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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri P.M. Jagtap & Shri S.S. Viswanethra Ravi
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH: KOLKATA
Before: Shri P.M. Jagtap, Accountant Member and Shri S.S. Viswanethra Ravi, Judicial Member
I.T.A No. 875/Kol/2017 A.Y: 2013-14
Vivekananda Hospital Vs. Income Tax Officer Pvt. Limited Ward 2(1), Durgapur PAN: AABCV 6140Q [Appellant] [Respondent]
For the Appellant : D.K. Sen, Advocate, ld.AR For the Respondent : Shri A.Bhattacharjee, Addl.CIT, ld.Sr.DR
Date of hearing : 07-05-2018 Date of pronouncement : 25-07-2018
ORDER Shri S.S. Viswanethra Ravi, JM :
This appeal by the Assessee is directed against the order of the Commissioner of Income Tax (Appeals), Durgapur dt. 30-01- 2017, wherein he confirmed the penalty of Rs. 7,62,445/- imposed u/s. 271(1)(c) of the Act by the AO.
The ld. AR submits that the assesse is engaged in conducting its business under the name and style ‘Vivekananda Hospital’. The assesse company filed its e-return for the A.Y under consideration showing total income as ‘Nil ‘ claiming deduction u/s. 80IB of the Act. During the assessment proceedings, the AO denied the said exemption and determined the total income at Rs. 21,78,052/- and allowed brought forward loss set off Rs.21,78,052/- and assed total income at ‘Nil’. Accordingly, the AO initiated penalty proceedings u/s. 271(1)( c) by issuing notice u/s. 274 r.w.s 271(1) ( c ) of the Act for claiming inadmissible expenditure by furnishing inaccurate particulars of expenditure and held that the assesse has concealed its income.
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Before the CIT- it was contended that there was no deliberate omission on the part of assesse in concealing the income or furnishing inaccurate particulars of income and placed reliance on the decisions of the Hon’ble Apex Court in the cases of T. Ashok Pai Vs. CIT reported in 292 ITR 11(2007) (SC) and CIT Vs. Reliance Petro Products P.Ltd reported in 322 ITR (201) 158(SC) respectively.
Considering the submissions of assesse the CIT-A opined that the assesse is not able to substantiate and failed to prove that the explanation offered by the assesse is bonafide and all material facts have been disclosed. The CIT-A by placing his reliance on the decision of the Hon’ble Supreme Court in the case of UOI Vs. Dharmendra Textile Processors confirmed the impugned penalty of Rs. 7,74,459/- as imposed by the AO u/s. 271(1) ( c) of the Act. Relevant portion of CIT-A order is reproduced herein below:-
“I have perused the ground of appeal of the appellant and the order of the AO. It is seen from the record that the AO has made the disallowance on the ground that TDS has not been deducted on such payments. The genuineness and the quantum of payment have not been disputed at all. The disallowance has been made merely on account of technical default of non deduction of TDS. Under the Income Tax Act, failure to deduct TDS, entails levy of interest and penalty under different provisions of the Act and certainly not u/s. 271(1)( c), which can be levied only if the appellant has concealed particulars of his income or has furnished inaccurate particulars of income nor has concealed any particulars of income because all the details of expenses, genuineness of the payment and quantum has been accepted. Once the payments made have not been doubted and on the basis of such payments the appellant has debited the said amount in the P & L account, it cannot be held that appellant is liable for penalty within the ambit of section 271(1)(c).
To attract the provisions of section 271(1)(c), the appellant must be held to have concealed the material particulars or to have furnished inaccurate particulars. If certain claims made by appellant is found not sustainable but has disclosed all the material facts then it cannot be held that appellant is guilty of furnishing of inaccurate particulars so as attract the penal provisions of section 271(1)(c).
It is further seen that the factual statement made by the appellant in the income return were found correct but the disallowance has been made due to legal fictions. In respect of ESIC payment due but not paid, in case of PF due but not paid. Neither it as inaccurate particular of income nor it was concealed. The disallowance was made because of legal fiction and it was merely in correct claims, therefore, reliance on C.I.T Vs. Reliance Petro Products Pvt. Ltd. 322 ITR(2010) 158 (SC) the penalty levied by the A.O. on the issue disallowance of Rs. 4,67,368/- on account of disallowance u/s 40(a)(ia) and Rs. 7,76,045/-, Rs. 1,48,308/- on account of non-deposit of 'Employees' contribution before due date and disallowance of Rs. 11,872/- u/s. 40A(3) for purchasing a 'LED TV' in cash is hereby deleted.
As regards the disallowance of Rs. 7,74,459/- is concerned. It is seen that assessee company debited an amount of Rs. 1938761/- under the head 'Rates & Taxes'. It was revealed from the concern ledger that the above amount included interest on P.Tax of Rs. 12014/- and interest on TDS of Rs. 762445/-. Now, by virtue of observation by the 'Supreme Court' and 'Calcutta High Court' 'interest paid under any provision of Income Tax Act, for late payment or short payment of regular tax, advance tax, self- assessment tax deductible at source' etc, is not deductible'. Interest on P. Tax was also a kind of penal a so inadmissible expenditure. It is seen that out of total payments 2 ITA No. 875/Kol/2017
19,38,761/- the disallowed of Rs. 7,74,459/- on claim of payment of interest on professional tax of Rs. 12,014/- and interest on TDS of Rs. 7,62,445/-. As the appellant did not deposit TDS deducted by on which interest of Rs.7,62,445/- was imposed. In this regard it is pertinent to mention here that for non deposit of TDS there is a provision of prosecution against deductor, therefore, aforesaid amount was penalty nature which was not permissible to allow as per Income Tax Act, 1961. The A.O. in his penalty order as observed that scrutiny selection process is computerized. The present scheme of things puts onus on the assessee to compute and pay taxes voluntarily and state true and correct particulars of its income in the return of income. The Department normally accepts the statement of income and taxes furnished by the assessee by way of e- return. The Department is not even asking for documents along with the return. Thus, the assessee is supposed to be filing its return honestly and disclosing full facts. But, the assessee has not discharged its onus of being an honest tax payer. It has claimed the disallowable item in its accounts and has not added back the disallowable expenditure on its own. It is the Department who finds out the disallowable item charged in the P/L A/c and added back to the income of the assessee.
Had the Department not picked up the assessee's case for scrutiny assessment, the assessee could have enjoyed the fruits of not declaring proper expenditure which adversely affects the income. Even during the course of proceedings of the case the assessee did not disclose voluntarily its true expenditure which was allowable as per law. Furnishing of wrong particulars in the return of income to evade or reduce tax liability is as good as the same of furnishing of inaccurate particulars of income and in the instant case the assessee submitted wrong particulars in the return of income.
Under the new scheme of scrutiny norms, all the cases are not selected for scrutiny assessment. Had the assessee's case not been selected for scrutiny, the assessee could have been benefited by filing income which is not accurate. The assessee took chance with the Department. Had the revenue not detected the inadmissible expenditure, the assessee could have enjoyed the fruits of filing particulars of income which is not accurate and would have caused-loss to the revenue. By furnishing' inaccurate particulars of expenditure the assesse has concealed, its true income and tax liability in the return of income.
Perusal of aforesaid observation of the A.O. that the claimed made by the appellant was penal in nature which consequences of launching the prosecution of against the appellant because TDS has been deducted but not deposit on which interest has been paid. The appellant did not disallow on his own. It was only when the case was selected under scrutiny and the A.O pointed out and disallowed the aforesaid amount being penal in nature therefore, considering the explanation of 271(1)( c) creates a legal fiction and raises a presumption against the appellant. It provides that if in respect of any fact which is material to the computation of total income, appellant (i) does not offer an explanation or offers an explanation which is found to be false by the AO. OR (ii) offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all material facts have been disclosed then, the amount added or disallowed shall be deemed to be income in respect of which particulars are concealed. Keeping in view of the decision of Hon’ble Supreme Court UOI vs. Dharmendra Textile Processors. The penalty levied by the AO on aforesaid amount of Rs. 7,74, 459/- is hereby upheld including the penalty over the quantum of the professional tax of Rs.12,014/-. “
Before us the ld. AR submits that the assesse claimed deduction u/s. 80IB of the Act basing on wrong advice and it was a mistake to follow wrong advice by making incorrect claim. The said wrong claim does not amount to concealment of income and placed reliance in the cases of Reliance Petroproducts P.Ltd. reported in (2011) 322 ITR 158 (SC) and T.Ashok Pai reported in (2007) 292 ITR 11(SC) and prayed to set aside the order of CIT-A.
The ld. DR submits that the assesse claimed exemption u/s. 80IB of the Act without any basis and with a clear mala fie intention.
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The plea of wrong claim and advice is not supported by an evidence. The CIT-A has rightly held that the assesse is not able to substantiate its contention. He relied on the orders of the AO & CIT- A.
Heard rival submissions and perused the material available on record. The facts of claiming exemption u/s.80IB and denial of same are undisputed. It clearly shows that the details of claiming said exemption were before the AO. On his satisfaction, he denied the said exemption having not made on any legal basis. The contention of assesse before the CIT-A that claim of exemption was made in pursuance of wrong advice as well as before the Tribunal. In our opinion by making wrong claim, which was not supported by statute cannot be termed as concealment of income and as such claim made in the return of income cannot amount to concealment of income. We find force in the arguments of the ld.AR, the decision of the Hon’ble Surpeme Court in the case of Reliance Petroproducts Pvt. Ltd supra, which held a mere disallowance, which has been confirmed by the Tribunal does not mean that the assesse has concealed its income or filed inaccurate particulars of income. Relevant finding of the Hon’ble Supreme Court in the case of supra is reproduced herein below for better understanding:-
“A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the 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. In Commissioner of Income Tax, Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], where this Court was considering the same provision, the Court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of India Vs. Dharamendra Textile Processors [2008(13) SCC 369], as also, the decision in Union of India Vs.Rajasthan Spg. & Wvg. Mills [2009(13) SCC 448] and reiterated in paragraph 13 that (page 13 of 317 ITR) : "13. It goes without saying that for applicability of Section 271(1)(c), conditions stated therein must exist." 4 ITA No. 875/Kol/2017
In the present case, it was a wrong claim made by mistake, which could not be the sole basis for levying of penalty u/s. 271(1) ( c) of the Act.
In view of aforementioned decision of Hon’ble Supreme Court and respectfully following, we cancel the impugned penalty of Rs.7,62,445/- imposed by the AO u/s. 271(1)( c ) of the Act and confirmed by the CIT-A. Thus, ground nos. 1 to 3 raised by the assesse are allowed.
Ground no. 4 is general in nature, which requires no adjudication.
In the result, the appeal of assesse is allowed.
Order pronounced in the open court on 25-07-2018
Sd/- Sd/- P.M. Jagtap S.S. Viswanethra Ravi Accountant Member Judicial Member Dated : 25-07-2018 PP(Sr.P.S.) Copy of the order forwarded to: 1. Appellant/Assessee: M/s. Vivekananda Hospital Pvt. Ltd Dr. Zakir Hussain Avenue, Durgapur-713206(WB). 2 Respondent/Revenue : Income Tax Officer, Ward 2(1), Durgapur Aaykar Bhawan (3rd Floor, City Centre, Durgapur,713206(WB). 3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order, Sr.PS/H.O.O ITAT Kolkata
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