Referred Sections:
Section 260?A of the Act
Section 271(1)(c) of the Act
Section 276C
Section 40A(7) of the Act
Referred Cases / Judgments:
M/s Brooke Bond India Ltd. vs CIT (WB)
CIT vs Zoom Communication (P.) Ltd. [2010] 327 ITR 510(Del.)
MAK Data P. Ltd. vs CIT [38 taxmann.com 448](SC).
Price Waterhouse Coopers Ltd. vs CIT 348 ITR 306 (SC).
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI `E' BENCH,
NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER,
ITA No. 206/DEL/2016
[Assessment Year: 2010-11]
ACIT, M/s Schneider Electric India (P.) Ltd.
Circle-22(2), 9th Floor, Tower C,
Room No.226, 02nd Floor, Building No.10, DLF Cyber City, Phase-II,
C.R. Building, I.P. Estate, Gurgaon,
New Delhi Haryana
PAN-AABCS1624G
Appellant Respondent
Revenue by Ms. Rinku Singh,
Assessee by Shri Kapil Geol, Shri Rohit Tiwari and
Shri Shobhit Narula
Date of Hearing 08/08/2019
Date of Pronouncement 09/08/2019
ORDER
PER T. S. KAPOOR, ACCOUNTANT MEMBER,
This is an appeal filed by the Revenue against the order of Ld.
CIT(A)-28, dated 12/11/2015. The Revenue has taken following grounds
of appeal:-
"1. The ld. CIT(A) has erred on facts and in law in deleting the
penalty of Rs.33,99,000/- levied u/s 271(1)(c) by the AO on account
of disallowance of fees paid to Registrar of Companies for increase
in authorized share capital. When the company is equipped with
battery of lawyers and CA who all know about the decision of Hon'ble
Supreme Court of India in the case of M/s Brooke Bond India Ltd. vs
CIT (WB) on the issue, it cannot be said that the expenses was
bonafidely claimed by the assessee. It is a wilful attempt on the part
of the assessee to claim exp of Rs.1 crore under this head on which
penalty u/s 271(1)(c) is definitely leviable."
2 ITA No.206/Del/2016
2. At the outset, the ld. DR submitted that assessee had claimed fee
paid to ROC for increase in share capital as business expenditure and it
was only when the assessee was confronted vide questionnaire dated
15/07/2013 and dated 26/07/2013, the assessee surrendered the amount
out of business expenditure and the ld. CIT(A) has wrongly stated that
even before the questioning by the AO, the assessee had its own had
surrendered the same Our attention was invited to the findings of the ld.
CIT(A) where he has mentioned that the assessee itself offered amount in
question to tax vide its letter dated 17/12/2013. It was pointed out that
surrender was made by the assessee after the questionnaire, therefore,
the findings of the Ld. CIT(A) are contrary to the facts.
3. The Ld. DR heavily placed her reliance on the order of the Delhi
High Court in the case of CIT vs Zoom Communication (P.) Ltd. [2010]
327 ITR 510(Del.) and further placed her reliance on the order of the
Hon'ble Supreme Court in the case of MAK Data P. Ltd. vs CIT [38
taxmann.com 448](SC). The Ld. DR in view of this facts and
circumstances vehemently argued that the ld. CIT(A) has wrongly allowed
relief to the assessee.
4. The Ld. AR on the other hand submitted that this was an inadvertent
mistake by the assessee as the amount was only Rs.1 crore whereas the
assessee had incurred a loss of Rs.15 crores and further the assessee at
3 ITA No.206/Del/2016
its own had made additions in the computation of income to the extent of
Rs.34-35 crores. The ld. AR in this respect invited our attention to para 3
onwards of Ld. CIT(A)'s order where he has noted all these facts. The ld.
AR therefore heavily placed his reliance on the order of the Ld. CIT(A).
Specific reliance was placed on the order of the Hon'ble Supreme Court
in the case of Price Waterhouse Coopers Ltd. vs CIT 348 ITR 306 (SC).
Our attention was further invited to the fact that tax auditors in the tax
audit report had not pointed out the nature of such expenditure to be
capital expenditure and therefore the mistake committed by the assessee
was an inadvertent mistake and therefore the Ld. CIT(A) has rightly
allowed the relief to the assessee.
5. We have heard the rival parties and have gone through the
material available on record. We find that though the contention of Ld. DR
that assessee had surrendered the amount for taxation after Assessing
Officer issued notices u/s 142(1) are correct, but the fact remains that the
AO came to know about the claim of the assessee regarding revenue item
for ROC fee from the audited accounts of the assessee company only and
which proves that the assessee had duly disclosed fully the particulars of
income and the Assessing Officer from the information provided by
assessee had only observed that it was a wrongly claim. The Hon'ble
Supreme Court in the case of Reliance Petro Products Pvt. Ltd. has held
4 ITA No.206/Del/2016
that any wrong claim made by the assessee will not tantamount to
concealment of income. Moreover we find that the assessee had filed
return declaring loss of Rs 15 crores and suo moto added back to
the income in the computation of income an amount of Rs.34-35 crores
which fact is coming out of order of the Ld. CIT(A) and therefore, the claim
of Rs.1crore cannot be said to be a deliberate claim and it was necessarily
an inadvertent mistake. Therefore, keeping in view these facts and
circumstances, we hold that assessee had committed an inadvertent and
bonafide mistake and had not intended or attempted to conceal its income
or furnish inaccurate particulars of income.
6. The Hon'ble Supreme Court in the case of Price Waterhouse
Coopers Ltd. vs CIT 348 ITR 306 (SC) in a similar case has deleted
peantly u/s 271(1)(c) of the Act by holding as under:-
"13. Against the order of the Tribunal, the assessee approached the Calcutta High
Court which dismissed its appeal filed under Section 260A of the Act by the
impugned order. The only reason given by the High Court for dismissing the appeal
reads as under:
"After analysing the facts of this case, considering the submissions made by
the learned Advocates for the parties and the materials placed before us, we
cannot brush aside the fact that the assessee company is a well known and
reputed Chartered Accountant firm and a tax consultant. We also do not find
any substance in the submissions made by Dr. Pal; on the contrary, in our
considered opinion, we find that Section 271(1)(c) of the Act has specifically
stated about the concealment of the particulars of income or furnishing of
inaccurate particulars of such income which has to be read "either" "or" and
on the given facts of this case would automatically come within the four
corners of Section 271(1)(c) of the Act and we come to the conclusion that the
appellant have failed to discharge their strict liability to furnish their true and
correct particulars of accounts while filing the return. We are also of the
5 ITA No.206/Del/2016
opinion that the penalty under that provision is a civil liability and wilful
concealment is not an essential ingredient for attracting civil liability as in
the matter of prosecution under section 276C, as has been held by the Hon'ble
Supreme Court. We also find that the mens rea is not an essential element for
imposing penalty for breach of civil obligations or liabilities. We, therefore,
accept the contention of Mr. Shome and dismiss the appeal answering the
questions in the negative."
14. During the course of hearing this appeal against the judgment and order of the
Calcutta High Court, we had required the assessee to explain to us how and why the
mistake was committed.
15. The assessee has filed an affidavit dated 14th September, 2012 in which it is
stated that the assessee is engaged in Multidisciplinary Management Consulting
Services and in the relevant year it employed around 1000 employees. It has a
separate accounts department which maintains day to day accounts, pay rolls etc. It
is stated in the affidavit that perhaps there was some confusion because the person
preparing the return was unaware of the fact that the services of some employees
had been taken over upon acquisition of a business, but they were not members of
an approved gratuity fund unlike other employees of the assessee. Under these
circumstances, the tax return was finalized and filled in by a named person who
was not a Chartered Accountant and was a common resource. 16. It is further
stated in the affidavit that the return was signed by a director of the assessee who
proceeded on the basis that the return was correctly drawn up and so did not notice
the discrepancy between the Tax Audit Report and the return of income.
17. Having heard learned counsel for the parties, we are of the view that the facts of
the case are rather peculiar and somewhat unique. The assessee is undoubtedly a
reputed firm and has great expertise available with it. Notwithstanding this, it is
possible that even the assessee could make a "silly" mistake and indeed this has
been acknowledged both by the Tribunal as well as by the High Court.
18. The fact that the Tax Audit Report was filed along with the return and that it
unequivocally stated that the provision for payment was not allowable under
Section 40A(7) of the Act indicates that the assessee made a computation error in
its return of income. Apart from the fact that the assessee did not notice the error, it
was not even noticed even by the Assessing Officer who framed the assessment
order. In that sense, even the Assessing Officer seems to have made a mistake in
overlooking the contents of the Tax Audit Report.
19. The contents of the Tax Audit Report suggest that there is no question of the
assessee concealing its income. There is also no question of the assessee
furnishing any inaccurate particulars. It appears to us that all that has happened in
the present case is that through a bona fide and inadvertent error, the assessee
while submitting its return, failed to add the provision for gratuity to its total
income. This can only be described as a human error which we are all prone to
make. The calibre and expertise of the assessee has little or nothing to do with the
inadvertent error. That the assessee should have been careful cannot be doubted,
but the absence of due care, in a case such as the present, does not mean that the
6 ITA No.206/Del/2016
assessee is guilty of either furnishing inaccurate particulars or attempting to
conceal its income.
20. We are of the opinion, given the peculiar facts of this case, that the imposition of
penalty on the assessee is not justified. We are satisfied that the assessee had
committed an inadvertent and bona fide error and had not intended to or attempted
to either conceal its income or furnish inaccurate particulars.
21. Under these circumstances, the appeal is allowed and the order passed by the
Calcutta High Court is set aside. No costs."
7. In view of the above facts and circumstances and judicial
precedents, the appeal filed by the Revenue is dismissed.
The order is pronounced in the open court on 09/08/2019.
Sd/- Sd/-
[BHAVNESH SAINI] [T.S. KAPOOR]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Delhi; Dated: 09/08/2019.
f{x~{tÜ? fÜA P.S
f{x~{tÜ?
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
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