Abr Auto Pvt Ltd New Delhi v. Acit New Delhi

In The Income Tax Appellate Tribunal Delhi Bench G New Delhi Before Shri H S Sidhu Judicial Member And Shri L P Sahu Accountant Member I T A No 6236 Del 2015 A Y 2009 10 M S Abr Auto Pvt Ltd B 5 Chirag Enclave New Delhi 11 0 048 Pan Aadca 5137 C Vs Acit Circle 1 1 New Delhi Appellant Respondent Assessee By Sh Amarjeeet Singh Ca Department By Sh Kaushlendra Tiwari Sr Dr Order Per H S Sidhu Jm Assessee Has Filed The Appeal Against The Order D Ated 04 9 2015 Passed By The Ld Commissioner Of Income Tax Appea Ls I New Delhi Pertaining To Assessment Year 2009 10 The Solitary Issue Raised In The Appeal Is Relating To Upholding The Penalty Of Rs 36 58 000 U S 271 1 C Of The I T Act 1961 2 The Facts In Brief Are That Assessee Is An Inves Tment Company And Has Made Investment In The Shares Of Closely Held Unquoted Companies The Total Amount Of Investment As On 31 3 2008 Was Rs 8 04 71 569 The Assessment In This Case Was Made Making The Fol Lowing Additions A Disallowance U S 14 A Rs 4 07 158 2 B Disallowance Of Bad Debts Rs 1 32 000 C Disallowance Of Return On Rs 10 84 005 Investments D Disallowance On Account Of Sale Rs 91 39 000 Of Rights Claimed As Capital Loss The Disallowances Made By The Ao Were Confirmed By The Ld Cit A Thereafter The Ao Issued Notice U S 274 Read With Section 271 1 C Of The I T Act 1971 For Levy Of Penalty The Penalty U S 271 1 C Was Levied On 31 3 2014 Of Rs 36 58 000 3 Aggrieved With The Said Penalty Order The Asses See Filed The Appeal Before The Ld Cit A Who Vide His Impugned Order Dated 04 09 2015 Has Upheld The Penalty In Dispute And Accordingly Dismissed The Appeal Of The Assessee 4 At The Time Of Hearing Ld Authorised Represent Ative Of The Assessee Has Stated That Assessee Had Appealed Be Fore The Ld Cit A Against The Above Said Additions However The Asse Ssee Did Not Press For The Disallowance Made On Account Of Bad Debts Of R S 1 32 000 And Disallowance Of Expenses On Account Of Return Of In Vestment Of Rs 10 84 005 In His Appellate Order Dated 01 2 201 3 The Ld Cit A Did Not Allow The Appeal Of The Assessee The Assessee Had Further Filed Appeal To Itat New Delhi Against Disallowance U S 14 A Of Rs 4 07 158 And Against Long Term Capital Loss Treat Ed As Business Income Of Rs 91 39 000 And The Itat Vide Its Ord Er Dated 5 8 2016 In Ita No 2375 Del 2013 Had Allowed The Appeal Of The Assesse And Deleted The Quantum Additions Of Rs 4 07 158 And Rs 91 39 000 However During The Penalty Proceedings The Ao Vide His Ord Er Dated 31 3 2014 3 Imposed Penalty Of Rs 36 58 000 U S 271 1 C O F The Act In Respect Of Total Additions Of Rs 1 07 62 163 On The Alle Ged Ground That The Assessee Had Furnished Inaccurate Particulars Of I Ncome In View Of The Above Ld Counsel Of The Assessee Stated That Out Of Four Quantum Addition On Which The Penalty Has Been Imposed Tw O Quantum Addition Has Already Been Deleted By The Itat A Bench Ne W Delhi In Ita No 2375 Del 2013 Ay 2009 10 Vide Order Dated 05 08 2016 In This Behalf He Filed The Copy Of The Tribunals Order Da Ted 05 08 2016 In Assessees Own Case And Requested That Penalty In D Ispute May Be Deleted Because The Assessee Has Not Furnished Any Inaccurate Particulars Of Income It Was Further Submitted T Hat Ao Did Not Record His Satisfaction For Initiation Of Penalty Proceedi Ngs And Further That Quantum And Penalty Proceedings Are Independent Of Each Other And Penalty Cannot Be Imposed Simply On The Basis Of F Inding Recorded In The Assessment Order Ld Counsel Of The Assessee Has Draw Our Attention Towards The Assessment Order Dated 30 12 2011 Passe D U S 143 3 Ii Of The Act And Stated That While Completing The Assess Ment The Ao Has Observed Penalty Proceedings U S 271 1 Is Being Init Iated Separately For Furnishing Inaccurate Particulars Of Income Concealment Income And Attaching A Printed Notice With Such Order Requiring The Assessee To Show Cause Why Penalty Un Der Section 271 1 Of The Act Be Not Levied For Concealment Filing O F Inaccurate Particulars Of Income Is Not Sufficient And The Penalty Procee Dings Cannot Be Said To Be Validly Initiated Under Such Circumstances He F Urther Stated That 4 Neither The Assessment Order Nor The Printed Show C Ause Notice Nowhere States The Specific Charge Of Alleged Concealment A Nd Or Furnishing Of Inaccurate Particulars Of Income Vis Vis Addition Made In View Of The Above He Stated That Entire Penalty Proceedings St And Vitiated Because It Is Not In Accordance With Law And In Order To Su Pport His Contention He Placed The Reliance On The Following Decisions Honble Karnataka High Court Decision In The Case Of Cit Ors Vs M S Manjunatha Cotton And Ginnig Factory Ors 2013 359 Itr 565 Apex Court Decision In The Case Of Cit Anr Vs M S Ssas Emerald Meadows In Cc No 11485 2016 Dated 05 8 2016 In View Of Above He Requested That The Penalty In Dispute May Be Cancelled And Appeal Of The Assessee May Be Allow Ed 5 On The Contrary Ld Dr Relied Upon The Orders Of The Authorities Below And Also Filed The Written Submissions Which Are Reproduced Hereunder Sub Written Submission In The Above Case Reg In The Above Case It Is Humbly Submitted That The Following Decisions May Kindly Be Considered 1 Union Of India V Pharamendra Textile Processors 2007 295 Itr 244 Copy Enclosed Where Honble Supreme Court Held That Penalty Under Section 271 5 1 C Is A Civil Liability For Which Willful Conce Alment Is Not An Essential Ingredient For Attracting The Civi L Liability As Is The Case In The Matter Of Proceedings Under Section 276 C 2 Cit Vs Zoom Communication P Ltd 191 Taxman 179 Delhi 2010 327 Itr 510 Delhi 2010 233 Ctr 465 Where Honble Delhi High Court Held Th At If Assessee Makes A Claim Which Is Not Only Incorre Ct In Law But Is Also Wholly Without Any Basis And Explanation Furnished By Him For Making Such A Cla Im Is Not Found To Be Bona Fide Explanation 1 To Sec Tion 271 1 C Would Come Into Play And Assessee Will Be Liable To Penalty 3 Mak Data P Ltd Vs Cit 38 Taxmann Com 448 Sc Where Honble Supreme Court Held That Under Explanation 1 To S 271 1 Voluntary Disclosure O F Concealed Income Does Not Absolve Assessee Of Secti On 271 1 Penalty If The Assessee Fails To Offer An Explanation Which Is Bonafide And Proves That All T He Material Facts Have Been Disclosed 5 Cit Vs Gates Foam Rubber Co 91 Itr 467 Cit Vs India Seafood 105 Itr 708 Where Honble Kerala 6 High Court Held That Claiming Excessive Deduction A Lso Amounts To Concealment Of Income 6 Steel Ingots Ltd Vs Cit 296 Itr 228 Where Honble Madhya Pradesh High Court Held That In Case Of Concealment Of True Income Chargeable To Tax By Making Bogus Claim Levy Of Penalty U S 271 1 C Read With Explanation 1 Is Justified 7 Cit Vs Escorts Finance Ltd 183 Taxman 453 Delhi 2010 328 Itr 44 Delhi 2009 226 Ctr 10 5 Where Honble Delhi High Court Held That If Claim M Ade In Return Of Income Appears To Be Ex Facie Bogus I T Would Be Treated As A Case Of Concealment Or Furnis Hing Of Inaccurate Particulars And Penalty Proceeding Wo Uld Be Justified 6 We Have Carefully Considered The Rival Submissio Ns And Perused The Relevant Records We Find That Assessee Had Appeale D Before The Ld Cit A Against The Quantum Additions I E Disallowa Nce U S 14 A Amounting To Rs 4 07 158 And Disallowance On Acc Ount Of Long Term Capital Loss Treated As Business Income Amounting T O Rs 91 39 000 However The Assessee Did Not Press For Other Disal Lowances Made On Account Of Bad Debts Of Rs 1 32 000 And Disallow Ance Of Expenses On Account Of Return Of Investment Of Rs 10 84 005 We Further Find That In His Appellate Order Dated 01 2 2013 The Ld Cit A Did Not Allow The 7 Appeal Of The Assessee And Aggrieved With The Actio N Of The Ld Cit A Te Assessee Appealed Before The Tribunal Against Disa Llowance U S 14 A Of Rs 4 07 158 And Against Long Term Capital Loss T Reated As Business Income Of Rs 91 39 000 And The Itat Vide Its Ord Er Dated 5 8 2016 In Ita No 2375 Del 2013 Had Set Aside The Finding Of The Ld Cit A On The Issue U S 14 A And Restore The Matter To The File Of The Ao For Fresh Adjudication After Due Verification Of The Claim O F The Assessee Regarding No Expenditure Having Been Incurred And Allowed Th E Issue Relating To Long Term Capital Loss Treated As Business Income O F Rs 91 39 000 By Deleted This Addition We Further Note That During The Penalty Proceedings The Ao Vide His Order Dated 31 3 2014 Imposed Penalty Of Rs 36 58 000 U S 271 1 C Of The Act In Respe Ct Of All The Four Additions Of Rs 1 07 62 163 Mentioned In The Gr Ounds Of Appeal As Aforesaid On The Alleged Ground That The Assessee Had Furnished Inaccurate Particulars Of Income 6 1 After Perusing The Assessment Order We Find Th At Ao Also Did Not Record His Satisfaction For Initiation Of Penalty P Roceedings Because While Passing The Assessment Order Dated 30 12 2011 Passe D U S 143 3 Ii Of The Act The Ao Has Stated That Penalty Proceedings U S 271 1 Is Being Initiated Separately For Furnishing Inaccurat E Particulars Of Income Concealment Income Which Is Not Sufficient And Therefore The Penalty Proceedings Cannot Be Said To Be Validl Y Initiated Under Such Circumstances However Nowhere In The Assessment O Rder States The Specific Charge Of Alleged Concealment And Or Fur Nishing Of Inaccurate 8 Particulars Of Income Therefore The Entire Penalt Y Proceedings Stand Vitiated Because It Is Not In Accordance With Law In View Of The Law Settled In The Following Case Laws I Cit Anr Vs M S Ssas Emerald Meadows 2015 11 Tmi 1620 Karnataka High Court Has Held That Tribunal Has Correctly Allowed The Appeal Filed By The Assessee Holding The Notice Issued By The Assessing Officer Under Section 274 Read With Section 271 1 C To Be Bad In Law As It Did Not Specify Which Limb Of Section 271 1 Of The Act The Penalty Proceedings Had Been Initiated I E Whether For Concealment Of Particulars Of Income Or Furnishing Of Inaccurate Particulars Of Income The Tribunal While Allowing The Appeal Of The Assessee Has Relied On The Decision Of The Division Bench Of This Court Rendered In The Case Of Commissioner Of Income Tax Vs Manjunatha Cotton And Ginning Factory 2013 7 Tmi 620 Karanataka High Court Thus Since The Matter Is Covered By Judgment Of The Division Bench Of This Court We Are Of The Opinion No Substantial Question Of Law Arises Decided In Favour Of Assessee Ii Cit Anr Vs M S Ssas Emerald Meadows Honble Supreme Court Of India Reported In 2016 8 Tmi 1145 Supreme Court The Apex Court Held That High Court Order Confirmed 2015 11 Tmi 1620 Supra Karnataka High Court Notice Issued By Ao Under Section 274 Read With Section 271 1 C To Be Bad In Law As It Did 9 Not Specify Which Limb Of Section 271 1 Of The Act The Penalty Proceedings Had Been Initiated I E Whether For Concealment Of Particulars Of Income Or Furnishing Of Inaccurate Particulars Of Income Decided In Favour Of Assessee 6 2 In The Background Of The Aforesaid Discussions And Respectfully Following The Precedents We Delete The Penalty In Dispute And Decide The Issue In Favor Of The Assessee And Against The Reve Nue Since We Have Deleted The Penalty And Did Not Discuss The Penalty Issue On Merit Hence The Case Laws Cited By The Ld Dr Are Not Useful At This Juncture Because These Case Laws Are On The Merits Of The Case Whic H We Have Not Discussed 7 In The Result The Appeal Filed By The Assess Ee Stands Allowed Order Pronounced In The Open Court On 04 12 2017 Sd Sd L P Sahu H S Sidhu Accountant Member Judicial Member Date 04 12 2017 Srbhatnagar Copy Forwarded To 1 Appellant 2 Respondent 3 Cit 4 Cit A 5 Dr Itat True Copy By Or Der Assistant Registrar Itat Delhi Benches