M/S. C.J. INTERNATIONAL HOTELS LTD.,NEW DELHI vs. DCIT, NEW DELHI

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ITA 5085/DEL/2011Status: DisposedITAT Delhi09 December 2016AY 2005-063 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no penalty under Section 271(1)(c) is leviable as the assessee disclosed all material facts and the details supplied were not found to be incorrect or false, following the Apex Court decision in CIT Vs. Reliance Petroproducts Pvt. Ltd.

What were the facts?

The assessee appealed against a penalty levied under Section 271(1)(c) for disallowance of depreciation and interest. The CIT(A) sustained the penalty for depreciation but modified it for interest.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied when the assessee has disclosed all material facts and the claim made, though unsustainable, does not amount to furnishing inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL

Before: SHRI BEFORE SHRI G.D. AGRAWALG.D. AGRAWALG.D. AGRAWAL & G.D. AGRAWAL & AND & SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVASHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA

For Appellant: Shri Tarandeep Singh, CA
For Respondent: Shri Anil Kumar Sharma, Senior DR
Hearing: 01.12.2016

PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2005-06 is directed against the order of learned CIT(A)-VIII, New Delhi dated 14th October, 2011.

2.

The assessee has challenged the levy of penalty by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961.

3.

The facts of the case are that the Assessing Officer had levied the penalty amounting to `9,18,592/- in respect of the following two additions/disallowances :-

(i) Disallowance of depreciation on West Tower - `2,74,500/-

2 ITA-5085/Del/2011 (ii) Disallowance of interest - `22,35,834/-

4.

On appeal, learned CIT(A) sustained the penalty in respect of disallowance of depreciation. However, in respect of disallowance out of interest, he directed that the penalty may be levied on the amount of `4,40,071/-. The Revenue has accepted the order of learned CIT(A) while the assessee is in appeal against the penalty sustained.

5.

We have heard the arguments of both the sides and have perused the material placed before us. After considering the facts of the case and submissions of both the sides, we are of the opinion that the issue of levy of penalty u/s 271(1)(c) in respect of the above two disallowances is squarely covered in favour of the assessee by the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – (2010) 322 ITR 158 (SC), wherein Hon’ble Apex Court held as under:-

1.

“Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”

6.

The ratio of above decision of Hon’ble Apex Court would be squarely applicable to the facts of the assessee’s case. The assessee has disclosed all material facts in respect of both the items and, admittedly, the details supplied by the assessee in its return of income are not found to be incorrect or erroneous or false. Accordingly, we, respectfully following the above decision of Hon’ble Apex Court, hold

3 ITA-5085/Del/2011 that no penalty u/s 271(1)(c) of the Act is leviable in respect of both the disallowances. The same is deleted.

7.

In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on .12.2016.

(SUDHANSHU SRIVASTAVA SUDHANSHU SRIVASTAVA) (G.D. AGRAWAL G.D. AGRAWAL) SUDHANSHU SRIVASTAVA SUDHANSHU SRIVASTAVA G.D. AGRAWAL G.D. AGRAWAL JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VK.

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