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Income Tax Appellate Tribunal, DELHI BENCH: ‘I’: NEW DELHI
Before: SHRI RAMIT KOCHAR & SHRI SUDHIR KUMAR
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘I’: NEW DELHI) BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No:-1444/Del/2019 (Assessment Year- 1999-2000) LT Foods Unit 134, 1st Floor, Addl. CIT Special Rectangle, Saket Distt. Vs. Range-5 Centre, New Delhi-110017 New Delhi PAN No:AAACL0259K APPELLANT RESPONDENT Appellant by: Sh. Rohit Jain, Advocate Sh. Shivam Gupta, AR Respondent by : Sh. Abhishek Deval, Sr. DR Date of Hearing : 08.05.2025 Date of Pronouncement: 28.05.2025 ORDER PER SUDHIR KUMAR, JM
The appeal by assessee is preferred against the order of Commissioner of Income Tax (Appeals)-36, New Delhi [for short hereinafter referred to as the “(Ld. CIT(A)”] dated 15.112018arising out of the penalty order of the AO vide order dated 31.07.2017for Assessment Year 1999-2000, on the following grounds of appeal: -
“ 1. That the order of the Ld. CIT (Appeals) dismissing the various grounds of appeal s raised by the appellant in illegal and bad in law and without jurisdiction.
2. That in view of the facts and circumstance of the case the Ld. CIT (Appeals) has erred on facts and in law in upholding the impugned penalty order U/s 271(1)(c) of the Income Tax Act, 1961 levying a penalty of Rs. 36,26,752/-.
3. That on the facts and in law, the order of the Ld. CIT (Appeals) upholding penalty imposed under section 271(1)(c) is illegal, erroneous, unjust, arbitrary, based on surmises and conjectures, against the principles of natural justice and without application of judicious mind.
4. That the submission and explanation given by the appellant and the material available on record have not been properly considered and judiciously interpreted.
5. That the Ld. CIT (Appeals) has erred in law and on facts in dismissing the ground that the Ld. AO has made computational error in determining the quantum of the amount of tax sought to be evaded in terms of explanation 4 to section 271(1) of the Income Tax Act, 1961 for imposing penalty under section 271(1)(c) of the Income Tax Act, 1961 and the quantum of penalty imposed of Rs. 36,26,752/- is highly excessive and arbitrary.
6. That the Ld. CIT (Appeals) has erred in law and on facts in not appreciating and considering the fact that the quantum of income sought to be evaded should be worked out on the deduction under section 80HHC of the Income Tax Act, 1961 as claimed in the income tax return for the relevant assessment year amounting to Rs. 1,32,84,280/- as against the eligible deduction under section 80HHC of the Income Tax Act, 1961 amounting to Rs. 2,64,67,883/-
7. That the Ld. CIT (Appeals) has erred in law and on facts in not appreciating and considering the fact that the quantum of income sought to be evaded should be worked out to Rs. NIL being the deduction under section 80HHC of the Income Tax Act, 1961 as assessed by the Ld. AO is Rs. 1,61,05,733/ whereas the deduction under section 80HHC of the Income Tax Act, 1961as claimed in the income tax return for the relevant assessment year amounts to Rs. 1,32,84,280/- only and accordingly no penalty to be imposed on the issue of deduction under section 80HHC of the Income Tax Act, 1961. 2
8. Without prejudice the Ld. CIT (Appeals) has erred in law and facts of the case in dismissing the ground that the penalty order passed is void ab-initio in the absence of passing of final assessment order in terms of the directions of the Honorable members of the ITAT.
9. That the appellant craves your honour's leave to add, alter, modify, change, substitute, withdraw any of the grounds of appeal at any stage of appellant proceedings.”
The brief facts of the case are that the assessee company filed its return of income for the relevant assessment year on 21-12-1999 declaring total income of Rs.6,20,054/- after claiming deduction u/s 80IA of the Act amounting to Rs. 2,64,67,883/- deduction u/s 80G of the Act amounting to Rs. 2,50,000/-. The assessing officer restricted the deduction u/s 80 HHC of the Act for an amount Of Rs. 1,61,05,733/-.
3. The assessing officer completed the assessment on the taxable income amounting Rs.35,98,970/- after disallowing the deduction u/s 80HHC and 80IA of the Act. Aggrieved the order of the A.O the assessee company has filed the appeal before the Ld. CIT(A) who vide his order dated 24-01-2003 dismissed the appeal. Being aggrieved the order of the LD. CIT(A) the assessee filed the appeal before the Hon’ble ITAT who vide order dated 30-11-2016 has upheld the disallowance and restored matter of disallowance u/s 80IA of the Act 3 for the fresh examination and verification. The AO had initiated penalty proceedings u/s 271(1) of the Act for concealment of the particulars of income and/ or furnishing inaccurate particulars of income vide notice dated 31-07-2017 and imposed the penalty of Rs. 36,26,752/- vide its order dated 31-07-2017.
4. Aggrieved by the order of the Assessing officer the assessee filed the appeal before the Ld. CIT(A) who vide his order dated 15-11-2018 dismissed the appeal. Being aggrieved the order of the order of the Ld. CIT(A) the assessee filed this appeal before the tribunal.
Ld. Counsel for assessee submitted that the deduction u/s 80HHC and 80IA of the Act has been claimed on the basis of the report furnished by accountants in Form No. 10CCA and 10CCB of the Income Tax rules 1962. He further submitted that assessee has furnished true and correct information and no concealment of any particular was made by the assessee. He also submitted that the assessee has not concealed any particular of income and /or furnished any inaccurate particulars of its income then no penalty can be imposed on the assessee. Ld. Counsel for assessee further submitted that assessing officer has not recorded any satisfaction then penalty cannot be imposed on the assessee. He also submitted that notice issued u/s 274 read with section 271(1) of the Act are vitiated since did not specifically state the grounds mentioned in section 271(1)(c ) of the Act. Reliance has placed on the following decisions:
4. Supreme Court of India Vs. S. V. Angidi Chettiar [1962] 44 ITR 739 (SC)
5. Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd.: 322 ITR 158
6. Delhi High Court in the case of CIT vs. International Audio- Visual Co: 288 ITR 570
7. Delhi High Court in the case of CIT vs. Nalwa Sons Investments Ltd: 327 ITR 543
8. Delhi High Court in the case of CIT vs. Dharampal Premchand Ltd: 329 ITR 572
9. Punjab & Haryana High Court in the case of CIT vs. Deep Tools (P) Ltd: 274 ITR 603
Delhi High Court in the case of CIT vs. S. Dhanabal: 309 ITR 268
11. Punjab & Haryana High Court in the case of CIT vs. Sidhartha Enterprises: 322 ITR 80
12. Delhi High Court in the case of CIT vs. Deban International Ltd.: 2 taxmann.com 140 (Delhi)
Sanghi vs. ACIT: 125 ITR 184 Copy of decision of Madhya Pradesh High Court in the case of Sohanlal G.
Hyderabad Tribunal in the case of Kalpalatha vs. ACIT: 44 TTJ 225.
The Ld. DR has submitted that the notice issued by AO for initiation the penalty proceeding was valid. The assessee has concealed the deduction claimed u/s 80 HHC of the Act and the penalty proceeding initiated against the assessee. He further submitted that the assessee has the knowledge on which basis the penalty proceedings was started. Reliance, has placed on the following decisions:
Lucknow Bench Sandeep Chandak Vs. ACIT [2017] 88 taxmann.com 815 (Lucknow-Trib)
2. High Court of Madras Sundaram Finance Ltd. Vs. ACIT
High Court of Madras Sundaram Finance Ltd. Vs. ACIT [2018] 93 taxmann.com 250 (Madras)
Ms. Madhushree Gupta Vs. Union of India Vikramajit Sen and Rajiv Shakdher JJ
5. K.P. Madhusudhanan Vs. CIT [2001] 118 Taxmann.com 324 (SC)
6. Veena Estate (P.) Ltd. Vs. CIT [2024] 158 taxmnan.com 341 (Bombay) High Court
Ms. Madhushree Gupta Vs. Union of India High Court of Delhi [2009] 183 Taxmnan.com 100 (Delhi)
Sundaram finance Ltd. v. Assistant 7. In the case of Commissioner of Income -tax, Co. Circle VI(4) Chennai [2018] 93 taxmann. Com 250 (Madras) the Hon’ble High Court held as under:
“16. We have perused the notices and we find that the relevant columns have been marked, more particularly, when the case against the assessee is that they have concealed particulars of income and furnished inaccurate particulars of income. Therefore, the contention raised by the assessee is liable to be rejected on facts. That apart, this issue can never be a question of law in the assessee's case, as it is purely a question of fact. Apart from that, the assessee had at no earlier point of time raised the plea that on account of a defect in the notice, they were put to prejudice. All violations will not result in nullifying the orders passed by statutory authorities. If the case of the assessee is that they have been put to prejudice and principles of natural justice were violated on account of not being able to submit an effective reply, it would be a different matter. This was never the plea of the assessee either before the Assessing Officer or before the first Appellate Authority or before the Tribunal or before this Court when the Tax Case Appeals were filed and it was only after 10 years, when the appeals were 8 listed for final hearing, this issue is sought to be raised. Thus on facts, we could safely conclude that even assuming that there was defect in the notice, it had caused no prejudice to the assessee and the assessee clearly understood what was the purport and import of notice issued under Section 274 r/w, Section 271 of the Act. Therefore, principles of natural justice cannot be read in abstract and the assessee, being a limited company, having wide network in various financial services, should definitely be precluded from raising such a plea at this belated stage.”
We have heard the revival contention of the parties and perused the material available on the record.
The Assessing officer has observed in his order as under:
“17. Accordingly, in view of the above facts, I hold that the assessee has concealed income on account of deduction u/s.80HHC rightly not shown in ITR for the year under consideration. Under the Act, penalty u/s. 271 (1)(c) is leviable for furnishing inaccurate particulars of such income. I am satisfied that the assessee company has not furnished accurate particulars of its income to the extent of Rs.1,03,62,149/- and is a fit case for imposition of penalty u/s. 271(1)(c) of the Act for furnishing inaccurate particulars in respect of its income amounting to Rs.1,03,62,149/-. I hereby impose a penalty of Rs.36,26,752/- u/s. 271(1)(c) of the I. T. Act, 1961 for furnishing of inaccurate particulars of its income. The amount of penalty has been calculated as under :-
Income Sought to be evaded by the assessee as discussed above Rs.1,03,62,149/- Tax on above Rs.36,26,752/- Penalty U/s. 271(1)(c) Minimum 100% Rs.36,26,752/- Maximum 300% Rs.1,08,80,256/- Penalty Imposed Rs.36,26,752/-
The minimum penalty of Rs.36,26,752/- is imposed u/s. 271(1)(c) of the Income Tax Act for not furnishing accurate particulars of its income. A notice of demand and challan/ ITNA 150 are issued to the assessee company.
10. Ld. Counsel for assessee has submitted that while calculating the income the deduction has restricted to business income up to Rs. 1,93,34,684/- while the AO in the assessment order allowed the deduction u/s 80HHC of the Act for an amount of Rs. 1,61,05,733/-. The Assessing Officer has imposed the penalty on the difference amount of the deduction instead of the difference of the income of Rs. 29,78,916/-. The A.O. should have levied the penalty on difference of the income not on the basis of the disallowances. The assessee restricted the deductions to business income and the appeal of the assessee was allowed by the Hon’ble Income Tax Appellate Tribunal and matter was restored to the A. O., to decide as a fresh in regards the deduction u/s 80IA of the Act. The assessee has not concealed any particular of income at the time of filing the return of income.
Secondly, in the instant case the assessee has claimed deduction u/s 80HHC of the Act amounting to Rs.2,64,67,882/- but the A.O has restricted the deduction u/s 80HHC for an amount of Rs. 1,61, 05,733/- and the penalty was imposed on the assessee. The assessee company completely relied upon the certificate of the computation issued by the Chartered Accountants (certificate of CA P.B page No 49 to 51) and there was no malafide intention of making wrong claims willfully or with intention to conceal any particulars or submit any inaccurate particulars. There is nothing to show that the certificate 11 issued by the CA was not in accordance with section 80HHC(4) of the Act. Relying the certificate of CA the assessee has claimed the deduction under section 80HHC which was bona fide. In the case of Commissioner of Income -Tax XVI v. S. Dhanabal [2009]178 Taxman 242 Delhi the Hon’ble High Court held as under para 9:
9. From the aforesaid decision of the Supreme Court, it is clear that de hors the question of mens rea and the question of the effect the deletion of the word "deliberate" from the provisions of section 271(1)(c) would have on the issue of mens rea, as per the terms of the said Explanation 1(B) before penalty can be imposed upon an assessee, it has to be found as a question of fact that the explanation offered by the assessee is not only not bona fide, but it must also be found as a fact that the assessee has not disclosed all the facts which were material to the computation of his income. If either of these two ingredients are missing, then penalty cannot be imposed upon the assessee. In the present case, we find that the assessee had clearly indicated all the facts from which his income could be easily computed. The only question that remained to be ascertained was the quantum of deduction that the assessee was entitled to. Inadvertently, the assessee had claimed 100 per cent 12
deduction under section 80HHE, when he was actually entitled to only an 80 per cent deduction. This, also, he did on the basis of expert advice which had been certified by his Chartered Accountant. The Commissioner of Income-tax (Appeals) as well as the Tribunal have come to a conclusive finding that the explanation offered by the assessee was bona fide and that all facts which were material to the computation of his income had been disclosed by the assessee. That being the case, there is no question of any penalty being imposable on the assessee. Consequently, no interference with the Tribunal's order is called for.
12. We observed that there is nothing to show that the CA has committed the mistake to issue wrong certificate or any action has been taken by the department against the CA. Even, after considering its proviso to section 80HHC(3) of the Act and deduction u/s 80HHC computed then also the assessee restricted its claim of deduction in under chapter VA to the gross total income of Rs. 1,99,54,739.30 leaving long term capital gain income of Rs. 6,20,054/-to tax. Thus, claiming total deduction under chapter VIA to 1,93,34,684.88 which inter alia included of claim of deduction u/s 80HHC, 80G and 80IA of the Act. It is also not the case of revenue that gross total income as declared by the assessee has been enhanced by the AO and so far as claim of deduction u/s 80IA is concerned is same restored by the tribunal to AO. Since, the assessee has not concealed income nor furnished inaccurate particulars of income then no penalty can be imposed on the assessee. Thus, we allowed the appeal of the assessee and deleted the penalty levied by the AO.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 28.05.2025