ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2(1), KONDAPUR vs. HYMA DEVELOPERS PRIVATE LIMITED (FORMERLY KNOWN AS DLF HOMES KOKAPET PVT. LTD.), MADHAPUR

Assessee is a company. It filed its Return of Income for the AY 2012- 13, declaring a loss of Rs. 5,42,39,733/- inclusive of interest claimed as revenue expenditure Rs. 4,63,68,948/-. Assessment u/s 143(3) of the Income Tax Act, 1961 (for short “the Act”) was completed on 25.02.2015 at a loss of Rs.(-) 5,11,506/- as against the returned loss of Rs.(-) 5,42,39,733/- thereby making disallowance on account of interest expenses to the tune of Rs.4,63,35,631/- and commission and brokerage expenses to the tune of Rs.73,59,279/-. Aggrieved by the order of the learned Assessing Officer, the assessee preferred appeal before the learned CIT(A), who by his order in Appeal No. 45/2015-16 dated 03.02.2017, inter alia, sustained said addi�ons which were subjected to ini�a�on of penalty proceedings u/s 271(1)(c) of the Act for furnishing inaccurate par�culars of income and concealment of income. Learned Assessing Officer, accordingly, levied penalty of Rs.1,50,44,405/- u/s 271(1)(c) of the Act @ 100% of the tax evaded for concealment of its true income and for furnishing inaccurate par�culars of income as the assessee failed to substan�ate its claim at the �me of assessment proceedings as well as at the �me of penalty proceedings.

Aggrieved, assessee preferred appeal before the learned CIT(A) challenging the levy of penalty sta�ng that all the par�culars were furnished before the learned Assessing Officer and it is only on verifying those par�culars learned Assessing Officer made certain disallowances and therefore, the case does not fall in the category of either concealment of income or furnishing of inaccurate par�culars. Assessee also pleaded that for the assessment year 2011-12 a similar penalty was levied and it was deleted by the learned CIT(A) in appeal holding that the case does not fall in either of the categories.

Learned CIT(A), based on the order passed by the Assessing Officer for the assessment year 2011-12 in assessee’s own case levying penalty, and held that it is not a fit case for levy of penalty as it could not be said that the assessee had furnished inaccurate par�culars of income or had concealed the par�culars of income and accordingly, penalty levied by the AO is liable to be deleted.

According to the learned DR, making a wrong claim also amounts to furnishing of inaccurate par�culars and thereby concealment of income and on that score he jus�fied the orders of the authori�es. 7. We have gone through the record in the light of the submissions made on either side. It is an admi�ed fact that as against the loss of ₹ 5, 42,39,733/-claimed by the assessee in the return of income, learned Assessing Officer completed the assessment at a loss of ₹ 5, 11, 406/- and in that process may disallowance on account of interest of expenses to the tune of ₹ 4, 63, 35, 631/-and commission and brokerage expenses to the tune of ₹ 73, 59, 279/-. It’s not the case of the Revenue that the assessee failed to show these expenses while compu�ng the income are that it is only during the assessment proceedings such a fact is unearthed for the 1st �me by the learned Assessing Officer. Assessee furnished in fact all these figures and it is only a�er considering them the learned Assessing Officer disallowed certain expenses claimed by the assessee. 8. In this context we would like to refer to the decision of the Delhi High Court in CIT vs. DCM Limited(2013) 359 ITR 0101 (Delhi), wherein the Hon’ble High Court of Delhi held that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible; that when such a claim is made during the course of regular or scru�ny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scru�nized both on facts and in law; that full probe and appraisal is natural and normal; that threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be