IN HIGH COURT OF DELHI AT NEW DELHI ITA 51/2015 CIT-2 Appellant Through : Sh. N.P. Sahni, Sr. Standing Counsel. versus M/S. CONNAUGHT PLAZA RESTAURENTS P. LTD. Respondent Through : Ms. Kavita Jha and Sh. Vivek Bansal, Advocates. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA ORDER 04.02.2015 revenue claims to be aggrieved against order of Income Tax Appellate Tribunal (ITAT) dated 02.07.2014 dismissing its appeal, ITA No.2947/Del/2013. [TAT affirmed view of CIT (Appeals) who had accepted assessee?s plea that penalty imposed by Assessing Officer (AO) was uncalled for in circumstances of case. assessee had, for AY 1998-99, claimed certain allowances ? 1,95,122/- under Section 35D of Income Tax Act, 1961 (hereafter referred to as ?the Act?), -4,05,000/- for prior period expenses and 33,69,555/- on account of license fee. AO disallowed these amounts; disallowance was rejected in appeal. AO initiated penalty proceedings and directed payment of '13,89,387/-. By order dated 12.03.2010, te CIT (Appeals), on being approached by assessee, by elaborate process of reasoning, after considering each head of claims, formed opinion that there was no concealment of any material facts in circumstances and that mere wrongful claim did not contract penalty proceedings. ITAT repelled Revenue?s appeal and confirmed order of CIT(Appeals). It is argued on behalf of Revenue that ITAT fell into error in misappreciating decision of Supreme Court in CIT v. Reliance Petroproducts (P). Ltd. 322 ITR 158(SC). It was submitted that in present case, another important feature which escaped attention of authorities was that even in previous year, similar deduction under Section 35D of Act had been sought ? which displayed assessee?s propensity to make inadmissible claims. It is
submitted in this context that had assessment not been finalized but merely filed under Section 143(1) of Act, matter would have gone undetected. It is precisely to address and deter such errant behaviour that penalty proceedings are mandated by Parliament under Section 271(1) of Act. This Court has considered submissions. Revenue?s appeal does not disclose as to when previous year assessments were finalized. As result, that contention is not substantial. So far as reliance placed on Reliance Petroproducts (supra) goes, that decision itself is authority for proposition that claim which is not sustainable in law ipso facto does not ?amount to furnishing inaccurate particulars regarding income of assessee. Such claim made in Return cannot amount to inaccurate particulars.? In present case, that assessee made three claims which were ultimately rejected ought not to have automatically resulted in penalty proceedings. Court recollects that Section 271(1) to this extent is not compulsive and enables AO to use his discretion in given facts and circumstances of case. Considering that CIT (Appeals) appreciated facts rather elaborately and by process of reasoning reversed findings of AO ? which was finally affirmed by ITAT, Court is of opinion that no substantial question of law arises. appeal is accordingly dismissed. S. RAVINDRA BHAT, J R.K.GAUBA, J FEBRUARY 04, 2015 2ajk 6 CIT-2 v. Connaught Plaza Restaurents P. Ltd