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ACIT, Circle-13(1), Room No. 406, C.R. Building, I.P. Estate, New Delhi. Vs Nuberg Engineering Ltd.,1223, Gali No.83, Shanti Nagar, Tri Nagar, New Delhi.
January, 28th 2015
ITA No.237/Del/2013
Asstt.Year: 2008-09

              IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCHES `E' NEW DELHI

       BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
                          AND
       SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER

                      ITA NO. 237/DEL/2013
                      ASSTT. YEAR: 2008-09

ACIT,             vs               Nuberg Engineering Ltd.,
Circle-13(1),                      1223, Gali No.83,
Room No. 406,                      Shanti Nagar, Tri Nagar,
C.R. Building,                     New Delhi.
I.P. Estate,                      (PAN: AAACN3523A)
New Delhi.
 (Appellant)                       (Respondent)
             Appellant by: Shri Vinay Jain, CA
          Respondent by: Shri Gunjan Prashad, CIT DR

                           O R D E R

PER CHANDRAMOHAN GARG, J.M.

       This appeal has been preferred by the revenue against the order of

the CIT(A)-XVI, New Delhi dated 26.10.2012 in Appeal No. 16/11-12 for AY

2008-09. Although the revenue has raised as many as five grounds in this

appeal but except ground no.1, other grounds are argumentative and

supportive to the main ground no. 1 which reads as under:-


              "1. Whether on the facts and in the circumstances of
        the case, the ld. CIT(A) has erred in deleting the penalty of
        Rs.41,49,854/- imposed u/s 271(1)( c) of the I.T. Act, 1961
        for furnishing of inaccurate particulars of income."
                                                                        1
ITA No.237/Del/2013
Asstt.Year: 2008-09

2.     Briefly stated, the facts giving rise to this appeal are that the assessee

while filing the return of income claimed deduction u/s 80IB of the Income

Tax Act, 1961 amounting to Rs.1,22,09,044/- . Subsequently, during the

assessment proceedings, assessee filed a letter on 8.9.2010 and withdrew

the claim of deduction. During the assessment proceedings, the issue was

discussed and the assessee's representative submitted that their claim was

valid but they were not in possession of excise certificate indicating the date

of commencement of business. However, in order to buy peace, the AR

submitted before the AO that they had withdrawn the claim of deduction

u/s 80IB of the Act and agreed for addition in this regard. Accordingly, the

said amount of claim was added back to the income of the assessee on

agreed basis. Subsequently, the AO issued a notice for imposition of penalty

u/s 271(1)(c) of the Act on 12.1.2011 fixing the date on 17.1.2011. None

appeared on the said date nor any reply was filed. The AO issued another

show cause notice on 15.2.2011 fixing the date on 28.2.2011. The AO held

that since the assessee has not filed any reply, it is therefore observed that

the assessee has no explanation to offer and penalty is decided on the basis

of material facts as per provisions of the Act. The AO imposed penalty of Rs.

41,49,854/- @100% of tax sought to be evaded.





3.     The aggrieved assessee preferred an appeal before the CIT(A) which

was allowed by passing the impugned order and the AO was directed to

                                                                               2
ITA No.237/Del/2013
Asstt.Year: 2008-09

delete the penalty. Now, the aggrieved revenue is before this Tribunal in

this second appeal with the main ground as reproduced hereinabove.


4.     We have heard arguments of both the sides and carefully perused the

material and documents placed before us. Ld. DR submitted that the ld.

CIT(A) has erred in deleting the penalty of Rs.41,49,854/- imposed u/s

271(1)(c) of the I.T. Act, 1961 for furnishing of inaccurate particulars of

income. Ld. DR further contended that the first appellate authority has

erred in deleting the penalty by holding that the AO had not recorded its

satisfaction regarding furnishing of inaccurate particulars of income

whereas the AO initiated the penalty proceedings u/s 271(1)(c) of the Act

in the assessment order and the assessee accepted that he had furnished

inaccurate particulars of income u/s 80IB of the Act and agreed for addition

of the same. Ld. DR vehemently contended that the CIT(A) ignored the

reason recorded by the AO for imposing penalty that the CIT(A) was aware

of the fact that commencement of business certificate of Excise department

was not available with it, still it did not file its revised return as per time

allowed u/s 139(5) of the Act. The DR also mentioned that the CIT(A) has

also ignored this important fact that the assessee accepted its mistake only

after issuance of notice u/s 143(2)/142(1) of the Act i.e. after initiation of

assessment proceedings.



                                                                             3
ITA No.237/Del/2013
Asstt.Year: 2008-09

5.     Replying to the above, at the very outset, ld. AR has drawn our

attention towards para no. 5.5 of the impugned order and submitted that

the impugned deduction was claimed by the assessee under a bona fide

mistake which he immediately rectified before commencement of

assessment proceedings by its letter dated October 8, 2009. The AR has

also drawn our attention towards assessment order para 3.1 at page 2 and

submitted that date of the letter of the assessee filed before the AO during

assessment proceedings was noted as 08.09.2010 which is wrong and

factually the correct date was 8.10.09 by which the assessee withdrew its

claim of deduction u/s 80IB of the Act. From bare reading of para 5.5 of the

impugned order, we note that the CIT(A) has appreciated this fact and

approved the contention of the assessee that the assessee filed letter on

8.10.09 before the commencement of assessment proceedings.


6.     Ld. AR supporting the impugned order further submitted that the

Hon'ble Delhi High Court in the case of CIT vs Societex (2012) 24

Taxman.com 309 has held that the mistake being a human bonafide clerical

mistake which occurred while making the statement of income cannot

attract penalty. In that case, the Hon'ble Jurisdictional High Court of Delhi

approved the conclusion of the ITAT that in this situation, the assessee

cannot be held guilty of filing inaccurate particulars of income.



                                                                           4
ITA No.237/Del/2013
Asstt.Year: 2008-09

7.     On careful consideration of above submissions and contentions of

both the sides and bare reading of the impugned order, we observe that the

CIT(A) has allowed the appeal of the assessee deleting the penalty imposed

by the AO u/s 271(1)(c) of the Act with following observations and

conclusions:-


              "5.6 In fact, before the questionnaires were issued u/s
        142(1) by the AO, the assessee offered the income to the
        extent it was claimed as deduction u/s 80IB to be considered
        as part of income. The assessee surrendered the same to buy
        peace with the department before the claim of deduction u/s
        80IB was examined by the AO in the assessment proceedings.
        Merely because the assessee disclosed additional income suo
        motu after issue of a notice u/s 143 (2) of the Act, does not
        amount to detection of concealment by the AO. Apparently,
        the assessee had given all particulars of his income and had
        disclosed all facts to the AO during the assessment
        proceedings. It is not the case of the AO that in reply to a
        query of the AO, some new facts were discovered or the AO
        had dug out some information which was not furnished by
        the assessee. In such circumstances, I am of the opinion that
        no penalty is leviable. It is well settled that assessment
        proceedings and penalty proceedings are separate and
        distinct and as held by .Hon'ble Supreme Court in the case of
        Ananthraman Veerasinghaiah & Co. vs. CIT, 123 ITR 457, the
        finding in the assessment proceedings cannot be regarded as
        conclusive for the purposes of the penalty proceedings. When
        the assessee himself offered the income and rectified the
        bonafide mistake before its detection by the AO, it could not
        be held liable for penalty under section 271(1) (c) of the Act.
        5.7 In a similar case Hon'ble Delhi High Court in the case of
        CIT vs. Societex (2012) 24 Taxman.com 309 upheld the
        decision of Tribunal and CIT (Appeal) where the assessee in
        this case made provision for taxation under the head current
        Liabilities and the provision was not added back to the profit
        as per the Profit & Loss Account. The Hon'ble ITA T held the
        mistake to be human bonafide clerical mistake which
                                                                          5
ITA No.237/Del/2013
Asstt.Year: 2008-09




        occurred while making the statement of income and it also
        held no satisfaction was recorded by the A.O in the
        assessment proceeding that the assessee was guilty of filing
        inaccurate particulars of income. It was therefore held that
        the penalty cannot be imposed on the assessee u/s 271 (1 )
        (c) of the Act.
        5.8 In the case of Dy. CIT vs. Tarun Agarwal 2009 (13) MTC
        831, the ITAT Lucknow Bench 'A' held that "the assessee had
        surrendered the amount before any specific detection of
        undisclosed income or even before the issue of notice. Even
        though a general enquiry was going on and notices had been
        issued to some of his relatives and the amount might have
        been surrendered because of compulsion of circumstances, it
        was not sufficient to penalize the assessee as the factum of
        detection was not there." In the instant case also, nothing is
        brought on record that there was any detection at the level
        of the AO to suggest that the assessee concealed the income,
        which was offered for taxation suo motu.
        5.9 In the case of ACIT v. Ashok Raj Nath (ITAT, Delhi) 'A'
        Bench in ITA No. 2970/(Del)/2012 it was held by the Hon
        'ble ITAT that merely because the assessee disclosed
        additional income suo moto after issue of notice u/s 143(2)
        of the Act, does not amount to detection of concealment by
        the A.O. Apparently the assessee had given all particulars of
        his income and had disclosed all facts to the A.O during the
        Assessment proceedings; It was held that it was not a case
        that on- reply to the query of the AO some new facts were
        discovered or the AO had dug out some information which
        was not furnished by the assessee. Therefore the Hon'ble
        ITAT was of the opinion that no penalty is leviable. In para 9
        of the order, Hon'ble ITAT held:
        "The assessee voluntary disclosed additional income during
        the course of assessment proceedings and paid tax thereon.
        In the light of view taken in the aforesaid decisions, it cannot
        be said in the case before us, additional income disclosed
        during the course of assessment proceedings was not
        voluntarily or that the assessee wanted to conceal the
        income. Even though the revised return was found to be
        invalid, the AO accepted the income as declared in the
        revised return and computation. The AO did not bring any

                                                                           6
ITA No.237/Del/2013
Asstt.Year: 2008-09

        material on record that the declaration of income made by
        the assessee in his revised return or his explanation was not
        bonafide. In these circumstances, there appears to be no
        basis for imposition of penalty on the ground that the
        assessee furnished inaccurate particulars of income."
        5.l0 In view of the above facts and decisions cited, it is held
        that as no satisfaction is recorded for initiation of penalty
        proceedings u/s 271(1)(c) of the IT Act, 1961 in respect of
        additions made for disallowance u/s 80IB of the Act.,
        therefore, the penalty order suffers from lack of jurisdiction
        to impose penalty. Further as the assessee himself offered the
        income and rectified the bonafide mistake before its
        detection by the AO, it could not be held liable for penalty
        under section 271(1) (c) of the Act."
8.     Under aforementioned conclusion of the CIT(A) and facts and

circumstances of the present case, from the assessment order dated

01.09.2010, we note that the AO made four additions and first addition was

related to disallowance of deduction u/s 80IB of the Act on agreed basis and

the AO did not record any satisfaction for imposing penalty u/s 271(1)(c) of

the Act but at the same time, we clearly observe that the AO specifically and

separately recorded satisfaction for imposing penalty in regard to other

three additions which clarify the mind and object of the AO during

assessment proceedings that he did not intend to impose penalty on the

agreed addition of disallowance of deduction u/s 80IB of the Act. At this

stage, we also note that the ld. DR has not disputed this fact that the

assessee withdrew its claim on 9.10.2009 prior to issuance of notice u/s

142(1) of the Act i.e. prior to commencement of assessment proceedings. In

this situation, we can safely presume that at the time of making addition on
                                                                           7
ITA No.237/Del/2013
Asstt.Year: 2008-09

agreed basis, the AO, in fact, was not intended to initiate penalty

proceedings on the count of first addition which was made on the basis of

written letter of the assessee withdrawing the claim u/s 80IB of the Act

dated 9.10.2009 which was filed prior to issuance of notice u/s 142(1) of

the Act. Hence, we are of the opinion that the assumption of jurisdiction for

initiation of penalty proceedings u/s 271(1)(c) of the Act was not valid. We

may also point out that in the original assessment order, the AO recorded

satisfaction about three additions at the end of relevant operative para but

neither at the end of impugned addition in regard to agreed disallowance

nor at the end of the assessment order, the AO bothered to record required

satisfaction as per provisions of the Act for initiation of penalty proceedings

u/s 271(1)( c) of the Act.


9.     However, in the totality of the facts and circumstances of the case, we

clearly note that the assessee has withdrawn its claim of deduction filed u/s

80IB of the Act at the very outset of assessment proceedings prior to

issuance of notice u/s 142(1) of the Act and the reason as explained by the

assessee was that their claim was valid but as they are not in possession of

excise certificate indicating date of commencement of business, therefore,

they agreed for addition in this regard. At this juncture, we respectfully

take cognizance of decision of Hon'ble Apex Court in the case of CIT vs

Reliance Petroproducts Ltd. 322 ITR 158 (SC) wherein their Lordships




                                                                             8
ITA No.237/Del/2013
Asstt.Year: 2008-09

held that merely because the claim of the assessee was not accepted or not

found to be acceptable by the revenue authorities, that by itself would not

attract penalty u/s 271(1)(c) of the Act. In the present case, we disagree

with the conclusion of the AO that the assessee had furnished either

inaccurate particulars of income or submitted wrong statement of its

income during assessment proceedings and as we have noted above the

assessee withdrew its claim of deduction us/ 80IB of the Act before

initiation of assessment proceedings. Therefore, we approve the conclusion

of the CIT(A) deleting the penalty and we reach to a logical conclusion that

we are unable to see any ambiguity or perversity or any other valid reason

to interfere in the impugned order of the CIT(A) and we uphold the same.

Accordingly, main ground of the revenue being devoid of merits is

dismissed.


9.      In the result, the appeal of the revenue is dismissed.


        Order pronounced in the open court on 27.1.2015.

         Sd/-                                       Sd/-

     (G.D. AGRAWAL)                         (CHANDRAMOHAN GARG)
     VICE PRESIDENT                           JUDICIAL MEMBER

DT. 27th January, 2015
`GS'




                                                                          9
ITA No.237/Del/2013
Asstt.Year: 2008-09




Copy forwarded to:-

   1.   Appellant
   2.   Respondent
   3.   C.I.T.(A)
   4.   C.I.T. 5. DR
                            By Order



                       Asstt. Registrar




                                          10

 
 
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