .2004 DECLARING TOTAL INCOME AT RS. 4,37,553/-. THE SAME WAS PROCESSED U/ S 143(1) OF THE INCOME TAX ACT, 1961 AND WHILE PROCESSING THE RETURN DEDUC TION TO THE EXTENT 4,69,462/- U/S 80HHC WAS WRONGLY ALLOWED. THEREFORE , THE ASSESSMENT WAS REOPENED U/S 147 OF THE INCOME TAX ACT, 1961 AND A DISALLOWANCE OF RS. 4,69,962/- WAS MADE TO THE TOTAL INCOME OF THE ASSE SSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HELD T HAT SINCE THERE IS LOSS FROM BUSINESS, THE QUANTUM OF DEDUCTION U/S 80HHC SHOULD BE CALCULATED ON THE AMOUNT OF EXPORT INCENTIVE RESTRICTED TO THE EXTENT OF PROFIT DECLARED BY THE ASSESSEE AND DISALLOWED THE EXCESS DEDUCTION CLAIME D BY THE ASSESSEE. THE ORDER OF THE ASSESSING OFFICER WAS UPHELD BY CIT(A) VIDE ORDER DATED 22.03.2013. IN THE MEANWHILE PENALTY PROCEEDINGS U/ S 271(1)(C) WERE ALSO INITIATED BY ISSUING SHOW CAUSE NOTICE U/S 271(1)(C )/274 DATED 19.12.2011 AND SERVED UPON THE ASSESSEE ON 27.02.2014 REQUIRING TH E ASSESSEE TO REPLY ON OR BEFORE 06.03.2014. THE ASSESSEE FILED ITS SUBMISSIO N ON 10.03.2014. THE ASSESSING OFFICER HELD THAT IT IS A CLEAR CUT CASE OF CONCEALMENT OF INCOME, THEREFORE, PENALTY OF AMOUNTING TO RS. 1,68,599/- W AS LEVIED, WHICH IS 100% OF THE TAX SOUGHT TO BE EVADED. 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSE SSEE. 5. THE LD. AR SUBMITTED THAT THERE IS NO CONCEALMEN T OF INCOME. IN FACT, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80HHC ON THE BONAFIDE BELIEF THAT IT IS ENTITLED TO SUCH DEDUCTION ON THE BASIS OF DOCUMENTS, WHICH IT WAS ENTITLED TO DO UNDER THE LAW. IT DID NOT CONCEAL AN Y INCOME OR PARTICULARS FROM THE DEPARTMENT. MERELY BECAUSE THE ASSESSEE HAD CLA IMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED TO THE REVENUE BY ITSE LF WOULD NOT ATTRACT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE L D. AR RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN CASE OF CIT V S. RELIANCE PETROPRODUCTS PRIVATE LIMITED. (2011) 11 SCC 762: 322 ITR 158 WHE REIN IT IS HELD THAT 4 ITA NO. 665/DEL/2016 SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOU NT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF ASSESSEE OR CON CEALMENT. 6. THE LD. DR RELIED UPON THE ORDERS OF THE ASSESSI NG OFFICER AND CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE HONBLE APEX COURT IN CASE OF RELIANCE PETROPRODUCTS PVT. L TD. (SUPRA) HELD AS UNDER: 18. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 19. IT WAS TRIED TO BE SUGGESTED 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 INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT 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 TH E CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING T HAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXP ENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES A TTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. 20. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS 5 ITA NO. 665/DEL/2016 EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDE R SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT I S CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THUS, IN THE PRESENT CASE THE ASSESSEE HAS CLAIMED THE DEDUCTION UNDER SECTION 80HHC ON THIS BASIS OF A CERTIFICATE ISSUED BY THE C.A., WHETHER IT IS RIGHT OR WRONG CLAIM DOES NOT ASSERT THAT THE ASSES SEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE I NCOME. THUS, THE PRESENT CASE IS SQUARELY COVERED BY THE HONBLE APEX COURT DECISION AND THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2018 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 22/03/2018 R. NAHEED 6 ITA NO. 665/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26/02/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 27/02/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 2 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 7 ITA NO. 665/DEL/2016