PRINCIPAL COMMISSIONER OF INCOME TAX 2 vs. M/S VINOD KUMAR SHUKLA

1 HIGH COURT OF MADHYA PRADESH : JABALPUR INCOME TAX APPEAL NO.

29 OF

2016

Principal Commissioner of Income Tax-2, Aayakar Bhawan, Hoshangabad Road, Bhopal.

- V/s -

M/s Vinod Kumar Shukla Constructions Pvt. Ltd.

Present : Hon'ble Shri Rajendra Menon; Acting Chief Justice Hon'ble Smt. Anjuli Palo ; J ...................................................................................................................... Shri Sanjay Lal for the appellant. Shri Mukesh Agrawal for the respondent assessee. ...................................................................................................................... J U D G M E N T (2/01/17) This is revenue's appeal under Section 260A of the Income Tax Act, 1961 challenging the order passed by the Income Tax Appellate Tribunal, Indore dated 9/07/15 in I. T. A. No. 92/Ind/2015 for the assessment year 2010-11. 2. Respondent Assessee, a Works Contractor, filed a detailed return of income and claimed deduction U/s 80IA (4) (i) of the Income Tax Act to the tune of Rs. 1,23,53,924/-. The same having been allowed by the Tribunal, this appeal has been filed by the Revenue and the main ground canvassed is with regard to levy of penalty U/s 271 (1) ( c) of the Act and the act of the Appellate Tribunal in interfering with the levy of penalty. 3. Shri Sanjay Lal took us through the orders passed by the Assessment Officer and the Commissioner of Income Tax (Appeals), the reasons which weighed with the authorities for imposition of penalty and the act of the Tribunal in interfering with the imposition of penalty. Shri Lal argued that once, there was a 2 misstatement made and the penalty was imposed, on such consideration, merely because the petitioner has acted on the wrong advice of the Chartered Accountant, that cannot be a ground for interfering with the punishment imposed. 4. Inviting our attention to the judgment of the Supreme Court in the case of Union of India & others Vs. Dharmendra Textiles Processors & others (2008) 306 ITR 277 (SC), Shri Sanjay Lal argues that the question of law formulated arises for consideration and, therefore, the appeal be admitted for considering the aforesaid question. 5. Shri Mukesh Agrawal refuted the aforesaid and took us through the findings recorded by the Tribunal from para 9 onwards, the judgment of the Supreme Court in the case of T. Ashok Pai Vs. Commissioner of Income Tax 161 Taxman 340 (S. C.) the concept of levying penalty U/s 271 (1) ( c) and the reasons which weighed with the Appellate Tribunal in interfering with the imposition of penalty and argued that the discretion exercised by the Tribunal in the matter is proper and, therefore, no question of law arises for consideration which warrants interference by this Court. 6. We have heard learned counsel for the parties at length and we find that the petitioner gave details about the income and on the basis of wrong advice or report tendered by the Chartered Accountant claimed deduction U/s 80IA under the assumption that they are entitled for deduction. The Assessment Officer and the appellate authority imposed the penalty but when the matter travelled to the Tribunal, the Tribunal found that if the assessee committed omission bonafidely and the mistake on the part of the assessee is a bonafide mistake, then the ingredients necessary for imposition of penalty are not made out. 7. After referring to the judgments as relied upon by Shri Sanjay Lal in the case of Dharmendra Textiles (supra) and after taking note of various other judgments of the Supreme Court, in para 9 and 10 of the impugned order, the Tribunal found that the principle laid 3 down by the Supreme Court is that by making a claim for deduction which is not sustainable under law, it cannot be said that the assessee has furnished the incorrect particulars. It is held by the Tribunal that the Supreme Court has considered all these aspects and it has been held that by merely seeking a benefit which is not admissible, may be on a mistake or on a wrong advice, a case of penalty is not made out and in para 12, it has been found by the Tribunal that on a wrong advice of the Chartered Accountant, the benefit was claimed but at the same time the respondent assessee did disclose all the facts, this being a bonafide act on the part of the assessee based on the advice of the Chartered Accountant, it cannot be said that there was a mens rea for imposition of penalty and the imposition of penalty has been interfered with. 8. The order passed by the Tribunal is a reasonable one and we find no substantial question of law for consideration in this appeal. 9. The appeal is therefore dismissed.

(Rajendra Menon) (Smt. Anjuli Palo) Acting Chief Justice Judge Vy/-