SISTAS P. LTD, MUMBAI V. ITO 2(3)(2), MUMBAI

ITA 1354/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87806 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: H P MAHAJANI
• Keywords: Bonafide belief; Retrospective amendment; Question of law

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, M UMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) , AND B.R.BASKARAN (AM) , . . , ./I.T.A. NO.1354/MUM/2013 ( / ASSESSMENT YEAR : 2005-06) SISTAS PRIVATE LIMITED, 101, MAHATMA GANDHI ROAD, 3 RD FLOOR, SHETTY HOUSE, MUMBAI-400023 / VS. INCOME TAX OFFICER -2(3)(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. :AAACS5758E ! / REVENUE BY: SHRI NEIL PHILIP ' ! /ASSESSEE BY : SHRI H P MAHAJANI # ' $% / DATE OF HEARING : 20.11.2014 &' ' $% /DATE OF PRONOUNCEMENT : 9. 1.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 17.01.2013 PASSED BY LD CIT(A)-6, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IS AGGRIEVED BY THE DECI SION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.36,14,604/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE FACTS THAT LED TO LEVY OF PENALTY ARE DISCUS SED IN BRIEF. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED TH AT THE ASSESSEE HAS PURCHASED UNITS OF MUTUAL FUND AND SOLD THEM AFTER THE RECEIPT OF DIVIDEND, WHICH LED TO INCURRING OF LOSSES. THE AO NOTICED THAT TH E PROVISIONS OF SEC. 94(7) SHALL APPLY TO THE ASSESSEE, AS PER WHICH THE LOSS INCURR ED ON SALE OF UNITS IS REQUIRED TO BE DISALLOWED TO THE EXTENT OF THE AMOUNT OF DIV IDEND RECEIVED, IF IT IS SOLD WITHIN A PRESCRIBED PERIOD. THE PROVISIONS OF SEC. 94(7), PRIOR TO THE AMENDMENT BY FINANCE (NO.2) ACT, 2004 , SHALL APPLY IF THE UNITS ARE PURCHASED ITA NO.1354/M/2013 2 WITHIN A PERIOD OF THREE MONTHS PRIOR TO THE RECORD DATE (FOR DECLARING DIVIDEND) AND SOLD WITHIN A PERIOD OF THREE MONTHS AFTER THE ABOVE SAID DATE. AS PER THE PRE-AMENDED PROVISIONS, THE TRANSACTIONS CARRIED OU T BY THE ASSESSEE WERE NOT HIT BY THE PROVISIONS OF SEC. 94(7) OF THE ACT. 3. HOWEVER, THE FINANCE (NO.2) ACT, 2004 AMENDE D THE PROVISIONS OF SEC. 94(7) OF THE ACT, WHEREBY THE SALE MADE WITHIN A PE RIOD OF NINE MONTHS AFTER THE RECORD DATE WAS ALSO BROUGHT WITHIN ITS AMBIT. ACC ORDING TO THE ASSESSEE, THE FINANCE (NO.2) ACT, 2004 WAS INTRODUCED IN THE PARL IAMENT ON 8 TH JULY 2004 AND RECEIVED THE ASSENT OF THE HONBLE PRESIDENT OF IND IA ON 10 TH SEP. 2004. IT CAME INTO EFFECT FROM 1.4.2005 AND HENCE BECAME APPLICAB LE FROM ASST. YEAR 2005-06. 4. THE CASE OF THE ASSESSEE WAS THAT IT PURCHA SED AND SOLD THE UNITS PRIOR TO 10 TH SEP. 2004, I.E., THE DATE ON WHICH THE FINANCE (NO .2) BILL, 2004 RECEIVED THE ASSENT OF THE HONBLE PRESIDENT OF INDIA. SINCE TH E TRANSACTIONS OF SALES WERE CONCLUDED PRIOR TO THE RECEIPT OF ASSENT OF THE PRE SIDENT OF INDIA, THE PRE- AMENDED PROVISIONS SHOULD BE APPLIED, I.E., THE PER IOD OF HOLDING AFTER THE RECORD DATE SHOULD BE TAKEN AS THREE MONTHS ONLY. ACCORD INGLY IT IS SUBMITTED THAT THE TRANSACTIONS WERE NOT HIT BY THE PRE-AMENDED PROVIS IONS OF SEC. 94(7) OF THE ACT. HOWEVER, THE SAID CONTENTIONS DID NOT FIND FAVOUR W ITH TAX AUTHORITIES AS WELL AS THE TRIBUNAL, SINCE THE FINANCE (NO.2) ACT, 2004 WA S MADE APPLICABLE FROM ASSESSMENT YEAR 2005-06 AND ACCORDINGLY IT WAS HELD THAT THE UNITS SOLD DURING THE PERIOD FROM 1.4.2004 TO 31.3.2005 HAVE TO BE EX AMINED IN TERMS OF AMENDED PROVISIONS OF SEC. 94(7) OF THE ACT. ACCORDINGLY, BY APPLYING THE AMENDED PROVISIONS, THE ASSESSING OFFICER DISALLOWED THE LO SS TO THE EXTENT OF RS.64,13,137/-. 5. THE ASSESSING OFFICER FURTHER NOTICED THAT T HE ASSESSEE HAD CLAIMED VARIOUS TYPES OF EXPENSES AGAINST THE INCOME RECEIVED BY WA Y OF RENT, PROFIT ON SALE OF INVESTMENT, DIVIDEND. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD INCURRED THOSE EXPENSES IN CONNECTION WITH A NEW PROJECT OF MAKING A SPECIAL DIARY ON MAHATMA GANDHI. HENCE, THE AO DISALLOWED EXPENDITU RE CLAIM TO THE EXTENT OF RS.36,62,414/-. IN THE QUANTUM APPEAL PROCEEDINGS , THE LD CIT(A) CONFIRMED BOTH THE DISALLOWANCES. THERE AFTER, IN THE PENALT Y PROCEEDINGS, THE ASSESSING LEVIED MINIMUM PENALTY OF RS.36,14,604/- ON BOTH DI SALLOWANCES DISCUSSED ITA NO.1354/M/2013 3 ABOVE. THE LD CIT(A) ALSO CONFIRMED THE PENALTY LE VIED BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 6. WE HEARD THE PARTIES AND PERUSED THE RECOR D. THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY LD CIT(A) IN QUANTUM ASSESSMENT PROCEEDINGS BY FILING APPEAL BEFORE THE ITAT AND THE TRIBUNAL, VIDE ITS ORDER DATED 12-08- 2011, HAS CONFIRMED THE DISALLOWANCE MADE U/S 94(7) OF THE ACT. HOWEVER, THE MATTER RELATING TO THE DISALLOWANCE OF EXPENSES WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE TRIBUNAL BY FILING APPEAL BEFORE THE HONBLE HIGH COURT OF BOMB AY AND THE HIGH COURT HAS ALSO CONFIRMED THE DISALLOWANCE MADE U/S 94(7) OF T HE ACT, VIDE ITS ORDER DATED 07-09-2012 REPORTED IN (2012)(27 TAXMANN.COM 236). 7. IN THE PENALTY PROCEEDINGS, THE MAIN EXPLAN ATION OF THE ASSESSEE WITH REGARD TO THE DISALLOWANCE MADE U/S 94(7) OF THE AC T WAS THAT (A) THE AMENDMENT WAS BROUGHT BY THE FINANCE (NO.2 ) BILL, 2004 IN SEC. 94(7) OF THE ACT, WHEREBY THE PERIOD OF HOLDIN G AFTER THE RECORD DATE WAS ENHANCED FROM 3 MONTHS TO 9 MONTHS AND THE SAID BILL RECEIVED THE ASSENT OF THE HONBLE PRESIDENT OF INDIA ON 10 TH SEP. 2004. HENCE THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE AME NDED PROVISIONS WILL NOT AFFECT THE TRANSACTIONS ALREADY CONCLUDED PRIOR TO THE DATE OF ASSENT OF THE HONBLE PRESIDENT OF INDIA. (B) THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT TH E TRANSACTIONS CARRIED ON BY HIM IN ACCORDANCE WITH THE PROVISIONS THAT EXISTED AT THE TIME OF ENTERING INTO THE TRANSACTIONS CANNOT BE AF FECTED BY A SUBSEQUENT AMENDMENT BROUGHT WITH RETROSPECTIVE EFFECT. (C) THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. ALL THE DETAILS WERE FURNISHED BEFORE THE A SSESSING OFFICER EITHER IN THE RETURN OF INCOME OR DURING THE COURSE OF ASSESS MENT PROCEEDINGS. (D) A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT LEAD TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER THESE EXPLANATIONS DID NOT FIND FAVOUR WIT H THE ASSESSING OFFICER AND LD CIT(A). 8. WE NOTICE THAT THERE IS NO DISPUTE WITH REGA RD TO THE FACT THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ITA NO.1354/M/2013 4 ASSESSMENT PROCEEDINGS. IN THE RETURN OF INCOME, T HE COPY OF WHICH IS PLACED AT PAGES 2 TO 5 OF THE PAPER BOOK, THE ASSESSEE HAS ST ATED THAT THE DISALLOWANCE U/S 94(7) WAS NIL. FURTHER THE FOLLOWING NOTE WAS ALSO APPENDED IN THE RETURN OF INCOME:- IT IS THE COMPANYS CONTENTION THAT THE AMENDMENT BROUGHT ABOUT BY THE FINANCE (NO.2) ACT, 2004 TO SECTION 94(7) WITH EFFE CT FROM 1.4.2005 SHOULD NOT APPLY TO TRANSACTIONS CONCLUDED BEFORE INTRODUC TION OF THE FINANCE BILL 2004 IN PARLIAMENT ON 8 TH JULY, 2004. THUS, IT IS SEEN THAT THE ASSESSEE WAS VERY MUCH CO NSCIOUS ABOUT THE APPLICABILITY OF THE PROVISIONS OF SEC. 94(7) AND A LSO ABOUT THE AMENDMENT BROUGHT IN BY FINANCE (NO.2) ACT. AT THE TIME OF FILING RETURN OF INCOME, THE ASSESSEE HAD ENTERTAINED A BONAFIDE BELIEF THAT THE TRANSACTIONS ENTERED INTO BY HIM UPTO THE DATE OF INTRODUCTION OF BILL IN THE PA RLIAMENT, I.E., UPTO 08-07-2004 WOULD NOT BE HIT BY THE NEW AMENDMENT. HOWEVER, I N THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CONTENDED THAT THE AM ENDED PROVISIONS SHALL NOT APPLY TO THE TRANSACTIONS CONCLUDED BEFORE THE BILL CAME INTO AN ACT, I.E., THE DATE OF RECEIPT OF ASSENT OF HONBLE PRESIDENT OF INDIA. 9. BEFORE US, THE LD A.R SUBMITTED THAT THE PE NALTY U/S 271(1)(C) OF THE ACT WAS LEVIED BY THE AO FOR FURNISHING INACCURATE PAR TICULARS OF INCOME. HE FURTHER CONTENDED THAT THE TRANSACTIONS ENTERED INTO BY THE ASSESSEE WOULD NOT ATTRACT PENALTY, SINCE THE ASSESSEE HAD FURNISHED ALL THE D ETAILS AND HENCE THERE WAS NO QUESTION OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY I TSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS P ER THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. RELIA NCE PETRO PRODUCTS PVT LTD (322 ITR 158). HE FURTHER PLACED RELIANCE ON VARIO US CASE LAWS ON WHICH IDENTICAL VIEWS HAVE BEEN EXPRESSED. 10. ON THE CONTRARY, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER OF LD CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS FURNISH ED RETURN OF INCOME AFTER EXPIRY OF ABOUT ONE YEAR FROM THE DATE OF CONCLUSIO N OF THE RELEVANT TRANSACTIONS, BY WHICH TIME, THE AMENDED PROVISIONS WERE VERY MUC H IN EXISTENCE. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE WAS AWAR E OF THE AMENDED PROVISIONS, BUT STILL CHOSE NOT TO MAKE DISALLOWANC E U/S 94(7) OF THE ACT AND HENCE THE SAME WOULD LEAD TO FURNISHING OF INACCURA TE PARTICULARS OF INCOME. ITA NO.1354/M/2013 5 11. IN THE REJOINDER, THE LD A.R DREW OUR ATTE NTION TO THE DECISION DATED 14-12- 2012 RENDERED BY THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT V/S M/S ADITYA BIRLA NOVA LIMITED (SUCCESSOR), IN BUSINESS TO M/S BIRLA GLOBAL FINANCE LIMITED, (2012-(IT1)-GTX-0390-BOM)( INCOME TAX APPEAL NO. 3899 OF 2010). WE HAVE GONE THROUGH THE SAID DECIS ION. THE FACTS PREVAILING IN THAT CASE ARE THAT THE ASSESSEE THEREIN CLAIMED DED UCTION U/S 35D OF THE ACT AND THE SAME WAS DISALLOWED ON THE GROUND THAT IT IS NO T AN INDUSTRIAL UNDERTAKING. IT IS PERTINENT TO NOTE THAT A SIMILAR CLAIM IN THE EA RLIER YEARS HAD ALSO BEEN DISALLOWED. ANOTHER CLAIM PUT FORTH BY THE ASSESSE E WAS RELATED TO THE DIMUNITION IN THE VALUE OF SHARES. THE SAID CLAIM WAS ALSO DISALLOWED ON THE GROUND THAT THE SHARES WERE HELD AS INVESTMENTS. T HE PENALTY LEVIED ON BOTH THE DISALLOWANCES WERE DELETED BY THE HONBLE JURISDICT IONAL HIGH COURT WITH THE FOLLOWING OBSERVATIONS:- 11. ............. HOWEVER TO ATTRACT THE PROVISION S OF SECTION 271, THE ASSESSEE MUST BE HELD TO HAVE CONCEALED THE MATERIA L PARTICULARS OR TO HAVE FURNISHED INACCURATE PARTICULARS. AT THE CO ST OF REPETITION IN THE PRESENT CASE, THERE WAS NO CONCEALMENT OF ANY M ATERIAL PARTICULARS BY THE RESPONDENT. NOR DID THE RESPONDE NT FURNISH INACCURATE PARTICULARS. THE RESPONDENT DISCLOSED AL L MATERIAL PARTICULARS AND ON THE BASIS THEREOF, MADE CERTAIN CLAIMS WHICH HAVE BEEN FOUND PURELY AS A QUESTION OF LAW TO BE NOT SU STAINABLE. IN THE PRESENT CASE, EXPLANATION 1(B) IS INAPPLICAB LE. THIS IS IN VIEW OF THE FACT THAT IT IS AN ADMITTED POSITION THAT TH E RESPONDENT HAS NEITHER CONCEALED ANY PARTICULARS OF INCOME NOR FUR NISHED INACCURATE PARTICULARS OF INCOME. EXPLANATION 1(B) WOULD APPLY ONLY WHERE AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOM E OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. EXPLANA TION 1(B) PROVIDES THAT IN SUCH CASES IF THE REASONS GIVEN FO R THE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME A RE FOUND TO BE UNSUBSTANTIATED OR NOT BONA-FIDE, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME WOULD REPRESENT INCOME I N RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 12. AS WE NOTED EARLIER, THE MATTER IN ANY EVENT ST ANDS CONCLUDED IN FAVOUR OF THE RESPONDENT BY THE JUDGMENT OF THE SUP REME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) WHERE THE SUPREME COURT CONSIDERED A SIMILAR SITUATION. THE R ESPONDENT THEREIN HAD DISCLOSED ALL THE FACTS AND THERE WAS N O CONCEALMENT OF INCOME. THE SUPREME COURT NEGATED AN IDENTICAL SUBM ISSION. THE ITA NO.1354/M/2013 6 JUDGMENT CONSIDERS AND INTERPRETS THE JUDGMENT OF T HE SUPREME COURT IN UNION OF INDIA & ORS. VS. DHARAMENDRA TEXTILE PROCE SSORS & ORS. (SUPRA). THE SUPREME COURT AFTER SETTING OUT SECTIO N 271 (1)(C) IN PARAGRAPH 10 HELD AS UNDER :- 10. ............................................. .................... A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN OR DER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICU LARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRE SENT IS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. HOWEVER, THE LEARNED COUNSEL FO R THE REVENUE SUGGESTED THAT BY MAKING INCORRECT CLAIM FO R 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 DET AILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITE MS 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 IS AN ADMITTED POSITION IN THE PRESE NT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR A NY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE , AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. 11. THE LEARNED COUNSEL ARGUED THAT SUBMITTING AN INCO RRECT CLAIM IN LAW FOR THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME. WE D O NOT THINK THAT SUCH CAN BE THE INTERPRETATION OF THE WORDS CO NCERNED. 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 INVO KED. 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 THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. THIS COURT R EFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS AS ALSO THE DECISION IN UNION OF INDIA V. RAJASTHAN SPG. & WVG. MILLS AND REITERATED IN PARA 13 THAT: ( ATUL MOHAN BINDAL CASE , SCC P. 597, PARA 13) ITA NO.1354/M/2013 7 13 . IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)( C ), CONDITIONS STATED THEREIN MUST EXIST. 19. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14-A OF T HE 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 FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM PART OF THE TOTAL INCOME. IT WAS, THEREFOR E, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCE SSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOU NTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS; ( I ) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; ( II ) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AM OUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXAB LE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. 20. 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 INACCU RATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN TH E RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1) ( C ). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PE NALTY UNDER SECTION 271(1)( C ) .THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 21. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF T.N. (2009) 11 SCC 687, AS REGARDS THE PENALTY AREAPPOSITE. IN THE AFOREMENTIO NED DECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS IN THE TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOU ND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOM E INCORRECT STATEMENTS MADE IN THE RETURN. HOWEVER, THE SAID TR ANSACTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THI S COURT, THEREFORE, OBSERVED: (SCC P.688, PARA 7) ITA NO.1354/M/2013 8 7 . SO FAR AS THE QUESTION OF PENALTY IS CONCERNED TH E ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNTS BOOK S. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVER ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDE THESE I TEMS IN THE DEALER'S TURNOVER DISALLOWING THE EXEMPTION PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STAND S SET ASIDE. THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE AS SESSEE IN ITS RETURN. THE SUPREME COURT ALSO HELD THAT IT WAS ONLY ON THE POINT OF MENS-REA THAT IN UNION OF INDIA & ORS. VS. DHARMENDRA TEXTILE PROCESSORS & ORS , THE SUPREME COURT OVER-RULED THE EARLIER JUDGMENT OF THE SUPREME COURT IN DILIP N. SHROFF VS . JT. CIT, (2007) 291 ITR 519. 13. MR.MALHOTRA SUBMITTED THAT EXPLANATION 1(B) TO SECTION 271(1) MANDATES THE LEVY OF PENALTY EVEN WHERE A CLAIM FOR DEDUCTION IS NOT UPHELD, EVEN THOUGH THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS AND HAS NOT SUPPRESSED ANY MATERIAL FACTS. HE SUBMI TTED THAT A VIEW TO THE CONTRARY WOULD RENDER EXPLANATION 1(B) NUGAT ORY. HIS ONLY RESPONSE TO THE JUDGMENT OF THE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. WAS THAT THE SUPREME COURT HAD FAILED TO NOTICE EXPLANATION-1 TO SECTION 271(1). 14. WE ARE UNABLE TO AGREE. IN ANY EVENT WE ARE BOU ND BY THE JUDGMENT OF THE SUPREME COURT. MERELY BECAUSE THE E XPLANATION WAS NOT REFERRED TO IN THE JUDGMENT OF THE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., IT CANNOT BE SAID THAT THE JUDGMENT IS PER-INCURIAM. THE LEARNED JUDGES HAVING EXPRESSLY CONSIDERED THE VERY SECTION, IT CAN HARDLY BE SUGGESTED THAT T HEY DID NOT NOTICE A PART OF THE SECTION AND DELIVERED THE JUDGMENT IN I GNORANCE THEREOF MERELY BECAUSE THAT PART IS NOT IN TERMS NOTED IN T HE JUDGMENT. 12. IN THE PRESENT CASE, IT IS NOT THE CASE OF T HE REVENUE THAT THE ASSESSEE HAS FAILED TO FURNISH ALL PARTICULARS OF INCOME. AS NO TICED EARLIER, THE ASSESSEE HAS INDICATED IN ITS RETURN OF INCOME THAT IT WAS CONSC IOUS OF THE PROVISIONS OF SEC. 94(7) OF THE ACT. THE ASSESSEE HAD ATTACHED A NOTE ALSO IN THIS REGARD EXPRESSING ITS VIEW ABOUT THE APPLICABILITY OF THE PROVISIONS OF SEC. 94(7) OF THE ACT. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE H AS CONTENDED THAT THE ITA NO.1354/M/2013 9 AMENDED PROVISIONS SHOULD NOT BE APPLIED ON THE TRA NSACTIONS CONCLUDED PRIOR TO THE DATE OF RECEIPT OF ASSENT OF HONBLE PRESIDENT OF INDIA. THUS, IN OUR VIEW, THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT THE AMENDE D PROVISIONS WILL NOT BE APPLICABLE FOR THE TRANSACTIONS CONCLUDED ATLEAST U PTO THE DATE OF RECEIPT OF ASSENT OF THE HONBLE PRESIDENT TO FINANCE (NO.2) B ILL , 2004. IN OUR VIEW, THE SAID BELIEF CANNOT BE ALTOGETHER REJECTED, SINCE TH E SAID CLAIM OF THE ASSESSEE IS A DEBATABLE ONE. EVEN OTHERWISE, WE ARE OF THE VI EW THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE, I.E., A CLAIM WHICH IS NO T SUSTAINABLE IN LAW BY ITSELF WOULD NOT LEAD TO FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. 13. IN VIEW OF THE FOREGOING, WE ARE OF THE VIE W THAT THE PENALTY LEVIED ON THE DISALLOWANCE MADE U/S 94(7) OF THE ACT IS LIABLE TO BE DELETED. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED ON THE DISALLOWANCE MADE U/S 94(7) OF THE ACT. 14. WITH REGARD TO THE PENALTY LEVIED ON THE DI SALLOWANCE OF EXPENSES, WE NOTICE THAT THE TRIBUNAL HAS RESTORED THE MATTER RE LATING THERETO TO THE FILE OF THE ASSESSING OFFICER WHILE DECIDING THE APPEAL FILED B Y THE ASSESSEE IN QUANTUM PROCEEDINGS. HENCE THE PENALTY LEVIED ON THE SAME DOES NOT SURVIVE AND THE ASSESSING OFFICER MAY EXAMINE ABOUT THE LEVY OF PEN ALTY IN THE SET ASIDE PROCEEDINGS. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 9TH JAN, 2015 . &' # () * + 9TH JAN, 2015 ' ' , - SD SD ( / VIJAY PAL RAO ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( # MUMBAI: 9TH JAN,2015. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : ITA NO.1354/M/2013 10 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # 0$ ( ) / THE CIT(A)- CONCERNED 4. # 0$ / CIT CONCERNED 5. 6. 1, $ 2 , % 2 , ( # / DR, ITAT, MUMBAI CONCERNED ,3 4 / GUARD FILE. 5 # / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) % 2 , ( # /ITAT, MUMBAI