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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI G.D. AGRAWAL, HON’BLE & SHRI K.N. CHARY
PER SHRI K.N. CHARY, JUDICIAL MEMBER
This is an appeal by the Revenue challenging the order dated 30.03.2015 in appeal no. 262/14-15 passed by the Ld. Commissioner of Income Tax (Appeals)-9, New Delhi (hereinafter for short called as the “Ld. CIT (A)”) on the following grounds:
1. “The Ld.CIT (A) has erred in deleting penalty of Rs. 28,97,945/- levied by the AO u/s 271 (1)(c) of the I.T. Act for furnishing inaccurate particulars of income.
The appellant craves, leave for reserving the right to amend, modify, alter, add or forego any grounds of appeal
at any time before or during the hearing of appeal.”
2. Relevant facts are that on 30.09.2011 the assessee filed the return of income for the AY 2011-12 declaring a total loss of Rs. 1,10,08,853/- and during the scrutiny assessment AO disallowed a sum of Rs. 96,66,674/- which comprises of interest paid on loan to a tune of Rs. 92,92,091/-, interest paid on delayed payment of service tax to a tune of Rs. 2,82,212/- and 86,371/- respectively. According to the AO the loan was taken in the previous year for purchase of capital assets and since the assessee company has not undertaken any business activity during the previous year relevant to the AY 2011-12, interest paid was attributable to capital assets and on that premise disallowed the interest expense. AO initiated proceedings u/s 271(1)(c) of the Act and concluded them with levying of penalty of Rs. 28,97,945/-. In appeal Ld. CIT (A) held that the claim preferred by the assessee was a bona fide one and there was no concealment of income or furnishing of inaccurate particulars. He, therefore, deleted the addition, hence, this appeal.
3. It is the argument of the Ld. DR that having raised the funds for purchase of capital assets, only with a view to avoid the tax, the assessee preferred a claim u/s 37 of the Act which is quite impermissible and they failed to substantiate the claim, as such, there are no bona fides in favour of the assessee. According to him, AO properly levied the penalty, but without considering the facts in their proper perspective the Ld. CIT (A) deleted the same. Per contra, it is the submission of the Ld. AR that though the production was stopped during the relevant year and no business was conducted, still the interest paid subsequent to the commencement of business is Revenue in nature, but merely because the expense was disallowed penalty proceedings will not automatically be invoked. According to him there is no concealment of income nor furnishing of inaccurate particulars, as such, Ld. AR submitted that the Ld. CIT (A) is right in deleting the same.
4. We have perused the record in the light of the arguments advanced on either side. There is no dispute of the facts stated on behalf of the assessee that the details relating to the interest paid is shown in the profit and loss account, Schedule XI forming part of the annual accounts giving details of interest and finance charges are shown in the computation of income for the year under consideration. Therefore, on the facts of the case, it cannot be inferred that the assessee company had intentionally concealed the particulars of income or furnished inaccurate particulars of such income to avoid tax as all the facts have been on record by way of e-filing of return. All interest and financial charges, and computation of income for the year under consideration, was placed before the AO. When all these details are very much available on record merely because it is opined by the AO that during the year no business activity was conducted by the assessee, the expense of interest would be capital in nature, it cannot be said that there is either concealment of income or furnishing of inaccurate particulars thereof.
Ld. CIT (A) placed reliance on the decisions of the Hon’ble Apex Court in Sir Shadi Lal Sugar & General Mills Ltd. (1987) 168 ITR 705, CIT vs. Reliance Petro Products (P)
Ltd. (2010) 322 ITR 158 (SC) and the decision of the Hon’ble Jurisdictional High Court in Devsons P. Ltd. vs. CIT (2011)
329 ITR 483 (Delhi) and Karan Raghav Exports (P) Ltd. vs. CIT (2012) 349 ITR 112 (Delhi) to reach the conclusion on facts that merely a wrong claim of deduction does not amount to furnish of inaccurate particulars. Having regard to the totality of the circumstances in this matter, the Ld. CIT (A) reached the conclusion that it’s a case where the assessee made a bona fide claim which was not found acceptable to the AO but when there is full and true disclosure of all material facts in the return of income it cannot be said that there is neither concealment of income nor furnishing of inaccurate particulars. We agree with the findings reached by the Ld. Cit (A) and find the appeal of the Revenue as devoid of merits, hence, we dismiss the grounds of appeal.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 09.10.2017