Ita/300/2019 Of The Principal Commissioner Of Income Tax Faridabad v. M/S Piyush Colonizers Ltd

ITA No. 300 of 2019} 1] IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH ITA No. 300 of 2019Date of decision: 10.2.2020 Principal Commissioner of Income Tax, Faridabad Vv .. Appellant M/s Piyush Colonizers Ltd. .. Respondent CORAM:HON'BLE MR. JUSTICE AJAY TEWARIHON'BLE MR. JUSTICE AVNEESH JHINGAN Present: |Mr. Tajender K. Joshi, Senior Panel Counsel withMr. Vikram Bali, Junior Panel Counsel for the appellant. AVNEESH JHINGAN, J. The revenue is in appeal under Section 260A of the Income TaxAct, 1961 (for short, ‘the Act’) against the order dated 28.12.2018 passed bythe Income Tax Appellate Tribunal, New Delhi (for short, ‘the Tribunal’)claiming following substantial questions of law: “(i) On the facts and in the circumstances of the case the Ld.CIT (A) and the Ld. ITAT have erred on facts and in lawin deleting the penalty of Rs. 1,26,39,400/- levied by theAssessing Officer u/s 271(1)(c) of the Act withoutproperly appreciating the facts of the case and withoutCIT (A) and the Ld. ITAT have erred on facts and in lawin deleting the penalty of Rs. 1,26,39,400/- levied by theAssessing Officer u/s 271(1)(c) of the Act withoutproperly appreciating the facts of the case and without ITA No. 300 of 2019|2] specifying what was wrong with Assessing Officer's orderas of why penalty was not leviable in this case?as of why penalty was not leviable in this case? (ii) Ld. CIT (A) and Ld. ITAT has erred on facts and in thelaw in deleting the penalty levied by the AO u/s 271(1)(c)of the Income Tax Act, 1961 without appreciating the factthat addition made by AO was contirmed to the extent ofRs.1,85,92,817/- and the assessee's intention was towithhold true particulars of income?law in deleting the penalty levied by the AO u/s 271(1)(c)of the Income Tax Act, 1961 without appreciating the factthat addition made by AO was contirmed to the extent ofRs.1,85,92,817/- and the assessee's intention was towithhold true particulars of income? (111)On the facts and in the circumstances of the case the Ld,CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty levied by the Assessing Officeru/s 271(1)(c) of the Act disregarding the facts that thepenalty is leviable on contravention of the provisions of acivil statute like Income Tax Act, there being so manyjudgments that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulters with any guilty intentions or not?CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty levied by the Assessing Officeru/s 271(1)(c) of the Act disregarding the facts that thepenalty is leviable on contravention of the provisions of acivil statute like Income Tax Act, there being so manyjudgments that breach of a civil obligation attracts levy ofpenalty whether the contravention was made by thedefaulters with any guilty intentions or not? (iv) On the facts and in the circumstances of the case the Ld,CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty especially without appreciatingthe facts that assessee deliberately filed inaccurateparticulars of income so as to reduce its tax liability?”CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty especially without appreciatingthe facts that assessee deliberately filed inaccurateparticulars of income so as to reduce its tax liability?” The relevant facts are that the assessment year involved is2008-09. A search and seizure was conducted at the administrative office ofPiyush Group of Companies and the residential premises of the Directorwere also searched on 16.1.2008. The proceedings concluded vide order ITA No. 300 of 2019}3] (iv) On the facts and in the circumstances of the case the Ld,CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty especially without appreciatingthe facts that assessee deliberately filed inaccurateparticulars of income so as to reduce its tax liability?”CIT (A) and the Ld. ITAT have erred on facts and in thelaw in deleting the penalty especially without appreciatingthe facts that assessee deliberately filed inaccurateparticulars of income so as to reduce its tax liability?” The relevant facts are that the assessment year involved is2008-09. A search and seizure was conducted at the administrative office ofPiyush Group of Companies and the residential premises of the Directorwere also searched on 16.1.2008. The proceedings concluded vide order ITA No. 300 of 2019}3] dated 29.12.2009 by disallowing claim of indirect expenses thereby makingan addition of.=9,56,05,810/-. In appeal, the 1[&(]Appellate Authority quashedthe disallowance of |L7,70,72,993/- and addition was restricted toL1,85,92,817/-. For the addition sustained, penalty proceedings wereinitiated under Section 271(1)(c) of the Act and penalty of L1,26,39,400/-was imposed vide order dated 30.3.2012. The 1[&(]Appellate Authority setaside the penalty vide order dated 31.3.2015. The appeal filed by therevenue was dismissed by the Tribunal, hence the present appeal. Learned counsel for the revenue argued that the |[&(]AppellateAuthority erred in setting aside the penalty, the partial addition wassustained and hence the penalty qua the same was leviable. The contention raised lacks merit. section 271(1)(c) of the Act is reproduced below: AQ7T1.(1) If the Assessing Officer or the Commissioner(Appeals) or the Commissioner in the course of anyproceedings under this Act, is satisfied that any person -- XX XX xX XI (c) has concealed the particulars of his income or furnished!inaccurate particulars of such income, or There is no dispute on the fact that during the relevantassessment year, the assessee changed the accounting method from projectcompletion to percentage method. It was the result of change of methodthat certain indirect expenses claimed could not be allowed. The accountbooks of the assessee were found to be duly audited and prepared inaccordance with accepted accounting standard. The change of accounting ITA No. 300 of 20191/4] method was also duly disclosed by the auditor. It was not the case of therevenue even before the Appellate Authority that the assessee hadSuppressed any material fact. At the highest, the case of the revenue was that even though thematerial was disclosed by the assessee but he had claimed certaininadmissible expenses. Claiming of an expense which is not sustainable initself cannot be a ground for invoking Section 271(1)(c) of the Act. Inorder to impose penalty under the said section, either there has to beconcealed particulars of the income or furnishing of inaccurate particularsof the income. Rejection of a claim that too where in the facts of the presentcase it was result of change of accounting method is not sufficient forpenalising the assessee. The Supreme Court in |C.LT. Ahmedabad v. Reliance Petroproducts, 2010 (322) ITR 158dealt with Section 271(1)(c) of the Actand held as under: “7. ......A glance at this provision would suggest that in orderto be covered, there has to be concealment of the particularsof the income of the assessee. Secondly, the assessee musthave furnished inaccurate particulars of his income. Present isnot the case of concealment of the income. That is not thecase of the Revenue either. However, the Learned Counsel forRevenue suggested that by making incorrect claim for theexpenditure on interest, the assessee has furnished inaccurateparticulars of the income. As per Law Lexicon, the meaningof the word "particular" is a detail or details (in plural sense);the details of a claim, or the separate items of an account. ITA No. 300 of 2019}5| Petroproducts, 2010 (322) ITR 158dealt with Section 271(1)(c) of the Actand held as under: “7. ......A glance at this provision would suggest that in orderto be covered, there has to be concealment of the particularsof the income of the assessee. Secondly, the assessee musthave furnished inaccurate particulars of his income. Present isnot the case of concealment of the income. That is not thecase of the Revenue either. However, the Learned Counsel forRevenue suggested that by making incorrect claim for theexpenditure on interest, the assessee has furnished inaccurateparticulars of the income. As per Law Lexicon, the meaningof the word "particular" is a detail or details (in plural sense);the details of a claim, or the separate items of an account. ITA No. 300 of 2019}5| Therefore, the word "particulars" used in the Section2/71(1)(c) would embrace the meaning of the details of thclaim made. It is an admitted position in the present case thatno information given in the Return was found to be incorrector inaccurate. It is not as if any statement made or any detailsupplied was found to be factually incorrect. Hence, at least,prima facie, the assessee cannot be held guilty of furnishinginaccurate particulars. The Learned Counsel argued that"submitting an incorrect claim in law for the expenditure oninterest would amount to giving inaccurate particulars of suchincome’. We do not think that such can be the interpretationof the concerned words. The words are lain and simple. Inorder to expose the assessee to the penalty unless the case isStrictly covered by the provision, the penalty provision cannotbe invoked. By any stretch of imagination, making anincorrect claim in law cannot tantamount to furnishinginaccurate particulars. In —Commissioner of Income Tax,Delhi Vs. Atul Mohan Bindal [2009(9) SCC 589], Where thisCourt was considering the same provision, the Courtobserved that the Assessing Officer has to be satisfied that aperson has concealed the particulars of his income orfurnished inaccurate particulars of such income. This Courtreferred to another decision of this Court inUnion ofIndiaVs. Dharamendra Textile Processors [2008(13) SCC 369]/as also, the decision in|Union ofIndia Vs.Rajasthan Spg. &Wve. Mills [2009(13) SCC 448]and reiterated in para 13 ITA No. 300 of 2019160] that:- "13. It goes without saying that for applicability ofSection 271(1)(c) conditions stated therein must exist."AX XX XX! 9. We are not concerned in the present case with the mens rea.However, we have to only see as to whether in this case, as amatter of fact, the assessee has given inaccurate particulars. InWebster's Dictionary, the word "inaccurate" has been definedas.-| "not accurate, not exact or correct; not according to truth;erroneous; as an inaccurate statement, copy or transcript’.We have already seen the meaning of the word "particulars" inthe earlier part of this judgment. Reading the words inconjunction, they must mean the details supplied in the Return,which are not accurate, not exact or correct, not according totruth or erroneous. We must hasten to add here that in this case,there is no finding that any details supplied by the assessee inits Return were found to be incorrect or erroneous or false.Such not being the case, there would be no question of invitingthe penalty under Section 271(1)(c) of the Act. A mere makingof the claim, which is not sustainable in law, by itself, will notamount to furnishing inaccurate particulars regarding theincome of the assessee. Such claim made in the Return cannotamount to the inaccurate particulars.” ITA No. 300 of 2019|/| In view of the facts of the case and considering the Apex Court decision, no interference is warranted in deletion of penalty. The appeal is dismissed. (AVNEESH JHINGAN) (AJAY TEWARIT) JUDGE JUDGE 10.2.202043 Whether speaking/reasoned:Whether reportable: Yes/NoYes/No