RAMAN CHOPRA,NEW DELHI vs. DCIT, NEW DELHI

143(3) vide order dated March 28 2014. The assessee fully co- operated with the assessment proceedings. Also, all the details relating to the claim of exemption of salary in the tax return were provided to the AO. However, the AO did not agree with the claim of exemption of remuneration. In the order, the AO has disallowed the claim and added back to the total income of the assessee. Based on above disallowance, the AO initiated penalty proceeding uls 271(1)(c) and held that assessee is guilty of furnishing inaccurate particulars of income which attracted the penal provisions of section 271(1)(c), and accordingly levied a penalty of RS.10,98,721/- vide order dated 26/09/2014 and in appeal before the Ld. CIT(A), the Ld. CIT(A) vide impugned order dated 10/9/2015 has upheld the penalty in dispute.

7.2 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.

7.3 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.

7.4 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.”