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* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment reserved on: 03 September 2024 Judgment pronounced on: 22 November 2024 + ITA 90/2020 PR. COMMISSIONER OF INCOME TAX – 04 ……Appellant Through: Mr. Zoheb Hossain, Sr. SC with Mr. Sanjeev Menon, Jr. SC.

versus M/S GRAGERIOUS PROJECTS PVT. LTD.

…… Respondent Through: Mr. Ajay Vohra, Sr. Adv with Mr. Rohit Jain, Mr. Aniket D.

Agrawal and Mr. Samarth Chaudhari, Advs.

+ ITA 109/2023, CM APPL. 8845/2023 PR. COMMISSIONER OF INCOME TAX-7 ……Appellant Through: Mr. Puneet Rai, Sr. SC with Mr. Ashivini Kumar and Mr.

Rishabh Nangia, Advs.

versus SARA SAE PVT LTD …… Respondent Through:

+ ITA 392/2023 PR. COMMISSIONER OF INCOME TAX, DELHI-7 …… Appellant Through: Mr. Puneet Rai, Sr. SC with Mr. Ashivini Kumar and Mr.

Rishabh Nangia, Advs.

versus VIRTUAL SOFTWARE AND TRAINING PVT. LTD.

…… Respondent Through: Dr. Rakesh Gupta, Mr. Somil Agarwal and Mr. Dushyant Agrawal, Advs.

Signature Not Verified Digitally Signed ITA 90/2020, ITA 109/2023 & ITA 392/2023 Page 1 of 12 CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MR. JUSTICE RAVINDER DUDEJA

J U D G M E N T

RAVINDER DUDEJA, J.

1. These are three appeals by the Revenue against the impugned orders passed by the Income Tax Appellate Tribunal [“ITAT”].

2. ITA 90/2020 is directed against an order passed by ITAT in ITA No. 112/Del/2019 for the Assessment Year [“AY”] 2015-16, ITA No. 109/2023 is directed against an order passed by the ITAT in ITA No. 9058/Del/2019 for the AY 2008-09 and ITA No. 392/2023 is directed against an order passed by ITAT in ITA No. 3926/Del/2019 for the AY

2001-02.

3. The common issue sought to be urged by the Revenue in all these appeals is whether the ITAT was justified in deleting the penalty under Section 271(1) (c) of the Income Tax Act, 1961 [“Act”] by ignoring the fact that the Assessee had claimed inaccurate expenses imposed by the Assessing Officer [“AO”] on the Assessing Company for the reason that in the notice under Section 274 read with Section 271(1) (c), the AO has not marked the specified limb for which the penalty notice is issued, although, penalty was also imposed for furnishing inaccurate income as per the penalty order by the AO.

4. For the sake of convenience, it will be apposite to refer to the facts of ITA No. 90/2020. Shorn of all necessary details, the facts are that assessee filed return on 01.10.2015, declaring loss of Rs.

476,35,92,302/-.

Signature Not Verified Digitally Signed ITA 90/2020, ITA 109/2023 & ITA 392/2023 Page 2 of 12

5. On 19.03.2016, a notice under Section 143 (2) of the Act was issued and served upon the assessee company.

6. On 28.03.2017, the original return was revised and the assessee declared a loss of Rs. 354,34,84,148/-, which included loss from Business or Profession amounting to Rs. 5,00,14,046/-. The income from short term capital gain Rs. 97,02,942/- and long term capital loss Rs. 350,31,73,044/- was claimed as exempt.

7. During the assessment proceedings, it was noticed that the assessee had claimed advances written off under the head “other expenses” in the P & L and loss from business was primarily due to this.

8. Assessment Order under Section 143(3) of the Act was passed on 23.05.2017, vide which, an addition of Rs. 5,00,00,000/- was made on account of alleged advance given to M/s. TAIDIA Construction and written off in the year under consideration. The AO while disallowing the alleged business expenditure noted that the assessee company had failed to file any agreement or supporting evidence in respect of the advance.

9. AO further adjusted the business loss of Rs. 14,046/- with the income from short term capital loss and assessed the total income at Rs.

96,88,900/- as against loss of Rs. 5,00,14,046/-, claimed in the ITR.

10. Penalty proceedings u/s 271(1)(c) were initiated by the AO and after recording his satisfaction, notice u/s 274 read with 271(1)(c) was issued, whereby, the assessee was asked to show cause as to why penalty u/s 271 (1) (c) may not be imposed upon it.

11. On 29.11.2