ACIT, New Delhi v. M/s. P.C. Bhandari & Co. Pvt. Ltd, New Delhi

ITA 1431/DEL/2009 | 2005-2006
Pronouncement Date: 23-04-2010 | Result: Dismissed

Appeal Details

RSA Number 143120114 RSA 2009
Bench Delhi
Appeal Number ITA 1431/DEL/2009
Duration Of Justice 1 year(s) 9 day(s)
Appellant ACIT, New Delhi
Respondent M/s. P.C. Bhandari & Co. Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 23-04-2010
Date Of Final Hearing 12-04-2010
Next Hearing Date 12-04-2010
Assessment Year 2005-2006
Appeal Filed On 13-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F DELHI) BEFORE SHRI A.D. JAIN AND SHRI R.C. SHARMA ITA NO. 1431(DEL)09 ASSESSMENT YEAR: 2005-06 ASSTT.COMMISSIONER OF INCOME TAX M/S. P.C. BHAN DARI & CO.PVT.LTD. CIRCLE 14(1) NEW DELHI. V. 45 G OLF LINK NEW DELHI. (APPELLANT) (RESPONDE NT) APPELLANT BY: SHRI H.K. LAL SR. DR RESPONDENT BY: SHRI V. K. AGGARWAL AR ORDER PER A.D. JAIN J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2005-06 TAKING THE FOLLOWING GROUND:- THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CA SE IN DELETING THE PENALTY OF RS. 2 26 619/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT 1961 WITHOUT APPR ECIATING THAT THE LATEST DECISION OF THE APEX COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277(SC) SQUARELY SUPPORTS THE STAND OF THE AO IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 2. THE FACTS ARE THAT THE ASSESSMENT IN THE ASSESSE ES CASE WAS COMPLETED AS A SCRUTINY ASSESSMENT AT NIL INCOME AS AGAINST A DECLARED LOSS ITA 1431(DEL)09 2 OF RS. 6 31 690/-. THE AO DISALLOWED THE BUSINESS LOSS CLAIMED BY THE ASSESSEE SINCE NO BUSINESS ACTIVITY HAD BEEN CARRI ED OUT DURING THE YEAR. IN THE PENALTY PROCEEDINGS THE ASSESSEE MAINTAINED THAT NEITHER ANY CONCEALMENT OF INCOME HAD BEEN RECOVERED IN THE ASS ESSMENT PROCEEDINGS NOR HAD THE ASSESSEE FURNISHED ANY INACCURATE PARTI CULARS OF INCOME; THAT THERE HAD BEEN NO MALA FIDE INTENTION ON THE PART O F THE ASSESSEE; THAT MERELY THERE WAS ANY DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO WITH REGARD TO THE CLAIM MADE BY THE ASSESSEE; A ND THAT THIS COULD NOT FORM THE BASIS OF LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT. THE ASSESSEE HAD SHOWN INCOME FROM INTEREST AND DI VIDEND AMOUNTING TO RS. 3 47 958/- PROFIT ON SALE OF INVESTMENT OF RS. 1 69 964/- AND OTHER INCOME OF RS. 94/- TOTAL AMOUNTING TO RS. 5 18 017/ -. IT WAS AGAINST THESE INCOMES THAT THE ASSESSEE HAD CLAIMED VARIOUS EXPEN SES. THE AO OPINED THAT PROFIT OR LOSS ON SALE/PURCHASE OF INVESTMENT IS CHARGED AS CAPITAL GAIN WHICH IS COMPUTED U/S 48 OF THE ACT HAVING A DIFFE RENT SET OF DEDUCTIONS PRESCRIBED UNDER THE ACT. THE AO OBSERVED THAT SI NCE THE ASSESSEE HAD EARNED INCOME WHICH DID NOT FORM PART OF ITS TOTAL INCOME THE CLAIM OF EXPENDITURE AGAINST SUCH INCOME WAS NOT ALLOWABLE AS NO BUSINESS ACTIVITY HAD BEEN CARRIED OUT; THAT THE CLAIM OF DEPRECIATIO N WAS ALSO NOT ALLOWABLE. THE AO HELD THAT THE ASSESSEE HAD CONCEALED ITS INC OME/HAD FURNISHED ITA 1431(DEL)09 3 INACCURATE PARTICULARS OF THE INCOME TO THE EXTENT OF RS. 6 31 690/-. THIS WAS HOW THE PENALTY OF RS. 2 26 619/- WAS LEVIED BY THE AO ON THE ASSESSEE. 3. BY VIRTUE OF THE IMPUGNED ORDER THE LEARNED CIT (A) DELETED THE PENALTY. THIS BRINGS THE DEPARTMENT IN APPEAL BEF ORE US. 4. CHALLENGING THE IMPUGNED ORDER THE LD. DR HAS C ONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY RIGHTL Y IMPOSED BY THE AO; THAT WHILE DOING SO THE LD. CIT(A) DID NOT APPRECI ATE THE DECISION OF THE HONBLE SUPREME COURT IN UNION OF INDIA AND OTHERS V. DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277(SC) W HICH SQUARELY SUPPORTS THE STAND OF THE AO IN LEVYING THE CONCEAL MENT PENALTY. IT HAS ALSO BEEN CONTENDED THAT THE FACT THAT NO APPEAL WA S PREFERRED BY THE ASSESSEE AGAINST THE ADDITION MADE BY THE AO IN THE ASSESSMENT PROCEEDINGS FURTHER GOES TO PROVE THAT THE PENALTY WAS CORRECTLY LEVIED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT FIRSTLY IT WAS A LOSS CASE AND IT WAS THEREFORE THAT THE ASS ESSEE DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENT ORDER; THAT THE ASSES SEE HAD MADE A BONA FIDE CLAIM OF CERTAIN EXPENDITURE WHICH WAS NECESSARY FO R THE DAY TO-DAY RUNNING OF THE COMPANY; THAT THESE EXPENSES WERE DI SALLOWED BY THE AO; ITA 1431(DEL)09 4 THAT IT WAS A CLEAR CASE OF DIFFERENCE IN OPINION R EGARDING THE CLAIM OF THE ASSESSEE; THAT THE ASSESSEE CONSIDERED THESE CLAIMS TO BE ALLOWABLE WHEREAS THE AO WAS OF THE VIEW THAT THEY WERE NOT A LLOWABLE; THAT EVEN THOUGH THERE WAS NO BUSINESS INCOME THE ASSESSEE C OMPANY HAD DURING THE YEAR INCOME FROM DIFFERENT SOURCES LIKE INTERE ST TAX FREE DIVIDENDS AND CAPITAL GAINS ETC.; THAT THIS GOES TO SHOW THAT TH E COMPANY WAS VERY MUCH IN EXISTENCE DURING THE YEAR; THAT THE COMPANY HAD FOR SURVIVAL TO INCUR VARIOUS EXPENSES; THAT THESE EXPENSES WERE NECESSIT ATED FOR CONTINUATION OF THE ASSESSEE COMPANY SO AS TO ENABLE IT TO MAKE EFF ORTS FOR BUSINESS WHICH IS ALSO EVIDENT FROM THE NATURE OF THE EXPENDITURE CLAIMED; THAT THE AO NOWHERE MADE IT OUT TO BE A CASE OF CLAIM OF BOGUS EXPENDITURE; THAT THE SOLE BASIS FOR THE DISALLOWANCE WAS THAT DURING THE YEAR THE ASSESSEE COMPANY HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY; AND THAT IT WAS IN THESE CIRCUMSTANCES THAT THE LD. CIT(A) DELETED THE PENAL TY AND RIGHTLY SO. THE LEARNED COUNSEL AS AGAINST DHARMENDRA TEXTILES PR OCESSORS AND OTHERS (SUPRA) HAS PLACED RELIANCE ON CIT AHMEDABAD V. RELIANCE PETROPRODUCTS PVT. LTD.. 6. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD WE DO NOT FIND THIS TO BE A FIT CASE FOR INTERFERING WITH THE WELL VERSED ORDER OF THE LD. CIT(A). OBVIOUSLY IT IS A CASE OF DIFFERENCE OF ITA 1431(DEL)09 5 OPINION BETWEEN THE ASSESSEE AND THE AO. THE ASSE SSEE CONSIDERED THE EXPENDITURE CLAIMED TO BE ALLOWABLE. THE AO ON THE OTHER HAND FELT OTHERWISE. THE CLAIM WAS DISALLOWED MERELY BECAUS E DURING THE YEAR THE ASSESSEE COMPANY DID NOT CARRY OUT ANY BUSINESS ACT IVITY. HOWEVER IT REMAINS UNDENIED THAT FOR THE VERY EXISTENCE OF THE ASSESSEE COMPANY CERTAIN EXPENSES HAD TO BE INCURRED. 7. THE LD. DR HAS SOUGHT TO PLACE RELIANCE ON UNIO N OF INDIA AND OTHERS V. DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277(SC) 306 ITR 277(SC) WHEREIN IT HAS BEEN HELD INTER ALIA THAT IN A CASE OF LEVY OF PENALTY FOR CONCEALING OR GIVING IN ACCURATE PARTICULARS WILFUL CONCEALMENT IS NOT ESSENTIAL FOR ATTRACTING THE CIVIL LIABILITY OF PENALTY; THAT THE EXPLANATIONS ADDED TO SECTION 271 (1)(C) OF THE I.T. ACT INDICATE THE ELEMENT OF CONSIDERING LIABILITY ON TH E ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING THE RETURN; AND THAT THE OBJECT BEHIND THE ENACTMENT OF SECTION 27 1(1)(C) READ WITH THE EXPLANATIONS INDICATES THAT THE SECTION HAS BEEN EN ACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. 8. DHARMENDRA TEXTILES PROCESSORS AND OTHERS (SUP RA) IT IS SEEN HAS BEEN CONSIDERED IN RELIANCE PETROPRODUCTS PVT. LTD.(SUPRA) IT HAS BEEN HELD IN RELIANCE PETROPRODUCTS PVT. LTD.(SU PRA) THAT IN ORDER TO BE ITA 1431(DEL)09 6 COVERED BY THE PROVISIONS OF SECTION 271(1)(C) OF T HE ACT THERE HAS TO BE A CONCEALMENT OF PARTICULARS OF ITS INCOME BY THE ASS ESSEE; THAT FURTHER THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME; THAT WHERE AS IN THAT CASE A STATEMENT MADE OR DETAILS SUPPLIED WERE NOT FOUND TO BE FACTUALLY INCORRECT AT LEAST PRIMA FACIE T HE ASSESSEE COULD NOT BE GUILTY OF FURNISHING INACCURATE PARTICULARS; THAT U NLESS THIS CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED; THAT BY ANY STRETCH OF IMAGINATION MAKING AN INCORRECT CLA IM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS; THAT THE AO HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULA RS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME; TH AT AS SUCH IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS U/S 271 ( 1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED; THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF ITS INCOME; THAT WHEN SUCH PARTICULA RS ARE FOUND TO BE INCORRECT THE LIABILITY WOULD ARISE; THAT THE ASS ESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT THE EXPLANATION IS NOT ONLY BO NA FIDE BUT THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF ITS INCOME WERE NOT DISCLOSED BY IT; THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER THE ASSESSEE H AS FURNISHED THE ITA 1431(DEL)09 7 PARTICULARS OF ITS INCOME; THAT IN DHARMENDRA TEXT ILES PROCESSORS AND OTHERS (SUPRA) IT WAS CONCLUDED THAT SINCE SECTIO N 271(1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETURN THE RE WAS NO MENS REA THAT THE OBJECT BEHIND THE ENACTMENT OF SECTION 271(1)( C) READ WITH THE EXPLANATION THERETO WAS FOR PROVIDING REMEDY FOR TH E LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AND THEREFORE WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABIL ITY; AND THAT IN DHARMENDRA TEXTILES PROCESSORS AND OTHERS (SUPRA) NO FAULT WAS FOUND WITH THE REASONING IN THE DECISION OF THE HONBLE S UPREME COURT IN DILIP N. SHROFF V. JOINT CIT BOMBAY AND ANOTHER 207 6 SCC 329 WHEREIN THE MEANING OF THE TERMS CONCEAL AND INACCURATE WAS EXPLAINED; THAT IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF (SUPRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE P ENALTY U/S 271(1)(C); THAT THE DECISION IN DILIP N. SHROFF (SUPRA) WAS OVERR ULED BASICALLY SINCE THE EFFECT AND DIFFERENCE BETWEEN SECTIONS 271(1)(C) AN D 276-C OF THE ACT WAS LOST SIGHT OF IN DILIP N. SHROFF; THAT INACCURAT E PARTICULARS MUST MEAN THE DETAILS SUPPLIED IN THE RETURN WHICH ARE NOT AC TUAL NOT EXACT OR CORRECT NOT ACCORDING TO TRUTH OR ERRONEOUS; THAT IN THAT C ASE [IN RELIANCE PETROPRODUCTS PVT. LTD.] THERE WAS NO FINDING THAT THE DETAILS SUPPLIED BY ITA 1431(DEL)09 8 THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INACCUR ATE OR ERRONEOUS OR FALSE; THAT SUCH NOT BEING THE CASE THERE WOULD BE NO QUE STION OF INVITING THE PENALTY U/S 271(1)(C) OF THE ACT; AND THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PART ICULARS. 9. THEREFORE AS SEEN ABOVE IN RELIANCE PETROPROD UCTS PVT. LTD.(SUPRA) IT HAS BEEN HELD UPON CONSIDERING D HARMENDRA TEXTILES PROCESSORS AND OTHERS (SUPRA) THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE AN D THAT SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULA RS. IN THE PRESENT CASE ALSO AS NOTED ABOVE IT WAS A MERE DIFFERENCE OF O PINION BETWEEN THE ASSESSEE AND THE AO REGARDING THE ALLOWABILITY OR O THERWISE OF THE EXPENSES CLAIMED BY THE ASSESSEE. THERE IS NO FIN DING FOR THE AO REGARDING THE ASSESSEE HAVING FURNISHED ANY INACCUR ATE PARTICULARS OF ITS INCOME IN THE RETURN OF INCOME FILED. THAT BEING SO CLEARLY CONCEALMENT PENALTY IS NOT ATTRACTED IN THE PRESENT CASE. ITA 1431(DEL)09 9 10. IN VIEW OF THE ABOVE DISCUSSION FINDING NO ER ROR WHATSOEVER IN THE ORDER OF THE LD. CIT(A) THE SAME IS HEREBY CONFIRM ED REJECTING THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT. 11. IN THE RESULT THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.04.2010 . SD/- SD/- (R.C. SHARMA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 .04.2010 *RM COPY FORWARDED TO: 1. ASSTT.COMMISSIONER OF INCOME TAX CIRCLE 14(1) NEW DELHI. 2. M/S. P.C. BHANDARI & CO.PVT.LTD. 45 GOLF LINK NEW DELHI. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR