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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI H. S. SIDHU & SHRI O.P. KANT
Date of Hearing : 30/06/2016 Date of Order : 08/07/2016
ORDER PER H.S. SIDHU, JM This appeal has been preferred by the assessee against the order of the Ld. CIT(A)-XI, Delhi dated 21.11.2012 in Appeal No. 289/11-12 relevant for AY 2001-02 by which the CIT(A) upheld and confirmed the penalty imposed by the AO u/s 271(1)(c) of the Income Tax Act 1961.
The grounds raised by the assessee read as under:-
On the facts and circumstances of the case, the penalty order passed by the Ld. CIT(A) is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, the ld. CIT(A) has erred, both on facts and in law, in confirming the order passed by the AO imposing the penalty u/s. 271(1)(c) of the Act as assessee did not furnish inaccurate particulars of income.
On the facts and circumstances of the case, the CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the above said penalty order passed by AO by arbitrary rejecting the material and evidences brought on record by the assessee to show that assessee did not furnish inaccurate particulars of income.
4. That the appellant craves leave to add, amend or alter any of the grounds of appeal before or at the time of hearing.
3. At the outset, the Ld. Counsel for the assessee stated that assessee has preferred an Appeal being Civil Appeal No. 4072/2014 before the Hon’ble Supreme Court of India in assessee’s own case pertaining to the quantum proceedings which is still pending before the Hon’ble Supreme Court of India. The Ld. Counsel for the assessee further submitted that in view of decision of Hon’ble Jurisdictional High Court of Delhi in the case of CIT vs. Liquid Investments Ltd. in dated 5.10.2010 wherein it
has been held that when a question of law has been framed on a particular issue then the issue becomes debatable and no penalty is sustainable in regard to such impugned addition.
Ld. Counsel of the assessee further draw our attention by filing a copy of judgment dated 8th July, 2014 in the case of CIT vs. Nayan Builders and Developers passed in Income Tax Appeal No. 415 of 2012 by the Hon’ble High Court at Bombay and stated that the present issue in dispute is squarely covered by the aforesaid decision.
On the other hand, Ld. DR relied upon the orders of the authorities below.
We have heard rival arguments of both the parties and carefully perused the records and other relevant material placed before us.
6.1 We find that the Hon’ble Jurisdictional High Court of Delhi in the case of CIT vs. Liquid Investments Ltd. in dated 5.10.2010 has held as under :-
“Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 on the ground that the issue of deduction under section 14A of the Act was a debatable issue. We may also note that against the quantum
14A of the Act was prescribed to the assessee, the assessee had preferred an appeal in this Court under section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case. This appeal is accordingly dismissed.”
6.2 We further find that the Hon’ble Bombay High Court vide its judgment dated 8th July, 2014 in the case of CIT vs. Nayan Builders and Developers passed in Income Tax Appeal No. 415 of 2012 has held as under:-
“Having heard Mr. Ahuja, Learned Counsel appearing on behalf of the Appellant, we find that this Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee’s Appeal in Quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated 27th September, 2010 admitting Income Tax Appeal No. 2368 of 2009. In our view, there was no case made out for imposition of penalty and the same was rightly set aside. The Appeal raises no substantial question of law, it is dismissed. No costs.”
6.3 After going through the aforesaid findings of the different Hon’ble High Courts, as aforesaid, we observed that admittedly the impugned addition has been upheld by the Ld. CIT(A), Tribunal and later by the Hon’ble High Court. At the same time we also observed that assessee filed an Appeal being Civil Appeal No. 4072/2014 before the Hon’ble Supreme Court of India which is still pending. After perusing the findings of the Hon’ble Jurisdictional High Court in the case of Liquid Investment Ltd. (supra) and the decision of the Hon’ble High Court of Bombay in the case of CIT vs. M/s Nayan Builders and Developers (Supra), we reach to a logical conclusion that when appeal of the assessee is pending before the Hon’ble Supreme Court of India, then the issue becomes debatable and in this situation no penalty u/s 271(1)(c) of the Act is leviable on the assessee.
Respectfully following the above decisions of Hon’ble Jurisdictional High Court of Delhi in the case of Liquid Investment Ltd. (supra) and the decision of the Hon’ble High Court of Bombay in the case of CIT vs. Nayan Builders and Developers (Supra), we are inclined to hold that the penalty was imposed on the assessee pertaining to the issue on which Appeal is pending before the Hon’ble Supreme Court of India being Civil Appeal No. 4072/2014 and the same has become debatable then no penalty is leviable thereon. In our considered opinion, the penalty in the present case is not exigible under this section. We, therefore, order for the deletion of penalty in dispute.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 08/07/2016.