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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI B.P.JAIN & SHRI SUDHANSHU SRIVASTAVA
This appeal has been preferred by the revenue against the order passed by the Ld. CIT(Appeals)-V, New Delhi for assessment year 2008-09 wherein, vide order dated 18/07/2014, the Ld. CIT (Appeals) has deleted the penalty of Rs. 16,10,668/- imposed under section 271 (1) (c) of the Income Tax Act, 1961 (hereinafter called “the Act” ).
Assessment year 2008-09 2. The brief facts of the case are that the assessment in this case was completed at an income of Rs. 2,42,52,48,040/- after excluding other income of Rs. 47,38,652/- pertaining to sale of scrap for the purpose of working out eligible deduction under section 80IA (1) of the Act. The assessee had claimed deduction under section 80IA on sale of scrap of Rs. 47,38,652/- which the AO did not accept and this finding of the AO was also sustained in appeal by the Ld. CIT (Appeals) as well as the ITAT. Thereafter, the AO proceeded to impose penalty of Rs. 16,10,668/- under section 271 (1) (c) of the Act on the disallowance and in appeal by the assessee, the Ld. CIT (Appeals) deleted the penalty and now the Department is in appeal against the deletion of the said penalty. The following grounds have been raised in this appeal:-
“1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred: (i) In deleting the penalty of Rs. 16,10,668/- imposed u/s 271 (1)(c) of the Act ignoring the fact that the issue, namely deduction u/s 801A on scrap sales, on which addition was made and which is the basis for imposing penalty is not a disputed issue at all and settled against assessee way back and much before filing of return of income.
(ii) In observing that issue regarding claim of deduction u/s 80IA on sale of scrap was debatable 2 | P a g e Assessment year 2008-09 till finally settled by decision of Hon’ble Supreme Court in the case of Liberty India Vs CIT 317 ITR 218. Actually this decision is not referring the issue of deduction u/s 80IA on scrap sale at all. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
None was present for the assessee. However, looking into the facts of the case we deem it fit to hear the appeal of the Department ex- parte qua the assessee.
The Ld. departmental representative read out from the assessment order as well as the penalty order and submitted that by including the scrap sales in the claim of deduction under section 80IA of the Act, the assessee had concealed income as well as furnished inaccurate particulars of income and, therefore, the penalty had been rightly imposed. It was submitted that the Ld. CIT (Appeals) had deleted the penalty under a mis-interpretation of the case laws as relied upon by him.
We have heard the Ld. departmental representative and have also perused the material on record. The Ld. CIT (Appeals), while deleting the penalty has noted that the claim of the assessee for scrap Assessment year 2008-09 sales as being eligible for deduction under section 80IA of the Act was based on certain judicial pronouncements and the issue had not yet attained finality and, therefore, the assessee’s act could not be said to be malicious. The Ld. CIT (Appeals) has noted that the assessee’s claim was at best debatable. The Ld. CIT (A) has placed reliance on the judgment of the Hon’ble Apex Court in the case of CIT versus Reliance Petroproducts Private Limited reported in 322 ITR 158 (SC) for deleting the penalty.
5.1 It is seen that the assessee cannot be said to have furnished inaccurate particulars of income as the particulars regarding the claim of deduction under section 80IA were very much part of the assessment proceedings/return of income/audited financial statements. We also find that the reliance of the Ld. CIT (Appeals) on the judgment of the Hon’ble Apex Court in the case of CIT versus Reliance Petroproducts Private Limited (supra) also cannot be faulted with. The Hon’ble Apex 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.
Assessment year 2008-09 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 Assessment year 2008-09 was an 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.
5.2 Reverting to the facts of the present case, the Assessing Officer, in the penalty order, has observed that the assesseee has furnished inaccurate particulars. The AO has held that the act of claiming deduction u/s 80IC was an act of furnishing of inaccurate particulars Assessment year 2008-09 of income. 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 7 | P a g e 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.”
5.3 Accordingly, we find no reason to interfere with the findings of the Ld. CIT (Appeals) and we dismiss the ground raised by the Department.
In the final result the appeal preferred by the Department stands dismissed.
Order is pronounced in the open court on 27th December, 2017.