Income Tax Appellate Tribunal - Delhi
Moderate Leasing & Capital Services ... vs Assessee on 4 January, 2016
ITA NO. 1123/DEL/2009
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
I.T.A. No. 1123/Del/2009
A.Y. : 2004-05
M/s Moderate Leasing & vs. DCIT,
Capital Services Ltd., Circle 5(1),
415, Modi Towers, 98, Nehru Place, New Delhi
New Delhi - 110 019
(PAN:: AAACM6945K)
(Appellant ) (Respondent )
Assessee by : Sh. Raj Kumar Gupta, CA
Department by : Sh. T. Vasanthan, Sr. DR
Date of Hearing: 10-12-2015
Date of Order : 04-1-2016
ORDER
PER H.S. SIDHU, JM
This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-VIII, New Delhi dated 03.5.2006 pertaining to assessment year 2004-05 on the following grounds:-
"1. That on the facts and in law imposing the penalty under section 271(1)(c) for Rs. 50,00,000/- is totally wrong, unjustified and illegal. The appellant company had never furnished any inaccurate particulars at any stage of assessment proceedings as well in penalty proceedings. As the Hon'ble ITAT has already allowed the quantum appeal in favour of appellant company. The penalty imposed u/s. 271(1)© be deleted in full.1
ITA NO. 1123/DEL/2009
2. That the appellant company craves leave to add, amend, alter or withdraw any of the ground of appeal on or before the date of hearing.
2. The brief facts of the case are that the assessment was completed u/s. 143(3) dated 30.9.2005 and AO assessed the income at Rs. 2,44,62,910/- and proposed the penalty u/s. 271(1)(c) for the failure on the part of the assessee to disclose true particulars of income regarding the wrong claim of capital loss amounting to Rs. 1,34,06,274/- as business loss for the reasons enumerated in the body of the assessment order. Against the said assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order 3.5.2006 dismissed the appeal of the assessee. Aggrieved with, in the first round assessee came up before the Tribunal in the quantum appeal which was decided in favour of the Assessee in ITA No. 2701/Del/2006 vide order dated 6.3.2009 by holding that the transaction was on revenue account and, therefore, the assessee is entitled to deduct the loss from its business losses. Against the Tribunal order dated 6.3.2009, Revenue filed an appeal before the Hon'ble High Court of Delhi at New Delhi vide ITA No. 137 of 2010 wherein the Hon'ble Court vide its judgment dated 18.11.2011 in the case of CIT vs. Moderate Leasing & Capital Services Ltd. has allowed the appeal of the Revenue holding that the shares in question were held as investments and loss on the sale thereof was capital loss and not Revenue Loss and set aside the order of the Tribunal.
2.1 The AO in the penalty proceedings vide his order dated 31.3.2008 has imposed the minimum penalty of Rs. 50,00,000/- u/s. 271(1)(c) of the I.T. Act, 1961. Ld. CIT(A) in appeal has upheld the penalty of Rs. 50,00,000/- vide his order 2.1.2009. Aggrieved, the Department preferred an appeal before the ITAT and the ITAT vide order dated 3.6.2009 deleted the penalty by holding that as the addition which forms the basis of imposing of penalty by the AO has been deleted by the ITAT impugned penalty amount imposed by the AO and sustained by the CIT(A) cannot survive and accordingly the same was cancelled 2 ITA NO. 1123/DEL/2009 and the orders of the revenue authorities were set aside. Aggrieved with the Tribunal order dated 3.6.2009, the Revenue preferred an Appeal No. 440/2010 in the case of CIT vs. Moderate Leasing & Capital Services Ltd. vide order dated 6.2.2012 has adjudicated the issue of penalty as under:-
"Ld. Counsel for the parties admit that an order of remit is required to be passed in the present case as the order of the tribunal in the quantum proceedings has been set aside by this Court in judgment dated 18.11.2011 passed in CIT-II vs. Moderate Leaving and Capital Services Ltd. for assessment year 2004-05.
In view of the statement made by the counsel for the parties, following substantial question of law is framed:-
"Whether the Income Tax Appellate Tribunal was right in deleting penalty under section 271(1)(c) of the Income Tax Act, 1961 in view of the order passed in quantum proceedings??
The aforesaid question of law is accordingly answered in negative i.e. in favour of the Revenue and against the assessee. Order of remit is passed and tribunal will decide the plea of respondent - assessee on merits. It is clarified that we have not expressed any opinion on the merits."
3. Pursuant to the above directions of the Hon'ble High Court of Delhi, the Appeal of penalty of the Assessee has been re-fixed before the Tribunal to decide the same on merits.
4. At the time of hearing, Ld. Counsel for the assessee has filed a Paper Book-I containing pages 1 to 31 having the copy of the assessment order u/s. 143(3) dated 30.9.2005; copy of the Ld. CIT(A) order dated 3.5.2006 (Quantum); Copy of Hon'ble High Court of Delhi order dated 18.11.2011 (Quantum); ITAT order dated 3.6.2009 (Penalty) and the Hon'ble High Court of 3 ITA NO. 1123/DEL/2009 Delhi order dated 6.2.2012 (Penalty). He also filed the copy of the Brief Synopsis and firstly stated that no penalty on debatable issue and in a case of difference of opinion; claim made by the assessee is bonafidely; all relevant facts and information correctly supplied and amount claimed under one head but assessed under a different head is not concealment and lastly submitted that in the absence of striking out the irrelevant portion on the printing SCN, the specific charge remains un-specified which means the SCN is invalid and un-sustainable. In order to support his aforesaid submissions, he referred plethora of judgments on each point and requested that the penalty in dispute may be deleted.
5. Ld. Departmental Representative controverted the arguments advanced by the Ld. Counsel of the assessee and he relied upon the orders of the revenue authorities and stated that since the Hon'ble High Court of Delhi vide its order dated 18.11.2011 in quantum appeal has allowed the Appeal in favor of the Revenue and against the assessee holding that the shares in question were held as investments and loss on the sale thereof was capital loss and not Revenue Loss and impugned order of the Tribunal was set aside, hence, the penalty in dispute may be sustained.
6. We have heard both the parties and perused the orders passed by the Revenue authorities, submissions made by both the parties and the case laws relied upon by the Assessee's counsel through his Brief Synopsis. We find that earlier penalty was deleted by the ITAT vide order dated 3.6.2009, as consequential to deletion of quantum by ITAT. However, the Hon'ble High Court of Delhi, in penalty appeal, restored back to ITAT for deciding on merits, as the quantum was sustained by the Hon'ble High Court. 6.1 We are not in agreement with the contention of the Ld. DR that since the quantum appeal has been decided by the High Court of Delhi in favour of the Revenue, the penalty may be sustained. Because the mere fact that an addition is confirmed in quantum proceedings cannot be conclusive of the 4 ITA NO. 1123/DEL/2009 imposition of penalty. The Hon'ble Calcutta High Court in Durga Kamal Rice Mill vs. CIT (2004) 265 ITR 25 (Cal), has held that quantum proceedings are different from penalty proceedings.
6.2 However, we find force in the assessee's counsel submissions that the claim of the assessee is bonafidely, because the shares of SBEC Sugar Ltd. were sold from which brought the said loss. It was also submitted before us that the part shares out of total shares of SBEC Sugar Ltd. were sold in earlier year AY 2003-04, resulted into loss of Rs. 46.35 lacs which was claimed in AY 2003-04 as a revenue loss and was allowed. Accordingly, in AY 2004-05 also, assessee bonafidely claimed the loss as a revenue loss. He submitted this also shows that the claim was totally bonafidely, but the Tribunal was also of the view that the said is capital loss. From the above, it is established that since the claim made bonafidely, but disallowed is not a situation of concealment of income. To support this view, we draw support from the decision of the Hon'ble CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR-158 (SC) wherein the Hon'ble Supreme Court has held that 'where there is no findings 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 u/sec. 271(1)(c) of the Act. A mere making a claim, which is not sustainable in law, by itself, will not amount of furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to furnishing a inaccurate particulars of income. As the assessee has furnished all the details of its expenditure as well as income in its return, which details, in themselves, were 5 ITA NO. 1123/DEL/2009 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, attract the penalty u/sec. 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty u/sec. 271(1)(c). That is clearly not the intendment of the Legislature". 6.3 Moreover, we also find that in this case all the relevant facts and information correctly supplied amount. In this case the assessee has claimed revenue loss bonafidely. The loss has been accepted as it is but only as a capital loss. Non-acceptance of a claim bonafidely made under one head but assessed under different head is not a situation of concealment of income. In this regard, we draw support from the decision in the case of HMA Udyog (P) Ltd. 211 CTR (Del.) 543, where it expenses claimed as revenue expenses but held as capital expenses. It has been held to be a case of debatable issue and no penalty u/s. 271(1)(c) of the I.T. Act.
7. In the background of the aforesaid discussions and respectfully following the aforesaid precedents, we are of the considered view that the assessee has not furnished inaccurate particulars of income or concealed the income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be 6 ITA NO. 1123/DEL/2009 inaccurate or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty of Rs. 50,00,000/- made u/s. 271(1)(c) of the I.T. Act and cancel the orders of the authorities below on the issue in dispute.
8. In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the Open Court on 04/1/2016.
Sd/- Sd/-
[O.P. KANT] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date: 04-1-2016
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR,
ITAT
TRUE COPY By Order,
Assistant Registrar
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