M/s Pan India Druges & Cemical Ltd, V. The A C I T 1 (1),

ITA 131/IND/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2931 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 13-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: MAHESH AGARWAL CAS
• Keywords: Depreciation; Speculation loss; Wrong claim
• Section: 271(1)(c); 143(3); 80P; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AABCP0242K I.T.A.NO. 131 /IND/20 09 . A.Y. : 2003 - 04 PAN INDIA DRUGS AND CHEMICAL LIMITED, ACIT, 1(2), INDORE. VS IND ORE APPELLANT RESPONDENT APPELLANT BY : SHRI MANOJ GUPTA AND SHRI MAHESH AGARWAL, CAS RESPONDENT BY : SHRI R. A. VERMA, SR. DR DATE OF HEARING : 03 .0 9 .2012 DATE OF PRONOUNCEMENT : 06 . 0 9 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 24.12.2008 FOR THE ASSESSMENT YEAR 2003-04, IN THE MATTER OF CONFIRMATION OF PENALTY IMPOSED U/ S 271(1)(C) OF THE INCOME-TAX ACT, 1961. -: 2: - 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUS ED. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A P UBLIC LIMITED COMPANY ENGAGED IN MANUFACTURING AND TRADING OF BUL K DRUGS AND CHEMICALS. DUE TO FINANCIAL PROBLEMS THE COMPANY HAS BECOME SICK INDUSTRIAL COMPANY AS PER SICA 1985 . THE APPELLANT COMPANY HAD DEFAULTED IN REPAYMENT OF ITS DUES TO MPFC, INDORE, WHO HAD TAKEN OVER THE POSSESSION OF THE FACTORY ON 28.2.2002 AND AUCTIONED MORE OR LESS ALL THE ASSETS DURING THE RELEVANT PREVIOUS YEAR FOR RS. 39.80 LAC S IN ORDER TO RECOVER THEIR PRINCIPAL AMOUNT OF RS. 60 LACS. THE RETURN FOR THE RELEVANT A.Y. 2003-04 UNDER CONSIDERATION), WAS FILED ON 2.12.2003 DECLARING TOTAL LOSS OF RS. 2,84,68,095/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 31.03.2006 ON GROSS TOTAL INCOME OF RS. 2,41,010/- BEFORE SET-OFF OF CARRIED FORWARD LOSSES. THE ADDITION OF RS. 2,87,09,105/- WAS MADE UNDER VARIOUS HEADS GIVEN HEREUNDER :- (1) LOSS ON SALE OF ASSETS DISALLOWED RS. 2,80,85,2 73/- (2)ROC EXPENSES RS. 1,38,000/- -: 3: - 3 (3) EXPENSES CLAIMED U/S 35DRS. 4,85 ,832/- AGAINST THE ASSESSMENT ORDER, THE ASSESSEE HAD FILE D APPEAL BEFORE THE CIT(A) ONLY ON THE ISSUES OF THE ADDITIO NS MADE AMOUNTING RS. 1,38,000/- (ROC EXPENSES) & RS. 4,85,832/- (EXPENSES CLAIMED U/S 35D) ONLY. THUS ADDITION AMOU NTING RS. 2,80,85,273/- ON ACCOUNT OF LOSS ON SALE OF ASSETS HAD BEEN CONCEDED BY ASSESSEE AT THE ASSESSMENT STAGE I TSELF AND NO APPEAL WAS FILED AGAINST THIS ADDITION. THE ADDI TIONS MADE AS REGARD TO ROC EXPENSES, EXPENSES CLAIMED U/S 35D WERE ALSO CONFIRMED BY CIT(A)-1, INDORE, VIDE HIS ORDER DATED 14.9.2006 IN IT NO 144/06-07. THE A.O. IMPOSED PENALTY UNDER SECTION 271(1)(C) ON THE ENTIRE AMOUNT OF ADDITION OF RS. 2,87,09,195/-. 3. BY THE IMPUGNED ORDER, THE CIT(A) DELETED PENALTY W ITH RESPECT TO ADDITION MADE ON ACCOUNT OF ROC EXPENSES AND EXPENSES CLAIMED U/S 35-B. HOWEVER, PENALTY IMPOSED WITH RESPECT TO LOSS ON SALE OF ASSETS WAS CONFIRMED BY THE LD.CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. SHRI MANOJ GUPTA AND SHRI MAHESH AGARWAL, C.A. APPEARED ON BEHALF OF THE ASSESSEE AND CONTENDED TH AT THE -: 4: - 4 ASSESSEE COMPANY WAS RUNNING HUGE LOSSES AND HAS BE COME A SICK COMPANY AS PER SICA 1985, AND SUBSEQUENTLY ALL THE ASSETS OF THE ASSESSEE WERE TAKEN OVER BY MPFC AND WERE AUCTIONED DURING THE YEAR UNDER CONSIDERATION. HE F URTHER SUBMITTED THAT DUE TO INADVERTENT MISTAKE OF THE AC COUNTANTS OF THE ASSESSEE COMPANY AT THE TIME OF FILING RETUR N OF INCOME, THE NET LOSS AS PER PROFIT AND LOSS ACCOUNT WAS TAK EN FOR COMPUTING TAXABLE INCOME UNDER THE INCOME-TAX ACT, 1961, AND INSTEAD OF ADDING THAT LOSS ON SALE OF ASSETS A S PER BOOKS OF ACCOUNTS AND REDUCING THE LOSS WORKED OUT AS PER BLOCK METHOD UNDER THE INCOME-TAX ACT. WHEN THE MISTAKE W AS NOTICED DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSEE AGREED WITH THE ASSESSING OFFICER AND CONCEDED THE CLAIM IN ASSESSMENT PROCEEDINGS ITSELF AND NO APPEAL WAS PRE FERRED ON THIS ADDITION. HOWEVER, THE ASSESSING OFFICER IMPOS ED PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF CLAIM OF LOS S AS PER BOOKS OF ACCOUNT IN PLACE OF LOSS TO BE WORKED OUT AS PER INCOME-TAX ACT IN RESPECT OF CLAIM OF DEPRECIATION ON WDV. OUR ATTENTION WAS INVITED TO THE PAGE 7 OF THE CIT(A)S ORDER TO THE EFFECT THAT THE IMPUGNED ADDITION WOULD NOT QUALIFY AS CONCEALM ENT. -: 5: - 5 HOWEVER, HE CONFIRMED PENALTY HOLDING IT AS FURNIS HING INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLA CED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETRO DRUGS, 322 ITR 158, IN SUPPORT OF THE PROPOSI TION THAT MAKING INCORRECT CLAIM IN LAW DOES NOT TANTAMOUNT T O FURNISHING OF INACCURATE PARTICULARS RELATING TO IN COME OF ASSESSEE. AS PER LD. AUTHORIZED REPRESENTATIVE , TH E LOSS WAS INADVERTENTLY CLAIMED ON THE BASIS OF WRITTEN DOWN VALUE OF ASSETS AS PER BOOKS OF ACCOUNT IN PLACE OF WDV AS P ER INCOME- TAX ACT. HE FURTHER SUBMITTED THAT THERE WAS NO MOT IVE OF EXCESS CLAIM IN VIEW OF HEAVY CARRY FORWARD LOSSES. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF I.T .A.T., AHMEDABAD BENCH IN THE CASE OF REY MULTIPLEX, 44 SO T 53. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SURESH CHAND MITTAL, 251 ITR 9 , WHEREIN IT WAS HELD WHERE THE ASSESSEE HAS SURRENDERED INCO ME AFTER PERSISTENT QUERY BY THE ASSESSING OFFICER, EXPLANAT ION OF THE ASSESSEE THAT HE HAS DECLARED ADDITIONAL INCOME TO BUY PEACE OF MIND AND TO COME OUT OF WAXED LITIGATION TO BE T REATED AS BONA FIDE. ACCORDINGLY, LEVY OF PENALTY U/S 271(1)( C) OF THE -: 6: - 6 INCOME-TAX ACT, 1961, WITH RESPECT TO SUCH INCOME W AS HELD TO BE NOT JUSTIFIED. 5. FURTHER RELIANCE WAS PLACED ON THE DECISION OF MADR AS HIGH COURT IN THE CASE OF CIT VS. SHRI SHRADHA TEXT ILES PROCESSORS, 286 ITR 499, IN SUPPORT OF THE PROPOSIT ION THAT MISTAKE IS POINTED OUT TO THE ASSESSEE AND THE ASSE SSEE WITHDREW THE CLAIM, THERE IS NO CONCEALMENT OF INCO ME AND PENALTY IS NOT TO BE IMPOSED. IN THE INSTANT CASE A LSO, THE CLAIM OF LOSS BY CLERICAL MISTAKE WAS ACCEPTED AND WITHDRAWN AND NO APPEAL WAS FILED AGAINST THE ADDITION, IT WA S PRAYED THAT RATIO OF HON'BLE MADRAS HIGH COURT IS CLEARLY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. FURTHER RELIANCE WAS PLACED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF LA XMI VILAS BANK, 303 ITR 428, IN SUPPORT OF THE PROPOSITION TH AT MISTAKE IN COMPUTATION DUE TO MISPLACEMENT OF DECIMAL CANNO T TANTAMOUNT TO CONCEALMENT OF PARTICULARS OR FURNISH ING INACCURATE PARTICULARS. IN THAT CASE, WHEN THE MIST AKE WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THE ASSESSEE AGREED THAT THERE WAS A MISTAKE. SIMILAR IS THE POSITION OF THE ASSESSEE, WHEREIN CLAIM OF EXCESS LOSS DUE TO CLAIM OF DEPREC IATION AS -: 7: - 7 PER PROFIT AND LOSS ACCOUNT WAS WITHDRAWN IN ASSESS MENT ITSELF. 6. FURTHER RELIANCE WAS PLACED ON THE DELHI BENCH OF I.T.A.T. IN THE CASE OF LHD MEMORIAL, 23 TAXMAN DOT COM 32, WHEREIN UNDER SIMILAR CIRCUMSTANCES EXCESS CLAIM OF DEPRECIATION WAS HELD TO BE NOT HIT BY THE MISCHIEF OF PROVISIONS OF SECTION 271(1)(C). FURTHER RELIANCE W AS PLACED ON THE DECISION IN THE CASE OF HAJI MOHD. BHAI VS. ITO , I.T.A.NO. 3672/MUM/10 AND SIMFS CAPITAL MARKETING IN I.T.A.NO . 1554/KOL/10. 7. ON THE OTHER HAND, SHRI R. A. VERMA, SR. DR CONTENDED THAT LOSS HAS BEEN WRONGLY COMPUTED BY TH E ASSESSEE BY NOT TAKING INTO ACCOUNT THE W.D.V. OF A SSETS AS PER BLOCK METHOD UNDER INCOME-TAX ACT, AND, THEREFO RE, THE PENALTY WAS CORRECTLY LEVIED FOR SUCH MISTAKE. HE F URTHER SUBMITTED THAT THE DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF RELIANCE PETRO(SUPRA) RELIED ON BY THE LD. AUTHORIZED REPRESENTATIVE ARE DISTINGUISHABLE ON FACTS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. W E HAD ALSO -: 8: - 8 DELIBERATED ON THE CASE LAWS CITED BY THE LD. AUTHO RIZED REPRESENTATIVE AND LD. SENIOR DR DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD, WE FOUND THAT THE ASSE SSEE COMPANY WAS RUNNING IN HUGE LOSSES AND IT HAS BECOM E SICK INDUSTRIAL UNDERTAKING AS PER SICA 1985. ALL THE AS SETS OF THE ASSESSEE WERE TAKEN UP BY THE MPFC AND WERE AUCTION ED DURING THE YEAR UNDER CONSIDERATION. HOWEVER, WHILE COMPUTING LOSS ON SALE OF ASSETS, THE ASSESSEE HAS INDIVIDUALLY TAKEN THE WDV AS PER BOOKS OF ACCOUNT IN PLACE OF W DV AS PER BLOCK METHOD UNDER THE INCOME-TAX ACT. THUS, INSTEA D OF CONSIDERING WDV AS PER INCOME-TAX ACT, WDV AS PER B OOKS WERE CONSIDERED WHICH RESULTED INADVERTENTLY CLAIMI NG HIGHER LOSS TO THE EXTENT OF RS. 1.71 CRORES. IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE WAS HAVING HUGE CARRY FORW ARD LOSSES AND WHICH WERE ALREADY LAPSING AS BEYOND EIGHT YEAR S, THERE CAN BE NO INTENTION TO CLAIM HIGHER LOSS. WHEN THE MISTAKE IN COMPUTING LOSS BY TAKING WDV AS PER BOOKS OF ACCOUN T WAS POINTED OUT DURING ASSESSMENT PROCEEDINGS, THE ASSE SSEE FAIRLY CONCEDED THE SAME AND DID NOT FILE ANY APPEAL AGAIN ST THE SAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. HOWE VER, THE -: 9: - 9 ASSESSING OFFICER LEVIED PENALTY WITH RESPECT TO TH E ADDITION SO MADE. IT IS ALSO A MATTER OF RECORD THAT ALL THE PA RTICULARS WITH REGARD TO WORKING OF WDV ON THE BASIS OF BOOKS OF A CCOUNTS VIS--VIS BLOCK OF ASSETS METHOD UNDER INCOME-TAX A CT, 1961, WAS FURNISHED ALONGWITH RETURN OF INCOME. THUS, T HE CRUX OF THE ISSUE IS THAT PENALTY IS IMPOSED WITH RESPECT T O THE ADDITION MADE ON ACCOUNT OF CLAIM OF LOSS AS PER DE PRECIATION ON WRITTEN DOWN VALUE OF ASSETS AS PER BOOKS OF ACC OUNT RATHER THAN AS PER WDV METHOD UNDER INCOME-TAX ACT. 9. HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS, 322 ITR 158, HAVE CATEGORICALLY OBSERVED THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLA IM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS. ACCORDINGLY, THE HON'BLE SUPREME COURT HELD THAT DE CLINE OF ASSESSEES CLAIM OF INTEREST AGAINST THE LOAN UTILI ZED FOR MAKING INVESTMENT IN TAX FREE SECURITIES WILL NOT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)( C) OF THE ACT. HON'BLE SUPREME COURT IN THIS CASE AFTER CONSIDERIN G THE -: 10: - 10 PROPOSITION OF LAW LAID DOWN IN THE CASE OF DILIP N .SHROFF - 291 ITR 519 (SC) AND DHARMENDER TEXTILE PROCESSORS - 306 IT R 277 (SC), HELD AS UNDER:- 'A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE 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 PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, 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 RET URN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING O FFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UN DER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDME NT OF THE LEGISLATURE.' 3. HON'BLE DELHI HIGH COURT IN THE CASE OF ARETIC I NVESTMENT PVT.LTD., VIDE ORDER DATED 18.2.20LO IN ITA 264/200 9 163 TAXMAN -: 11: - 11 533, OBSERVED THAT WHERE THE LOSS CLAIMED BY THE AS SESSEE ON ACCOUNT OF TRADING IN SHARES WAS NOT ACCEPTED BY TH E AO AND WAS TREATED AS A SPECULATION LOSS IN TERMS OF EXPLANATI ON TO SECTION 73 OF THE ACT, DID NOT AUTOMATICALLY RESULT IN THE INF ERENCE OF CONCEALMENT OF INCOME JUSTIFYING IMPOSITION OF PENA LTY U/S 271(1)(C) OF THE ACT. IT WAS OBSERVED BY THE HON'BLE DELHI HIGH COURT THAT WHERE ASSESSEE HAS DECLARED HIS INCOME F ROM BROKERAGE AND OTHER INCOME AGAINST WHICH IT .HAD CL AIMED SHARE TRADING LOSS, THE AO FOUND THAT LOSS WAS SPECULATIV E IN NATURE AND COULD NOT BE ADJUSTED AGAINST ASSESSEE'S NORMAL INC OME, ACCORDINGLY THE AO HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF MAKING A WRO NG CLAIM OF SHARE TRADING LOSS AGAINST THE NORMAL INCOME AND IM POSED PENALTY U/S 271(1)(C) OF THE ACT. THE HON'BLE HIGH COURT HE LD THAT MERE TREATMENT OF BUSINESS LOSS AS A SPECULATION LOSS BY THE AO DID NOT AUTOMATICALLY WARRANT INFERENCE OF CONCEALMENT OF I NCOME, ACCORDINGLY PENALTY WAS NOT LEVIABLE. 4. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. THE SHAHABAD COOP. SUGAR MILLS LIMITED, 322 ITR 73, OBSERVED THAT WHERE THE ASSESSEE ENGAGED IN MARKETI NG OF -: 12: - 12 SUGAR BY ITS MEMBERS IS FOUND TO HAVE MADE WRONG CL AIM OF DEDUCTION U/S 80P AND 80(2)(D), THE DISALLOWANCE OF CLAIM WAS HELD TO BE NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION, WHICH MAY INVOKE LEVY OF PENALTY U/S 2 71(1)(C). ACCORDINGLY, ORDER OF THE IT AT CHANDIGARH BENCH DE LETING PENALTY IMPOSED U/S 271(1)(C) WAS UPHELD BY THE HON 'BLE COURT. 5. HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S.P.K.STEELS PVT.LTD. - 270 ITR 156 UPHELD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY U/S 271(1)(C) BY OBSERVING THAT ASSESSEE BEING ENGAGED IN THE BUSINESS OF COMM ISSION AGENCY, EXPLANATION TO SECTION 73 WAS APPLICABLE AN D THUS, LOSS ON ACCOUNT OF TRADING IN SHARES WAS DISALLOWED , IT WAS HELD THAT FOR SUCH DISALLOWANCE PENALTY U/S 27L(1)( C) IS NOT LEVIABLE AS THE ASSESSEE HAS FILED PRELIMINARY DETA ILS ALONGWITH THE RETURN. 6. HON'BLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF SIDDHARTHA ENTERPRISES - 322 ITR 80 OBSERVED THAT W HERE THE ASSESSEE'S CLAIM FOR SET OFF ON ACCOUNT OF CAPI TAL GAINS -: 13: - 13 AGAINST PROFIT OF BUSINESS WAS DISALLOWED BY THE AO AND AO IMPOSED PENALTY FOR FURNISHING INACCURATE PARTICULA RS OF INCOME, THE CIT(A) DELETED THE SAME AND TRIBUNAL UP HELD THE ORDER OF THE CIT(A) BY OBSERVING THAT ENTIRE FA CTS HAVE BEEN DISCLOSED BY THE ASSESSEE IN THE DOCUMENTS FIL ED ALONGWITH THE RETURN AND THE MISTAKE HAS BEEN COMMI TTED BY THE COUNSEL OF THE ASSESSEE FOR SUCH WRONG CLAIM , THERE WAS NO SCOPE FOR CONCEALING ANY INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME, WHILE COUNTERING THE DEPARTMENT'S CONTENTION THAT EVEN IF CLAIM FOR SET OFF OF CAPITAL LOSS AGAINST PROFIT OF BUSINESS WAS BY THE NEGLIGENCE OR BY MISTAKE, THE FACT REMAINS THAT THE PARTICULAR S OF INCOME FURNISHED WERE NOT CORRECT AND WILLFUL CONCE ALMENT NOT BEING AN ESSENTIAL REQUIREMENT FOR LEVY OF PENA LTY U/S 271(1)(C) OF THE IT ACT AS HELD BY THE HON'BLE SUPR EME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA), THE PENALTY COULD NOT BE DELETED, THE HON'BLE HIGH COURT OBSERVED AS UNDER:- 'WE ARE UNABLE TO ACCEPT THE SUBMISSION. THE JUDGME NT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE -: 14: - 14 PROCESSORS [2008] 306 ITR 277 CANNOT BE READ AS LAY ING DOWN THAT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS THAT QUALITATIVE DIFFERENCE BETWEEN CRIMINA L LIABILITY UNDER SECTION 276C AND PENALTY UNDER SECT ION 271(1)(C) HAD TO BE KEPT IN MIND AND APPROACH ADOPT ED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, THE CONCE PT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE S AID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOM E 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 DELIBERA TE ATTEMPT TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNA L CANNOT BE HELD TO BE PERVERSE.' 7. HON'BLE SUPREME COURT IN THE CASE OF SURESH CHAN D MITTAL - 251 ITR 9 OBSERVED THAT WHERE ASSESSEE HAS SURRENDERED THE INCOME AFTER PERSISTENCE QUERIES BY THE ASSESSING OFFICER, THE EXPLANATION OF THE ASSESSEE THAT HE -: 15: - 15 HAS DECLARED ADDITIONAL INCOME TO BUY PEACE OF MIND AND TO COME OUT OF WAXED LITIGATION COULD BE TREATED AS BO NA-FIDE, ACCORDINGLY LEVY OF PENALTY U/S 271(1)(C) WAS HELD TO BE NOT JUSTIFIED. FURTHERMORE, IN ORDER TO JUSTIFY THE LEV Y OF PENALTY, TWO FACTORS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSES SEE'S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS, I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACC URATE PARTICULARS ON THE PART OF THE ASSESSEE. EXPLANATIO N I TO SECTION 271(1)(C) HAS NO BEARING ON FACTORY NO.I BU T HAS A BEARING ONLY ON FACTORY NO.2. THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSES SEE. NO PENALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANC ES ARE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THE AMO UNT DOES NOT REPRESENT CONCEALED INCOME WITH THE HYPOTH ESIS THAT IT DOCS. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS -: 16: - 16 UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEP TED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POS ITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE, THE EX PLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS TH E CONCEALED INCOME OF THE ASSESSEE. 10. IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIE W PROPOSITION OF LAW LAID DOWN HON'BLE SUPREME COURT, JURISDICTIONAL HIGH COURT AND OTHER COURTS AS DISCU SSED HEREINABOVE, THIS CASE IS NOT A FIT CASE FOR LEVY O F PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 6 TH SEPTEMBER, 2012. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH SEPTEMBER, 2012. CPU* 459