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TMI Blog2019 (4) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (11) TMI 848 - ITAT DELHI] ; and after due consideration of PCIT vs. M/s Shree Gopal Housing and Plantation Corporation [ 2018 (2) TMI 604 - BOMBAY HIGH COURT] ; in our view the issue regarding penalty u/s 271(1)(c) of IT Act disputed in the appeals before us is covered in favour of the assessee by the aforesaid orders - as we have already deleted the penalties levied u/s 271(1)(c) of IT Act, the other contention raised by the assessee, that the penalties were barred by limitation, is academic in nature and need not be adjudicated - Decided in favour of assessee. - ITA No.: 765/Del/2019, SA No.: 380/Del/2019 Arising Out of ITA No.: 765/Del/2019, ITA No.: 693/Del/2019, SA No.: 379/Del/2019 Arising Out of ITA No.: 693/Del/2019 - - - Dated:- 12-4-2019 - ITA No.: 757/Del/2019, SA No.: 398/Del/2019 Arising Out of ITA No.: 757/Del/2019, ITA No.: 756/Del/2019, SA No.: 397/Del/2019 Arising Out of ITA No.: 756/Del/2019, ITA No.: 755/Del/2019, SA No.: 384/Del/2019 Arising Out of ITA No.: 755/Del/2019, ITA No.: 754/Del/2019, SA No.: 383/Del/2019 Arising Out of ITA No.: 754/Del/2019, ITA No.: 692/Del/2019, SA No.: 382/Del/2019 Arising Out of ITA No.: 692/Del/2019 And ITA No.: 758/Del/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g whether the penalty is initiated for concealment of income or for furnishing of inaccurate particulars of income. 5. That on the facts and circumstances of the case and in law, the CIT(A) erred in alleging that the Appellant had concealed particulars of income, without appreciating that the Appellant made complete disclosure in the notes accompanying the return of income. 6. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that on identical facts, penalty had been deleted by the predecessor of the CIT(A) in the case of GE Caledonian Ltd. and GE Aviation Service Operation LLP for the AY 2011-12. 7. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that the Hon ble High Court having admitted the appeal of the Appellant for the same AY on a substantial question of law qua existence of a permanent establishment, the issue was prima facie debatable, on which no penalty could have been levied, 8. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me AY on a substantial question of law qua existence of a permanent establishment, the issue was prima facie debatable, on which no penalty could have been levied, 7. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that penalty under Section 271(1)(c) of the Act had been deleted in the case of Rolls Royce, which formed the bedrock and sole basis of the addition made by the AO, on which penalty has now been levied. 8. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty under Section 271(1)(c) of the Act on the basis of profits attributed to the alleged PE of the Appellant, which was based on estimation, and, therefore, do not tantamount to concealment of income or furnishing of inaccurate particulars of income. Grounds of appeal in ITA No. 757/Del/2019 are as under: 1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) [ CIT(A) ] erred in confirming the action of the Assessing Officer ( AO ) in levying penalty of ₹ 1,04,01,600/- under Section 271(1)(c) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 are as under: 1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) [ CIT(A) ] erred in confirming the action of the Assessing Officer ( AO ) in levying penalty of ₹ 43,44,788/- under Section 271(1)(c) of the Income Tax Act, 1961 ( the Act ) 2. That on the facts and circumstances of the case and in law, the Ld. AO erred in passing the penalty order under Section 271(1)(c) of the Act which are wholly without jurisdiction and clearly barred by limitation inasmuch as the same have been passed beyond the period of limitation prescribed under Section 275(1)(a) of the Act. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the initiation of penalty by way of issue of penalty notice under Section 274 of the Act without specifying whether the penalty is initiated for concealment of income or for furnishing of inaccurate particulars of income. 4. That on the facts and circumstances of the case and in law, the C1T(A) erred in alleging that the Appellant had concealed particulars of income, without appreciating that the Appellant made complete disclosure in the notes accompan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing of inaccurate particulars of income. 4. That on the facts and circumstances of the case and in law, the CIT(A) erred in alleging that the Appellant had concealed particulars of income, without appreciating that the Appellant made complete disclosure in the notes accompanying the return of income. 5. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that on identical facts, penalty had been deleted by the predecessor of the' CIT(A) in the case of GE Caledonian Ltd. and GE Aviation Service Operation LLP for the AY 2011-12. 6. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that the Hon ble High Court having admitted the appeal of the Appellant for the same AY on a substantial question of law qua existence of a permanent establishment, the issue was prima facie debatable, on which no penalty could have been levied, 7. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that penalty under Section 271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishment, the issue was prima facie debatable, on which no penalty could have been levied. 7. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the levy of penalty, without appreciating that penalty under Section 271(1)(c) of the Act had been deleted in the case of Rolls Royce, which formed the bedrock and sole basis of the addition made by the AO, on which penalty has now been levied. 8. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty under Section 271(1)(c) of the Act on the basis of profits attributed to the alleged PE of the Appellant, which was based on estimation, and, therefore, do not tantamount to concealment of income or furnishing of inaccurate particulars of income. Grounds of appeal in ITA No. 692/Del/2019 are as under: 1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) [ CIT(A) ] erred in confirming the action of the Assessing Officer ( AO ) in levying penalty of ₹ 28,93,660/- under Section 271(1)(c) of the Income Tax Act, 1961 ( the Act ) 2. That on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the levy of penalty under Section 271(1)(c) of the Act on the basis of profits attributed to the alleged PE of the Appellant, which was based on estimation, and, therefore, do not tantamount to concealment of income or furnishing of inaccurate particulars of income. Grounds of appeal in ITA No. 758/Del/2019 are as under: 1. That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) [ CIT(A) ] erred in confirming the action of the Assessing Officer ( AO ) in levying penalty of ₹ 22,10,340/- under Section 271(1)(c) of the Income Tax Act, 1961 ( the Act ) 2. That on the facts and circumstances of the case and in law, the Ld. AO erred in passing the penalty order under Section 271(1)(c) of the Act which are wholly without jurisdiction and clearly barred by limitation inasmuch as the same have been passed beyond the period of limitation prescribed under Section 275(1)(a) of the Act. 3. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the initiation of penalty by way of issue of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of those additions in the assessment order which have been confirmed by Income Tax Appellate Tribunal ( ITAT for short). However, he submitted that the additions have been disputed by the respective assessees in appeals u/s 260A of IT Act. He further informed that all these appeals filed by the respective assessees in Hon ble High Court, u/s 260A of IT Act are yet to be decided by the Hon ble High Court. However, he submitted that the Hon ble High Court has framed substantial questions of law in respect of the additions that were confirmed by ITAT. He contended that the quantum additions, though confirmed by ITAT, are on debatable and disputable issues on which difference of opinion can legitimately exist. Therefore, he submitted that the quantum additions being debatable and disputable, penalty u/s 271(1)(c) of IT Act was unjustified and should be deleted. In this regard he drew our attention to the decision of Hon ble Delhi High Court, which is jurisdictional High Court, in the case of CIT vs. Liquid Investment and Trading Company vide order dated 05.10.2010 in ITA No. 240/2019 in which the Hon ble High Court held as under: Both the CIT(A) as well as the ITAT have set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O are barred by limitation. c) The AO did not make specific charge in the penalty notice whether there was concealment of particulars on income or there was furnishing of inaccurate particulars of income. 2.2) In reply, the Ld. Departmental Representative ( DR for short) did not dispute the contentions of Ld. Counsel for assessee that quantum additions were on disputable and debatable issues on which different views could legitimately exist. He also did not dispute the fact that substantial questions of law have been framed by Hon ble High Court in appeals u/s 260A of IT Act in respect of quantum additions confirmed by ITAT regarding all the additions in respect of which penalties (disputed in the present appeals before us) have been levied by AO u/s 271(1)(c) of IT Act. However, He relied on order of Hon ble Mumbai High Court in the case of PCIT vs. M/s Shree Gopal Housing and Plantation Corporation in 2018-TIOL-2413-Hon'ble High Court-MUM-IT and contended that it cannot be a universal rule that once the appeal from the order of the Tribunal has been admitted in the quantum proceedings, then, ipso facto the issue is debatable issue warranting deletion of penalty by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, is against Revenue and in favour of assessee. Moreover, in another case of Hon ble Bombay High Court reported at CIT vs. Nayan Builders Developers [2015] 56 taxmann.com 335 (Bombay)/[2015] 231 Taxmann 665 (Bombay)/[2014] 368 ITR 722 (Bombay) it was held by Hon ble High Court: As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on the assessee s appeal in quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated September 27, 2010, admitting Income Tax Appeal No. 2368 of 2009. In our view, there was no case made out for imposition of penalty and the same was rightly set aside. 4.2) Facts are not in dispute. It is not disputed that substantial questions of law on the quantum additions confirmed by ITAT have already been framed by Hon ble Delhi High Court regarding all the additions in respect of which penalties (disputed in the present appeals before us) have been levied by the AO, u/s 271(1)(c) of IT Act. It is also not in dispute that quantum additions were on disputable and debatable issues on which different views could legitimately exist. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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