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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’: NEW DELHI
Before: SHRI N.K SAINI & SHRI KULDIP SINGH
The Appellant, Deputy Commissioner of Income-tax, Circle- 6(1), New Delhi. (hereinafter referred to as ‘the Revenue’) by filing the present appeal, sought to set aside the impugned order dated 21.07.2014 qua Assessment Year 2005-06 passed by Ld. CIT(A)-IX, New Delhi, on the grounds inter alia that:-
“ 1. Whether in the fact and circumstances of the case & in law, the Ld. CIT(A) erred in deleting the Penalty imposed lu/s 271(1)(c) amounting to Rs. 6355909/- by the AO by grossly ignoring the reasons advanced by the assessing officer and totally relying upon the submission of the assessee company? 2. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law.
3. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal raised above at the time of hearing.
Briefly stated the facts necessary to adjudicate the issues at hand are: the Assessee is into the business of trading and manufacturing of all tyres and tubes, filed return of income for the year under assessment declaring total loss of Rs. 7,81,94,190/- which was completed u/s 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) by reducing the total loss claimed by the assessee to Rs. 60,824,758/- by making additions of Rs. 1,42,04,926/-, Rs. 28,02,000/-, Rs. 1,15,368/-, Rs. 2,44,328/-, and Rs. 2,810/- on account of Technical Fee, ROC Fee, Gratuity, Employee Contribution to EPF and Loss on sale of fixed assets respectively.
On the basis of assessment framed u/s 143(3) and additions made thereunder AO initiated penalty proceeding u/s 271(1)(c) of the Act for ‘concealment of income and furnishing of inaccurate particulars of such income’. Declining the contentions made by the assessee vide letter dated 20th March 2012 and 30th March 2013, AO proceeded to hold that the assessee filed inaccurate particulars of its income and evaded tax to the tune of Rs. 17369432/- and thereby imposed penalty of Rs. 6355909/- @ 100% u/s 271(1)(c) of the Act.
Assessee carried the matter before the Ld. CIT(A) by way of filing the appeal, who has confirmed the penalty levied on loss of sale of fixed assets amounting to Rs. 2,830/- by partly allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the Ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and order passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, the Co-ordinate Bench of Tribunal in in the case of M/s Michelin India Tyres Pvt. Ltd. vs. DCIT, Circle 6(1) vide order dated 30.10.2015, assessee’s own case deleted the entire additions made by the AO and confirmed by the Ld. CIT(A), except addition of Rs. 1,15,368/- and Rs. 2,810/- claimed by the assessee as provisions for payment of gratuity based on actual valuation and loss on sale of fixed assets respectively.
It is the case of the assessee that it has claimed an amount of Rs. 1,15,368/- and Rs. 2,810/- respectively due to bonafide mistake and as such does not amount to concealment of income and relied upon the decision rendered by Hon’ble Supreme Court of India in the case cited as Price Waterhouse Coopers (P.) Ltd. vs. Commissioner of Income- tax 25 taxmann.com 400.
Undisputedly, the assessee has made its entire claims for deductions /disallowances on the basis of its audited financial. Assuming the claim set up by the assessee for an amount of Rs. 1,15,368/- on account of provision for gratuity as wrong and not sustainable, the same cannot be placed in the category of furnishing the inaccurate particulars of income to evade the tax in the face of the audited financial relied upon by the assessee. It was duty of the Assessing Officer to examine the claim if allowable or not within the parameters of law.
Hon’ble Apex Court in the case of Price Waterhouse Coopers (P.)
Ltd. (supra) decided the identical issue in favour of the assessee by returning the following findings-
“ The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income.”
So, we are of the considered view that both in case of claiming deduction on account of provisions for gratuity amounting to Rs. 1,15,368/- and claiming deduction on account of loss on sale of fixed assets of Rs. 2,810/- are purely on account of bonafide and inadvertent mistake, when the entire claim has been explained in the audit report and cannot be treated as concealment of income by any stretch on imagination even. So, we find no legality or perversity in the impugned order passed by the Ld. CIT(A), hence appeal filed by the Revenue is hereby dismissed.
Order pronounced in the open court on 22/6/2018.