COMMISSIONER OF INCOME TAX DELHI I vs. BECTON DICKINSON INDIA LTD.
What did the High Court hold?
The High Court agreed that penalty under Section 271(1)(c) can be levied even when the assessed income is a loss. However, it held that on merits, since substantial additions were deleted and the remaining were due to a difference of opinion, penalty proceedings would fail.
What were the facts?
The Revenue appealed against the ITAT's dismissal of penalty under Section 271(1)(c). The assessee had claimed a loss, and the Assessing Officer made additions, including one for foreign exchange fluctuation. A substantial portion of these additions were later deleted in appeal.
What were the issues?
Whether penalty under Section 271(1)(c) can be levied on assessed loss, and if penalty is sustainable when substantial additions are deleted on merits.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(3)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Gold Coin Health Food Pvt. Ltd.229 citing304 ITR 308 · 2008 · SC · Read judgment
- CIT v. Woodward Governor India Pvt. Ltd.120 citing294 ITR 451 · 2007 · HC · Read judgment
- Virtual Soft Systems Ltd. v. CIT91 citing289 ITR 83 · 2007 · SC · Read judgment
IN THE HIGH COURT OF DELHI AT NEW DELHI ITA 114/2009 THE COMMIISONER OF INCOME TAX, DELHI-I, NEW DELHI ?.. Appellant Through: Ms Prem Lata Bansal, Advocate . Versus . BECTON DICKINSON INDIA LTD ?.. Respondent Through: Mr Prakash Kumar, Advocate . . CORAM HON?BLE MR JUSTICE VIKRAMAJIT SEN HON?BLE MR JUSTICE RAJIV SHAKDHER . . O R D E R 12.03.2009 . . 1. The Revenue has preferred this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the ?Act) against judgment dated 04.07.2008 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the ?Tribunal?) in ITA No 3366/Del/2006 pertaining to assessment year 2001- 02. 2. The Revenue is aggrieved on account of the fact that the Tribunal has dismissed their appeal with respect to sustainability of imposition of penalty by it under Section 271(1)(c) of the Act both on the point of law, as well as, on merits. On the point of law, the Tribunal has followed the judgment of the Supreme Court in the case of Virtual Soft Systems Ltd vs Commissioner of Income Tax: (2007) 289 ITR 83. It is contended by the learned counsel for the Revenue, Ms Prem Lata Bansal that the said judgment of the Supreme Court has been reversed by a larger bench judgment of the Supreme Court in the case of Commissioner of Income Tax vs Gold Coin Health Food Pvt Ltd: (2008) 304 ITR 308. On merits the learned counsel submits that the Tribunal failed to appreciate that a Special Leave Petition was pending with respect to deletion of the additions. 3. In this case the brief facts which require to be noticed are:- 3.1 The assessee had filed on 30.10.2001 a return of income declaring a loss of Rs 21,77,21,692/-. The assessee?s case was picked up for scrutiny. The Assessing Officer after making suitable enquiries assessed the income of the assessee under Section 143(3) of the Act at a loss of Rs 19,10,60,972/-. Amongst various additions made the Assessing Officer had also made an addition on account of loss claimed by the assessee due to foreign exchange fluctuation in respect of its foreign debt outstanding at the end of the relevant previous year. The addition on this account amounted to Rs 1,85,03,817/-. In addition to the above disallowance was also made with regard to contributions by the assessee towards provident fund amounting to approximately Rs 9 lacs. As is noted from the order of the authorities below, the total disallowances were to the extent of Rs 2.66 crores. It is undisputed that out of the said . . disallowances in appeal proceedings disallowances to the extent of Rs 2.57 crores have been deleted. The Tribunal has also noted that in so far as the remaining disallowances of approximately Rs 9 lacs are concerned, those relate to only difference of opinion between assessee and the Assessing Officer and do not arise out of the assessee furnishing inaccurate particulars or concealing particulars of its income. 4. In view of the aforesaid facts and circumstances, we are of the view, that the contention of the learned counsel for the Revenue on the point of law that a penalty under Section 271(1)(c) of the Act can be levied even when the assessed income is a loss and no tax is payable on the assessed income, will have to be accepted. It will also have to be accepted that the amendment brought in by virtue of insertion of Explanation 4 to Section 271(1)(c) is clarificatory in nature and hence, operates retrospectively. In this regard she correctly places reliance on the judgment of the Supreme Court in Gold Coin Health Food Pvt Ltd (supra). The Tribunal, as correctly urged by the learned counsel for the Revenue, decided the point of law against the Revenue placing reliance on an earlier judgment of the Supreme Court in Virtual Soft Systems Ltd (supra), which stands reversed and is no longer a good law. 5. This, however, does not obviate the difficulties of the Revenue in view of the fact that on merits a substantial part of the additions which was the reason that the penalty had been imposed stands deleted. The pendency of the Special Leave Petition by itself would not come to the aid of the Revenue. As noted by the Tribunal, with which we concur, the remaining deletions in the sum of Rs 9 lacs emanate due to a difference of opinion and not on account of the assessee?s furnishing inaccurate particulars. In these circumstances the penalty proceedings are bound to fail. 6. We may also note in the passing that the addition made on account of fluctuation in foreign exchange stands covered by a judgment of the Division Bench of this Court in CIT vs Woodward Governor: (2007) 294 ITR 451(Del). 7. In view of the above, we are of the opinion that the appeal does not call for interference by us. No substantial question of law arises for our consideration. Resultantly, the appeal is dismissed. . VIKRAMAJIT SEN, J . . RAJIV SHAKDHER, J March 12, 2009/mb . ITA 114-2009 Page 4 of 4 . 1 .
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