Commissioner Of Income-Tax, Hisar v. B.b.singhal

Income-tax Appeal No.725 **** IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Income-tax Appeal No.725of 2010 Date of decision: 5.1.2011 Commissioner of Income-Tax, Hisar ...Appellant Versus B.B.Singhal ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. K.K.Mehta, Advocate for the appellant. **** ADARSH KUMAR GOEL, J ( Oral). 1.This Appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (hereinafter referred to as“the Act”) against order dated 30.6.2009 passed by the Income TaxAppellate Tribunal, Delhi Bench 'B', New Delhi in ITANo.2884/DEL/2008, for the assessment year 2004-05, raisingfollowing substantial question of law:- “Whether on the facts and circumstances of thecase, the Hon'ble ITAT was right in law in deletingthe penalty without appreciating the fact that theassessee furnished inaccurate particulars of incomeby relying upon hearsay and unreliableinterpretation of legal provisions?” 2.The assessee was an employee of New India AssuranceCompany Limited. He voluntarily retired and received ex-gratiabenefit as per the scheme. Even though only an amount of ` 5 lacswas exempted from tax under Section 10(10C) of the Act, theassessee claimed exemption on the entire amount of gratuity. TheAssessing officer apart from making addition to the declared income,imposed penalty for taking wrong plea for exemption. On appeal,levy of penalty was set aside by the CIT(A) on the ground that claimof the assessee was under a bonafide mistake and the assessee hasgiven all the relevant particulars in the return. This view has beenupheld by the Tribunal as under:- “We have considered the rival submissions and perusedthe material placed on record. Ld. AR of the assesseerelied on the decision of the Hon'ble High Court ofRajasthan in the case of A.R.Enterprises Pvt. Ltd. Vs.CIT, reported in (2008) 215 CTR 306 in which referringthe judgment of the Hon'ble Supreme Court in the case ofDilip N. Shroff Vs. JCIT, (2007) 210 CTR (SC) 228deleted the penalty imposed u/s 271 (1)(c) of the Act. Ld.AR of the assessee also cited the decision in the case ofCIT Vs. Mica Wood Pvt. Ltd. reported in 170 Taxman 256(Del.) in support of the claim of the assessee. Keeping inview the findings made by the Commissioner of Income-tax (appeals) in his order and also the aforesaidjudgments cited by the ld. AR, we are of the view that the penalty levied by the Assessing Officer deserves to bedeleted. We, therefore, uphold the order of theCommissioner of Income-tax (appeals) and dismiss theappeal of the revenue.” 3.We have heard learned counsel for the appellant. 4.Learned counsel for the appellant submits that statutoryprovision being clear seeking claim of deduction on entire amount ofgratuity amounts to giving inaccurate particulars of income.Reliance has been placed on Commissioner of Income-Tax Vs.Zoom Communication P. Ltd.[2010] 327 ITR 510 (Delhi). It wasalso submitted that judgment of the Hon'ble Supreme Court in DilipN. Shroff Vs. JCIT,(2007) 210 CTR (SC) 228 referred by theTribunal has been overruled in subsequent judgment in Union ofIndia and others Vs. Dharamendra Textile Processors andothers(2008) 13 Supreme Court Cases 369. 5.We are unable to accept the submission. 3.We have heard learned counsel for the appellant. 4.Learned counsel for the appellant submits that statutoryprovision being clear seeking claim of deduction on entire amount ofgratuity amounts to giving inaccurate particulars of income.Reliance has been placed on Commissioner of Income-Tax Vs.Zoom Communication P. Ltd.[2010] 327 ITR 510 (Delhi). It wasalso submitted that judgment of the Hon'ble Supreme Court in DilipN. Shroff Vs. JCIT,(2007) 210 CTR (SC) 228 referred by theTribunal has been overruled in subsequent judgment in Union ofIndia and others Vs. Dharamendra Textile Processors andothers(2008) 13 Supreme Court Cases 369. 5.We are unable to accept the submission. 6.The CIT(A) as well as the Tribunal categorically foundthat claim of the assessee though inadmissible was put forwardunder a mistaken bonafide view. This finding is not shown to beperverse. Whether or not the assessee furnished incorrect particularsis normally a question of fact. There may not be bar to levy ofpenalty where exemption is wrongly claimed if it can be held to havebeen done with a view to evade tax. The issue has to be gone intofrom case to case. Judgment in Zoom Communication is on thefacts and circumstances of that case. It cannot be applied to the present case. The contention on behalf of the revenue that judgmentin Dilip N. Shroff was no longer good law has also no relevance.Even after the judgment in Dharminder Textiles, the requirement ofSection 271(1)(c) of the Act has to be complied with to levy penalty.If the assessee has furnished valid explanation that its claim wasput forward under mistaken bonafide belief and not to evade tax,setting aside of penalty cannot be held to be illegal. No substantialquestion of law arises. Accordingly, the appeal is dismissed. (Adarsh Kumar Goel) Judge January 05,2011Pka (Ajay Kumar Mittal) Judge