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TMI Blog2019 (9) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... s nature of transaction . In the case of Commissioner of Income Tax Vs. Electrolux Kelvantro Ltd. [ 2013 (9) TMI 970 - DELHI HIGH COURT] held that where the issue involved is debatable and not free from doubt, no penalty can be levied. - Decided in favour of assessee. - ITA No.1510/Del/2016 - - - Dated:- 7-8-2019 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Appellant : Ms. Ananya Kapoor, Adv. For The Respondent : Shri G. Johnson, Sr. DR ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 31/12/2015 passed by the Ld. Commissioner of Income-tax (Appeals)-6, Delhi [in short the Ld. CIT(A) ] for assessment year 2005-06 in relation to penalty under section 271(1)(c) of Income tax Act, 1961 (in short the Act ). The grounds of appeal raised by the assessee are reproduced as under: Ground 1: Levy of penalty under section 271(1 )(c) 1. On facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) -6, New Delhi [learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illegal, bad in law and without jurisdiction. 1.6: That satisfaction recorded/charge levied while completing the assessment and while levying the penalty are different and hence the notice issued under section 274 of the Act, and the order passed under section 271(l)(c) of the Act are illegal bad in law and without jurisdiction. Ground 1.7: That the levy of penalty is illegal, unjust and not in accordance the mandatory requirements of Section 271(l)(c) have not been met in the instant case. The relevant facts are already on record and no new fact is required to be investigated. The above noted grounds go to the root of the matter. It is therefore humbly requested that the same may kindly be admitted and adjudicated. Reliance is place on the decision of Hon ble Supreme court in the case of NTPC 229 ITR 383 (SC) 3. Briefly stated facts of the case are that as against the return of income declared of ₹ 33,34,44,830/-, the total income of the assessee for the year under consideration was assessed under section 143(3) of the Act at ₹ 74,27,57,980/-and penalty proceedings were initiated und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified in the notice, the penalty levied on the assessee need to be set-aside in view of the decision of the Hon ble Karnataka High Court in the case of Manjunath Cotton Ginning Factory, 359 ITR 565 (Kar.) 6. On the other hand, the learned DR submitted that charges on which penalty was initiated are clearly mentioned in the assessment order and, therefore, assessee was aware about the charges, for penalty was initiated. 7. We have heard the rival submission on the issue in dispute. The learned counsel of the assessee agreed with the facts that the charges on which penalty was initiated were clearly mentioned in the assessment order. In view of the clarity of the charges at the stage of the assessment order, she did not press the additional ground and proceeded to argue the penalty on merit. Accordingly the additional ground of the appeal is dismissed. 7.1 While arguing the ground of the appeal, the Ld. counsel of the assessee submitted that all facts in respect of the issue in dispute on which addition made by the Assessing Officer, were duly disclosed by the assessee in the return of income as well as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3 We have heard the rival submission of the parties on the issue in dispute. The facts in respect of the issue in dispute are that the Assessing Officer observed payment of ₹ 24,94,181/- as advances written off under the head administrative and other expenses in the profit and loss account. On being asked, the assessee vide letter dated 28/07/2008 explained that amount of ₹ 24,75,000/- was on account of forfeiture of security deposit in relation to certain equipment taken on lease from M/s Toshiwal Enterprises Controls Private Limited (vendor). It was submitted that said equipment was lost by the assessee and thus security deposit was forfeited by the vendor. According to the assessee, since the forfeiture of the security was in relation to lease of the equipment, the loss of security deposit was a revenue expenditure. The assessee relied on following judgments for its claim as business loss: 1. IBM World Trade Corporation Vs. CIT (186 ITR 42) 2. CIT Vs. Mysore Sugar Company Ltd. ( 46 ITR 649) 3. CIT Vs. India Biselores (181 ITR 69) 7.4 Whereas, according to the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been permanently destroyed/ lost. The law relating to allowability of compensation paid for permanent damage to the leased asset has long been settled in the case of Robert Addie Sons Collieries v. CIR [1924] 8 Tax Cas. 671 wherein it has been held that the compensation paid for a permanent damage to the leased asset is in the nature of capital expenditure. The ratio of this case was followed in the case of Bharat Collieries Ltd. vs. CIT (32 ITR 547). Therefore, the submission of the appellant that the issue of allowability of forfeiture of security deposit for the loss of leased asset is a debatable issue is not correct. Moreover, the appellant could not furnish relevant documents/evidence to substantiate its claim. 5.13 As discussed above, the facts regarding claim of forfeiture of security deposit amounting to ₹ 24,75,000/- as revenue expenditure was not apparent from the From the Schedule N Administrative Other Expenses of the AFS for the FY 2004-05 without making further inquiries/obtaining further details of the amount of ₹ 24,94,181/- . Similarly, the said claim was not disclosed by the tax auditor in tax audit report even though there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is evident from the above that assessee is deemed to represent the income in respect of which particulars have been concealed if in respect of any fact material to the computation of income, - the assessee failed to offer an explanation or explanation is found to be false - or - explanation is not substantiated and the assessee fails to prove that such explanation is bonafide and all facts material to the computation of the income have been disclosed. 7.8 In the instant case, the assessee has offered Explanation as why the transaction of loss of security was claimed as business loss. This Explanation has not found to be false by the Assessing Officer. Further, the assessee substantiated the Explanation by way of filing relevant documents in relation to the transaction. In our opinion, the assessee has disclosed all the facts material to the computation of the income in the assessment proceedings. It is not the requirement of the law that all the facts material to the computation of income have to be disclosed in the return of income only as there are no relevant columns in the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no doubt that there were two opinions, whether the advances written off could be considered as revenue expenditure or capital expenditure. 7.10 Further, we find that Hon ble High Court of Punjab and Haryana in the case of Commissioner of Income Tax versus Amtek Auto Limited (supra) has held that merely because assessee claimed expenditure as revenue, which was held as capital by the Assessing Officer, penalty for concealment could not be imposed where assessee discloses nature of transaction . 7.11 In the case of Commissioner of Income Tax Vs. Electrolux Kelvantro Ltd. (supra), Hon ble Delhi High Court held that where the issue involved is debatable and not free from doubt, no penalty can be levied. The relevant finding of the Hon ble High Court is reproduced as under: 5. In the present case, the Tribunal has upheld the order of the Commissioner of Income-tax (Appeals) deleting penalty imposed by the Assessing Officer under section 271(1 )(c) of the Income-tax Act, 1961 (for short, the Act ). The assessee had made payment of noncompete fee amounting to ₹ 36,66,663 and claimed it as a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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