KAMANI OIL INDUSTRIES P.LTD,MUMBAI vs. DCIT 6(2), MUMBAI

स्थधमी रेखध सं./जीआइआय सं./PAN/GIR No. :AACK4395B अऩीरधथी ओय से / Appellant by: Shri Jitendra Jain प्रत्मथी की ओय से/Respondent by Shri H M Wanare सुनवधई की तधयीख / Date of Hearing : 20.7.2016 घोषणध की तधयीख /Date of Pronouncement : 27.7.2016 आदेश / O R D E R

Per RAJESH KUMAR, Accountant Member:

is against the confirmation of penalty of Rs.1,65,401/- by the ld.CIT(A) as imposed by the AO under section 271(1)(c ) of the Income Tax act, 1961.

3. Facts of the case in brief are that the assessee filed its return of income for the assessment year under consideration on 30.9.2009 declaring total income of Rs.14,56,08,016/-. The assessment was completed under section 143(3) on 8.12.2011 determining the total income at Rs. Rs.14,86,25,270/- after making disallowance of claim u/s 35D of Rs.5,35,279/- and disallowance of membership fees of Rs.24,81,975/-.

4. During the course of assessment proceedings, the AO found that the assessee has debited an amount of Rs.19,54,886/- under section 35D of the Act. The assessee was asked to furnish the details of the claim made u/s 35D of the Act. The assesse filed revised calculation and submitted that the claim was made wrong and excess to the tune of Rs.5,35,279/- as correct claim came to Rs.14,19,607/- whereas the claim as made was u/s 35D of the Act was Rs. 19,54,886/-. The facts is discussed by the AO in para 5 at page 2 of the assessment order. The AO issued show cause notice to the assessee as to why the penalty should not be imposed in respect of excess claim of deduction u/s 35D of the Act which was replied by the assessee vide letter dated 1.2.2013 submitting therein that the assessee suo mottu revised the claim u/s 35D during the course of assessment proceedings which has been incorporated in the assessment order. Since the assessee has suo mottu revised the claim u/s 35D of the Act, there cannot be any concealment of income or furnishing inaccurate particulars of income which warrants initiation of penalty proceedings. However, the AO brushed aside the submissions of the assessee and came to the conclusion that the assessee has furnished inaccurate particulars of income by filing wrong claim u/s 35D and levied penalty equal to 100% of the tax sought to be evaded amounting to Rs.165,401/- vide order dated 228.1.2014 passed under section 271(1)( c) of the Act. Aggrieved by the order of AO, the assessee preferred an appeal before the ld.CIT(A), who also dismissed the appeal of the assessee by holding that the assessee has furnished inaccurate particulars of income and uphold the action of the AO by relying on the order of Hon’ble Apex Court in the case of MAK Data Limited (2013) 38 taxmann.com 448 and after considering the submissions made by the assessee and by giving the detailed findings and decision as incorporated in para 5 of the appellate order after following various decisions passed by the Hon’ble Apex Court.

5. The ld. AR reiterated the his submissions as made before the AO and the ld.CIT(A) and submitted that the penalty has been wrongly imposed by the AO and sustained by the ld. CIT(A) in the given facts as the assessee has suo mottu filed revised calculation of claim u/s 35D which was incorporated by the AO in the assessment order as stated hereinabove and difference of Rs.5,35,279/- was added to the income of the assessee. The ld. Counsel submitted that the said mistake and wrong claim had occurred due to inadvertent mistake in calculation of expenses which was also certified by the Chartered Accountant of the assessee. The ld. AR submitted that the assessee under bonafide belief claimed deduction u/s 35D and the said claim u/s 35D also recalculated and placed before the AO during assessment proceedings by the assessee itself. The ld. Counsel submitted that the order passed by the ld. CIT(A) is wrong and passed on the basis of decision of Hon’ble Apex Court which were distinguishable on facts as discussed in the case of CIT Vs Zoom Communication Pvt. Ltd. 327 ITR 510 (SC) and the case law relied by the ld.CIT(A) in the case of MAK Data Limited(supra). In defence, the ld.counsel of the assessee relied upon the number of decisions namely: a) Price Waterhouse Coopes P Ltd V/s CIT (348 ITR 306(SC); b) CIT V/s Reliance Petroproduct Pvt.Ltd -322 ITR 158 (SC); c) CIT V/s Aditya Birla Nova Limited (82 CCH 206 (Bom) etc;

6. The ld. DR vehemently opposed the submissions of the ld. AR and heavily relied on the orders of authorities below. The ld. DR submitted that wrong claim was made with the intention to suppress the profit of the assessee and therefore liable for penalty u/s 271(1)( c ) of the Act which was rightly imposed by the AO and sustained by the ld.CIT(A). Finally urged that the penalty imposed by the AO and confirmed by the ld. CIT(A) be upheld.

7. We have carefully considered the rival submissions and perused the material available before us. We have also gone through the orders of authorities below and decisions relied upon by the parties. We find from the record that the assessee has made claim u/s 35D of the Act which was reduced during the course of assessment proceedings when the assessee filed revised calculation u/s 35D and thus the difference of Rs.5,35,279/- was added to the income of the assessee. We find that the claim of the assessee was also certified by the Chartered Accountant of the assessee and find merit in the submissions of the ld. AR that it was claimed under bonafide belief. The case of the assessee find strong support from number of decisions as placed before the Bench during the course hearing. In the case of Price Waterhouse Coopers Pvt.Ltd, the Hon’ble Supreme Court has held as under : Held : The fact that the Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable u/s 40A(7) indicates that the assessee made a computation error in its return of income. Apart from the fact that the assessee did not notice the error, it was not even noticed even by the AO seems to have made a mistake in overlooking the contents of the Tax Audit Report. The contents of the Tax Audit Report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. It appears that all happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The calibre and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Given the peculiar facts of this case, the imposition of penalty on the assessee is not justified. The assessee had committed an inadvertent and bonafide error and had not intended to or attempted to either conceal is income or furnish inaccurate particulars. Under these circumstance, the appeal was allowed and he order passed by the Calcutta High Court was set aside” In the case of Reliance Petroproduct (supra), the Hon’ble Supreme Court held as under :

“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 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. Therefore, it is obvious that it must be shown that the conditions under Section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. –CIT V/s Atul Mohan Bindal (2009) 225 CTR (SC) 248: (2009) 28 DTR (SC) 1 : (2009) 9SCC 589 followed: Reading the words “ inaccurate” and “particulars” in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty under Section 271(1)(c). If the contention of the Revenue is accepted then in the case of every return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. The Tribunal, as well as, the Commissioner of Income Tax (Appeals) and the High Court have correctly reached this conclusion.- Sree Krishna Electricals V/s State of Tamil Nadu and Anr (2009) 23 VST 249 (SC) applied; Reliance Petroproducts (P) Ltd (judgment dated 23rd Oct, 2007 of the Gujara High Court in Tax Appeal No.1149 of 2007) affirmed”