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Income Tax Appellate Tribunal, DELHI
Before: SH. SHAMIM YAHYA & SH. ANUBHAV SHARMASmt. Gurmeet Kaur Kalra,
The assessee has come in appeal against order dated 09.01.2019 in appeal no. 167/17-18/ CIT(A)-15 for the assessment year 2012-13 passed by Commissioner of Income Tax (Appeals)-15, New Delhi (hereinafter referred to as the ‘First Appellate Authority’ or in short ‘Ld. F.A.A.’) in appeal before it against order dated 30.12.2011 u/s 143(3) of the Income Tax Act, 1961 passed by DCIT, Circle 26(1), New Delhi ( herein after referred to as ‘Ld. Assessing officer or in short Ld. AO’).
The facts in brief are the assessee Appellant has filed return of income for A.Y. 2009-10, declaring income of Rs. 8,84,000/-. The income was assessed at Rs. 61,54,354/- after setting off of the b/f loss. The addition of Rs. 1,13,30,664/- on account of bogus creditors u/s 68 and Rs. 1,26,136/- on account of short and excess being debited to P&L, were made. During the appellate proceedings, despite several opportunities, the appellant had failed to appear and make submissions and the appeal was dismissed. However, the matter was restored that to the file of, CIT(A) by the Hon'ble ITAT vide it's order dated 29.10.2013. The appelate proceedings were again taken up and the additions were confirmed in the first appellate proceeding. Thereafter, during the penalty proceedings u/s 271(l)(c), as mentioned by the Ld. AO in para 20 in his order, several opportunities were given to the assessee and the assessee had furnished no explanations. As per the detailed discussions made by the AO in his order, a penalty of Rs. 39,45,378/- u/s 271(l)(c) of the Income Tax Act 1961 was imposed on the assessee.
In appeal however the Ld. CIT(A) upheld the order of penalty and assessee has come before the Tribunal raising following grounds of appeal : “The following grounds of appeal are independent of, and without prejudice to one another : That on the facts and in the circumstances of the case and 1. in law, the order passed by the Ld CIT(A) under section 250 of the Act confirming penalty amounting to Rs. 39,45,378/- is wrong and bad in law as there was neither any concealment of income nor furnishing of any inaccurate particulars of income by the Appellant. ’ That on the facts and in the circumstances of the case and 2. in law, the Ld CIT(A) has grossly erred in confirming penalty levied by Ld. AO under section 27i(i)(c)of the Act in respect of the following disallowances made in the assessment order, disregarding the submissions made by the appellant in this regard: a. Disallowance of INR 1,13,30,664/ on account of non- production of confirmation from sundry creditors under section 68 of the Act; b. Disallowance of Rs. 1,26,136/- on account of Short and excess expense debited in P&L account; c. Disallowance of INR 1,00,000/- of deduction claimed under section 80C of the Act That on the facts and in the circumstances of the case and 3. in law, the Ld. CIT(A) has failed to appreciate that a mere disallowance of a claim does not automatically result in levy of penalty. That on the facts and in the circumstances of the case and 4. in law, the Ld CIT(A) has failed to appreciate that the provisions of section 27i(i)(c) of the Act are not applicable'in this case as the Appellant has furnished complete facts in the return of income and offered a bonafide explanation. That on the facts and in the circumstances of the case and 5. in law, the Ld. CIT(A) has grossly erred in confirming the penalty order passed by the Ld. AO without appreciating that the Ld. AO has passed the impugned penalty order under section 27i(i)(c) without giving sufficient opportunity of being heard to the appellant and accordingly, the impugned penalty order under section 271(1)(c) deserved to be quashed. The Appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or during the course of hearing.”
4. The case was called for hearing on 02.06.2022 but non-appeared on behalf of the assessee in spite of notice being issued. As the matter was pertaining to merely the penalty proceedings no further notices were justified and arguments of Ld. CIT(A) were heard.
5. It was submitted on behalf of Sr. DR that assessee has been constant defaulter not coming up with any assistance at any stage of assessment or appeals and therefore levy of penalty was justified.
6. The bench has given thoughtful consideration to the matter on record and it comes up from the same that the initial assessment order was passed on 13.12.2011 which was challenged by the assessee and Ld. CIT(A) vide order dated 21.02.2013 had confirmed additions. The assessee challenged the CIT(A) order before this Tribunal and by order dated 29.10.2013, the matter was remanded back to Ld. CIT(A) for deciding the appeal de novo and the fresh impugned order has been passed. It can be observed that primarily the penalty has been sustained for the reason that Ld. CIT(A) was of the opinion that the assessee was given sufficient opportunities still failed to disclose material facts and submitted no explanation as to why it claimed deductions, which were on its face bogus.
7. Appreciating aforesaid and what transpires is that the increase in amounts of certain creditors during the year under consideration compared to the rest of creditors required proof of their genuineness. Accordingly the expenses booked appeared to be bogus in nature to ld. AO and were disallowed and added back to the income of the assessee. It appears that there was non-satisfaction of the ld. AO but prima facie the bogus nature was not established on the basis of any inquiry conducted or evidences collected by Ld. AO.
8. Ld. CIT(A) has taken note of the judgment of Hon’ble Spreme Court of India in CIT vs Reliance Petroproducts Pvt Ltd [2010] 322 ITR 158. where its earlier judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. [2007(6) SCC 329] was considered to the extent of defining scope of words ‘inaccurate’. However, Ld CIT(A) has tried to take advantage of some part of the judgment, as with regard to crucial date to see the conduct of the assessee, without following its substantial ratio. Hon’ble Supreme Court in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. [Supra] had made following observations as with regard to concept of furnishing inaccurate information; “In Webster's Dictionary, "inaccurate" has been defined as:
not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript.
It signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars.
The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard to clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the event he offers one, was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should have been found as of fact that he has not disclosed all the facts which was material to the computation of his income.
The explanation, having regard to the decisions of this Court, must be preceded by a finding as to how and in what manner he furnished the particulars of his income. It is beyond
any doubt or dispute that for the said purpose the Income Tax Officer must arrive at a satisfaction in this behalf. [See Commissioner of Income Tax v. Ram Commercial Enterprises Ltd., 246 ITR 568 and Diwan Enterprises v. Commissioner of Income Tax, 246 ITR 571]” 8.1 Further, in CIT Vs Reliance Petro Products Pvt. Ltd. (supra) it held as under:
“A glance at the provisions of section 271(1)(c) of the Income tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, 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. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”
Consequently, mere disallowance of a claim, unless established by some positive evidence and not just presumption out of non submission of information by assessee, cannot be said to give rise to furnishing of inaccurate information. The Act does not incorporate any presumption of law of furnishing inaccurate information by virtue of failure of assessee to furnish the information to the satisfaction of Ld. Tax Authority. Therefore, in these circumstances levying of penalty and its sustenance in appeal deserve to be set aside.
The appeal is allowed and impugned order is set aside.
Order pronounced in the open court on 8th June, 2022.