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TMI Blog2025 (5) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... eversing the Assessing Officer's action imposing section 271(1)(c) penalty of Rs. 14,88,45,634/-; vide his lower appellate discussion reading as under: "5.4 Ground no. 2 is directed against the grievance of appellant with regard to levy of penalty u/s 271(1)(c) on technical ground. 5.5 The AR of the appellant submits as under: 1. At the foremost, the Appellant furnished that the penalty can be levied only in case of concealment of income or filing of inaccurate particulars of income. Relevant submission made in this regard is as follows: "A) PENALTY LEVIED ONLY IN CASE OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF THE SAME Penalty under section 271(1)(c) may be imposed only in case where it is proved that the assessee has consciously made a concealment or has furnished inaccurate particulars of his income. In the instant case, as stated above in the background of the case, the Appellant had duly disclosed the fact about treatment of interest on late payment of license fee in the audited financial statements. Further, the Appellant had submitted all the details sought by the Respondent during the course of assessment proceedings. In view of the above, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of levying penalty under Section 271(1)(c) signifies a deliberate act or omission on the part of the Assessee and has held that: "such deliberate act must be either for the purpose of concealment of income or furnishing of inaccurate particulars." 2. The principle emerging out of the above submission of the Appellant is that penalty cannot be levied by the AO where there has been no concealment of income or filing of inaccurate particulars of income. The Appellant has stated that it had duly disclosed the fact about the treatment of interest on late payment of license fee in the audited financial statements and also furnished entire details sought by the AO during the course of assessment proceedings. In contrast, the assessing officer has mentioned that it is primary duty of every assessee to disclose true and correct particulars of income while filing the return from year to year (para 8). Further, it has also relied on the fact that the inaccurate particulars in the instant case would not have come to notice if the return would not have been picked up for scrutiny. In support of the same, the AO has also relied on CIT vs. Zoom Communications Pvt Ltd. (327 ITR 516), which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in the instant case is a debatable one and the Appellant was in a bona fide belief that the interest on license fee is a revenue expenditure, whereas the Respondent was of the view that such expenditure was of capital nature. Given that two views are possible and the department has taken a different view, viz-a-viz the position adopted by the appellant, cannot form a basis for levying penalty under section 271(1)(c). Where the assessing officer accepts one version in preference to the other does not make out a case for penalty, nor can the guilt of concealment of income be said to have been established. Further, nowhere in the assessment or the appellate orders have the revenue authorities held that the details furnished by the appellant are false or incorrect. Hence, the decision of the Hon'ble Delhi High Court, being based on different set of facts, cannot be relied upon by the Respondent in the instant case." 5.6 I have considered the facts of the case and submission of the AR of the appellant. It is further noted that the appellant also relied on the recent judgment of the Hon'ble Delhi High Court in case of PCIT- 8 vs. Samtel India [96 Taxmann.com 162), which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se' return inviting imposition of penalty." In view of the above, I am of the opinion that the Appellant's argument and explanations were bona fide. Additionally, it had furnished its explanations with respect to the positions adopted in its return of income, and accordingly, since there has been no concealment of income and no failure on part of the Appellant to offer explanations, I am of the view that the argument of the Appellant is accepted 5.8 Additionally, the Appellant has also stated in its submission that the issue of allowance of interest on license fee was a debatable issue on which question of law was framed and admitted by the Delhi High Court for adjudication. In this regard, the Appellant has made following submission, which is being reproduced for reference: "(D) WHERE TWO OPINIONS ARE POSSIBLE OR THERE ARE DEBATABLE VIEWS THEN THERE CAN BE NO PENALTY FOR CONCEALMENT OF INCOME At the very outset, we wish to submit that based on a plain reading of the provisions of section 271(1)(c) of the Act, along with Explanation attached thereto, it is apparent that penalty under for concealment of income/furnishing of inaccurate particulars of income cannot be le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealment or furnishing inaccurate particulars. The assessee had given all particulars of expenditure and income and had disclosed all facts to the Assessing Officer. It was not the case of the Assessing Officer or the assessee that in reply to the questionnaire of the Assessing Officer, some new facts were discovered or the Assessing Officer had dug out some information which was not furnished by the assessee. Thus, department's contention of concealment of income by the assessee or furnishing of false particulars by the assessee had no basis. There was no force in the appeal and, therefore, the appeal was to be dismissed." In the case of Asst. Director of Income Tax vs. Nortel Networks Ltd (2014) (Delhi High Court) (ITA No. 7/2014), the Hon'ble Delhi Court has confirmed the order of the Hon'ble Delhi ITAT wherein it had been held that in cases where more than one view is possible, penalty cannot be levied under section 271(1)(c) of the Act. In the case of ACIT vs. Porritts & Spencer (A) Ltd. (2008) (Delhi ITAT), the Hon'ble Bench observed that where the assessee has disclosed all the material facts and after placing the facts on record the assessing author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of certain provisions of the Act and raised contention but it did not find favour with the authorities, it may be on account of difference of opinion on particular set of facts but it does not amount that there had been a concealment of particulars of income. In view of our above discussion, we are of the opinion that penalty levied in the given facts and circumstances is illegal and invalid. We, therefore, cancel the same." In CIT Vs Calcutta Credit Corporation (1987) (166 ITR 29) (Calcutta), the Calcutta High Court has held that: "The facts found by the Tribunal had not been challenged as perverse or based on no evidence. It was settled law that mere addition to the taxable income did not automatically lead to an order of penalty. No case for levy of penalty had been made out as two opinions were arrived at on the same facts. The Tribunal was justified in holding that no penalty was leviable." (Emphasis supplied) Similar view has been expressed in a plethora of other judgments of various Courts, such as: Vidyut Metallics Vs Deputy Commissioner of Income tax (2001) (116 Taxman 275) (Mag.); CIT Vs Jagabandhu Kumar Ruplal Sen Poddar (1982) 133 ITR 156 (Calcutta Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment whereunder deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section 260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case. This appeal is accordingly dismissed." Similarly, the Hon'ble Delhi Tribunal in the case of ACIT v Shri Pawan Kumar Malhotra ITA 5556/Del/2011, it is order dated April 29, 2016 held as under. 11. in the context of the appeals of the assessee we are of the considered opinion that the issue on hand is debatable, open and capable of having an alternate view as the same is held to be representing a substantial question of law by the Jurisdictional High Court at the time of admission of appeal. Accordingly, it is appropriate for us to hold, that the assessee was under a bona fide belief for staking its claim and in the presence of these factors, no penalty under section 271(1)(c) is leviable. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidity of a penalty order. This is only to put the record straight insofar as the opinion that the Tribunal as expressed in the present impugned order viz. that upon mere admission of a Tax Appeal on quantum additions, is an indication that the issue is debatable one and that therefore, penalty should automatically be deleted without any further reasons or grounds emerging from the record." 5.10 In the instant case, the Hon'ble High Court in its order dated 04.12.2008 made a clear observation that a substantial question of law is framed with respect to issue of interest on license fee, which clearly goes on to show that the issue in the instant case was indeed debatable. Accordingly, in view of the discussion above, I am of the view that in the instant case, there is a difference of opinion between the Appellant and the AO which arises out of a debatable issue whether interest on license fee is revenue expenditure or capital expenditure and due to such difference of opinion, in conformity to the various judgments discussed above, argument of the Appellant is accepted and no penalty can be levied in the instant case. 5.11 In addition to the above, the Appellant also furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, wherein the learned coordinate bench's order dated 26.05.2006 upheld the CIT(A)'s above referred findings. It then chose to file its tax appeal in hon'ble jurisdictional high court under section 260A of the Act which first stood admitted and then their lordships restored the matter back to the Assessing Officer in light of Commissioner of Income-tax vs. Bharti Hexacom Ltd., [2014] 221 Taxman 323 (Delhi). And that the Assessing Officer thereafter passed his consequential order on 30th December, 2016 again disallowing the assessee's interest expenditure claim on delayed licence fee in very terms. All this has admittedly attained finality now. 6. It is after the above quantum backdrop that we now come to the impugned penalty proceedings. Learned Assessing Officer passed its penalty order on 30th June, 2017 holding the assessee to have both concealed as well as furnished inaccurate particulars of income whilst raising the foregoing interest expenditure claim of delayed licence fee after rejecting its detailed explanation which has admittedly been reversed in the lower appellate proceedings. This is what leaves the Revenue aggrieved. 7. We have given our thoughtful consideration to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciating the detailed justification given by the AO in the assessment order 2. On the facts and circumstances of the case the Id. CIT(A) erred in deleting the disallowance of 10% of the commission expenses, amounting to Rs. 19,02,99,1647-made by the AO by relying on the judgement given in case of Vodafone Mobile Services Pvt. Ltd. for the A.Y. 2008-09 by the Hon'ble ITAT without appreciating that the above issue is a factual issue and not legal issue and thus the judgement given in case of another assessee for another assessment years was not binding and without appreciating the fact that the onus was on the assessee to establish genuineness of expenses claimed and under such circumstances ad-hoc disallowance was justified. 3. On the facts and circumstances of the case the Id. CIT(A) erred in deleting the addition of Rs. 39,99,98,2377- made by the AO by treating the payment of Royalty-WPC charges is capital in nature without appreciating the detailed justification given by the AO in the assessment order. 4. On the facts and circumstances of the case the Id. CIT(A) erred in deleting the addition of Rs. 10,40,29,1607- on account of advertisement expenditure claimed by assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., which already stand accepted to the extent of 90%. We thus see no reason to interfere with the learned CIT(A)'s findings deleting the impugned disallowance. This second substantive ground raised at the Revenue's behest stand rejected. 18. The Revenue's third substantive ground seeks to revive the Assessing Officer's action disallowing the assessee's royalty and Wireless Planning Commission (WPC) charges treated as capital expenditure in the course of assessment and deleted in the CIT(A)'s lower appellate order. Suffice to say, it emerges herein as well that this tribunal in Vodafone Idea Ltd. case (2017) 83 taxmann.com 7 (Del.) has followed CIT Vs. Fascel Ltd. (2009) 221 CTR 305 (Del) whilst concluding such expenses as revenue in nature only. We thus uphold the learned CIT(A)'a action deleting the impugned disallowance in very terms. 19. Lastly comes the Revenue's fourth substantive ground that CIT(A) has erred in law and on facts in treating the assessee's advertisement expenditure of Rs. 10,40,29,160/- as revenue in nature as against the assessment findings holding the same as capital expenditure. We are informed during the course of hearing that this tribunal's earlier c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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