Radial International, New Delhi vs Department Of Income Tax

Department by : Sh. Vikram Sahay, Sr. DR Assessee by : Sh. Rakesh Nanda, FCA

Date of Hearing : 04-02-2015 Date of Order : 04-02-2015 ORDER

PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 18/7/2013 passed by the Ld. Commissioner of Income Tax (Appeals)-XXIV, New Delhi on the following grounds:-

"1. Deleting the penalty of Rs. 12,78,171/- imposed by the AO u/s. 271(1)(c) of the I.T. Act where the assessee has willfully treated his income in such a manner that lead to loss of revenue and tantamount of furnishing the inaccurate particulars.

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2. In stating that Explanation 1 of section 271(1)(c) of the I.T. Act is squarely not covered whereas it is squarely covered.

3. Not considering the fact that the assessee has shown its different head of income to avoid th tax liability.

4. The appellant craves the right to add, alter or amend any ground of appeal."

2. The facts narrated by the revenue authorities are not disputed by both parties, therefore, no need to repeat the same for the sake of convenience. The AO completed the assessment u/s 143(3) of the Income Tax Act, 1961 on 30.12.2008 and made the addition in dispute. Aggrieved by the order of the AO u/s. 143(3) of the I.T. Act, the assessee filed an appeal before the Ld. CIT(A)-XXIV, New Delhi on 28.1.2009. Ld. CIT(A) confirmed the addition made by the AO. The assessee preferred Appeal before the ITAT, Delhi. The ITAT in ITA No. 1368/Del/2010, vide order dated 16.12.2011 confirmed the addition made by the AO and dismissed the appeal filed by the assessee. Thereafter, AO has imposed penalty of Rs. 12,78,171/- u/s. 271(1)(c) of the I.T. Act vide his order dated 26.9.2012 for furnishing inaccurate particulars of income by the assessee.

3. Against the penalty order dated 26.9.2012, the assessee filed an appeal before the ld. CIT(A), who vide impugned order has deleted the penalty made by the AO u/s. 271(1)(c) of the I.T. Act vide his order dated 18.7.2013.

4. Against the above order passed by the Ld. CIT(A), Revenue has filed the appeal before the Tribunal.

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5. At the time of hearing, Ld. Counsel of the assessee made a statement that the addition has been deleted by the Hon'ble Jurisdictional High Court, therefore, the penalty is not sustainable in the eyes of law. He requested that the Appeal filed by the Revenue may be dismissed. Ld. Counsel of the assessee has filed a copy of the judgment dated 25.4.2014 passed by the Hon'ble High Court of Delhi in ITA No. 485/2012 in the case of Radials International vs. ACIT, in the quantum appeal of assessee's own case wherein the Hon'ble High Court has held as under:-

"This Court is thus of the opinion that the Ld. ITAT erred in holding the transactions to be income from business and profession. The order of the ITAT is consequently set aside and the appeal is answered in favor of the assessee."

6. Ld. DR relied upon the order of the AO and reiterated the grounds of appeal raised by the Revenue in its present appeal.

7. We have heard both the parties, perused and considered the relevant records available with us, specially the orders of the Revenue authorities; copy of the judgment of the Hon'ble High Court dated 25.4.2014 passed in ITA No. 485/2012 in the case of Radials International vs. ACIT, in the quantum appeal of assessee's own case. We find that Ld. CIT(A) has adjudicated and summarized the issue as under vide para no. 5.8 to 5.11 from pages 14 to 15 of the impugned order dated 18.7.2013 as under:-

"5.8 To summarize, none of the conditions of the Explanation 1 are applicable to the facts of the present case, as the appellant has been forth coming in

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disclosing all facts that are relevant for the computation of its income. Therefore, the appellant has clearly discharged the onus / burden cast upon it to prove that none of the three conditions of the Explanation 1 are met.

5.9 Here it is relevant to reiterate that the addition made by the AO is not on account of any inconsistency in the facts furnished by the appellant but is purely on account of a difference of opinion as regards the interpretation of law on the same set of facts as have been furnished by the appellant.

5.10 It is also worthwhile to mention that penalty proceedings are separate proceedings from the assessment proceedings and merely because the quantum addition has been confirmed by the High Authority it does not necessarily mean that penalty is also leviable u/s. 271(1)© of the I.T. Act. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of UOI vs. Dharmendra Textile Processors reported in 306 ITR 277 wherein it has been held that:-

"Merely because the addition is confirmed does not ipso facto

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attract the penalty provision. In the penalty proceedings, the whole matter has to be seen in a different perspective irrespective of the fact that the addition has been confirmed by Higher Authorities."

5.11 In the entirety of the facts and circumstances and for the cumulative reasons stated above, I am of the considered opinion that the disclosures made by the appellant in this regard were bona fide and were not false or fanciful. The appellant did not file inaccurate particulars of income in claiming deduction of the aforesaid amount. Therefore, the penalty levied by the Assessing Officer under section 271(1)(c) of the Act is hereby deleted."

7.1 We also find the Hon'ble High Court vide its judgment dated

25.4.2014 passed in ITA No. 485/2012 in the quantum appeal of

assessee's own case has held that ITAT erred in holding the

transactions to be income from business and profession.

Accordingly, the order of the ITAT was consequently set aside and

the appeal was answered in favor of the assessee.

8. We find that that as the Hon'ble High Court of Delhi has

already set aside the order of the Tribunal, as aforesaid and decided

the issue in favor of the assessee, in the quantum appeal as well as

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Ld. CIT(A) held that because the quantum addition has been

confirmed by the Higher Authority it does not mean that penalty is

also leviable u/s. 271(1)(c) of the I.T. Act. We find that in this regard

Ld. CIT(A) placed reliance on the decision of the Hon'ble Supreme

Court in the case of UOI vs. Dharmendra Textile Processors reported

in 306 ITR 277 wherein it has been held that:-

"Merely because the addition is confirmed

does not ipso facto attract the penalty

provision. In the penalty proceedings, the

whole matter has to be seen in a different

perspective irrespective of the fact that the

addition has been confirmed by Higher

Authorities."

9. In the background of the aforesaid discussions and precedents,

we find that Ld. CIT(A) has rightly held that the disclosures made by

the assessee in this regard were bona fide and were not false or

fanciful. We find that Ld. CIT(A) further observed that the assessee

did not file inaccurate particulars of income in claiming deduction of

the aforesaid amount. Therefore, the penalty levied by the

Assessing Officer under section 271(1)(c) of the Act was rightly

deleted by the Ld. CIT(A). In view of the above, we are of the view

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that no interference is called for in the well reasoned order passed

by the Ld. CIT(A), hence, we uphold the same.

10. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 04/02/2015.

Sd/- Sd/-

[R.S. SYAL] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 04/02/2015 "SRBHATNAGAR" Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches

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