ITA NO. 4871/Del/2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
I.T.A. No. 4871/DEL/2013
A.Y. : 2006-07
Dy. Commissioner of Income Tax, M/s Security Printing &
Circle 8(1), VS. Minting Corporation of India
Room No. 163, CR Building, Ltd.,
New Delhi 16th floor, Jawahar Vyapar
Bhawan, Janpath,
New Delhi
(PAN: AACJS6111J)
(APPELLANT) (RESPONDENT)
Department by : Sh. B.R.R. KUMAR, Sr. DR
Assessee by : None
Date of Hearing : 10-02-2015
Date of Order : 12-02-2015
ORDER
PER H.S. SIDHU, JM
This appeal by the Revenue is directed against the order of
the Ld. Commissioner of Income Tax (Appeals-XI) New Delhi
pertaining to assessment year 2006-07.
2. The grounds raised read as under:-
"1. On the facts and circumstances of the case the Ld.
CIT(A) erred in deleting the penalty of Rs.
57,12,718/- made by the AO u/s. 271(1)(c) of the
I.T. Act, on account of disallowance of prior period
expenses.
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2. The appellant crave, leave to add, amend, alter,
forego or delete any ground of appeal before at or
before the time of hearing."
3. The aforesaid appeal came up for hearing before the Bench on
10.2.2015. Inspite of notice to the assessee by RPAD, Assessee,
neither its any authorized representative was appeared to represent
the case nor any adjournment application is filed by the assessee.
Keeping in view of the facts and circumstances of the case, we are
of the view that no useful purpose would be served by again and
again sending the notice to the assessee and therefore, we are
deciding the issue in dispute exparte qua assessee, after hearing
the Ld. DR.
4. The brief facts of the case are that the Return declaring total
income of Rs. 9,11,18,593/- was filed on 30.11.2006. The
assessment was completed u/s. 143(3) vide order dated 22.11.2008
at an income of Rs. 9,11,18,593/-. Subsequently it was noticed by
the AO that an amount of Rs. 1,69,71,833/- related to prior period
expense. Reassessment order u/s. 147 r.w.s. 143(3) was passed on
2.9.2011 whereby prior period expenses amounting to Rs.
1,69,71,833/- were added to the total income of the assessee.
Penalty proceedings u/s. 271(1)© were also initiated in the
assessment order u/s. 147 r.w.s. 143(3) itself. In response to show
cause notice u/s. 271(1)© dated 19.3.2012, the assesse filed its
reply dated 26.3.2012 through its Authorised Representative
which was considered by the AO and the same was not accepted.
During the course of assessment proceedings, the submission of the
assessee with regard to prior period expenses were found to be
factually incorrect. The assessee company was incorporated on
13.1.2006, i.e. during AY 2006-07 and in view of the above, AO held
that prior period expenses amounting to Rs. 1,69,71,833/- should
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have been disallowed by the assesee in its computation of income.
AO has further observed that the assessee has conceded that it has
debited prior period expense to the profit and loss account. Ld. AO
has further observed that the assessee was in full knowledge of the
claims made by him and furnished inaccurate particulars of its
income with a view to willfully evade taxes. Accordingly, the AO
vide his order dated 30.3.2012 has imposed the penalty of Rs.
57,12,718/- u/s. 271(1)© of the I.T. Act.
5. Against the penalty order of the Assessing Officer, Asseessee
appealed before the Ld. First Appellate Authority, who vide
impugned order 31.5.2013 has partly allowed the appeal of the
assesee by deleting the penalty of Rs. 57,12,718/- made u/s.
271(1)© of the I.T. Act imposed by the Assessing Officer.
6. Aggrieved by the aforesaid order dated 31.5.2013, Revenue is
in appeal before the Tribunal.
7. At the time of hearing Ld. Departmental Representative has
relied upon the order of the Assessing Officer and reiterated on the
contentions raised in the grounds of appeal filed by the Revenue.
8. We have heard Ld. DR and perused the records especially the
impugned order dated 31.5.2013, we are of the considered view that
Ld. CIT(A) has noted that it was an entity, which was under the
Ministry of Finance. There were 8 units which were later merged
and the assessee company was incorporated. The expenses of Rs.
1,69,71,833/- pertained to an earlier period but were claimed in the
current year. Therefore, there was no attempt to conceal income.
The assessee claimed the expenses in the current year under a
bonafide belief that the expenses could be claimed as they were
genuine business expenses. Ld. CIT(A) has considered the
contention of the assessee and observed that the assessee had
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incurred an expenditure in the period prior to the current year. The
assessee under a bonafide misconception debited the expenditure in
the current year. There was no deliberate furnishing of inaccurate
particulars by the assessee. Ld. CIT(A) has found that from the
record that the AO has never disputed the fact that the
expenditure of Rs. 1,69,71,833/- was not genuine and was not for
the purpose of business. Ld CIT(A) further noted that in the case of
K.C. Builders, the Hon'ble Supreme Court has held that :-
"It is implicit in the word "concealed" that there has been
a deliberate act on the part of the assessee." In this case,
there is no intention or desire on the part of the assessee
to hide or conceal the income so as to avoid the
imposition of tax thereon. There was no furnishing of
inaccurate particulars for concealing of income."
8.1 We find that Ld. CIT(A) further observed that the assessee has
quoted various case laws which are in its favor. One of the cases
squarely applicable is of Hero Honda Motors Limited vs. DCIT
passed in ITA No. 2698/Del/2010 by the ITAT, Delhi Benches, Delhi.
The ITAT states:-
"The stand taken by the assessee at the time of filing of
return of income was a possible and plausible view and
therefore, the penalty is not justified. The judgment of
Apex Court in the case of CIT vs. Reliance Petroproducts
Limited (322 ITR 158) also supports the case of the
assessee because in that case it was held by the Apex
Court that mere making of a claim by itself will not
amount to furnishing of inaccurate particulars or unless it
is found that the details supplied by the assessee in the
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return of income was found to be incorrect or erroneous
or false."
8.2 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.
8.3 In this regard, we find Ld. CIT(A) has rightly applied the
decision of 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.
8.4 Keeping in view of the facts and circumstances as explained
above, we are of the view that the assessee has not deliberately
furnished inaccurate particulars with a view to concealment of
income. We further find that the explanation of the assessee is
bonafide. In the background of the aforesaid discussions and
precedents, we find that Ld. CIT(A) has rightly observed that the
assessee would not be liable for levey of penalty and he deleted the
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penalty of Rs. 57,12,718/-. 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 by dismissing the Appeal
filed by the Revenue.
9. In the result, the appeal filed by the Revenue stand dismissed.
Order pronounced in the Open Court on 12/02/2015.
Sd/- Sd/-
[J.S. REDDY] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 12/2/2015
"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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