Phelix Appliances Limited, Baroda V. The Income tax Officer, Ward-4(2), Baroda

ITA 1310/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6825 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ITA NO. 1310/AHD/2016 ( / ASSESSMENT YEAR : 2009-10 ) PHELIX APPLIANCES LTD. 9, B, SHITALKUNJ SOCIETY MANJALPUR BARODA - 390 010 / VS. THE INCOME TAX OFFICER WARD-4(2) BARODA 390 007 ./ ./ PAN/GIR NO. : AABCP 1857 C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MANISH J. SHAH, AR / RESPONDENT BY : SHRI JAYA CHAUDHARY, SR.DR / DATE OF HEARING 11/12/2018 !'# / DATE OF PRONOUNCEMENT 01 /01/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)2, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-2/ 156/2014-15 DATED 15/06/2015 ARISING IN THE ASSESSMENT ORDER PASSED U NDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS ' THE ACT') DATED 08/11/2011 RELEVANT TO ASSESSMENT YEAR (AY) 2009-1 0. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED ON LAW AND ON FACTS IN ARRIVING AT THE CONCLUSION THAT YOUR APPELLANT HAD CONCEALED THE IMPUGNED INCO ME AND ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 2 - THEREBY CONFIRMING OF LEVYING PENALTY OF RS.2,70,00 0/- U/S.271(1)(C) OF THE IT ACT, 1961. 3. AT THE OUTSET, IT WAS NOTICED THAT THERE WAS A DELAY IN FILING THE APPEAL BY THE ASSESSEE BY 265 DAYS. THE ASSESSEE EXPLAINED IT IN THE CONDONATION PETITION SUPPORTED WITH THE AFFIDAVIT THAT THE CONC ERNED DIRECTOR LOOKING AFTER THE TAXATION MATTERS WAS OUT OF INDIA. THE AC COUNTANT OF THE ASSESSEE DID NOT INTIMATE TO THE DIRECTOR OF THE COMPANY ABO UT THE RECEIPT OF THE ORDER FROM THE LD. CIT(A). THEREFORE THE DELAY OCCU RRED IN FILING THE APPEAL. THE ASSESSEE IN SUPPORT OF HIS CLAIM FILED THE AFFIDAVIT WHICH IS PLACED ON RECORD. 4. ON THE OTHER HAND, THE LD. DR OPPOSED CONDONIN G THE DELAY IN FILING THE APPEAL BY THE ASSESSEE ON THE GROUND THAT THERE WERE OTHER DIRECTORS IN THE COMPANY WHO COULD LOOK AFTER THE TAX MATTERS. H OWEVER THE LD. DR LEFT THE ISSUE AT THE DISCRETION OF THE BENCH. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. CONSIDERING THE FACTS AND CIRC UMSTANCES FOR THE DELAY IN FILING THE APPEAL BY THE ASSESSEE, WE ARE INCLINED TO CONDONE THE SAME AFTER HAVING THE RELIANCE ON THE JUDGMENT OF H ONBLE SUPREME COURT IN THE CASE OF COLLECTOR, LAND ACQUISITION V. MST. KATIJI AND ORS. (167 ITR 471) WHERE CERTAIN LAID DOWN CERTAIN PRINC IPLES FOR CONSIDERING THE CONDONATION PETITION FOR FILING THE APPEAL WHIC H ARE REPRODUCED HEREUNDER: (1) ORDINARILY, A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING AN APPEAL LATE (2) REFUSING TO CONDONE DELAY CAN RESULT IN A MERITORIO US MATTER BEING THROWN AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEA TED. AS AGAINST THIS, WHEN ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 3 - DELAY IS CONDONED, THE HIGHEST THAT CAN HAPPEN IS T HAT A CAUSE WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. (3) 'EVERY DAY'S DELAY MUST BE EXPLAINED' DOES NOT MEAN THAT A PEDANTIC APPROACH SHOULD BE MADE. WHY NOT EVERY HOUR'S DELAY , EVERY SECOND'S DELAY? THE DOCTRINE MUST BE APPLIED IN A RATIONAL, COMMONS ENSE AND PRAGMATIC MANNER. (4) WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO N ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEIN G DONE BECAUSE OF A NON- DELIBERATE DELAY. (5) THERE IS NO PRESUMPTION THAT DELAY IS OCCASIONED DE LIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALA FIDES . A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT, HE RUNS A S ERIOUS RISK. (6) IT MUST BE GRASPED THAT THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALISE INJUSTICE ON TECHNICAL GROUNDS BUT BECA USE IT IS CAPABLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 5.1. FROM THE ABOVE JUDGMENT OF THE HONBLE APEX C OURT, WE NOTE THAT THE SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED RA THER THAN DECIDING THE MATTER ON THE BASIS OF A TECHNICAL DEFECT. THUS WE CONDONE THE DELAY, AND ACCORDINGLY WE PROCEED TO HEAR THE GROUND OF APPEAL OF THE ASSESSEE ON MERIT. 6. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT TH E LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY SUSTAINING THE PENALTY OF RS. 2,70,000/- U/S 271(1)(C) OF THE ACT. 7. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A LIMITED COMPANY. IT WAS ENGAGED IN THE BUSINESS OF MANUFACTURING, ASSEMBLING OF AIR CONDITIONER MACHINES IN THE EARLI ER YEARS. HOWEVER, IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE START ED TRADING IN AIR- ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 4 - CONDITIONERS. THE ASSESSEE DURING THE YEAR HAS SOL D THREE ACS AMOUNTING TO RS. 45,000/- AND CLAIMED THE COST OF GOODS SOLD AT RS. 38,765/- LEAVING A GROSS PROFIT OF RS. 6,235/- ONLY. THE ASSESSEE A GAINST SUCH GROSS PROFIT HAS CLAIMED INDIRECT EXPENSES AMOUNTING TO RS. 21,5 1,880/- ONLY. THUS, THE ASSESSEE HAS DECLARED NET LOSS OF RS. 21,45,645 /-. 8. HOWEVER, THE ASSESSEE IN ITS STATEMENT OF INCOME WHILE COMPUTING THE INCOME UNDER THE HEAD BUSINESS AND PROFESSION HAS MADE THE DISALLOWANCE OF RS. 12,74,366/- ONLY. THUS, THE ASSESSEE HAS CLAIMED A LOSS OF RS. 8,71,279/- UNDER THE HEAD BUSINESS AND PROFESSION. THE RELEVANT EXTRACT OF THE STATEMENT OF INCOME IS REPR ODUCED AS UNDER: INCOME UNDER HEAD BUSINESS & PROFESSION: NET PROFIT AS PER P & L A/C. 17,54,335 ADD : ITEMS INADMISSIBLE OR DISALLOWABLE EXPENSES DISALLOWED 78,300 EXPENSES RELATING TO OTHER HEADS OF INCOME 11,87,880 INCOME TAX PAID 8,166 ------------- SUB TOTAL 12,74,366 ----------- 30,28,721 LESS : INCOME CONSIDERED SEPARATELY RENT RECEIVED 3 9,00,000 ------------- INCOME UNDER THE HEAD PROFIT & GAINS OF BUSINESS (-) 8,71,279 8.1. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION H AS ALSO SHOWN RENTAL INCOME AMOUNTING TO RS. 27,30,000/- AFTER CLAIMING THE DEDUCTION U/S 24 ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 5 - OF THE ACT. THUS, THE ASSESSEE CLAIMED THE SET OFF OF THE BUSINESS LOSS AMOUNTING TO RS. 8,71,279/- AGAINST THE INCOME UND ER THE HEAD HOUSE PROPERTY. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WERE NO MANUFACTURING ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THE YEAR. THEREFORE, IT WAS NOT ELIGIBLE FOR CLAIMING A NY EXPENSES UNDER THE HEAD BUSINESS AND PROFESSION. ACCORDINGLY, THE A SSESSING OFFICER DISALLOWED THE LOSS OF RS. 8,71,279/- AND DENIED TH E SET OFF OF SUCH LOSS AGAINST THE INCOME UNDER THE HEAD HOUSE PROPERTY. THUS, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS ON ACCOUN T OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD BUSINESS AN D PROFESSION FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CON CEALMENT OF INCOME IN HIS ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT V IDE ORDER DATED 08/11/2011. 8.2. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED A N OTICE U/S.274 R.W.S. 271(1)(C) OF THE ACT FOR LEVYING THE PENALTY ON ACC OUNT OF FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED THAT THE EXPENSES WERE CLAIMED IN THE COU RSE OF ITS BUSINESS OF SALE PURCHASE OF AIR CONDITIONER. THEREFORE, IT HA S NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. HOWEVER, THE ASS ESSING OFFICER DISAGREED WITH THE SUBMISSION OF THE ASSESSEE BY OB SERVING THAT THE ASSESSEE HAS TRIED TO CLAIM THE DOUBLE BENEFIT OF T HE EXPENSES UNDER THE HEADS HOUSE PROPERTY AS WELL AS BUSINESS AND PRO FESSION WHICH IS NOT ALLOWABLE UNDER THE PROVISIONS OF THE ACT. ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 6 - 9. THE ADDITION MADE BY THE ASSESSING OFFICER IN TH E ASSESSMENT FRAMED U/S 143(3) OF THE ACT WAS CONFIRMED BY THE L D. CIT(A) AS WELL AS BY THE HONBLE ITAT. THEREFORE, THE ASSESSING O FFICER HELD THE ASSESSEE GUILTY FOR FURNISHING INACCURATE PARTICULA RS OF INCOME AND DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME. AC CORDINGLY, THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) OF THE ACT, FOR RS. 2,70,000/- BEING 100% OF THE AMOUNT OF TAX SOUGHT T O BE EVADED. 10. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT T HE EXPENSES CLAIMED UNDER THE HEAD BUSINESS AND PROFESSION WERE INCURRE D IN THE COURSE OF BUSINESS OF SALE/PURCHASE OF AIR CONDITIONER. THER EFORE, IT HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. AC CORDINGLY, THERE IS NO OCCASION FOR LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. 11. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENT ION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE CANNOT CLAI M DOUBLE BENEFIT UNDER THE PROVISIONS OF THE ACT. AS SUCH, THE ASSESSEE HA S CLAIMED BOGUS EXPENSES TO CLAIM THE SET OFF OF THE BUSINESS LOSS AGAINST THE INCOME UNDER THE HEAD HOUSE PROPERTY. THEREFORE, THE LD. CIT(A) CONFIRMED THE PENALTY ORDER OF THE ASSESSING OFFICER. 12. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 7 - 13. THE LD.AR BEFORE US SUBMITTED THAT THE ASSESSEE -COMPANY BEING A BODY CORPORATE HAS TO INCUR CERTAIN EXPENSES TO KEE P ITS STATUS ACTIVE. THEREFORE, THE EXPENSES CLAIMED BY THE ASSESSEE IN P&L ACCOUNT WERE INCURRED IN CONNECTION WITH THE BUSINESS OF THE ASS ESSEE. IT DID NOT CLAIM ANY DEDUCTION OF ANY EXPENSES TWO TIMES AS ALLEGED BY THE AUTHORITIES BELOW. AS SUCH, THE ASSESSEE IN ITS STATEMENT OF I NCOME HAS ALREADY DISALLOWED THE EXPENSES CLAIMED UNDER THE HEAD REP AIR AND MAINTENANCE WHICH WAS AVAILABLE TO IT UNDER SECTIO N 24 OF THE ACT. THUS, THE QUESTION OF CLAIMING THE DOUBLE BENEFIT O F THE SAME EXPENSES DOES NOT ARISE. 14. THE LD.AR IN SUPPORT OF HIS CLAIM RELIED UPON T HE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD REPORTED AT (2010) 322 ITR 158 (SC). 15. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT IT HAD CLAIMED THE EXPENSES INCURRED FOR REPAIRS & MAINTENANCE IN TH E P&L ACCOUNT AS WELL AS U/S 24 OF THE ACT WHICH AMOUNTS TO DOUBLE D EDUCTION OF THE SAME EXPENSES. SIMILARLY, THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR, THEN THE QUESTION OF CLAIMING TRAVELING EXPENSE DOES NOT ARISE. BUT THE ASSESSEE HAS CLAIMED THE SAME IN THE P&L ACCOUNT. 16. THE LD. DR ACCORDINGLY SUBMITTED THAT THE ASSES SEE HAD USED THE COLORABLE DEVICE BY CLAIMING SUCH EXPENSES UNDER TH E HEAD BUSINESS AND PROFESSION BY SHOWING ITS SMALL AMOUNT OF THE SALE S OF THE AIR CONDITIONER. THE PURPOSE OF THE ASSESSEE IS TO CLA IM THE EXPENSES IS TO ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 8 - BOOK THE LOSSES UNDER THE BUSINESS AND PROFESSION S O THAT IT CAN CLAIM SET OFF FROM HOUSE PROPERTY INCOME. THE LD. DR VEHEMENT LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE HEARD THE RIVAL CONTENTION AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE IN THE INSTANT CA SE HAS SHOWN LOSSES UNDER THE HEAD BUSINESS AND PROFESSION AMOUNTING TO RS. 8,71,279/- WHICH WAS SET OFF AGAINST THE INCOME UNDER THE HEAD HOUSE PROPERTY. THE EXPENSES CLAIMED BY THE ASSESSEE RESULTING LOSSES U NDER THE HEAD BUSINESS AND PROFESSION WAS DISALLOWED BY THE AO ON THE GROU ND THAT THERE WERE NO BUSINESS ACTIVITIES CARRIED OUT BY THE ASSESSEE. THE LD CIT(A) AND ITAT SUBSEQUENTLY CONFIRMED THE VIEW TAKEN BY THE A O. 18. ACCORDINGLY, THE AO LEVIED THE PENALTY OF RS . 2,70,000/- ON ACCOUNT OF FURNISHING INACCURATE PARTICULAR OF INCO ME FOR THE EXPENSES CLAIMED UNDER THE HEAD BUSINESS AND PROFESSION. THE PENALTY WAS LEVIED UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T. THE LD. CIT(A) SUBSEQUENTLY CONFIRMED THE PENALTY ORDER OF THE AO. 19. NOW THE CONTROVERSY ARISES BEFORE US FOR AD JUDICATION WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR OF INC OME IN THE GIVEN FACTS AND CIRCUMSTANCES. FROM THE PRECEDING DISCUSSION, W E NOTE THAT IT WAS ALLEGED THAT THE ASSESSEE HAD CLAIMED DOUBLE BENEFI T BY CLAIMING EXPENSES UNDER SECTION 24 OF THE ACT AS WELL AS UND ER THE HEAD BUSINESS AND PROFESSION. ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 9 - 20. IN THIS REGARD, WE NOTE THAT THE ASSESSEE H AS CLAIMED DEDUCTION UNDER SECTION 24 OF THE ACT ON ACCOUNT OF REPAIR AN D MAINTENANCE EXPENSES AS PER THE PROVISION OF LAW. THIS FACT IS UNDISPUTED. ON PERUSAL OF THE STATEMENT OF INCOME OF THE ASSESSEE, WE NOTE THAT THE ASSESSEE HAS SUO-MOTO DISALLOWED THE EXPENSES CLAIMED ON ACCOUNT OF REPAIR AND MAINTENANCE UNDER THE HEAD BUSINESS AND PROFESSION AMOUNTING TO RS. 11,87,880/-ONLY. THIS ACT OF THE ASSESSEE PROVES TH AT IT HAS NOT CLAIMED A DOUBLE DEDUCTION OF REPAIR AND MAINTENANCE EXPENSES UNDER THE HEAD BUSINESS AND PROFESSION AS WELL AS UNDER THE HEAD H OUSE PROPERTY. THUS WE DISAGREE WITH THE FINDING OF THE LOWER AUTHORITI ES THAT THE ASSESSEE HAS CLAIMED THE DOUBLE BENEFIT OF THE SAME EXPENSES. 21. IT IS AN UNDISPUTED FACT THE ASSESSEE HAS CL AIMED LOSSES UNDER THE HEAD BUSINESS AND PROFESSION AMOUNTING TO RS. 21,84 ,145/- APPROXIMATELY AFTER ADJUSTING THE GROSS PROFIT OF R S. 6235.00 ONLY. 21.1. HOWEVER, THE ASSESSEE IN THE STATEMENT OF I NCOME HAS MADE THE DISALLOWANCES OF CERTAIN EXPENSES AS DISCUSSED IN T HE PRECEDING PARAGRAPH. 22. THUS THE LOSS CLAIMED BY THE ASSESSEE COMES T O RS. 8,71,279/- ONLY UNDER THE HEAD BUSINESS AND PROFESSION. THE ASSESSE E IS BODY CORPORATE AND LISTED WITH THE STOCK EXCHANGE. THE ASSESSEE TO KEEP ITS STATUS ACTIVE HAS TO INCUR CERTAIN EXPENSES SUCH AS AUDIT FEES, L ISTING FEES, ADMINISTRATIVE EXPENSES, ROC FILING FEES, AND ON TH E OTHER CONNECTED MATTERS. THUS THE EXPENSES WHICH HAVE BEEN INCURRED BY THE ASSESSEE TO ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 10 - KEEP THE STATUS OF IT ACTIVE CANNOT BE TREATED AS B OGUS. AS SUCH THE ASSESSEE HAS CLAIMED EXPENSES UNDER THE HEAD BUSINE SS AND PROFESSION OF RS. 8,77,514/- ONLY WHICH WAS REDUCED BY THE AMOUNT OF GROSS PROFIT OF RS. 6,235/-ONLY. THUS THE NET LOSS COMES TO RS. 8,7 1,279/-ONLY. THE AUTHORITIES BELOW HAVE DISALLOWED ALL THE EXPENSES. 23. WE NOTE THAT THE ITAT HAS ALSO DISALLOWED T HESE EXPENSES IN ITS ORDER VIDE ITA NUMBER2536/AHD/2012 DATED 31.07.2013 . THUS, THERE CANNOT BE ANY QUESTION ABOUT THE ALLOWABILITY THE E XPENSES ON MERIT. 24. THE LIMITED ISSUE BEFORE US FOR OUR ADJUDIC ATION WHETHER THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR OF INC OME. IN THIS REGARD, WE FIND THAT THE AUTHORITIES BELOW HAVE NOT POINTED OU T ANY DEFECT IN THE EXPENSES CLAIMED BY THE ASSESSEE SUGGESTING THAT TH ESE ARE BOGUS IN NATURE. THE BASIS USED FOR DISALLOWANCE OF THE EXPE NSES WAS THAT THERE WAS NO BUSINESS ACTIVITY OF THE ASSESSEE. THOUGH TH E ASSESSEE HAS SHOWN A TURNOVER OF RS. 45,000/- WHICH WAS DULY ACCEPTED BY THE REVENUE. 25. THE ASSESSEE HAS CLAIMED EXPENSES UNDER THE HEAD HOUSE PROPERTY FOR WHICH IT WAS ENTITLED UNDER THE PROVISIONS OF S ECTION 24 OF THE ACT. BUT THE ASSESSEE CLAIMED THE SET OFF BUSINESS LOSSE S AGAINST THE HOUSE PROPERTY INCOME WHICH WAS DISALLOWED BY THE AUTHORI TIES BELOW ON THE GROUND THAT THERE WAS NO BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE DURING THE YEAR. ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 11 - 25.1. IN THIS REGARD, WE NOTE THAT WHETHER THERE WAS ANY BUSINESS ACTIVITY IN THE YEAR UNDER CONSIDERATION OR NOT IS NO POINT OF DISPUTE. IT IS BECAUSE THE ASSESSEE BEING A BODY CORPORATE HAS TO INCUR CERTAIN ESSENTIAL EXPENSES TO KEEP ITS STATUS ACTIVE. THEREFORE THE C LAIM OF THE ASSESSEE FOR THE EXPENSES CANNOT BE TREATED AS IF THE ASSESSEE H AS FURNISHED INACCURATE PARTICULAR OF INCOME. THE CLAIM MADE BY THE ASSESSE E MIGHT BE A WRONG CLAIM WHICH IS NOT ALLOWABLE UNDER THE ACT BUT DOES NOT MEAN THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR OF INC OME. 25.2. IN THIS REGARD, WE FIND SUPPORT AND G UIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RE LIANCE PETROPRODUCTS (P) LTD REPORTED IN 189 TAXMAN 322, WHEREIN IT WAS HELD AS UNDER: THE WORD 'PARTICULARS' MUST MEAN THE DETAILS SUPPL IED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDI NG TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE WAS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEO US OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING TH E PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETU RN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 25.3. MOREOVER, THE ASSESSEE IS VERY MUCH ENTIT LED TO CLAIM THE SET OF THE LOSS UNDER ONE HEAD AGAINST THE INCOME OF ANOTH ER HEAD SUBJECT TO CERTAIN EXCEPTIONS UNDER THE PROVISIONS OF SECTION 71 OF THE ACT. THE CASE OF THE ASSESSEE DOES NOT FALL IN ANY OF THE EXCEPTI ONS AS PROVIDED UNDER SECTION 71 OF THE ACT. THUS THE CLAIM OF THE ASSESS EE NOT ALLOWED BY THE AUTHORITIES BELOW CANNOT RENDER THE CLAIM OF THE AS SESSEE AS IF IT HAS ITA NO.1310/AHD/2016 PHELIX APPLIANCES LTD. VS. ITO ASS T.YEAR 2009-10 - 12 - FURNISHED INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE ABOVE, WE ARE NOT INCLINED TO UPHOLD THE ORDER OF THE AUTHORITIES BELOW. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT T HE AO NOT TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 26. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/01/2019 SD/- SD/- (MS.MADHUMITA ROY) (WASEEM AH MED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/01/2019 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)- 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD