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2015 (6) TMI 494 - ITAT DELHI

2015 (6) TMI 494 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - CIT(A) cancelled penalty levy - disallowance u/s 14A - Held that:- 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 amount to furnishing inaccurateparticulars regarding the income of the assessee. Such a claim .....

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S. Sidhu,JJ. For the Petitioner: Sh. BRR KUMAR, SR. DR. For the Respondent: S h. ROHIT JAIN, ADV. AND MS. DEEPASHREE RAO, CA 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 the Department read as under:- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in cancelling the penalty of ₹ 31,41,30 .....

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e. As per the assessee the disallowance u/s. 14A came to ₹ 9,735/-, whereas as per the AO the disallowance under section 14A was to be made as per Rule 8D and thus disallowance of ₹ 92,41,858/- has been made by the AO while completing the assessment in dispute. 3.1 Assessing Officer levied the penalty of ₹ 31,41,308/- by relying upon the various decision of the Hon ble Supreme Court of India in the case of Dharmendra Textile Processor 306 ITR 277 (SC) and Delhi High Court s dec .....

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al. 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 documentary evidence filed by him in the shape of Paper Book containing pages 1 to 81 in which he has attached various documentary evidences and co .....

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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 the assessee to show .....

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) 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 "concealment of income" and "f .....

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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 criminal in nature, they are still quasi-crimina .....

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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 assessee to evade tax. The Mens rea is essent .....

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ir 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 Mills (2010) (lGSTR66) (SC), and where they have reiterated again that "that for applicability of Section 271(l)(c} the condition stated there .....

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ion 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 the facts and circumstances in each case has to be seen in the conte .....

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he accordingly, applied Rule 8D 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 particulars of income" or "furnishing of inaccurate particulars. T .....

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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 erroneous. 8.15 In this regard, Ld. CIT(A) has rightly placed reliance upon the de .....

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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 at the provisions of Section 271(l)(c) of the Income Tax Act 1961, suggest .....

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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 are found to be inaccurate, the liability would arise. To attract penalty, .....

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