TaxTMI 
TaxTMI 
2023 (5) TMI 826
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....ained the addition of Rs. 5 lacs u/s 14A only on adhoc/estimate basis and no penalty u/s 271(1)(c) is leviable on such adhoc addition, as confirmed by the Ld. CIT(A). 3. That the Ld. CIT(A) has failed to appreciate that all the particulars with regard to the investments, expenses etc. has duly been disclosed in the Balance Sheet while filing the return of income and, as such, the assessee has neither concealed the particulars of income or furnished inaccurate particulars of income. 4. That the Ld. CIT(A) has ignored the binding judgments of the Hon'ble Apex Court in case of CIT vs Reliance Petro Products (P) Ltd. reported in 322 ITR 158 and Hon'ble High Courts in similar cases and various other cases of coordinate Benches of the ITAT before confirming the levy of penalty u/s 271 (1 )(c) of the Income Tax Act, 1961. 5. Notwithstanding the above said grounds of appeal, the confirmation of levy of penalty u/s 271(1)(c) is again not proper since no specific charge either of concealment of income or for furnishing inaccurate particulars of income have been framed against the assessee as per binding judgment of full Bench of the Hon'ble Bombay High ....
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....ished inaccurate particulars of income. 6. It was submitted that the assessee had disclosed and furnished complete and accurate particulars of its income while filing return of income and during the course of assessment proceedings u/s 143(3). There is no finding recorded by the AO as to how the assessee has furnished inaccurate particulars of income and merely the fact that in the quantum proceedings, the addition has been confirmed, the same cannot be a basis for levy of penalty u/s 271(1)(c) of the Act. It was submitted that even the ld CIT(A) has completely ignored the details submissions as filed before him and has confirmed the levy penalty without assigning any reasons. In support, reliance was placed on the judgment of Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd 322 ITR 158. 7. It was further submitted that even no specific charge has been made against the assessee as is apparent from the notice u/s 271(1)(c) and as per judgment of Full Bench of Hon'ble Bombay High Court in the case of Moh. Farhan, 125 Taxman.com 253, the levy of penalty u/s 271(1)( c) is liable to be cancelled. 8. Further, the ld AR placed reliance on the written submi....
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....rect. Further it has also been submitted that the investments made in the subsidiaries are strategic investments and it is also a settled law that the disallowance u/s 14A cannot be made on strategic investments. However, the Ld. AO without taking the cognizance of such explanation and with a presumptive mindset made the additions by applying the provisions of Rule 8D. 4. Further, the matter was taken before the Hon'ble Bench of ITAT, wherein the Hon'ble Bench considered the submissions made by the assessee and held that the additions made by the Ld. AO are incorrect and that the additions have been made without considering the submissions of the assessee and the said para is reproduced below:- "the Assessing Officer was supposed to consider the submissions of the assessee and examine the accounts of the assessee and was required to record his findings/reasoning that he is not satisfied with the plea/submissions of the assessee. However, no such exercise has been done by the Assessing Officer in this case." Further, the Hon'ble ITAT also upheld the contention of the assessee that the investments made by the assessee were strategic inv....
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....ed inaccurate particulars. It is because of the disallowance of the expenditure the total amount representing total income is enhanced to the extent of disallowance. Conditions which are to be fulfilled before section 271(1)(c) is attracted do not exist." . * Delhi Bench of the Tribunal in the case of ACIT, Circle-3 vs Prashant Srivastava in ITA No. 5102/Del/2012 wherein the addition in. the case of the assessee was made for not producing any bills or vouchers, however, the Hon'ble Tribunal deleted the penalty on the same addition by stating that" 9. In the background of the aforesaid discussions and precedents, we find that the levy of penalty in this case is not justified particularly when the assessment was framed on the income determined on estimate basis and without bringing any material on record to substantiate that the assessee willfully and intentionally concealed the income or furnished the inaccurate particulars of the income, hence, we do not see any reason to interfere with the order of the Ld. CIT(A), accordingly, we uphold the same and decide the issue against the Revenue." * Delhi Bench of the Tribunal in the case of Shri Manish Bhargav, vs Inc....
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.... few of them are as under: ❖ UNI DESIGN JEWELLERY (P) LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX as reported in (2010) 6 ITR (Trib) 10 (Mumbai) Where there is difference between the income returned and income assessed and such difference is on account of disallowance of the bona fide claim for deduction made under s. 10A it would not constitute concealment and hence penalty under s. 271(1)(c) would not be leviable. ❖ DCIT vs. NATIONAL COOPERATIVE DEVELOPMENT CORPORATION as reported in (2012) 136 ITD 1 (Delhi) Formation of different opinion by AO on the basis of details provided by assessee does not amount to concealment of income warranting imposition of penalty. ❖ VEEJAY SERVICE STATION vs. ASSISSTANT COMMISSIONER OF INCOME TAX as reported in (2009) 122 TTJ (Del) 824 Assessee having disclosed complete facts regarding goodwill on introduction of a new partner, it cannot be said that the assessee has furnished inaccurate particulars merely because there was a difference of opinion between the AO and the assessee regarding computation of capital gains and, therefore, levy of penalty under s. 271(1)(c) was not ....
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.... by the assessee during the course of the assessment proceedings have also never been doubted by the Ld. AO substantiating that there has been no act of deliberate concealment of income or furnishing inaccurate particulars of income by assessee such that penalty under section 271 (1 )(c) of the Act can be levied. Reliance in this regard is placed on the latest judgment of Hon'ble SC in the case of CIT vs Reliance Petro Products (P) Ltd. as reported in 322 ITR 158 wherein it has Been held as under: "A glance at the provision of s. 271(l)(c) would suggest that in order to be covered, 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 Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a 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....
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....0; MIMOSA INVESTMENT CO. (P) LTD. vs. ITO (2010) as reported in 6 ITR 789 "Penalty under s. 271 (1)(c)-Concealment of income-All relevant facts furnished with return-Mere fact that the AO while discharging his duty is recalculating the total income in accordance with law which is not the same as calculated by the assessee, it cannot be held that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income or there is a deemed concealment in accordance with Expln. 1 to s. 271(1)." Thus, in view of above, it is amply clear that penalty proceedings cannot be initiated on additions made u/s 14A of the Act. 9. Lastly and most importantly, it is to be seen that in the impugned penalty order Ld. AO has not given even a single reason to substantiate his allegation that the assessee has furnished inaccurate particulars of income. The Ld. AO after giving a brief history of the case till page 12 of the penalty has merely written one small paragraph number 5.2 wherein it has been vaguely and without providing any reason has alleged that, "it is evident that assessee has deliberately furnished inaccurate particulars of in....
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....was submitted that it is therefore a case where the specific provision as applicable in the fact of the present case were deliberately not considered and the disallowance so warranted under the said provision were not made while filing the return of income. It is therefore a clear case of furnishing of inaccurate particulars of income and in view of the same, the order of the ld CIT(A) be confirmed and the appeal of the assessee be dismissed. 10. We have heard the rival contentions and perused the material available on the record. Firstly, on perusal of the penalty order, it is noted that the AO has referred to the order of the Coordinate Bench dt. 13/10/2020 in the context of quantum proceedings and has held that since the disallowance under section 14A r.w. Rule 8D amounting to Rs. 1,42,26,765/- is now restricted to Rs. 5,00,000/-, it is a fit case for levy of penalty under section 271(1)(c) of the Act and penalty for furnishing inaccurate particulars of income has thereafter been levied on the amount of disallowance of Rs 5,00,000/- under section 14A r.w. Rule 8D. We therefore find that the AO has levied the penalty merely basis confirmation of addition of Rs 5,00,000/- in th....
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....f the assessee and in the instant case, no such exercise has been done by the Assessing officer. We find that the said findings of the Coordinate Bench in fact supports the case of the assessee in the sense that where there is no examination of books of accounts of the assessee so presented before the AO, how the AO has arrived at a finding that there are certain administrative expenditure which has been incurred by the assessee in relation to exempt income and which has not been disallowed in terms of Section 14A r/w Rule 8D(2)(iii) while filing the return of income. 14. Infact, we find that the whole thrust of the AO during the course of assessment proceedings has been on the fact that the assessee has incurred significant interest cost and has earned exempt income, and therefore, there should be disallowance of interest cost under Rule 8D(2)(ii) , however, the AO didn't finally made any disallowance under Rule 8D(2)(ii) and has gone ahead and has made disallowance under Rule 8D(2)(iii). As regards disallowance under Rule 8D(2)(iii), there is however no discussion in the body of the assessment order disputing the assessee's claim that it has not incurred any administrative exp....
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....ments and major chunk of dividend income was earned from strategic investment made in subsidiary companies and thus, taking into account the entirety of facts and circumstances of the case, lump sum disallowance of Rs 5,00,000/- was found reasonable on account of administrative expenditure and to that extent, the addition was sustained. We therefore find that the disallowance so provided in Rule 8D(2)(iii) is basically by virtue of deeming fiction and basis which the amount was computed and even the deeming fiction has not been applied in the strictest of the language and has been held amenable to the peculiar facts and circumstances of the given case, as can be seen from the order of the Co-ordinate Bench, therefore the same cannot lead to a scenario where it can be held that there is any inaccurate furnishing of particulars of income in the return so filed by the assessee. 16. Further, we find that the mere fact that the provision of Section 14A r.w. Rule 8D(2)(iii) are held applicable and the claim of the assessee that it has not incurred any expenditure in relation to exempt income not being accepted cannot lead to a situation where the charge of furnishing of inaccurate par....
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..... That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 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 or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered....
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....material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff Vs. Joint Commissioner of Income Tax, Mumbai & Anr. was upset. In Union of India Vs. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there was no necessity of mens rea. The Court went on to hold that the objective behind enactment of Section 271(1)(c) read with Explanations indicated with the said Section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, willful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under....