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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 assessee against the order dated 11/09/2015 passed by the Ld. CIT (Appeals)-3, Gurgaon wherein vide the impugned order, the Ld. CIT (Appeals) has confirmed the imposition of penalty of Rs. 19,800/- under section 271 (1) (c) of the Income Tax Act, 1961 (hereinafter called “the Act”) for assessment year 2009-10.
Assessment year 2009-10 2. The brief facts of the case are that the assessee had filed its return of income declaring total income of Rs. 1,22,80,582/- and an addition of Rs. 66,000/- was made in the assessment order passed section 143 (3) of the Act by disallowing the expenses relating to issue of shares for increase in the authorised share capital. During the course of assessment proceedings, it was found that the assessee had claimed expenses of Rs. 3,60,960/- under the head “miscellaneous expenses” and on verification it was found that the assessee had debited total expenses of Rs. 3,30,000/- on account of issue of shares out of which Rs. 2,64,000/- had been added back in the computation of the total income and the balance amount of Rs. 66,000/- was not added back to the computation which resulted in excess claim of expenses of Rs. 66,000/-. Subsequently, penalty proceedings were also initiated under section 271 (1) (c) of the Act and penalty of Rs. 19,800/- was imposed which was confirmed by the Ld. CIT (Appeals).
Now, the assessee has approached the ITAT and has raised the following grounds of appeal:-
“1. That, on the facts and circumstances of the case, the order passed by the CIT (Appeal) Gurgaon on dismissing of appeal against u/s 271(1)(c) of the Income Tax Act, 1961 is bad in law . 2 | P a g e Assessment year 2009-10 2. That on the facts and circumstances, of the case CIT (A) order is bad in law as appellant disclosed full particulars of income and the case of appellant is covered by explanation I to section 271(1)(c) of the Income Tax Act, 1961 . 3. That on the facts and circumstances of the case, CIT(A) failed to notice that explanation or appellant was bona fide.”
None was present on behalf of the assessee and no adjournment application has also been received on behalf of the assessee. However, looking into the facts of the case, we proceed to hear the appeal ex parte qua the assessee.
The Ld. departmental representative placed reliance on the orders of the authorities below and vehemently argued that the penalty had been rightly imposed as the expenses on issue of shares was capital expenditure and the assessee’s act of claiming the same as revenue expenditure was without any bona fide. It was submitted that the penalty imposed be confirmed.
We have heard the departmental representative and have also perused the material on record. The facts of the case are undisputed.
The penalty has been imposed for furnishing inaccurate particulars of income. Undoubtedly, there has been a failure on the part of the assessee in adding back the amount of Rs. 66,000/- to the Assessment year 2009-10 computation of his income. However, it is not the case of the Department that the assessee had furnished inaccurate particulars because the relevant details were very much on record and formed part of the return of income of the assessee. 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. 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 Assessment year 2009-10 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 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 Assessment year 2009-10 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.
5.1 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 not adding back the impugned amount to the computation of income was an act of furnishing of inaccurate particulars of income. The Ld. CIT (A) has also confirmed the imposition of penalty. 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:
Assessment year 2009-10 “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.”
Assessment year 2009-10 5.2 Although, both the lower authorities have held that the assessee has furnished inaccurate particulars of 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 deem it fit to set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty.
In the final result, appeal of the assessee stands allowed. Order is pronounced in the open court on 27th December, 2017.