Optimum Media Services Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 3325/DEL/2011 | 2007-2008
Pronouncement Date: 18-11-2011 | Result: Allowed

Appeal Details

RSA Number 332520114 RSA 2011
Assessee PAN AAACO7982L
Bench Delhi
Appeal Number ITA 3325/DEL/2011
Duration Of Justice 4 month(s) 25 day(s)
Appellant Optimum Media Services Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 18-11-2011
Date Of Final Hearing 02-11-2011
Next Hearing Date 02-11-2011
Assessment Year 2007-2008
Appeal Filed On 23-06-2011
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `I : NEW DELHI) BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO.3325/DEL./2011 (ASSESSMENT YEAR : 2007-08) OPTIMUM MEDIA SERVICES PVT. LTD. VS. DCIT CIRCL E 13(1) C/O O.P. SAPRA & ASSOCIATES NEW DELHI. C-763 NEW FRIENDS COLONY NEW DELHI-110025. (PAN/GIR NO.AAACO7982L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJIV SAPRA/SHRI O.P. SAPRA AD V. REVENUE BY : SHRI A.K. MONGA SR.DR ORDER PER K.D. RANJAN: AM THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 07-08 ARISES OUT OF ORDER OF CIT(A)-XVI NEW DELHI. THE ONLY ISSUE FOR CONSIDER ATION RELATES TO LEVY OF PENALTY U/S 271(1)(C) OF THE I.T. ACT 1961. 2. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT R ETURN OF LOSS OF RS.11 867/- WAS FILED ON 25.10.2007. THE ASSESSMENT U/S 143(3) WAS MADE ON 4.12.2009 AT AN INCOME OF RS.1 84 200/- AFTER DISALLOWANCE OF PRELIMINARY EXP ENSES WRITTEN OFF AMOUNTING TO RS.1 73 337/-. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER THAT FOR ASSESSMENT YEAR 2006-07 THE ASSESSMENT WAS COMPLETED U/S 143(3) AFTER DISALLOWING ROC EXPENSES OF RS.1 72 98 3/- U/S 35D OF THE ACT AND AFTER CAPITALIZING PROFESSIONAL FEE OF RS.23 400/- PAID F OR INCORPORATION OF THE COMPANY. THEREFORE IN THE YEAR UNDER CONSIDERATION THERE W AS NO BROUGHT FORWARD LOSSES AVAILABLE TO THE ASSESSEE AND ROC EXPENSES OF RS.1 72 337/- W ERE ALSO REQUIRED TO BE ADDED BACK TO THE TOTAL INCOME. THE ASSESSEE HOWEVER DID NO T ADD BACK THE ROC EXPENSES TO THE TOTAL INCOME AND THE BENEFIT OF BROUGHT FORWARD LOS SES FOR ASSESSMENT YEAR 2006-07 WAS ALSO CLAIMED. DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE ASSESSEE FILED REVISED COMPUTATION OF INCOME WHEREIN PRELIMINARY EXPENSES WRITTEN OFF OF RS.1 72 337/- AND I.T.A. NO.3325/DEL./2011 (A.Y. : 2007-08) 2 2 BENEFIT OF BROUGHT FORWARD LOSSES WAS WITHDRAWN. D URING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSING OFFICER INVOKED PROVISIO NS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT HE PLACED RELIANCE ON THE DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ESCORTS FINANCE LTD. 226 CTR 1 05(DEL.) FOR THE PROPOSITION THAT IN CASE OF FALSE CLAIM PENALTY U/S 271(1)(C) WAS LEVI ABLE. THE ASSESSING OFFICER ALSO PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. VIDYAGAURI NATVERLAL & ORS. (1999) 153 CTR (GUJ.) 546 FOR THE PROPOSITION THAT IN CASE OF FALSE CLAIM PENALTY U/S 271(1)(C) WILL BE ATTRACTED. TH E ASSESSING OFFICER THEREFORE IMPOSED THE PENALTY EQUIVALENT TO 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. 3. ON APPEAL IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE CLAIMED ROC EXPENSES OF RS.1 72 337/- U/S 35D OF THE ACT AND BR OUGHT FORWARD LOSSES OF EARLIER YEARS WHICH WAS VOLUNTARILY WITHDRAWN BY THE ASSESSEE BY FILING REVISED COMPUTATION. HOWEVER THIS CONTENTION OF THE ASSESSEE WAS REJECT ED BY CIT(A) ON THE GROUND THAT THE ASSESSEE REVISED COMPUTATION OF INCOME ONLY WHEN QU ESTIONNAIRE DATED 18.9.2009 WAS ISSUED BY THE ASSESSING OFFICER REQUIRING THE ASSES SEE INTER ALIA TO JUSTIFY THE SAME. THEREFORE IT COULD NOT BE SAID THAT THE ASSESSEE H AD VOLUNTARILY OFFERED TO ADD BACK TO ITS INCOME THE EXCESS CLAIM OF ROC EXPENSES AND BROUGH T FORWARD LOSSES. THEREFORE PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSABLE. TH E CIT(A) ACCORDINGLY UPHELD THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 4. BEFORE US LD.AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE INCURRED ROC EXPENSES IN RESPECT OF INCREASE OF AUTHORIZED SHARE CAPITAL DURING THE PREVIOUS YEAR RELEVANT ASSESSMENT YEAR 2006-07. THE ASSESSEE AMO RTIZED THE PRELIMINARY EXPENSES AND CLAIMED 1/10 TH OF THE EXPENSES IN ASSESSMENT YEAR 2006-07. IN AS SESSMENT YEAR 2007-08 ASSESSEE ALSO CLAIMED 1/10 TH OF EXPENSES AMOUNTING TO RS.1 72 337/-. THE ASSES SEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 25.10.2007 WHEREIN DEDUCTION U/S 35D OF THE ACT AND BROUGHT FORWARD LOSSES WERE CLAI MED. THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07 DISALLOWING THE CLAIM OF ASSESSEE U/S 35D WAS MADE ON 17.10.2008. THE ASSESSEE FILED LETTER REVISING COMPUTATION OF INCOM E VIDE LETTER DATED 14.10.2009. THEREFORE IT WAS SUBMITTED THAT RETURN OF INCOME C LAIMING THE BENEFIT U/S 35D AND OF BROUGHT FORWARD LOSSES WERE FILED MUCH BEFORE THE A SSESSMENT WAS MADE FOR ASSESSMENT I.T.A. NO.3325/DEL./2011 (A.Y. : 2007-08) 3 3 YEAR 2006-07 DISALLOWING THE CLAIM OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT IN ASSESSMENT YEAR 2006-07 NO PENALTY WAS IMPOSED FOR SIMILAR DEFAULT ON THE PART OF THE ASSESSEE. THE ASSESSEE WAS UNDER BONAFIDE BELIEF A T THE TIME OF FILING OF THE RETURN THAT DEDUCTION U/S 35D OF THE ACT IN RESPECT OF PRELIMIN ARY EXPENSES WAS ALLOWABLE AS DEDUCTION. HE ALSO SUBMITTED THAT NO SPECIFIC QUER Y WAS RAISED BY THE ASSESSING OFFICER BECAUSE OF WHICH THE ASSESSEE FILED REVISED COMPUTA TION OF INCOME. THE ASSESSEE HAS DISCLOSED ALL FACTS IN THE RETURN OF INCOME. IT WA S NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEBITED THE EXPENSES UNDER DI FFERENT HEADS WHICH WAS NOT IDENTIFIABLE ON PERUSAL OF THE RETURN OF INCOME. LD .AR OF THE ASSESSEE ALSO SUBMITTED THAT THE DECISION OF HONBLE DELHI HIGH COURT IN TH E CASE OF ESCORTS FINANCE LTD. IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE AS I N THAT CASE THE ASSESSEE MADE FRAUDULENTLY BOGUS CLAIM. IN THE CASE OF THE ASSES SEE ASSESSEE HAD CLAIMED DEDUCTION BASED ON VARIOUS DECISIONS. LIKEWISE THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF VIDYAGAURI NATVERLAL & ORS. (SUPRA) WAS ALS O DISTINGUISHABLE ON FACTS. LD.AR OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF DEL HI HIGH COURT IN THE CASE OF CIT VS. BRAHMAPUTRA CONSORTIUM LTD. WHEREIN ON IDENTICAL F ACTS THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT HELD TO BE LEVIABLE. LD.AR OF THE ASSE SSEE FURTHER SUBMITTED THAT CLAIM OF THE ASSESSEE WAS BONA FIDE AND THEREFORE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT IMPOSABLE. 6. ON THE OTHER HAND LD.DR. SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ABOUT THE FACTS THAT THE ASSESS EE HAD INCURRED EXPENDITURE BY WAY OF ROC EXPENSES IN ORDER TO INCREASE AUTHORIZED SHARE CAPITAL. THE ASSESSEE IN THE RETURN OF INCOME HAD CLAIMED DEDUCTION U/S 35D OF THE ACT FOR ASSESSMENT YEAR 2006-07 AND ALSO FOR ASSESSMENT YEAR FOR CONSIDERATION I.E. 2007-08. IT IS ALSO A FACT THAT ASSESSING OFFICER WHILE COMPLETING ASSESSMENT FOR ASSESSMENT YEAR 200 6-07 ON 17.10.2008 HAD DISALLOWED THE CLAIM U/S 35D OF THE ACT. THE ASSESSEE HAD FIL ED RETURN OF INCOME ON 25.10.2007 MUCH BEFORE THE DATE OF ASSESSMENT ORDER FOR ASSESS MENT YEAR 2006-07. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD FIL ED REVISED COMPUTATION WITHDRAWING THE CLAIM FOR DEDUCTION U/S 35D OF THE ACT. THE AS SESSEE VIDE LETTER DATED 14.10.2009 HAD I.T.A. NO.3325/DEL./2011 (A.Y. : 2007-08) 4 4 INDICATED THAT REVISED COMPUTATION OF INCOME WAS BA SED ON ASSESSMENT ORDER DATED 17.10.2008 PASSED FOR ASSESSMENT YEAR 2006-07. WE HAVE ALSO GONE THROUGH THE P&L A/C FOR ASSESSMENT YEAR 2007-08 WHEREIN ASSESSEE HA D CLAIMED PRELIMINARY EXPENSES WRITTEN OFF AT RS.1 72 337/-. THEREFORE IN THE RE TURN OF INCOME FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE. THE ASSESSEE REVISED THE COMPUTAT ION IN VIEW OF THE FACT THAT DISALLOWANCE U/S 35D OF THE ACT WAS MADE BY THE ASS ESSING OFFICER IN ASSESSMENT YEAR 2006-07. FROM ABOVE FACTS IT IS EVIDENT THAT ASSE SSEE HAD NOT CLAIMED DEDUCTION U/S 35D OF THE ACT FRAUDULENTLY OR BOGUS CLAIM WITHOUT INC URRING THE EXPENDITURE. MERELY BECAUSE DISALLOWANCE OF CLAIM HAS BEEN MADE IN ASSE SSMENT YEAR 2006-07 AND ASSESSEE HAD REVISED THE COMPUTATION OF INCOME BASED ON THE ORDER FOR ASSESSMENT YEAR 2006-07 FOR THE YEAR UNDER CONSIDERATION IN OUR CONSIDERE D OPINION PENALTY U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE. 8. ASSESSEES CASE IS COVERED BY THE DECISION OF HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BRAHMAPUTRA CONSORTIUM LTD. IN I.T. A. NO.1582 OF 2010 DATED 3.8.2011. IN THIS CASE A FEE OF RS.1.59 LAKHS WAS PAID TO RE GISTRAR OF COMPANIES FOR INCREASING AUTHORIZED CAPITAL. THE ASSESSEE CLAIMED THE SAME AS REVENUE EXPENDITURE. THE ASSESSING OFFICER DISALLOWED THE SAME FOLLOWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PSIDC LTD. VS. CIT 225 I.T.R. 792. THE ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. ON APPEAL THE CI T(A) CONCURRED WITH THE APPROACH OF THE ASSESSING OFFICER HOLDING THAT IN VIEW OF EX PLANATION 1 TO SECTION 271(1)(C) OF THE ACT DISALLOWANCE OF THE CLAIM OF ROC FEE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICULARS HAD BEEN CONCEALED BY THE ASSESSEE WITH IN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND HENCE ASSESSEE WAS LIABLE FOR PENALTY. ON FURTHER APPEAL ITAT CANCELLED THE PENALTY ON THE GROUND THAT THE EXPLANATION GIVEN BY THE ASSESSEE COULD NOT BE CALLED MALA FIDE AND NO PARTICULARS WERE CONCEALED BY THE ASSES SEE IN THIS BEHALF. ON APPEAL HONBLE DELHI HIGH COURT HELD THAT ASSESSING OFFICER WAS NO T CORRECT IN HOLDING THAT SUBMITTING INACCURATE CLAIM WOULD AMOUNT TO GIVING AN INACCURA TE PARTICULARS. THE CONTENTION OF THE REVENUE WAS REJECTED IN VIEW OF THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT PVT. LTD. 322 I.T.R.158. I N THE CASE OF THE ASSESSEE ASSESSEE HAD CLAIMED DEDUCTION U/S 35D OF THE ACT ON BONA FIDE BELIEF THAT THE ASSESSEE WILL BE ELIGIBLE FOR DEDUCTION WHICH WAS HOWEVER DISALLOWE D IN EARLIER ASSESSMENT YEARS. THE I.T.A. NO.3325/DEL./2011 (A.Y. : 2007-08) 5 5 ASSESSEE HAD NOT CLAIMED BOGUS DEDUCTION WITHOUT IN CURRING THE EXPENDITURE. THEREFORE IN OUR CONSIDERED OPINION ASSESSEES CASE IS COVER ED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF BRAHMAPUTRA CONSORTIUM LT D. (SUPRA). SINCE THE CLAIM OF THE ASSESSEE FOR DEDUCTION IS NOT MALA FIDE IT IS HELD THAT THE PENALTY U/S 271(1)(C) IS NOT IMPOSABLE. WE ACCORDINGLY CANCEL THE PENALTY IMPOS ED U/S 271(1)(C) OF THE ACT. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18.11.2011. SD/- SD/- (DIVA SINGH) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED NOV. 18 2011. SKB COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVI NEW DELHI 5.CIT(ITAT) NEW DELHI. AR/ITAT