COMMISSIONER OF INCOME TAX, DELHI Vs. MADHUSHREE GUPTA
February, 28th 2013
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 27.02.2013
+ ITA 47/2013
COMMISSIONER OF INCOME TAX, DELHI ... Appellant
MADHUSHREE GUPTA ... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Suruchi Aggarwal
For the Respondent : Mr V. N. Jha
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
BADAR DURREZ AHMED, J (ORAL)
1. This appeal is directed against the Tribunal's order dated
25.05.2012 in ITA No. 1589/Del/2005 pertaining to the assessment year
2001-02. It arises out of the penalty order passed by the Assessing
Officer under Section 271(1)(c) of the Income Tax Act, 1961. A penalty
of ` 18,79,303/- had been imposed upon the respondent. The
Commissioner of Income Tax (Appeals) confirmed the penalty, which
had been deleted by the Tribunal by virtue of the impugned order.
ITA 47/2013 Page 1 of 5
2. The Assessing Officer had noted that the assessee had claimed
current year's losses amounting to ` 80,65,000/- pertaining to the
business of the assessee in respect of the share trading business. The
respondent / assessee had set off this loss against the amount of profit
after claiming deduction under Section 80HHC of the said Act. The
Assessing Officer held that the deduction under Section 80HHC was
allowable on the gross total income as defined under Section 80AB read
with Section 80HHC. The gross total income, according to Section
80AB, was the income of the assessee after setting off the current year's
losses. Consequently, the Assessing Officer had, in the quantum
proceedings, disallowed the deduction of ` 53,17,841/- out of the total
deduction of ` 1,03,61,340/- claimed by the assessee /respondent.
3. The learned counsel for the respondent pointed out that the
Tribunal had placed reliance on the decision in the case of CIT v.
Reliance Petroproducts Private Limited: 322 ITR 158 (SC) wherein it
was held that mere making of a claim, which is not sustainable in law,
would not, ipso facto, amount to furnishing inaccurate particulars
ITA 47/2013 Page 2 of 5
regarding the income of the assessee and would, therefore, not
automatically result in a penalty order against the assessee.
4. The learned counsel for the appellant placed reliance on the
decision of this Court in the case of CIT v. Zoom Communication
Private Limited: 327 ITR 510 (Del), wherein this Court, after examining
the decision of the Supreme Court in Reliance Petroproducts Private
Limited (supra), had observed that the Court cannot overlook the fact that
only a small percentage of the income tax returns are picked up for
scrutiny and if the assessee makes a claim which is not only incorrect in
law but is also wholly without any basis and the explanation furnished by
him for making such a claim is not found to be bonafide, it would be
difficult to say that he would still not be liable to penalty under Section
271(1)(c) of the Act. Therefore, the issue to be examined in the present
case is whether the claim made by the assessee is wholly without any
basis and the explanation furnished by the assessee for making such a
claim is not bonafide.
ITA 47/2013 Page 3 of 5
5. The learned counsel for the respondent pointed out that the reason
for making the claim in the manner indicated above was that there were
decisions of the Bombay High Court in the case of CIT v. Shirke
Construction Equipments Limited:  246 ITR 429 (Bom) and also
of the Kerala High Court in the case of CIT v. Smt. T. C. Usha: 
266 ITR 497 (Ker) which supported the position adopted by the
respondent / assessee in its return. It is only subsequently that the matter
was settled by the Supreme Court in the case of IPCA Laboratory Ltd. v.
DCIT:  266 ITR 521 (SC), wherein the Supreme Court held that
the provisions of Section 80AB had an overriding effect over all the other
sections in Chapter VI-A including Section 80HHC. The decision in
IPCA Laboratory Ltd (supra) came subsequent to the filing of the return.
Therefore, it cannot be said that the claim made by the respondent /
assessee was not bona fide or without any basis. We agree with the
submission made by the learned counsel for the respondent / assessee.
The present case is not covered by the ratio laid down in Zoom
Communication Private Limited (supra). The Tribunal has arrived at the
correct decision relying upon the decision of the Supreme Court in
ITA 47/2013 Page 4 of 5
Reliance Petroproducts Private Limited (supra). No question of law
arises for our consideration.
The appeal is dismissed.
BADAR DURREZ AHMED, J
FEBRUARY 27, 2013
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