Greater Ludhiana Area Development Aughority (GLADA), Ludhiana V. Dy.Commissioner of Income Tax, Ludhiana

ITA 1130/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73567 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset; Depreciation; Business expenditure; Bonafide belief; Question of law; Wrong claim; Capital receipt; Revenue expenditure; Capital expenditure
• Section: 80IB; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1130 /CHD/2013 ASSESSMENT YEAR : 2008-09 GREATER LUDHIANA AREA VS. THE D.C.I.T., DEVELOPMENT AUTHORITY(GLADA), CIRCLE-VI, PUDA COMPLEX, FEROZEPUR ROAD, LUDHIANA. LUDHIANA. PAN: AAALG1055F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 10.03.2014 DATE OF PRONOUNCEMENT : 20.03.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, CHANDIGARH DATED 18.11.2013 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE PEN ALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APP EALS), LUDHINAN HAS ERRED IN CONFIRMING THE PENALTY AMOUNTING TO RS.18,54,00,000 /- LEVIED BY THE ASSESSING OFFICER U/S 85 271(1)(C) OF THE INCOME TAX ACT, 196 1. 2. THAT THE PENALTY U/S 271 (1) (C) HAS BEEN LEVIED AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE DETAILED SUBMISSION FILED DURING THE CO URSE OF HEARING HAS NOT BEEN CONSIDERED PROPERLY AND ESPECIALLY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF M/S RELIANCE PETROPRODUCTS PVT. LTD. 32 2ITR158. 2 4. THAT THE WORTHY CIT (A) HAS ERRED IN NOT CONSIDE RING PROPERLY THAT ALL THE FACTS OF THE CASE WERE DISCLOSED AND NOTHING WAS CONCEALE D AND NO INACCURATE PARTICULARS WERE FILED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE LEA RNED A.R. FOR THE ASSESSEE POINTED OUT THAT ISSUE IN THE PRESENT APPE AL IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF PUNJAB URBAN D EVELOPMENT AUTHORITY. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS.60 CRORES INCURRED ON CONSTRUCTION OF INTERNATIONAL AIRPORT AT MOHALI. THE ASSESSING OFFICER AND THE CIT (APPEALS) HAD HELD TH E SAID EXPENDITURE TO BE NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL IN ASSESSEES APPEAL IN ITA NO.1220/CHD /2011 RELATING TO ASSESSMENT YEAR 2008-09 VIDE ORDER DATED 6.12.2013 HAD UPHELD THE A DDITION MADE IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER HAD L EVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ACCOUNT OF THE AFOR ESAID ADDITION, WHICH WAS CONFIRMED BY THE CIT (APPEALS). 5. WE FIND THAT SIMILAR ISSUE OF LEVY OF PENALTY UN DER SECTION 271(1)(C) OF THE ACT ON DISALLOWANCE OF EXPENDITURE INCURRED ON CONTRIBUTION TOWARDS AIRPORT AT MOHALI AROSE IN THE CASE OF PUNJAB URBAN DEVELOPMENT AUTHORITY VS DCIT IN ITA NO.149/CHD/201 3 RELATING TO ASSESSMENT YEAR 2008-09 WHEREIN VIDE CONSOLIDATED O RDER DATED 26.2.2014 ALONGWITH ITA NOS. 26 & 27/CHD/2012 AND ITA NOS. 814, 254 & 815/CHD/2013 I.E. THE APPEALS FILED BY THE REVENUE, THE TRIBUNAL IN THE APPEAL FILED BY THE ASSESSEE AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT HELD AS UNDER: 3 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. PENALTY FOR CONCEALMENT IS LEVIABLE U/S 271 (1)(C) OF THE ACT IN CASE ANY ONE OF THE TWO PRE-CONDITIONS ARE SATISFIED. THE PRE-CONDITIONS FOR LEVY OF PENALTY ARE EITHER THE ASSESSEE HAD CONCEALED TH E PARTICULARS OF ITS INCOME OR IN THE ALTERNATIVE, THE ASSESSEE HAD FURN ISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TWO CONDITIO NS NEEDS TO BE FULFILLED BEFORE LEVY OF PENALTY UNDER SECTION 271 (1)(C) O F THE ACT. THE PROVISIONS OF THE ACT ENVISAGES AN OPPORTUNITY OF H EARING TO BE AFFORDED TO THE ASSESSEE TO PROVE ITS BONAFIDES AND WHERE TH E ASSESSEE IS ABLE TO PROVE THE BONAFIDES OF HIS CLAIM, WITH REGARD TO T HE PARTICULARS OF INCOME FURNISHED IN THE RETURN OF INCOME, IN SUCH C IRCUMSTANCES NO PENALTY IS LEVIABLE FOR CONCEALMENT OF INCOME OR FO R FURNISHING INACCURATE PARTICULARS OF INCOME UNDER SECTION 271 (1)(C) OF THE ACT. THE EXPRESSIONS CONCEALMENT AND INACCURATE PARTI CULARS U/S 271 (1)(C) OF THE ACT HAS BEEN DELIBERATED UPON IN PLE THORA OF JUDGMENTS BY VARIOUS COURTS. THE HON'BLE SUPREME COURT IN DHAR MENDRA TEXTILES & PROCESSORS CASE (SUPRA), OBSERVED THAT THE PENALTY U/S 271 (1)(C) OF THE ACT IS A CIVIL LIABILITY. HOWEVER, WHERE THE LIABI LITY IS PENAL IN NATURE THOUGH BEING CIVIL LIABILITY AND THERE IS NO REQUIR EMENT OF ESTABLISHING THE MENS REA OF THE INTENTION OF THE ASSESSEE IN CA SES WHERE THE ASSESSEE IS FOUND TO HAVE CONCEALED THE PARTICULARS OF HIS I NCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER, WHERE T HE INFORMATION FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME T O THE BEST OF KNOWLEDGE OF THE ASSESSEE IS CORRECT AND COMPLETE, IT CANNOT BE SAID THAT THE ONUS ON THE ASSESSEE HAS NOT BEEN DISCHARGED TO PROVE ITS BONAFIDES. WHERE ANY ADDITION TO, OR DISALLOWANCE FROM, HAD BE EN MADE TO THE RETURNED INCOME, IT PER SE CANNOT BE THE FOUNDATION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT AS FINDINGS IN THE A SSESSMENT ORDER CANNOT BE TAKEN A CONCLUSIVE PROOF OF CONCEALMENT FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. UNDE R THE EXPLANATION 1 TO SECTION 271 (1), THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE BONAFIDES OF HIS CLAIM AND WHERE THE ASSESSEE DISCHARGES ITS ONUS OF PROVING HIS CLAIM TO BE BONAFIDELY MADE, THE COURTS HAVE HELD T HAT THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. 26. IN THE FACT OF THE PRESENT CASE, THE ASSESSEE H AD CLAIMED AN EXPENDITURE OF RS. 225 CR AGAINST THE COST OF LAND FOR ESTABLISHING AN INTERNATIONAL AIRPORT AT MOHALI. THE SAID EXPEN DITURE WAS CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE UND ER SECTION 37(1) OF THE ACT ON THE PLEA THAT THE ESTABLISHMENT OF INTERNATIONAL AIRPORT IN THE VICINITY OF THE AREA, WHICH IS UNDER THE CONTROL OF THE ASSESSEE AUTHORITY, WOULD RESULT IN HIGHER PROF ITABILITY TO THE ASSESSEE VIS--VIS THE INCREASE IN THE PRICE OF THE LAND/HOUSES SOLD BY THE ASSESSEE. THE ASSESSEE CLAIMED THAT THE SAI D EXPENDITURE WAS MADE IN FURTHERANCE OF DEVELOPMENT OBJECT OF TH E AUTHORITY INCLUDING ECONOMIC DEVELOPMENT OF THE LAND AND ALSO OF THE AREA IN TOTALITY. THE SAID EXPENDITURE WAS INCURRED BECAUS E OF COMMERCIAL NECESSITY AND AS IT HAD NOT ACQUIRED ANY CAPITAL AS SET NOR MADE ANY DONATION TO ANY ORGANIZATION, THE SAME WAS DULY CLAIMED AS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. THE ASSESSEE TOOK A DECISION TO CONTRIBUTE TOWARDS THE DEVELOPMENT OF INTERNATIONAL AIRPORT IN THE JURISDICTIONAL AREA A UTHORITY, ON THE SUGGESTIONS OF THE PUNJAB GOVERNMENT WHICH IN-TURN WOULD RESULT INTO MANY FOLD INCREASE IN THE RATES OF THE LAND TO BE SOLD BY THE ASSESSEE TO VARIOUS PERSPECTIVE BUYERS. THE ASSESS ING OFFICER, HOWEVER, DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE TOTALING RS. 225 CR ON THE FOLLOWING ISSUES : 4 A. THE JVC HAD BEEN FORMED FOR THE PURPOSE OF CONS TRUCTION OF AIRPORT AT MOHALI IN WHICH GMADA, HUDA AND AIRPO RT AUTHORITY OF INDIA HAD THEIR SPECIFIC SHARES, BUT P UDA HAD NO SHARE HOLDING IN JVC AND HAD NOTHING TO DO W ITH THE AIRPORT AT MOHALI AND SO IT WAS NOT KNOWN AS TO IN WHAT CAPACITY PUDA HAD BOOKED THE AMOUNT OF RS. 225 CRORES FOR ACQUISITION OF LAND FOR AIRPORT AT MOHAL I. B. THE EXPENDITURE OF RS. 225 CRORES FOR ACQUISITION O F LAND FOR AIRPORT AT MOHALI WAS NOT AT ALL RELATED TO INC OME EARNED DURING THE YEAR. C. THAT ASSESSEE HAD NOT SHOWN THE ACQUIRED LAND IN IT S FIXED ASSETS SCHEDULE/BALANCE SHEET, WHICH CLEARLY SUBSTA NTIATED THAT THE EXPENDITURE WAS NOT RELATED TO THE BUSINES S OF THE APPELLANT. 27. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF ASSESSING OFFICER. 28. THE TRIBUNAL IN ITA NO. 390/CHD/2012 RELATING T O ASSESSMENT YEAR 2008-09 VIDE CONSOLIDATED ORDER DATED 16.12.20 13 ADJUDICATED THE ISSUE VIDE PARAS 188 TO 217 OF THE ORDER. THE TRIBUNAL AFTER CONSIDERING THE VARIOUS FACETS OF SE CTION 37 OF THE INCOME TAX ACT VIDE PARA 198 AND 199 CONSIDERED THE ISSUE OF ALLOWABILITY OF EXPENDITURE UNDER SECTION 37 OF THE ACT IN RELATION TO THE NATURE OF THE EXPENDITURE WHETHER THE SAME I S CAPITAL IN NATURE OR REVENUE IN NATURE. THE RELEVANT FINDINGS OF THE TRIBUNAL VIDE PARAS 198 AND 199 ARE AS UNDER : 198 THE LAST CONDITION FOR ALLOWABILITY OF EXPENDI TURE U/S 37 WAS THAT IT SHOULD NOT BE IN THE NATURE OF CAPITAL EXPE NDITURE. IN THE CASE BEFORE US, IT HAS BEEN HELD THAT THE EXPENDITU RE WAS INCURRED FOR THE PURPOSE OF ACQUISITION OF LAND AND THEREFO RE, BEING IN CAPITAL NATURE IS NOT ALLOWABLE. IN THIS REGARD WE HAVE PERUSED JOINT VENTURE AGREEMENT (IN SHORT JVA) CAREFULLY AN D FIND THAT THE SAME WAS ENTERED ON 17 TH DAY OF SEPT, 2009 BETWEEN AIRPORT AUTHORITY OF INDIA (STATUTORY AUTHORITY ESTABLISHED UNDER THE AIRPORT ACT, 1994) AND GOVERNMENT OF PUNJAB THROUGH GMADA (STATUTORY AUTHORITY CONSTITUTED BY GOVERNMENT OF P UNJAB AND HUDA (STATUTORY AUTHORITY CONSTITUTED BY HARYANA HO USING DEVELOPMENT AUTHORITY). IN THE RECITATION CLAUSE I T HAS BEEN RECITED THAT MEMORANDUM OF UNDERSTANDING WAS SIGNED AMONG THOSE PARTIES ON 4.1.2008 WHICH BROADLY PROVIDE FOR THE FOLLOWING TERMS AND CONDITIONS: A JOINT VENTURE COMPANY (JVC) WOULD BE FORMED WIT H 51% EQUITY STAKE OF AAI AND 24.5% EQUITY STAKE EACH OF GMADA AND HUDA TO OPERATE AND MAINTAIN THE CHANDIGARH INTERNATIONAL AIRPORT (CIA) AT CHANDIGARH TO BE BUILT BY AAI; PUNJAB GOVERNMENT WOULD TRANSFER THE REQUIRED LAND LOCATED AT MOHALI, PUNJAB OF 300 ACRES APPROXIMATELY TO BE JV COMPANY INCLUDING LAND FOR C ITY SIDE DEVELOPMENT. THE COST OF LAND WOULD BE EQUALLY SHARED BETWEEN THE GOVERNMENTS OF PUNJAB & HARYANA AND WOULD BE CAPITALIZED AND SHALL COUNT TOWARDS THE EQUITY CONTRIBUTION OF GMADA AND HUDA. AAI WOULD BE RESPONSIBLE FOR CREATING THE TERMINAL BUILDING AND OTHER AIRSIDE FACILITIES FOR THE JVC WITHOUT SEEKING ANY CASH CONSIDERATION FORM OTHER JV PARTNERS WHICH WOULD BE SUBSEQUENTLY CAPITALIZED 5 AT A VALUE TO BE DETERMINED BY AAI AT THE TIME OF T RANSFER AND SHALL COUNT TOWARDS THE EQUITY CONTRIBU TION OF AAI; AND THE COST OF LAND WOULD BE COUNTED TOWARDS THE 49% E QUITY CONTRIBUTION OF GMADA AND HUDA AND THE COST OF INTERNATIONAL CIVIL AIR TERMINAL & OTHER AE RONAUTICAL ASSETS TO BE BUILT BY AAI WILL BE COUNTE D TOWARDS THE 51% EQUITY CONTRIBUTION OF AAI AS PER T HE PROVISIONS IN THE SHAREHOLDERS AGREEMENT TO BE EXECUTED BY THE JV PARTIES AND THE JV COMPANY. AS PER RECITATION CLAUSE IT IS FURTHER AGREED THAT SAME (JVC) IS FOR THE FOLLOWING PURPOSES: TO FORM A JOINT VENTURE COMPANY WHICH WILL UNDERTAK E THE OPERATION AND MAINTENANCE OF CHANDIGARH INTERNATIONAL AIRPORT TO BE BUILT BY AAI AT CHANDIG ARH; TO SUBSEQUENTLY TAKE OVER THE EXISTING INFRASTRUCTU RE BELONGING TO AAI AT THE CIVIL ENCLAVE AT CHANDIG ARH AT SUCH VALUE AS MAY BE DETERMINED BY AAI AND TO OP ERATE AND MAINTAIN THE SAME. TO UNDERTAKE FURTHER DEVELOPMENT OF CIVIL AIR TERMI NAL AT CHANDIGARH, COMMENSURATE WITH THE TRAFFIC POTENTIAL, COMMERCIAL VIABILITY AND AVAILABILITY OF FINANCIAL RESOURCES; TO RECORD THE TERMS AND CONDITIONS ON WHICH THE PAR TIES TO THIS AGREEMENT WILL SUBSCRIBE TO THE SHARE CAPITAL (AS DEFINED HEREINAFTER) OF THE JOINT VENTU RE COMPANY (JKVC) AND TO REGULATE THE RELATIONSHIP AMONGST THE JOINT VENT URE PARTIES AS LONG AS THEY ARE SHAREHOLDERS OF THE JVC. FURTHER WHILE DEFINING THE RESPONSIBILITY OF THE PA RTIES, IT HAS BEEN PROVIDED IN RESPECT OF RESPONSIBILITY OF THE STATE GOVERNMENT/GMADA AS UNDER: RESPONSIBILITIES OF STATE GOVERNMENT / GMADA: CLEARANCES / PERMISSIONS / NOC TO BE OBTAINED BY GM ADA FROM CONCERNED AUTHORITIES ACTIVITIES / SERVICES FOR RESPONSIBILITIES FOR CLE ARANCE / PERMISSION. TRANSFER OF LAND (200 ACRES) TO GMADA THE JV COMPANY FOR DEVELOPMENT OF PROJECT. THE GMADA SHALL ACQUIRE THE LAND OF AROUND 300 ACR ES AND TRANSFER TO THE JVC FOR THE DEVELOPMENT OF CHANDIGARH INTERNATIONAL AIRPORT. THE GMADA AND HUDA SHALL BEAR ALL THE EXPENDITURE IN EQUAL SHARE IN RESPECT OF CLAIM OR LIABILITIES ARISING OUT THE ANY LITIGATION, PRESENT OR FUTURE I N THE MATTER OF LAND ACQUISITION. THE GMADA SHALL ENSURE THAT INITIAL ESTABLISHMENT O F SUB STATION AND WATERLINE TO BE DONE BY STATE GOVERNMENT FREE OF COST. THE GMADA SHALL EXEMPT THE CIVIL AIR TERMINAL COMPL EX INCLUDING APRON I.E. AREA INCLUDING CITY SIDE DEVELOPMENT STAFF COLONY AND THE LAND USED FOR THE INSTALLATION OF NAVIGATIONAL AIDS AND OTHER RELATED EQUIPMENT FROM PROPERTY TAX AND OTHER MUNICIPAL TAX ES INITIALLY FOR A PERIOD OF TEN YEARS COMMENCING FROM THE DATE OF TRANSFER OF LAND TO JVC TO MINIMIZ E OPERATIONAL LOOSES. THE NEED FOR FURTHER EXTENSI ON OF THESE CONCESSION AND EXEMPTIONS WILL BE JOINTLY REV IEWED BY GMADA & AAI AT THE END OF THE TEN YEAR PERIOD. THE GMADA WILL ACQUIRE THE LAND AND DEVELOP FOURLAN D APPROACH ROAD TO CIVIL AIR TERMINAL WITH LIGHTING, HORTICULTURE, SIGNAGES ETC. AND THE COST OF THE SAME SHALL BE EQUALLY SHARED BETWEEN GMADA & HUDA. THE GMADA SHALL REMOVE THE IDENTIFIED OBSTACLES, IF ANY, HAZARD FOR SAFELY OF AIRCRAFT OPERATION FORM THE APPROACH PATH OF EXTENDED RUNWAY AND TRANSITIONAL A REA SUCH AS HIGH TENSION / LOW TENSION POWER LINES, CANAL, GAS PIPELINE, STRUCTURES, BUILDINGS, CHIMNEY S, TREES ETC. AT THEIR COST. IN CLAUSE 3.1 IT HAS BEEN SPECIFICALLY NOTED THAT J VC WILL BE INCORPORATED AS A PRIVATE LTD COMPANY. CLAUSE 3.2 DEALS WITH SHAREHOLDERS AGREEMENT WHICH IS AS UNDER: 6 SHAREHOLDERS AGREEMENT A SHAREHOLDERS AGREEMENT WILL BE EXECUTED BY AND BETWEEN AAI, GMADA, HUDA AND THE JVC, AFTER THE JOINT VENTURE COMPANY IS INCORPORATED. TILL SUCH TIME THE SHAREHOLDERS AGREEMENT IS EXECU TED AND AOA IS APPROVED BY THE PARTIES, IT IS AGREE D BY THE PARTIES THAT THE REGULATIONS CONTAINED IN TA BLE A IN SCHEDULE I TO THE INDIAN COMPANIES ACT, 19 56 MAY BE APPLIED TO THE PROPOSED JVC. IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE PROVI SIONS OF THIS AGREEMENT AND THE MOA OR AOA, THE PARTIES SHALL TAKE ALL STEPS TO ALTER OR AMEND THE MOA AND AOA TO MAKE IT CONSISTENT WITH THE TERMS OF THIS AGREEMENT. CLAUSE 4.2 AND 4.3 DEALS WITH SHARE CAPITAL WHICH I S AS UNDER: 4.2 INITIAL SUBSCRIBED / PAID UP CAPITAL AT THE TIME OF INCORPORATION, THE ISSUED SHARE CAPI TAL OF THE COMPANY SHALL BE RS. 1000,00,000/- (RS. TEN CRORE) AND THE CONTRIBUTION OF THE PARTIES HALL BE AS FOLLOWS:- AAI SHALL SUBSCRIBE TO 51,00000/- (FIFTY ONE LAC) E QUITY SHARE OF RS. 10/- (RS. TEN ONLY) EACH FOR CAS H AGGREGATING TO RS. 5,20,00,000/- (RS. FIVE CRORE TE N LAC ONLY) GMADA SHALL SUBSCRIBE TO 24,50,000/- (TWENTY FOUR L AC FIFTY THOUSAND) EQUITY SHARES OF RS. 10 (RUPEES TEN ONLY) EACH FOR CASH AGGREGATING TO RS. 2,45,00,000/- (RS. TWO CRORE FORTY FIVE LAC ONLY) HUDA SHALL SUBSCRIBE TO 24,50,000/- (TWENTY FOUR LA C FIFTY THOUSAND) EQUITY SHARES OF RS. 10 (RUPEES TEN ONLY) EACH FOR CASH AGGREGATING TO RS. 2,45,00, 000/- (RS. TWO CRORE FORTY FIVE LAC ONLY) (A) THE PROPORTION IN WHICH THE PARTIES SHALL SUBS CRIBE TO THE EQUITY SHARE CAPITAL OF THE JVC SHALL BE AS FOLLOWS SUBJECT TO PROVISIONS CONTAINED IN PARA 5:- AAO = 51% GMADA = 24.5% HUDA = 24.5% (B) THE STATE GOVERNMENT WOULD TRANSFER THE REQUIRE D LAND LOCATED AT MOHALI, PUNJAB TO THE JVC AND AAI WOULD BE RESPONSIBLE FOR CREATING THE AIRSIDE F ACILITIES AND TERMINAL BUILDING FOR THE JVC, WHICH WILL BE APPROPRIATED TOWARDS SHARE CAPITAL AND SHARE PRE MIUM. AT THE TIME OF VOLUNTARY WINDING UP OF THE COMPANY, THE SHARE PREMIUM PAID BY GMADA, HUDA & AA I SHALL BE CONSIDERED FOR DETERMINING THE VALUE OF ASSETS TO BE BIFURCATED / ALLOCATED TO THE SE THREE PARTIES. 199 REST ALL THE CLAUSES ARE GENERAL CLAUSES AND NO T VERY RELEVANT FOR US AND THEREFORE, SAME ARE NOT BEING REPRODUCE D. COMBINED READING OF ABOVE CLAUSES CLEARLY SHOW THAT BOTH THE STATE GOVERNMENTS HAVE CONTRIBUTED TOWARDS DEVELOPMENT OF THE AIRPORT AT MOHALI IN TERMS OF ACQUISITION OF LAND AND AGAI NST SUCH ACQUISITION OF LAND THE GOVERNMENT OF PUNJAB THROU GH GMADA HAS BEEN ALLOWED 24.5% EQUITY STAKE IN THE AIRPORT WHIC H WOULD ULTIMATELY BE RUN AS BUSINESS VENTURE BY FLOATING P RIVATE LTD COMPANY. THEREFORE, IT BECOMES VERY CLEAR THAT WH AT HAS BEEN CONTRIBUTED BY THE ASSESSEE, IS ONLY LAND. IT SEEM S THAT THE LAND HAS BEEN ACQUIRED BY GOVERNMENT OF PUNJAB AND SINCE GOVERNMENT OF PUNJAB DID NOT HAVE MONEY, THEREFORE, THE ASSES SEE AUTHORITY HAS BEEN ROPED IN TO MAKE CONTRIBUTION TO MAKE THE PAYMENT FOR ACQUISITION OF LAND. IT IS NOT CLEAR IN WHOSE NAM E THE LAND HAS BEEN REGISTERED FROM THE DOCUMENTS PRODUCED BEFORE US. HOWEVER, THE FACT REMAINS THAT THE CONTRIBUTION WAS MADE ONL Y IN TERMS OF LAND FOR WHICH THE GOVERNMENT OF PUNJAB THROUGH GMA DA WOULD ACQUIRE SHARES TO THE TUNE OF 24.5%. THIS IS CLEAR BECAUSE OF CAPITAL CONTRIBUTION FOR STARTING A NEW BUSINESS VE NTURE OF RUNNING AIRPORT. IT HAS FURTHER TO BE NOTED THAT NAME OF P UDA DOES NOT APPEAR IN THE JVA DESPITE PUDA MAKING THE BIGGEST C HUNK OF THE CONTRIBUTION I.E. RS. 225 CRORES OUT OF RS. 300 COR ES OF TOTAL CONTRIBUTION. WHEN THE MONEY HAS BEEN SPENT ONLY F OR ACQUISITION 7 OF LAND THAT IS FOR ULTIMATELY PURCHASING OF LAND F OR THE PROPOSED AIRPORT, THIS CANNOT BE CALLED A REVENUE EXPENDITU RE. IT IS CLEARLY A CASE OF CAPITAL EXPENDITURE WHICH IS NOT ALLOWABL E U/S 37 BECAUSE IT CLEARLY PROVIDES THAT EXPENDITURE IN THE NATURE OF CAPITAL IS NOT ALLOWABLE FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS OF BUSINESS AND PROFESSION. IN VIEW OF ABOVE CLAUSES , WE HOLD THAT THIS EXPENDITURE I.E. THE CONTRIBUTION MADE BY PUDA IS NOT FOR THE BUSINESS PURPOSES AND IT IS IN FORM OF CAPITAL CONT RIBUTION AND IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE, S AME IS NOT ALLOWABLE U/S 37. WE FAIL TO UNDERSTAND WHY PUDA H AS NOT LOOKED AFTER ITS INTEREST EITHER BY BECOMING SHAREHOLDER I N THE PROPOSED AIRPORT OR BY RAISING A CLAIM AGAINST THE GOVERNMEN T OF PUNJAB FOR TRANSFER OF LAND OR RECOVERY OF THE CONTRIBUTION IF THE LAND WAS RETAINED BY THE GOVERNMENT OF PUNJAB AGAINST WHICH GOVERNMENT OF PUNJAB WAS TO RECEIVE 24.5% OF EQUITY SHARES IN THE JVA. 29. THE TRIBUNAL, THUS HELD THAT WHERE THE MONEY HA D BEEN SPENT ONLY FOR THE ACQUISITION OF LAND FOR THE ULTIMATELY PURCHASE OF LAND FOR THE PROPOSED AIRPORT, SUCH EXPENDITURE COULD NO T BE CALLED AS REVENUE EXPENDITURE. IT WAS HELD IT IS CLEARLY A CASE OF CAPITAL EXPENDITURE WHICH IS NOT ALLOWABLE UNDER SECTION 37 BECAUSE IT CLEARLY PROVIDES THAT EXPENDITURE IN THE NATURE OF CAPITAL IS NOT ALLOWABLE FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS OF BUSINESS AND PROFESSION. THE TRIBUNAL FURTHER HELD THAT THE EXPENDITURE I.E. THE CONTRIBUTION MADE BY THE ASSES SEE WAS NOT FOR BUSINESS PURPOSES BUT WAS IN THE FORM OF CAPITAL CO NTRIBUTION AND IN THE NATURE OF CAPITAL EXPENDITURE AND HENCE, NOT AL LOWABLE UNDER SECTION 37(1) OF THE ACT. THEREAFTER, THE TRIBUNAL ANALYZED THE CASE LAWS RELIED UPON BY BOTH THE AUTHORIZED REPRESENTAT IVES AND VIDE PARA 213 HAS ELABORATED UPON THE DECISION RELIED UP ON BY THE REVENUE OF OIL INDUSTRY DEVELOPMENT BOARD VS ACIT 1 23 ITD 67 (DEL) (TRIB) AND HELD AS UNDER : FROM ABOVE IT IS CLEAR THAT UNLESS AND UNTIL THE EX PENDITURE IS RELATED TO THE BUSINESS OF THE ASSESSEE SO AS TO ME ET THE REQUIREMENT OF SECTION 37 THAT THE EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINES S, SAME IS NOT ALLOWABLE. THEREFORE, CLEARLY THIS CASE LAW IS APPLICABLE TO THE ASSESSEE IN THE SENSE THAT EVEN IF THE EXPENDIT URE IS INCURRED TO MEET THE OBJECTS OF A PARTICULAR UNDERTAKING THE SAME IS STILL NOT ALLOWABLE UNLESS THE SAME HAS BEEN INCURRED FOR THE PURPOSE OF BUSINESS. 30. FURTHER, VIDE PARA 215 THE DECISION IN ANDHRA P RADESH HOUSING BOARD VS DCIT IN ITA NO. 717/HYD./2012 & OR S. WAS CONSIDERED BY THE TRIBUNAL AND IT WAS OBSERVED THAT THE FACTS OF THE SAID CASE WERE IDENTICAL TO THE FACTS OF THIS CASE. IN THE CASE BEFORE HYDERABAD BENCH, SUM OF RS. 1180 CR WAS GIVEN TO TH E ANDHRA PRADESH HOUSING CORPORATION ON THE DIRECTIVE OF THE GOVERNMENT AND IT WAS HELD BY THE TRIBUNAL THAT THE SAID WOULD NOT AMOUNT TO AN EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS. THE SAID AMOUNT BEING TRANSFERRED TO ANDHRA PRADESH STATE HOUSING C ORPORATION AT THE DIRECTIVE OF THE GOVERNMENT FOR IMPLEMENTING CE RTAIN HOUSING PROJECTS AND THE ASSESSEE BEING NOT IN ANY WAY CONN ECTED WITH THE IMPLEMENTATION OF THAT PROJECT, IT WAS HELD THAT TH E SAID EXPENDITURE 8 COULD NOT BE SAID TO BE AN EXPENDITURE LAID OUT WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE TRIBU NAL, IN THE CASE OF THE ASSESSEE APPLYING THE SAID RATIO HELD THAT AS T HE FACTS WERE IDENTICAL, THE EXPENDITURE WAS NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE. IN CONCLUSION, THE TRIBUNAL HELD THAT TH E EXPENDITURE HAD NOT BEEN INCURRED FOR THE PURPOSE OF BUSINESS AND I N ANY CASE, THE EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDITUR E AND THEREFORE, THE SAME WAS NOT ALLOWABLE. 31. IN VIEW OF THE ABOVESAID FINDINGS OF THE TRIBUN AL IN ASSESSEE'S CASE UNDER WHICH THE EXPENDITURE CLAIME D AT RS. 225 CR INCURRED FOR THE ESTABLISHMENT OF INTERNATIONAL AIR PORT AT MOHALI BEING DISALLOWED, THE ISSUE ARISING IS WHETHER THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TA X (APPEALS) WERE OF THE VIEW THAT THE ASSESSEE WAS LIABLE TO LE VY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ON CONCEALED INCOME OF RS. 225 CR, PENALTY @ 150% AMOUNTING TO RS. 104,28,75,0 00/- WAS LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE C OMMISSIONER OF INCOME TAX (APPEALS). AS PER THE ASSESSING OFFICER , THE EXPLANATION I TO SECTION 271(1)(C) OF THE ACT PROVI DES A LEGAL FICTION WHEREUNDER ANY ADDITION OR DISALLOWANCE IS DEEMED T O REPRESENT THE CONCEALED INCOME FOR THE PURPOSE OF LEVY OF PENALTY FOR CONCEALMENT, ONCE THE ADDITIONS PRESCRIBED IN THE EXPLANATION AR E SATISFIED. THE ONUS IS ALSO UPON THE ASSESSEE TO ESTABLISH THAT TH E EXPLANATION OFFERED WAS BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF ITS INCOME HAD BEEN DISCLOSED , WOULD BE UPON THE PERSON CHARGED WITH CONCEALMENT. THE ASSESSING OFFICER, IN THE PRESENT CASE HAD HELD THE ASSESSEE TO HAVE FAILED T O DISCHARGE THE ONUS CAST UPON IT AND HAVING FURNISHED INACCURATE P ARTICULARS OF INCOME, WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS PER THE COMMISSIONER OF INCOME TAX, THE EX PENDITURE INCURRED BY THE ASSESSEE WAS PURELY A CASE OF APPLI CATION OF INCOME WHICH HAD NO DIRECT OR INDIRECT CONNECTION WITH THE BUSINESS CARRIED ON BY THE ASSESSEE AND HENCE, THE SAME WAS DISALLOW ED AS BUSINESS EXPENDITURE AND IN THE FACTS OF THE CASE WHERE THE ASSESSEE HAD DEBITED THE EXPENDITURE OF RS. 225 CR TO ITS INCOME AND EXPENDITURE HAVING BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE , THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THAT THE CASE OF THE ASSESSEE WAS NOT COVERED BY EXPLANATION I TO SECTION 271(1)(C) OF TH E ACT. 32. SECTION 271(1) OF THE ACT READS 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 (A) [* * *] (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB- SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142 ], OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR [(D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BE NEFITS OR FURNISHED INACCURATE PARTICULARS 90 OF SUCH FRINGE BENEFITS,] 9 HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) [* * *] (II) IN TE CASES REFERRED TO IN CLAUSE (B), IN ADD ITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH FA ILURE ; (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D) IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN , BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME 1 OR FRINGE BENEFITS.. 33. THE EXPLANATION I UNDER SECTION 271(1) READS AS UNDER : EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 34. THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEM DABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFE RRING TO THE WORD PARTICULARS IN INACCURATE PARTICULARS OF INCOME, OBSERVED, AS PER LAW LEXICON, THE MEANING OF WORD PARTICULAR IS A DETAIL OR DETAILS, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN SECTION 271 (1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT WAS FURTHER HELD AS UNDER:- WE HAVE ALREADY SEEN THE MEANING OF THE WORD PART ICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WOR DS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT A CCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 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 INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . (UNDERLINED SUPPLIED BY US) 35. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTHER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRONEOUS OR FALSE 10 NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT P ENALTY UNDER SECTION 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALT Y U/S 271 (1)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE B Y THE ASSESSEE IN THE RETURN OF INCOME. 36. THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PE TROPRODUCTS P.LTD. (SUPRA) FURTHER HELD AS UNDER : READING THE WORDS 'INACCURATE' AND 'PARTICULARS' 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. IN TH IS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(L)(C) . A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTI CULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WEL L 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 ITS CLAIM IN THE RETURN OR NOT. MERELY BE CAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT TH E PENALTY UNDER S. 271(L)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN I N CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON , THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE CIT(A) A ND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION.SREE KRISHNA ELE CTRICALS VS. STATE OF TAMIL NADU & ANR. (2009) 23 VST 249 (SC) APPLIED; RELIANCE PETROPRODUCTS (P) LTD. (JUDGMENT DT. 23RD OCT., 2007 OF THE GUJAR AT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 37. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS AMTEK AUTO LTD. (SUPRA) HELD THAT THE ASSESSEE HAD DISCLO SED THE NATURE OF TRANSACTION IN ITS RETURN OF INCOME AND BASED ON I NTERPRETATION OF PROVISIONS OF THE STATUTE WHERE THE ASSESSING OFFIC ER FOUND THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT REVENUE IN NATURE BUT CAPITAL EXPENSES, MERELY FOR THAT REASON WOULD NOT RENDER THE ASSESSEE LIABLE TO PENALTY PROCEEDINGS. THE RELEVA NT FINDINGS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE PARA 4 ARE AS UNDER : 4. THE ASSESSEE HAS DISCLOSED THE NATURE OF TRANSACTIO NS IN ITS RETURN. IT WAS ON THE BASIS OF INTERPRETATION OF THE PROVISION S OF THE STATUTE, THE ASSESSING OFFICER FOUND THAT SUCH EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT THE REVENUE EXPENDITURE BUT THE CAPITAL EXPENSES. THERE IS FINE DISTINCTION AS TO WHEN AN EXPENDITURE CAN BE TREATED AS A REVENUE OR A CAPITA L EXPENDITURE. THEREFORE, MERELY FOR THE REASON THAT THE ASSESSEE HAS CLAIMED THE EXPENDITURE TO BE REVENUE WILL NOT RENDER THE ASSESSEE LIABLE TO P ENALTY PROCEEDINGS. THE ORDER PASSED BY THE TRIBUNAL DOES NOT GIVE RISE TO THE QU ESTIONS OF LAW SOUGHT BY THE REVENUE. 11 38. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SIDHARTHA ENTERPRISES [(2010) 228 CTR (P&H) 579 ] HELD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT EVERY CASE WHERE PARTICULARS OF IN COME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS TH AT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND PENALTY UNDER S. 271(1)(C) HAD TO BE KEPT IN MIND AND APPR OACH ADOPTED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT U NDERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ON LY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A MERE MISTAK E. THIS BEING THE POSITION, THE FINDING HAVING BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNA L CANNOT BE HELD TO BE PERVERSE. 39. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS LTD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED TH AT MAKING WRONG CLAIM FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTIO N 271 (1)(C) OF THE ACT. 40. THE HON'BLE HIMACHAL PRADESH HIGH COURT IN CIT VS H.P. STATE FOREST CORPORATION LTD. (SUPRA) HELD AS UNDER : WE ARE OF THE CONSIDERED VIEW THAT THE LATEST JUDG EMENT OF THE APEX COURT IN RELIANCE PETRO PRODUCTS CASE (SUPRA) SQUARELY COVE RS THE PRESENT CASE ALSO. THE APEX COURT IN THIS JUDGMENT HAS CLEARLY HELD TH AT THE WORD 'INACCURATE' AS USED IN THE ACT WOULD MEAN SOMETHING WHICH IS NOT A CCURATE, NOT EXACT OR NOT CORRECT. SOMETHING WHICH IS UNTRUE IS INACCURATE. T HE SAME FACTS CAN BE GIVEN TWO INTERPRETATIONS. IF THE INTERPRETATION GIVEN IS PLAUSIBLE THOUGH NOT ACCEPTED BY THE ASSESSING AUTHORITY IT CANNOT BE SA ID THAT THE STATEMENT OF PARTICULARS IS SO INACCURATE OR ERRONEOUS AS TO INV ITE IMPOSITION OF PENALTY. TRUE IT IS THAT MENS REA IS NOT REQUIRED TO BE PROV ED. WHEN MENS REA IS PROVED IT SHOWS THAT THE PERSON HAD AN INTENTION OF EVADIN G PAYMENT OF TAX BY ILLEGAL MEANS. MERELY BECAUSE A WRONG INTERPRETATION TO THE SAME SET OF FACTS IS GIVEN WOULD NOT, IN OUR OPINION, MEAN THAT THE ASSESSEE I S LIABLE TO PAY PENALTY ALSO. WE MUST REMEMBER THAT PENALTY IS BY ITS VERY NATURE PENAL AND SOMEBODY IS BEING PUNISHED FOR AN ACT WHICH IS UNJUSTIFIED. THE ASSESSEE IN THE PRESENT CASE HAS ALREADY BEEN BURDENED WITH TAX AND INTERES T ON THE AMOUNT ADDED TO HIS INCOME. THE MOOT QUESTION IS WHETHER THE ASSESS EE SHOULD BE MADE LIABLE TO PAY PENALTY. 22. THE APEX COURT IN RELIANCE PETRO PRODUCTS' CASE (SU PRA) HAS CLEARLY LAID DOWN THAT MERELY BECAUSE THE ASSESSEE MAKES A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE, AS POI NTED OUT ABOVE, THE ASSESSEE WAS DEDUCTING THE AMOUNT OF RS. 2,12,18,295 ON ACCO UNT OF DETERIORATION OF OLD STOCK. THIS WAS BEING DONE ON ESTIMATION ON THE BASIS OF THE REPORTS MADE BY VARIOUS OFFICERS OF THE CORPORATION. THIS ESTIMA TION WAS NOT ACCEPTED MAINLY ON THE GROUND THAT THE REPORTS WERE MADE AND RESOLUTION PASSED BY THE BOARD AFTER THE ASSESSMENT YEAR WAS OVER AND THEREF ORE THEY COULD NOT BE GIVEN RETROSPECTIVE BENEFIT. IT HAS NOT BEEN FOUND THAT THE CLAIM OF THE ASSESSEE THAT THE WOOD HAD ROTTED AND DETERIORATED IS FALSE. IT IS NOBODY'S CASE THAT THE ASSESSEE FUDGED THE AMOUNTS, THE BOOKS OF ACCOUNTS OR TRIED TO CREATE FALSE EVIDENCE. THE CLAIM MADE BY THE ASSESSEE MAY NOT HAVE BEEN ACCEPTED BY THE REVENUE BUT IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS TO SUCH AN EXTENT THAT PENALTY SHOULD B E IMPOSED UPON IT. THERE 12 DOES NOT APPEAR TO BE FALSEHOOD IN THE ACCOUNTS THO UGH THE SYSTEM OF CALCULATING THE DEPRECIATION MAY HAVE BEEN IMPROPER . WE ALSO CANNOT LOSE SIGHT OF THE FACT THAT ASSESSEE IS A GOVERNMENT COR PORATION. ITS ACCOUNTS ARE DULY AUDITED AND EVEN THE CAG HAS GONE THROUGH AND APPROVED THE ACCOUNTS OF THE CORPORATION. IN SUCH CIRCUMSTANCES, WE ARE O F THE VIEW THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH CLAIM WAS NOT ACCEPTED BY THE REVENUE THAT BY ITSELF WOULD NOT, IN OUR OPI NION, ATTRACT PENALTY UNDER S. 271(L)(C) OF THE ACT. 41. THE SECOND ASPECT IN RELATION TO THE LEVY OF PE NALTY IS TO BE CONSIDERED IN VIEW OF THE EXPLANATION I CLAUSE (A) UNDER SECTION 271(1) OF THE ACT. THE SAID EXPLANATION UNDER SECTI ON 271(1) OF THE ACT LAYS OUT THAT IN CASES WHERE ANY PERSON UNDER T HIS ACT FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) OR THE COMMISSIONER TO BE FALSE, THEN THE AMOUNT ADDED OR DISALLOWED FOR COMPUTING THE TOTAL INCOME OF SUCH PERSON IS DE EMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 42. FURTHER CLAUSE (B) TO EXPLANATION 1 UNDER SECTI ON 271(1) OF THE ACT PROVIDES THAT WHILE COMPUTING THE TOTAL INC OME OF ANY PERSON, WHERE SUCH PERSON OFFERS AN EXPLANATION WHI CH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVES THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAM E AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED B Y HIM, THEN SUCH AMOUNT ADDED TO HIS INCOME IS TO BE TREATED AS INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE CLAUSE (B) TO EXPLANATION 1 UNDER SECTION 271(1) OF THE ACT, T HUS SET OUT THAT IN CASE WHERE THE ASSESSEE OFFERS AN EXPLANATION WH ICH, (A) IS NOT ABLE TO SUBSTANTIATE AND; (B) HE IS UNABLE TO PROVE THAT THE EXPLANATION OFFERED BY HIM WAS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAD BEEN DISCLOSED BY HIM, THEN HE IS L IABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVE R, WHERE THE EXPLANATION FURNISHED BY SUCH PERSON IS BONAFIDE AN D ALL THE FACTS AND MATERIAL RELATING TO THE COMPUTATION OF INCOME HAD BEEN FURNISHED ON RECORD, THEN THE SAID PERSON HAVING DI SCHARGED, HIS ONUS CANNOT BE SAID TO HAVE CONCEALED THE PARTICULA RS OF HIS INCOME. 43. THE HON'BLE DELHI HIGH COURT IN CIT VS DIKSHA H OLIDAYS LTD. (SUPRA) HAD DELIBERATED UPON THE ISSUE AND HAD UPHELD THE ORDER OF THE TRIBUNAL WHO IN TURN HAD CONSIDERED VA RIOUS JUDICIAL PROPOSITIONS ON THE ISSUE AND HELD AS UNDER : PENALTY HAVING BEEN CANCELLED BY THE TRIBUNAL ON FI NDING THAT ASSESSEE HAD DISCLOSED ALL THE FACTS BEFORE THE A.O. AND DIS ALLOWANCE WAS MADE BECAUSE THE ASSESSEE'S CLAIM HAD NOT BEEN SUBSTANT IATED WITH SUFFICIENT EVIDENCE, NO SUBSTANTIAL QUESTION OF LAW ARISES. 44. SIMILARLY, THE CHANDIGARH BENCH OF TRIBUNAL IN ACIT VS TRB EXPORTS PVT. LTD. (SUPRA) HAD, ON THE ISSUE OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT AND WHETHER THE SAME WAS LEVIA BLE WHERE AN EXPENDITURE HAD BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE, HAD HELD AS UNDER : 13 PENALTY UNDER S. 271(L)(C) IS ATTRACTED IN CASE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE HAD CLAIMED FOREIGN TRAVE L EXPENSES OF WIFE OF THE DIRECTOR WHO HAD ACCOMPANIED HER HUSBAND ON FOREIGN TRAVEL. THE SAID EXPENDITURE WAS DISALLOWED BEING NOT RELATABLE TO T HE BUSINESS OF THE ASSESSEE COMPANY. MERELY BECAUSE AN EXPENDITURE HAS BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE DOES NOT AUTOMATICALLY MA KE THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY UNDER S. 271(L)(C). IN ANY CASE, MERE DISALLOWANCE OF EXPENDITURE DOES NOT ATTRACT THE LEVY OF PENALTY UN DER S. 271(L)(C). THERE IS NO MERIT IN THE LEVY OF PENALTY ON DISALLOWANCE OF EXPENSES HOLDING THE SAME TO BE NON-BUSINESS EXPENSES. FURTHER, ESTIMATED DIS ALLOWANCE OF PERSONAL EXPENSES TOTALLING RS. 33,135 DOES NOT WARRANT LEVY OF PENALTY UNDER S. 271(L)(C) IN THE FACTS OF THE CASE WHERE NO EVIDENC E HAS BEEN FOUND TO ESTABLISH THAT THE ASSESSEE HAD EITHER CONCEALED IT S INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ORDER OF THE CIT(A) DELETING PENALTY UNDER S. 271(L)(C) ON ACCOUNT OF DISALLOWANCE OF FO REIGN TRAVELLING EXPENSES IS UPHELD. 45. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE IS SUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BA SED ON ONE POSSIBLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASI S OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME B Y THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO A S TO ATTRACT THE PENAL PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 46. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS GURDASPUR COOPERATIVE SUGAR MILLS LTD. ON DECIDING THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHERE THE ASSESSEE HAD RECEIVED GRANT-IN-AID WHICH WAS HELD T O BE REVENUE RECEIPTS IN THE HANDS OF THE ASSESSEE AND NOT CAPIT AL RECEIPTS, AS CLAIMED BY THE ASSESSEE, HELD THAT THE ISSUE WAS DE BATABLE AND THERE WAS NO MERIT IN THE LEVY OF PENALTY UNDER SEC TION 271(1)(C) OF THE ACT. THE HON'BLE HIGH COURT HELD AS UNDER : IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT IN AID FROM THE STATE GOVERNMENT. THE ASSESSE E REFLECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVENUE RECEIPT. THE ISSUE; WHETHER THE AMOUNT OF GRANT IN AID IS CAPITA L RECEIPT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNE D IN THE JUDGMENT RELIED UPON IS ON FACT OF NON-FURNISHING OF DETAILS OF EXP ENSES. THE ISSUE WAS NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RE LIANCE ON THE DIVISION BENCH JUDGMENT IS MISCONCEIVED. 47. FURTHER, THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN CIT VS RAJ OVERSEAS ALSO ADJUDICATING THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON DISALLOWANCE OF CLA IM OF DEDUCTION UNDER SECTION 80IB OF THE ACT IN RESPECT OF INCOME FROM DUTY DRAWBACK HELD AS UNDER : THE ASSESSEE IS MANUFACTURER AND DERIVED INCOME FRO M EXPORTS. THE ASSESSEE CLAIMED DEDUCTION UNDER S. 80-IB OF THE AC T IN RESPECT OF INCOME FROM DUTY DRAW BACK. THE AO DISALLOWED THE SAID CLA IM ON THE GROUND THAT THE INCOME DERIVED FROM DUTY DRAW BACK WAS NOT INCO ME DERIVED FROM INDUSTRIAL UNDERTAKING, AS HELD BY THE HON'BLE SUPR EME COURT IN CIT VS. STERLING FOODS INDIA (1999) 153 CTR (SC) 439 : (199 9) 237 ITR 579 (SC). PENALTY WAS ALSO LEVIED. THE CIT(A) UPHELD THE VIEW OF THE AO BUT THE TRIBUNAL DELETED THE PENALTY WITH THE FOLLOWING OBS ERVATIONS : 14 ...................THUS, PRIMA FACIE, IT INDICATES THAT THIS ISSUE WAS A DEBATABLE ONE. 4. IN VIEW OF FACTUAL FINDING OF THE TRIBUNAL, IT C ANNOT BE DISPUTED THAT THE ISSUE WAS DEBATABLE AND DEDUCTION CLAIMED BY THE ASSESSEE DID NOT LACK BONA FIDES. IN SUCH A SITUATION, PENALTY UNDER S. 71(C) OF THE ACT WAS NOT ATTRACTED. IN RECENT JUDGMENT OF THE HON'BLE SUPREME COURT IN CIT VS. RE LIANCE PETROPRODUCTS (P) LTD. (2010) 230 CTR (SC) 320 : (2010) 36 DTR (SC) 449 TH E LEGAL POSITION TO THIS EFFECT HAS BEEN REITERATED. IF THE ASSESSEE HAS MAD E FULL DISCLOSURE IN THE RETURN, CLAIM FOR DEDUCTION CANNOT BE HELD TO BE GIVING OF INACCURATE PARTICULARS. THE VIEW TAKEN BY THE TRIBUNAL IS, THUS, A POSSIBLE VIEW. 48. ANOTHER ASPECT OF THE APPEAL BEFORE US, AS POIN TED OUT BY THE LD. AR FOR THE ASSESSEE WAS THAT THE PRESENT APPEAL WAS DISMISSED AGAINST THE ASSESSEE IN VIEW OF THE RATIO LAID DOWN IN ANDHRA PRADESH HOUSING BOARD VS DCIT (SUPRA) AGAINST WHICH AN APPEAL HAS BEEN ADMITTED BY THE HON'BLE ANDHRA PRADESH HIG H COURT IN IT APPEAL NO. 611 OF 2013 AND THE SAID ISSUE IS PENDIN G BEFORE THE HON'BLE HIGH COURT. IN VIEW THEREOF, IT WAS POINTE D OUT BY THE LD. AR FOR THE ASSESSEE THAT AS AN APPEAL IS PENDING BE FORE THE HON'BLE HIGH COURT, THE ISSUE BECOMES DEBATABLE AND NO PENA LTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. IN RELAT ION THERETO, THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LA ID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS LIQUID INVESTMEN T TRADING CO. (SUPRA). 49. THE HON'BLE DELHI HIGH COURT IN CIT VS LIQUID I NVESTMENT & TRADING CO. (SUPRA) HELD THAT IN CASES WHERE THE AP PEAL HAS BEEN PREFERRED AGAINST THE ORDER OF THE TRIBUNAL AND THE SAME HAVE BEEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED SHO WS THAT THE ISSUE IS DEBATABLE AND FOR THESE REASONS, NO PENALT Y UNDER SECTION 271(1)(C) OF THE ACT COULD BE LEVIED. 50. THE LD. DR FOR THE REVENUE, HOWEVER IN REPLY, R ELIED UPON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS SPLENDOUR CONSTRUCTION IN IT APPEAL 1977 OF 2010, DATE OF JUDGEMENT 14.01.2011 WHEREIN THE ISSUE WAS CONSIDER ED AND IT WAS HELD THAT IN EACH CASE WHEREIN APPEAL HAS BEEN PREF ERRED, IT CANNOT BE SAID THAT THE ISSUE WAS DEBATABLE AND THE ASSESS EE WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 51. THE LD. DR FOR THE REVENUE, IN REPLY HAD PLACED RELIANCE ON CIT VS ATUL MOHAN BINDAL (SUPRA) WHEREIN IT HAS BEE N HELD THAT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS A STRICT CIVIL LIABILITY. WE ARE IN CONFORMITY WITH THE PLEA OF T HE LD. DR FOR THE REVENUE IN THIS REGARD. THE HON'BLE SUPREME COURT I N DHARMINDERA TEXTILE & PROCESSORS CASE (SUPRA) HAVE EARLIER LAI D DOWN THE PROPOSITION THAT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS CIVIL LIABILITY AND THE SAME PROPOSITION HAS BEEN UPHELD BY THE LATER DECISION OF THE HON'BLE SUPREME COURT. HO WEVER, IN EACH CASE, WHERE AN ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE, THE ISSUE TO BE CONSIDERED IS WHETHER THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND COMPLETE INFORMATION IN T HIS REGARD WAS FURNISHED IN THE RETURN OF INCOME. THE ISSUE HAVIN G BEEN DECIDED AGAINST THE ASSESSEE PERSE DOES NOT ATTRACT THE LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS HELD BY VARIO US COURTS AND FURTHER, WHERE SUCH CLAIM OF THE ASSESSEE IS A DEBA TABLE ISSUE THEN, THERE IS NO MERIT IN ANY LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF 15 THE ACT, WHICH PROPOSITION HAS ALSO BEEN HELD BY VA RIOUS COURTS AS REFERRED TO BY US IN THE PARAS HEREIN ABOVE. 52. NOW COMING TO THE FACTS OF THE PRESENT CASE, TH E ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE ASSESSEE IS LI ABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE HON 'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) HAVE LAID DOWN THE PROPOSITION THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUN T TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE . 53. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (SUPRA) ON THE IS SUE WHETHER THE AMOUNT OF GRANT-IN-AID WAS CAPITAL RECEIPT OR R EVENUE RECEIPT BEING DEBATABLE ISSUE HELD THAT THE PENALTY U/S 271 (1)(C) OF THE ACT WAS NOT IMPOSABLE. THE RELEVANT FINDINGS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUG AR MILLS (SUPRA) ARE AS UNDER: 3. WE FIND THAT THE RELIANCE ON THE ABOVESAID JUDGM ENT IS NOT TENABLE, AS IN THE AFORESAID CASE, THE DEDUCTIONS UNDER SECTION 80-O OF THE ACT WAS DECLINED FOR THE REASON THAT THE ASSESSEE HAS NOT P RODUCED ANY DETAILS OF THE EXPENSES ALLEGEDLY INCURRED BY IT. THE DELHI HIGH C OURT OBSERVED (PAGE 170): 'THE ASSESSEE, FOR CLAIMING DEDUCTION UNDER SECTION 80-O OF THE ACT, WANTED THE SAME AT 50 PER CENT OF THE GROSS INCOME RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA PROVIDED BY IT TO ITS FOREIGN CLIENTS. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT ON CORRECT INTERPRETATION UNDER SE CTION 80-O, DEDUCTION IS RESTRICTED TO THE NET INCOME AND, THEREFORE, EXPEND ITURE INCURRED IN INDIA FOR EARNING THE FOREIGN EXCHANGE HAD TO BE DEDUCTED. TH E ASSESSING OFFICER, THEREFORE, WANTED THE ASSESSEE TO FURNISH THE DETAILS OF EXPEN SES. AS THE ASSESSEE FAILED TO DO THE NEEDFUL IN RESPECT OF VARIOUS PARTICULARS DEMAN DED, THE ASSESSING OFFICER WAS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE SUCH EXPEN DITURE IN THE RATIO OF PROPORTION OF FOREIGN INCOME TO THE TOTAL INCOME.' 4. IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT- IN-AID FROM THE STATE GOVERNMENT. THE ASSESSEE REFL ECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVEN UE RECEIPT. THE ISSUE WHETHER THE AMOUNT OF GRANT-IN-AID IS CAPITAL RECEIPT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNED IN THE JUDGMENT RELIED UPON IS ON FEET OF NON-FURNISHING OF DETAILS OF EXPENSES. THE ISSUE WAS NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RELIANCE ON THE DIVISION BENCH JUDGM ENT IS MISCONCEIVED. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR I N THE FINDINGS RECORDED BY THE TRIBUNAL WHILE SETTING ASIDE THE PENALTY. CONSE QUENTLY, WE DO NOT FIND THAT THE ORDER OF THE TRIBUNAL GIVES RISE TO ANY SUBSTAN TIAL QUESTION OF LAW FOR THE OPINION OF THIS COURT. 54. IN VIEW OF THE ABOVE, IT IS TO BE SEEN WHETHER CLAIM OF THE ASSESSEE WAS BONAFIDE OR MALAFIDE WITH AN INTENTION TO EVADE TAXES. ADMITTEDLY, THE ASSESSEE HAD ACTED ON THE ADVICE OF STATE GOVERNMENT AND PAID RS. 225 CR FOR THE DEVELOPMENT OF INTERNATIONAL AIRPORT AT MOHALI, WITH THE AIM THAT SUCH ESTABLISHMENT OF INTERNATIONAL AIRPORT IN THE REGIO N WOULD PROVIDE BETTER INFRASTRUCTURAL FACILITIES, WHICH IN TURN WO ULD BOOST URBAN DEVELOPMENT OF THE STATE OF PUNJAB AND BOOST THE AC TIVITIES 16 UNDERTAKEN BY IT, RESULTING IN HIGHER PROFITS TO TH E ASSESSEE. EXPLANATION 1 TO SECTION 271(1) DOES PROVIDE A LEGA L FICTION UNDER WHICH THE ONUS IS UPON THE ASSESSEE TO ESTABLISH TH AT ALL FACTS RELATING TO THE CLAIM AND MATERIAL FACTS RELATING T O THE COMPUTATION OF INCOME HAD BEEN DISCLOSED IN THE RETURN OF INCOM E AND ALSO THAT DEDUCTION OR EXPENDITURE WAS ALLOWABLE IN ITS HANDS AND MERELY BECAUSE THE ADDITION OR DISALLOWANCE HAS BEEN MADE TO ITS TOTAL INCOME, DOES NOT ESTABLISH CONCEALMENT IN THE HANDS OF ASSESSEE. HENCE, WHERE THERE IS NO FINDING THAT ANY OF THE DE TAILS SUPPLIED BY ASSESSEE IN RETURN OF INCOME WERE FOUND TO BE INCOR RECT OR ERRONEOUS OR FALSE, THE ASSESSEE IS NOT LIABLE FOR LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 55. THE ASSESSEE IN PRESENT CASE HAVING PAID FOR TH E ESTABLISHMENT OF INTERNATIONAL AIRPORT AT MOHALI WA S UNDER THE BONAFIDE BELIEF THAT THE EXPENDITURE IS DULY ALLOWA BLE AS REVENUE EXPENDITURE AND SAME WAS SO CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE SAID EXPENDITURE HAS BEEN HELD BY THE TRIBUNAL NOT TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. IT HAS ALSO BEEN HELD BY THE TRIBUNAL THAT THE EXPENDITURE IS IN NATURE OF C APITAL EXPENDITURE AND THEREFORE, THE SAME IS NOT ALLOWABLE. MERE DIS ALLOWANCE OF EXPENDITURE IN THE HANDS OF ASSESSEE DOES NOT ESTAB LISH THE CHARGE OF CONCEALMENT IN THE HANDS OF ASSESSEE. VARIOUS C OURTS HAVE TIME AND AGAIN LAID DOWN THE PRINCIPLE THAT WHERE THE AS SESSEE HAS BONAFIDE EXPLANATION OF NON-EXCLUSION OF RECEIPTS A S ITS INCOME OR FOR CLAIMING PARTICULAR ITEM OF EXPENDITURE AS DEDU CTION, EVEN WHERE CLAIM OF ASSESSEE IS REJECTED, NO PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME COULD BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE ASS ESSEE HAVING DECLARED COMPLETE FACTS WITH REGARD TO EXPENDITURE OF RS. 225 CR AND THE CLAIM OF THE ASSESSEE BEING BONAFIDE, THOUG H NOT ALLOWED AS EXPENDITURE IN THE HANDS OF ASSESSEE, DOES NOT JUST IFY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, MUCH LE SS PENALTY @ 150% OF THE TAX SOUGHT TO BE EVADED. 56. FURTHER, IN THE TOTALITY OF THE FACTS AND FOLLO WING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND THE VARI OUS OTHER HIGH COURTS IN SERIES OF THE DECISIONS, WE HOLD THAT IN VIEW OF THE FINDINGS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE, W HEREIN THE ADDITION IN THE HANDS OF THE ASSESSEE HAS BEEN MADE ON TWO ACCOUNTS I.E., THE EXPENDITURE HAVING BEEN INCURRED FOR THE PURPOSE OF BUSINESS BEING NOT ALLOWABLE. FURTHER FINDING O F THE TRIBUNAL IN ASSESSEE'S CASE IS THAT THE EXPENDITURE IN ANY CASE IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE, THE SAME WAS NOT ALLOWABLE. THE ISSUE BEING DEBATABLE DOES NOT WARRANT LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 57. IN VIEW OF THE ABOVESAID FINDINGS, WE HOLD THAT THE ASSESSEE, IN THE PRESENT SET OF FACTS AND CIRCUMSTA NCES, IS NOT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHERE THE CLAIM OF THE ASSESSEE VIS--VIS EXPENDITU RE INCURRED ON ESTABLISHMENT OF INTERNATIONAL AIRPORT HAD BEEN REJECTED. ACCORDINGLY, WE DELETE THE PENALTY LEVIED UNDER SEC TION 271(1)(C) OF THE ACT AND THE ASSESSING OFFICER IS D IRECTED TO DELETE THE SAME. THE GROUNDS OF APPEAL RAISED BY T HE ASSESSEE ARE ALLOWED. 17 5. THE FACTS AND ISSUES RAISED IN THE PRESENT APPEA L ARE IDENTICAL TO THE ISSUES AROSE IN ITA NO.149/CHD/2012 & ORS.(SUPRA) A ND FOLLOWING THE PARITY OF REASONING WE HOLD THAT THE ASSESSEE IS NOT EXIGI BLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICE R IS THUS DIRECTED TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE A CT AT RS.18,54,00,000/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE TH US ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MARCH, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH MARCH, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH