Ita/346/2019 Of Principal Commissioner Of Income Tax Faridabad v. M/S Piyush Buildwell India Ltd

ITA No. 346 of 20191] IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH ITA No. 346 of 2019Date of decision: 10.2.2020 Principal Commissioner of Income Tax, Faridabad .. Appellant Vv M/s Piyush Buildwell India Ltd. .. Respondent CORAM:HON'BLE MR. JUSTICE AJAY TEWARIHON'BLE MR. JUSTICE AVNEBEESH JHINGHON'BLE MR. JUSTICE AVNEBEESH JHING Present:Mr. Tajender K. Joshi, Senior Panel Counsel withMr. Vikram Bali, Junior Panel Counsel for the appellant. Mr. 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. ITAT has erred on facts and in law by upholding thedecision of Ld. CIT (A) and in deleting the penalty of Rs.2,94,64,260/- levied by the Assessing Officer u/s 271(1)(c) of the Act by holding that the impugned penalty is pre-mature and hence unable to sustain the same?decision of Ld. CIT (A) and in deleting the penalty of Rs.2,94,64,260/- levied by the Assessing Officer u/s 271(1)(c) of the Act by holding that the impugned penalty is pre-mature and hence unable to sustain the same? (11) On the facts and in the circumstances of the case the Ld,ITAT has erred on facts and in law by upholding thedecision of Ld. CIT (A) and in deleting the penalty leviedITAT has erred on facts and in law by upholding thedecision of Ld. CIT (A) and in deleting the penalty levied ITA No. 346 of 2019|2]| by holding that the Assessing Officer has erred in levyingpenalty on entire amount of disallowance as wasoriginally disallowed by Assessing Officer when the Ld.CIT(A) had held that assessee was eligible forproportionate deduction especially when no quantum ofproportionate deduction were quantified while decidingthe appeal. penalty on entire amount of disallowance as wasoriginally disallowed by Assessing Officer when the Ld.CIT(A) had held that assessee was eligible forproportionate deduction especially when no quantum ofproportionate deduction were quantified while decidingthe appeal. (111) On the facts and in the circumstances of the case the Ld,ITAT has erred in deleting the penalty when it is a matterof claim of exemption or deduction under the Act, a heavyonus is placed on assessee. By claiming inaccuratededuction to reduce the tax liability tantamounts tofurnishing inaccurate particulars of income.ITAT has erred in deleting the penalty when it is a matterof claim of exemption or deduction under the Act, a heavyonus is placed on assessee. By claiming inaccuratededuction to reduce the tax liability tantamounts tofurnishing inaccurate particulars of income. (iv) On the facts and in the circumstances of the case Ld,ITAT has erred on facts and in law in deleting the penaltyespecially without going into the Explanation 5A(i1) toSection 271(1)(c) of the Act?”ITAT has erred on facts and in law in deleting the penaltyespecially without going into the Explanation 5A(i1) toSection 271(1)(c) of the Act?” 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. In proceedings under Section 153A of theAct, vide order dated 29.12.2009 addition of=8,66,85,3809/- was made bdisallowing the claim of the assessee made under Section 80IB of the Act.Further, an addition of41,84,32,854/- was made by disallowing otherexpenses. In the appeal filed, the ][(*]Appellate Authority remanded the ITA No. 346 of 20191/3] 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. In proceedings under Section 153A of theAct, vide order dated 29.12.2009 addition of=8,66,85,3809/- was made bdisallowing the claim of the assessee made under Section 80IB of the Act.Further, an addition of41,84,32,854/- was made by disallowing otherexpenses. In the appeal filed, the ][(*]Appellate Authority remanded the ITA No. 346 of 20191/3] matter back holding that the assessee was eligible for proportionatededuction under Section 80IB of the Act taking into consideration theresidential unit having area less than 1000 square feet. The AssessingOfficer was to verify the factual position, however due to non-veritficationthe addition was sustained by the Assessing Officer. Penalty ofL2,94,64,260/- under Section 271(1)(c) of the Act was imposed on30.3.2012 for the amount of deductions disallowed. In the appeal, the |[(*]Appellate Authority deleted the penalty on 31.3.2015. The appeal of 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 as the partial addition wassustained and hence the penalty qua the same was leviable. The contention raised lacks merit. The claim of the assesseeunder Section 8OIB of the Act was rejected by holding that the flats weresituated within 25 kilometers from municipal limits of Delhi and the builtup area was more than 1000 square feet. The said order was set aside andthe matter was remitted back for allowing proportionate deduction vis-a-visthe residential unit having less than 1000 square feet area. It was only as aresult of non-verification of the factual aspect that addition was again made,The assessee had disclosed the particulars and the deduction was claimed inthe return. It is also not disputed that there were details before theAssessing Officer to prove that the assessee had constructed two bed roomunits. In view of the findings recorded by the authorities, the disputeboiled down that the assessee was entitled to proportionate deduction underSection 8OIB of the Act, whereas he had claimed full deduction. Even ITA No. 346 of 20194] though ultimately due to non-verification of the factual aspect theproportionate relief could not be given by the Assessing Officer. The present case does not fall within the ambit of Section 27](1)(c) of the Act. The claiming of deduction which ultimately was notsustainable will not itself amount to furnishing of inaccurate particulars.The Supreme Court in |C.LT. Ahmedabad v. ReliancePetroproducts, 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.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 furnishing ITA No. 346 of 20195] ITA No. 346 of 20195] inaccurate 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 in Union ofIndiaVs. Dharamendra Textile Processors [2008(13) SCC 369]1as also, the decision inUnion ofIndia Vs.Rajasthan Spg. &Wve. Mills [2009(13) SCC 448]and reiterated in para 13that:- "13. It goes without saying that for applicability ofsection 271(1)(c) conditions stated therein must exist." xX X xXx xX xX Xi] 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. In ITA No. 346 of 2019160] Webster'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.” In view of the facts of the case and considering the decisioncited above, no interference is warranted in deletion of penalty. The appeal is dismissed. (AVNEESH JHINGAN) (AJAY TEWARIT)JUDGE JUDGE 10.2.202065 Whether speaking/reasoned:Yes/NoWhether reportable:Yes/No