ITA NO. 3697/Del/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "B", NEW DELHI
BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A. No. 3697/Del/2011
A.Y. : 2004-05
DCIT, CIRCLE 10(1), VS. M/S DELHI
NEW DELHI AUTOMOBILES LTD.,
14-C, SAGAR
APARTMENTS, 6,
TILAK MARG, NEW
DELHI 110 001
(PAN: AABCD7933P)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. Aloke Periwal, CA
Department by : Ms. Nidhi Srivastava, Sr. D.R.
ORDER
PER SHAMIM YAHYA: AM
This appeal by the Revenue is directed against the order of the
Ld. Commissioner of Income Tax (Appeals)-XVI, New Delhi dated
31.3.2011 pertaining to assessment year 2004-05.
2. The issue raised is that Ld. CIT(A) erroneously deleted the
penalty u/s. 271(1)(c) of the I.T. Act amounting to Rs. 11,92,044/-.
3. The brief facts are as under:-
The original return declaring loss of Rs. 33,22,770/- was
filed on 1.11.2004. The said return was processed u/s.
143(1) and thereafter assessment u/s. 143(3) was
completed at new income of Rs. NIL vide order dated
27.9.2006. During the course of assessment proceedings,
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it was observed by the Assessing Officer that no
significant business activity was carried out by the
assessee during the period relevant to the asstt. year
2004-05. It was also observed that no significant
business activities have actually been carried out by the
assessee company in earlier years. In the return of
income, the assessee had shown receipts on account of
sales at Rs. 3,99,232/- only as against stock inventory of
opening and closing stock at Rs. 5,68,30,244.75. The
assessee also wrote back unclaimed balance amounting
to Rs. 1,44,32,161.49. The assessee also shown sale of its
fixed assets. The profits on sale of fixed assets has been
shown at Rs. 1,72,50,006.65. It has shown miscellaneous
income at Rs. 24,24,373/-. From the above, the
Assessing Officer inferred that the business had already
been wounded up by the assessee. He opined that the
details furnished by the assessee company also revealed
that the company had not undertaken any effort to
improve its business during the year. Assessing Officer
further referred to Hon'ble Kerala High Court decision in
the case of SPV Bank Ltd. vs. CIT (1980) 126 ITR 773,
wherein the Hon'ble Court has held that in order to
sustain a claim for deduction by way of business
expenditure, the expenditure must have been laid out or
expended for the purpose of a business which was in
existence in the year of account, the profits of which are
under assessment. Hence, in view of the judgment of
Kerala High Court (supra), the Assessing Officer
disallowed the claim of the assessee for loss of Rs.
33,22,770/-.
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4. On the above addition, penalty u/s. 271(1)(c) of the Act was
also initiated.
5. Upon assessee's appeal Ld. CIT(A) deleted the levy of penalty
and held as under:-
"I have considered the facts of the case along with the
submissions made by the authorized representative of
the appellant company. It has been laid down by
Hon'ble Courts that assessment and penalty
proceedings are independent and separate and merely
because addition to income has been made during
assessment proceedings, levy of concealment penalty
does not follow automatically. In the instant case, the
Assessing Officer himself is admitting in the assessment
and penalty orders on the one hand that the appellant
had income from business (albeit not very substantial),
miscellaneous receipts and profit on sale of fixed assets
during the year and on the other hand, the Assessing
Officer has held no business activities were carried out
during the year and hence the loss worked out due to
excess of expenditure over income was to be disallowed.
Thus, as pointed out by the appellant, the Assessing
Officer is acknowledging the income received by the
appellant during the year but not allowing the excess of
expenditure over income, stating that the business of
the appellant had closed down. However, the AO has
failed to specify any item of expenditure claimed by the
appellant which was not supported by bills/ vouchers.
Accordingly, in my view, the AO has not been able to
establish that there was furnishing of inaccurate
particulars of income or concealment of income. The
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judgement of the Hon'ble Hyderabad Bench of the ITAT in
the case of Navbhartat Enterprise Pvt. Ltd. relied upon by
the appellant, in which the ITAT held that merely
because there was difference of opinion between the
assessee and the department regarding allowability of
depreciation/ losses, concealment of income was not
established, is squarely applicable to the facts of this
case. Therefore, the AO is directed to delete the penalty
levied u/s. 271(1)(c). These two grounds of appeal are
allowed."
6. Against the above, the Revenue is in appeal before us.
7. We have heard both the counsel and perused the records. We
find that in the quantum proceedings, the addition was sustained by
the Ld. CIT(A) as the assessee has not availed the opportunities of
hearing. Ld. Counsel of the assessee has submitted that the said
order of the Ld. CIT(A) has been set aside by the tribunal to the file
of the Ld. CIT(A). In this view of the matter, Ld. Counsel of the
assessee submitted that the penalty u/s. 271(1)(c) in this case is not
sustainable. Further, Ld. Counsel of the assessee submitted that in
this case there is no concealment or furnishing of inaccurate
particulars and as such pleaded that the order of the Ld. CIT(A) be
affirmed. Ld. Departmental Representative on the other hand relied
upon the order of the Assessing Officer.
8. We have carefully considered the submissions and perused
the records. We find that in this case that there is no concealment
or furnishing of inaccurate particulars by the assessee. We find that
Assessing Officer in this case has himself admitted that assessee
has income from business (though not very substantial),
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miscellaneous receipts and profit on sale of fixed assets. Assessing
Officer has thus contradicted himself by saying that no business
activities were carried out by the assessee and hence the loss
worked out due to excess of expenditure over income was
disallowed. Thus, while Assessing Officer acknowledged the receipt
by the assessee during the year, but he did not allow the excess of
expenditure over income, stating that the business of the appellant
had closed down. We further find that Assessing Officer has failed to
specify any amount of expenditure claimed by the assessee which
is not supported by bills / vouchers. Hence, no case of bogus
expenditure has been made out. Thus, we agree with the Ld. CIT(A)
that Assessing Officer has not been able to establish that there is
furnishing of inaccurate particulars or concealment of income.
8.1 Furthermore, as stated by the Ld. Counsel of the assessee on
merits of the case the matter has been remitted by the Tribunal to
the file of the Ld. CIT(A). Hence, since the quantum has not yet
been confirmed, the penalty is also not leviable in this view of the
matter.
9. In this regard, we place reliance 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
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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
bonafide belief that the offender is not liable to act in the manner
prescribed by the statute."
9.1 We further place reliance upon the Hon'ble Apex Court
decision in the case of CIT vs. Reliance Petro Products Ltd. in Civil
Appeal No. 2463 of 2010. 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
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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.
10. In the background of the aforesaid discussions and precedents,
we do not find any infirmity in the order of the Ld. Commissioner of
Income Tax (A), hence, we uphold the same.
11. In the result, the appeal filed by the Revenue stands
dismissed.
Order pronounced in the open court on 06/12/2013.
Sd/- Sd/-
SUDHIR]
[I.C. SUDHIR] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 06/12/2013
"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
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