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2015 (5) TMI 547 - ITAT DELHI

2015 (5) TMI 547 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - disallowance u/s 14A - Held that:- The assessee had earned dividend income which is an exempt income and assessee, on its own, disallowed a sum of 1% of dividend income u/s 14A. The Tribunal further held that the AO was not satisfied with the assessee’s quantum of disallowance and he accordingly applied Rule 8D of the Income Tax Rules 1962 and computed the disallowance which was accepted by the assessee to avoid further litigation. Th .....

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evidence from the AO that the assessee has concealed or has furnished inaccurate particulars of its income, did not ipso facto invite levy of penalty u/s 271(1)(c) of the Act. The present case is squarely covered in favour of the assessee by the decision of ITAT Delhi ‘E’ Bench in the case of ACIT vs M/s Mehrotra Invofin India Pvt. Ltd. (2015 (5) TMI 535 - ITAT DELHI) and hence, sole ground of the revenue being devoid of merits is dismissed. - Decided in favour of assessee. - ITA No. 4363/Del/20 .....

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in cancelling the penalty of ₹ 15,54,462/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961. 3. We have heard arguments of both the sides and carefully perused the relevant material placed on record. At the very outset, ld. Counsel of the assessee has drawn our attention towards paper book filed by the assessee spread over 83 pages and another paper book of case laws spread over 48 pages along with the decision of ITAT Delhi E Bench in ITA No. 4488/Del/2013 dated 24.4.2015 for A .....

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fied basis. However, ld. DR did not seriously object to the fact that in the case of M/s Mehrotra Invofin India Pvt. Ltd. (supra), the Tribunal has upheld the order of the CIT(A) deleting the penalty in the similar set of facts and circumstances. 5. On careful consideration of above, from vigilant reading of the order of the Tribunal in the case of ACIT vs M/s Mehrotra Invofin India Pvt. Ltd., we note that the Tribunal upheld the order of the CIT(A) approving the deletion of penalty by the first .....

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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 furnished inaccurate particulars of such income. Further, after insertion of Explanation 1 to Section 271(1)(c), the onus is on t .....

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IT 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 spell out mainly the following rules for the purpose of penalty imposable: (i) Both the expressions & .....

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e 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 presumption that the assessee is guilty. (v) Though penalty proceedings under the income-tax law may not be crim .....

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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) (306 ITR 277) (SC) held that "default merited penalty without having to consider an intend of the a .....

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sor's Case (Supra) has not overruled their decision in Dilip N. Shroff's case except for its mention of Mens rea therein. ITA NO. 4488/Del/2013 6 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 Mills (2010) (lGSTR66) (SC), and where they have reiterated again that "th .....

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ome. 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 an untenable claim. 8.11 From the various judicial precedents it is seen that .....

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O 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 prove that there is failure on the part of the assessee to "conceal the part .....

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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 income are "not accurate or exact or correct according to truth or erroneo .....

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stances 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 322 ITR 158 (SC) the head notes of the said case reads as under: "A glance .....

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uilty 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 the assessee can furnish the particulars of his income. When such particulars .....

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urate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 8.17 We find that the above view of the Apex court in the case of Reliance Petroproduct has been followed by jurisdictional Delhi High Court and also Delhi Tribunal in numerous subsequent cases. 8.18 We are of the view that addition has been made by the AO on the basis of difference of opinion, as accordingly to him Rule 8D is applicable and whereas as .....

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