Commissioner Of Income Tax, Faridabad v. M/S Ssp Ltd., 19, Dlf Industrial Area-Ii

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 450 of 2009 (O&M) DATE OF DECISION: 20.8.2009 Commissioner of Income Tax, Faridabad ..........Appellant Versus M/s SSP Ltd., 19, DLF Industrial Area-II,..........RespondentFaridabad CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-Mr. Rajesh Katoch, Advocatefor the appellant. **** ADARSH KUMAR GOEL, J. (Oral) 1.The revenue has preferred this appeal under Section 260A ofthe Income Tax Act, 1961 (for short, “the Act”) against the order of IncomeTax Appellate Tribunal, Delhi Bench 'G' New Delhi dated 27.01.2009passed in ITA No. 2210/Del./2008 for the assessment year 2001-02,proposing to raise following substantial questions of law:- 1. “Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty of Rs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 in respect of additionsin assessee's income which were confirmed by theLd. ITAT vide its order dated 30.3.2007 in ITA No.2090/Del.2005?case, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty of Rs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 in respect of additionsin assessee's income which were confirmed by theLd. ITAT vide its order dated 30.3.2007 in ITA No.2090/Del.2005? 2. Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty of Rs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 even though theassessee furnished inaccurate particulars of incomeand by doing so the assessee company reduced itstax liability?case, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty of Rs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 even though theassessee furnished inaccurate particulars of incomeand by doing so the assessee company reduced itstax liability? 3. Whether, on the facts and in the circumstances of thecase, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty ofRs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 even though thepenalty is leviable on contravention of the provisionsof a civil statute like Income Tax Act and, it is settledlaw that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulter with any guilty intention or not.case, the Ld. ITAT was right in law in confirming theorder of the Ld. CIT(A) in deleting the penalty ofRs.8,00,000/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 even though thepenalty is leviable on contravention of the provisionsof a civil statute like Income Tax Act and, it is settledlaw that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulter with any guilty intention or not. 4. Without prejudice to the above, whether, on the factsand in the circumstances of the case, the Ld. ITATwas right in law in confirming the order of the Ld. CIT(A) in deleting the portion of penalty levied by theAssessing Officer u/s 271(1)(c) of the Income Tax Act,1961 on the addition of Rs.17,94,761/- whileobserving in para 4 of its order that the expenditure onthe PF and ESI is allowable, in contravention of thejudgment of Hon'ble Bombay High in the case of CITVs. Pamwi Tissues Ltd. (215 CTR 150), wherein thecase of CIT Vs. Vinay Cement Ltd. was distinguishedand in the circumstances of the case, the Ld. ITATwas right in law in confirming the order of the Ld. CIT(A) in deleting the portion of penalty levied by theAssessing Officer u/s 271(1)(c) of the Income Tax Act,1961 on the addition of Rs.17,94,761/- whileobserving in para 4 of its order that the expenditure onthe PF and ESI is allowable, in contravention of thejudgment of Hon'ble Bombay High in the case of CITVs. Pamwi Tissues Ltd. (215 CTR 150), wherein thecase of CIT Vs. Vinay Cement Ltd. was distinguished and it was held that the payment of PF and ESIshould be made by the 'due date' and there could beno legal dispute on this issue?” 2.During the assessment, the Assessing Officer made additionson account of disallowance and also levied penalty on that ground. TheCIT(A) deleted the penalty holding that mere disallowance was not aground for levying penalty in absence of any concealment or giving ofinaccurate particulars. This view has been upheld by the Tribunal byobserving as under:- “We have considered the rival submissions. A perusalof the penalty order clearly shows that the penalty hasbeen levied on account of two additions. The first onebeing the disallowance of certain expenses under thehead office expenditure and second on the disallowanceof the PF and ESI payments made beyond the due dateunder the respective Acts. In regard to the disallowanceof expenditure, it is noticed that in the assessment orderthe assessee has specifically explained that theexpenses are business expenditure and they have beenincurred as fooding expenses to entertain the clients andbusiness related persons and the original bills ofexpenditure could also be verified. It is further noticedthat this expenditure had been disallowed on anestimate basis without pointing out any specific defect inthe explanation of the assessee. Obviously, on anestimate, disallowance of an expenditure, no penalty isleviable. In regard to the PF and ESI payments whichhave been disallowed it is noticed that in all cases, thepayments have been made before the due date of filing the return. The decision of the Hon'ble jurisdictionalHigh Court in the case referred to upon by the Ld. AR inthe case of PM Electronics Ltd. (supra) would besquarely applicable and the payment is allowanceexpenditure though the same has not been allowed inthe quantum appeal. In view of the decision of theHon'ble jurisdictional High Court, one it is found that theexpenditure on the PF & ESI is allowable, just becausethe disallowance has been confirmed on a mistakeninterpretation, it would not lead to the reason for theconfirmation of levy of penalty. In the circumstances, onthis ground also, no penalty is leviable in the hands ofthe assessee. This being so, we are of the view that thefinding of the CIT(A) in cancelling the penalty on the twocount is on a fight footing and does not call for anyinterference.” 3.We have heard learned counsel for the appellant. 4.A concurrent finding has been recorded on facts that there wasvalid explanation that the assessee had raised debatable issue for claimingthe expenditure and disallowance is no ground for levying penalty. Mereerroneous claim in absence of any concealment or giving of inaccurateparticulars is no ground for levying penalty. 3.We have heard learned counsel for the appellant. 4.A concurrent finding has been recorded on facts that there wasvalid explanation that the assessee had raised debatable issue for claimingthe expenditure and disallowance is no ground for levying penalty. Mereerroneous claim in absence of any concealment or giving of inaccurateparticulars is no ground for levying penalty. 5.Learned counsel for the revenue submitted that there was noconfusion with regard to payment of employees' contribution and the saidcontribution was also delayed. Assuming the assessee was not justified indelaying the deposit and was liable to pay tax on the said amount, thiscould not be conclusive to infer deliberateness of default on the part of theassessee. Issue of levy of penalty has to be decided on facts of eachcase. 6.In view of above, no substantial question of law arises. Theappeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 20, 2009(DAYA CHAUDHARY)poojaJUDGE Note:-Whether this case is to be referred to the Reporter .......Yes/No