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2015 (5) TMI 535 - ITAT DELHI

2015 (5) TMI 535 - ITAT DELHI - TMI - Penalty u/s. 271(1)(c) - disallowance u/s. 14A - Held that:- As decided in Commissioner of Income tax Vs. Reliance Petroproducts Pvt. Ltd. reported in [2010 (3) TMI 80 - SUPREME COURT] Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under Section 271 (l)(c). A mere making of a claim, which is not sustainable in law by itself will not .....

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ly deleted the penalty made by the Assessing Officer. - Decided in favour of assessee. - I.T.A. No. 4488/DEL/2013 - Dated:- 24-4-2015 - Shri S.V. Mehrotra And Shri H.S. Sidhu JJ. For the Appellant : Sh. K.K. JAISWAL, SR. DR. For the Respondent : S h. ROHIT JAIN, ADV. AND MS. ORDER Per H.S. Sidhu, JM Revenue has filed this appeal against the Order dated 10.5.2013 passed by the Ld. Commissioner of Income Tax (Appeals)-III), New Delhi pertaining to assessment year 2009-10. 2. The grounds raised by .....

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nt proceedings AO noticed that the assessee has earned a dividend income of ₹ 5,14,50,508/- which did not form part of the total income. As per the assessee the disallowance u/s. 14A came to ₹ 5,14,505/-, whereas as per the AO the disallowance under section 14A was to be made as per Rule 8D and thus disallowance of ₹ 14,39,759/- has been made by the AO while completing the assessment in dispute. 3.1 Assessing Officer levied the penalty of ₹ 4,89,374/- by relying upon the .....

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ispute by allowing the appeal filed by the assessee. 5. Now aggrieved with the impugned order, Revenue filed the present Appeal before the Tribunal. 6. At the time of hearing, Ld. DR relied upon the order of the AO and reiterated the contention raised by the Revenue in the grounds of appeal as well as the citations cited by the AO in the assessment order and the penalty order. 7. On the contrary, Ld. Counsel of the assessee relied upon the order passed by the Ld. First Appellate Authority and do .....

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e lower authorities as well as the various decision rendered by the Hon ble Supreme Court of India and the Hon ble High Court of Delhi. 8.1 After going through the submissions filed by the assessee alongwith the case law as well as the orders of the revenue authorities, it is very relevant to go through the relevant provisions of section 271(1)(c), which provides for imposition of penalty where the AO has to be satisfied that:- i) any person had concealed particulars of his income or ii) had fur .....

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ement of proof of Mens rea on the part of the Revenue, would no longer be necessary as held in Addl. CIT Vs Jeevan Lal Shah (1994) 205 ITR 244 (SC) and B.A. Balasubramaniam and Bros. Co. Vs CIT (1999) 236 ITR 977 (SC). The role of the Explanation was only to place the burden of proof squarely on the taxpayer. 8.3 We note that in this context two landmark judgments were given by Apex Court in Dilip N. Shroff Vs Joint CIT (2007) 2911TR 519 (SC) and T. Ashok Pai Vs CIT (2007) 292 ITR 11 (SC), which .....

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. The statute requires satisfaction on the part of the Assessing Officer. He is' required to arrive at a satisfaction so as to show that there is primary evidence to establish that the assessee had concealed the amount or furnished inaccurate particulars and this onus is to be discharged by the department. (iv) The Assessing officer while considering levy of penalty should consider whether the assessee has been able to discharge his part of the burden. He should not begin with the presumptio .....

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o "conditions precedent", which are required to be satisfied before the Explanation could be applied. It was also pointed out as held by Hon ble Supreme Court in K. C. Builders Vs AC/T {2004} {265 ITR 562} {SC} that "deliberateness" is implied in the concept of concealment. 8.4 However after the decision laid down in Dilip N. Shroff (Supra), T. Ashok Pai (Supra) in a dispute under Central Excise Law the Apex Court in the case of UOI Vs Dharamendra Textile Processors (2008) (3 .....

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58) (SC), it is clear that the Hon ble Supreme Court by giving the ruling in Dharmendra Textile Processor's Case (Supra) has not overruled their decision in Dilip N. Shroff's case except for its mention of Mens rea therein. 8.7 It is also pertinent to mention here that after the ruling of Dharamendra Textile Processor, the Hon ble Supreme Court has come out with the ruling in 2 different cases namely CIT Vs Atul Mohan Bindal (2009) (317 ITR1) and UOI Vs Rajasthan Spinning & Weaving M .....

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ars of income or (b) assessee has furnished inaccurate particulars of such income. 8.10 Thus, in view of the Hon'ble Supreme Court's decision in Reliance Petroproducts (Supra) it is clear that the legislature did not intend to impose penalty on every assessee whose claim was rejected by the assessing officer. What is sought to be covered under Section 271(l)(c) is concealment of "particulars of income" or furnishing of "inaccurate particulars of income" and making of .....

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ts own disallowed a sum of ₹ 5,14,505, under section 14A. However, the AO was not satisfied with the appellant's quantum of disallowance and he accordingly, applied Rule BD and computed the disallowance. 8.13 It is also an established proposition that the assessment proceedings a penalty proceedings are two different proceedings. An issue may call for a addition to income under section 143(3) of the I.T. Act, but in order to invoke a penalty, the AO has to walk little extra mile to pro .....

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; 5,14,50,508 and asessee's believe that no direct expenditure is incurred in earning the exempt income, shows that there is a difference of opinion and it is a vexed question of law. 8.14 Keeping in view of the above facts and circumstances of the case, we find considerable force in the finding of the Ld. CIT(A) that in the present case the conditions laid down in Section 271(1)(c) are not being fulfilled, because "inaccurate particulars" means the details filed in the return of i .....

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ishing of inaccurate particulars. 8.16 Keeping in view of the facts and circumstances as explained above, we are of the view that Ld. CIT(A) has rightly held that there is no concealment or inaccurate particulars of income where the addition and/or disallowance is based on bona-fide claims, debatable claims and difference of opinion as held inter-alia by the Hon'ble Supreme Court in a recent judgment in the case of Commissioner of Income tax Vs. Reliance Petroproducts Pvt. Ltd. reported in 3 .....

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e return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where .....

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