M/S. G.N. INFOMEDIA P. LTD.,NEW DELHI vs. DCIT, NEW DELHI

PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER :

This appeal has been preferred by the assessee against order

dated 19/08/2016 passed by the Ld. CIT (Appeals)-35, New Delhi

for the assessment year 2012-13 . The issue under challenge is the

confirmation of penalty of Rs. 1,51,579/- imposed u/s 271(1)(c) of

the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

2 ITA no.5371/Del/2016 (G.N.Informedia) 1.1 The grounds raised by the assessee are as under:-

“Ld. CIT (A) has erred in deciding Appeal Ex Parte without affording an opportunity to Appellant whereas prior to change of Ld. CIT (A) earlier Ld. CIT (A) has heard the matter and detailed written submissions were filed on both the issues on a/c of

i. Disallowance of Interest for Delayed Payments of TDS Rs. 2,81,311/- ii. Disallowance of Donation of Rs. 2,50,000/- And prayed Returned Loss may please be reduced. 1. Ld. CIT(A) erred in facts and in law confirming Penalty u/s 271(1)(c) at 1,51,579/- on account of i. Disallowance of Interest for Delayed Payments of TDS of Rs. 2,81,311/- ii. Disallowance of Donation of Rs. 2,50,000/-

Ld. CIT (A) completely overlooked the fact.

a. Assessee had furnished all the particulars in Return filed. b. Assessee has never concealed the particulars of income nor submitted false information. c. Assessee had voluntarily surrendered during the Asstt. Proceedings. That Interest on delayed Payment of Interest for late payment of TDS and donation was erroneously not reduced from Returned Loss and on a/c of Bonafide mistake this may please be reduced from Returned Loss.

3 ITA no.5371/Del/2016 (G.N.Informedia) 4. That Penalty imposed and consequent Tax Demand is bad in Law.”

was called out for hearing nor was any adjournment application

received on behalf of the assessee in this regard. The notice for

hearing before the ITAT has also been returned un-served by the

postal authorities. Accordingly, looking into the facts of the case, we

are proceeding to hear this appeal ex parte qua the assessee.

furnishing inaccurate particulars of income and also for concealing

its income with respect to disallowance of interest for delayed

payment of TDS amounting to Rs. 1,95,952/- and disallowance of

donation amounting to Rs. 2,50,000/-. It is further seen that when

the assessee approached the Ld. CIT (A) against the imposition of

the impugned penalty, notice was issued to the assessee for

appearance but the notice was returned un-served by the postal

authorities, and therefore, the Ld. CIT (A) proceeded to adjudicate

the issue on the basis of written submissions filed on behalf of the

assessee. The Ld. CIT(A) has held that both the claims of the

4 ITA no.5371/Del/2016 (G.N.Informedia) assessee i.e. regarding claim of interest on delayed payment of TDS

and claim of donation, both of which were debited to the Profit &

Loss Account were prima facie not allowable. As per the impugned

order, it was the assessee’s explanation in the written submissions

before the Ld. CIT (A) that this payment had been claimed as

expenditure by mistake and the same was surrendered during the

course of assessment proceedings. The Ld. CIT (A) was of the view

that this explanation of the assessee was not bona fide. The Ld. CIT

(A) noted that the assessee took a chance of the case not being

picked up for scrutiny and as such the bona fide of the assessee

were under doubt and, therefore, the penalty, under the

circumstances was to be upheld.

supported the order of the Ld. CIT (A) and submitted that this was a

fit case for confirmation of penalty in view of the concurrent

findings of both the lower authorities.

records.

5 ITA no.5371/Del/2016 (G.N.Informedia) 5.1 Although, the assessee has raised a ground that the appeal of

the assessee was dismissed ex parte, without giving an opportunity

to the assessee of being heard but a perusal of the impugned order

shows that the Ld. CIT (A) had duly considered the written

submissions filed on behalf of the assessee when the assessee had

failed to appear before the Ld. CIT (A) and the notice of hearing had

returned un-served. Even the notice of hearing for this appeal

before the ITAT sent by the Registry of the ITAT has returned un-

served. This reflects a very careless attitude on the part of the

assessee and we were inclined to dismiss the assessee’s appeal at

the thresh-hold itself for want of prosecution. However, we are

proceeding to adjudicate the appeal on the merits of the case.

5.2 At this juncture it may be apposite to refer to the decision of

the Hon’ble Supreme Court in the case of CIT v. Reliance

Petroproducts (P.) Ltd. reported in [2010] 322 ITR 158/189 Taxman

322, wherein the Hon’ble Court, while interpreting the provisions of

section 271(1)(c) of the Act, has held that a glance at the said

provision would suggest that in order to be covered by it, there has

to be concealment of the particulars of the income of the assessee.

6 ITA no.5371/Del/2016 (G.N.Informedia) Secondly, the assessee must have furnished inaccurate of his

income. In the facts of that case, the court found that it was not a

case of concealment of the particulars of the income, nor was it the

case of the revenue either. However, the counsel for the revenue

suggested that by making an incorrect claim for the expenditure on

interest, the assessee had furnished inaccurate particulars of

income. The court observed that it had to only see as to whether in

that case, as a matter of fact, the assessee had given inaccurate

particulars. The court noted that as per Law Lexicon, the meaning

of the word "particular" is a detail or details (in the plural sense);

the details of a claim, or the separate items of an account.

Therefore, the word "particular" used in section 271(1)(c) would

embrace the meaning of the details of the claim made. The court

further observed that in Webster's Dictionary, the word "inaccurate"

has been defined as: "not accurate, not exact or correct; not

according to truth; erroneous; as an inaccurate statement, copy or

transcript." The court observed that reading the words "inaccurate"

and "particulars" in conjunction, they must mean the details

supplied in the return, which are not accurate, not exact or correct,

not according to truth or erroneous. The court noted that it was an

7 ITA no.5371/Del/2016 (G.N.Informedia) admitted position that no information given in the return was found

to be incorrect or inaccurate. It was not as if any statement made or

any detail supplied was found to be factually incorrect and

accordingly, held that, prima facie, the assessee could not be held

guilty of furnishing inaccurate particulars. The court repelled the

contention raised by the counsel for the revenue that "submitting

an incorrect claim in law for the expenditure on interest would

amount to giving inaccurate particulars of such income". The

Hon’ble Apex Court held that in order to expose the assessee to

the penalty unless the case is strictly covered by the provision,

the penalty provision cannot be invoked. By any stretch of

imagination, making an incorrect claim in law cannot tantamount

to furnishing inaccurate particulars. Therefore, it is obvious that it

must be shown that the conditions under section 271(1)(c) must

exist before the penalty is imposed.

5.3 Reverting to the facts of the present case, the Assessing

Officer, in the penalty order, has observed that the assesseee has

furnished inaccurate particulars as well as concealed the income.

The AO has held that the act of claiming expenditure which was not

8 ITA no.5371/Del/2016 (G.N.Informedia) allowable under the provisions of the Act was an act of furnishing of

inaccurate particulars of income and concealment. The Ld. CIT (A)

has noted that the explanation of the assessee regarding

inadvertent error lacked bona fide. However, with regard to the

provisions of section 271(1)(c ) of the Act pertaining to penalty, the

Hon’ble Apex Court has authoritatively laid down that making of a

claim by the assessee which is not sustainable will not tantamount

to furnishing inaccurate particulars. In CIT vs. Reliance

Petroproducts Pvt. Ltd. (supra), the Hon’ble Apex Court has held as

follows:

“A glance at this provision would suggest that in order to be covered, there has to be concealment of particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of income. That is not the case of the Revenue either. However, the Ld. Counsel for the revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the section 271 (1) (c) would embrace the meaning of the details

9 ITA no.5371/Del/2016 (G.N.Informedia)

of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The learned counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income." We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars.”

5.4 Although, both the lower authorities have held that the

assessee has furnished inaccurate particulars of income and

concealed income, on an overall consideration on the facts, such a

view is not tenable is the present appeal Therefore, respectfully

following the judgment of the Hon’ble Apex Court in the case of

Reliance Petroproducts Pvt. Ltd. (Supra) we set aside the impugned

orders and direct the AO to delete the penalty.

10 ITA no.5371/Del/2016 (G.N.Informedia)

(Order pronounced in the open court on 13th June, 2018).

Sd/- Sd/- (PRASHANT MAHARISHI) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: 13.06.2018 Binita Copy of order to: - 1) The Appellant; 2) The Respondent; 3) The CIT; 4) The CIT(A)-, New Delhi; 5) The DR, I.T.A.T., New Delhi; True Copy

By Order

ITAT, New Delhi