CIT vs. SUBROS LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 547/2012 . . . CIT ..... Appellant . Through: Ms. Rashmi Chopra, Sr. Standing Counsel. . versus . . . SUBROS LTD ..... Respondent . Through: Mr. Rajesh Kumar, Advocate. . . . CORAM: . HON'BLE MR. JUSTICE S. RAVINDRA BHAT . HON'BLE MR. JUSTICE R.V.EASWAR . . . O R D E R . 07.09.2012 . . . The Revenue urges that the impugned order of the Income Tax Appellate Tribunal (?Tribunal?, for short) dated 27.08.2010 in ITA No.1326/Del/2010 is erroneous. In support of its appeal learned counsel argues that the assessee in this case did not file a revised return but filed a fresh calculation after notice was issued under Section 143(2) of the Income Tax Act, 1961 (?Act?, for short). . The brief facts of the case are that the assessee had sought deduction in the bonafide belief that the approval under Section 35(2AB)(1) of the Act would be granted from the date of its application to the competent authority. However, the approval granted did not relate back to the date of application i.e. sometime in September, 2004. The assessee accordingly filed a revised computation of income in the course of the assessment proceedings, restricting its claim to 100% instead of 150% on the expenses incurred towards research and development before 28.01.2005. It argued that there was neither any concealment nor did it furnish any inaccurate particulars. The penalty order of the Assessing Officer was set-aside by the CIT (Appeals). The Revenue?s appeal was dismissed by the Tribunal. . In the impugned order the Tribunal held as follows: - . ?7.2 We find that section 271(1)(c) of the Act postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In the present case we find that assessee was under the bonafide belief by the time of filing the return that it will receive the approval for the weighted deduction. The fact that the said approval had not been received was duly reflected by way note in the return of income. Hence, the assessee cannot be held guilty for . furnishing inaccurate particulars and concealment of income. As earlier stated prescribed authority vide letter dated 11.12.2006 gave the approval from 28.5.2006. Hence by this time the stipulated time for filing revised return u/s 139(5) has also expired. The only reason given by the Assessing Officer in para 3.8 of his order is that assessee has not filed any return revised return u/s 139(5) of the act. Assessing Officer further mentioned that though the assessee has received approval from DSandIR in December, 2006 no return was filed within due time i.e. 31.3.2006. This clearly shows the non-application of the mind by the Assessing Officer. As nobody is expected to do the impossible. After receiving the approval letter in December, 2006, the assessee cannot be expected to do the impossible and file a return of on previous dates i.e. by 31.3.2006. . . . 7.3 That assessee has not appealed against the addition can also not be said to be a reason for levying penalty. Assessee itself filed revised computation and paid tax, so there is no question of filing an appeal. Moreover no case has been made out that assessee at the time of filing of return could not have had a bonafide belief that it will not receive the approval. That assesse (sic.) was awaiting the approval was clearly depicted by way of note in return. SO there is adequate and proper disclosure of facts. . . . 7.4 In this background, in our considered opinion section 271(1)(c) is not attracted here, which mandates levy of penalty for concealment of income or furnishing of inaccurate particulars. The case law referred by the Ld. Departmental Representative of Escorts Finance Ltd. (Supra) is not applicable on the facts of the present case. That case was with reference to an ex-facie inadmissible claim made by the assessee. In the present case by no stretch of imagination assessee claim can be categorized as ex-facie bogus claim. In the case of C.I.T vs. Zoom Communication Pvt. Ltd. (supra) in ITA No.7/2010 vide order dated 24.5.2010 the Hon?ble Delhi High Court confirmed levy of penalty for claiming an amount which was purely capital in nature as revenue and also claiming income tax paid as deduction. There was no explanation that mistake was bonafide. These case laws are clearly not applicable. The assessee here had made a claim and disclosed the basis of the same. The same cannot be said to not bonafide.? . . . The Tribunal relied on certain other decisions of coordinate Benches which have been mentioned by it. The impugned order also applies the ratio of CIT v. Reliance Petro Products Ltd., (2010) 322 ITR 158 in support of its reasoning. . Having regard to these the Court holds that the reasoning of the Tribunal is sound and justified, and does not call for any interference. No substantial question of law arises. The appeal is accordingly dismissed. . . . . . . . S. RAVINDRA BHAT, J . . . . . . . R.V.EASWAR, J . SEPTEMBER 07, 2012 . hs . . . . . $ 15 .