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2016 (9) TMI 849 - ITAT DELHI

2016 (9) TMI 849 - ITAT DELHI - TMI - Levy of penalty u/s 271(1)(c) - deduction u/s 80IB - Held that:- The assessee has claimed that revised returns for both asstt. years 2005-06 and 2006-07 were filed, withdrawing claim u/s 80IB of I.T. Act at the time when return for asstt. year 2007-08 was being filed. The assessee claims that the realisation that the assessee was not eligible for deduction u/s 80IB of I.T. Act was arrived at the time of filing return for asstt. year 2007-08 impliedly claimin .....

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not merit serious consideration, and in the facts and circumstances of the cases before us, it does not advance the cause of the assessee. Had the revised returns been filed (withdrawing claim made u/s 80IB of I.T. Act for asstt. year 2005-06 and 2006-07) well before the time of filing return for asstt. year 2007-08 i.e. well before 31.10.2007, but after questionnaire dated 4.7.2007 was issued by Ld. AO, would the assessee be justified in claiming a favourable consideration ? No. In view of the .....

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ke or delay canít be used to advance oneís cause. In law, nobody can claim the benefit of delays or mistakes on his own part; though it may advance the cause of the other side. - Penalties levied u/s 271(1)(c) of I.T. Act by the Ld. AO for both asstt. years 2005-06 and 2006-07 ; and upheld by the Ld. CIT(A) for both these years are hereby confirmed. We uphold the orders of the lower authorities for both asstt. years 2005-06 and 2006-07 and dismiss the appeals filed by the assessee for both a .....

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levy of penalty u/s 271(1) (c) of the Income Tax Act 1961 (hereinafter referred to the Act ). The following grounds have been raised in ITA No. 3953/Del/2013 for asstt. year 2005-06 :- 1. That on the facts and circumstances of the case, CIT(A) was not justified in confirming penalty of ₹ 10,35,008/- on the alleged ground of furnishing of inaccurate particulars of income in the context of statutory claim u/s 80-1B. 2. That in any case, mistake if any was on account of bona fide causes and .....

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3/Del/2013 for asstt. year 2006-07 the following grounds have been raised :- 1. That on the facts and circumstances of the case, CIT(A) was not justified in confirming penalty of ₹ 15,20,262/- on the alleged ground of furnishing of inaccurate particulars of income in the context of statutory claim u/s 80-1B. 2. That in any case, mistake if any was on account of bona fide causes and assessee having filed the revised return /revised statement of income, there could be no case of any penalty .....

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appeals are filed against levy of penalties amounting to ₹ 10,35,008/- for asstt. year 2005-06 and ₹ 15,20,262/- for asstt. year 2006-07 levied u/s 271(1)(c) of I.T. Act. The penalties were imposed by the Ld. AO in respect of claim made by the assessee u/s 80IB of I.T. Act in the original return of income for asstt. years 2005-06 and 2006-07 respectively. The quantum of deduction claimed u/s 80IB of I.T. Act was ₹ 28,28,472/- for asstt. year 2005-06 and ₹ 45,16,523/- for .....

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of IT Act amounting to ₹ 28,28,472/-. However the Ld. AO treated the revised return as not filed since the revised return was submitted beyond the statutory time limit prescribed u/s 139(5) of I.T. Act. In the assessment concluded, the deduction claimed u/s 80IA of I.T. Act in the original return, amounting to ₹ 28,28,472/- was disallowed. Simultaneously penalty proceedings u/s 271(1)(c) of Income Tax Act were also initiated for asstt. year 2005- 06 by the Ld. AO. For asstt. year 20 .....

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ion u/s 80IA of Act was confronted with the assesee in the course of assessment proceedings for asstt. year 2005-06 vide questionnaire dated 4.7.2007 and in view of that, the Ld. AO held that the revision of return for asstt. year 2006-07 will not absolve the assessee of the purview of penalty proceedings under the provisions of section 271(1)(c) of Income Tax Act. Penalty proceedings were initiated by Ld. AO for asstt. year 2006-07 also u/s 271(1)(c) of I.T. Act. 2.1. During penalty proceedings .....

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return was also not correct. Further in the event of penalty proceedings, it did not offer any explanation, regarding disallowances of deduction u/s 8018 and imposition of penalty. The case of the assessee, therefore, squarely falls under explanation 1 & 4 to section 271(1)(c) of Income tax Act, 1961. Reference can also be made to the case law of CIT vs. Escorts Finance Ltd. (2009) 226 CTR 105 (Del), where the jurisdictional High Court held that in case of false claim penalty for concealmen .....

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ormation. Therefore, it was held that merely because information was available in the Tax Audit Report, would not absolve it from the penalty. In another case Gujarat High Court in the case of CIT vs. Vidyagauri Natwarlal and Ors. (1999) 238 ITR (Guj) had held that in the case of false claim, penalty for concealment is attracted. 4.2 After considering the Apex Court decision in the case of M/s Reliance Petroproducts, The Hon'ble High Court of Delhi in the case of M/s Zoom Communication Pvt. .....

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observed that the a claim which is wholly untenable in law and has absolutely no foundation on which it could be mean, the assessee would not be liable to imposition of penalty, even if he was not acting bonafide while making a claim of this nature, that would give a licence to unscrupulous assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the .....

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of penalty u/s 271(1)(c) of I.T. Act amounting to ₹ 10,35,008/- for asstt. Year 2005-06. The assessee submitted before Ld. CIT(A) that at the time of preparing the income tax return for asstt. year 2007-08 it came in the knowledge of the assessee company that such deduction was not available to the assessee. The assessee claimed before the Ld. CIT(A) that withdrawal of claim u/s 80IB of I.T. Act was a conscious disclosure from the assessee company itself. However the assessee company fail .....

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71(1)(c) of I.T. Act by relying on the following decisions : 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi & Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 2.1.2. During penalty proceedings for asstt. year 2006-07 the AO issued show cause notice to assessee on 11.1.2012.The assessee f .....

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ed the return of income for all the earlier years thereby paying tax due alongwith interest. It was also submitted by assessee before Ld. AO that the questionnaire issued for A.Y. 2005-06 was general in nature and there was no show cause to withdraw the deduction u/s 80IB of the I.T. Act. It was further submitted by assessee before Ld. AO that the withdrawal of claim by assessee was well before passing any order u/s 143(3) in the assessment proceedings and that such withdrawal did not amount to .....

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company claimed deduction u/s 80IB as it was of the view that such deduction is available to them but while preparing return for AY 2007-08, it came to the knowledge of the management that this deduction is not available to the assessee company, and the assessee company immediately revised the returns of income for all the earlier years thereby paying tax due along with interest. The assessee submitted before Ld. CIT(A) that it was a conscious disclosure from the assessee company itself and that .....

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, vide separate order dated 19.3.2013 for asstt. year 2006-07, upheld the levy of penalty u/s 271(1)(c) and dismissed assessee s appeal relying on the following decisions :- 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi & Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 3. Now the asses .....

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owly and not widely or with the object of advancing the object and intention of the legislature. She also contended that the view favourable to the assessee should be adopted when two reasonable views are possible. She further relied on the decision of Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd. 322 ITR 158 (SC) for the proposition that mere making of a claim, which is not sustainable in law, by itself, does not amount to furnishing inaccurate particulars regarding .....

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06 or asstt. year 2006-07. On the other hand the Ld. DR strongly supported the orders of the Ld. AO and the Ld. CIT(A). 3.1. We find that the withdrawal of claim u/s 80IB of I.T. Act was made by the assessee only after the questionnaire was issued to the assessee for asstt. year 2005-06 by the AO, in the course of asstt. proceedings for asstt. year 2005-06 asking the assessee to furnish the details of all exemptions and deductions claimed by it in the return of income and to clarify as to why th .....

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eduction u/s 80IB was not available to the assessee ; the assessee has also not provided any explanation or information / particulars as to on what basis it realised at the time of filing income tax return for asstt. year 2007-08 that deduction u/s 80IB of I.T. Act was not available to the assessee. The assesee submitted that claim was earlier made and later withdrawn on account of difference of opinion. However, at no stage has the assessee provided any explanation or information/ particulars a .....

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)(c) of I.T. Act, even on strict and narrow construction of S. 271(1)(c) of I.T. Act and two reasonable views are not possible. Hence the case of Virtual Soft System Ltd. vs. CIT (supra) does not help the assessee. The assessee withdrew deduction u/s 80IB of I.T. Act by filing revised return only when it was faced with query raised by Revenue during assessment proceedings for asstt. year 2005-06, to justify its claim u/s 80IB of I.T. Act. The assessee could have withdrawn the claim before the ca .....

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for asstt. year 2005-06 and for asstt. year 2006-07 that the deduction u/s 80IB of I.T. Act was not available to it and further that despite this knowledge, the assessee made claim u/s 80IB of I.T. Act, though it was not admissible, with the motive to avail of deduction u/s 80IB of I.T. Act in case the returns for asstt. year 2005-06 and 2006-07 were not selected for scrutiny. 3.2. The Ld. AR of the asseessee drew our attention to apex court decision in the case of CIT vs. Reliance Petroproduct .....

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ncome for asstt. year 2005-06 and 2006-07 were incorrect by assessee s own admission. In fact, the case of the assessee is directly covered against the assessee by decision of Hon ble Jurisdictional High court in the case of CIT vs. Zoom Communication Pvt. Ltd. 191 Taxman 179 (Delhi). In CIT vs. Zoom Communication Pvt. Ltd. (supra) , which is binding on us ; the Hon ble Jurisdictional High Court held, after considering CIT vs. Reliance Petroproducts (supra) as under :- It is true that mere submi .....

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f the assessee makes a claim which is not only incorrect in law, but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271 (1)( c ). If one takes the view that a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, the assessee would not be liable to imposition of penalty, even if he was not .....

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nce would be that the persons, who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them, would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. (Para20) 3.2.1. Further, perusal of the binding order of Hon ble Jurisdictional High Court in the case of CIT vs. Zoom Communication Pvt. Ltd. (supra), relevant p .....

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d in this background, we are of the view that filing of revised return for asstt. year 2005-06 and 2006-07 by the assesee withdrawing the claim u/s 80IB of I.T. Act ; well after the case was selected for scrutiny for asstt. year 2005-06 and after the assessee was issued questionnaire by the Ld. Assessing Officer requiring the assessee to clarify as to why the same should be accepted ; was done at too late a stage. There is a critical stage after which it is too late, and withdrawal of claims mad .....

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as Income Tax Department picks up a small percentage of income-tax returns for scrutiny) and large numbers in the crowd of travellers leaving the station may not be asked by the Ticket Collector to show the ticket. But once a ticketless passenger is confronted by the Ticket Collector and asked to show ticket, (just as in the cases before us, the Ld. AO vide questionnaire dated 04.7.2007 asked the assessee to clarify why exemptions and deductions claimed by it should be accepted) the ticketless p .....

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ot withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 immediately after the case was selected for scrutiny for asstt. year 2005-06. Claims u/s 80IB of I.T. Act were withdrawn by the assessee much after the Ld. AO issued questionnaire dated 4.7.2007 asking the assessee to clarify why exemptions and deductions claimed by it should be accepted. By that time it is too late and the assessee has missed the boat. At that late a stage, well past the critical stage, .....

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stt. year 2007-08 impliedly claiming thereby that the assessee decided to withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 (by filing revised returns of income) not because of the questionnaire dated 4.7.2007 issued by the Ld. AO) but because subsequently at the time of filing return for asstt. year 2007-08 the assessee on its own realised that deduction u/s 80IB was not admissible. This is a self-serving claim without any credible proof. Self-serving clai .....

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