TaxTMI 
TaxTMI 
2015 (5) TMI 1109
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....ive consignments and documents through DHL's worldwide network. For transhipment of international consignments relating to India, the assessee had entered into an agreement dated 26th April 2002 with DHL Express (India) Private Limited (DHL India) for providing services in relation thereto. Under the said agreement both the parties render services to each other mutually on a 'Principal to Principal' basis. As per the same, the assessee delivers consignments collected by DHL India from various locations in India to specified destinations outside India and DHL India provides similar services to the assessee within India. The agreement has been entered into on the basis of 'Çost Plus' model. As per the 'Cost Plus' based operating agreement, the consideration of the assessee is determined as an amount in excess of revenues collected by DHL India over costs incurred by it plus the agreed mark-up. 3. The assessee had filed its return of income for the A.Y.2003-04 declaring total income of Rs. 1,47,46,115/- as income from other sources and NIL income from business with appropriate disclosures by way of notes. The assessment was completed under Section 143(3) assessing total inco....
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....o tax if any, payable] by him, a sum which shall not be less than, but which shall not exceed [three times], the amount of tax sought to be evaded by reason of the concealment of particulars of his income {or fringe benefits} or the furnishing of inaccurate particulars of such income {or fringe benefits]. Explanation 1 - Where in respect of any facts materials to the computation of total income of any person under this Act- (A) such person foils to offer on explanation or offers on explanation which is found by the [Assessing] Officer or the {Commissioner (Appeals)) {or the Commissioner] to be false, or (B) such person offers on explanation which he is not able to substantiate [foils to prove that such explanation is bonafide and that all the facts relating to the some and material to the computation of his total income hove been disclosed by him}. 1.3.2. The perusal of above provisions read with explanation would show that Explanation 1 to section 271 (1) (c) of the Act provides that the penalty would be deemed to attract where in respect of a fact material to the computation of income either no explanation is offered, or explanation offered is ....
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....ions delivered in the case of assessee sister concern. The issues ore debatable and the explanation furnished by the assessee is not held to be false by the assessing officer. The explanation is bonafide and under such circumstances. levy of penalty is bad in law. Thus, this decision is equally applicable to the facts of the appellant's case. 1.3.3. The Hon'ble Punjab and Haryana High Court in the case of Haryana warehousing Corporation (2009-TIOL-332-HC-P&H-IT) held that the essential pre-requisites under Section 271 (1) (c) of the Act before 0 penalty con be levied is that the assessee should have either concealed its income or furnished inaccurate particulars of income. Accordingly. to levy penalty at a first place, all the essential ingredients to levy penalty under Section 271 (1) (c) of the Act should be fulfilled. The AO has. however. taken a different view that the amount is taxable. It is trite law that penalty proceedings are distinct and separate proceedings from assessment proceedings. The finding recorded in the assessment order is not conclusive for deciding the imposition of penalty. It only has a persuasive value. The AO has referred to the....
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....the material on record. there is nothing to show that there was an attempt at concealing income or furnishing inaccurate particulars. 1.3.7. The Hon'ble Pune Tribunal in the case of Kanbay Software India Pvt. Ltd. Vs, DClT [2009J 22 DTR 481 (Pune) (2009* TIOL*196*ITAT*PUNE) has observed that concealment implies that the person concealing an income is hiding camouflaging or covered up so as it cannot be seen found observed or discovered. Further the expression 'furnishing of inaccurate particulars of income', implies furnishing of details or information about income which are not in conformity with the facts or truth, It does not extend to subjective areas such as the taxability of income admissibility of a deduction and interpretation of law. The admission or rejection of a claim is a subjective exercise and whether a claim is accepted or rejected has nothing to do with furnishing of inaccurate particulars of income. In this decision. the Pune ITAT. interpreting the decision of the Supreme Court in case of Dharmendra Textile has held that the judgment of the Apex Court is not en authority for proposition that penalty is an automatic consequence of an addition b....
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....shows that taxability of income is disputable. 1.3.13. It does not seem to be a case that the Assessee has taken a stand which is not tenable or which it is not able to substantiate. The conclusions reached at by the AO merely appear to be a difference of opinion on a debatable issue than the one taken by the Appellant. The AO has himself pointed in para 6 at page no 8 in the penalty matter that the Appellant should have referred section 9(1)(i), 9(1)(vi) and 9(1)(vii) in the notes alongwith computation and assessee has also not produced judicial decision in support of its claim. On perusal of the notes to return of income and the assessment submissions of the Appellant during assessment proceedings, it is observed that the Appellant made the relevant references in the notes to return which were substantiated in the assessment proceedings by way of references to judicial precedents, references to circulars commentaries, etc. in support of its claim. This clearly shows the issues involved were 'debatable issues' of legal interpretation. 1.3.15. The Hon'ble Mumbai Tribunal in the case of AClT vs. VIP Industries Ltd. [2009) (30 SOT 254) (Mum) (21....
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....hin the mischief of this section, the act (intentional or unintentional) of the assessee should result into the concealment of income. Where on assessee genuinely makes claim for 0 particular deduction by disclosing all the necessary facts relating to the some that will not amount to concealment even if the assessee's claim is rejected." 1.3.16. The Hon'ble Supreme Court in Union of India vs. Rajasthan Spinning & Weaving Mills 23 DTR (SC) 158 which also was given in the context of Excise laws as in the case of Dharmendra Textiles, it was observed that the decision of Dharmendra Textiles will not apply to every case of non-payment or short payment of duty. 1.3.17. The Hon'ble ITAT, Mumbai Bench in the case of Roborant Investments (P) (7 SOT 181) (Mum) has held that the cases involving genuine difference of opinion on matters of low between the assessee and the AO are clearly outside the scope of Explanation to Sec.271 (1)(c). 1.3.18. The Hon'ble Jurisdictional Mumbai Tribunal in the case of Telebuild Construction (P) Ltd. Vs. AClT (13 SOT 218) has reaffirmed the principle that merely because the claim of deduction claimed by the assessee is....
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.... therefore claimed that it was to be included in the profit for purpose of sec.80HHC. The AO disallowed the claim and imposed penalty. The Tribunal found that all the which could not be justified in low. The Hon'ble Delhi High Court had held that when there was full disclosure of material it could not be said that the conduct of assessee attracted provisions of Section 271 (1) (c) of the Act penalty was held unjustified. The Hon'ble Delhi High Court has discussed the case of ClT vs. Vidyagauri Natvarlal 233 ITR 91 (Guj) and has held as under. "What is required to be considered is whether there was any enquiry that was required to be mode by' the Assessing Officer before concluding that the assessee had furnished inaccurate or false particulars. In this case we are of the view that no such enquiry was required to be mode but there was only the need for application of the low. On the legal position. the Assessing Officer was not satisfied and did not agree with the assessee but that by itself is not a ground to invoke the penalty provision of the statute. Learned counsel for the Revenue relied upon ClT v Vidyagauri Natvarlal (/999) 238 ITR 91 (Guj). In t....
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....es. it will not automatically lead to 0 case for penalty under section 271 (1 )(c) of the IT Act. 1961. 1,3.24. Further as observed in the case of the Appellant assessment has been made on the basis of difference of opinion regarding the interpretation of law on the question of PE, existence of Agency PE. Royalty and FTS. There is no concealment of any fact nor have any additional facts been discovered proving the earlier disclosure in the return to be false or wrong. 1.3.25. Further my predecessor ClT(A) has also in the assessee's own case for AY 1998-99 vide appeal order no. ClT (A) XXXI/DDIT(IT)1 (2)/ITO-l 08107-08 dated 28-2-2008 and AY 1999-2000 vide order No. ClT (A) XXXI/DDIT(IT) 1 (2)/IT-1 07/07-08 dated 29-2-2008 and my own finding for A.Y. 2000-01 2001-02. 2002-03, 2005-06 and 2006-07 under the same set of facts has held that no penalty is leviable under section 271 (1) (c) in case of the Appellant and deleted the penalty levied by The AO. on similar lines a) above. I also have no reason to leviable from findings given by my predecessor ClT(A) in this regard. 1.3.26. Considering my aforesaid conclusions as well as my predecessor's findin....
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.... assessee on the ground that a substantial question of law arises. On this factual matrix, we are of the considered opinion that no penalty can be levied on the facts and circumstances of the case. The facts have already been brought out on page 1 to 6 of this order. 8. The Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Ltd. held as follows : " A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexion, the meaning of the word "particular" is a details (in plural sense); the details of the claim, or the separate items of an account. Therefore, the word "particulars" used in the s. 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made....
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....State of Tamil Nadu & Anr. (2009) 23 VST 249 (SC), applied, Reliance Petroproducts (P) Ltd. (judgment dt, 23rd Oct., 2007 of the Gujarat High court in Tax Appeal No. 1149 of 2007) affirmed." 9. Applying the propositions laid down to the facts of this case, we have to necessarily hold that merely because the assessee has made a bonafide claim, and the Revenue has rejected the claim on a different legal interpretation, a penalty u/s 271(1)(c) cannot be levied. Thus we uphold the contention of the assessee that there is no furnishing of inaccurate particulars of income in this case. There is no finding in the return of income that any details supplied by the assessee in the return of income were found to be incorrect or erroneous or false. Hence we delete the penalties for both the assessment years. 10. In the result, the appeals of the assessee are allowed. We have also gone through the order of the Hon'ble jurisdictional High Court, wherein the appeal preferred by the department against the above order of the Tribunal was dismissed. The relevant observation of the Hon'ble High Court in this regard is as under :- "2. The Income Tax Appellate Tribunal in ....