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Income Tax Appellate Tribunal, DELHI BENCHES (CAMP AT MEERUT
Before: SHRI N.S. SAINI & SHRI KULDIP SINGH
ASSESSEE BY : None REVENUE BY : Shri S.S. Rana, CIT DR Date of Hearing : 10.01.2019 Date of Order : 24.01.2019
O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, Shri Vijay Kumar Gupta (hereinafter referred to as ‘the Assessee’) by filing the present appeal, sought to set aside the impugned order dated 26.06.2018 passed by Ld. CIT (Appeals), Meerut, by allowing the penalty order dated 26.03.2018 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’), qua the assessment year 2013-14 on the grounds inter alia that :-
“1 The learned CIT (Appeal) was not justified by dismissing the appeal.
2. The learned Commissioner of Income Tax (Appeal) has erred in summarily rejecting the plea of the appellant with respect to following.
a) That the Learned Assessing Officer has erred both on facts and in law imposing a penalty of Rs.8,30,500/- u/s 271(1)(c) of the IT Act for alleged concealment of income amounting to Rs.28,68,750/- being the alleged addition under section 68 of Income Tax Act, 1961 b) That the several observations as made and inferences drawn are untenable, incorrect, unwarranted.”
Briefly stated the facts necessary for adjudication of the controversy at hand are : On the basis of completed assessment under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’), penalty proceedings have been initiated by the Assessing Officer on confirmation of the addition by the ld. CIT (A) to the tune of Rs.28,68,750/- u/s 271(1)(c) of the Act. Declining the contentions raised by the assessee, AO proceeded to levy the penalty of Rs.8,30,500/-.
Assessee carried the matter by way of an appeal before the ld. CIT (Appeals) who has confirmed the penalty by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
Assessee has not preferred to put in appearance despite issuance of the notice and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file.
We have heard the ld. Departmental Representative for the revenue to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, addition made by the AO has been confirmed 6. by the ld. CIT (A). It is also not in dispute that penalty has been imposed on the basis of three additions made by the AO : one, deduction claimed by the assessee on account of interest of Rs.4,08,000/- u/s 36 (1)(iii) of the Act was disallowed; two, that the assessee has failed to verify the sales made in the jewellery business by seeking confirmation of debtor amounting to Rs.15,20,750/-; and third, addition of Rs.9,40,000/- on account of lack of verification of purchase of jewellery. It is also not in dispute that during appellate proceedings, ld. CIT (A) has extended the relief of Rs.1,93,495/- to the assessee.
In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower Revenue authorities and arguments addressed by the ld. AR to the parties, the sole question arises for determination in this case is:-
“as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings while interpreting the provisions contained u/s 271(1)(c) of the Act?”
From the perusal of the penalty order passed by the AO, it is apparently clear that the penalty has been levied on the sole ground that the assessee has made claim or deductions and sale & purchase of jewellery without supporting documents. However, penalty order shows that AO was not sure enough as to whether the assessee has concealed the particulars of income or has furnished inaccurate particulars of income during the assessment proceedings.
So far as claim of deduction on account of interest of Rs.4,08,000/- u/s 36(1)(iii) by the assessee is concerned, the same has been disallowed by holding that loan on which interest was paid was not utilized for the shop used for the business except one shop about which interest of Rs.30,000/- was allowed. The addition of Rs.15,20,750/- and Rs.9,40,000/- was also made on failure of the assessee to get the sale and purchase of jewellery verified. But at no point of time, the AO has come up with categoric finding that the assessee filed incorrect or erroneous or false documents to make the claim in his income-tax return. It is settled principle of law that mere making of claim which is not sustainable does not amount to furnishing of inaccurate particulars of income.
Hon’ble Supreme Court in a case cited as CIT vs. Reliance Petro Products Pvt. Ltd. – 322 ITR 158 (SC). decided the identical issue in favour of the assessee. Operative part of which is reproduced for ready reference as under :-
“A glance at the provisions of section 271(1)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, 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. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”
Hon’ble Delhi High Court in case cited as CIT vs. IFCI Limited – (2010) 328 ITR 611 (Delhi) while deciding the identical issue held that in case, if any claim made by the assessee has not been accepted it would not per se tantamount to furnishing any account of inaccurate particulars to attract the penalty proceedings u/s 271(1)(c). Operative part of the aforesaid judgment is extracted as under :-
Held; dismissing the appeal, that the assessee had filed the return and furnished all particulars. The assessee had explained during the penalty proceedings that the investments were written off in the books of account and were claimed as deduction on account of loss which occurred to the assessee in the computation of total income. The Tribunal analysing the facts had expressed the view that there had been no furnishing of inaccurate particulars of such income and the assessee had declared the entire material. It was a case where a claim put forth by the assessee as regards the loss was not accepted but that would not per se tantamount to furnishing any kind of inaccurate particulars. Thus, there had been no concealment of income or furnishing of inaccurate particulars. Hence, the cancellation of penalty was valid.
Moreover, the AO before initiating the penalty proceedings has not recorded satisfaction if the assessee has concealed particulars of income or has furnished inaccurate particulars of income so as to attract the provisions of section 271(1)(c) of the Act rather proceeded to levy the penalty by specifically writing in para 2 on page 3 of the penalty order that the record filed by the assessee not found to be correct. The ld. DR for the Revenue by relied upon the impugned order passed by the ld. CIT (A) also placed reliance on judgment cited as Mak Data (P.) Ltd. vs. CIT 358 ITR 593 and 217 TIOL 2583-HC-Del. However, the aforesaid decisions relied upon by the ld. DR is not application to the facts and circumstances of the case.
In view of what has been discussed above, we are of the considered view that penalty levied by the AO and confirmed by ld. CIT (A) is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is allowed. Order pronounced in open court on this 24th day of January, 2019.