Bharti Aquanet Ltd., New Delhi vs Department Of Income Tax

ACIT vs. Bharti Aquanet Ltd., Circle-2(1), Room No. 398D, (Now Bharti Airtel Ltd.) No. 1, C.R. Building Aravali Crescent, New Delhi. Nelson Mandela Road, Vasant Kunj, Phase-III, New Delhi. (PAN AABCB4990J)

(Appellant) (Respondent)

Appellant by : Smt. Parwinder Kaur, Sr. DR Respondent by : Shri Anil Bhalla, CA

ORDER

PER GEORGE GEORGE K, JUDICIAL MEMBER

This appeal at the instance of assessee is directed against the CIT (A)

order dated 17.10.2012. The relevant assessment year is A.Y 2001-02.

2. The solitary issue that arises for our consideration is whether the CIT(A) is

justified in deleting the penalty u/s 271(1)(C) of the Act amounting to Rs.

5,94,400/-.

3. Briefly stated the facts of the case are as follows :-

Assessee in its return of income had claimed revenue expenditure of Rs.

15,02,910/-. Assessment u/s 143(3) of the Act was completed on 8.12.2003 by 2 ITA No. 6400/Del/12 DCIT vs. M/s. Bharti Aquanet Ltd.

disallowing the revenue expenditure claimed on the ground that there was no

commencement of business by the assessee company. The CIT(A) decided the

issue in favour of the assessee company and held the business has been set up

and directed that sum of Rs. 1502910/- be allowed as revenue expenditure. On

further appeal before the ITAT, the Tribunal held that the business has not been

set up, however, the expenses was allowed to be capitalized.

4. The AO subsequent to the Tribunal order, imposed a penalty u/s 271(1)©

of the Act amounting to Rs. 5,94,400/-. On further appeal against the imposition

of penalty, the CIT(A) deleted the penalty. The relevant finding of the CIT(A)

reads as under :-

(at page 3)

"The version of the appellant has been considered. From the facts noted above in para - 3 it may be seen that there is difference of opinion between the authorities involved on the issue of commencement of business. Therefore, the issue is debatable and the ratio of the ITAT judgment referred above by the appellant is applicable. Therefore, no penalty is imposable in this case. Penalty levied by the AO is cancelled. Ground of appeal no. 3 is allowed."

5. The revenue being aggrieved is in appeal before us. Ld. DR relied on the

order of AO imposing penalty u/s 271(1)(c) of the Act. The Ld. AR on the other

hand had furnished argument notes and reiterated the submissions made before

the Income Tax Authorities.

6. We have heard the rival submissions and perused the material on record. In

the instant case, the issue in quantum proceedings is debatable. The CIT(A) held 3 ITA No. 6400/Del/12 DCIT vs. M/s. Bharti Aquanet Ltd.

in favour of the assessee company. However, the Tribunal held that expenditure

was not revenue expenditure but capital expenditure. This amounted to

reclassification of the claim made by the assessee company. The disallowance of

claim of asseseee is based on the information and particulars filed by the

assessee company itself. The expenditure has not been held to non genuine

expenditure. Therefore, on facts and circumstances of this case, it cannot be

stated that there is a willful or contumacious conduct on the part of assessee to

conceal income or filing of inaccurate particulars of income. Therefore, we

uphold the order of the CIT(A) as correct and in accordance with law and no

interference is called for. It is ordered accordingly.

7. In the result, the appeal filed by the revenue is dismissed.

This decision was pronounced in the Open Court on 13th January, 2015.

sd/- sd/- (N.S. SAINI) ( GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 13th January, 2015 *Veena Copy of order forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By Order

Deputy Registrar, ITAT