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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI H. S. SIDHU & SHRI O.P. KANT
ORDER PER H.S. SIDHU, JM
This appeal is filed by assessee against the Order dated 17.7.2014 passed by the Ld. CIT(A)-VI, New Delhi relating to Assessment Year 2007-08.
The grounds raised read as under:-
That the order of the Ld. CIT(A) is bad in law and is against the facts and circumstances of the case.
2. That having regard to the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the penalty of Rs. 34,500/- imposed by the DCIT,
Circle3(1), New Delhi u/s. 271(1)(c) of the Act.
3. That the Ld. CIT(A) while upholding the imposition of penalty u/s. 271((1)(c) has failed to appreciate the provisions of section 68 on the basis of which the impugned penalty was imposed.
4. That in any case and in view of the matter, order of Ld. CIT(A) in confirming the action of AO is bad in law
and unjustified.
That the appellant craves the lave to add, modify,
amend or delete any of the grounds of the appeal at the time of hearing.
The brief facts of the case are that the assessee company is engaged in the business of investment and trading in shares. The assessee company filed its return of income on 30.10.2007 declaring income of Rs. 27,78,790/-. The return was processed under section 143(1) of the I.T. Act, 1961. Subsequently the case was selected for scrutiny and assessment was made on Rs. 51,48,76,850 after making various additions. Being aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide his order dated 09.6.2011 confirmed the addition on account of unexplained liabilities / deposited to the tune of Rs. 1,02,280/-. The AO following the decision of the Ld. CIT(A) initiated the penalty proceedings u/s. 271(1)(c) of the I.T. Act, 1961 and levied penalty amounting to Rs. 34,500/-. Being aggrieved from the penalty of Rs. 34,500/- u/s. 271(1)(c) of the I.T. Act, 1961 the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 17.7.2014 has confirmed the penalty imposed by the AO.
Against the above order of the Ld. CIT(A) dated 17.7.2014, assessee is in appeal before the Tribunal.
5. During the hearing, Ld. Counsel of the assessee has submitted that Ld. CIT(A) while upholding the imposition of penalty u/s. 271(1)(c) has failed to appreciate the provisions of section 68 of the I.T. Act, 1961 on the basis of which the impugned penalty was imposed. He further stated that during the course of assessment proceedings, the assessee fully disclosed all the information asked for and has nowhere furnished any inaccurate particulars. It was the further contention that nowhere in the assessment order, it has been recorded that the assessee furnished inaccurate particulars of income. Therefore, he stated that no penalty can be levied in this case as it cannot be said that there was any attempt by the assessee to conceal particulars of income. In this behalf, he filed a copy of the decision rendered by the Hon’ble Supreme Court of India in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. reported in (2010) 322 ITR 158 (SC) and stated that the present case is fully covered by said decision and accordingly, requested that the penalty in dispute may be deleted.
On the contrary, Ld. DR relied upon the order of the authorities below and stated that the Ld. CIT(A) has passed a well reasoned order which does not need any interference, hence, the same may be affirmed.
We have heard both the counsel and perused the orders passed by the Revenue authorities. From the records, it reveals that the AO levied penalty of Rs. 34,500/- passed u/s. 271(1)(c) of the I.T. Act, 1961 vide order dated 26.3.2013. We further note that the assessee fully disclosed all the information asked for and has nowhere furnished any inaccurate particulars. However, nowhere in the assessment order, it has been recorded that the assessee furnished inaccurate particulars of income. We find that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. The AO has not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable, because all the documents submitted by the assessee were neither rejected by the AO as false or incorrect facts nor AO had clinching any further evidence of concealment of facts.
7.1 We also find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee’s conduct cannot be said to be contumacious so as to warrant levy of penalty.
7.2 In this regard, we find that assessee’s counsel reliance from the Hon’ble Apex Court decision in the case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010 is squarely applicable in the present case of the assessee. In this case vide order dated 17.3.2010 it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word ‘concealment’ and ‘inaccurate’ continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon’ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not accepted by the Assessing Officer for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature.
7.3 We further place reliance from the Apex Court decision rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein it was held that “An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute.”
In the background of the aforesaid discussions and precedents, we find that the levy of penalty in this case is not justified. Accordingly, we set aside the orders of the authorities below and delete the levy of penalty in dispute.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 05/06/2017.