TMI Blog2008 (2) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... UDGMENT The judgment of the court was delivered by Rakesh Kumar Garg, J .1. The present appeal has been filed by the revenue against the order dated 5.4.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench 'H' New Delhi in ITA No.175/D/2006 in the case of respondent assessee for the assessment year 1993-94 raising the following substantial questions of law:-. "(a) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in deciding that proving contumacious intent is an essential ingredient in levy of penalty in contravention of the provisions of a Civil Statute like Income Tax Act in spite of there being so many judgements that breach of a Civil obligation attracts levy of penalty whether the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of commission paid by M/s Rohan Engineers Consultant (P) Ltd. for Rs.94,991/-. He also observed that the assessee has made false statement with regard to the payment of Rs.52,500/- to M/s Proplus Management, Registrar of Companies and Sh. K.K. Paul claiming this expenditure to be revenue in nature whereas the same was capital expenditure. Thus, the Assessing Officer vide the assessment order dated 26.3.1996 made the assessment and also ordered for initiation of proceedings under Section 271(1)(c) of the Act. Against the above orders, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Faridabad who partly allowed the appeal vide his order dated 16.2.1998 against which both revenue and the assessee preferred ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is liable to penalty on the sum of Rs.7,18,851/-. A penalty of Rs.4,15,000/- is as such imposed which is worked out as under:- Tax payable on income of Rs.54,03,021/- After appeal effect to the order of the Hon'ble ITAT Rs. 31,06,736/- Less:- Tax on above income as reduced by Rs.7,18,851/-i.e. on Rs.46,84,170/- Rs.26,93,398/- Tax sought to be evaded Rs. 4,13,338/- minimum penalty @ 100% Rs. 4,13,338/- M minimum penalty @ 300% Rs. 12,40,014/- Pe penalty imposed Rs. 4,15,000/- Issued Demand notice and challan.The above penalty order has been passed after taking necessary approval f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has made false statement with regard to the payment of Rs.52,500/- to M/s. Proplus Management Service, Registrar of Companies and Sh. K.K. Paul claiming this expenditure to be revenue in nature whereas the same was capital expenditure. The AO held that the assessee has furnished inaccurate particulars of income amounting to Rs.7,18,851/- and levied penalty of Rs.4,15,000/-. We find that the return was filed by the assessee on 4.1.1994 whereas the decision of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. vs. CIT [1997] 225 ITR 798 (SC) was rendered on 27.2.1997 holding fees payable to Registrar of Companies for increase in share capital as capital expenditure. Thus on the date of filing of the return the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the assesses raised a bona fide contention that a particular item is not taxable, he would have to show it as forming part and pay tax upon it on the point of being held liable for penalty in case contention is ultimately found by the Court to be not acceptable. This surely could never have been intended by the legislature. Hence, for the reasons given above, we are of the view that the penalty levied cannot be sustained in law. Hence, we set aside the order of the CIT(A) and delete the penalty of Rs.4,15,000/-. The grounds of appeal of the assesses are allowed." 7. Mr. Yogesh Putney, counsel for the appellant, has argued that the assessee had filed inaccurate particulars as the additions have been made on the returned income as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that the assessee filed inaccurate particulars of income or concealed its income. The Hon'ble Supreme Court in the case of Cement Marketing Company of India Ltd. v. ACIT and others [1980] 124 ITR 15 (SC) has held that unless the filing of an inaccurate return is accompanied by a guilty mind, penalty cannot be imposed. It has been further held that return cannot be "false" unless there is an element of deliberateness in it. Where the assessee does not include a particular item in the taxable turnover under bona fide belief that he is not liable so as to include the same, it would not be right to treat the return as a false return inviting imposition of penalty. Thus, we are of the view that the order of the Tribunal does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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