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Before: SHRI H.S. SIDHU & SHRI PRASHANT MAHARISHI
This appeal by the Assessee is directed against the Order dated 02.11.2015 of the Ld. Commissioner of Income Tax (Appeals)-20 New Delhi pertaining to assessment year 2011-12.
The grounds of appeal raised in the assessee’s appeal read as under:-
i) That the order dated 2.11.2015 passed by the CIT(A) is bad in law and against the facts of the case. ii) That the Ld. CIT(A), New Delhi has gravely erred in law and on facts of the case a) in rejecting and dismissing the appeal of the appellant by not going into the facts and merits of the case and not even deliberating upon the grounds of appeal nos. 2 which he has copied in this appellate order on page 2 but has failed to discuss the merits of the said additions, for reasons best known to him. b) in not appreciating the legal position in respect of grounds no. 2 for which written submission were duly furnished to the Ld. CIT(A).
3. That the AO has erred in law and on facts of the case in imposing the penalty u/s. 271(1)© amounting to Rs. 4,64,870/- without any proper basis and appreciation of facts of the case.
4. That the appellant craves leave to add, amend, alter, delete, rescind, forgo or withdraw any of the above grounds of appeal either before or during the course of appellate proceedings in the interest of the natural justice.
Prayer
Prayed that the impugned orders be set aside and the additions made by the AO be deleted since they are devoid of any merit and against the facts and position of law.
The brief facts of the case are that assessment in this case was completed u/s. 143(3) of the Income Tax Act, 1961 (in short “Act) on 22.3.2014 at an income of Rs. 79,95,770/- against the returned income of Rs. 53,39,120/-. During assessment proceedings, penalty u/s. 271(1)© of the Act was initiated on addition on account of withdrawal of exemption u/s. 54F of the Act. AO observed that assessee has furnished inaccurate particulars of income leading to concealment of income and liable for penalty within the meaning of section 271(1)© of the Act and imposed the penalty of Rs. 4,64,870/- vide his order dated 17.9.2014. Against the penalty order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 2.11.2015 has dismissed the appeal of the assessee.
Against the above order of the Ld. CIT(A) dated 2.11.2015, assessee is in appeal before the Tribunal.
During the hearing, Ld. Counsel of the assessee has submitted that assessee is an individual, a doctor, practicing dentistry who returned his income of Rs. 53,39,120/-. Against this, assessment was completed at Rs. 75,95,770/-. In the return, assessee had claimed exemption u/s. 54F of Rs. 22,56,648/-. During the course of assessment, the claim was withdrawn by the assessee. He further submitted that the AO on the basis of assumptions, assumed falsehood in assessee’s submission and imposed penalty u/s. 271(1)© of the Act, which later wrongly confirmed by the Ld. CIT(A). Hence, he stated that no penalty can be levied in this case as it cannot be said that there was any attempt by the assessee to conceal particulars of income or furnishing of inaccurate particulars of income. In this behalf, he filed a copy of the decision rendered by the Hon’ble Supreme Court of India in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. reported in (2010) 322 ITR 158 (SC) and stated that the present case is 3 fully covered by said decision and accordingly, requested that the penalty in dispute may be deleted.
On the contrary, Ld. DR relied upon the order of the authorities below and stated that the Ld. CIT(A) has passed a well reasoned order which does not need any interference, hence, the same may be affirmed. He relied upon the following case laws:
- UOI vs. Dharmendra Textile Processors (2007) 295 ITR 244 (SC) - CIT vs. Zoom Communication (P) Ltd. 191 Taxmann 179 (Delhi). - CIT vs. Moser Baer India Ltd. 184 Taxman 8 (SC) - Mak Data P Ltd. vs. CIT 38 taxmann.com 448. - Khandelwal Steel and Tube Traders vs. ITO (2018) 95 taxamann.com 15 (Madras) - CIT vs. Gates Foam and Rubber Co. 91 ITR 467 - CIT vs. India Seafood (105 ITR 708) - Steel Ingots Ltd. vs. CIT 296 ITR 228.
We have heard both the counsel and perused the orders passed by the Revenue authorities. We find that assessee is an individual, a doctor, practicing dentistry who returned his income of Rs. 53,39,120/-. Against this, assessment was completed at Rs. 75,95,770/-. In the return, assessee had claimed exemption u/s. 54F of the Act of Rs. 22,56,648/-. During the 4 course of assessment proceedings, the claim was withdrawn by the assessee. We further note that the assessee fully disclosed all the information asked for and has nowhere furnished any inaccurate particulars.
However, nowhere in the assessment order, it has been recorded that the assessee furnished inaccurate particulars of income. We find that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. The AO has not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable, because all the documents submitted by the assessee were neither rejected by the AO as false or incorrect facts nor AO had clinching any further evidence of concealment of facts.
7.1 We also find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee’s conduct cannot be said to be contumacious so as to warrant levy of penalty.
7.2 In this regard, we find that assessee’s counsel reliance from the Hon’ble Apex Court decision in the case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010 is squarely applicable in the present case of the assessee. In this case vide order dated 17.3.2010 it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word ‘concealment’ and ‘inaccurate’ 5 continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon’ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature.
7.3 We further place reliance from the Apex Court decision rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein it was held that “An order imposing penalty for failure to carry out a statutory obligation is the result of a 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. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute.”
7.4 We further note that the case laws cited by the Ld. DR are on distinguished facts, hence, does not support the case of the revenue.
In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, we find that the levy of penalty in this case is not justified. Accordingly, we set aside the orders of the authorities below and delete the levy of penalty in dispute.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced on 14/02/2019.