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

3. It is seen that the impugned penalty was imposed for 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 (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.

(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.

(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 (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 (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 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.

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