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Lodhi Property Company Ltd. Versus ACIT, Circle 4 (1) , New Delhi

2015 (9) TMI 221 - ITAT DELHI

Penalty u/s 271(1)(c) - assessee has claimed expenses during the Assessment Year 2005- 06 on account of fee paid to ROC, depreciation, Umaid Bhawan Palace Project cost written off and other expenses in Assessment Year 2005-06, and claim of depreciation and other expenses in Assessment Year 2006-07, which have been disallowed by the A.O. being not sustainable - Held that:- Keeping in view the facts and circumstances explained it is of the considered view that against the quantum addition sustaine .....

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assessee for statistical purposes. - I.T.A. No.61& 62 /Del/2013 - Dated:- 26-8-2015 - SHRI N. K. SAINI AND SHRI H. S. SIDHU, JJ. For The Appellant : Shri R. S. Singhvi, CA For The Respondent : Ms. Kesang Y. Sherpr, Sr. DR ORDER PER H. S. SIDHU, JM: The assessee by filling present appeals sought to set aside the common order dated 25.10.2012 passed by Ld. CIT(A) upholding penalty of ₹ 54,85,590/- and ₹ 56,60,190/- imposed by the A.O. u/s 271(1)(c) of the I. T. Act, 1961 (hereinafter .....

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in law in not holding that penalty of ₹ 54,85,590 imposed by the assessing officer under section 271(1)(c) of the Income-tax Act, 1961 ("the Act") is without jurisdiction and barred by limitation. 1.1 That on the facts and in the circumstances of the case, the CIT(A) erred in law in not holding that the penalty order dated 14.03.2012 passed by assessing officer was barred by limitation prescribed under section 275 of the Act. 2. That on the facts and in the circumstances of the .....

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he CIT(A) erred in law in not appreciating that all material particulars were truly, fully and accurately furnished and disclosed by the appellant in the return of income and accompanying documents. 2.3 That on the facts and in the circumstances of the case, the CIT(A) erred in law in upholding the levy of penalty without appreciating that in none of the proceedings, any finding of particulars, having been concealed or inaccurately furnished, was returned or recorded by any of the authorities. 3 .....

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penses which were admittedly revenue in nature had been made purely on the basis of difference of opinion between the appellant and the assessing officer as regards the question whether there was complete cessation/ discontinuance of business by the appellant or a mere temporary lull. 3.2 That on the facts and in the circumstances of the case, the CIT(A) erred in law in upholding the penalty levied by the assessing officer, without appreciating that the expenditure written off by the appellant i .....

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epresented "project costs" and (b) at the time of incurring thereof, the assessee was not carrying on any business. 4. That without prejudice to above, on the facts and in the circumstances of the case, the CIT(A) erred in law in hurriedly upholding the penalty order, without waiting for the decision of the quantum appeal pending before Hon'ble Delhi High Court. 2. Briefly stated the facts of the case are that the assessee filed return of income for the Assessment Year 2005-06 and .....

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wan Palace Project cost written off and disallowance of other expenses respectively by passing order and subsequently, assessed the income at ₹ 1,49,91,020/- in I.T.A.No. 61/Del/2013 and ₹ 9,63,961/- and ₹ 1,58,51,811/- on account of disallowance of claim of depreciation and other expenses respectively in I.T.A.No. 62/Del/2013. 3. Against the assessment order passed by the A.O., assessee filed appeals before Ld. CIT(A), who vide impugned order dated 25.10.2012, upheld the order .....

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in both the years i. E. ₹ 54,85,590/- and ₹ 56,60,190/- were imposed. 5. The assessee again challenged the order passed by Ld. ACIT, Circle 4(1), New Delhi imposing penalty u/s 271(1)(c), before Ld. CIT(A), who has dismissed the appeal of assessee and the impugned order is now under challenge before ITAT. 6. The A.O. considered the same and rejected the contention raised by the assessee in reply dated 07.03.2012 and imposed penalty @ 100% in both the yeas. Aggrieved, the assessee fil .....

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oncealment or furnishing of inaccurate particulars of income; that the amount of expenses claimed by the assessee were admittedly revenue in nature and the disallowance of expenses is based upon difference of opinion between the appellant assessee and the A.O. The Ld. counsel for the assessee further submitted that Ld. CIT(A) vide impugned order has erred in law in upholding the penalty levied by A.O. without appreciating that the A.O. had made disallowance merely on the assumptions and surmises .....

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s Nayan Builders & Developers (P) Ltd. 368 ITR 722 iii) CIT Vs Reliance Petroproducts (P) Ltd. 322 ITR 158 (S. C.) iv) Karan Raghav Exports (P) Ltd Vs CIT 349 ITR 112 (Del.) v) New Holland Tractors (P) Ltd. Vs CIT (Del) vi) Carefour WC and C India P. Ltd. Vs DCIT 368 ITR 692. vii) CIT Vs Samsung India Electronics Ltd. 356 ITR 354 (Del.) 8. On the other hand, Ld . D. R. relied upon the order of A.O. in imposing penalty u/s 271(1)(c) and impugned order passed by Ld. CIT(A) by contending inter- .....

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further submitted that no interconnection, interdependence or interlacing between Umaid Bhawan Palace, Jodhpur, a new business and Lodhi Hotel business, which is evident from audit report filed with I. T. Return for Assessment Year 2004-05 has been established; that the assessee did not supply copy of agreement entered into between Umaid Bhawan Palace Project being a joint venture with Marudhar Hotels Pvt. Ltd. despite demand; that the assessee has not furnished any evidence to establish interco .....

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ot admissible as per judgements cited as PSIDC Ltd. Vs CIT, 225 ITR 792 (S. C.) and Brooke Bond India Ltd. Vs CIT 225 ITR 798 (S. C.); that since the assets in question have not been used for the purpose of business, the claim of the depreciation thereon amounting to ₹ 7,99,025/- are not allowable, hence added to the income of assessee; that the assessing authorities have disallowed the claim of project cost written off by the assessee for the Umaid Bhawan Palace is capital in nature - cla .....

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. Undisputedly, the assessee has claimed expenses to the tune of ₹ 1,49,91,020/- during the Assessment Year 2005- 06 on account of fee paid to ROC, depreciation, Umaid Bhawan Palace Project cost written off and other expenses in Assessment Year 2005-06, and ₹ 1,68,15,772/- on account of claim of depreciation and other expenses in Assessment Year 2006-07, which have been disallowed by the A.O. being not sustainable. Ld. A.R. relied upon Hon ble Apex Court s judgement in the case of CI .....

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ealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in Section 271(12)(c) would embrace the details of the claim made. Where no information given in the 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, t .....

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or correct, not according to the truth or erroneous. 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(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return canto amount to furnishing inaccurate particulars. Dec .....

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. It is further argued by Ld. Counsel for the assessee that the penalty is not leviable because the matter is admitted in the Hon ble Delhi High Court and pending for adjudication and the issue is debatable. In support of his contention, he relied upon the order dated 08.07.2014 passed by Hon'ble High Court of Bombay in the case of CIT Vs Nayan Builders and Developers, which reads as under: Having head Mr. Ahuja, Ld. Counsel appearing on behalf of the appellant, we find that this appeal cann .....

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made out for imposition of penalty and the same was rightly set side. The appeal raises no substantial question of law, it is dismissed. No costs. 11. Ld. Counsel for the assessee further stated that against the order of ITAT, assessee has filed appeal before Hon ble Delhi High Court, which his pending for adjudication. He has also filed a copy of order dated 24.07.2014 of Hon ble High Court to support this contention: In the High Court of Delhi at New Delhi I.T.A.278/2012 I.T.A.279/2012 I.T.A.2 .....

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