The Janata Sahakari Bank Ltd., Nashik V. Assistant Commissioner of Income-tax,

ITA 1453/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0468 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Invalid notice; Depreciation; Principle of natural justice; Question of law; Initiation of penalty proceedings; Reasonable cause; Wrong claim; Bad and doubtful debts; Revised return; Bonafide mistake; Revenue expenditure; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 153A; 80P; 274; 13

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! '# $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO.1453/PN/2015 #% & '& / ASSESSMENT YEAR : 2007-08 THE JANTA SAHAKARI BANK LTD., HUNDIWALA LANE, YEOLA DISTRICT, NASHIK 423 101. PAN AAAAJ1491P . / APPELLANT V/S A CIT , CIRCLE 3, MALEGAON . . / RESPONDENT / APPELLANT BY : SHRI SANKET JOSHI / RESPONDENT BY : SHRI HITENDRA NINAWE ( / ORDER PER VIKAS AWASTHY, JM : 1. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) I, NASHIK DT.24.07.2015 FOR THE ASSESSMENT YEAR 2007-08 CON FIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A CO-OPERATIVE BANK. THE ASSESSEE FILED IT S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 31.10.2007 DE CLARING / DATE OF HEARING :10.11.2016 / DATE OF PRONOUNCEMENT: 16.11.2016 2 ITA NO.1453/PN/2015 TOTAL INCOME OF RS.32,90,839/-. DURING THE COURSE OF SCRUTIN Y ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) INTER ALIA DISALLOWED RS.7,00,000/-. RS.2,00,000/- ON ACCOUNT OF TRANSFE R TO INVESTMENT FLUCTUATION FUND AND RS.5,00,000/- TOWARDS PROV ISION FOR OUTSTANDING INTEREST. THE A.O. THEREAFTER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) IN RESPECT OF ABOVE SAID ADDITIONS . THE A.O. VIDE ORDER DATED 07.03.2013 LEVIED PENALTY OF RS.2,20,000/ - FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOM E. THE ASSESSEE FILED APPEAL AGAINST THE ORDER LEVYING PENALTY U/S.271(1)(C) OF THE ACT. THE CIT (A) UPHELD THE LEVY OF PENALTY U/S.27 1(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS. AGAINST THE ORDER OF F IRST APPELLATE AUTHORITY, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI SANKET JOSHI APPEARING ON BEHALF OF THE ASSESSE E SUBMITTED THAT THE ASSESSEE HAS ASSAILED LEVY OF PENALTY ON MERITS AS WELL AS ON LEGAL GROUNDS. THE LD.A.R. SUBMITTED THAT THE A SSESSEE BEING CO-OPERATIVE BANK WAS ELIGIBLE TO CLAIM DEDUCTION U/S. 80P UPTO A.Y. 2006-07. THE PROVISIONS OF SEC.80P WERE AMEN DED W.E.F. A.Y. 2007-08. THE INCOME OF THE CO-OPERATIVE BANKS BECA ME TAXABLE AFTER INSERTION OF SUB-SECTION (4) TO SEC.80P W.E.F 01.07.2007 BY THE FINANCE ACT, 2006. THEREAFTER, THE ASSESSEE MAINTAINED BOOKS OF ACCOUNT AS PER R.B.I. GUIDELINES. THE ASSESSMENT YEAR UND ER APPEAL WAS THE FIRST YEAR WHEN THE ASSESSEE HAD MAINTAINED PRO FIT AND LOSS ACCOUNT AND BALANCE SHEET IN ACCORDANCE WITH AMENDED P ROVISIONS. INADVERTENTLY, TWO ITEMS I.E., DIRECT CREDIT TO INVESTMENT FLU CTUATION FUND ACCOUNT RS.2,00,000/- AND PROVISION FOR OUTSTANDING INTEREST RS.5,00,000/- WERE CLAIMED AS DEDUCTIONS WHILE COMPUTING BU SINESS INCOME OF THE ASSESSEE. THE BOOKS OF ACCOUNT OF ASSESSE E ARE SUBJECTED TO AUDIT AND THE ACCOUNTS WERE PREPARED AS PER R.B.I. 3 ITA NO.1453/PN/2015 GUIDELINES. THE ABOVE SAID CLAIMS MADE BY THE ASSESSEE WER E NOT EVEN POINTED BY THE AUDITORS DUE TO OVERSIGHT. IT WA S A BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE DUE TO CHANGE IN T HE LEGAL PROVISIONS. THEREFORE, NO PENALTY SHOULD BE LEVIED UNDER SUCH CIRCUMSTANCES. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLA CED RELIANCE ON THE FOLLOWING DECISIONS. 1. CIT VS. SOCIETEX 259 CTR 325 DELHI & 2. AGRASEN URBAN CO-OPERATIVE BANK LTD., VS. ITA NO.355/PN/2012 IN A.Y 2007-08 DECIDED ON 19.02.2014. 4. THE LEARNED A.R. FURTHER SUBMITTED THAT A PERUSAL OF ASSESSMENT ORDER WOULD SHOW THAT PENALTY PROCEEDINGS W ERE INITIATED U/S 271(1)(C) BY THE A.O. IN RESPECT OF AFOREMENTIONE D ADDITIONS. HOWEVER, THE A.O. HAS NOT SPECIFICALLY STATED WHE THER THE PENALTY U/S 271(1)(C) IS BEING INITIATED FOR CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREAFTER NO TICE U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED TO ASSESSEE ON 17.12.2009. EVEN THE NOTICE DOES NOT SPECIFY WHETHER THE PENALTY P ROCEEDINGS FOR ASSESSMENT YEAR 2007-08 ARE INITIATED FOR CONCEALMENT O F INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR BOTH. TH E A.O. VIDE ORDER DT.07.03.2013 LEVIED PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND THEREBY CONCEALE D THE INCOME TO THE EXTENT OF RS.7,00,000/-. THE CIT (A) IN FIRST A PPEAL UPHELD THE LEVY OF PENALTY U/S 271(1)(C) FOR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. THE AUTHORITIES BELOW HAVE ERRED IN NOT SPECIFYING IN THE FIRST INSTANCE THE CHARGE FOR WHICH PENALT Y IS BEING LEVIED. THEREAFTER, THE A.O AND THE CIT (A) HAD GIVEN DIFFER ENT REASONS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE LEARNED A.R. 4 ITA NO.1453/PN/2015 SUBMITTED THAT WHERE THERE IS INCONSISTENCY IN THE CHARG E FOR LEVY OF PENALTY AND WHERE THE NOTICE FOR LEVY OF PENALTY IS AMBIGUO US, NO PENALTY IS LEVIABLE. IN SUPPORT OF HIS SUBMISSIONS, THE LD.A.R . PLACED RELIANCE ON THE FOLLOWING DECISIONS. 1) CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 IT R 565 KARNATAKA. 2) SLK PROPERTIES VS. ITO IN ITA NO.140/PN/2014 A.Y. 2006-07 DECIDED ON 18.03.2016. 3) SANJOG THARACHAND LODHA VS. ITO IN ITA NO.688-689/ PN/2014 FOR A.Y. 2007-08 AND 2008-09 DECIDED O N 31.08.2015. THE LD.A.R. POINTED THAT THE DECISION RENDERED BY THE HO NBLE KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & G INNING FACTORY (SUPRA) WAS FOLLOWED IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS BY HONBLE KARANTAKA HIGH COURT IN ITA NO.380 O F 2015 DECIDED ON 23.11.2015. THE DEPARTMENT CARRIED THE MATTER IN APP EAL BEFORE THE HONBLE SUPREME COURT OF INDIA. THE HONBLE S UPREME COURT DISMISSED THE SLP UPHOLDING THE DECISION RENDERED IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS (SUPRA). 5. ON THE OTHER HAND, SHRI HITENDRA NINAWE REPRESEN TING THE DEPARTMENT VEHEMENTLY DEFENDED THE FINDINGS OF CIT (A ) IN UPHOLDING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. T HE LD.D.R. SUBMITTED THAT THE ASSESSEE VIOLATED THE PROVISIONS OF TH E ACT IN CLAIMING DEDUCTIONS. THE CONTENTION OF THE ASSESSEE THA T CLAIM HAS BEEN MADE OUT OF IGNORANCE IS NOT SUSTAINABLE, AS IGNORANC E OF LAW IS NO EXCUSE. THE WRONGFUL DEDUCTION CLAIMED BY THE ASSES SEE CAME TO LIGHT ONLY WHEN THE CASE OF ASSESSEE WAS TAKEN UP FOR SCRUTINY, OTHERWISE AMOUNT OF RS.7,00,000/- WOULD HAVE ESCAPED FRO M THE TAX NET. IN SO FAR AS SPECIFIC CHARGE NOT MENTIONED IN THE N OTICE U/S 274 IS CONCERNED, THE LD.D.R. SUBMITTED THAT IT IS A TRIVIAL ISS UE AND THE 5 ITA NO.1453/PN/2015 PENALTY CANNOT BE DELETED MERELY ON THIS GROUND ALONE. IN SUPPORT OF HIS SUBMISSIONS, THE LD. D.R. RELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KAUSHALYA AND OTHERS REPORTED AS 216 ITR 660. THE LD. D.R. FURTHER SUBMITTED THAT POW ERS OF CIT (A) ARE COTERMINOUS WITH THAT OF THE A.O, THEREFOR E, NOT MENTIONING OF ANY SPECIFIC CHARGE IN THE ASSESSMENT ORDER WOULD NOT BE FATAL FOR LEVY OF PENALTY. THE CIT (A) IN FIRST APPEAL HAS S PECIFIED THE REASON FOR LEVY OF PENALTY. THE LD.D.R. PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. ZOOM COMMUNICATIONS PVT. LTD. (2010) 327 IT R 510 (DELHI) TO SUPPORT THE CASE OF REVENUE. 6. CONTROVERTING THE SUBMISSIONS MADE ON BEHALF OF THE DEPARTMENT, THE LEARNED A.R. SUBMITTED THAT IT IS A WELL SE TTLED LAW THAT CHARGE SHOULD BE SPECIFIC AT THE TIME OF INITIATION O F PENALTY AND NOT DURING THE COURSE OR CONCLUSION OF PENALTY PROCEEDIN GS. THE ASSESSEE HAD FURNISHED EXPLANATION FOR CLAIMING DEDUCTION. THE DEDUCTION WAS CLAIMED OUT OF IGNORANCE AND EVEN DURING A UDIT OF ACCOUNTS THE MISTAKE COULD NOT BE RECTIFIED DUE TO OVER SIGHT. THE A.O. REALIZED MISTAKE AT THE TIME OF ASSESSMENT PROCEEDINGS , THEREFORE, THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE SAID DISALLOWANCE. THE LD.A.R. SUBMITTED THAT THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS (SUPRA) IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THUS THE RELIANCE PLACED ON THE ABOVE CASE BY THE LD. D.R. IS MISPLACED. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. T HE ASSESSEE 6 ITA NO.1453/PN/2015 HAS CHALLENGED THE LEVY OF PENALTY ON TWO GROUNDS (1) VALIDIT Y OF PENALTY NOTICE, AND 2) ON MERITS. 8. A PERUSAL OF ASSESSMENT ORDER DT.17.12.2009 SHOWS TH AT PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED FOR ADDITION OF RS.2,00,000/- ON ACCOUNT OF DIRECT CREDIT TO INVESTMENT FLU CTUATION ACCOUNT AND RS.5,00,000/- FOR DIRECT TRANSFER FROM INTERES T RECEIPT ACCOUNT. WHILE INITIATING PENALTY PROCEEDINGS, THE A.O., HAS NOT SPECIFIED THE REASON FOR INITIATING PENALTY PROCEEDINGS. THE RELEVANT EXTRACT OF THE FINDINGS OF THE A.O. FOR INITIATING PENALTY IN RE SPECT OF BOTH THE ADDITIONS READ AS UNDER : 4.1 CONTENTION IS NOT CONVINCING. PENALTY PROCEED INGS U/S 271(1)(C) ARE INITIATED FOR ADDITION OF RS.2,00 ,000/- WHICH UNLIKE OTHER ADDITIONS IS NOT BASED ON INFORM ATION APPARENT FROM ACCOUNTS. 6.1 CONTENTION IS NOT CONVINCING. PENALTY PROCEED INGS U/S 271(1)(C) ARE INITIATED FOR ADDITION OF RS.5,00 ,000/- WHICH UNLIKE OTHER ADDITIONS IS NOT BASED ON INFORM ATION APPARENT FROM ACCOUNTS. 9. EVEN WHILE CONCLUDING THE ASSESSMENT ORDER THE A.O. HAS AGAIN REFERRED TO PENALTY PROCEEDINGS U/S 271(1)(C) IN PARA 12. IN CONCLUDING PARAGRAPH AGAIN THERE IS NO MENTION OF SPECIFIC C HARGE FOR LEVY OF PENALTY. PARAGRAPH 12 OF THE ASSESSMENT ORDER R EADS AS UNDER: 12. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR ADDITION OF RS.2,00,000/- & RS.5,00,000/- IN RESPEC T OF DIRECT CRDITS TO INVESTMENT FLUCTUATION A/C AND OVE RDUE INTEREST A/C BY DEBITING TO INTEREST RECEIVABLE ACC OUNT AS HELD IN PARA 4.1 AND 6.1 RESPECTIVELY. ISSUE SHOW CAUSE NOTICE U/S 274 READ WITH SECTION 271(1)(C) 7 ITA NO.1453/PN/2015 10. THEREAFTER NOTICE U/S.274 R.W.S 274(1)(C) WAS ISSUED TO THE ASSESSEE ON 17.12.2009. IN THE NOTICE, AGAIN IT HAS N OT BEEN SPECIFIED WHETHER THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR BOTH. AT THE TIME OF PASSING OF PENALTY ORDER U/S.271(1)(C), THE A.O., HAS CONCLUDED BY OBSERVING THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS AND THEREFORE CONCEALED THE INCOM E TO THE EXTENT OF RS.7,00,000/-. THE RELEVANT EXTRACT OF PARA 5 O F THE ORDER LEVYING PENALTY IS REPRODUCED BELOW: 5. FROM THE ABOVE FACTS OF THE CASE, IT IS CRYSTAL CLEAR THAT BY FURNISHING INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF PROVISIONS AS DISCUSSED ABOVE, THE ASSESSEE HAS CONCEALED THE INCOME. I AM, THEREFORE SATISFIED TH AT, ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND T HEREBY CONCEALED THE INCOME TO THE EXTENT OF RS.7,00,000/- , AND THEREBY RENDERING ITSELF LIABLE FOR PENALTY U/S.271 (1)(C). I THEREFORE LEVY PENALTY OF RS.2,00,000/- (RS.TWO LAK H TWENTY THOUSAND ONLY) AS AGAINST THE MAXIMUM PENALTY IMPOS SIBLE AT RS.6,42,600/-. 11. IN FIRST APPEAL, THE CIT (A) UPHELD THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTRACT OF FINDINGS OF THE CIT (A) ARE AS UNDER: 5.7 ADVERTING TO THE FACT IN INSTANT CASE IT IS EV IDENT THAT THE ASSESSEE HAS REDUCED ITS TAXABLE INCOME BY CLAIMING EXPENSES FOR INVESTMENT FLUCTUATION EXPENSES AND PR OVISION OF INTEREST. THE ASSESSEE ON HIS OWN HAD FURNISHED INACCURATE PARTICULARS WHICH WAS UNTENABLE IN LAW. THEREFORE THE ACTION OF THE A.O. DESERVES TO BE UPH ELD IN LEVYING PENALTY U/S 271(1)(C) AS THE ASSESSEE HAS N OT MADE TRUE DISCLOSURE AND HAS FURNISHED INACCURATE PARTIC ULARS OF INCOME BY CLAIMING DIRECT CREDITS INVESTMENT FLUCTUA TION ACCOUNT OF RS.5,00,000/- AND DIRECT CREDIT TO OUTST ANDING INTEREST PROVISION ACCOUNT AT RS.2,00,000/-. 12. THUS A CLOSE READING OF THE ASSESSMENT ORDER, NOTIC E U/S 274 OF THE INCOME TAX ACT, PENALTY ORDER AND THE ORDER OF CIT (A) CONFIRMING LEVY OF PENALTY SHOWS THAT THERE IS NO COHEREN CE IN THE REASONS FOR LEVY OF PENALTY. THE A.O. AT THE TIME OF ASSESS MENT 8 ITA NO.1453/PN/2015 PROCEEDINGS HAS FAILED TO MENTION THE CHARGE FOR INITIATING PENALTY PROCEEDINGS, THE NOTICE U/S 274 R.W.S. 271(1)(C) IS AMBIGUOU S, IN PENALTY ORDER THE A.O. HAS LEVIED PENALTY FOR INACCURATE PARTICULARS AND FOR CONCEALMENT AND THE CIT (A) HAS CONFIRMED THE PEN ALTY FOR FURNISHING INACCURATE PARTICULARS. FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME ARE TWO DIFFE RENT CHARGES AND BOTH THE EXPRESSIONS HAVE DIFFERENT CONNOTA TIONS. THE LEGISLATURE IN ITS WISDOM IN ORDER TO DISTINGUISH THESE TWO CHARGES HAS USED THE WORD OR IN SEC.271(1)(C) OF THE ACT. 13. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F SANJOG TARACHAND LODHA VS. ITO DELETED THE PENALTY UND ER SIMILAR CIRCUMSTANCES WHERE THE A.O FAILED TO SPECIFY THE REASONS FOR LEVY OF PENALTY. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TRIBUN AL IN SAID CASE ARE AS UNDER: 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR A ND HAVE THOROUGHLY PERUSED THE WRITTEN SUBMISSION ALON G WITH PAPER BOOK FILED BY THE ASSESSEE. A SEARCH AND SEI ZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 21-05-2 009 IN THE CASE OF LODHA GROUP. PURSUANT TO NOTICE ISSUED U/S. 153A, THE ASSESSEE FILED HIS RETURN OF INCOME FOR T HE IMPUGNED ASSESSMENT YEARS. IN THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS, THE ASSESSEE DECLARED ADDITIONAL INCOME ADMITTED DURING THE COURSE OF SEA RCH. THE ASSESSMENT WAS COMPLETED U/S. 153A R.W.S. 143(3) BY ACCEPTING THE INCOME RETURNED BY THE ASSESSEE. THU S, NO FURTHER ADDITION WAS MADE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. PENALTY U/S. 271(1)(C) WAS INITIATED AGAINST THE ASSESSEE ON THE ADDITIONAL INCOME ADMITTED DURI NG SEARCH AND RETURNED U/S. 153A PROCEEDINGS. THE ASS ESSEE HAS PLACED ON RECORD NOTICES ISSUED U/S. 271(1)(C) R.W.S. 274 OF THE ACT FOR LEVY OF PENALTY IN THE ASSESSMENT YE ARS 2007- 08 AND 2008-09. THE SAID NOTICES ARE AT PAGES 15 A ND 16 OF THE PAPER BOOK. A PERUSAL OF NOTICES SHOW THAT THE Y ARE STEREO TYPE NOTICES, WITH BLANK SPACES. SPECIFIC R EASONS FOR LEVY OF PENALTY U/S. 271(1)(C), WHETHER IT IS FOR C ONCEALMENT OF PARTICULARS OR FOR FURNISHING INACCURATE PARTICU LARS OR FOR BOTH, HAVE NOT BEEN SPECIFIED. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS POINTED OUT THAT IF THE IRRELEVANT C OLUMNS OF THE PRINTED FORM OF NOTICE U/S. 274 HAVE NOT BEEN S TUCK OFF BY THE ASSESSING OFFICER, THE NOTICE FOR LEVY OF PE NALTY U/S. 271(1)(C) SHALL BE DEEMED TO BE INVALID. IN SUPPOR T OF THESE SUBMISSIONS, RELIANCE HAS BEEN PLACED ON THE DECISI ON OF 9 ITA NO.1453/PN/2015 HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY REPORTED AS 359 ITR 565 (KARAN). 6. A PERUSAL OF THE ORDER PASSED U/S. 271(1)(C) DAT ED 28- 06-2012 LEVYING PENALTY SHOWS, THAT IN PARA 2 THE A SSESSING OFFICER HAS SPECIFICALLY MENTIONED THAT PENAL PROCE EDINGS U/S. 271(1)(C) ARE INITIATED FOR CONCEALING THE INC OME. THE RELEVANT EXTRACT OF PARA 2 OF THE ORDER LEVYING PEN ALTY READS AS UNDER: 2. .SINCE ASSESSEE HAD ORIGINALLY CONCEALED INC OME TO THE EXTENT OF RS.7,92,190/-, PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WAS INITIATED ON FINALIZATION OF ASSESSMENT PROCEEDINGS. IN BOTH THE IMPUGNED ASSESSMENT YEARS, THE ORDER LEVYING PENALTY ARE SIMILARLY WORDED. 7. IN THE CONCLUDING PARAGRAPH OF THE ORDER, THE AS SESSING OFFICER HAS OBSERVED THAT THE PENALTY IS LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALING INCOME. THE RELEVANT EXTRACT OF PARA 7 OF THE ORDER READS A S UNDER: 7. I AM SATISFIED THAT THE ASSESSEE HAS WITHOUT AN Y REASONABLE CAUSE, FURNISHED AN INACCURATE PARTICULA RS OF INCOME AND THEREBY CONCEALED HIS INCOME TO THE EXTENT OF . FURNISHING OF INACCURATE PARTICULARS OF INCOME AN D CONCEALING OF INCOME ARE TWO DIFFERENT EXPRESSIONS HAVING DIFFERENT CONNOTATIONS. FOR INITIATING PENALTY PRO CEEDINGS, THE ASSESSING OFFICER HAS TO BE VERY SPECIFIC FOR T HE REASONS OF LEVYING PENALTY, WHETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALING OF INCOME OR FO R BOTH. IN THE PRESENT CASE, A PERUSAL OF NOTICE ISSUED U/S. 2 71(1)(C) R.W.S. 274 SHOWS THAT THE ASSESSING OFFICER HAS NOT SPECIFIED THE REASONS FOR LEVYING OF PENALTY I.E. W HETHER IT IS FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEAL MENT OF INCOME OR BOTH. FURTHER, A BARE PERUSAL OF THE ORD ER LEVYING PENALTY WOULD SHOW THAT THE ASSESSING OFFICER IS NO T CLEAR WHETHER THE PENALTY IS LEVIED FOR CONCEALMENT OF IN COME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR B OTH. 8. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (SUPRA) HAS HEL D THAT WHERE IT IS NOT CLEAR FROM THE NOTICE U/S. 274 THE REASONS FOR LEVYING OF PENALTY THE NOTICE ITSELF IS BAD IN LAW AND THE PENALTY ORDER PASSED ON THE BASIS OF SUCH NOTICE IS NOT SUSTAINABLE. THE RELEVANT EXTRACT OF THE ORDER OF HON'BLE HIGH COURT READS AS UNDER: NOTICE UNDER SECTION 274 59. AS THE PROVISION STANDS, THE PENALTY PROCEEDING S CAN BE INITIATED ON VARIOUS GROUND SET OUT THEREIN. IF THE ORDER PASSED BY THE AUTHORITY CATEGORICALLY RECORDS A FIN DING REGARDING THE EXISTENCE OF ANY SAID GROUNDS MENTION ED THEREIN AND THEN PENALTY PROCEEDINGS IS INITIATED, IN THE NOTICE TO BE ISSUED UNDER SECTION 274, THEY COULD CONVENIENTLY REFER TO THE SAID ORDER WHICH CONTAINS THE SATISFACTION OF THE AUTHORITY WHICH HAS PASSED THE ORDER. 10 ITA NO.1453/PN/2015 HOWEVER, IF THE EXISTENCE OF THE CONDITIONS COULD N OT BE DISCERNED FROM THE SAID ORDER AND IF IT IS A CASE O F RELYING ON DEEMING PROVISION CONTAINED IN EXPLANATION-1 OR IN EXPLANATION-1(B), THEN THOUGH PENALTY PROCEEDINGS A RE IN THE NATURE OF CIVIL LIABILITY, IN FACT, IT IS PENAL IN NATURE. IN EITHER EVENT, THE PERSON WHO IS ACCUSED OF THE CONDITIONS MENTIONED IN SECTION 271 SHOULD BE MADE KNOWN ABOUT THE GROUNDS ON WHICH THEY INTEND IMPOSING PENALTY ON HI M AS THE SECTION 274 MAKES IT CLEAR THAT ASSESSEE HAS A RIGHT TO CONTEST SUCH PROCEEDINGS AND SHOULD HAVE FULL OPPOR TUNITY TO MEET THE CASE OF THE DEPARTMENT AND SHOW THAT THE CONDITIONS STIPULATED IN SECTION 271(1)(C) DO NOT E XIST AS SUCH HE IS NOT LIABLE TO PAY PENALTY. THE PRACTICE OF TH E DEPARTMENT SENDING A PRINTED FORM WHERE ALL THE GRO UND MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SA TISFY REQUIREMENT OF LAW WHEN THE CONSEQUENCES OF THE ASS ESSEE NOT REBUTTING THE INITIAL PRESUMPTION IS SERIOUS IN NATURE AND HE HAD TO PAY PENALTY FROM 100% TO 300% OF THE TAX LIABILITY. AS THE SAID PROVISIONS HAVE TO BE HELD TO BE STRICT LY CONSTRUED, NOTICE ISSUED UNDER SECTION 274 SHOULD S ATISFY THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHE RWISE, PRINCIPLES OF NATURAL JUSTICE IS OFFENDED IF THE SH OW CAUSE NOTICE IS VAGUE. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE. 60. CLAUSE (C) DEALS WITH TWO SPECIFIC OFFENCES, TH AT IS TO SAY, CONCEALING PARTICULARS OF INCOME OR FURNISHING INAC CURATE PARTICULARS OF INCOME. NO DOUBT, THE FACTS OF SOME CASES MAY ATTRACT BOTH THE OFFENCES AND IN SOME CASES THERE M AY BE OVERLAPPING OF THE TWO OFFENCES BUT IN SUCH CASES T HE INITIATION OF THE PENALTY PROCEEDINGS ALSO MUST BE FOR BOTH THE OFFENCES. BUT DRAWING UP PENALTY PROCEEDINGS FO R ONE OFFENCE AND FINDING THE ASSESSEE GUILTY OF ANOTHER OFFENCE OR FINDING HIM GUILTY FOR EITHER THE ONE OR THE OTHER CANNOT BE SUSTAINED IN LAW. IT IS NEEDLESS TO POINT OUT SATIS FACTION OF THE EXISTENCE OF THE GROUNDS MENTIONED IN SECTION 2 71(1)(C) WHEN IT IS A SINE QUA NON FOR INITIATION OR PROCEED INGS, THE PENALTY PROCEEDINGS SHOULD BE CONFINED ONLY TO THOS E GROUNDS AND THE SAID GROUNDS HAVE TO BE SPECIFICALL Y STATED SO THAT THE ASSESSEE WOULD HAVE THE OPPORTUNITY TO MEET THOSE GROUNDS. AFTER, HE PLACES HIS VERSION AND TRI ES TO SUBSTANTIATE HIS CLAIM, IF AT ALL, PENALTY IS TO BE IMPOSED, IT SHOULD BE IMPOSED ONLY ON THE GROUNDS ON WHICH HE I S CALLED UPON TO ANSWER. IT IS NOT OPEN TO THE AUTHORITY, AT THE TIME OF IMPOSING PENALTY TO IMPOSE PENALTY ON THE GROUNDS O THER THAN WHAT ASSESSEE WAS CALLED UPON TO MEET. OTHERWI SE THOUGH THE INITIATION OF PENALTY PROCEEDINGS MAY BE VALID AND LEGAL, THE FINAL ORDER IMPOSING PENALTY WOULD O FFEND PRINCIPLES OF NATURAL JUSTICE AND CANNOT BE SUSTAIN ED. THUS ONCE THE PROCEEDINGS ARE INITIATED ON ONE GROUND, T HE PENALTY SHOULD ALSO BE IMPOSED ON THE SAME GROUND. WHERE THE BASIS OF THE INITIATION OF PENALTY PROCEEDINGS IS NOT IDENTICAL WITH THE GROUND ON WHICH THE PENALTY WAS IMPOSED, THE IMPOSITION OF PENALTY IS NOT VALID. TH E VALIDITY OF THE ORDER OF PENALTY MUST BE DETERMINED WITH REF ERENCE TO THE INFORMATION, FACTS AND MATERIALS IN THE HANDS O F THE AUTHORITY IMPOSING THE PENALTY AT THE TIME THE ORDE R WAS PASSED AND FURTHER DISCOVERY OF FACTS SUBSEQUENT TO THE IMPOSITION OF PENALTY CANNOT VALIDATE THE ORDER OF PENALTY WHICH, WHEN PASSED, WAS NOT SUSTAINABLE. 11 ITA NO.1453/PN/2015 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE AC T TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED I N THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOM E UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PART ICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WH ILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT W HETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COUR T IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INAC CURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS H ELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ST ANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES W ILL LEAD TO AN INFERENCE AS TO NON-APPLICATION OF MIND. 9. THUS, IN THE FACTS OF THE CASE AND DOCUMENTS ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE NOTICE ISSUE D U/S. 271(1)(C) R.W.S. 274 IS INVALID AND THUS, THE SUBSE QUENT PENALTY PROCEEDINGS ARISING THERE FROM ARE VITIATED . THE IMPUGNED ORDERS ARE SET ASIDE AND THE APPEALS OF TH E ASSESSEE ARE ALLOWED. THUS, IN VIEW OF THE FACTS OF CASE, DOCUMENTS ON RECORD AND THE DECISION OF CO-ORDINATE BENCH, WE ARE OF THE CONS IDERED VIEW THAT IT IS A FIT CASE FOR DELETING PENALTY ON THE GROUND OF INVALID NOTICE. 14. ON MERITS, THE LD.A.R. HAS ARGUED THAT ASSESSMENT Y EAR 2007-08 WAS THE FIRST ASSESSMENT YEAR AFTER AMENDMENT TO SEC.80P OF THE ACT VIDE WHICH THE CO-OPERATIVE BANKS WERE TAKEN OUTSIDE THE PURVIEW OF EXEMPTION GRANTED UNDER SEC.80P OF THE ACT. UNDISPUTEDLY, ACCOUNTS MAINTAINED BY THE ASSESSEE WERE AUDITED IN ASSESSMENT YEAR UNDER APPEAL. BEING THE FIRST ASSESSME NT YEAR AFTER THE INSERTION OF SUB-SECTION(4) TO SEC.80P BY THE FINANCE ACT, 2006, THE AMOUNTS WERE CLAIMED BY THE ASSESSEE OUT OF IGNORAN CE AND INADVERTENT MISTAKE. EVEN DURING AUDIT, THE AUDITORS FAILED TO POINT 12 ITA NO.1453/PN/2015 OUT THE MISTAKE. THE EXPLANATION FURNISHED BY THE ASSESSE E IS NOT FOUND TO BE FALSE BY THE DEPARTMENT. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF AGARSEN URBAN CO-OPERATIVE BANK LTD., VS. ACIT (SUPRA) DELETED THE LEVY OF PENALTY WHERE THE ASSE SSEE HAD INADVERTENTLY CLAIMED DEDUCTION ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS. THE RELEVANT EXTRACT OF THE CASE OF THE TRIBUNAL IS REPRODUCED BELOW: 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFI CER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF TH E ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER, I N THE INSTANT CASE, LEVIED PENALTY ON THE ADDITION OF RS.95 LAKHS TOWARDS PROVISION FOR BAD AND DOUBTFUL DEBTS ON THE GROUND THAT THE ASSESSEE HAD MADE A FALSE CLAIM AND THERE WAS NO BO NAFIDE REASON FOR CLAIMING SUCH DEDUCTION. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THOUGH THE AMOUNT IS AN INADMISSIBLE DEDUCTION/CLAIM, HOWE VER, THE SAME WAS NOT A FALSE CLAIM BUT WAS AN INADVERTE NT MISTAKE. IT IS THE SUBMISSION OF THE LD. COUNSEL F OR THE ASSESSEE THAT THE CLAIM OF PROVISION FOR BAD & DOU BTFUL DEBT WAS VERY MUCH THERE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED. NEITHER THE TAX CONSULTANTS NOR THE TAX AUDITORS COULD POINT OUT THE MISTAKE FOR WHICH THE SAME REMAINED TO BE DEDUCTED FROM THE LOSS WHICH WAS ALS O APPEARING IN THE SAME PROFIT AND LOSS ACCOUNT. WE FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE CLAIM OF RS.95 LAKHS ALONG WITH LOSS OF RS .2.40 CRORES ARE AVAILABLE IN THE PROFIT AND LOSS ACCOUNT WHICH WERE AUDITED BY THE AUDITORS. EVEN THOUGH THE ASSE SSEE IS NOT ENTITLED TO CLAIM THE PROVISION FOR BAD AND DOU BTFUL DEBTS RESERVE, HOWEVER, NEITHER THE TAX CONSULTANTS NOR T HE TAX AUDITORS COULD POINT OUT THE ABOVE GLARING MISTAKE. UNDER THESE CIRCUMSTANCES THE PLEA OF THE ASSESSEE THAT T HE CLAIM FOR DEDUCTION WAS MADE ON ACCOUNT OF BONAFIDE MISTA KE HAS TO BE ACCEPTED. IN OUR OPINION, WHEN ALL FACTS ARE AVAILABLE ON RECORD, IT CANNOT BE SAID THAT THE ASSESSEE ATT EMPTED TO FURNISH INACCURATE PARTICULARS OF INCOME. IT IS A CASE OF MAKING AN INCORRECT CLAIM. FURTHER, IN OUR OPINION NON- FURNISHING OF A REVISED RETURN DOES NOT MEAN THAT T HE BONAFIDE MISTAKE IN MAKING A WRONG CLAIM SHOULD BE VISITED WITH LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. THIS VIEW OF OURS FINDS SUPPORT FROM THE DECISION OF HONBLE BOM BAY HIGH COURT IN THE CASE OF SOMANY EVERGREEN KNITS LTD. (S UPRA). 10.1WE FIND IN THE CASE OF SOMANY EVERGREEN LTD. (S UPRA) THE ASSESSING OFFICER MADE ADDITION OF RS.32,51,161 /- ON ACCOUNT OF WRONG CLAIM OF DEPRECIATION. AS AGAINST ALLOWABLE DEPRECIATION OF RS.1.38 CRORES THE ASSESS EE CLAIMED DEPRECIATION OF RS.1.71 CRORES. DURING PEN ALTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT IT WAS A B ONAFIDE MISTAKE ON THE PART OF THE ASSESSEES CHARTERED ACC OUNTANT 13 ITA NO.1453/PN/2015 IN MAKING THE AFORESAID CLAIM IN THE RETURN OF INCO ME. HOWEVER, THE ASSESSING OFFICER, REJECTING THE SUBMI SSIONS OF THE ASSESSEE, HELD THAT THE ASSESSEE FURNISHED INAC CURATE PARTICULARS OF INCOME AND LEVIED PENALTY U/S.271(1) (C) OF THE I.T. ACT. THE CIT(A) CONFIRMED THE LEVY OF PENALTY . ON FURTHER APPEAL, THE TRIBUNAL RELYING ON VARIOUS DECISIONS D ELETED THE PENALTY. WHEN THE REVENUE FILED AN APPEAL BEFORE T HE HIGH COURT, THE HONBLE HIGH COURT UPHELD THE ORDER OF T HE TRIBUNAL BY OBSERVING AS UNDER : 3. REGARDING QUESTION B: (I) THE RESPONDENT-ASSESSEE HAD DURING THE ASSESSM ENT YEAR SOLD ITS GARMENT MANUFACTURING MACHINE AND CLA IMED A LOSS OF RS.21.68 LAKHS THEREON AS A REVENUE EXPENDI TURE IN ITS RETURN OF INCOME. IN THE COURSE OF THE ASSESSME NT PROCEEDINGS, THE RESPONDENT -ASSESSEE REALISED ITS MISTAKE AND WITHDREW THE ABOVE LOSS SHOWN AS REVENUE EXPEND ITURE IN ITS PROFIT AND LOSS ACCOUNT AND IN THE CONSEQUEN T RETURN OF INCOME. THE ASSESSING OFFICER ACCEPTED THE ABOVE WITHDRAWAL AND COMPLETED THE ASSESSMENT. HOWEVER, H E IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. (II) IN APPEAL, THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL BY THE IMP UGNED ORDER RECORDS A FINDING THAT IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME, THE RESPONDE NT- ASSESSEE HAS CLEARLY DESCRIBED THE LOSS AS THE LOSS ON SALE OF ITS GARMENT UNIT ASSETS. THIS LOSS WAS ADDED TO THE NET LOSS IN THE COMPUTATION OF THE TOTAL INCOME. THUS, THERE WAS COMPLETE DISCLOSURE. THE TRIBUNAL FURTHER RECORDS T HAT THE ABOVE LOSS WAS CLAIMED BY THE RESPONDENT-ASSESSEE AS A REVENUE EXPENDITURE AS THE CHARTERED ACCOUNTANT DID NOT ADVICE THEM CORRECTLY AS TO THE LEGAL POSITION. HOW EVER, DURING THE ASSESSMENT PROCEEDINGS, THE MISTAKE WAS NOTICED AND CORRECTED BY THE RESPONDENT-ASSESSEE. O N THE ABOVE FACTS, THE TRIBUNAL CONCLUDED THE CLAIM FOR D EDUCTION MADE BY THE RESPONDENT-ASSESSEE WAS ON ACCOUNT OF A BONAFIDE MISTAKE AND IN SUCH CIRCUMSTANCES, THE LEV YING OF PENALTY WAS NOT JUSTIFIED. (III) THE GRIEVANCE OF THE REVENUE IS THAT PENALTY IS JUSTIFIED IN VIEW OF THE FACT THAT THE RESPONDENT-ASSESSEE HAD N OT FILED A REVISED RETURN OF INCOME. HOWEVER, THE TRIBUNAL NOT ED THAT THE TIME TO FILE REVISED RETURN HAD EXPIRED. IN ANY EVENT, EVEN THE REVENUE DOES NOT DISPUTE THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE RESPONDENT-ASSESSEE. IN THE ABO VE VIEW, IMPOSITION OF PENALTY UPON THE RESPONDENT-ASSESSEE IS NOT WARRANTED. 10.2WE FIND THE HONBLE SUPREME COURT IN THE CASE R ELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS OBSERVED AS UN DER (SHORT NOTES) : A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINA BLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCU RATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACC URATE 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 A TTRACT THE 14 ITA NO.1453/PN/2015 PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE T HE CLAIM MADE IS NOT ACCEPTABLE BY AO FOR ANY REASON, THE AS SESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 10.3RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND IN VIEW OF OUR REASONS GIVEN IN THE PRECEDING PARAGRAPHS WE ARE OF THE CONSIDERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. THE DECISIO N OF HONBLE SUPREME COURT IN THE CASE OF MAKDATA PVT. LTD. (SUP RA) IS UNDER DIFFERENT SET OF FACTS AND IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE LD.CIT(A) AND DIRECT THE ASSESSING OFFICER TO CANCEL THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED. 15. FURTHER, OUR ATTENTION HAS BEEN DRAWN TO THE DEC ISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SOCIE TEX (SUPRA) WHEREIN THE DECISION RENDERED BY THE HONBLE HIGH COURT IN ZOOM COMMUNICATIONS PVT. LTD (SUPRA) WAS ALSO REFERRED. THE HO NBLE HIGH COURT AFTER CONSIDERING THE SAME DELETED THE PENALT Y WHERE CERTAIN DEDUCTION WAS CLAIMED INADVERTENTLY. THE RELEVANT EXTRACT OF THE JUDGMENT DISTINGUISHED THE RATIO LAID DOWN IN ZOOM COMMUNICATIONS PVT. LTD. (SUPRA) IS REPRODUCED BELOW. 6 . ZOOM COMMUNICATION PVT. LTD. (SUPRA) IS PREMISED ON THE FOOTING THAT EVEN IF INADVERTENT BY PARTICULARS ARE NOT GIVEN, IF THE AUTHORITY FINDS THAT THE EXPLANATION GIVEN I S NOT BONA FIDE PENALTY U/S. 271 WOULD BE WARRANTED. SIMILAR OBSERVATIONS WERE MADE IN CIT V. RELIANCE PETRO PRO DUCTS PVT. LTD., (2010) 322 ITR 158. IN THE PRESENT CASE, SO FAR AS THE QUESTION OF DEPRECIATION IS CONCERNED WHAT EMER GES FROM THE PREVIOUS DISCUSSION IS THAT THE CIT(APPEALS) HA D ACCEPTED THE ASSESSEE S CLAIM FOR DEPRECIATION TO THE EXTENT OF 2/3RD IN RESPECT OF THE BANGALORE PROPERTY. IT I S ALSO THE MATTER OF RECORD THAT THE KHAN MARKET PROPERTY WAS LET OUT FOR THE FIRST TIME IN THE LATTER PART OF THE CONCER NED ASSESSMENT YEAR I.E. IN AUGUST, 1996. IN THESE CIRCUMSTANCES, THE BENEFIT OF INADVERTENCE OR MECHA NICAL OR REPETITIVE CLAIM BEING MADE CAN BE GIVEN TO THE ASS ESSEE. SIMILARLY, AS FAR AS THE PROVISION FOR TAXATION IS C ONCERNED, WE NOTICE THAT THE TRIBUNAL BY THE IMPUGNED ORDER H AD STATED IN THE EXTRACT REPRODUCED ABOVE THAT THE ASS ESSEE HAD MADE A CLAIM FOR DEDUCTION OF THE PROVISION FOR THE FIRST TIME IN THE YEAR UNDER APPEAL; IN OTHER WORDS, THER E WAS NO HISTORY OF FURNISHING SUCH ACCURATE PARTICULARS BY THE ASSESSEE FOR THE PREVIOUS YEARS. HAVING REGARD TO T HESE CIRCUMSTANCES AND THE FACT THAT THE CIT(APPEALS) AS WELL AS THE TRIBUNAL HAD HELD IN FAVOUR OF THE ASSESSEE, TH IS COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THIS CASE. APPEAL IS DISMISSED. 15 ITA NO.1453/PN/2015 16. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE VARIOUS DECISIONS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW T HAT THE APPEAL FILED BY THE ASSESSEE DESERVES TO BE ALLOWED AND T HE ORDER CONFIRMING LEVY OF PENALTY IS SET ASIDE. THE AO IS DIRECTED TO CANCEL THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 16 TH DAY OF NOVEMBER, 2016. SD/- SD/- (R.K. PANDA) (VIKAS A WASTHY) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER / PUNE; ! DATED : 16 TH NOVEMBER, 2016. YAMINI ()*#+,!-!'+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A) - 1, NASHIK 4. 5. 6. PR.COMMISSIONER OF INCOME TAX - 1, NASHIK, #$% &&'(, * '(, / DR, ITAT, B PUNE; %+, - / GUARD FILE. (% / BY ORDER, //TRUE COPY// ./0 &1 '2 / SR. PRIVATE SECRETARY * '( , / ITAT, PUNE