Commissioner Of Income Tax, Delhi v. Madhushree Gupta

THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 27.02.2013 +ITA 47/2013 COMMISSIONER OF INCOME TAX, DELHI ... Appellant versus MADHUSHREE GUPTA... RespondentAdvocates who appeared in this case:For the Appellant: Mr Suruchi AggarwalFor the Respondent: Mr V. N. Jha CORAM:-HON’BLE MR JUSTICE BADAR DURREZ AHMEDHON’BLE MR JUSTICE R.V.EASWAR JUDGMENT BADAR DURREZ AHMED, J (ORAL) 1.This appeal is directed against the Tribunal’s order dated25.05.2012 in ITA No. 1589/Del/2005 pertaining to the assessment year 2001-02.It arises out of the penalty order passed by the AssessingOfficer under Section 271(1)(c) of the Income Tax Act, 1961. A penaltyof`18,79,303/-hadbeenimposedupontherespondent.TheCommissioner of Income Tax (Appeals) confirmed the penalty, whichhad been deleted by the Tribunal by virtue of the impugned order. 2.The Assessing Officer had noted that the assessee had claimedcurrent year’s losses amounting to ` 80,65,000/- pertaining to thebusiness of the assessee in respect of the share trading business.Therespondent / assessee had set off this loss against the amount of profitafter claiming deduction under Section 80HHC of the said Act.The Assessing Officer held that the deduction under Section 80HHC wasallowable on the gross total income as defined under Section 80AB readwith Section 80HHC.The gross total income, according to Section80AB, was the income of the assessee after setting off the current year’slosses.Consequently, the Assessing Officer had, in the quantumproceedings, disallowed the deduction of ` 53,17,841/- out of the totaldeduction of ` 1,03,61,340/- claimed by the assessee /respondent. 3.The learned counsel for the respondent pointed out that the Tribunal had placed reliance on the decision in the case ofCIT v.Reliance Petroproducts Private Limited: 322 ITR 158 (SC) wherein itwas held that mere making of a claim, which is not sustainable in law,would not, ipso facto, amount to furnishing inaccurate particulars regarding the income of the assessee and would, therefore, notautomatically result in a penalty order against the assessee. 4.The learned counsel for the appellant placed reliance on thedecision of this Court in the case ofCIT v. Zoom CommunicationPrivate Limited: 327 ITR 510 (Del), wherein this Court, after examiningthe decision of the Supreme Court in Reliance Petroproducts PrivateLimited (supra), had observed that the Court cannot overlook the fact thatonly a small percentage of the income tax returns are picked up forscrutiny and if the assessee makes a claim which is not only incorrect inlaw but is also wholly without any basis and the explanation furnished byhim for making such a claim is not found to be bonafide, it would bedifficult to say that he would still not be liable to penalty under Section271(1)(c) of the Act. Therefore, the issue to be examined in the presentcase is whether the claim made by the assessee is wholly without anybasis and the explanation furnished by the assessee for making such aclaim is not bonafide. 5.The learned counsel for the respondent pointed out that the reasonfor making the claim in the manner indicated above was that there weredecisions of the Bombay High Court in the case ofCIT v. ShirkeConstruction Equipments Limited: [2000] 246 ITR 429 (Bom) and alsoof the Kerala High Court in the case ofCIT v. Smt. T. C. Usha: [2004]266 ITR 497 (Ker) which supported the position adopted by therespondent / assessee in its return. It is only subsequently that the matterwas settled by the Supreme Court in the case ofIPCA Laboratory Ltd. v.DCIT: [2004] 266 ITR 521 (SC), wherein the Supreme Court held thatthe provisions of Section 80AB had an overriding effect over all the othersections in Chapter VI-A including Section 80HHC.The decision inIPCA Laboratory Ltd (supra) came subsequent to the filing of the return.Therefore, it cannot be said that the claim made by the respondent /assessee was not bona fide or without any basis.We agree with thesubmission made by the learned counsel for the respondent / assessee.The present case is not covered by the ratio laid down in ZoomCommunication Private Limited (supra). The Tribunal has arrived at thecorrect decision relying upon the decision of the Supreme Court in Reliance Petroproducts Private Limited (supra).No question of law arises for our consideration. The appeal is dismissed. BADAR DURREZ AHMED, J R.V.EASWAR, JFEBRUARY 27, 2013SR