DCIT, NEW DELHI vs. M/S MORGAN SECURITIES & CREDIT (P) LTD., NEW DELHI

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ITA 6158/DEL/2015Status: DisposedITAT Delhi17 November 2017AY 2007-084 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that Rule 8D is applicable only from AY 2008-09 onwards, making the disallowance invalid. Therefore, the penalty imposed for concealment or inaccurate particulars was not warranted.

What were the facts?

The Assessing Officer imposed a penalty under Section 271(1)(c) for disallowance made under Section 14A read with Rule 8D for AY 2007-08. The CIT(A) deleted this penalty.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the disallowance under Section 14A was made by applying Rule 8D for an assessment year prior to its applicability.

Which sections of the Income-tax Act were involved?

Section 14A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI

Before: SHRI R.S. SYAL & SMT BEENA PILLAI

For Respondent: Shri Atiq Ahmad, Sr. DR
Hearing: 15.11.2017Pronounced: 16.11.2017

DCIT, Vs. Morgan Securities & Credit (P) Ltd., A-38, 1st Floor, Mohan Co-operative Circle-17(1), New Delhi. Indl. Estate, Main Mathura Road, New Delhi. PAN: AACCM7937R (Appellant) (Respondent) Assessee By : None Department By : Shri Atiq Ahmad, Sr. DR Date of Hearing : 15.11.2017 Date of Pronouncement : 16.11.2017 ORDER PER R.S. SYAL, VP: This appeal filed by the Revenue is directed against the order passed by the CIT(A) on 15.09.2015 deleting the penalty of Rs.23,61,909/- imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2007-08.

2.

We have heard the ld. DR and gone through the necessary records.

There is no appearance from the side of the assessee despite notice. As such, we are proceeding to dispose off the appeal ex parte qua the assessee. Penalty in this case was imposed with reference to the disallowance made u/s 14A read with Rule 8D.

3.

Adverting to the facts of the instant case, it is seen that the disallowance u/s 14A of the Act was made by the Assessing Officer in terms of Rule 8D. The Hon'ble Bombay High Court in Godrej & Boyce Manufacturing Company Ltd. vs. DCIT, 318 ITR 81 (Bom), has held that the provisions of Rule 8D are applicable only from the assessment year 2008-09 onwards. The assessment year under consideration is 2007-08.

In view of the foregoing discussion, it is clear that the very basis for making disallowance u/s 14A by applying Rule 8D, is itself under the shadow of doubt. By no standard, such a disallowance can be construed as a case of concealment of income or furnishing of inaccurate particulars of income so as to warrant penalty u/s 271(1)(c) of the Act.

4.

The Hon'ble Supreme Court in the case CIT Vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) has held that simply for the reason that the Assessing Officer did not find the claim of the assessee to be sustainable in law up to a certain extent, cannot be a case for penalty u/s. 271(1)(c), more so, when the particulars furnished by the assessee were not inaccurate. Ratio decidendi of the judgment is fully applicable to the instant case as well. In view of the foregoing discussion, we uphold the impugned order deleting the penalty imposed u/s 271(1)(c) of the Act.

5.

In the result, the appeal is dismissed.

Order pronounced in the open court on 16th November, 2017.

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