ILA JITENDRA MEHTA,MUMBAI vs. DCIT CENTRAL CIRCLE 8(4), MUMBAI

Q.4. During the assessment year under consideration, you have claimed a deduction u/s 54F of the IT Act, 1961 of Rs.6,72,00,364/. Please produce the documentary evidences for the eligible claim of Rs.6,72,00,364/-.

4.1 The Assessee, in reply to the aforesaid question, has replied as under: Ans: Sir, I have inadvertently claimed the exemption u/s 54F of the Act, while filing return of income u/s 139(1) of the Act. I have filed revised computation of income vide letter dated 16.08.2016 wherein the above mentioned inadvertent error, has been rectified. Further, since the return was belated return, hence I was unable to revise it. However, to rectify the mistake I have filed revised computation of income. Sir, I request you to kindly accept the revised computation of income and not to levy penalty for my ignorance.

4.2 The AO vide question no.5 also asked the Assessee specifically:

Q5. Who files your income tax return? As per the return of income dated 30th March 2016, the same is filed and digitally signed by yourself? Please offer your comments.

4.3 The Assessee in response to aforesaid question has replied as under: Ans: Sir, the return of income was filed on 30th March 2016 by my accountant. Since, I was having digital signature, the same was attached while filing my return of income.

4.4 The AO further vide question No.6 show caused the Assessee as to why penalty u/s 271(1)(c) of the Act “is not attracted”. (emphasized by us)

5. The Assessee in response to aforesaid show cause/question replied as under: Ans: Sir, I have rectified my mistake by filing revised computation of income. Since the return could not revise as was filed after due date. Hence, I request not to levy penalty u/s 271(1)(c) of the Act.

“That in the case pertaining to AY. 2013-14 also the Assessee has claimed an incorrect claim deduction u/s 54F of the Act of long term capital gain, which was disallowed and a penalty u/s 271(1)(c) of the Act has been initiated for the A.Y. 2013-14. Thus, it is evident that the Assessee is habitually claiming incorrect deduction u/s 54F of the Act. Thus, the incorrect deduction claimed by the Assessee cannot be considered as a mistake nor a bonafide mistake”. ultimately, disallowed the said deduction claimed u/s 54F of the Act and consequently made the addition of Rs.6,72,00,364/- and added the same in the income of the Assessee.

6. The AO simultaneously in the Assessment order, also recorded the satisfaction that the Assessee is liable for penalty u/s 271(1)(c) of the Act and therefore initiated separately, the penalty proceedings u/s 271(1)(c) of the Act for concealment of income.

8. The AO thereafter issued a penalty notice dated 31.12.2016 u/s 271(1)(c) r.w.s 274 of the Act for the limb of furnishing of particulars of income.

10. The Assessee in response to the aforesaid show cause notice, filed her reply dated 24.05.2017, which reads as under:

"We refer to your notice in respect of penalty under section 271(1)(c) of the Act. In connection to that, under the instructions of our above mentioned Assessee and on his behalf, we state and submit as follows:

1. Before dealing with the grounds on which the present proceedings were initiated we would like to state the relevant facts, in brief, for a better understanding of the matter before Your Goodself

2. The Assessee had filed its original Return of Income u/s. 139 of the Act on 29.03.2016 declaring total income as Rs. 17,78,3901-. The case was selected for limited scrutiny assessment.

3. Subsequently, notices u/s. 143(2) and 142(1) of the Act dated 28.07.2016 and 22.08.2016 along with a detailed questionnaire calling for various details was served on the assessee.

6. Accordingly, the AO disallowed a sum of Rs. 6,72,00,364/- on account of violation of section 54Fvide order dated 23.12.2016.

PENAL PROVISIONS ARE NOT ATTRACTED:

9. As per provisions of section 271 (J)(c) of the Income tax Act, for a just levy of penalty, there are some primary requirements that need to be fulfilled. Relevant provisions of the Act are as under:

"(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person-

(a). .. .. .... ... . . (b) (c) has concealed the particulars of his income or furnished inaccurate particulars of such income.

He may direct that such person shall pay by way of penalty. 11. From the above, it may be observed that the levy of penalty will be justified only when it is independently proved that there is concealment of income Or inaccurate particulars of income are furnished.

12. Further, mere making of the claim in the Return of Income which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the Assessee.

13. Further, a guilty mind is necessary for the purpose of levy of penalty. In the instant case, the Assessee had neither concealed any income nor furnished inaccurate particulars of income. There was no deliberate attempt by the Assessee to evade tax.

16. Looking at the above facts, we ingeminate that a) All the facts and details were submitted during the course of assessment proceedings. b) There was no mens rea or guilty mind on the part of the Assessee. c) Additions/Disallowances made do not automatically warrant concealment of income or furnishing of inaccurate particulars of income.

17. It will be observed and appreciated in view of the above facts, relevant provisions of the Act and considering the relevant judicial pronouncements as stated below, it is hereby submitted that the penalty proceedings u/s. 271 (I)(c) of the Act deserve to be recalled.

18. In this connection, reliance is first placed upon the order of the Hon'ble Tribunal in the case of Nuchem Ltd. v. DCIT [49 ITD 441, 451 (Del)). In this case, as against the returned loss, the assessment was completed on a positive income as a result of disallowance of expenditure on purchase of plant and machinery claimed as revenue expenditure; disallowance of interest on FDRs representing amounts of disputed excise duty deposited for obtaining bank guarantee; and addition/disallowance u/s. 40A(7) of the Act etc. Upon their sustenance by the Hon'ble Tribunal, proceedings u/s. 217(I)(c) of the Act were initiated and consequent penalty levied by the Assessing Officer whose order was sustained in first appeal. In the second appeal preferred by the assessee, the Hon'ble Tribunal, however, deleted the levy by observing as under:

"7. ... ... ..................... ......... ... .. ... .. ....... .......... ..... ...

In such a situation where the assessee has raised a legal contention bona fide and this issue was not settled by the Hon'ble Supreme Court, whether it is ultimately accepted or rejected, will not generally be an act of concealment of particulars of income, fraud or gross or willful negligence on the part of the assessee or furnishing of inaccurate particulars of income. Therefore, provision contained in Explanation to section 271 (1) Cc) cannot be attracted even if it can be said that the said Explanation applies because of the discrepancy between the income returned by the petitioner and the income assessed by the Income-tax Officer. In the case of Burmah- Shell Oil Storage & Distributing Co. of India Ltd. (supra), the Hon'ble Calcutta High Court had taken this view."

... The Ld. A.R. of the assessee, before us, has submitted that the assessee neither had filed any inaccurate particulars of income nor had concealed its income. The assessee was under bonafide belief that there was no liability to capital gains tax. The assessee had formed this view in the light of the decision of the Jabalpur Bench of the Tribunal in the case of "ACIT vs. Thermoflics India Ltd. " (supra). He has further submitted that the assessee was of the view that even if section 45(4) was applicable to distribution of capital assets on retirement, the value of stock in trade was to be excluded from the value of net assets transferred to the retiring partners. He has further submitted that if so done, the result would be a negative balance and under such circumstances the assessee was under the bonafide belief that there was no liability for capital gains tax under section 45(4). There was no intention of the assessee to evade tax. That full particulars were disclosed. The assessee had not declared capital gains under bonafide belief that it was not liable to pay any tax on this income. After considering the above submissions of the assessee and going through the order of the Ld. CIT(A), we find that the Ld. CIT(A) has committed no mistake while deleting the penalty levied by the AO under section 27I(1)(c) of the Act upon the assessee. We do not find any infirmity in the order of the Ld. CIT(A) and the same is therefore upheld."

20. At the cost of repetition, it is submitted that rejection of a claim made in the assessment or its sustenance by the appellate authorities would not justify levy of penalty. In any case, we submit that no case of concealment of particulars of income or furnishing of inaccurate particulars of income has been made out against Assessee. In the circumstances, this cannot be considered to be a fit case for visiting with penal provision. For these reasons also, the impugned proceedings deserve to be recalled.

21. Since in the present case, AR of the Assessee had voluntarily filed a revised computation of income vide letter dated 16.08.2016 before Assessing Officer pointed out and all the facts relating to the same and material to the computation of Assessee's total income were duly submitted, we humbly request your good self to drop the penalty proceedings initiated by Your Goodself.

22. Therefore, penalty for concealment of particulars of income or furnishing inaccurate – particulars of such income as contemplated u/s. 271 (l)(c) cannot and should not be imposed.) 23. In view of the above, we humbly request your good self to drop the penalty proceedings initiated under Section 27I(I)(c) o/the Act.”

“That the Assessee is a member of part of Rohan group. All the personal and business accounts are being handled professionally through Chartered Accountants. The Assessee cannot take a plea that return was filed by her accountant. As per the same, it is digitally signed by the Assessee. Further, as the individual returns are needed to be personally signed by the Assessee and a physical copy required to be sent to Bangalore CPC for validating the same. Thus, the Assessee cannot take plea that she has not filed the return or she has not seen this return. Further, the return of income was filed belated on 29.03.2016 and the case was selected for scrutiny on 28.07.2016. Thus, the Assessee has availed already plenty of times for filing her individual return of income. Further, on perusal of the case records, it is seen that the Assessee has submitted the claim of withdrawal of deduction u/s 54F of only after issuance of plethora of notices and follow up scrutiny action. A notice u/s 142(1) dated 22.08.2016 was not responded to. Further, a show cause for initiating action u/s 271(1)(b) of the Act was issued on 16.09.2016. Further, a notice u/s 142(1) was issued on 19.10.2016 and 07.11.2016. However, no reply was submitted in this case by the Assessee. Further, a summon u/s 131 of the Act was issued by the AO on 20.11.2016. Then on 07.12.2016 the Assessee has submitted a letter for withdrawal of claim u/s 54F of the Act. The Act does not provide such a claim of withdrawal of any deduction claimed in the return of income during the course of the scrutiny. Thus, claim of the Assessee of withdrawal of expense cannot be said to be justified and deserves to be penalized. The AO while relying on various judgments specifically in the case of CIT vs. Zoom Communication Pvt. Ltd. (327 ITR 510) wherein it was held that for the proposition that "if the Assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and explanation furnished by him for making such a claim is not found to be bona fide, Explanation-1 to section 271(1)(c) would come into play and assessee will be liable to penalty". and Mac Data Limited in 358 ITR 0593 (SC), ultimately held that incorrect deduction claimed by the Assessee cannot be considered as a mistake nor a bonafide mistake. From all the above discussions and considering the overall facts of the case it is evident that the Assessee is habiuatilly claiming incorrect deduction u/s 54F of the Act. This approach cannot be accepted by the Department. It needs to be underlined at this juncture that only 1 or 2% of the total returns filed are selected for income tax scrutiny every year. Had the case would not have been selected for scrutiny, the claim of the Assessee would have been finalized u/s 143(1) of the Act and would have resulted to loss of revenue. Thus, the Assessee is liable for penalty u/s 271(1)(c) of the Act for filing inaccurate particular of income thereby concealing the taxable income with a motive to evade the tax”.

12. The Assessee being aggrieved challenged the said penalty order and levy of penalty before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner more or less on the same footing/reasoning as observed by the AO in the Assessment order and penalty order, ultimately affirmed the levy of penalty by dismissing appeal of the Assessee, by observing and holding as under:

“11. GROUND NO 1 In this ground the appellant has challenged the penalty levied u/s 271(1)(c) of the IT Act. 11.2 I have considered the penalty order and facts available on record. It is seen that during the year under consideration the appellant filed the return of income claiming exemption u/s 54F of the I.T Act of Rs.6,72,00,364/- on the capital gains derived from sale of shares of Halford realties Pvt. Ltd., Rutham builders Pvt. Ltd. and Wellcity real estate Pvt. Ltd. During the assessment proceedings, the AO asked the appellant to furnish the details of the same. In response to this the appellant filed a letter stating that she has incorrectly claimed the exemption u/s 54F. The A.Ο recorded the statement of the appellant u/s 131 of the IT Act on 19.12.2016 wherein in the answer to question no 4 the appellant has stated that she has inadvertently claimed exemption u/s 54F while filing the return of income. On 7.12. 2016 the appellant has filed a letter withdrawing the claim of exemption. Therefore, the AO disallowed the claim of exemption made u/s 54F of the IT Act and also initiated penalty u/s 271(1)(c) for furnishing inaccurate particulars about her income.

11.3 During the penalty proceedings, the appellant has submitted that there was no intention to conceal the income and the claim was made inadvertently. It was also contended that merely making the claim in the return of income which is not sustainable in law by itself will not amount to furnishing inaccurate particulars about the income. The appellant has also relied on various case laws. The AO considered the submission of the appellant. It is noted that the assessee is a part of Rohan group which is engaged in the business of builder and construction. The books of accounts are being handled by the professional chartered accountants therefore, the assessee cannot take a plea that the return was filed by her accountant and the claim was made by mistake. The return of income was filed belated on 29.03.2016 and the case was selected for scrutiny on 28.07.2016. Further, only after the case selected for scrutiny and notice u/s 143(2) was issued the assessee has submitted a letter withdrawing the claim of deduction u/s 54F.

Notices u/s 142(1) were also issued however the same were not complied and only on 07.12.2016 the assessee has filed the letter of withdrawal. This fact shows that assessee has withdrawn the claim after various notices issued. The AO held that in facts of the case the explanation given by the assessee is not acceptable and hence the penalty for furnishing inaccurate particulars is leviable as per the explanation 1 to section 271(1)(c) The AO relied on the decision of Delhi High Court in case of CIT vs. Zoom Communication Pvt. Ltd(191 taxman 179) and the decision in case of MAK DATA Ltd.

11.4 During the appeal proceedings as discussed in para 3 above, in spite of issuing several notices, the appellant has not complied to the same. No explanation to substantiate the grounds of appeal has been furnished. In the grounds of appeal, the appellant has contended that adequate opportunities were not provided to the appellant by the AO and hence there is gross violation of principle of natural justice. However, it is seen from the penalty order that the AO has issued notices to the appellant and in response to the same the appellant furnished the written submission. Hence the contention of the appellant is factually incorrect. Further during the appeal proceedings also adequate opportunities were provided however the same are not availed. The contention of the appellant is contrary to the facts available on record and hence the same deserves to be rejected.

11.5 It is an undisputed fact that, the appellant has filed the I.T return belatedly on 29.03.2016. The assessment was selected for scrutiny on 28.07.2016 thereafter AO issued notice u/s 142(1) on 22.08.2016, 19.10.2016 and 07.11.2016. However, the appellant has not complied to these notices issued by the AO. Thereafter, summons u/s 131 was issued on 20.11.2016. A statement of the appellant was recorded u/s 131 of the IT Act on 19.12.2016 wherein the appellant has stated that the exemption claimed u/s 54F was inadvertently claimed while filing the return of income. The appellant submitted the letter on 07.12.2016 withdrawing the claim made u/s 54F of the IT Act. Further, as pointed out by the AO the appellant is part of Rohan group and the books of accounts are handled by the professional chartered accountants. From the facts of the case the contention of the appellant that the exemption claimed u/s 54F is due to inadvertent mistake is factually incorrect. The fact itself shows that the appellant has deliberately made an attempt to claim the exemption u/s 54F of the IT Act for which the appellant is not eligible. The appellant was aware that she was not eligible for such claim u/s 54F of the IT Act and in spite of that the exemption was claimed. The intention is nothing but to evade the taxes by furnishing inaccurate particulars about her income. Had this case not been selected for scrutiny u/s 143(2) of the IT Act, the appellant would have got the benefit and to that extent the taxes would have been evaded. Even the filing of belated return is a well thought out strategy. The appellant can claim that she could not revised the return as the same was belated return. The entire fact shows that the appellant has made the illegal claim after a well thought out strategy. Therefore, it cannot be compared with the cases where the assessee makes some claims/deductions in the return of income and the same is disallowed. Hence the case laws relied by the appellant are not applicable in the facts of the case of the appellant. In the appellant's case there is a deliberate attempt to evade the taxes by furnishing inaccurate particulars about her income. Therefore, the explanation furnished by the appellant is not acceptable as the same is not bona fide. The appellant case is thus clearly covered by the Explanation 1 to section 271(1)(c). The reliance is also placed on the decision of Hon'ble Supreme Court in case of MAC Data Pvt. Ltd vs. CIT (358 ITR 593) wherein the Hon'ble S.C has held as under-

The question is whether the Assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. Explanation to Section 271(1) raises a presumption of concealment, when a difference is noticed by the AO. between reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise.

“That she being a lady is not much acquainted with the taxation matters and admittedly the return of income which is under consideration was filed by her accountant by using digital signature of the Assessee, however, on realizing her mistake qua incorrect claim made u/s 54F of the Act inadvertently, she rectified her mistake by filing a specific letter dated 16.08.2016 wherein she has specifically statted that deduction u.s 54F of the Act was inadvertently claimed and therefore she is rectifiying her said inadvertent mistake by filing letter dated 16.08.2016 along with revised computation of income. The Assessee further claimed that she in reply to the questions raised during the statement recorded by the AO u/s 131 of the Act during the assessment proceedings the Assessee in reply to the question about the deduction claimed u/s 54F of the Act, specifically replied that she had inadvertently claimed such exemption by filing her return of income u/s 139(1) of the Act. She has filed revised computation of income vide letter dated 16.08.2016 wherein the above mentioned inadvertent mistake has been rectified. Further, since the return was belated return hence, she was unable to revise it. However, to rectify the mistake she has filed revised computation of income and therefore to accept the revised return of income and not to levy penalty for her ignorance. Her return of income was filed on 30.03.2016 by her accountant by using the digital signature. Since the return could not be revised as the same was filed after due date and therefore she has rectified her mistake by filing revised computation of income, hence, requested the AO not to levy penalty u/s 271(1)(c) of the Act”.

14. The Assessee further in support of her claim for deletion of the penalty also relied on various judgments of various courts including in the cases of Pullanguod Rubber Produce Company Ltd. Vs. State of Kerala (1973) 91 ITR 18 (SC), CIT vs. Reliance Petroprdoucts Ltd. 322 ITR 158 (SC), Commissioner of Income Tax -1, Mumbai vs. Somani Evergree Knits Ltd. (2013) 35 taxmann.com 529 (Bom.) and CIT vs. Dalmia Dyechem Industries (ITA No.1396 of 2013) (2015) 61 taxmann.com 200 (Bom.).

15. On the contrary, the Ld. D.R. refuted the claim of the Assessee and submitted that the Assessee is a habitual offender as observed by the AO in the assessment order as well as in the penalty order as she has also claimed the deduction u/s 54F of the Act in the AY 2013-14, which was disallowed and therefore the Assessee is not entitled for any relief and consequently the penalty imposed by the AO and affirmed by the Ld. Commissioner may be sustained.

“That she had inadvertently claimed the exemption u/s 54F of the Act while filing her return of income u/s 139(1) of the Act, however, she has rectified her inadvertent mistake by filing her revised computation of income vide letter dated 16.08.2016. Further, since the return was belated return, hence, she was unable to revise it. The return of income was filed on 30.03.2016 by her accountant and since she was having digital signature, the same was attached while filing her return of income. Further, since the return could not be revised as the same was filed after the due date and therefore she has rectified her mistake by filing revised computation of income and therefore she requests not to levy penalty u/s 271(1)(c) of the Act.

19. From the aforesaid facts and circumstances, the question emerges “whether the act of Assessee qua rectifying her mistake by withdrawing her incorrect claim u/s 54F of the Act as inadvertent as alleged, by filing revised computation of income during the assessment proceedings”, can be treated as bonafide mistake and would not entail the levy of penalty?

“That in the absence of any explanation in respect of surrendered income, the first part of clause (A) of explanation 1 to section 271(1)(c) is attracted because the nature and source of the amount surrendered are facts material to the computation of the total income. The absence of any explanation regarding the receipt of money, which is in the exclusive knowledge of the Assessee leads to an adverse inference against the Assessee and is statutorily considered as amounting to concealment of income under the first part of clause (a) of the explanation to section 271(1)(c) and penalty has to be levied”.

2. If the contention of the Revenue is accepted then in case of every return where the claim made is not accepted by the AO for any reason the Assessee will invite penalty u/s 271(1)(c) of the Act, that is clearly not the intendment of the legislature.

4. By any stretch of imagination, making an incorrect claim in law, cannot tantamount to furnishing of inaccurate particular of income.

“That an order imposing penalty for failure to carry out a statutory obligation is the result of quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances.”.

The Ld. CIT(A) upheld the levy of penalty, however, the Tribunal, on appeal, accepted the mistake for claiming the excess depreciation originally, as claimed as bonafide and inadvertent mistake on the part of the Assessee and therefore by holding that in any case during the course of assessment proceedings the Assessee realized its mistake and pointed out the same, the mistake should not be visited with penalty. Tribunal also held that time to file a revised return had expired.

The Revenue Department being aggrieved by filling appeal before the Hon’ble High Court, challenged the order of the Tribunal in deleting the penalty mainly by focusing that mistake ought to have been rectified by filing a revised return of income but the Assessee has failed to revise the same and therefore the Tribunal was not justified in deleting the penalty levied by the AO u/s 271(1)(c) of the Act, even though the Assessee had accepted in assessment proceedings that it had filed inaccurate particulars of income by claiming excess depreciation in its return of income.

The Hon’ble High Court affirmed the decision of the Tribunal by dismissing the appeal of the Revenue by taking into consideration the determination made by the Tribunal to the effect:

“That the Assessee had not filed a revised return of income as the time to file the revised return of income has already expired in any event even the Revenue does not dispute that it was a bonafide mistake on the part of the Assessee and the excess depreciation originally claimed was on account of bonafide and inadvertent mistake on the part of the Assessee as during the course of assessment proceedings the Assessee realized its mistake and pointed out the same to the AO. Thus, imposition of penalty was not warranted”.

and therefore much inference cannot be drawn in this particular case, specifically in view of the judgment by the Hon’ble Apex Court in the case of Pullanguod Rubber Produce Company Ltd. case (supra) wherein the Tribunal while relying on the decision relating to the year immediately to the previous assessment, affirmed the decision of the authorities below in not allowing the claim of the Assessee and therefore the Hon’ble Apex Court has held “that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect”. As the Assessee in the instant case, after receiving the notice dated 28.07.2016, immediately by filing her reply vide letter dated 16.08.2016 along with revised computation of income and drawing the attention of the AO, rectified her mistake for claiming the deduction u/s 54F of the Act inadvertently and therefore in this case no adverse inference is warranted.

26.1. Upon remand, the AO again disallowed the proportionate interest holding that Assessee had borrowed funds of which interest liability had been incurred. The AO also levied penalty holding that the Assessee concealed its income by furnishing inaccurate particulars.

26.2 The Assessee challenged the said penalty by filing appeal before the then CIT(Appeals) on the ground that the Assessee had no malafide intention to evade any tax and all facts and details were placed on record.

26.2 The Ld. Commissioner by relying on the judgment of the Hon’ble Apex Court in the case of Reliance Petro-products Ltd. (supra) deleted the penalty by concluding that merely because the claim made by an Assessee was disallowed, penalty cannot be levied unless it is demonstrated that the Assessee had any malafide intention.

26.3 The order of the then Ld. CIT(A) got affirmed from the Tribunal and therefore the Revenue being aggrieved challenged the order passed by the Tribunal in affirming the decision of the Ld. CIT(A) in deleting the penalty imposed. Before the Hon’ble High Court, the Revenue Department has placed reliance on the judgment of the Hon’ble High Court of Delhi in the case of CIT vs. Zoom Communication Pvt. Ltd. (supra) and the fact that miniscule number of cases are picked up for scrutiny and therefore the decision of the Hon’ble Apex Court in the case of Reliance Petro-products Ltd.

(supra) should be interpreted in such a manner that there is no scope of misuse.

26.4 The Hon’ble Jurisdictional High Court by considering the submission made by the Revenue and decision of the Tribunal, ultimately did not find any perversity with the decision of the then CIT(A) and the Tribunal in deleting the penalty imposed by the then AO, by holding as under:

“That the case of Zoom Communication Pvt. Ltd. (supra) is clearly distinguishable on facts because in that case the Assessee had conceded before the AO that its action of claiming revenue deductions was not correct at all. It was not the case of the Assessee therein, throughout the proceedings that deductions carried out by the Assessee was a debatable issue. The Hon’ble High Court of Delhi noted that before it, the Assessee could not explain the circumstances and its conduct.

In the present case, when the Assessee had bonafide pleaded that it was covered by a particular position of law that one authority i.e. the Tribunal had passed certain orders in its favour during the assessment proceedings it could not be said that the Assessee fell within the ambit of section 271(1)(c) of the Act, as in this case both the authorities have taken a possible view of the matter upon appreciating the evidence”.

26.5 The Hon’ble High Court has also dealt with the issue raised by the Revenue as observed by the AO in this case as well, to the affect “that since miniscule number of cases are picked up for scrutiny and therefore decision of the Hon’ble Apex Court in the case of Reliance Petro-products case (supra) should be interpreted in such a manner that there is no scope of misuse”, and answered by holding as under:

” Because small number of cases are picked up for scrutiny does not mean that rigorous of the provision are diluted. Whether a particular person has concealed income or has deliberately furnished inaccurate particulars, would depend on facts of each case. In the present case, we are concerned only with the finding that there has been no concealment and furnishing of inaccurate particulars of the present Assessee.”

“Whether the penalty levied in the instant case for furnishing of inaccurate particular of income as determined by the AO in the penalty order instead on the limb of concealment of income on which the penalty proceedings were initiated, is sustainable or not”.

Order pronounced in the open court on 02.06.2024.