TMI Blog2012 (10) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case had furnished inaccurate particulars of income attracting the penal action provided u/s 271 (1) (C) - against assessee. - I.T.A. NO. 1206/Del/2011 - - - Dated:- 15-10-2012 - SHRI I.C. SUDHIR, AND SHRI T.S. KAPOOR, JJ. Revenue by: Sh. Sunil Gantur, Sr. DR Assessee by: Sh. Kaunan Kapur, Adv. ORDER PER I.C. SUDHIR, JM: The revenue has questioned first appellate order whereby the ld. CIT (A) has deleted the penalty imposed u/s 271 (1) (c) of the Act by the AO. 2. We have heard and considered the argument advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The relevant facts are that the assessee was employed with HCL Deluxe NV (HDX), a company incorporated in Netherland. HCL Deluxe Pvt. Ltd. was an Indian subsidiary of HDX. The assessee derived salary income from HCL Deluxe Pvt. Ltd. Deluxe Corporation of USA, held 50% share holding in HDX. The other 50% was held by an Indian house. During March 1999, Deluxe Corporation USA acquired 50% holding of the Indian business partner, and restructured the management set up of HDX. By a letter dated 06.04.1999, Deluxe Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee were proved by the disclosure in the return and the payment of taxes. The revenue has questioned this action of the ld. CIT (A). 5. In support of the ground the ld. DR has basically placed reliance on the penalty order. He submitted that there was no any scope of debate on the taxability of the amount received since the amount was received out of the contract for employment. The Tribunal has also upheld the action of the AO in holding that the amount is a taxable income in the hands of the assessee. Thus it is clear case of concealment of particulars of income and furnishing inaccurate particulars thereof on the part of the assessee to attract penal action u/s 271 (1) (C) of the Act. The ld. DR submitted further that had there not been the scrutiny assessment u/s 143 (3) of the Act the assessee would not have come forward to offer tax on the amount received by him. The ld. DR placed reliance on the following decisions: - CIT Vs. ECS Ltd. (2011) 336 ITR 162 (Del) - ITO Vs. Pandit Vijay Kant Sharma, ITA No. 3709/Del/2008 order dated 29.5.2009. - VLCC Health Care Ltd. Vs. ACIT ITA No. 289/Del/2009 order dated 12.2.2010 - Rayata Corporation (P) Ltd. Vs. Union of India (200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax paid as refund. We are of the view that there is scope of nurturing a bona fide belief that tax is not payable on a receipt where two views are possible regarding it. No such case is there in the present appeal before us. The provisions laid down u/s 17 (3) of the Act are very clear that profits in lieu of salary includes the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his self employment or the modification of the terms and conditions relating thereto. For a ready reference Clauses (i) and (ii) to sub-Section (3) to section 17 are being reproduced hereunder: 3. Profits in lieu of salary includes- (i) the amount of any compensation due to received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; (ii) any payment (other than any payment referred to in clause (10) clause (10A) clause (10B) clause (11), clause (12) clause(13) or clause (13A) of section 10, due to or received by an assessee from an employer or a former employer or from a provident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income in his return of income is bona fide. The requirement for availing the benefit u/s 271 (1)(C) Explanation 1 of the Act for exemption from penal action under the said provisions are available only if the assessee is able to prove that such explanation is bona fide and that all the facts relating to the income and material to the computation of his total income have been disclosed by him. For a ready reference the relevant extract of Section 271 (1) (C ) of the Act are being reproduced hereunder: 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1). If the Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) [********] (b) has failed to comply with a notice [under sub-section (2) of section115 WD or under sub-section (2) of section 115 WE or] under sub-section (1) of section 142 or sub-section (2) of section 143 [or fails to comply with a direction issued under sub-section (2A) of section 142], or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. (d) has concealed the particulars of the fringe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraphs we have discussed the facts of the present case and when it is considered in totality keeping in mind that the provisions laid down u/s 17 (3) (1) of the Act were clear to bring the receipt as taxable and there was no scope of debate regarding its taxability, the bona fide of the explanation of the assessee that he was under a belief that the amount received is a capital receipt not chargeable to tax is not acceptable. In this regard we find strength from the recent decision of Hon ble Delhi High Court in the case of CIT Vs. Zoom Communication (P) Ltd. (Supra) wherein the Hon ble Jurisdictional High Court of Delhi after discussing several decisions including the decisions of Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts (P), has been pleased to hold that if a view is taken that the claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty even if he was not acting bona fide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) of the Act and even if their case is selected for scrutiny, they can get away merely by paying the tax, which in any case, was payable by them. The consequence would be that the persons who make claims of this nature actuated by a mala fide intention to evade tax otherwise payable by them would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. 21. We find that the assessee before us did not explain either to the Income-tax authorities or to the Income-tax Appellate Tribunal as to in what circumstances and on account of whose mistake, the amounts claimed as deductions in this case were not added, while computing the income of the assessee-company. We cannot lose sight of the fact that the assessee is a company which must be having professional assistance in computation of its income, and its accounts are compulsorily subjected to audit. In the absence of any details from the assessee, we fail to appreciate how such deductions could ..... 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