M/s. Keshav Power Ltd., New Delhi V. DCIT, New Delhi

CO 167/DEL/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0097 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SMTI NAINA S O IN KA B IL
• Assessee Lawyers: R M MEHTA
• Keywords: Earning of tax free income; Question of law
• Section: 271(1)(c); 14A; 260A; 115JB; 147

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SMT DIVA SINGH , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2804/DEL/2015 (ASSESSMENT YEAR: 2008 - 09 ) DCIT, CIRCLE - 14(2), NEW DELHI VS. M/S. KESHAV POWER LTD, 4, SCINDIA HOUSE, NEW DELHI PAN: AACCK5351M (APPELLANT) (RESPONDENT) CO NO. 167/DEL/2018 (IN ITA NO. 2804/DEL/2015) (ASSESSMENT YEAR: 2008 - 09) M/S. KESHAV POWER LTD, 4, SCINDIA HOUSE, NEW DELHI PAN: AACCK5351M VS. DCIT, CIRCLE - 14(2), NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SMTI NAINA S O IN KA B IL, SR. DR ASSESSEE BY: SHRI R.M. MEHTA, CA DATE OF HEARING 11/09 / 2018 DATE OF PRONOUNCEMENT 1 0 / 1 2 / 2018 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . TH IS APPEAL IS FILED BY THE REVENUE AND CROSS OBJECTION IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT ( A) - V, NEW DELHI DATED 06.02.2015 FOR THE ASSESSMENT YEAR 2008 - 09. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) VIDE HIS COMBINED ORDER HAS ERRED IN DELETING THE PENALTY IMPOSED ON U/S 271(1)(C) OF RS. 25,77,500 (FOR A.Y. 2008 - 09) AND RS. 13,20,000/ - (FOR A.Y. 2010 - 11) BY NOT APPRECIATING THE FACTS THAT AS THE ASSESSEE COMPANY PAGE | 2 HAS PAID LARGE AMOUNT OF INTEREST TO AXIS BANK, YES BANK AND SNCCIL ON THE LOANS TAKEN FOR INVESTMENTS IN SHARES OF DALMIA CEMENT AND ON SUCH INVESTMENTS ASSESSEE HAS EARNED DIVIDEND INCOME WHICH WAS CLAIMED AS EXEMPTED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) VIDE HIS COMBINED ORDER HAS ERRED IN IGNORING THE FACTS THAT ASSESSEE HAS NOT CHANGED THE SAID ADDITIONS IN APPEAL, THUS IT HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 3. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 3 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN CROSS OBJECTION: - THAT THE INTIMATION OF PENALTY U/S 271(1)(C) AND THE ORDER PASSED PURSUANT TO SUCH INITIATION ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION IN AS MUCH AS THE SPECIFIC CHARGE HAS NOT BEEN INDICATED IN THE NOTICE ISSUED BY THE AO U/S 271(1)(C)/ 274 OF THE ACT. 4 . BRIEF FACTS OF THE CASE SHOWS THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF GENERATION AND DISTRIBUTION OF POWER, WHO FILED ITS RETURN OF INCOME ON 29/9/2008 DECLARING N IL INCOME FOR A.Y. 2008 09. THE ASSESSMENT UNDER SECTION 143 (3 ) READ WITH SECTION 147 OF THE INCOME TAX ACT WAS PASSED ON 25/3/2013, WHEREIN, THE ADDITION BECAUSE OF DISALLOWANCE OF EXPENDITURE UNDER SECTION 14 A OF THE ACT WAS MADE OF INR 1 6560453/ . (TOTAL DISALLOWANCES COMPUTED OF RS. 22746641/ LESS DISALLOWED BY THE ASSESSEE HIMSELF OF INR 6186188/ .) AND ADJUSTMENT TO THE BOOK PROFIT UNDER SECTION 115 J B WAS ALSO MADE ON ACCOUNT OF DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14 A OF THE INCOME TAX ACT OF RS. 22746641. 5 . THE LEARNED ASSESSING OFFICER WHO MADE AN ADDITION OF RUPEES 22746641/ BECAUSE OF DISALLOWANCE UNDER SECTI ON 14 A OF THE INCOME TAX ACT HAS ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 (1) ( C) O F THE INCOME TAX ACT. THE LEARNED ASSESSING OFFICER NOTED THAT ASSESSEE HAS ACQUIRED SHARES OF DALMIA CEMENT BHARAT LTD OF INR 616,400,000 AND HAS OBTAINE D A FRESH LOAN OF INR 360,000,000 FROM Y ES BANK, WHICH IS APART FROM THE LOAN OBTAINED FROM PAGE | 3 A XIS BANK. THE ASSESSEE HAS ALSO TAKEN A LOAN OF INR 33,000,000 FROM M/S NATRAJ CERAMIC AND CHEMICAL INDUSTRIES LTD. ACCORDINGLY, THE ASSESSEE HAS PAID TOTAL INTEREST OF RS. 49790277/ WHICH HAS BEEN ALLEGEDLY OBTAINED FOR INVESTING IN THE SHARES OF THE ASSOCIATE COMPANY. THE ASSESSEE HAS EARNED DIVIDEND OF INR 11,900,000, WHICH IS CLAIMED AS EXEMPT UNDER SECTION 10 OF THE INCOME TAX ACT . O N THESE EXEMPT INCO ME , ASSESSEE COMPANY HAS DISALLOWED ONLY A SUM OF INR 6,186,000 AS EXPENDITURE INCURRED TOWARDS EARNING OF EXEMPT INCOME. THE LEARNED ASSESS ING OFFICER EXAMINED THE DETAILS AND AFTER THAT WORKED OUT TOTAL DISALLOWANCE OF RS. 22746641/ UNDER SECTION 14 A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES. THEREFORE, THE BALANCE DISALLOWANCE WAS MADE IN THE NORMAL COMPUTATION OF TOTAL INCOME AND THE SAME DISALLOWANCE WAS MADE UNDER SECTION 115JB OF THE ACT FOR COMPUTATION OF THE BOOK PROFIT. ON THIS D ISALLOWANCE THE PENALTY PROCEEDINGS UNDER SECTION 271 (1) OF THE ACT WAS INITIATED BY THE LEARNED ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 274 ON 25/3/2013. 6 . BEFORE THE AO, ASSESSEE SUBMITTED THAT ASSESSEE HAS ALREADY DISALLOWED INR 6,186,000 UND ER SECTION 14 A OF THE INCOME TAX ACT. WITH RESPECT TO THE INTEREST EXPENSES, IT WAS STATED THAT THE ASSESSEE HAS A SHAREHOLDER FUND OF INR 251,200,000 AND OUT OF WHICH THESE INVESTMENTS HAVE BEEN MADE AND THEREFORE NOW, NO INTEREST DISALLOWANCE CAN BE M ADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 14 A OF THE ACT. IT WAS FURTHER STATED THAT THE INVESTMENT HAS BEEN MADE AS STRATEGIC INVESTMENT TO RETAIN THE PROMOTERS CONTROL AND THEREFORE NO DISALLOWANCE UNDER SECTION 14 A C AN BE MADE. IT WAS FURTHER STATED THAT HONOURABLE BOMBAY HIGH COURT IN CASE OF RELIANCE UTILITIES AND POWER LTD HAS HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENT AND SAME TIME ASSESSEE HAS RAISED LOAN , IT CAN BE PRESUMED THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE FROM INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. , WITH RESPECT TO THE INTEREST PAID ON BANK LOAN , IT WAS STATED THAT IT HAVE BEEN UTILIZED FOR THE PURPOSES OF THE BUSINESS AND NO A MOUNT OF INTEREST CAN BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 14 A PAGE | 4 OF THE ACT. THEREFORE, THE ASSESSEE CHALLENGED THE QUANTUM OF INTEREST DURING THE COURSE OF PENALTY PROCEEDINGS AND STATED THAT THERE IS NEITHER CONCEALMENT OF INCOME N OR FURN ISHING OF INACCURATE PARTICULARS . THEREFORE, PENALTY CANNOT BE LEVIED ON THE DISALLOWANCE . 7 . THE LEARNED ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT AS ASSESSEE HAS NOT PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOM E TAX APPEALS AGAINST THE ABOVE DISALLOWANCE , ASSESSEE HAS ACCEPTED THAT IT HAS SUBMITTED INACCURATE PARTICULARS OF INCOME. HE THEREFORE STATED THAT FOR THE DISALLOWANCE OF RS. 22746641/ UNDER SECTION 14 A OF THE INCOME TAX ACT ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF ITS INCOME AND THEREFORE HE IMPOSED A PENALTY OF RS. 2 577500/ V IDE ORDER DATED 26/9/2013. 8 . THE ASSESSEE AGGRIEVED WITH THE ORDER OF THE LEARNED ASSESSING OFFICER PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS WHO DELETED THE PENALTY AS PER COMBINED ORDER FOR ASSESSMENT YEAR 2008 09 AND 2010 11 DATED 6/2/2015. HE HELD THAT LOOK ING INTO THE FACT S AND APPLYING THE LEGAL POSITION, HE WAS OF THE CONSIDERED VIEW THAT THE PROVISIONS OF SECTION 271 (1) ( C) OF THE ACT ARE NOT ATTRACTED AND ACCORDINGLY, THE PENALTY LEVIED FOR THE YEAR IS NOT MAINTAINABLE. HE FURTHER STATED THAT THE APPELLANT HAS PAID ALL TAXES ON ADDITION MADE UNDER SECTION 11 5 JB OF THE INCOME TAX ACT WITHOUT MAKING ANY LITIGATION WITH THE DEPARTMENT AND THE ISSUE IS HIGHLY DEBATABLE ON ADDITION OF 14 A READ WITH RULE 8D WITH RESPECT TO THE PROVISIONS OF SECTION 115JB OF THE INCOME TAX ACT. HE THEREFORE, DELETED THE PENALTY. 9 . THEREFORE REVENUE AGGRIEVED WITH THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME TAX (A PPEALS ) HAS PREFERRED AN APPEAL BEFORE US AND THE ASSESSEE ALSO AGGRIEVED HAS FILED CROSS OBJECTION STATING THAT THE INITIATION OF PENALTY UNDER SECTION 271 (1) ( C ) ON THE ORDER PASSED PURSUANT TO SUCH INITIATION ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION IN AS MUCH AS THE SPECIFIC CHARGE HAS NOT BEEN INDICATED IN THE NOTICE ISSUED UNDER SECTION 271 (1) ( C ) READ WITH SECTION 274 OF THE INCOME TAX ACT BY THE LEARNED ASSESSING OFFICER. PAGE | 5 10 . THE LEARNED AUTHORISED REPRESENTAT IVE SUBMITTED THE COPY OF THE NOTICE DATED 25/3/2013 AND STATED THAT OUT OF THE TWO CHARGES SPECIFIED THEREIN, NONE OF THE CHARGES HAS BEEN STRUCK OFF BY THE ASSESSING OFFICER AND THEREFORE THE CHARGE IS NOT SPECIFIC IN THE NOTICE. HE FURTHER REFERRED T O THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER AND STATED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS RECORDED THE SATISFACTION WHILE DISALLOWING INR 1 6560453/ UNDER SECTION 14 A OF THE ACT IN NORMAL COMPUTATION HOLDING THAT HE IS SATISFIED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND THEREFORE PENALTY PROCEEDINGS UNDER SECTION 271 (1) ( C ) OF THE ACT ARE INITIATED. HE FURTHER STATED THAT WHILE COMPUTING THE BOOK PROFIT THERE IS NO SUCH SATISFACT ION RECORDED BY THE LEARNED ASSESSING OFFICER AND HENCE PENALTY ITSELF TO THAT EXTENT IS INVALID. HE OTHERWISE STATED THAT DISALLOWANCE UNDER SECTION 14 A UNDER SECTION 115 JB OF THE ACT IS ITSELF A DEBATABLE ISSUE. HE FURTHER STATED THAT EVEN ADDITION UNDER SECTION 115JB OF THE ACT CANNOT BE MADE WITH RESPECT TO DISALLOWANCE UNDER SECTION 14 A OF THE ACT AS HELD BY THE HONOURABLE DELHI HIGH COURT. 11 . THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER AN D STATED THAT DISALLOWANCE HAS BEEN MADE UNDER SECTION 14 A OF THE INCOME TAX ACT AND THEREFORE, THE SAME HAS RIGHTLY BEEN DISALLOWED BY THE LEARNED ASSESSING OFFICER WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT, AS WELL AS IN THE NORMAL COMPUTATION OF THE TOTAL INCOME AND THE EXPLANATION FURNISHED BY THE ASSESSEE IS NOT SATISFACTORY . HE FURTHER STATED THAT THERE IS A SPECIFIC CHARGE IN THE ASSESSMENT ORDER ITSELF THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOM E AND THEREFORE NO FAULT CAN BE FOUND IN THE ORDER OF THE LEARNED AO. HE THEREFORE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER FOR LEVY OF THE PENALTY. 12 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORIT IES. ADMITTEDLY IN THIS CASE, THE DISALLOWANCES BEEN MADE UNDER SECTION 14 A OF THE INCOME TAX ACT IN THE NORMAL COMPUTATION OF THE TOTAL INCOME AS WELL AS WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115J B OF THE PAGE | 6 INCOME TAX ACT. WHILE COMPUTING THE NO RMAL TAXABLE INCOME OF THE ASSESSEE , THE ASSESSEE ITSELF HAS DISALLOWED THE SUM OF INR 6,186,000 WHEREAS THE LEARNED ASSESSING OFFICER HAS ENHANCED THE DISALLOWANCE BY MAKING A FURTHER DISALLOWANCE BECAUSE OF INTEREST EXPENDITURE. ADMITTEDLY, THE ASSESSEE HAS NOT CHALLENGED THE ADDITION BEFORE THE HIGHER FORUM. HOWEVER, MERELY BECAUSE IT HAS NOT BEEN CHALLENGE D BEFORE THE HIGHER FORUM , IT CANNOT BE SAID THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. EVEN OTHERWISE, THE NOTIC E ISSUED UNDER SECTION 274 OF THE INCOME TAX ACT SHOWS THAT THE LEARNED ASSESSING OFFICER HAS NOT STRUCK OFF ONE OF THE TWIN CHARGES MENTIONED THEREIN. IN VIEW OF THIS , THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE ON THAT GROUND BY FOLLOWING TH E DECISION OF THE HONOURABLE KARNATAKA HIGH COURT IN CASE OF [2016] 73 TAXMANN.COM 241 (KARNATAKA) COMMISSIONER OF INCOME - TAX, BANGALORE V, SSAS EMERALD MEADOWS (2016] 73 TAXMANN.COM 248 (SC)/[2016] 242 TAXMAN 180 (SC)) 3. THE TRIBUNAL HAS ALLOWED TH E APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE, HAS RELIED ON THE DECISION OF THE DIVISION B ENCH OF THIS COURT RENDERED IN THE CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565/218 TAXMAN 423/35 TAXMANN.COM 250 (KAR.) . 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDGMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED. 13 . FURTHER, HONOURABL E SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS LIMITED [ 2010] 189 TAXMAN 322 (SC)/[2010] 322 ITR 158 (SC)/[2010] 230 CTR 320 (SC) HAS HELD AS UNDER: - 7. AS AGAINST THIS, LEARNED COUNSEL APPEARING ON BEHALF OF THE RESPONDENT POINTED OUT THAT THE LANGU AGE OF SECTION 271(1)( C ) HAD TO BE STRICTLY CONSTRUED, THIS BEING A PAGE | 7 TAXING STATUTE AND MORE PARTICULARLY THE ONE PROVIDING FOR PENALTY. IT WAS POINTED OUT THAT UNLESS THE WORDING DIRECTLY COVERED THE ASSESSEE AND THE FACT SITUATION HEREIN, THERE COULD NOT BE ANY PENALTY UNDER THE ACT. IT WAS POINTED OUT THAT THERE WAS NO CONCEALMENT OR ANY INACCURATE PARTICULARS REGARDING THE INCOME WERE SUBMITTED IN THE RETURN. SECTION 271(1)( C ) IS AS UNDER : '271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS ) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON ( C )HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LEARNED COUNSEL FOR REVENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FOR THE EXPENDITURE ON INTEREST, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTION 271(1)( C ) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN T HE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE LEARNED COUNSEL ARGUED THAT 'SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME'. WE DO NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM I N LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IN CIT V. ATUL MOHAN BINDAL [2009] 9 SCC 589, WHERE THIS COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED T HE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THIS COURT REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS ALSO, THE DECISION IN UNION OF INDIA V. RAJASTH AN SPG. & WVG. MILLS [2009] 13 SCC 448 AND REITERATED IN PARA 13 THAT : '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)( C ), CONDITIONS STATED THEREIN MUST EXIST.' 8. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)( C ) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE AS SESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. IN DILIP N. SHROFF V. JT. CIT [2007] 6 SCC 329, THIS COURT EXPLAINED THE TERMS 'CONCEALMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRACT THE PENALTY UNDER SECTION 271(1)( C ), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD 'INACCURATE' SIGNIFIED A DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WEN T ON TO HOLD THAT CLAUSE ( III ) OF SECTION 271(1) PROVIDED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHORITY, INASMUCH AS THE AMOUNT OF PAGE | 8 PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICU LARS OF INCOME, BUT IT MAY NOT EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE IN THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY IT SELF BE FURNISHING INACCURATE PARTICULARS. IT WAS FURTHER HELD THAT THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WENT ON TO HOLD THAT THE ELEMENT OF MENS REA WAS ESSENTIA L. IT WAS ONLY ON THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHROFF'S CASE ( SUPRA ) WAS UPSET. IN DHARAMENDRA TEXTILE PROCESSORS' CASE ( SUPRA ), AFTER QUOTING FROM SECTION 271 EXTENSIVELY AND ALSO CONSIDERING SECTION 271(1)( C ), THE COURT CAME TO THE CONCLUSION THAT SINCE SECTION 271(1)( C ) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN, THERE WAS NO NECESSITY OF MENS REA . THE COURT WENT ON TO HOLD THAT THE OBJECTIV E BEHIND ENACTMENT OF SECTION 271(1)( C ) READ WITH EXPLANATIONS INDICATED WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AND, THEREFORE, WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRA CTING CIVIL LIABILITY AS WAS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE ACT. THE BASIC REASON WHY DECISION IN DILIP N. SHROFF'S CASE ( SUPRA ) WAS OVERRULED BY THIS COURT IN DHARAMENDRA TEXTILE PROCESSORS' CASE ( SUPRA ), WAS THAT ACCORDIN G TO THIS COURT THE EFFECT AND DIFFERENCE BETWEEN SECTION 271(1)( C ) AND SECTION 276C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF ( SUPRA ). HOWEVER, IT MUST BE POINTED OUT THAT IN DHARAMENDRA TEXTILE PROCESSORS' CASE ( SUPRA ), NO FAULT WAS FOUND W ITH THE REASONING IN THE DECISION IN DILIP N. SHROFF'S CASE ( SUPRA ), WHERE THE COURT EXPLAINED THE MEANING OF THE TERMS 'CONCEAL' AND 'INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF'S CASE ( SUPRA ) TO THE EFFECT THAT MENS REA WAS AN ESSE NTIAL INGREDIENT FOR THE PENALTY UNDER SECTION 271(1)( C ) THAT THE DECISION IN DILIP N. SHROFF'S CASE ( SUPRA ) WAS OVERRULED. 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA . HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' WE HAVE A LREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SE CTION 271(1)( C ) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PAR TICULARS. 10. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURT HER PAGE | 9 POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS K NOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; ( I ) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; ( II ) AN ITEM OF EXPENDITURE MAY BE FALSE LY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT I TS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)( C ). IF WE ACCEPT T HE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)( C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 11. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU [2009] 23 VST 249 AS REGARDS THE PENALTY ARE APPOSITE. IN THE AFOREMENTIONED D ECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS IN TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATEMENTS MADE IN THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED : 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT IN CLUDED IN THE TURNOVER ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDE THESE ITEMS IN THE DEALER'S TURNOVER DISALLOWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STANDS SET ASIDE.' THE SITUATION IN T HE PRESENT CASE IS STILL BETTER AS NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN ITS RETURN. 12. THE TRIBUNAL, AS WELL AS, THE COMMISSIONER OF INCOME - TAX (APPEALS) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION AND, T HEREFORE, THE APPEAL FILED BY THE REVENUE HAS NO MERITS AND IS DISMISSED. 14 . EVEN OTHERWISE THE HONOURABLE DELHI HIGH COURT IN CASE OF CIT VS. LIQUID INVESTMENT COMPANY IN ITA NUMBER 240 OF 2009 DATED 05/10/2010 HAS HELD WHILE DELETING THE PENALTY U/S 27191) 9 C) OF THE ACT ON DISALLOWANCE U/S 14A OF THE ACT AS UNDER : - BOTH THE CIT(A) AS WELL AS THE ITAT HAVE SET ASIDE THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE ISSUE OF DEDUCTION UNDER SECTION 14A OF THE ACT WAS A DEBATABLE ISSUE. WE MAY ALSO NOTE THAT AGAINST THE QUANTUM ASSESSMENT WHERE UNDER DEDUCTION UNDER PAGE | 10 SECTION 14A OF THE ACT WAS PRESCRIBED TO THE ASSESSEE, THE ASSESSEE HAS PREFERRE D AN APPEAL IN THIS COURT UNDER SECTION 260A OF THE ACT WHICH HAS ALSO BEEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED. THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE. FOR THESE REASONS, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESE NT CASE. 15 . FURTHER WE FOUND THAT FOR STRATEGIC INVESTMENTS DISALLOWANCE CANNOT BE MADE IS ALSO SUPPORTED BY THE DECISION OF THE HON DELHI HIGH COURT IN HOLCIM LIMITED, THEREFORE THE DISALLOWANCE U/S 14 A IS ITSELF A DEBATABLE ISSUE TILL IT WAS DECIDED BY HONOURABLE SUPREME COURT IN CASE OF MAXOPP INVESTMENTS LIMITED V CIT [2018] 91 TAXMANN.COM 154 (SC)/[2018] 254 TAXMAN 325 (SC)/[2018] 402 ITR 640 (SC)/[2018] 301 CTR 489 (SC) . 16 . IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX APPEALS IN DELETING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271 (1) ( C ) OF THE INCOME TAX ACT OF RS. 2 577500. 17 . ACCORDINGLY , THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED AN APPEAL FILED BY THE LEARN ED ASSESSING OFFICER IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 1 0 / 1 2 / 2018 . - SD/ - - SD/ - ( DIVA SINGH ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 / 1 2 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI