Commissioner of Income Tax v. Ifci Ltd

MADAN B. LOKUR, J JUNE 03, 2010 pk

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 3rd June, 2010 + ITA 732/2010 COMMISSIONER OF INCOME TAX ..... Appellant Through: Mr. Sanjeev Sabharwal, Adv. versus IFCI LIMITED ..... Respondent Through: Mrs. Kavita Jha, Ms. Akansha Aggarwal, Advocates CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MADAN B. LOKUR 1. Whether reporters of the local papers be allowed to see the judgment? yes 2. To be referred to the Reporter or not? no 3. Whether the judgment should be reported in the Digest? no DIPAK MISRA, CJ In this appeal under Section 260A of the Income Tax Act, 1961 (for brevity "the Act"), the revenue has called in question the legal sustainability of the order dated 31st October, 2008 passed by the Income Tax Appellate Tribunal (for short "the tribunal") in ITA 4664/Delhi/2007. 2. At the very outset, it is apposite to note that the tribunal was dealing with two appeals, one preferred by the assessee which pertained to assessment year 1996-97 and the other preferred by the revenue, i.e. ITA No. 4507/Delhi/2007 which related to assessment year 1998-99. 3. In the appeal preferred by the assessee, the only issue that emerged for consideration before the tribunal pertained to confirmation of penalty in respect of investments written off. The said claim was disallowed by the Assessing Officer. In course of assessment proceedings, the Assessing Officer initiated a penalty proceeding under Section 271(1)(c) of the Act. The amount of investment written off was disallowed by the Assessing Officer and the same was affirmed up to the level of the tribunal. 4. In course of penalty proceeding, it was explained by the assessee that the investments were written off in the books of account and were claimed as deduction on account of loss occurred to the assessee in the computation of total income. It was urged that as the entire facts were disclosed in the return, it could not be treated as concealment of income. The stand put forth by the assessee was rejected on the ground that the assessee had made certain claims by way of business expenditure in the return but was unable to substantiate the same. Accordingly, the assessing officer imposed the penalty under Section 271(1)(c) of the Act. 5. The aforesaid order was assailed in appeal before CIT(Appeals) who affirmed the order of the Assessing Officer by expressing the view that the assessee had knowingly and deliberately furnished inaccurate particulars of income. The appellate authority expressed the view that the legislature had already by way of inserting Explanation (1B) in Section 271(1)(c) had shifted the onus from the revenue to the assessee and, therefore, it was obligatory on the part of the assessee to prove that there was no mens rea on his part in filing inaccurate particulars of income. It was also held that the assessee was required to prove in a bona fide manner that the addition was not on account of concealment or furnishing of inaccurate particulars of such income. 6. Grieved by the aforesaid order, the assessee preferred an appeal before the tribunal. It was contended before the tribunal that the entire details of the claim were available in the return and it had not shown any false income or furnished any inaccurate particulars of income and hence, the imposition of penalty was unwarranted. The tribunal, as is evident from the order impugned, has held that the investment that was written off was disallowed up to the level of the tribunal and there is no dispute in that regard. The assessee had claimed the loss on account of investments written off which was not allowed by way of deduction. Thus, the assessee had declared the entire material in the return of income and merely a claim of a deduction on account of loss incurred in the capital field as revenue loss was not allowed would not make it liable for penalty for concealment of income or furnishing inaccurate particulars of such income. The tribunal referred to its earlier decision in Nasu Prop