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Income Tax Appellate Tribunal, DELHI ‘H’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. ASTHA CHANDRA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the Revenue is preferred against the order of the ld. CIT(A) - 4 dated 24.01.2019 pertaining to Assessment Year 2014-15.
The solitary grievance of the Revenue is that the ld. CIT(A) erred in deleting penalty of Rs. 86 lakhs made by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'].
None appeared on behalf of the assessee inspite of repetitive notices. In fact, notice issued through the ld. DR was served by an Officer as reported by the ld. DR. We, therefore, decided to proceed exparte. The ld. DR was heard at length. Case records carefully perused.
The roots for levy of penalty lie in the assessment order dated 14.12.2016 framed u/s 143(3) of the Act. The assessee filed return of income on 30.11.2014 declaring loss of Rs. 3,52,40,293/- which was revised on 06.04.2015 with a revised loss of Rs. 3,73,01,931/-.
Return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee.
During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has claimed loss on sale of assets amounting to Rs. 2,77,19,813/-. The assessee was asked to justify the allowability with supporting evidences.
In its reply, the assessee stated that it is in the business of retail sale of garments and the joint venture got discontinued. The assessee was left with no option than to discard the business and surrender the rented premises back to the owner.
It was explained that it was not possible to retrieve the expenses incurred on the premises as they were one time fixtures and could not be taken out, and the same was loss to the business and was, accordingly, written off.
Reply of the assessee did not find any favour with the Assessing Officer who proceeded by disallowing the loss and made addition of Rs. 2,77,19,813/- and initiated penal proceedings u/s 271(1)(c) of the Act for filing inaccurate particulars of income.
In the penal proceedings, the same query was raised by the Assessing Officer and same reply was filed by the assessee. Once again the Assessing Officer discarded the claim of the assessee and levied penalty of Rs. 86 lakhs for filing inaccurate particulars of income.
The assessee challenged the levy of penalty before the ld. CIT(A) and reiterated its claim that since there was no intention to carry on business in future and since the rented premises were returned back to the owner, the assessee could not dismantle the interior and therefore, expenditure incurred was written off and loss was claimed.
It was explained to the ld. CIT(A) that since there were accumulated losses which effectively neutralize any tax liability, the assessee did not prefer any appeal against the assessment order.
After considering the facts and submissions, the ld. CIT(A) was convinced that the assessee has not filed any inaccurate particulars of income and drawing support from the decision of the Hon'ble Supreme Court in the case of Reliance Petro Products 322 ITR 158 and the Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt Ltd 348 ITR 306, the ld. CIT(A) deleted the penalty levied by the Assessing Officer.
Before us, the ld. DR strongly supported the findings of the Assessing Officer and relied upon the decision of the Hon'ble Supreme Court in the case of 295 ITR 244, Hon'ble Delhi High Court decision in 328 ITR 44 and 105 ITR 708.
We have carefully considered the orders of the authorities below.
There is no dispute that the expenses incurred by the assessee on the rented premises were written off as loss on surrender of the rented property on discontinuance of running business.
It is also not in dispute that all the entries were duly recorded in the books of account of the assessee. The ratio laid down by the Hon'ble Supreme Court in the case of Reliance Petro Products [supra] squarely apply on the facts of the case in hand, in as much as, in that case, the Hon'ble Supreme Court held as under:
“It was an admitted position in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words.
The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars.
Therefore, it must be shown that the conditions under section 271(l)(c ) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise.
The word 'particulars' must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In the instant case, there was no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(l)(c). A mere making of the claim, which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars”.
The facts of the case in hand, as discussed hereinabove, in light of the decision of the Hon'ble Supreme Court in the case of Reliance petro Products [supra] makes the case of the assessee distinguishable from the decision relied upon by the ld. DR. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A).
In the result, the appeal of the Revenue in is dismissed.
The order is pronounced in the open court on 25.08.2022.