9911796707
TMI Blog2016 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... he total dividend received has been received from various HCL Group of Companies which the assessee is a promoter investor and has been stated to be holding shares in the said companies for more 15 to 25 years. Dividend income is also stated to be received directly by way of dividend warrant which gets credited to the bank of the assessee. In the background of the aforesaid discussions and precedents, we are in agreement with the finding of the Ld. CIT(A) in directing the AO to delete the disallowance of ₹ 1,99,09,856/- made u/s. 14A of the I.T. Act and by holding that Rule 8D is not applicable in this case. - Decided in favour of assessee Penalty u/s 271(l)(c) - Held that:- When assessee furnished all the material in the return which was not found to be incorrect, it is upto the authorities to accept the claim in the return or not, but the same couldn't be considered as concealment or furnishing of inaccurate particulars. CIT(A) has rightly held that there is no concealment or inaccurate particulars of income where the addition and/or disallowance is based on bona-fide claims, debatable claims and difference of opinion as held inter-alia by the Hon'ble Supreme Court in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed exempt income of ₹ 328,53,07,960/-. The AO, directed the assessee to furnish details of financial and administrative expenses along with reasons as to why the same should not be disallowed under section 14A of the I.T. Act, 1961. In response thereof, the assessee, during the assessment proceedings submitted that dividend was received primarily on shares which were acquired way back in the earlier years, i.e. more than 15 to 25 years. The assessee claimed that out of total expenditure of ₹ 27..57 crores, expenditure of ₹ 22.43 crores has already been disallowed in the return of income. Further, out of balance expenditure of ₹ 5,32,48,929/-, the assessee has further disallowed a sum of ₹ 15,66,528/- as expenditure incurred in relation to exempt income. Assessee further clamed before the AO that in view of suo moto disallowance so made, no further disallowance under section 14A(2) of the I.T. Act is called for, but the AO has not agreed with the above contention of the assessee and is of the view that the provisions of section 14A of the I.T. Act have been inserted by the Finance Act, 2001, w.e.f. 1.4.1962 and is, therefore, clearly applicable to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and also the provision of section 14A of the IT Act is now well crystallized by the later decisions of the Supreme Court In the case of Walfort Share Stock Brokers, which has been followed and applied by the Bombay High Court in the case of Godrej Boyce and the Jurisdictional High Court in the case of Maxopp Investment, as relied upon by the AR for the appellant, Reference may be made to certain observations of the Bombay High Court and the Delhi High Court in the said judgments which are as under: The Bombay High Court in the case of Godrej Boyce has held as under: ..... In order to determine the quantum of the disallowance. there must be a proximate relationship between the expenditure and the income which does not form part of the total income. Once such a proximate relationship exists. the disallowance has to be effected. All expenditure incurred in the earning of income which does not form part of the total income has to be disallowed subject to compliance with the test adopted by the Supreme Court in Walfort and it would not be permissible to restrict the provisions of Section 14A by an artificial method of interpretation. .. Hence, the intenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27 crores. The composition of the said administrative expenses of ₹ 5,32,48,929 is found in Schedule 13 of the Audited Accounts. It is noticed that the said amount comprises of various expenses which are normally incurred by a company during the course of it's regular business activities. Moreover the appellant has additionally himself disallowed a sum of ₹ 15,66,528 by proportionately disallowing expenses of some of the employees. There is nothing on record to controvert the submissions made on behalf of the appellant. The expenses claimed are also in the nature of day to day administrative expenses and cannot be held to be relatable to the exempt income'. It is also noticed that more if the total dividend received has been received from various HCL Group of Companies which the appellant is a promoter investor and has been stated to be holding shares in the said companies for more 15 to 25 years. Dividend income is also stated to be received directly by way of dividend warrant which gets credited to the bank of the appellant. In view of the aforesaid facts, I have no reason to disagree with the claim of the appellant that no further expenditure over a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n directing the AO to delete the disallowance of ₹ 1,99,09,856/- made u/s. 14A of the I.T. Act and by holding that Rule 8D is not applicable in this case. Therefore, we do not see any infirmity in the well reasoned order passed by the Ld. CIT(A) on the issue in dispute, hence, we uphold the same and dismiss the Appeal filed by the Revenue on this issue. ITA NO. 6419 /DEL/2012 (2008-09) 9. The following grounds have been raised in ITA No. 6419/Del/2012 (AY 2008-09):- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the penalty of ₹ 52,29,007/- imposed by the AO u/s. 271(1)(c) of the Income Tax Act, 1961. 2. The order of the CIT(A) is erroneous and is not tenable on facts in law. 3. The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of the hearing of the appeal. 10. The following grounds have been raised in ITA No. 6420/Del/2012 (AY 2008-09):- 1. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the penalty of ₹ 72,56,457/- imposed by the AO u/s. 271(1)(c) of the Income Tax Act, 1961. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 24.4.2015 of the Coordinate Bench (in which one of the Judicial Member was the party) in the case of ACIT vs. M/s Mehrotra Invofin India Pvt. Ltd. passed in ITA No. 4488/Del/2013 (AY 2009-10) and stated that the issue of penalty involved in the present appeal is also squarely covered by the aforesaid decision dated 24.4.2015. Therefore, he requested the Bench that the Appeal of the Revenue may accordingly be dismissed. 17. We have heard both the parties and perused the relevant records available with us, especially the order passed by the Revenue Authority. We are of the considered that the Ld. CIT(A) has deleted the penalty in dispute by thoroughly examining the written statement filed by the asseessee and the order of the lower authorities as well as the various decisions rendered by the Hon ble Supreme Court of India and the Hon ble High Court of Delhi. 17.1 After going through the submissions filed by the assessee alongwith the case law as well as the orders of the revenue authorities, it is very relevant to go through the relevant provisions of section 271(1)(c), which provides for imposition of penalty where the AO has to be satisfied that:- i) any person ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Textile Processors (2008) (306 ITR 277) (SC) held that default merited penalty without having to consider an intend of the assessee to evade tax. The Mens rea is essential only for matters of prosecutor and not penalty. 17.4 Thus after the decision in the case of Dharamendra Textile Processor (Supra) Mens rea is not necessary to be proved by revenue for civil penalties. 17.5 However with the decision of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd (2010) (322 ITR 158) (SC), it is clear that the Hon ble Supreme Court by giving the ruling in Dharmendra Textile Processor's Case (Supra) has not overruled their decision in Dilip N. Shroff's case except for its mention of Mens rea therein. 17.6 It is also pertinent to mention here that after the ruling of Dharamendra Textile Processor, the Hon ble Supreme Court has come out with the ruling in 2 different cases namely CIT Vs Atul Mohan Bindal (2009) (317 ITR1) and UOI Vs Rajasthan Spinning Weaving Mills (2010) (lGSTR66) (SC), and where they have re-iterated again that that for applicability of Section 271(l)(c} the condition stated therein must exist. 17.7 Even in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any positive evidence from the AO that assessee has concealed or furnishing of inaccurate particular didn't ipso facto warrant penalty under Section 271(1)(c). 17.13 Keeping in view of the above facts and circumstances of the case, we find considerable force in the finding of the Ld. CIT(A) that in the present case the conditions laid down in Section 271(1)(c) are not being fulfilled, because inaccurate particulars means the details filed in the return of income are not accurate or exact or correct according to truth or erroneous. 17.14 In this regard, Ld. CIT(A) has rightly placed reliance upon the decision of the of the Hon ble Supreme Court of India in the case of Reliance Petro Products (Supra) wherein it was held that when assessee furnished all the material in the return which was not found to be incorrect, it is upto the authorities to accept the claim in the return or not, but the same couldn't be considered as concealment or furnishing of inaccurate particulars. 17.15 Keeping in view of the facts and circumstances as explained above, we are of the view that Ld. CIT(A) has rightly held that there is no concealment or inaccurate particulars of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
