ITO, New Delhi v. M/s. Metallica Industries Ltd, New Delhi

ITA 5151/DEL/2010 | 2000-2001
Pronouncement Date: 24-11-2011 | Result: Dismissed

Appeal Details

RSA Number 515120114 RSA 2010
Assessee PAN AAACM9033E
Bench Delhi
Appeal Number ITA 5151/DEL/2010
Duration Of Justice 1 year(s) 5 day(s)
Appellant ITO, New Delhi
Respondent M/s. Metallica Industries Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 24-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 24-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2000-2001
Appeal Filed On 19-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NOS. 5151 5152 & 5153/DEL/2010 ASSESSMENT YEARS: 2000-01 2002-03 & 2003-04 ITO VS. METALLICA INDUSTRIES LTD. WARD 6(4) 72 JANPATH NEW DELHI. NEW DELHI. AAACM9033E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.S. NEGI SR. DR RESPONDENT BY : DR. RAKESH GUPTA ADV. ORDER PER BENCH : - THESE ARE THE APPEALS AGAINST THE RESPECTIVE ORDER OF LD. CIT(A) WHEREIN IT HAS BEEN URGED THAT CIT(A) ERRED IN DELETING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. A.Y. 2000-01 PENALTY RS. 4 64 592/- A.Y. 2002-03 PENALTY RS. 4 17 823/- A.Y. 2003-04 PENALTY RS. 4 07 330/- SINCE FACTS IN THE 3 YEARS ARE IDENTICAL WE ARE ADJUDICATING THE ISSUE WITH REFERENCE TO FACTS AND FIGURES FOR ASSESSMENT YEAR 2000-01. 2. ORIGINAL ASSESSMENT IN THESE CASES WAS DONE U/S 143(3) IN WHICH INCOME BY WAY OF RENT FROM THE COMMERCIAL PREMISE ITA NOS. 5151 5152 & 5153/D/2010 2 WAS ASSESSED AS INCOME FROM HOUSE PROPERTY THOUGH IT WAS CLAIMED AS BUSINESS INCOME AS A RESULT OF WHICH EXPENSES CLAIMED WERE DISALLOWED. THE MATTER WAS ULTIMATELY AGITATED IN APPEAL BEFORE THE TRIBUNAL IN WHICH THE TRIBUNAL HELD THAT THOUGH INCOME IS TO BE ASSESSED UNDER HOUSE PROPER TY BUT ASSESSEE IS ENTITLED TO CLAIM ADMINISTRATIVE EXPENS ES WITH REFERENCE TO ASSESSEES HOLDING ON TO THE ASSETS. 3. THE ASSESSMENT ORDER GIVING EFFECT TO THE TRIBUN ALS ORDER WAS PASSED WHEREIN THE AO ALLOWED CERTAIN EXP ENSES TO THE TUNE OF RS. 8 09 671/-. THE APPEAL WAS FILED A ND LD. CIT(A) FURTHER ALLOWED THE EXPENSES ON SALARY & WAG ES IN ITS ENTIRETY. THE AO IMPOSED PENALTY U/S 271(1)(C) AT T HIS STAGE BASED ON THE ASSESSMENT ORDER DATED 30.09.2008 WHE REAS FURTHER EXPENSES WERE ALLOWED BY THE LD. CIT(A). SUBSEQUENTLY UPON ASSESSEES APPEAL LD. COMMISSIONE R OF INCOME TAX (APPEALS) DELETED THE LEVY OF PENALTY. 3.1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HE LD AS UNDER:- 3. I HAVE CONSIDERED THE ISSUE. IN CIT VS. ATUL MOHAN BIDNAL 317 ITR 1 (SC) THE APEX COURT HELD THAT FOR APPLICABILITY OF SECTION 271(1)(C) THE CONDITIONS STATED ITA NOS. 5151 5152 & 5153/D/2010 3 THEREIN MUST EXISTS. THE CONDITIONS ARE THAT THE ASSESSEE SHOULD HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BEFORE THE PENALTY U/S 271(1)(C) COULD BE LEVIED. THIS HAS BEEN REITERATED IN A RECENT DECISION OF THE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 WHEREIN HONBLE APEX COURT INTERPRETED THE MEANING OF THE EXPRESSIONS CONCEALMENT INACCURATE AND PARTICULARS USED IN CLAUSE (C) ;OF SEC. 271(1) AND HELD THAT EVERYTHING WOULD DEPEND UPON THE RETURN OF INCOME FILED BECAUSE THAT WAS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME. THE APEX COURT HELD THAT WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY OF PENALTY WOULD ARISE. READING THE WORDS PARTICULARS IN CONJUNCTION WITH THE WORD INACCURATE THE APEX COURT HELD THAT THEY ONLY MEAN THAT THE DETAILS SUPPLIED IN THE RETURN WHICH WERE NOT ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO TRUTH OR ERRONEOUS AND UNLESS THERE IS A FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN THE RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY ITA NOS. 5151 5152 & 5153/D/2010 4 U/S 271(1)(C) . THE APEX COURT FURTHER HELD THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS. THE APEX COURT HELD THAT IF 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. HONBLE COURT HELD THAT 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 U/S 271(1)(C). THE APEX COURT WENT ON TO HOLD THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTABLE BY THE AO FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY U/S 271(1)(C). 4. IN THE INSTANT CASE THE ADDITIONS WERE MADE BASED ON THE PARTICULARS OF INCOME FILED IN THE RETURN OF INCOME. NO NEW INCOME HAS BEEN ADDED IN THE ITA NOS. 5151 5152 & 5153/D/2010 5 REASSESSMENT COMPLETED AFTER TWO ROUNDS OF APPEALS. EXPENSES WERE DISALLOWED AS THE SAME WERE INADMISSIBLE IN THE OPINION OF THE AO. THE APPELLANT FURNISHED DETAILS OF ITS INCOME AND EXPENDITURE WHICH DETAILS WERE NOT FOUND TO BE INACCURATE NOR COULD THEY BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. MERELY BECAUSE THE APPELLANT HAD OFFERED CERTAIN INCOME UNDER A DIFFERENT HEAD OF INCOME AND CLAIMED CERTAIN EXPENDITURE AS BUSINESS DEDUCTION WHICH WERE NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE AO THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C). THE CONDITIONS PRESCRIBED IN SEC. 271(1)(C) DO NOT EXIST IN THIS CASE. I THEREFORE CANCEL THE PENALTY IMPOSED OF RS. 4 64 592/-. 4. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 5.1 LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED THA T IN FACT FOR A.Y. 2002-03 & 2003-04 THE LD. CIT(A) ALLOWED LEGAL & PROFESSIONAL CHARGES AND SALARY EXPENSES. IN THE BACKGROUND OF AFORESAID FACTUAL SUBMISSIONS THE ASS ESSEE HAS URGED THAT THIS WAS THE CASE WHERE DIFFERENT VI EW WAS ITA NOS. 5151 5152 & 5153/D/2010 6 TAKEN BY THE ASSESSEE ASSESSING OFFICER AND LD. CI T(A). ALLOWABILITY OF EXPENSES WAS NOT DISPUTED AND ONLY QUANTUM WAS DISPUTED AND THEREFORE THERE IS NO CASE FOR P ENALTY. IT HAS BEEN CLAIMED THAT IN A.Y. 2001-02 WHEN HEAD OF INCOME WAS CHANGED IN ASSESSMENT YEAR PENALTY WAS NOT EVE N INITIATED. THE ASSESSEE HAS FURTHER PLEADED THAT I T HAS BEEN HELD IN THE FOLLOWING CASES THAT IN CASE OF CHANGE OF HEAD OF INCOME NO PENALTY SHALL BE IMPOSED. CIT VS. JMD ADVISORS P. LTD. 124 ITD 223 ITO VS. ROBORANT INVESTMENTS P. LTD. 7 SOT 181 ALPHA ASSOCIATES VS. DCIT 66 TTJ 758 CIT VS. REGENCY EXPRESS BUILDERS P. LTD. 166 TAXM AN 269. THE ASSESSEE HAS FURTHER PLACED RELIANCE UPON THE C ASE LAW FROM THE APEX COURT IN CIT VS. RELIANCE PETROPRODUC TS P. LTD. 322 ITR 158 WHEREIN IT HAS BEEN HELD THAT A MERE M AKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSE LF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. 6. LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE ASSESSING OFFICER AND THE DECISION OF HONBLE APEX COURT IN DHARMENDRA TEXTILES. ITA NOS. 5151 5152 & 5153/D/2010 7 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. 8. WE FIND THAT SECTION 271(1)(C) OF THE ACT POSTUL ATES LEVY OF PENALTY FOR CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT WE FIND THAT ASSESSEE CANNOT BE HELD GUILTY OF SUCH ACT. IT IS SETTLED LAW AS COVERED BY THE CASE LAW CITED ABOVE THAT MERE CHAN GE OF HEAD OF INCOME WILL NOT INVITE LEVY OF PENALTY U/S 271(1)(C). MOREOVER IN THE PRESENT CASES ALLOWABILITY OF EXP ENSES WAS NOT DISPUTED ONLY THE QUANTUM WAS DISPUTED. IN THAT VIEW OF THE MATTER THERE CANNOT BE ANY CASE FOR LEVY OF PEN ALTY U/S 271(1)(C). WE FIND THAT LD. CIT HAS PASSED A REASO NABLE ORDER AND IT DOES NOT NEED ANY INFERENCE ON OUR PART ACCO RDINGLY WE UPHOLD THE SAME. 9. IN COMING TO THE AFORESAID CONCLUSION WE PLACE RELIANCE UPON THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT H AS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 29 1 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND I NACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN ITA NOS. 5151 5152 & 5153/D/2010 8 THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A E SSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NO T ACCEPTED BY THE AO FOR ANY REASON THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 10. WE WOULD ALSO LIKE TO REFER THE DECISION OF TH E HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL V S. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTO RY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED M ERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHO ULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDI CIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. E VEN IF A ITA NOS. 5151 5152 & 5153/D/2010 9 MINIMUM PENALTY IS PRESCRIBED THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FR OM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 11. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENTS WE DO NOT FIND ANY INFIRMITY OR ILLEGA LITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) AND HENCE WE UPHOLD THE SAME. 12. IN THE RESULT ALL THE THREE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/11/201 1. SD/- SD/- (A.D. JAIN) (SHAMIM YAHY A) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24/11/2011 *KAVITA/SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER ASSITANT REGISTRAR