Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’: NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI SUDHANSHU SRIVASTAVA
This appeal has been preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals) – XVIII, New Delhi for assessment year 2010 –11 wherein, vide order dated 22nd of August 2014, the Ld. CIT (Appeals) has partly confirmed the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.
ITA 5206/Del/2014 Assessment year 2010-11 2. The brief facts of the case are that the return of income for the year under consideration was filed declaring a total income of Rs. 2,78,26,960/-. The case was selected for scrutiny and during the course of assessment proceedings the AO observed that in certain ledger accounts lump sum debit entries had been passed on 31/03/2010. The AO found that expenses amounting to Rs. 6 Lacs debited under various heads were not supported by proper evidences and he proceeded to disallow 50% out of the same and made an addition of Rs. 3 Lacs. The AO further disallowed 25% of expenses incurred on business promotion and telephone on the ground that personal element could not be ruled out. He proceeded to make an addition of Rs. 1,61,800/- on this account.
The AO also observed that the assessee had not shown accrued interest of Rs. 7,52,341/- in its computation of income although the assessee was following mercantile system of accounting. The AO proceeded to add this amount also to the income of the assessee and the assessment was completed at a total income of Rs. 2,90,41,101/-.
2.1 Penalty proceedings under section 271 (1) (c) of the Income Tax Act, 1961 were also initiated against the assessee and subsequently a penalty of Rs. 4,12,690/- was imposed for ITA 5206/Del/2014 Assessment year 2010-11 furnishing inaccurate particulars of income as well as for concealment of income. The assessee carried the matter in appeal before the First Appellate Authority who deleted the penalty imposed on ad hoc additions/disallowances of Rs. 3 Lacs and Rs. 1,61,800/- but confirmed the penalty imposed on the addition of Rs. 7,52,341/- which pertained to accrued interest not declared by the assessee.
2.2 Now the assessee is in appeal before the ITAT and has raised the following grounds of appeal –
“1. (a) That the Order of Ld. Assessing Officer, is bad in law and facts of the case;
(b) That the Order of Ld. Assessing Officer is bad in law as no speak order has been made and explanation offered by assessee is not considered while imposing penalty u/s 271(l)(c).
(c ) That the order is bad in law as no justification has been provided for imposition of penalty u/s 271 (c).
That the imposition of penalty of Rs.7,52,341/- is bad in law and liable to be deleted.”
The Ld. Authorised Representative submitted that it had come to the notice of the AO during the course of assessment proceedings that the interest accrued as per Form 26 AS was more than the interest booked in the profit and loss account. It ITA 5206/Del/2014 Assessment year 2010-11 was submitted that the interest as per Form 26 AS was Rs. 16,85,525/- whereas the interest declared in the profit and loss account was Rs. 8,91,770/-. It was submitted that when the AO pointed out the discrepancy, the assessee took up the matter with Punjab National Bank, Naraina Vihar branch which had issued the TDS certificates only for Rs. 8,91,770/- i.e. is the amount which was duly declared in the assessee’s return of income. It was submitted that the assessee had declared interest income as per the TDS certificate provided by the bank. It was further submitted that the assessee had declared the income from interest based on the certificate issued by the bank and it was only after the discrepancy was noticed by the AO, that the assessee came to know that accrued interest had not been accounted for correctly. It was submitted that this was the first year in which Form 26 AS was available online and the assessee, at the time of filing of return, was unaware of such a facility having been introduced by the tax Department. It was further submitted that the error was bona fide and, accordingly, it was not a fit case for imposition of penalty. Reliance was placed on a number of case laws and it was prayed that the penalty as sustained by the Ld. CIT (Appeals) be also deleted.
ITA 5206/Del/2014 Assessment year 2010-11 4. In response, the Ld. Senior Departmental Representative submitted that it was assessee’s responsibility to declare its true income and the assessee had failed to do so. The Ld. Senior DR vehemently argued that the penalty imposed should be confirmed.
We have heard the rival submissions and have also perused the material on record. It is clear that in the instant case it cannot be said that the assessee had withheld any relevant information regarding accrued interest out of its own volition or mala fide intention. The assessee had duly disclosed the amount of interest as reflected in the TDS certificate issued by Punjab National Bank and the omission occurred only due to incorrect TDS certificate having been issued by the bank. Thus, the bona fides of the assesssee cannot be doubted in such circumstances.
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. 322 ITR 158 (SC), the Hon’ble Apex Court has held as follows:
ITA 5206/Del/2014 Assessment year 2010-11 “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.”
5.1 Although both the lower authorities have held that the assessee has furnished inaccurate particulars and concealed particulars of income, on a 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 ITA 5206/Del/2014 Assessment year 2010-11 Reliance Petroproducts Pvt. Ltd. (Supra) we set aside the order of the Ld. CIT (Appeals) and direct the AO to delete the penalty.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 31st October, 2017.