1 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `B' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER
ITA NO. 1948/DEL/2013
Assessment Year : 2003-04
Dy.Commissioner of income Tax, vs Crew Bos Products Pvt. Ltd.,
Central Circle-I, 624C, Jaina Tower-1,
Faridabad. District Centre, Janakpuri,
New Delhi-110058
(PAN: AAACC3222F)
(Appellant) (Respondent)
Appellant by: Smt. Parwinder Kaur, Sr.DR
Respondent by : None
ORDER
PER CHANDRAMOHAN GARG, JM
These appeals have been preferred by the Revenue against the order
of the CIT(Central), Gurgaon dated 08.01.2013 in Appeal No.
1/3(LDH)/CIT(A) (C)/GGN/2011-12 for AY 2003-04.
2. The revenue has raised following grounds in this appeal:-
"(i) Whether on the facts and in the circumstances of the
case, the ld. CIT(A) was justified in deleting the penalty of
Rs.12,08,047/- imposed by the AO u/s 271(1)(c) of the
Income Tax Act, 1961 by ignoring the fact that while
deciding the quantum appeal, the addition made by the AO
has been sustained by the ld. CIT(A)?
2 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
(ii) Whether under the circumstances when the claim of
the assessee u/s 80HHC was found to be not admissible,
penalty u/s 271(1)(c) of the Act is leviable?"
3. Briefly stated, the facts giving rise to this appeal are that the original
assessment was completed at a total income of Rs. 81,04,620/- vide order
dated 30.11.2006 passed u/s 143(3) of the Income Tax Act, 1961 (for short
the Act). Subsequently, the above assessment order was set aside by the
CIT, Delhi-I, New Delhi u/s 263 of the Act dated 27.03.2008 by observing
that the order passed by the AO was erroneous and prejudicial to the interest
of revenue as the assessee has claimed excessive deduction u/s 80HHC of
the Act and set aside the order of the AO with the direction to frame a fresh
assessment order in accordance with law after giving proper opportunity of
hearing for the assessee. During the reassessment proceedings in pursuance
to order u/s 263 of the Act, the assessee was asked to explain as to why in
reference to section 80HHC of the Act, the total income of the business
including both in relation to export oriented unit as also the other exports be
not taken for computation of deduction u/s 80HHC of the Act. After
considering the assessee's submissions, the AO did not find any force in it
and held that the Act is quite explicit on the issue and the AO made
recomputation of deduction according to which the assessee was found
entitled to claim deduction u/s 80HHC of the Act to the tune of
3 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
Rs.25,13,742/- as against the deduction of Rs. 58,00,945 as claimed by the
assessee in its return of income filed with the department.
4. Subsequently, the AO initiated penalty proceeding u/s 271(1)(c) of the
Act and held that the assessee has concealed particulars of its taxable income
and has furnished inaccurate particulars of its income by way of claiming
excess deduction u/s 80HHC of the Act as discussed above. Finally, the AO
passed penalty order dated 28.3.2011 and imposed penalty of Rs.12,08,047.
The aggrieved assessee preferred an appeal before the CIT(Central),
Gurgaon which was allowed by deleting the penalty. Now, the aggrieved
revenue is before this Tribunal in the second appeal with the grounds as
reproduced hereinabove.
5. When the case was called for hearing, neither the assessee nor his
representative appeared and there is no application for adjournment before
us. On careful perusal of the relevant material placed on record as well as
penalty and impugned order, we observe that the appeal may be disposed of
after hearing the ld. DR and we proceed to decide the appeal in absence of
assessee and his representative.
6. We have heard arguments of ld. DR and carefully perused the relevant
material placed on record, inter alia assessment order, penalty order and
impugned order by which the CIT(Central), Gurgaon cancelled and deleted
4 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
the penalty. Ld. DR submitted that the CIT was not justified in deleting the
penalty imposed by the AO by ignoring the fact that while deciding the
quantum appeal, the addition made by the AO has been sustained by the CIT
and therefore the AO rightly held that the assessee furnished inaccurate
particulars of its income and also concealed the particulars of taxable income
and the AO rightly imposed penalty u/s 271(1)(c) of the Act. The DR
vehemently contended that the CIT deleted the penalty without any sound,
cogent or justified reasoning. The DR finally prayed that the impugned
order may be set aside by restoring that of the penalty order.
7. From bare reading of impugned order, we observe that the CIT,
Gurgaon deleted the penalty by following the decision of Hon'ble Supreme
Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR
158(SC) wherein their lordships interpreted the intendment of the legislature
and provisions of section 271(1)(c) of the Act. The relevant para 10 of this
order reads as under:-
"10. It was tried to be suggested that s. 14A of the Act
specifically excluded the deductions in respect of the
expenditure incurred by the assessee in relation to income
which does not form part of the total income under the Act.
It was further pointed out that the dividends from the
shares did not form part of the total income. It was,
therefore, reiterated before us that the AD had correctly
reached the conclusion that since the assessee had claimed
excessive deductions knowing that they are incorrect; it
amounted to concealment of income; it was tried to be
5 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
argued that the falsehood in accounts can take either of the
two forms; (i) a 17 item of receipt may be suppressed
fraudulently; (ii) an item of expenditure may be falsely (or
in an exaggerated amount) claimed, and both types
attempt to reduce the taxable income and, therefore both
types amount to concealment of particulars of one's
income as well as furnishing of inaccurate particulars of
income. We do not agree, as the assessee had furnished all
the details of its expenditure as well as income in its
return, which details, in themselves, were not found to be
inaccurate nor could be viewed as the concealment of
income on its part. It was up to the authorities to accept its
claim in the return or not. Merely because the assessee
had claimed the expenditure, which claim was not
accepted or was not acceptable to the Revenue, that by
itself would not, in our opinion, attract the penalty under s
271 (l) (c). If we accept the contention of the revenue then
in the case of every return where the claim made is not
accepted by AO for any reason, the assessee will invite
penalty under s. 271 (1) (c ). That is clearly not the
intendment of the legislature."
8. We further observe that the CIT has also relied on the decision of
Hon'ble Supreme Court in the case of M/s Hindustan Steel Ltd. vs State
of Orissa (1972) 83 ITR 26(SC) and decision of Hon'ble High Court of
Delhi in Escorts Finance Ltd. (2009) 226 CTR (Del) 105 wherein it was
held that where facts are clearly disclosed in the return, penalty cannot be
levied merely because an amount is not allowed or taxed as income.
Turning to the facts and circumstances of the present case, admittedly, the
assessee made claim of deduction u/s 80HHC of the Act which was reduced
during the reassessment proceedings finalized u/s 263/143(3) of the Act and
6 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
a substantial part of the claim of the assessee for deduction u/s 80HHC of
the Act was reduced and the AO held that the assessee was entitled to claim
deduction u/s 80HHC of the Act of Rs.25,13,742 or against the deduction of
Rs.58,00,945 as claimed by the assessee in its return of income. In this
factual matrix, while the AO passed an order of reassessment in pursuance to
order of CIT u/s 263 of the Act and on recomputation of deduction, the AO
allowed the claim of the assessee for deduction u/s 80HHC Act at a lower
figure but even in this situation, it cannot be inferred that the assessee has
concealed its particulars of income or has furnished inaccurate particulars of
its income. Thus, we come to a conclusion that the CIT was right in
following decision of Hon'ble Supreme Court in the case of CIT vs Reliance
Petroproducts Pvt. Ltd. (supra) and the CIT deleted the penalty on just and
cogent reason because penalty cannot be levied merely because the
assessee's claim was not accepted or was not acceptable to the revenue, that
by itself would not attract the penalty u/s 271(1)(c) of the Act. Accordingly,
we are unable to see any ambiguity, perversity or any other valid reason to
interfere with the impugned order and appeal of the revenue being devoid of
merits is dismissed.
9. In the result, the appeal of the revenue is dismissed.
7 ITA No. 1948/Del/2013
Asstt.Year: 2003-04
Order pronounced in the open court on 8.8.2014.
Sd/- Sd/-
(G.D. AGRAWAL) (CHANDRAMOHAN GARG)
VICE PRESIDENT JUDICIAL MEMBER
DT. 8th AUGUST 2014
`GS'
Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T. 5. DR
By Order
Asstt.Registrar
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