Income Tax Appellate Tribunal - Delhi
Sanjiv Puri, New Delhi vs Department Of Income Tax on 4 November, 2011
ITA NO. 696/Del/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
AND
SHRI C.M. GARG, JUDICIAL MEMBER
I.T.A. No. 696/Del/2012
A.Y. : 2001-02
Asstt. Commissioner of Income tax, vs. Shri Sanjiv Puri,
Circle 27(1), CB-228, Ring Road, Naraina, New
Room No. 218, D-Block, Vikas Delhi
Bhavan, New Delhi (PAN/GIR NO. : AAAPP2443A)
(Appellant ) (Respondent )
Assessee by : Sh. A.K. Srivastava, CA
Department by : S. Mohanty, D.R.
ORDER
PER SHAMIM YAHYA: AM This appeal by the revenue is directed against the order of the Ld. Commissioner of Income Tax (Appeals) dated 4.11.2011 pertaining to assessment year 2001-02.
2. The issue raised is that Ld. Commissioner of Income Tax (Appeals) erred in cancelling the penalty u/s. 271(1)(c) of the Income Tax Act amounting to ` 3,78,298/-.
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ITA NO. 696/Del/2012
3. In this case, assessee has filed return of income on 31.10.2001. The case was assessed u/s. 143(1) at the returned income. Notice u/s. 148 was issued and assessment was framed u/s. 147/143(3) at ` 29,48,360/- vide order dated 4.12.2008. The main issue was re- computation of deduction u/s. 80HHC by disallowing netting of interest received by the assessee on fixed deposit receipts from interest paid by assessee to the banks for the purpose of business. On this addition, penalty was also imposed. Assessee claimed that no penalty is leviable, as assessee has not concealed any particulars of income nor has furnished inaccurate particulars of his income and assessee has fully disclosed the facts in his financial statements enclosed with the return. Assessing Officer did not accept this contention. He relied on the fact that the Ld. Commissioner of Income Tax (Appeals) has confirmed the addition in assessment year 2004-05 and on the decision of the Hon'ble Supreme Court in the case of UOI vs. Dharmendra Textile Processors Ltd. (2008) 174 Taxman 571 in which it has been held that the penalty u/s. 271(1)(c) is a civil liability and willful concealment is not an essential ingredient for attracting civil liability. Accordingly, penalty of ` 3,78,298/- was imposed by the assessee.
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4. Upon assessee's appeal Ld. Commissioner of Income Tax (Appeals) noted that the Assessing Officer has not given any justification for levy of penalty and has also not mentioned as to whether it relates to the concealment and furnishing of inaccurate particulars of income. Ld. Commissioner of Income Tax (Appeals) opined that penalty was levied mechanically by the Assessing Officer and hence cannot be legally sustained.
5. Against this order the Revenue is in appeal before us.
6. We have heard the rival contentions in light of the material produced and precedent relied upon.
6.1 Ld. Departmental Representative claimed that the assessee has made a wrongful claim as the issue is covered by the decision of the Jurisdictional High Court in the case of Shri Ram Honda Power Equip and Ors. reported in 158 Taxman 474 (Del) (2007). She further relied upon the decision of the Hon'ble Delhi High Court in the case C.I.T. vs. of Zoom Communication P Ltd. 327 ITR 510.
6.2 Ld. counsel of the assessee on the other hand submitted that there is no concealment or furnishing of inaccurate particulars in this case. He submitted that assessee has fully disclosed all the facts in his return of income and the method of computation of income by 3 ITA NO. 696/Del/2012 interest was duly disclosed. Ld. counsel further claimed that the decision of the Hon'ble Jurisdictional High court in the case of Shri Ram Honda Power Equip and Ors. (Supra) came in the year 2007, while the assessee has filed his return in the year 2001. At that time this issue was not settled. There were two views possible for netting of interest on that time. Ld. counsel further placed reliance upon the decision of the Hon'ble Apex Court in the case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010.
6.3 We have carefully considered the submissions and perused the records. We find that section 271(1(c) of the Act postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. In this case we find that there is computation of deduction u/s. 80HHC by the Assessing Officer by disallowing netting of interest received by the assessee on fixed deposit receipts from interest paid by assessee to the banks for the purpose of business. Admittedly the assessee has filed the return in the year 2001. At that time this issue was not settled and there was two views possible regarding the treatment of this issue. Under the circumstances, the case law relied by the Ld. Departmental Representative is not applicable. Hence, we hold that 4 ITA NO. 696/Del/2012 there is no infirmity in the order of the Ld. Commissioner of Income Tax (Appeals) in deleting the penalty u/s. 271(1)(c) of ` 3,78,298/-. 6.4 In this regard we refer to the Hon'ble Apex Court decision in the case of CIT vs. Reliance Petro Products Ltd. in Civil Appeal No. 2463 of 2010. In this case vide order dated 17.3.2010 it has been held that the law laid down in the Dilip Sheroff case 291 ITR 519 (SC) as to the meaning of word 'concealment' and 'inaccurate' continues to be a good law because what was overruled in the Dharmender Textile case was only that part in Dilip Sheroff case where it was held that mensrea was a essential requirement of penalty u/s 271(1)(c). The Hon'ble Apex Court also observed that if the contention of the revenue is accepted then in case of every return where the claim is not accepted by the AO for any reason, the assessee will invite the penalty u/s 271(1)(c). This is clearly not the intendment of legislature.
6.5 We further refer to the decision of the Hon'ble Apex Court rendered by a larger Bench comprising of three of their Lordships in the case of Hindustan Steel vs. State of Orissa in 83 ITR 26 wherein it was held that "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi- criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. 5
ITA NO. 696/Del/2012 Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act, or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute."
7. In the background of the aforesaid discussion and precedents relied upon, we uphold the order of the Ld. Commissioner of Income Tax (Appeals) in deleting the levy of penalty.
8. In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 20/4/2012.
Sd/- Sd/-
[C.M. GARG]
GARG] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 20/4/2012
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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