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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
The present appeal by the assessee is directed against the order dated 18.08.2017 passed by the Commissioner of Income- tax (Appeals)-7, New Delhi [in short ‘learned CIT(A)’] for assessment year 2013-14 in relation to penalty levied by the learned Assessing Officer, raising the grounds as under:
(M/s. ONCOR HEALTHCARE PVT. LTD.)
On the facts and in the circumstances of the case in law, the Learned Assessing Officer has erred in levying penalty of Rs.28,12,314/- under section 271(1)(c) of the Income-tax Act, 1961 which was confirmed by learned CIT(Appeals) for the addition made by Learned Assessing Officer which are highly debatable and arising out of surmises and guess work and additions are made on estimation basis and are not supported by any cogent evidences, and therefore, entire penalty needs to be struck down.
2. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer has erred in levying a penalty u/s 271 (1)(c) of the Income Tax Act, 1961 without recording any satisfaction regarding furnishing of inaccurate particulars of income or concealment of income. 3. That the authorities below has failed to consider that mere disallowance claim of expenses does not tantamount to concealment of Income, hence imposition of penalty is not attracted. 4. The above grounds of appeal
are without prejudice to one another.
5. The Appellant craves, leave, to add, alter, amend and/or forego any of the grounds of the appeal at the time of hearing.
The facts in brief that the company was originally incorporated in 2004 under the name of K.K. Clinmed Pvt. Ltd. and was engaged in providing medical and health care related consultancy. The assessee company e-filed its return of income on 23.09.2013, declaring loss of Rs.1,06,96,831. Statutory notices were issued and complied with. The case was selected for scrutiny. The Assessing Officer observed that the business operation for which the assessee-company was established had not started and in absence of business operation such expenses are pre-commencement/preoperative expenses. The assessment company has earned other income of Rs.44,02,329/- comprises of dividend income of Rs.40,80,683/-. Consequently, the Assessing Officer passed assessment order dated 29.02.2016 and added
(M/s. ONCOR HEALTHCARE PVT. LTD.) expenses of Rs.86,66,260/- on the grounds that the business was not started and initiated penalty u/s 271(1)(c) of the Income- tax Act, 1961 (in short ‘the Act’) for dual charges of concealment of income as well as furnishing inaccurate particulars of income. The assessee did not prefer appeal against quantum addition in view of no actual tax payment included. In view of no appeal by the assessee, the learned Assessing Officer levied penalty u/s 271(1)(c) of the Act amounting to Rs.28,12,314/-. Aggrieved, the assessee preferred an appeal before learned CIT(A), who upheld the order of the Assessing Officer. Aggrieved, the assesses is before the Tribunal.
Before us, the learned counsel of the assessee submitted that firstly, there is no application of the mind by the Assessing Officer while levying the impugned penalty. He submitted that in the assessment order, the Assessing Officer initiated the penalty on the charges of concealment of income as well as for furnishing inaccurate particulars of income, but in the impugned penalty order, the penalty has been levied only on the charge of furnishing inaccurate particulars of the income and Ld. CIT(Appeals) has also upheld the charges of furnishing inaccurate particulars of income only. Further, he submitted that expenses claimed by the assessee have not been held to be ingenuine by the Assessing Officer, and disallowance has been made in the assessment order only on the ground that business of the assessee was not set up and, therefore, expenses claimed have been disallowed. According to the assessee, business was already commenced and setup, but looking to loss claimed in the return of income, which was reduced by the Assessing Officer and there
(M/s. ONCOR HEALTHCARE PVT. LTD.) being no real tax effect involved, the assessee did not prefer the appeal before the Ld. CIT(A). It is contention of the learned counsel that the issue or the claim made by the Assessing Officer, at most can be held as debatable and not unsubstantiated or patently wrong claim. In view of the arguments, the learned counsel submitted that claim has been made bonafidely, and therefore, assessee should not be liable of penalty for furnishing inaccurate particulars of income.
On the other hand, the learned DR relied on the order of the lower authorities.
We have heard rival submission of the parties who appeared through Videoconferencing facility and perused the relevant material on record. The Assessing Officer has levied penalty under section 271(1)(c) of the Act on quantum disallowance of expenses of ₹ 86,66,260/- out of the expenses of ₹1,42,362,574/- claimed by the assessee. The assessee informed before the lower authorities that company was originally incorporated in the year 2004 under the name of K.K. Clinmed (P) Ltd. for providing medical and healthcare related consultancy and duly declared business turnover from the year 2004 to 2008 and filed all required statutory returns and paid taxes. In March 2011, the name of the company changed to M/s Oncor Healthcare Private Limited and in financial year 2012-13 (relevant to assessment year into consideration) the assessee company tied up with M/s Nargis Dutt Memorial Charitable Trust, Mumbai for setting up of a super specialty hospital in Mumbai, but due to non-clearance from the regulatory authorities, the project was abandoned and (M/s. ONCOR HEALTHCARE PVT. LTD.)
money received by way of share capital from the investors, was returned. These facts have not been disputed by Ld. DR. 5.1 In background of the above facts, we are of the opinion that this is not the first year of operation of the assessee company, and the assessee company has already set up its business and commenced business operations in earlier years. Though the assessee has not challenged the finding of the learned Assessing Officer in view of the reason of no present tax liability, the assessee cannot be invited with penalty under section 271(1)(c) of the Act for filing of inaccurate particulars of the income. The expenses claimed by the assessee have not been found to be ingenuine and merely disallowed by way of rejecting a claim of the assessee, which is not wrong patiently or prima facie. The Hon’ble Supreme Court in the case of C.I.T. Vs. Reliance Petroproducts Pvt. Ltd, 322 ITR 158 (SC) held that if merely a claim has been found to be unsustainable in law, the assessee cannot be invited penalty for furnishing of inaccurate particulars of the income. Hon’ble Supreme Court held that in absence of any finding by the Assessing Officer as to the details filed by the assessee in the return of income were found to be incorrect, erroneous or false, there would be no question of inviting penalty under section 271(1)(c) of the Act. The facts and circumstances of the case in hand being identical, respectfully following the finding of the Hon’ble Supreme Court (supra), no penalty could be levied in the case of the assessee for furnishing inaccurate particulars of the income. 5.2 Accordingly, we set aside the order of the lower authorities and delete the penalty amounting to ₹ 28,12,314/- under section (M/s. ONCOR HEALTHCARE PVT. LTD.)
271(1)(c) of the Act. The ground No. 3 (three) of the appeal of assessee is accordingly allowed. Since the penalty has already been deleted by us, the ground Nos. 1 (one) and 2 (two) of the appeal are rendered academic only, hence we are not adjudicating these grounds. 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24th November, 2021