9911796707
TMI Blog2024 (5) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ent services and career advice to various clients in India had declared total loss of Rs. 23,79,32,221/- by filling its return of income on dated 29- 11-2012, which was selected for scrutiny and therefore statutory notices were issued to the assessee, whereby the assessee was asked to file certain details and documents. The assessee filed the relevant details as called for by the Assessing Officer (AO) who after considering the same and observing "that in the statement of computation of the income for assessment year under consideration the assessee company has claimed an expenditure to the tune of Rs. 2,16,88,667/- on account of expenditure incurred for leasehold improvements", show caused the assessee "as to why the said expenditure should be treated as revenue expenditure instead of capital expenditure". 2.1 The assessee before the AO claimed that during the assessment year under consideration the assessee had entered into leave and license agreements for use and occupation of the following premises: 1. Express Towers, Nariman Point, Mumbai 2. DLF Cyber City, DLF Phase II, Gurgaon 2.2 The assessee further claimed that expenses incurred by the assessee were for the leasehol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CIT, West Bengal (27 ITR 34) wherein the expenditure incurred for the enduring benefit of the business has been treated as capital expenditure instead of revenue expenditure. 3.1 The AO further observed that on verification of the expenses on rent of Rs. 3,66,44,045/- the assessee has also included a sum of Rs. 18,56,375/- being straight line of rent expenses. On being asked, the assessee explained that the same was only an adjustment entry. The AO considered the submission of the assessee, however, also disallowed the sum of Rs. 18,56,375/- under section 37(1) of the Act by holding that the said amount is not expenditure actually and only an adjustment entry and not being expended for the business of the assessee. 4. The AO in the assessment order, also recorded satisfaction for initiating the penalty proceedings under section 271(1)(c) of the Act for furnishing the inaccurate particulars of income qua the claims of expenditures of Rs. 2,16,88,667/- on account of leasehold improvements and the amount of Rs. 18,56,375/- on account of adjustment entry. The AO simultaneously, in para-No.9 of the assessment order also recorded that accordingly a penalty notice under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars of income". Thus I find that the AO was not sure about the limb of the default while imposing the penalty. The appellant by relying on the decision of Hon'ble Karnataka High Court in the case of CIT vs. Manjunath Cotton & Ginning Factory 35 taxmann.com 250 and the decision of Hon'ble Supreme Court of India in the case of Ashok Pai vs. CT (292 ITR 11) and decision of Hon Bombay High Court in the case of CIT vs. Samson Perinchery (392 ITR 4) and many other decisions, submitted that the penalty was initiated for furnishing inaccurate particulars of income but the penalty is levied invoking explanation 1 to section 271(1)(c), therefore requested to squash the penalty. The appellant has further on without prejudice basis submitted that the AO has given the effect to the order of LdCIT(A) to allow the depreciation and thus there is calculation error in imposing penalty. I have considered the facts of the case and submission made by the appellant. I find that the AO has not adhered to the satisfaction recorded for initiating the penal proceedings while imposing the penalty. Thus I find the penalty was initiated for furnishing inaccurate particulars of income but whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the breaches under section 271(1)(c) of the Act for initiation of penalty proceedings will not permit levy of penalty for other breach. Further, it is incumbent upon the AO to come to a positive finding as to whether there was concealment of income or furnishing of inaccurate particulars of income. In absence of such clear cut finding the penalty order is liable to be struck down. With regard to the judgment passed by the Hon'ble Bombay High Court in the case of Veena Estate (P) Ltd. vs. CIT (supra) the Ld. Counsel tried to justify its case by submitting that in the said case, the contention qua defective penalty notice was raised for the first time before the Hon'ble High Court i.e. after more than 20 years of passing of the Tribunal order. Further, no such contention qua defective notice was raised either before the AO/CIT/Tribunal/Hon'ble High Court, until the admission of the appeal. The Hon'ble High Court, in fact did not entertain the defective notice on the ground that the appellant never raised an objection from the very inception i.e. since the last 30 years and therefore could not be allowed to be raised the same in the absence of prejudice caused to the appellant. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furnishing inaccurate particulars of income but levy of penalty for concealment of income /furnishing of inaccurate particulars of income and while relying on the judgments passed by the Hon'ble Karnataka High Court in the case of CIT vs. Manjunath Cotton & Ginning Factory 35 taxmann.com 250 and by the Hon'ble Apex Court in the case of T. Ashok Pai vs. CIT (292 ITR 11) and by Hon'ble Bombay High Court in the case of CIT vs. Samson Perinchery (392 ITR 4) and many other decisions and by observing "that the AO has not adhered to the satisfaction recorded for initiating the legal proceedings while imposing the penalty. The penalty was initiated for furnishing the inaccurate particulars of income but while imposing the penalty, the AO has applied both the limbs, which is incorrect approach", ultimately deleted the penalty imposed by the AO. 10.4 As we have observed above that admittedly the penalty proceedings qua two additions made by the AO, were initiated for furnishing of inaccurate particulars of income. However, the notice dated 31-03-2015 under section 274 read with section 271(1)(c) of the Act was issued without satisfying any particular limb of penalty and the AO ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars". 10.10 We are also of the considered view that rejection of claim does not ipso facto leads to levy of penalty. Even otherwise in this case the penalty levied failed to pass the legal tests, as determined by the Higher Courts and therefore on the aforesaid analyzations and peculiar facts and circumstances in cumulative effects, the decision of the Ld. Commissioner for deletion of the penalty does not require any interference, as the same is neither perverse nor suffers from any impropriety and/or illegality. Consequently, deletion of penalty is sustained and Revenue's appeal i.e. ITA no 2661/Mum/2023 is dismissed. 11. Now coming to the second issue qua defective notice issued under section 274 read with section 271(1)(c) of the Act without specifying the particular limb of penalty, as we have already affirmed the decision of the Ld. Commissioner for deletion of penalty, hence for the sake of brevity are inclined not to delve into this aspect, as adjudication of the same would prove futile exercise. 12. Coming to the Cross objections filed by the Assessee, we observe that cross objections raised by the Assessee more or less are in support of impugned order, therefore in v ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
