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Income Tax Appellate Tribunal, DELHI BENCH: ‘H’ NEW DELHI
Before: SHRI H. S. SIDHU & SHRI O.P. KANT
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘H’ NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA Nos. 132 & 133/Del /2011 Assessment Year: 1990-91
M/s Video Electronics Pvt. Ltd. Vs. D.C.I.T., E-45/7, Okhla Industrial Area, Circle-17(1), Phase-2, New Delhi – 20 New Delhi (PAN:AAACVO886C) (Appellant) (Respondent)
Appellant by : Sh. Gurjeet Singh, CA & Sh. Mukesh Sharma, CA Respondent by: Sh. Sarabjeet singh, Sr. DR
Date of hearing : 15-02-2016 Date of pronouncement: 03-03-2016
ORDER PER H.S. SIDHU, J.M.: These are two appeals filed by the assessee against the separate orders passed by the Ld. CIT(A) under section 254/143(3)/147 of the Income Tax Act, 1961 on 16.9.2010 in quantum Appeal in which the Assessee has challenged the additions made by the AO which was confirmed by the Ld. CIT(A) and in another Order dated 23.9.2010 passed by the Ld. CIT(A) under section 271(1)(c) upholding the penalty levied by the AO. Since the issues involved in both the appeals are inter-connected, hence, we are disposing of these appeals by passing this consolidated order for the sake of convenience. 2. The grounds raised in ITA No. 132/Del/2011 (AY 1990-91) read as under:-
2 “1. The Ld. CIT(A) confirmed the order of the AO enhancing the assessed income by rectifying his own order passed u/s. 254/147 of the Income Tax Act on 16.3.2009 without giving any opportunity to your appellant. 2. The Ld. CIT(A) confirmed the order of the AO in disallowing the claim of Rs. 8.15 lacs in the assessment year 1990-91 as per provisions of Section 32AB of the Income Tax Act restored back by ITAT. 3. The Ld. CIT(A) erred in not considering the order of the Judicial Member of ITAT, wherein he has directed the CIT(A) to decide on merit the issue involved in regard to the allowing deduction of Revised Claim u/s. 80I. 4. The Ld. CIT(A) erred in calculating the charging of interest u/s. 234A, 234B, 234C restored by ITAT to decide afresh in terms of the guidelines laid down by the Special Bench of the Tribunal in the case of Motorola Inc. vs. DCIT reported in (2005) 95 ITD 269 (Del.) (SB). Your appellant craves leave, add, alter, amend, substitute, or omit any or all of the aforesaid grounds of appeal before or at any time of hearing of the Appeal as they may be advised. ITA NO. 132/DEL/2011 (AY 1990-91)
The brief facts of the case are that the return of income declaring total income at Rs. 33,86,260/- was filed by the assessee on 31.12.1990. Assessment was completed u/s. 143(3) of the Act vide order dated 29.3.1999 determining total income at Rs. 37,01,970/-. Thereafter, proceedings u/s. 147 were initiated and order u/s. 144/148 was passed by the then AO on 12.1.2000 determining total income at Rs. 1,29,63,216/- by making various additions. Against the order of the AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 19.2.2001 while upholding the reassessment, had confirmed the additions and dismissed the appeal of the assesse. Against the order of the Ld. CIT(A), assessee appealed before the Tribunal. In the Tribunal
3 the Judicial Member passed the order against the assessee and the Accountant Member passed the order in favour of the assessee. The matter was referred to the Third Member, and the Third Member confirmed the order of the Judicial Member. In the quantum order and the Tribunal vide order 15.7.2008 confirmed that as the Third Member has agreed with the views taken by the Judicial Member and hence as per the majority view all the three appeals of the assessee were partly allowed. Accordingly, In the second round the AO passed the consequential order dated 20.3.2009 giving the effect to the directions of the ITAT which was impugned and made the additions again against which the Assessee again appealed before the Ld. CIT(A) who vide order date 16.9.2010 has partly allowed the appeal of the assessee. Now again the Assessee is aggrieved with the order of the Ld. CIT(A) and filed the Appeal before the Tribunal being ITA No. 132/Del/2011 (AT 1990-91).
At the time of hearing, Shri Gurjeet Singh, CA/Authorised Representative of the Assessee made a statement that he is withdrawing the Quantum Appeal i.e. ITA No. 132/Del/2011 (AY 1990-91) filed by the assessee.
4.1 On the other hand, Ld. DR has not raised any objection on the withdrawal of the quantum Appeal filed by the Assessee.
Keeping in view of the Statement made by the Ld. Authorised Representative of the Assessee, Shri Gurjeet Singh, CA for withdrawal of the Quantum Appeal and no objection raised by the Ld. DR, the Appeal of the Assessee is dismissed as Withdrawn.
PEANLTY APPEAL BEING ITA NO. 133/DEL/2011 (AY 1990-91 6. The grounds raised in ITA No. 133/Del/2011 (AY 1990-91 read as under:-
4 “1. The Ld. CIT(A) erred in confirming penalty (wrongly mentioned in the grounds of appeal as deleting penalty) imposed by AO u/s. 271(1)(c) of the Income Tax Act, without considering the facts of the case. Your appellant craves leave, add, alter, amend, substitute, or omit any or all of the aforesaid grounds of appeal before or at any time of hearing of the Appeal as they may be advised.” 7. The brief facts of the case are that the return of income declaring total income at Rs. 33,86,260/- was filed by the assessee on 31.12.1990. Assessment was completed u/s. 143(3) of the Act vide order dated 29.3.1999 determining total income at Rs. 37,01,970/-. Thereafter, proceedings u/s. 147 were initiated and order u/s. 144/148 was passed by the then AO on 12.1.2000 determining total income at Rs. 1,29,63,216/- by making various additions. Against the order of the AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 19.2.2001 while upholding the reassessment, had confirmed the additions and dismissed the appeal of the assesse. Against the order of the Ld. CIT(A), assessee appealed before the Tribunal. In the Tribunal the Judicial Member passed the order against the assessee and the Accountant Member passed the order in favour of the assessee. The matter was referred to the Third Member, and the Third Member confirmed the order of the Judicial Member. In the quantum order and the Tribunal vide order 15.7.2008 confirmed that as the Third Member has agreed with the views taken by the Judicial Member and hence as per the majority view all the three appeals of the assessee were partly allowed. After receipt of the order of the ITAT, the AO passed the consequential order dated 20.3.2009 giving effect to the directions of the ITAT. The AO has taken the following additions / disallowances for levy of penalty vide the impugned order dated 30.3.2009 and imposed the penalty of Rs.51,49,038/-.
5 i) Disallowance of depreciation of Rs. 28,36,166/- (wrongly mentioned as Rs. 14,18,296/- in the impugned order.)
ii) Consultancy charges paid to M/s Esskay Financial Consultants of Rs. 2,12,750/-.
iii) Withdrawal of deduction u/s. 32AB for Rs. 8,15,000/-.
iv) Withdrawal from IDBI for non business purposes Rs. 55,00,000/-
Against the above Penalty Order dated 30.3.2009 passed by the Assessing Officer, assessee appealed before the Ld. First Appellate Authority, who vide impugned order dated 23.9.2010 dismissed the appeal of the assessee.
Against the above order of the Ld. CIT(A) dated 23.9.2010, assessee is in appeal before the Tribunal.
Ld. Counsel of the assessee stated that Ld. CIT(A) has erred in upholding the penalty imposed by the AO U/s. 271(1)(c) of the I.T. Act, 1961 and without considering the facts of the case. He also stated that it is now a settled proposition of law that findings in the quantum proceedings may be good enough for refusing the assessee’s claim but were not sufficient for levying penalty for concealment of income. Hence, he requested that penalty imposed by the AO and confirmed by the ld. CIT(A) may be deleted. In support of his contention, he placed reliance on the following decisions:-
a) Reliance Industries Ltd. Vs. ACIT (2013) 38 CCH 17 (Mum Tb)
b) CIT vs. Rampur Engg. Ltd. (2010) 187 Taxman 171 (Delhi)
6 c) Shree Commercial Ltd. Vs. CIT (2009) 308 ITR 0406 (Mumbai High Court)
d) DCIT vs. Saraya Industries Ltd. (2006) 104 TTJ 213 (Delhi)
e) CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC).
On the other hand, Ld. DR relied upon the order of the authorities below and requested that the Appeal of the Assessee may be dismissed.
We have heard both the parties and perused the records, especially the orders of the authorities below.
12.1 We find that Ld. CIT(A) has observed that the AO has conclusively proved that the assessee has made false claims of depreciation, legal, and professional charges and deductions u/s. 32AB in respect of purchase and lease of computers, which transaction was found to be sham transaction by all the fact fidning authorities, to evade the taxes. There was a deliberate attempt to defraud the Revenue. The findings of the AO were not at all controverted by the assessee and held that AO was justified in levying the penalty u/s. 271(1)(c) of the Act and directed him to re-computed the penalty after taking into account the depreciation claim of Rs. 28,36,166/- in place of Rs. 14,18,296/- as wrongly adopted in the penalty order and dismissed the appeal of the assessee.
After perusing the finding of the AO made in his penalty order as
well as finding in impugned order of the Ld. CIT(A), we are not in
agreement with the finding of the Ld. CIT(A), because the mere fact
that an addition is confirmed in quantum proceedings cannot be
conclusive of the imposition of penalty. The Hon’ble Calcutta High
Court in Durga Kamal Rice Mill vs. CIT (2004) 265 ITR 25 (Cal), has
held that quantum proceedings are different from penalty proceedings.
The Hon’ble Kerala High Court in CIT vs. P.K. Narayanan (1999) 238
ITR 905 (Ker.), has held that despite the addition being confirmed by
the Tribunal in quantum proceedings, the penalty can still be deleted
by the Tribunal, if the facts justify.
13.1 We further find that AO observed that assessee furnished
inaccurate particulars of its income and is liable for penalty u/s
271(1)(c), which did not establish that how the assessee has furnished
inaccurate particulars of its income. In our view, as regards the
furnishing of inaccurate particulars, no information given in the
return was found to be incorrect or inaccurate. We further find that
section 271(1)(c) postulates imposition of penalty for furnishing of
inaccurate particulars and concealment of income. In this regard, we
draw our support from the decision of the Hon'ble CIT vs. Reliance
Petroproducts Pvt. Ltd. (2010) 322 ITR-158 (SC) wherein the Hon'ble
Supreme Court has held that 'where there is no findings that any
details supplied by the assessee in its return are found to be incorrect or
erroneous or false, there isno question of inviting the penalty u/sec.
271(1)(c) of the Act. A mere making a claim, which is not sustainable in
law, by itself, will not amount of furnishing inaccurate particulars
regarding the income of the assessee. Such claim made in the return
cannot amount to furnishing a inaccurate particulars of income. As the
assessee has 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, in our opinion, attract the penalty u/sec. 271(1)(c). If we
accept the contention of the Revenue then in case of every return where
the claim made is not accepted by the Assessing Officer for any reason,
the assessee will invite penalty u/sec. 271(1)(c). That is clearly not the
intendment of the Legislature".
13.2 In the background of the aforesaid discussions and precedent,
we are of the considered view that the assessee has not furnished
inaccurate particulars of income and there are no findings of the
Assessing Officer and the CIT (Appeals) that the details furnished by
the assessee in his return are found to be inaccurate or erroneous or
false. Under these circumstances, in our view the penalty in dispute is
totally unwarranted and deserve to be deleted. Accordingly, we delete
the penalty in dispute made u/s. 271(1)(c) of the I.T. Act and
quashed the orders of the authorities below on the issue in dispute
and allow the appeal filed by the assessee.
9 14. In the result, the Assessee’s Quantum Appeal being ITA No. 132/Del/2011 (AY 1990-91) is dismissed as withdrawn and the Assessee’s Penalty Appeal being ITA No. 133/Del/2011 (AY 1990-91) stands allowed.
Order pronounced in the Open Court on 03/03/2016. Sd/- Sd/-
[O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 03/03/2016
“SRB”