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DCIT, Circle-7(1), Room No. 321, 3RDFLOOR, CR BUILDING, IP ESTATE, NEW DELHI VS. M/S SARDAR EXHIBITORS PVT. LTD., 1147, CHANDNI CHOWK, DELHI 110 006
November, 14th 2014
                                                ITA NOS. 5432-5438 & 5485/Del/2010


               IN THE INCOME TAX APPELLATE TRIBUNAL
                    DELHI BENCH "G", NEW DELHI
              BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
                                  AND
              SHRI T.S. KAPOOR, ACCOUNTANT MEMBER


                         I.T.A. Nos. 5432, 5433,
                         5434, 5435, 5436, 5437,
                         5438 & 5485/DEL/2010
                         A.Yrs. 1989-90, 1990-91,
                         1991-92, 1992-93, 1993-
                          94, 1995-96, 1996-97 &
                                  1994-95
DCIT, Circle-7(1),              VS.                   M/S SARDAR
Room No. 321, 3RD                                     EXHIBITORS PVT.
FLOOR,                                                LTD.,
CR BUILDING,                                          1147, CHANDNI
IP   ESTATE,       NEW                                CHOWK,
                                                      DELHI ­ 110 006
DELHI
                                                      (PAN: AABCS1835K)

(APPELLANT)                                           (RESPONDENT)



        Department by                 :    Sh. Vikram Sahay, Sr. DR
         Assessee by                  :    Sh. K. Sampath, Sr. Adv. And Sh.
                                           V. Raj Kumar, Adv.


                   Date of Hearing : 05-11-2014
                   Date of Order          : 10-11-2014


                             ORDER
PER BENCH
     These eight appeals by the Revenue are directed against the
separate orders of the Ld. Commissioner of Income Tax (Appeals)
New Delhi pertaining to assessment years 1989-90, 1990-91, 1991-
92, 1992-93, 1993-94, 1995-96, 1996-97 & 1994-95.           Since the issues
involved in these appeals are common, we are therefore, proceeding

                                   1
                                            ITA NOS. 5432-5438 & 5485/Del/2010


to dispose them off these appeals by this consolidated order for the
sake of convenience by      adjudicating the ITA No. 5432/Del/2010
(A.Y. 1989-90) as under:-

2.   The grounds raised in the ITA No. 5432/Del/2010 read as

under:-


           "1.   On the facts and circumstances of the case the Ld.
                 CIT(A) in law as well as on merits in deleting the
                 penalty of Rs. 24,61,047/- imposed by the AO u/s.
                 271(1)(c) on the Income Tax Act, 1961.

           2.    The appellant craves to amend, modify, alter, add
                 or forego any ground of appeal at any time before
                 or during the hearing of this appeal."

3.    The facts of the case are not in dispute by both the parties,
therefore, need not repeated here for the sake of convenience.

4.   Against the order of the          Assessing Officer, Asseessee
appealed before the Ld. First Appellate Authority, who vide
impugned order 21.9.2010 has allowed the appeal of the assessee
by deleting the penalty imposed by the Assessing Officer.

5.   Aggrieved by the aforesaid order dated 21.9.2010, Revenue is
in appeal before us.

6.   Ld. Departmental Representative has relied upon the order of
the Assessing Officer reiterated on the contentions raised in the
grounds of appeal filed by the Revenue.      He also reiterated          the
contents of the Penalty order dated 30.3.2009 passed by the Asstt.
Commissioner of Income Tax, Circle 7(1), New Delhi that the
assessee has not contested the proceedings of penalty on merit, it
was held that the assessee has failed to furnish the accurate

                                   2
                                           ITA NOS. 5432-5438 & 5485/Del/2010


particulars of income by claiming arrear of rent as capital receipts,
the AO treated the same as revenue receipts which were confirmed
by the ITAT. He also submitted that as per the finding of the ITAT,
during the year under consideration the arrear rent receipts comes
to Rs. 20,19,107/- and penalty u/s. 271(1)© was levied              for an
amount of Rs. 11,66,033/- i.e. 100% of tax sought to be evaded.




7.    Ld. Counsel of the assessee in support of his claim has filed
one Paper Book, having pages 1 to 146 containing the Arbitration
order, ITAT, High Court and Supreme Court orders and record at
assessment and appellate stages. Ld. Counsel of the assessee on
the contrary reiterated the contents of Ld. CIT(A)'s order wherein
he has observed that assessee has stated that penalty can be only
imposed if:

           (a)   assessee has not been able to substantiate their
                 explanation.

           (b)   when such explanation was not bonafide and

           (c)   when all the relevant facts relating to the same and
                 material to the computation of total income have
                 not been disclosed.

7.1   Hence, Ld. Counsel of the assessee stated that Ld. CIT(A) has
rightly observed that there is no concealment of facts or filing of
inaccurate particulars.   There exist no conditions which should
attract penal provisions. It is also seen that all the relevant and
material facts are well within the knowledge of the department, High
Courts and other authorities. It was the Ld. CIT(A) observation that
this is a case where there is only a difference of interpretation and
opinion.   Hence, it is felt that these cases do not fall within the




                                  3
                                              ITA NOS. 5432-5438 & 5485/Del/2010


purview of section 271(1)(c).       Hence, the penalty imposed for
Rs. 11,66,033/- was deleted.

8.   We have heard both the counsel and perused the records. We
have also gone through the paper book filed by the assessee's
counsel and the contention raised by both the parties. We find that
Ld. CIT(A) has adjudicated the issue as under:-

                     "As the Assessee          has not contested the
                     proceedings of penalty on merit, it is held that
                     the assessee has failed to furnish the accurate
                     particulars of income by claiming arrear of
                     rent as capital receipts, the AO treated the
                     same      as   revenue     receipts      which      were
                     confirmed by the ITAT. He also submitted that
                     as per the finding of the ITAT, during the year
                     under consideration the arrear rent receipts
                     comes to Rs. 20,19,107/- and penalty u/s.
                     271(1)© was levied          for an amount of Rs.
                     11,66,033/- i.e. 100% of tax sought to be
                     evaded.

                     The submissions made by the appellant during
                the course of appellate proceedings have been
                carefully considered.    It is seen that the amount
                received by the assessee was compensation for
                illegal occupation of the premises by the Ministry of
                Defence. The appellant has stated that there was
                no fraud or concealment of any income and all the
                facts had been disclosed truly and correctly before
                the authorities and the Hon'ble Courts. It has been
                stated that addition was made only on account of

                                    4
                              ITA NOS. 5432-5438 & 5485/Del/2010


difference    of       interpretation      between         the
Department and the assessee. The appellant has
rlied on the case of CIT vs. Nath Brothers Exim
International Ltd. 288 ITR 570. The appellant also
relied on CIT vs. Rahuljee and Co. 250 ITR 225 (Del);
CIT vs. Chandrakant M. Tolla 218 ITR 438 (Mad.);
Kikani Gordhan Dass & Co. vs. CIT 200 ITR 678; CIT
vs. Ajaib Singh and Co. (2002) 253 ITR 630 (P&H);
CIT vs. Calcutta Credit Corporation (1987) 166 ITR
29 (Cal.); CIT vs. Harshvardhan Chemical and
Minerals Ltd. (2003) 259 ITR 212 (Raj.); CIT vs.
Indian Metals and Ferro Alloys Ltd. (1995) 211 ITE
35 (Ori.).

      It has been stated that the assessee received
Rs. 5.12 crores in AY 1998-99, whereas this arrears
of rent was added w.e.f. 1989-90 and following
demands were raised which includes interest u/s.
234 as below:-

S.No. Year         Additional     Interest        Total
                   demand         u/s. 234
1      1989-90     1262478        4096741         5359219
2      1990-91     2433850        7313719         9747569
3      1991-92     4301247        1034499         5335746
4      1992-93     3209044        6883399         10092443
5      1993-94     4350116        6807931         11158047
6      1994-95     3905296        5486941         9392237
7      1995-96     2175298        2925775         5101073
8      1996-97     2505389        2618131         5123520
       Total       24142718       37167136        61309584

      On the basis of the above chart, the assessee
has submitted that on total arrear of rent of Rs. 5.12
crores a sum of Rs. 6.13 crores has been raised as

                   5
                                             ITA NOS. 5432-5438 & 5485/Del/2010


                income tax payable.        As per the assessee, they
                have been already penalized by the charging of
                interest u/s. 234 amounting to Rs. 3,71,67,136/-.

                      Further, the appellant has stated that penalty
                can be only imposed if:

                a)    assessee has not been able to substantiate
                      their explanation.

                (b)   when such explanation was not bonafide and

                (c)   when all the relevant facts relating to the
                      same and material to the computation of total
                      income have not been disclosed.

                      It is seen that in the present case that there is
                no concealment of facts or filing of inaccurate
                particulars. There exist no conditions which should
                attract penal provisions. It is also seen that all the
                relevant and material facts are well within the
                knowledge of the department, High Courts and
                other authorities. It was the Ld. CIT(A) observation
                that this is a case where there is only a difference of
                interpretation and opinion.      Hence, it is felt that
                these cases do not fall within the purview of section
                271(1)(c).   Hence, the penalty imposed for Rs.
                11,66,033/- is deleted."

8.1   We also find that section 271(1)(c) postulates imposition of
penalty for furnishing of inaccurate particulars and concealment of
income. On the facts and circumstances of this case the assessee's
conduct cannot be said to be contumacious so as to warrant levy of
penalty.

                                  6
                                             ITA NOS. 5432-5438 & 5485/Del/2010


8.2   In this regard, we draw support from the Hon'ble Apex Court
decision in the case of CIT vs. Reliance Petro Products Ltd. in          Civil
Appeal No. 2463 of 2010 which is squarely applicable in the present
case of the assessee. In this case vide order dated 17.3.2010 it has
been held that the law laid down in the Dilip Sheroff case 291 ITR
519 (SC) as to the meaning of word `concealment' and `inaccurate'
continues   to be a good law because what was overruled in the
Dharmender Textile case was only that part in Dilip Sheroff case
where it was held that mensrea was a essential requirement of
penalty u/s 271(1)(c). The Hon'ble Apex Court also observed that if
the contention of the revenue is accepted then in case of every
return where the claim is not accepted by the Assessing Officer            for
any reason, the assessee will invite the penalty u/s 271(1)(c). This is
clearly not the intendment of legislature.

8.3   We    further draw    support from the Apex Court             decision
rendered by a larger Bench comprising of three of their Lordships in
the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein
it was held that "An order imposing penalty for failure to carry out a
statutory obligation is the result of a quasi-criminal proceedings, and
penalty will not ordinarily be imposed unless the party obliged either
acted deliberately in defiance of law or was guilty of conduct
contumacious or dishonest, or acted in conscious disregard of its
obligation. Penalty will not also be imposed merely because it is
lawful to do so. Whether penalty should be imposed for failure to
perform a statutory obligation is a matter of discretion of the
authority to be exercised judicially and on a consideration of all the
relevant circumstances. Even if a minimum penalty is prescribed,
the authority competent to impose the penalty will be justified in
refusing to impose penalty, when there is a technical or venial
breach of the provisions of the Act, or where the breach flows from a




                                   7
                                           ITA NOS. 5432-5438 & 5485/Del/2010


bonafide belief that the offender is not liable to act in the manner
prescribed by the statute."

9.    In the background of the aforesaid discussions and precedents,
we find that the levy of penalty in this case is not justified, hence,
we do not see any reason to interfere with the order           of the Ld.
CIT(A), accordingly,   we uphold the same      and decide the issue
against the Revenue.

10.   In the result, all the Eight appeals filed by the Revenue stand
dismissed.

      Order pronounced in the Open Court on 10/11/2014.




      Sd/-                                                Sd/-

[T.S. KAPOOR]                                     [H.S. SIDHU]
ACCOUNTANT MEMBER                              JUDICIAL MEMBER

Date 10/11/2014
"SRBHATNAGAR"
Copy forwarded to: -
1.    Appellant -
2.    Respondent -
3.    CIT
4.    CIT (A)
5.    DR, ITAT


                              TRUE COPY
                                                   By Order,




                                                  Assistant Registrar,
                                                  ITAT, Delhi Benches


                                   8

 
 
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