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2016 (3) TMI 504 - ITAT DELHI

2016 (3) TMI 504 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - inaccurate particulars of income - contract awarded to the assessee was not for civil construction, erection and plant and machinery and therefore the claim u/s 44BBB of the Act was incorrect and also the fees for supervision of erection, testing and commissioning of material were taxable u/s 44D on gross basis @20% u/s 115A - Held that:- The claim of the assessee has not been accepted because of legal interpretation of provision of s .....

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to have furnished inaccurate particulars of income. It is simply a matter of interpretation of that contract. It is established principle that merely because of the claim of the assessee did not find favour of the assessing authority , it cannot attract a provision of penalty u/s 271(1)(c) of the Act. Furthermore at the time of filing of return the assessee has put a note along with computation of income which fully disclosed the content of the agreement as well the contention of the assessee. .....

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regarding the income of the assessee.- Decided in favour of assessee - ITA Nos. 5075/Del/2011 - Dated:- 9-2-2016 - SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh. Gaurav Dudeja, Sr. DR For The Respondent : Sh.Rajan Bhatia, CA Sh. Ashok Khanna, CA ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal preferred by the revenue against the order of the ld. CIT (A)-XXIX, New Delhi dated 29.07.2011 for the Assessment Year 2004-05 deleting the penalt .....

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rendered supervision services & training services. The appellant filed its return of income offering 10% of total amount of supply of material and equipment of ₹ 2,37,55,936/- i.e. ₹ 23,75,590/- u/s 44BBB of the Act . Since According to AO the contract of the assessee did not satisfied conditions of contract mentioned u/s 44BBB of the ACT but only service contract, the benefit of section 44BBB was denied to the assessee. The AO further held that consideration received by the appe .....

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ssessee preferred against the order of CIT (A). Therefore the view of the ld AO was concurrently accepted with respect to section 44BBB of the Act and partly on applicability of rate of tax on service contracts. In these background the penalty u/s 271(1)(c) was levied by order dated 25.03.2010. While levying the penalty ld AO disregard the contention of the assessee that there is no concealment of income and no inaccurate particulars of income were filed. Against the order of AO, assessee prefer .....

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confirmed therefore penalty is rightly levied. 4. Against this the ld AR submitted that merely because the addition has been confirmed, the assessee cannot be subjected to penalty u/s 271(1)(c). For this he has relied upon the order of the learned Commissioner of Income-tax (Appeals) who has deleted the penalty after considering the decision of Hon ble Supreme Court in the case of the CIT Vs. Reliance Petro Products (P) Ltd. 189 Taxmann 322(SC). Therefore he submitted that penalty cannot be levi .....

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of the further view that the fees for supervision of erection, testing and commissioning of material were taxable u/s 44D on gross basis @20% u/s 115A of the Act. Therefore the assessee has furnished inaccurate particulars of income and penalty is leviable. Against this the learned Commissioner of Income-tax (Appeals) has held that the claim of the assessee has not been accepted because of legal interpretation of provision of statute and resulted into confirmation of additions. Admittedly assess .....

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atter of interpretation of that contract. It is established principle that merely because of the claim of the assessee did not find favour of the assessing authority , it cannot attract a provision of penalty u/s 271(1)(c) of the Act. Furthermore at the time of filing of return the assessee has put a note along with computation of income which fully disclosed the content of the agreement as well the contention of the assessee. In the note it is contended that the assessee satisfied the condition .....

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income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense) ; the .....

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ate particulars. The learned counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate Page No : 0164 particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an in .....

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in Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 13 SCC 448*** and reiterated in paragraph 13 that (page 13 of 317 ITR) : "13. It goes without saying that for applicability of section 271(1)(c), conditions stated therein must exist." 9. Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document .....

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a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, .....

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he particulars of his income. The court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Joint CIT* was upset. In Union of India v. Dharamendra Textile Processors**, after quoting from section 271 extensively and also considering section 271(1)(c), the court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for givin .....

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why decision in Dilip N. Shroff v. Joint CIT was overruled by this court in Union of India v. Dharamendra Textile Processors2, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff v. Joint CIT1. However, it must be pointed out that in Union of India v. Dharamendra Textile Processors**, no fault was found with the reasoning in the decision in Dilip N. Shroff v. Joint CIT*, where the court .....

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. In Webster's Dictionary, the word "inaccurate" has been defined as : "not accurate, not exact or correct ; not according to truth ; erroneous ; as an inaccurate statement, copy or transcript." 11. We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We .....

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curate particulars. 12. It was tried to be suggested that section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed .....

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culars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attrac .....

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