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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: RAJESH KUMAR & SONJOY SARMA
order
: November 30, 2022 आदेश /O R D E R
PER SONJOY SARMA, JUDICIAL MEMBER:
This is appeal filed by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre dated 02.06.2022 for A.Y. 2018-19. The assessee in this appeal has taken the following grounds of appeal: “i. That the penalty levied u/s 271(1)(c) is a civil liability is not applicable to your appellant case as there was no concealment of fact and figures come out during the assessment proceeding and as such the order passed by the ld. CIT(A), NFAC, Delhi need to be cancelled. ii. That the penalty u/s 271(1)(c) the particulars filed by the assessee in it statement of accounts, income tax return which amount to concealment of income/inaccurate supply of particulars of facts/income does not stand and as such the penalty order need to be cancelled.
2 AY 2015-16 Artdeco Collection Pvt. Ltd. iii. That your appellant craves leave to add other grounds/further grounds at the time of hearing of the appeal.”
Though the Registry has pointed out that the appeal is time barred, however, in view of the decision of the Hon’ble Supreme Court in the case of Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020, the period of filing appeal during the COVID- 19 pandemic is to be excluded for the purpose of counting the limitation period. In view of this, the appeal is treated as filed within the limitation period.
Brief facts of the case are that the assessee filed his return of income on 30.09.2015 for the relevant assessment year 2015-16 declaring total loss of Rs. 55,83,286/-. Subsequently, the case was selected for scrutiny through CASS. The notice u/s 143(2) and 142(1) were issued. During the course of scrutiny proceedings, it was noticed that books of accounts and computation of income that were debited an amount of Rs. 17,73,675/- under the head ‘Exceptional Items’. The AO held that expenditure would be capital in nature and he disallowed the entire amount of Rs. 17,73,675/- and added back to the total income of the assessee and penalty proceedings u/s 271(1)(c) were initiated separately for concealment of income/furnishing inaccurate particulars of income and penalty imposed to the tune of Rs. 5,48,066/- vide order dated 25.05.2018. This issue was agitated by the assessee before the ld. CIT(A) but the ld. CIT(A) confirmed the order of AO by observing as under: “4.3. I have considered the material placed on record. On perusal of the details, it is seen that the appellant has claimed capital expenditure amount of Rs. 17,73,675/- as an exceptional items on the profit & loss account. Further, it is seen from the penalty order passed by the AO that reason of addition is respect to the capital nature expenses claimed. Wherein the appellant has failed to prove the same before the AO.
3 AY 2015-16 Artdeco Collection Pvt. Ltd. 4.4.In view of the above, it is clear that the appellant argued for wrongly disallowance of claim of capital expenses. Accordingly, the penalty has been correctly levied on the disallowance of capital expenses amount as the appellant has furnished inaccurate particulars of income through which reduced the income for tax. As far as deliberate intent and/or attempt on the part of appellant is concerned, it is now well settled proposition that the penalty u/s 271(1)(c) is leviable if appellant fails to disclose truly and correctly all the particular of its income in its valid filed return. 4.4.1 In this regard, reliance can be placed on the decision of Hon'ble Supreme court in the case of Union of India vs. Dharmendra Textile Processors [2008] 13 SCC 369, the Hon'ble Supreme Court has held as under:
The objective behind the enactment of section 271(1)(c) read with the Explanations indicates that the said section has been enacted to providing for a remedy for loss of revenue and such penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act.
4.4.2 Further, in ihe case of CIT Ahmadabad V. Reliance Petroproducts (P) Ltd. [2010] 189 Taxman 322; Hon'ble Supreme Court of India, though decided the case in favour of Reliance Petroproducts (P) Ltd, has held in para 8 as under: "There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise"
4.4.3 The Hon'ble Supreme Court of India further held in para 9 that "the meaning of the word "particulars" must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous."
4.5 Moreover, the appellant case clearly falls within the ambit of the explanation 1 to the section 271(1)(c) of the Act which raises a rebuttable presumption and shifts the onus on the appellant to establish bonafide of its claim.
4.6 Though the Hon'ble courts have held time and again penalty u/s 271(1)(c) is a civil liability and, therefore, mensrea is not an essential element for imposition of penalty for breach of civil obligations; the facts of the case clearly reveal that there was willful attempt of concealment on part of appellant.
4 AY 2015-16 Artdeco Collection Pvt. Ltd. 4.7 In view of above facts and that no further cogent evidences or arguments have been put forth by the appellant during the course of appellate penalty proceedings, it is quite clear that the appellant has furnished inaccurate particulars of income. Therefore, the ld. Assessing Officer was justified in levied the penalty u/s 271(1)(c) of the Act. Thus, the penalty is confirmed.
Hence, the appeal of the assessee on this ground is dismissed.”
The ld. Counsel for the assessee submitted that the ld. CIT(A) failed to appreciate that the ld. AO has never concluded that there was a prima facie case to issue notice u/s 271(1)(c) of the Act and ld. CIT(A) erred in holding that the AO has rightly levied the penalty u/s 271(1)(c) of the Act. He submitted that the AO has not detected any concealment on account of particulars of income or furnishing inaccurate particulars of said income because the assessee had furnished all the details before the AO and this fact is acknowledged by the AO. Accordingly to the ld. Counsel for the assessee nothing was conceal from the AO, assessee had submitted all details in point no. 3 of Note no. 20 of final account of the company regarding expenditure of Rs. 17,73,675/-. However the company could not be interpreted properly at the time of hearing before the AO. The ld. Counsel submitted that simply because of explanation of the assessee was rejected, penalty cannot be imposed. On the other hand, the ld. DR strongly supported the order of the AO. He submitted that assessee had made false claim before the AO and penalty order passed by the AO uphold by the ld. CIT(A).
5. We have considered the rival submission and have perused the facts on record. We observe from the fact before us that levied penalty u/s 271(1)(c) of the Act has been levied in respect of expenditure amounting to Rs. 17,73,675/- which was claimed by the assessee as exceptional item in the profit & loss a/c and were fully disclosed in the profit & loss a/c and also by way of Note no. 20 of final account. We 5 AY 2015-16 Artdeco Collection Pvt. Ltd. observe that the AO has levied penalty for the reason that the assessee has filed inaccurate particulars in respect of the aforesaid expenses and thereby levied a penalty of Rs. 5,48,066/- being hundred percent of the tax sought to be evaded. The ld. CIT(A) confirmed the order on the ground that the assessee has wrongly claimed a capital nature expenditure by way of exceptional item in the profit & loss account. In our considered view that the penalty imposed by the AO and confirmed by the ld. CIT(A) is not correct as further reason that the assessee has disclosed all the facts in the tax return filed by the assessee and thus all the facts were available before AO and nothing was concealed. Even if, the assessee has made a claim which is not correct or not as per provisions of the Act or which the AO considered to be not correct even then the penalty cannot be levied as the full facts were before the AO in the return of income. The facts of the assessee finds that in the case of CIT vs Reliance Petro Products (P) Ltd. (2010) 322 ITR 158 whereby Hon’ble Supreme Court has held that making of claim which is not sustainable in law and claim made in the return cannot be held to be furnishing of inaccurate particulars of income, merely because the assessee claimed deduction interest expenditure which is not been accepted by the revenue and penalty cannot be levied u/s 271(1)(c). On the same analogy, we find that the facts of assessee’s case are quite similar. We, therefore, respectfully follow the same set aside the order of ld. CIT(A).