M/s Punjab Urban Planning & Development Authority, Mohali V. ACIT, Mohali

ITA 149/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73481 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Business expenditure; Question of law; Capital receipt; Onus to prove; Revenue expenditure; Capital expenditure
• Section: 143(3); 80IB; 37(1); 37; 28; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.26 & 27/CHD/2012 AND ITA NOS. 814, 254 & 815/CHD/2013 A.YS : 2004-05, 2005-06, 2007-08 2008-09 & 2009-10 THE DY COMMISSIONER OF VS M/S PUNJAB URBAN PLANNI NG & INCOME TAX, DEVELOPMENT AUTHORITY, CIRCLE 6(1), PUDA BHAWAN, MOHALI. SECTOR 62, SAS NAGAR, MOHALI. PAN : AAALP0045J & ITA NO.149/CHD/2013 ASSESSMENT YEAR : 2008-09 M/S PUNJAB URBAN PLANNING VS THE A.C.I.T., & DEVELOPMENT AUTHORITY, CIRCLE 6(1), PUDA BHAWAN, MOHALI. SECTOR 62, MOHALI. PAN : AAALP0045J (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI AKHILESH GUPTA ASSESSEE BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 21.01.2014 DATE OF PRONOUNCEMENT : 26.02.2014 O R D E R PER SUSHMA CHOWLA, JM OUT OF THIS BUNCH OF SIX APPEALS, FOUR APPEALS ARE FILED BY THE REVENUE AGAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) AGAINST DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE 2 INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') RELATING TO ASSESSMENT YEARS 2004-05, 2005-06, 2007-08 AND 2009-10. THE CROSS A PPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 07.02.20 13 AGAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT RELATING TO ASSESSMENT YEAR 2008-09. 2. ALL THESE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL IN ITA NO. 149/CHD/2012: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES. OF T HE CASE AND IN LAW, THE WORTHY CIT(A) THROUGH HIS ORDER DATED 07.02.2013 HA S ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF PROVISIONS OF SECTIO N 250(6) OF THE INCOME TAX ACT, 1961. (2) (I) THAT ON THE BASIS OF FACTS AND CIRCUMSTANC ES OF THE CASE, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO , WHEREIN HE HAD ERRED IN LEVYING PENALTY OF RS. 1,04,28,75,000/- ON ADDIT ION OF RS. 225 CRORES ON ACCOUNT OF EXPENDITURE INCURRED ON THE DEVELOPMENT OF INFRASTRUCTURE IN THE FORM OF SETTING UP OF AN INTERNATIONAL AIRPORT AT MOHALI, WHICH IS ACCORDANCE WITH THE OBJECTS AND FUNCTIONS FOR WHICH THE ASSESSEE AUTHORITY HAS BEEN CONSTITUTED AND THE APPLICATION OF FUNDS WERE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT UNDER WHI CH THE AUTHORITY HAS BEEN CONSTITUTED. (II) THAT ON THE BASIS OF FACTS AND CIRC UMSTANCES OF THE CASE, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO , WHEREIN HE HAD ERRED IN LEVYING PENALTY ON ADDITION OF RS. 225 CRORES EV EN WHEN THIS EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AUTHORITY. (III) THAT ON THE BASIS OF FACTS AND CI RCUMSTANCES OF THE CASE, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO , WHEREIN HE HAD ERRED IN LEVYING PENALTY DESPITE THE FACT THAT THE ISSUE BEING A DEBATABLE ISSUE AND THE QUANTUM IS STILL PENDING FOR ADJUDICATION B EFORE HON'BLE ITAT AND HAS NOT ATTAINED FINALITY. 3. THAT WORTHY CIT(A) HAS ERRED IN NO T ALLOWING THE GROUND OF THE APPELLANT THAT THE LD. AO ACTED WITH BIASED AND PREJUDICE MIN D, DID NOT AFFORD PROPER OPPORTUNITY, DID NOT CONFRONT ANY BAD INFERENCE DRA WN BY HIM, ACTED IN 3 HASTE AND ILLEGAL MANNER EVEN THOUGH THE PENALTY WA S GOING TO BE TIME BARRED BY 31.03.2013. 4. THAT WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTI ON OF LD. AO, WHEREIN HE HAD ACTED WITH SUCH BIASED AND PREJUDICED MIND T HAT HE HAS LEVIED A PENALTY TO THE EXTENT OF 1 50% WHICH IS TO TALLY UNWARRANTED. 5. THAT THE WORTHY CIT(A) HAS ERRED IN PASSING THE IMP UGNED ORDER IN HASTE AS THE APPEAL WAS FILED BEFORE HIM ON 30.11.2012 AN D WAS ORIGINALLY FIXED FOR HEARING ON 21.03.2013. HOWEVER, EVEN W ITHOUT ANY REQUEST FROM THE APPELLANT, THE SAME WAS PREPONED FOR 31.01.2013 AND THE SAME WAS DECIDED ON THE BASIS OF THAT SOLITARY DATE OF HEARI NG AND SUCH A DELICATE MATTER INVOLVING HUGE QUANTUM WAS DECIDED WITHOUT AFFORDING FURTHER OPPORTUNITY TO ARGUE THE MATTER. 6. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 4. IN ITA NO. 26/CHD/2012, THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL : I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.5,99,62,243/- ON ACCOUNT OF INSTALLMENTS RECEIVE D. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.53,31,784/- ON ACCOUNT OF INSTALLMEN TS RECEIVED PENDING ADJUSTMENTS. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.6,78,007/- ON ACCOUNT OF ADJUSTED HIRE PURCHASE DEBTORS. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 5. IN ITA NO. 27/CHD/2012, THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.4,90,51,888/- ON ACCOUNT OF INSTALLMENTS FOR SAL E OF HOUSES/FLATS RECEIVED DURING THE YEAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.46,47,680/- ON ACCOUNT OF INSTALLMEN TS RECEIVED PENDING 4 ADJUSTMENTS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDITION OF RS.6,84,104/- ON ACCOUNT OF ADJUSTED HIRE PURCHASE DEBTORS. 5. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 6. IN ITA NO. 814/CHD/2013, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN A LLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF T HE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L )(C) ON ADDITION OF RS.1,94,64,044/- ON ACCOUNT OF INSTALLMENTS FOR SAL E OF HOUSES/FLATS RECEIVED DURING THE YEAR. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE S ET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF . 7. IN ITA NO. 254/CHD/2013, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOU T APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. C1T(A), HAS ERRED IN DELETING THE PENALTY AMOUNTING TO RS.1 4,26,215/- WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271( L)(C) WITH RESPECT TO ADDITION OF RS.46,15,584/- MADE ON ACCOUNT OF INSTA LLMENTS RECEIVED DURING THE YEAR ON ACCOUNT OF FOR SALE OF HOUSES/FL ATS. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) B E SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 8. IN ITA NO. 815/CHD/2013, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOU T APPRECIATING THE FACTS OF THE CASE. 5 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE LD. CIT(A), HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) ON ADDI TION OF RS.41,54,303/- ON ACCOUNT OF INSTALLMENTS FOR SALE OF HOUSES/FLATS RE CEIVED DURING THE YEAR. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) B E SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 9. IN ITA NO. 149/CHD/2013, THE GROUND NO. 1 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND THE GROUND NOS. 3 & 5 ARE NOT PRESSED, HENCE THE SAME ARE DISMISSED. 10. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT RS. 1 04,28,75,000/- ON ADDITION OF RS. 225 CRORES ON ACCOUNT OF EXPENDITUR E INCURRED ON THE DEVELOPMENT OF INFRASTRUCTURE IN THE FORM OF SETTIN G UP OF INTERNATIONAL AIRPORT AT MOHALI. THE ASSESSEE, BY WAY OF GROUND NO. 4 IS AGGRIEVED BY THE ORDER OF ASSESSING OFFICER IN L EVYING THE PENALTY TO THE EXTENT OF 150%. 11. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE FOR THE YEAR UNDER CONSIDERATION HAD FURNISHED RETURN OF INCOME DECLARING LOSS OF RS. 160.89 CR AND THE ASSESSMENT IN THE CASE WAS CO MPLETED UNDER SECTION 143(3) OF THE ACT ON A TOTAL INCOME OF RS. 194.46 CR. WHILE COMPLETING THE ASSESSMENT VIDE ORDER DATED 29.12.20 10, THE ASSESSING OFFICER MADE VARIOUS ADDITIONS AND SOME OF THE ADDI TIONS WERE REVISED VIDE ORDER PASSED UNDER SECTION 154 OF THE ACT DATE D 23.03.2011. THE ASSESSEE'S APPEAL WAS PARTLY ALLOWED BY THE COMMIS SIONER OF INCOME TAX (APPEALS), CHANDIGARH AND PURSUANT TO THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), THE FOLLOWING ADDITIONS WE RE UPHELD : A) ADDITION OF RS. 16,42,01,257/- ON ACCOUNT OF DI SALLOWANCE OF 50% OF ADMINISTRATIVE EXPENDITURE. B) ADDITION OF RS. 225 CR ON ACCOUNT OF AMOUNT PAI D FOR DEVELOPMENT OF AIRPORT AT MOHALI. 6 C) ADDITION OF RS. 46,15,584/- ON ACCOUNT OF INSTA LMENT RECEIVED ON SALE OF HOUSES/FLATS 12. THE ASSESSING OFFICER COMPLETED THE PENALTY PRO CEEDINGS INITIATED UNDER SECTION 271(1)(C) OF THE ACT IN RES PECT OF THE FIRST ADDITION OF DISALLOWANCE OF THE 50% OF THE ADMINIST RATIVE EXPENSES, AND DROPPED THE PENALTY PROCEEDINGS INITIATED UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, IN RESPECT OF THE ADDITION OF RS. 225 CR BEING AMOUNT PAID FOR DEVELOPMENT OF THE AIRPORT AT MOHAL I, THE ASSESSING OFFICER AFTER CONSIDERING THE REPLY OF THE ASSESSEE ON THIS ISSUE WHICH IS INCORPORATED AT PAGES 5 TO 10 OF THE ORDER, LEVY ING PENALTY UNDER SECTION 271(1)(C) OF THE ACT, HELD THAT THE NATURE OF THE BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE WAS FOR THE URB AN DEVELOPMENT OF THE STATE OF PUNJAB AND THE ACTIVITIES INCLUDED DEV ELOPMENT OF LAND AND SUBSEQUENT SALE OF RESIDENTIAL AS WELL AS COMME RCIAL PROPERTIES. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE COM MISSIONER OF INCOME TAX (APPEALS) HAD CONSIDERED THE OBJECTIONS RAISED BY THE ASSESSEE IN ENTIRETY AND CONFIRMED THE ADDITION. T HE ASSESSING OFFICER OBSERVED THAT, FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY CLAIMED OR AN EXAGGERATED AMOUNT COULD BE CLAIMED AND SINCE ATTEMPTS OF BOTH THE TYPES REDUCES TAXABLE INCOME, BOTH AMOUNT TO CONCEALMENT OF PARTI CULARS OF ONES INCOME AS WELL AS TO FURNISHING OF INACCURATE PARTI CULARS OF INCOME. SINCE THE ASSESSEE HAD CLAIMED THE EXPENDITURE KNOW ING THAT IT WAS INCORRECT, IT AMOUNTS TO CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER HELD BY THE ASSESSING OFFICER, IF WE TAKE THE VIEW THAT SUCH A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUND ATION ON WHICH IT COULD BE MADE, WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY THAT WOULD 7 GIVE A LICENCE TO UNSCRUPULOUS ASSESSEES TO MAKE WH OLLY UNTENABLE AND UNSUSTAINABLE CLAIMS IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY. AND EVEN IF THEIR CASE IS SELECTE D FOR SCRUTINY, THEY AN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY A MALAFIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE T AX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP F OR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE P ENALTY PROVISIONS IN THE ACT HAVE. THE ASSESSING OFFICER, THUS HELD THAT BY MAKING A N INCORRECT CLAIM OF EXPENDITURE, THE ASSESSEE HAD FU RNISHED INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT, EXPLANATION 1 TO S. 271(1) PROVIDES A LEGAL FICTI ON WHERE UNDER ANY ADDITION OR DISALLOWANCE IS DEEMED TO REPRESENT THE CONCEALED INCOME FOR THE PURPOSE OF LEVY OF CONCEAL MENT PENALTY ONCE THE CONDITION PROVIDED IN THE EXPLANATION ARE SATIS FIED. THE SAID EXPLANATION SHIFTS THE BURDEN OF PROOF FROM THE DEP ARTMENT TO THE ASSESSEE AS REGARDS THE CONCEALED INCOME. IN SUBST ANCE, THE SAID EXPLANATION PROVIDES FOR A DEEMING FICTION WHEREUND ER ANY ADDITION OR DISALLOWANCE MADE TO THE TOTAL INCOME IS REGARDE D AS CONCEALED INCOME FOR THE PURPOSE OF LEVY OF CONCEALMENT PENAL TY UNDER THE CIRCUMSTANCES MENTIONED THEREIN. AS PER THE PROVISI ONS OF EXPLANATION 1 TO SECTION 271(1)(C), THE ONUS TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF ITS INCOME HAVE BEEN DISCLOSED W ILL BE ON THE PERSON CHARGED WITH CONCEALMENT . 13. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HA D FAILED TO DISCHARGE THE ONUS CAST UPON IT AND HAVING FURNISHE D INACCURATE PARTICULARS OF INCOME WAS LIABLE TO LEVY OF PENALTY UNDER SECTION 8 271(1)(C) OF THE ACT TO THE EXTENT OF 150% OF THE T AX SOUGHT TO BE EVADED. FURTHER, THE ASSESSING OFFICER HELD THAT T HE ASSESSEE HAD ALSO FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPE CT OF THE ADDITION MADE ON ACCOUNT OF INSTALMENT RECEIVED DURING THE Y EAR ON ACCOUNT OF SALE OF HOUSES/FLATS. THE ASSESSING OFFICER IMPOSE D PENALTY UNDER SECTION 271(1)(C) OF THE ACT TO THE EXTENT OF 100% OF THE TAX SOUGHT TO BE EVADED. 14. THE COMMISSIONER OF INCOME TAX (APPEALS) AT PAG ES 3 TO 8 OF THE APPELLATE ORDER REPRODUCED THE SUBMISSIONS OF T HE ASSESSEE AND THEREAFTER CONSIDERED THE ISSUE OF LEVY OF PENALTY ON THE DISALLOWANCE OF EXPENDITURE OF RS. 225 CR. THE COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE AMOUNT DEBITED BY THE ASSE SSEE WAS NOT AN EXPENDITURE OF THE ASSESSEE AT ALL, AND IT WAS PURE LY A CASE OF APPLICATION OF INCOME FOR A PURPOSE WHICH HAD NO DI RECT OR EVEN INDIRECT RELATION WITH THE BUSINESS OF THE ASSESSEE . THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT IN TH E QUANTUM PROCEEDINGS, IT WAS HELD THAT EVEN IN THE NOTINGS A VAILABLE ON THE FILE OF PUDA, THERE WAS NO MENTION OF ANY BENEFIT WHICH WAS EXPECTED TO ACCRUE TO PUDA, BECAUSE OF THE ESTABLISHMENT OF AN INTERNATIONAL AIRPORT. IN RELATION TO THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE COMMISSIONER OF INCOME TAX (APPEALS) O BSERVED THAT WHERE THE ASSESSEE HAD A BONAFIDE EXPLANATION FOR N ON-INCLUSION OF RECEIPT IN ITS TAXABLE INCOME OR FOR CLAIMING PARTI CULAR ITEM OF EXPENDITURE AS DEDUCTION FROM TAXABLE INCOME, EVEN THOUGH THE STAND OF THE ASSESSEE WAS REJECTED, NO PENALTY FOR CONCEA LMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS COULD BE IMPOS ED. HOWEVER, THE SAID LEGAL POSITION HAD TO BE CAREFULLY APPLIED AS IN THE PRESENT SCENARIO, VERY FEW TAX RETURNS WERE TAKEN UP BY THE DEPARTMENT FOR SCRUTINY AND AS THE LEVEL OF TRUST OF THE DEPARTMEN T ON THE TAX PAYERS 9 HAD INCREASED, THE LEVEL OF THE ASSESSEE TO MAKE CO RRECT AND FULL DISCLOSURE OF HIS INCOME IN THE RETURN HAD GONE UP. 15. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE P ARA 4.3.2 HELD AS UNDER : AS DISCUSSED EARLIER, THE APPELLANT HAD QUIETLY DE BITED THE EXPENDITURE OF RS. 225 CRORES IN THE INCOME AND EXP ENDITURE ACCOUNT AND WHEN THE REVENUE QUESTIONED THE ALLOWAB ILITY OF THIS EXPENDITURE, IT WAS ASSERTED THAT THE EXPENDIT URE WAS ALLOWABLE UNDER SECTION 37(1) OF THE ACT, BUT WHEN THE CLAIM OF THE APPELLANT WAS EXAMINED IN DEPTH, IT WAS FOUN D THAT THERE EXISTED ABSOLUTELY NO BASIS FOR CLAIMING THIS AMOUNT AS DEDUCTION. 16. IT WAS FURTHER HELD BY THE COMMISSIONER OF INCO ME TAX (APPEALS) THAT THE ASSESSEE'S CASE WAS NOT COVERED UNDER ANY OF THE CONDITIONS LAID DOWN IN EXPLANATION-I BELOW SECTION 271(1) OF THE ACT AS THE ASSESSEE HAD NOT PROVED THAT THE EXPLANATION GIVEN BY IT WAS BONAFIDE. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE CASE OF THE ASSESSEE WAS SQUARELY COVERED BY EXPLAN ATION I(B) UNDER SECTION 271(1) OF THE ACT BECAUSE THE CORRECT FACTS RELATING TO THE CLAIM OF RS. 225 CR WERE NOT DISCLOSED. THE COMMIS SIONER OF INCOME TAX (APPEALS) THUS, HELD THAT WHERE THE SAID AMOUNT HAD BEEN SPENT ON THE DIRECTIONS OF THE PUNJAB GOVERNMENT AND SUCH IN CURRING OF THE EXPENDITURE BY THE ASSESSEE BEING NOT FOR BUSINESS PURPOSES, COULD NOT BE APPORTIONED FOR A FUND AS DEDUCTION FROM THE TAX ABLE INCOME. IN VIEW THEREOF, THE COMMISSIONER OF INCOME TAX (APPEA LS) UPHELD LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 17. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E APPEAL OF THE ASSESSEE IS IN RESPECT OF THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON ADDITION OF RS. 225 CR. IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE SAID AMOUNT WAS DEBITED T O THE PROFIT & LOSS 10 ACCOUNT AND WAS CLAIMED AS AN EXPENDITURE OF REVENU E ACCOUNT. EVEN THE TAX AUDITORS DID NOT OBJECT TO THE SAID CLAIM O F REVENUE EXPENDITURE. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED BY C AG WHO IN-TURN HAD NOT RAISED ANY OBJECTION AGAINST THE SAID CLAIM OF THE ASSESSEE. IT WAS FURTHER POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE TRIBUNAL WHILE DISALLOWING THE CLAIM OF THE ASSESSEE HAD HEL D THAT THE SAID EXPENDITURE WAS MADE ON THE BEHEST OF DIRECTIONS OF THE STATE GOVERNMENT AND WAS NOT BUSINESS EXPENDITURE. THE AS SESSEE, HOWEVER AT THE TIME OF FILING THE RETURN OF INCOME HAD CLAI MED THE EXPENDITURE INCURRED FOR THE DEVELOPMENT OF AIRPORT AS REVENUE EXPENDITURE, THOUGH THE SAID EXPENDITURE WAS INCURRED AT THE DIRECTIONS OF STATE GOVERNMENT. 18. THE NEXT PLEA OF THE LD. AR FOR THE ASSESSEE WA S THAT THE TRIBUNAL WHILE DECIDING THE ISSUE AGAINST THE ASSES SEE IN PARA 215 HAD RELIED ON THE RATIO LAID DOWN BY THE HYDERABAD BENC H OF TRIBUNAL IN ANDHRA PRADESH HOUSING BOARD VS DCIT IN ITA NO. 717 /HYD/2012 & ORS., AGAINST WHICH THE HON'BLE ANDHRA PRADESH HIGH COURT HAD ADMITTED THE APPEAL AND HENCE THE ISSUE WAS DEBATAB LE. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT WHERE THE ISSUE IS DE BATABLE, WHETHER PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIA BLE OR NOT HAS BEEN LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS LIQUID INVESTMENT & TRADING CO. IN ITA NO. 240 OF 2009 VID E JUDGEMENT DATED 05.10.2010. ANOTHER PLEA WAS RAISED BY THE A SSESSEE THAT WHERE THE CLAIM OF THE ASSESSEE WAS NOT FOUND TO BE FALSE , NO PENALTY UNDER SECTION 271(1)(C) WAS LEVIABLE ON SUCH BONAFIDE CLA IM OF THE ASSESSEE. RELIANCE IN THIS RESPECT WAS LAID DOWN ON CIT VS RE LIANCE PETROPRODUCTS P.LTD. (2010) 322 ITR 158 (S.C), CIT VS AMTEK AUTO LTD. (2013) 84 CCH 140 (P&H) & CIT VS SIDHARTHA ENT ERPRISES (2010) 11 322 ITR 80 (P&H). IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT WHERE THE CLAIM OF THE ASSESSEE IS BONAFIDE AN D ENTRIES ARE MADE TO THAT EXTENT, THEN NO PENALTY IS LEVIABLE UNDER S ECTION 271(1)(C) OF THE ACT. OUR ATTENTION WAS DRAWN TO PARA 16 OF CIT VS ZOOM COMMUNICATION (P) LTD. (2010) 327 ITR 510 (DEL) AND IT WAS POINTED OUT THAT THE HON'BLE DELHI HIGH COURT IN THE SAID D ECISION HAD NOT SAID ANYTHING NEW EXCEPT THAT HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PETRO PRODUCTS (P) LTD.(SU PRA). 19. THE NEXT ARGUMENT OF THE LD. AR FOR THE ASSESSE E WAS THAT WHERE THE CLAIM IS NOT FOUND TO BE BOGUS, EVEN THOUGH IT WAS DISALLOWED, NO PENALTY WAS LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON CIT VS DEEKSHA HOLIDAYS LTD. (2010) 186 T AXMAN 183 (DEL) AND ACIT VS T.R.B. EXPORTS P.LTD. (2010) 134 TTJ 49 (CHD). FURTHER, WHERE THE ISSUE IS A DEBATABLE ISSUE AGAINST WHICH COMPLETE FACTS WERE FURNISHED ON RECORD, THERE IS NO BASIS FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. RELIANCE WAS PLACED ON CIT VS GURDASPUR CO- OPERATIVE SUGAR MILLS LTD. (2013) 354 ITR 27 (P&H) AND CIT VS RAJ OVERSEAS(2011) 336 ITR 261 (P&H). THE LD. AR FOR TH E ASSESSEE FURTHER POINTED OUT THAT THE ASSESSEE WAS A GOVERNM ENT ORGANIZATION AND THE INTENT WAS TO PAY DUE TAXES AND IN SUCH CIR CUMSTANCES LENIENT VIEW NEEDS TO BE TAKEN. RELIANCE WAS PLACED ON CIT VS H.P.STATE FOREST CORPORATION LTD. (2012) 340 ITR 204 (HP) IN THIS REGARD. 20. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITTED T HAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER HAD INIT IATED THE PENALTY BOTH FOR CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS OF INCOME. HOWEVER, WHILE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE ASSESSING OFFICER LEVIED PENALTY FO R FURNISHING OF INACCURATE PARTICULARS OF INCOME. 12 21. THE LAST PLEA MADE BY THE LD. AR FOR THE ASSESS EE WAS THAT THERE WAS NO MERIT IN LEVYING THE SAID PENALTY @ 150% OF THE TAX SOUGHT TO BE EVADED. 22. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE EXPENDITURE HAD NOT BEEN INCURRED BY THE ASSESSEE IN ITS OWN RIGHT, WHICH IS THE PRE- REQUISITE FOR ALLOWING THE EXPENDITURE UNDER SECTIO N 37 OF THE ACT. THE SAID EXPENDITURE WAS INCURRED AT THE BEHEST OF THE STATE GOVERNMENT AND THE ASSESSEE WAS NOT EVEN CLEAR AS TO THE NATUR E OF THE EXPENDITURE, WHETHER IT WAS LOAN TO THE GOVERNMENT, SHARE APPLICATION OR ANY OTHER ADVANCE. THE EXPENDITURE INCURRED BY T HE ASSESSEE BEING PURELY CONTRIBUTION TO PURCHASE LAND ON THE DIRECTI ONS OF THE GOVERNMENT OF PUNJAB WAS HELD TO BE NOT ALLOWABLE A S A REVENUE EXPENDITURE IN THE HANDS OF THE ASSESSEE BY THE TRI BUNAL IN THE QUANTUM PROCEEDINGS. 23. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ASSESSEE HAS PLACED RELIANCE ON SERIES OF DECISIONS WHICH HAVE B EEN OVER-RULED BY THE HON'BLE SUPREME COURT IN CIT VS ATUL MOHAN BIND AL 317 ITR 1 (S.C) WHEREIN IT HAS BEEN HELD THAT THE LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT IS STRICT CIVIL LIABILITY. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE THAT RELIANCE ON CIT VS SIDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) BY THE ASSESSEE WAS INCORRECT AS IN THE FACTS OF THE SAID CASE, PENALTY WAS DELETED ON ELEMENT OF OMISSION. IN ORDER TO DECIDE WHETHER THE EXPLANATI ON OF THE ASSESSEE IS BONAFIDE, IT WAS SUBMITTED BY THE LD. DR FOR THE REVENUE, THAT WE HAVE TO SEE THE DEGREE I.E. IS IT CLOSE TO THE TRUT H TO FALL WITHIN THE DOMAIN OF DEBATABLE. THE ASSESSEE, IN THE PRESEN T FACTS OF THE CASE HAS TRIED TO MAKE THE ISSUE DEBATABLE WHICH IS NOT DEBATABLE. IT WAS FURTHER POINTED OUT BY THE LD. DR FOR THE REVENUE T HAT CAG AUDIT WAS ONLY TO CHECK THE ACCOUNTS AND NOT THE LEGALITY OF ALLOWABILITY OF 13 EXPENDITURE AND THE SUBMISSIONS MADE BY THE ASSESSE E IN THIS REGARD WERE THUS, TO BE DISMISSED. IN RESPECT OF THE AUDIT REPORT, IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE AUDITORS HAVE FAILED TO REMARK ON THE SAID EXPENDITURE AND IN THE ABSENC E OF THE SAME, IT COULD NOT BE SAID THAT THE DISCLOSURE MADE BY THE A SSESSEE WAS BONAFIDE. FURTHER REFERENCE WAS MADE TO EXPLANATIO N I TO SECTION 271(1)(C) OF THE ACT AND IT WAS POINTED OUT THAT TH OUGH AN EXPLANATION HAS BEEN FILED BY THE ASSESSEE BUT THE ASSESSEE IS UNABLE TO SUBSTANTIATE THAT IT IS BONAFIDE OR PROVE IT IS TRU E. AS THE ASSESSEE HAD FAILED TO SHOW HOW THE EXPENDITURE INCURRED BY IT W AS GENUINE AND INCURRED FOR THE PURPOSE OF BUSINESS, NO IMMUNITY C OULD BE PROVIDED TO THE ASSESSEE FROM PENAL CONSEQUENCES. RELIANCE WAS PLACED ON MAK DATA P.LTD. VS CIT (2013) 358 ITR 593 (DEL). IN THE CONCLUSION IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE TH AT THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT PAGES 2 & 3 OF THE APPELLAT E ORDER HAS GIVEN A FINDING THAT FROM THE NOTINGS OF FILE OF PUDA, THE OFFICERS OF THE PUDA WERE AGAINST BEARING THE SAID FINANCIAL BURDEN AND EVEN AGAINST THE SAME, THE EXPENDITURE WAS NOT ONLY INCURRED BY THE ASSESSEE BUT WAS FURTHER BOOKED AS REVENUE EXPENDITURE. 24. IN THE REJOINDER, IT WAS POINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT THE EXPENDITURE WAS INCURRED BY THE A SSESSEE ON THE DIRECTIONS OF THE GOVERNMENT AND ITS DISALLOWANCE C OULD NOT ATTRACT LEVY OF PENALTY FOR CONCEALMENT UNDER SECTION 271(1 )(C) OF THE ACT. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. PENALTY FOR CONCEALMENT IS LEVIABLE U/S 271 (1)(C) OF THE ACT IN CASE ANY ONE OF THE TWO PRE-CONDITIONS ARE SATISFIED. THE PRE-CONDITI ONS FOR LEVY OF PENALTY ARE EITHER THE ASSESSEE HAD CONCEALED THE PARTICULARS O F ITS INCOME OR IN THE 14 ALTERNATIVE, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TWO CONDITIONS NEEDS TO BE FULFILLED BEFORE LEVY OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. THE PROVISI ONS OF THE ACT ENVISAGES AN OPPORTUNITY OF HEARING TO BE AFFORDED TO THE ASSESS EE TO PROVE ITS BONAFIDES AND WHERE THE ASSESSEE IS ABLE TO PROVE THE BONAFID ES OF HIS CLAIM, WITH REGARD TO THE PARTICULARS OF INCOME FURNISHED IN TH E RETURN OF INCOME, IN SUCH CIRCUMSTANCES NO PENALTY IS LEVIABLE FOR CONCEALMEN T OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME UNDER S ECTION 271 (1)(C) OF THE ACT. THE EXPRESSIONS CONCEALMENT AND INACCURATE PARTICULARS U/S 271 (1)(C) OF THE ACT HAS BEEN DELIBERATED UPON IN PLE THORA OF JUDGMENTS BY VARIOUS COURTS. THE HON'BLE SUPREME COURT IN DHAR MENDRA TEXTILES & PROCESSORS CASE (SUPRA), OBSERVED THAT THE PENALTY U/S 271 (1)(C) OF THE ACT IS A CIVIL LIABILITY. HOWEVER, WHERE THE LIABILITY IS PENAL IN NATURE THOUGH BEING CIVIL LIABILITY AND THERE IS NO REQUIREMENT O F ESTABLISHING THE MENS REA OF THE INTENTION OF THE ASSESSEE IN CASES WHERE THE ASSESSEE IS FOUND TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF INCOME. HOWEVER, WHERE THE INFORMATION FURNISHED B Y THE ASSESSEE IN THE RETURN OF INCOME TO THE BEST OF KNOWLEDGE OF THE AS SESSEE IS CORRECT AND COMPLETE, IT CANNOT BE SAID THAT THE ONUS ON THE AS SESSEE HAS NOT BEEN DISCHARGED TO PROVE ITS BONAFIDES. WHERE ANY ADD ITION TO, OR DISALLOWANCE FROM, HAD BEEN MADE TO THE RETURNED INCOME, IT PER SE CANNOT BE THE FOUNDATION OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT AS FINDINGS IN THE ASSESSMENT ORDER CANNOT BE TAKEN A CONCLUSIVE PROOF OF CONCEALMENT FOR THE PURPOSE OF LEVY OF PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. UNDER THE EXPLANATION 1 TO SECTION 271 (1), THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE BONAFIDES OF HIS CLAIM AND WHERE THE ASSESSEE D ISCHARGES ITS ONUS OF PROVING HIS CLAIM TO BE BONAFIDELY MADE, THE COURTS HAVE HELD THAT THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 15 26. IN THE FACT OF THE PRESENT CASE, THE ASSESSEE H AD CLAIMED AN EXPENDITURE OF RS. 225 CR AGAINST THE COST OF LAND FOR ESTABLISHING AN INTERNATIONAL AIRPORT AT MOHALI. THE SAID EXPENDIT URE WAS CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE UNDER SECTION 37(1) OF THE ACT ON THE PLEA THAT THE ESTABLISHMENT OF INTERNATIONAL AI RPORT IN THE VICINITY OF THE AREA, WHICH IS UNDER THE CONTROL OF THE ASSE SSEE AUTHORITY, WOULD RESULT IN HIGHER PROFITABILITY TO THE ASSESSEE VIS- -VIS THE INCREASE IN THE PRICE OF THE LAND/HOUSES SOLD BY THE ASSESSEE. THE ASSESSEE CLAIMED THAT THE SAID EXPENDITURE WAS MADE IN FURTH ERANCE OF DEVELOPMENT OBJECT OF THE AUTHORITY INCLUDING ECONO MIC DEVELOPMENT OF THE LAND AND ALSO OF THE AREA IN TOTALITY. THE SAID EXPENDITURE WAS INCURRED BECAUSE OF COMMERCIAL NECESSITY AND AS IT HAD NOT ACQUIRED ANY CAPITAL ASSET NOR MADE ANY DONATION TO ANY ORGA NIZATION, THE SAME WAS DULY CLAIMED AS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF BUSINESS. THE ASSESSEE TOOK A DECISION TO CONTRIBUT E TOWARDS THE DEVELOPMENT OF INTERNATIONAL AIRPORT IN THE JURISDI CTIONAL AREA AUTHORITY, ON THE SUGGESTIONS OF THE PUNJAB GOVERNM ENT WHICH IN-TURN WOULD RESULT INTO MANY FOLD INCREASE IN THE RATES O F THE LAND TO BE SOLD BY THE ASSESSEE TO VARIOUS PERSPECTIVE BUYERS. THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE TOTALING RS. 225 CR ON THE FOLLOWING ISSUES : A. THE JVC HAD BEEN FORMED FOR THE PURPOSE OF CONSTRUCTION OF AIRPORT AT MOHALI IN WHICH GMADA, HUDA AND AIRPORT AUTHORITY OF INDIA HAD THEIR SPECI FIC SHARES, BUT PUDA HAD NO SHARE HOLDING IN JVC AND HA D NOTHING TO DO WITH THE AIRPORT AT MOHALI AND SO IT WAS NOT KNOWN AS TO IN WHAT CAPACITY PUDA HAD BOOKED TH E AMOUNT OF RS. 225 CRORES FOR ACQUISITION OF LAND FO R AIRPORT AT MOHALI. B. THE EXPENDITURE OF RS. 225 CRORES FOR ACQUISITION O F LAND FOR AIRPORT AT MOHALI WAS NOT AT ALL RELATED TO INC OME EARNED DURING THE YEAR. C. THAT ASSESSEE HAD NOT SHOWN THE ACQUIRED LAND IN IT S FIXED ASSETS SCHEDULE/BALANCE SHEET, WHICH CLEARLY SUBSTA NTIATED 16 THAT THE EXPENDITURE WAS NOT RELATED TO THE BUSINES S OF THE APPELLANT. 27. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ORDER OF ASSESSING OFFICER. 28. THE TRIBUNAL IN ITA NO. 390/CHD/2012 RELATING T O ASSESSMENT YEAR 2008-09 VIDE CONSOLIDATED ORDER DATED 16.12.20 13 ADJUDICATED THE ISSUE VIDE PARAS 188 TO 217 OF THE ORDER. THE TRIB UNAL AFTER CONSIDERING THE VARIOUS FACETS OF SECTION 37 OF THE INCOME TAX ACT VIDE PARA 198 AND 199 CONSIDERED THE ISSUE OF ALLOW ABILITY OF EXPENDITURE UNDER SECTION 37 OF THE ACT IN RELATION TO THE NATURE OF THE EXPENDITURE WHETHER THE SAME IS CAPITAL IN NATURE O R REVENUE IN NATURE. THE RELEVANT FINDINGS OF THE TRIBUNAL VIDE PARAS 19 8 AND 199 ARE AS UNDER : 198 THE LAST CONDITION FOR ALLOWABILITY OF EXPENDI TURE U/S 37 WAS THAT IT SHOULD NOT BE IN THE NATURE OF CAPITAL EXPENDITURE. IN THE CASE BEFORE US, IT HAS BEEN HELD THAT THE EXPEN DITURE WAS INCURRED FOR THE PURPOSE OF ACQUISITION OF LAND AN D THEREFORE, BEING IN CAPITAL NATURE IS NOT ALLOWABLE. IN THIS REGARD WE HAVE PERUSED JOINT VENTURE AGREEMENT (IN SHORT JVA) CARE FULLY AND FIND THAT THE SAME WAS ENTERED ON 17 TH DAY OF SEPT, 2009 BETWEEN AIRPORT AUTHORITY OF INDIA (STATUTORY AUTHORITY EST ABLISHED UNDER THE AIRPORT ACT, 1994) AND GOVERNMENT OF PUNJAB THR OUGH GMADA (STATUTORY AUTHORITY CONSTITUTED BY GOVERNMEN T OF PUNJAB AND HUDA (STATUTORY AUTHORITY CONSTITUTED BY HARYANA HOUSING DEVELOPMENT AUTHORITY). IN THE RECITATION CLAUSE IT HAS BEEN RECITED THAT MEMORANDUM OF UNDERSTANDING WAS S IGNED AMONG THOSE PARTIES ON 4.1.2008 WHICH BROADLY PROVI DE FOR THE FOLLOWING TERMS AND CONDITIONS: A JOINT VENTURE COMPANY (JVC) WOULD BE FORMED WIT H 51% EQUITY STAKE OF AAI AND 24.5% EQUITY STAKE EACH OF GMADA AND HUDA TO OPERATE AND MAINTAI N THE CHANDIGARH INTERNATIONAL AIRPORT (CIA) AT CHANDIGARH TO BE BUILT BY AAI; PUNJAB GOVERNMENT WOULD TRANSFER THE REQUIRED LAND LOCATED AT MOHALI, PUNJAB OF 300 ACRES APPROXIMATELY TO BE JV COMPANY INCLUDING LAND FOR C ITY SIDE DEVELOPMENT. THE COST OF LAND WOULD BE EQUALLY SHARED BETWEEN THE GOVERNMENTS OF PUNJAB & HARYANA AND WOULD BE CAPITALIZED AND SHALL COUNT TOWARDS THE EQUITY CONTRIBUTION OF GMADA AND HUDA. AAI WOULD BE RESPONSIBLE FOR CREATING THE TERMINAL BUILDING AND OTHER AIRSIDE FACILITIES FOR THE JVC WITHOUT SEEKING ANY CASH CONSIDERATION FORM OTHER JV PARTNERS WHICH WOULD BE SUBSEQUENTLY CAPITALIZED AT A VALUE TO BE DETERMINED BY AAI AT T HE TIME OF TRANSFER AND SHALL COUNT TOWARDS THE EQUITY CONTRIBUTION OF AAI; AND THE COST OF LAND WOULD BE COUNTED TOWARDS THE 49% E QUITY CONTRIBUTION OF GMADA AND HUDA AND THE COST OF INTERNATIONAL CIVIL AIR TERMINAL & OTHE R AERONAUTICAL ASSETS TO BE BUILT BY AAI WILL BE 17 COUNTED TOWARDS THE 51% EQUITY CONTRIBUTION OF AAI AS PER THE PROVISIONS IN THE SHAREHOLDERS AGREEMENT TO BE EXECUTED BY THE JV PARTIES AND THE JV COMPANY. AS PER RECITATION CLAUSE IT IS FURTHER AGREED THAT SAME (JVC) IS FOR THE FOLLOWING PURPOSES: TO FORM A JOINT VENTURE COMPANY WHICH WILL UNDERTAK E THE OPERATION AND MAINTENANCE OF CHANDIGARH INTERNATIONAL AIRPORT TO BE BUILT BY AAI AT CHANDIG ARH; TO SUBSEQUENTLY TAKE OVER THE EXISTING INFRASTRUCTU RE BELONGING TO AAI AT THE CIVIL ENCLAVE AT CHANDIGARH AT SUCH VALUE AS MAY BE DETERMINED BY AA I AND TO OPERATE AND MAINTAIN THE SAME. TO UNDERTAKE FURTHER DEVELOPMENT OF CIVIL AIR TERMI NAL AT CHANDIGARH, COMMENSURATE WITH THE TRAFFIC POTENTIAL, COMMERCIAL VIABILITY AND AVAILABILITY OF FINANCIAL RESOURCES; TO RECORD THE TERMS AND CONDITIONS ON WHICH THE PAR TIES TO THIS AGREEMENT WILL SUBSCRIBE TO THE SHARE CAPITAL (AS DEFINED HEREINAFTER) OF THE JOINT VENTU RE COMPANY (JKVC) AND TO REGULATE THE RELATIONSHIP AMONGST THE JOINT VENT URE PARTIES AS LONG AS THEY ARE SHAREHOLDERS OF THE JVC. FURTHER WHILE DEFINING THE RESPONSIBILITY OF THE PA RTIES, IT HAS BEEN PROVIDED IN RESPECT OF RESPONSIBILITY OF THE STATE GOVERNMENT/GMADA AS UNDER: RESPONSIBILITIES OF STATE GOVERNMENT / GMADA: CLEARANCES / PERMISSIONS / NOC TO BE OBTAINED BY GM ADA FROM CONCERNED AUTHORITIES ACTIVITIES / SERVICES FOR RESPONSIBILITIES FOR CLE ARANCE / PERMISSION. TRANSFER OF LAND (200 ACRES) TO GMADA THE JV COMPANY FOR DEVELOPMENT OF PROJECT. THE GMADA SHALL ACQUIRE THE LAND OF AROUND 300 ACR ES AND TRANSFER TO THE JVC FOR THE DEVELOPMENT OF CHANDIGARH INTERNATIONAL AIRPORT. THE GMADA AND HUDA SHALL BEAR ALL THE EXPENDITURE IN EQUAL SHARE IN RESPECT OF CLAIM OR LIABILITIES ARISING OUT THE ANY LITIGATION, PRESENT OR FUTURE IN THE MATTER OF LAND ACQUISITION. THE GMADA SHALL ENSURE THAT INITIAL ESTABLISHMENT O F SUB STATION AND WATERLINE TO BE DONE BY STATE GOVERNMENT FREE OF COST. THE GMADA SHALL EXEMPT THE CIVIL AIR TERMINAL COMPL EX INCLUDING APRON I.E. AREA INCLUDING CITY SIDE DEVELOPMENT STAFF COLONY AND THE LAND USED FOR THE INSTALLATION OF NAVIGATIONAL AIDS AND OTHER RELATED EQUIPMENT FROM PROPERTY TAX AND OTHER MUNIC IPAL TAXES INITIALLY FOR A PERIOD OF TEN YEARS COMMENCING FROM THE DATE OF TRANSFER OF LAND TO JVC TO MINIMIZE OPERATIONAL LOOSES. THE NEED FOR FURTHER EXTENSION OF THESE CONCESSION AND EXEMPTION S WILL BE JOINTLY REVIEWED BY GMADA & AAI AT THE END OF THE TEN YEAR PERIOD. THE GMADA WILL ACQUIRE THE LAND AND DEVELOP FOURLAN D APPROACH ROAD TO CIVIL AIR TERMINAL WITH LIGHTING, HORTICULTURE, SIGNAGES ETC. AND THE COST OF THE SAME SHALL BE EQUALLY SHARED BETWEEN GMADA & HUDA. THE GMADA SHALL REMOVE THE IDENTIFIED OBSTACLES, IF ANY, HAZARD FOR SAFELY OF AIRCRAFT OPERATION FORM THE APPROACH PATH OF EXTENDED RUNWAY AND TRANSITION AL AREA SUCH AS HIGH TENSION / LOW TENSION POWER LINES, CANAL, GAS PIPELINE, STRUCTURES, BUILDINGS, CHIMNEYS, TREES ETC. AT THEIR COST. IN CLAUSE 3.1 IT HAS BEEN SPECIFICALLY NOTED THAT J VC WILL BE INCORPORATED AS A PRIVATE LTD COMPANY. CLAUSE 3.2 DEALS WITH SHAREHOLDERS AGREEMENT WHICH IS AS UNDER: SHAREHOLDERS AGREEMENT A SHAREHOLDERS AGREEMENT WILL BE EXECUTED BY AND BETWEEN AAI, GMADA, HUDA AND THE JVC, AFTER THE JOINT VENTURE COMPANY IS INCORPORATED. 18 TILL SUCH TIME THE SHAREHOLDERS AGREEMENT IS EXECU TED AND AOA IS APPROVED BY THE PARTIES, IT IS AGREED BY THE PARTIES THAT THE REGULATIONS CONTAINE D IN TABLE A IN SCHEDULE I TO THE INDIAN COMPANIES ACT, 1956 MAY BE APPLIED TO THE PROPOSED JVC. IN THE EVENT OF ANY INCONSISTENCY BETWEEN THE PROVI SIONS OF THIS AGREEMENT AND THE MOA OR AOA, THE PARTIES SHALL TAKE ALL STEPS TO ALTER OR AMEND THE MOA AND AOA TO MAKE IT CONSISTENT WITH THE TERMS OF THIS AGREEMENT. CLAUSE 4.2 AND 4.3 DEALS WITH SHARE CAPITAL WHICH I S AS UNDER: 4.2 INITIAL SUBSCRIBED / PAID UP CAPITAL AT THE TIME OF INCORPORATION, THE ISSUED SHARE CAPI TAL OF THE COMPANY SHALL BE RS. 1000,00,000/- (RS. TEN CRORE) AND THE CONTRIBUTION OF THE PARTIES HALL BE AS FOLLOWS:- AAI SHALL SUBSCRIBE TO 51,00000/- (FIFTY ONE LAC) E QUITY SHARE OF RS. 10/- (RS. TEN ONLY) EACH FOR CAS H AGGREGATING TO RS. 5,20,00,000/- (RS. FIVE CRORE TE N LAC ONLY) GMADA SHALL SUBSCRIBE TO 24,50,000/- (TWENTY FOUR L AC FIFTY THOUSAND) EQUITY SHARES OF RS. 10 (RUPEES TEN ONLY) EACH FOR CASH AGGREGATING TO RS. 2,45,00,000/- (RS. TWO CRORE FORTY FIVE LAC ONLY) HUDA SHALL SUBSCRIBE TO 24,50,000/- (TWENTY FOUR LA C FIFTY THOUSAND) EQUITY SHARES OF RS. 10 (RUPEES TEN ONLY) EACH FOR CASH AGGREGATING TO RS. 2,45,00,000/- (RS. TWO CRORE FORTY FIVE LAC ONLY) (A) THE PROPORTION IN WHICH THE PARTIES SHALL SUBS CRIBE TO THE EQUITY SHARE CAPITAL OF THE JVC SHALL BE AS FOLLOWS SUBJECT TO PROVISIONS CONTAINED IN PARA 5:- AAO = 51% GMADA = 24.5% HUDA = 24.5% (B) THE STATE GOVERNMENT WOULD TRANSFER THE REQUIRE D LAND LOCATED AT MOHALI, PUNJAB TO THE JVC AND AAI WOULD BE RESPONSIBLE FOR CREATING THE AIRSIDE F ACILITIES AND TERMINAL BUILDING FOR THE JVC, WHICH WILL BE APPROPRIATED TOWARDS SHARE CAPITAL AND SHAR E PREMIUM. AT THE TIME OF VOLUNTARY WINDING UP OF THE COMPANY, THE SHARE PREMIUM PAID BY GMADA, HU DA & AAI SHALL BE CONSIDERED FOR DETERMINING THE VALUE OF ASSETS TO BE BIFURCATED / ALLOCATED TO THESE THREE PARTIES. 199 REST ALL THE CLAUSES ARE GENERAL CLAUSES AND NO T VERY RELEVANT FOR US AND THEREFORE, SAME ARE NOT BEING REPRODUCED. COMBINED READING OF ABOVE CLAUSES CLEARLY SHOW THAT BOTH THE STATE GOVERNMENTS HAVE CONTRIBUTED TOWARDS DEVELOPM ENT OF THE AIRPORT AT MOHALI IN TERMS OF ACQUISITION OF LAND AND AGAINST SUCH ACQUISITION OF LAND THE GOVERNMENT OF PUNJAB THROUGH GMADA HAS BEEN ALLOWED 24.5% EQUITY STAKE IN THE AI RPORT WHICH WOULD ULTIMATELY BE RUN AS BUSINESS VENTURE B Y FLOATING PRIVATE LTD COMPANY. THEREFORE, IT BECOMES VERY C LEAR THAT WHAT HAS BEEN CONTRIBUTED BY THE ASSESSEE, IS ONLY LAND. IT SEEMS THAT THE LAND HAS BEEN ACQUIRED BY GOVERNMENT OF PUNJAB AND SINCE GOVERNMENT OF PUNJAB DID NOT HAVE MONEY, THEREFORE, THE ASSESSEE AUTHORITY HAS BEEN ROPED IN TO MAKE CO NTRIBUTION TO MAKE THE PAYMENT FOR ACQUISITION OF LAND. IT IS N OT CLEAR IN WHOSE NAME THE LAND HAS BEEN REGISTERED FROM THE DO CUMENTS PRODUCED BEFORE US. HOWEVER, THE FACT REMAINS THAT THE CONTRIBUTION WAS MADE ONLY IN TERMS OF LAND FOR WHI CH THE GOVERNMENT OF PUNJAB THROUGH GMADA WOULD ACQUIRE SH ARES TO THE TUNE OF 24.5%. THIS IS CLEAR BECAUSE OF CAPITA L CONTRIBUTION FOR STARTING A NEW BUSINESS VENTURE OF RUNNING AIRP ORT. IT HAS FURTHER TO BE NOTED THAT NAME OF PUDA DOES NOT APPE AR IN THE JVA DESPITE PUDA MAKING THE BIGGEST CHUNK OF THE CO NTRIBUTION I.E. RS. 225 CRORES OUT OF RS. 300 CORES OF TOTAL C ONTRIBUTION. WHEN THE MONEY HAS BEEN SPENT ONLY FOR ACQUISITION OF LAND THAT IS FOR ULTIMATELY PURCHASING OF LAND FOR THE PROPOS ED AIRPORT, THIS CANNOT BE CALLED A REVENUE EXPENDITURE. IT I S CLEARLY A CASE 19 OF CAPITAL EXPENDITURE WHICH IS NOT ALLOWABLE U/S 3 7 BECAUSE IT CLEARLY PROVIDES THAT EXPENDITURE IN THE NATURE OF CAPITAL IS NOT ALLOWABLE FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS OF BUSINESS AND PROFESSION. IN VIEW OF ABOVE CLAUSES , WE HOLD THAT THIS EXPENDITURE I.E. THE CONTRIBUTION MADE BY PUDA IS NOT FOR THE BUSINESS PURPOSES AND IT IS IN FORM OF CAPI TAL CONTRIBUTION AND IN THE NATURE OF CAPITAL EXPENDITU RE AND THEREFORE, SAME IS NOT ALLOWABLE U/S 37. WE FAIL TO UNDERSTAND WHY PUDA HAS NOT LOOKED AFTER ITS INTEREST EITHER B Y BECOMING SHAREHOLDER IN THE PROPOSED AIRPORT OR BY RAISING A CLAIM AGAINST THE GOVERNMENT OF PUNJAB FOR TRANSFER OF LA ND OR RECOVERY OF THE CONTRIBUTION IF THE LAND WAS RETAIN ED BY THE GOVERNMENT OF PUNJAB AGAINST WHICH GOVERNMENT OF PU NJAB WAS TO RECEIVE 24.5% OF EQUITY SHARES IN THE JVA. 29. THE TRIBUNAL, THUS HELD THAT WHERE THE MONEY HA D BEEN SPENT ONLY FOR THE ACQUISITION OF LAND FOR THE ULTIMATELY PURCHASE OF LAND FOR THE PROPOSED AIRPORT, SUCH EXPENDITURE COULD NOT BE CALLED AS REVENUE EXPENDITURE. IT WAS HELD IT IS CLEARLY A CASE OF CAPITAL EXPENDITURE WHICH IS NOT ALLOWABLE UNDER SECTION 37 BECAUSE IT CLEARLY PROVIDES THAT EXPENDITURE IN THE NATURE OF CAPITAL IS NOT AL LOWABLE FOR THE PURPOSE OF COMPUTING PROFITS AND GAINS OF BUSINESS AND PROFESSION. THE TRIBUNAL FURTHER HELD THAT THE EXPENDITURE I.E. THE CONTRIBUTION MADE BY THE ASSESSEE WAS NOT FOR BUSINESS PURPOSES BUT WAS IN THE FORM OF CAPITAL CONTRIBUTION AND IN THE NATURE OF C APITAL EXPENDITURE AND HENCE, NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT. THEREAFTER, THE TRIBUNAL ANALYZED THE CASE LAWS RELIED UPON BY BOTH THE AUTHORIZED REPRESENTATIVES AND VIDE PARA 213 HAS ELABORATED UP ON THE DECISION RELIED UPON BY THE REVENUE OF OIL INDUSTRY DEVELOPM ENT BOARD VS ACIT 123 ITD 67 (DEL) (TRIB) AND HELD AS UNDER : FROM ABOVE IT IS CLEAR THAT UNLESS AND UNTIL THE EX PENDITURE IS RELATED TO THE BUSINESS OF THE ASSESSEE SO AS TO MEET THE REQUIREMENT OF SECTION 37 THAT THE EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE O F BUSINESS, SAME IS NOT ALLOWABLE. THEREFORE, CLEARLY THIS CAS E LAW IS APPLICABLE TO THE ASSESSEE IN THE SENSE THAT EVEN I F THE EXPENDITURE IS INCURRED TO MEET THE OBJECTS OF A PA RTICULAR UNDERTAKING THE SAME IS STILL NOT ALLOWABLE UNLESS THE SAME HAS BEEN INCURRED FOR THE PURPOSE OF BUSINESS. 20 30. FURTHER, VIDE PARA 215 THE DECISION IN ANDHRA P RADESH HOUSING BOARD VS DCIT IN ITA NO. 717/HYD./2012 & ORS. WAS C ONSIDERED BY THE TRIBUNAL AND IT WAS OBSERVED THAT THE FACTS OF THE SAID CASE WERE IDENTICAL TO THE FACTS OF THIS CASE. IN THE CASE B EFORE HYDERABAD BENCH, SUM OF RS. 1180 CR WAS GIVEN TO THE ANDHRA P RADESH HOUSING CORPORATION ON THE DIRECTIVE OF THE GOVERNMENT AND IT WAS HELD BY THE TRIBUNAL THAT THE SAID WOULD NOT AMOUNT TO AN EXPEN DITURE INCURRED FOR THE PURPOSE OF BUSINESS. THE SAID AMOUNT BEING TRA NSFERRED TO ANDHRA PRADESH STATE HOUSING CORPORATION AT THE DIRECTIVE OF THE GOVERNMENT FOR IMPLEMENTING CERTAIN HOUSING PROJECTS AND THE A SSESSEE BEING NOT IN ANY WAY CONNECTED WITH THE IMPLEMENTATION OF THA T PROJECT, IT WAS HELD THAT THE SAID EXPENDITURE COULD NOT BE SAID TO BE AN EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE TRIBUNAL, IN THE CASE OF THE ASSESSEE APPLYING THE SAID RATIO HELD THAT AS THE FACTS WERE IDENTICAL, THE EXPENDITURE WAS NO T ALLOWABLE IN THE HANDS OF THE ASSESSEE. IN CONCLUSION, THE TRIBUNAL HELD THAT THE EXPENDITURE HAD NOT BEEN INCURRED FOR THE PURPOSE O F BUSINESS AND IN ANY CASE, THE EXPENDITURE WAS IN THE NATURE OF CAPI TAL EXPENDITURE AND THEREFORE, THE SAME WAS NOT ALLOWABLE. 31. IN VIEW OF THE ABOVESAID FINDINGS OF THE TRIBUN AL IN ASSESSEE'S CASE UNDER WHICH THE EXPENDITURE CLAIMED AT RS. 225 CR INCURRED FOR THE ESTABLISHMENT OF INTERNATIONAL AIRPORT AT MOHAL I BEING DISALLOWED, THE ISSUE ARISING IS WHETHER THE ASSESSEE IS EXIGIB LE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) WERE OF THE VI EW THAT THE ASSESSEE WAS LIABLE TO LEVY OF PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT AND ON CONCEALED INCOME OF RS. 225 CR, PENALTY @ 150% AMOUNTING TO RS. 104,28,75,000/- WAS LEVIED BY THE ASSESSING OFFICER 21 AND UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEA LS). AS PER THE ASSESSING OFFICER, THE EXPLANATION I TO SECTION 271 (1)(C) OF THE ACT PROVIDES A LEGAL FICTION WHEREUNDER ANY ADDITION OR DISALLOWANCE IS DEEMED TO REPRESENT THE CONCEALED INCOME FOR THE PU RPOSE OF LEVY OF PENALTY FOR CONCEALMENT, ONCE THE ADDITIONS PRESCRI BED IN THE EXPLANATION ARE SATISFIED. THE ONUS IS ALSO UPON T HE ASSESSEE TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF ITS INCOME HAD BEEN DISCLOSED, WOULD BE UPON THE PERSON CHARGED WI TH CONCEALMENT. THE ASSESSING OFFICER, IN THE PRESENT CASE HAD HELD THE ASSESSEE TO HAVE FAILED TO DISCHARGE THE ONUS CAST UPON IT AND HAVING FURNISHED INACCURATE PARTICULARS OF INCOME, WAS LIABLE TO LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AS PER THE COMMISSIO NER OF INCOME TAX, THE EXPENDITURE INCURRED BY THE ASSESSEE WAS PURELY A CASE OF APPLICATION OF INCOME WHICH HAD NO DIRECT OR INDIRE CT CONNECTION WITH THE BUSINESS CARRIED ON BY THE ASSESSEE AND HENCE, THE SAME WAS DISALLOWED AS BUSINESS EXPENDITURE AND IN THE FACTS OF THE CASE WHERE THE ASSESSEE HAD DEBITED THE EXPENDITURE OF RS. 225 CR TO ITS INCOME AND EXPENDITURE HAVING BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE, THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THAT TH E CASE OF THE ASSESSEE WAS NOT COVERED BY EXPLANATION I TO SECTIO N 271(1)(C) OF THE ACT. 32. SECTION 271(1) OF THE ACT READS AS UNDER : 271. (1) IF THE ASSESSING] OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) [* * *] (B) HAS FAILED TO COMPLY WITH A NOTICE UNDER SUB- SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SECTION 115WE OR UNDER SUB-SECTION (1) OF SECTION 142 OR SUB-SECTION (2) OF SECTION 143 OR FAILS TO COMPLY WITH A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF SECTION 142], OR 22 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR [(D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BE NEFITS OR FURNISHED INACCURATE PARTICULARS 90 OF SUCH FRINGE BENEFITS,] HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) [* * *] (II) IN TE CASES REFERRED TO IN CLAUSE (B), IN ADD ITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM OF TEN THOUSAND RUPEES] FOR EACH SUCH FA ILURE ; (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D) IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME 1 OR FRINGE BENEFITS.. 33. THE EXPLANATION I UNDER SECTION 271(1) READS AS UNDER : EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT A LL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAU SE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. 34. THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEM DABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFERRING TO T HE WORD PARTICULARS IN INACCURATE PARTICULARS OF INCOME, OBSERVED, A S PER LAW LEXICON, THE MEANING OF WORD PARTICULAR IS A DETAIL OR DETAIL S, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN SECTION 271 (1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT WAS FURTHER HELD AS UNDER:- WE HAVE ALREADY SEEN THE MEANING OF THE WORD PART ICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT A CCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING 23 THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY I TSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . (UNDERLINED SUPPLIED BY US) 35. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTHER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRONEOU S OR FALSE NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSE E HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCE PTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENALTY UNDER SEC TION 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDM ENT OF THE LEGISLATURE IS NOT TO LEVY PENALTY U/S 271 (1)(C) OF THE ACT IN C ASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCO ME. 36. THE HON'BLE SUPREME COURT IN CIT VS RELIANCE PE TROPRODUCTS P.LTD. (SUPRA) FURTHER HELD AS UNDER : READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEI NG THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271 (L)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS E XPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F 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, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271(L)(C). IF THE CONT ENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLA IM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENA LTY UNDER S. 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. THE TRIBUNAL, AS WELL AS, THE CIT(A) AND THE HIGH COURT HAVE CORRECTLY RE ACHED THIS CONCLUSION.SREE KRISHNA ELECTRICALS VS. STATE OF T AMIL NADU & ANR. (2009) 23 VST 249 (SC) APPLIED; RELIANCE PETROPRODUCTS (P) LTD. (JUDGMENT DT. 23RD OCT., 2007 OF THE GUJARAT HIGH C OURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 24 37. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS AMTEK AUTO LTD. (SUPRA) HELD THAT THE ASSESSEE HAD DISCLO SED THE NATURE OF TRANSACTION IN ITS RETURN OF INCOME AND BASED ON I NTERPRETATION OF PROVISIONS OF THE STATUTE WHERE THE ASSESSING OFFIC ER FOUND THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS NOT REVENUE IN NATURE BUT CAPITAL EXPENSES, MERELY FOR THAT REASON WOULD NOT RENDER THE ASSESSEE LIABLE TO PENALTY PROCEEDINGS. THE RELEVANT FINDIN GS OF THE HON'BLE PUNJAB & HARYANA HIGH COURT VIDE PARA 4 ARE AS UNDE R : 4. THE ASSESSEE HAS DISCLOSED THE NATURE OF TRANSACTIO NS IN ITS RETURN. IT WAS ON THE BASIS OF INTERPRETATION OF THE PROVIS IONS OF THE STATUTE, THE ASSESSING OFFICER FOUND THAT SUCH EXPENDITURE CLAIM ED BY THE ASSESSEE IS NOT THE REVENUE EXPENDITURE BUT THE CAPITAL EXPENSES. T HERE IS FINE DISTINCTION AS TO WHEN AN EXPENDITURE CAN BE TREATED AS A REVEN UE OR A CAPITAL EXPENDITURE. THEREFORE, MERELY FOR THE REASON THAT THE ASSESSEE HAS CLAIMED THE EXPENDITURE TO BE REVENUE WILL NOT RENDER THE A SSESSEE LIABLE TO PENALTY PROCEEDINGS. THE ORDER PASSED BY THE TRIBUNAL DOES NOT GIVE RISE TO THE QUESTIONS OF LAW SOUGHT BY THE REVENUE. 38. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SIDHARTHA ENTERPRISES [(2010) 228 CTR (P&H) 579 ] HELD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT EVERY CASE WHERE PARTICULARS OF IN COME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS TH AT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND P ENALTY UNDER S. 271(1)(C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF P ENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF TH E SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIB ERATE DEFAULT AND NOT A MERE MISTAKE. THIS BEING THE POSITION, THE FINDING HAVING BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TA KEN BY THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE. 25 39. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MI LLS LTD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED THAT MAKING WR ONG CLAIM FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271 (1)(C ) OF THE ACT. 40. THE HON'BLE HIMACHAL PRADESH HIGH COURT IN CIT VS H.P. STATE FOREST CORPORATION LTD. (SUPRA) HELD AS UNDER : WE ARE OF THE CONSIDERED VIEW THAT THE LATEST JUDG EMENT OF THE APEX COURT IN RELIANCE PETRO PRODUCTS CASE (SUPRA) SQUARELY C OVERS THE PRESENT CASE ALSO. THE APEX COURT IN THIS JUDGMENT HAS CLEARLY H ELD THAT THE WORD 'INACCURATE' AS USED IN THE ACT WOULD MEAN SOMETHIN G WHICH IS NOT ACCURATE, NOT EXACT OR NOT CORRECT. SOMETHING WHICH IS UNTRUE IS INACCURATE. THE SAME FACTS CAN BE GIVEN TWO INTERPRETATIONS. I F THE INTERPRETATION GIVEN IS PLAUSIBLE THOUGH NOT ACCEPTED BY THE ASSESSING AUTHORITY IT CANNOT BE SAID THAT THE STATEMENT OF PARTICULARS IS SO INACC URATE OR ERRONEOUS AS TO INVITE IMPOSITION OF PENALTY. TRUE IT IS THAT MENS REA IS NOT REQUIRED TO BE PROVED. WHEN MENS REA IS PROVED IT SHOWS THAT THE P ERSON HAD AN INTENTION OF EVADING PAYMENT OF TAX BY ILLEGAL MEANS. MERELY BECAUSE A WRONG INTERPRETATION TO THE SAME SET OF FACTS IS GIVEN WO ULD NOT, IN OUR OPINION, MEAN THAT THE ASSESSEE IS LIABLE TO PAY PENALTY ALS O. WE MUST REMEMBER THAT PENALTY IS BY ITS VERY NATURE PENAL AND SOMEBO DY IS BEING PUNISHED FOR AN ACT WHICH IS UNJUSTIFIED. THE ASSESSEE IN THE PR ESENT CASE HAS ALREADY BEEN BURDENED WITH TAX AND INTEREST ON THE AMOUNT A DDED TO HIS INCOME. THE MOOT QUESTION IS WHETHER THE ASSESSEE SHOULD BE MADE LIABLE TO PAY PENALTY. 22. THE APEX COURT IN RELIANCE PETRO PRODUCTS' CASE (SU PRA) HAS CLEARLY LAID DOWN THAT MERELY BECAUSE THE ASSESSEE MAKES A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMOUNT TO FURNISHING I NACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE PRESEN T CASE, AS POINTED OUT ABOVE, THE ASSESSEE WAS DEDUCTING THE AMOUNT OF RS. 2,12,18,295 ON ACCOUNT OF DETERIORATION OF OLD STOCK. THIS WAS BEI NG DONE ON ESTIMATION ON THE BASIS OF THE REPORTS MADE BY VARIOUS OFFICERS O F THE CORPORATION. THIS ESTIMATION WAS NOT ACCEPTED MAINLY ON THE GROUND TH AT THE REPORTS WERE MADE AND RESOLUTION PASSED BY THE BOARD AFTER THE A SSESSMENT YEAR WAS OVER AND THEREFORE THEY COULD NOT BE GIVEN RETROSPE CTIVE BENEFIT. IT HAS NOT BEEN FOUND THAT THE CLAIM OF THE ASSESSEE THAT THE WOOD HAD ROTTED AND DETERIORATED IS FALSE. IT IS NOBODY'S CASE THAT THE ASSESSEE FUDGED THE AMOUNTS, THE BOOKS OF ACCOUNTS OR TRIED TO CREATE F ALSE EVIDENCE. THE CLAIM MADE BY THE ASSESSEE MAY NOT HAVE BEEN ACCEPTED BY THE REVENUE BUT IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURA TE PARTICULARS TO SUCH AN EXTENT THAT PENALTY SHOULD BE IMPOSED UPON IT. T HERE DOES NOT APPEAR TO BE FALSEHOOD IN THE ACCOUNTS THOUGH THE SYSTEM OF C ALCULATING THE DEPRECIATION MAY HAVE BEEN IMPROPER. WE ALSO CANNOT LOSE SIGHT OF THE FACT THAT ASSESSEE IS A GOVERNMENT CORPORATION. ITS ACCO UNTS ARE DULY AUDITED AND EVEN THE CAG HAS GONE THROUGH AND APPROVED THE ACCOUNTS OF THE CORPORATION. IN SUCH CIRCUMSTANCES, WE ARE OF THE V IEW THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH CLAIM WAS NOT ACCEPTED BY THE REVENUE THAT BY ITSELF WOULD NOT, I N OUR OPINION, ATTRACT PENALTY UNDER S. 271(L)(C) OF THE ACT. 26 41. THE SECOND ASPECT IN RELATION TO THE LEVY OF PE NALTY IS TO BE CONSIDERED IN VIEW OF THE EXPLANATION I CLAUSE (A) UNDER SECTION 271(1) OF THE ACT. THE SAID EXPLANATION UNDER SECTI ON 271(1) OF THE ACT LAYS OUT THAT IN CASES WHERE ANY PERSON UNDER T HIS ACT FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER OF INCOME TAX (APPEALS) OR THE COMMISSIONER TO BE FALSE, THEN THE AMOUNT ADDED OR DISALLOWED FOR COMPUTING THE TOTAL INCOME OF SUCH PERSON IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. 42. FURTHER CLAUSE (B) TO EXPLANATION 1 UNDER SECTI ON 271(1) OF THE ACT PROVIDES THAT WHILE COMPUTING THE TOTAL INCOME OF ANY PERSON, WHERE SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVES THAT SUCH EXPLANAT ION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM, THEN SUCH AMOUNT ADDED TO HIS INCOME IS TO BE TREATED AS INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE CLAUSE (B) TO EXPLANATION 1 UNDER SECTION 271(1) OF THE ACT, THUS SET OUT THAT IN CASE WHERE THE ASSESSEE OFFERS AN EXPLANATION WHICH, (A) IS NOT ABLE TO SUBSTANTIA TE AND; (B) HE IS UNABLE TO PROVE THAT THE EXPLANATION OFFERED BY HIM WAS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAD BEEN DISCLOS ED BY HIM, THEN HE IS LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) O F THE ACT. HOWEVER, WHERE THE EXPLANATION FURNISHED BY SUCH PERSON IS B ONAFIDE AND ALL THE FACTS AND MATERIAL RELATING TO THE COMPUTATION OF I NCOME HAD BEEN FURNISHED ON RECORD, THEN THE SAID PERSON HAVING DI SCHARGED, HIS ONUS CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME. 43. THE HON'BLE DELHI HIGH COURT IN CIT VS DIKSHA H OLIDAYS LTD. (SUPRA) HAD DELIBERATED UPON THE ISSUE AND HAD UPHE LD THE ORDER OF THE 27 TRIBUNAL WHO IN TURN HAD CONSIDERED VARIOUS JUDICIA L PROPOSITIONS ON THE ISSUE AND HELD AS UNDER : PENALTY HAVING BEEN CANCELLED BY THE TRIBUNAL ON FI NDING THAT ASSESSEE HAD DISCLOSED ALL THE FACTS BEFORE THE A.O. AND DIS ALLOWANCE WAS MADE BECAUSE THE ASSESSEE'S CLAIM HAD NOT BEEN SUBSTANT IATED WITH SUFFICIENT EVIDENCE, NO SUBSTANTIAL QUESTION OF LAW ARISES. 44. SIMILARLY, THE CHANDIGARH BENCH OF TRIBUNAL IN ACIT VS TRB EXPORTS PVT. LTD. (SUPRA) HAD, ON THE ISSUE OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT AND WHETHER THE SAME WAS LEVIA BLE WHERE AN EXPENDITURE HAD BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE, HAD HELD AS UNDER : PENALTY UNDER S. 271(L)(C) IS ATTRACTED IN CASE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF I NCOME. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE HAD CLAIMED FOREIGN T RAVEL EXPENSES OF WIFE OF THE DIRECTOR WHO HAD ACCOMPANIED HER HUSBAND ON FOREIGN TRAVEL. THE SAID EXPENDITURE WAS DISALLOWED BEING NOT RELATABLE TO THE BUSINESS OF THE ASSESSEE COMPANY. MERELY BECAUSE AN EXPENDITURE HAS BEEN DISALLOWED IN THE HANDS OF THE ASSESSEE DOES NOT AUTOMATICALLY MA KE THE ASSESSEE EXIGIBLE TO LEVY OF PENALTY UNDER S. 271(L)(C). IN ANY CASE, MERE DISALLOWANCE OF EXPENDITURE DOES NOT ATTRACT THE LE VY OF PENALTY UNDER S. 271(L)(C). THERE IS NO MERIT IN THE LEVY OF PENALTY ON DISALLOWANCE OF EXPENSES HOLDING THE SAME TO BE NON-BUSINESS EXPENS ES. FURTHER, ESTIMATED DISALLOWANCE OF PERSONAL EXPENSES TOTALLI NG RS. 33,135 DOES NOT WARRANT LEVY OF PENALTY UNDER S. 271(L)(C) IN T HE FACTS OF THE CASE WHERE NO EVIDENCE HAS BEEN FOUND TO ESTABLISH THAT THE ASSESSEE HAD EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ORDER OF THE CIT(A) DELETING PENALTY UN DER S. 271(L)(C) ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPEN SES IS UPHELD. 45. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE IS SUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID I SSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BASED ON ONE POSSI BLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASIS OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME BY THE ASSESSEE OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE PENAL PR OVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 46. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS GURDASPUR COOPERATIVE SUGAR MILLS LTD. ON DECIDING THE ISSUE OF LEVY OF PENALTY 28 UNDER SECTION 271(1)(C) OF THE ACT WHERE THE ASSESS EE HAD RECEIVED GRANT-IN-AID WHICH WAS HELD TO BE REVENUE RECEIPTS IN THE HANDS OF THE ASSESSEE AND NOT CAPITAL RECEIPTS, AS CLAIMED BY TH E ASSESSEE, HELD THAT THE ISSUE WAS DEBATABLE AND THERE WAS NO MERIT IN T HE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE HON'BLE HIG H COURT HELD AS UNDER : IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT IN AID FROM THE STATE GOVERNMENT. THE ASSESSE E REFLECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVENUE RECEIPT. THE ISSUE; WHETHER THE AMOUNT OF GRANT IN AID IS CAPITA L RECEIPT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNED IN THE JUDGMENT RELIED UPON IS ON FACT OF NON-FURNISHING O F DETAILS OF EXPENSES. THE ISSUE WAS NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RELIANCE ON THE DIVISION BENCH JUDGMENT IS MISCONCE IVED. 47. FURTHER, THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN CIT VS RAJ OVERSEAS ALSO ADJUDICATING THE ISSUE OF LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT ON DISALLOWANCE OF CLAIM OF DE DUCTION UNDER SECTION 80IB OF THE ACT IN RESPECT OF INCOME FROM D UTY DRAWBACK HELD AS UNDER : THE ASSESSEE IS MANUFACTURER AND DERIVED INCOME FRO M EXPORTS. THE ASSESSEE CLAIMED DEDUCTION UNDER S. 80-IB OF THE AC T IN RESPECT OF INCOME FROM DUTY DRAW BACK. THE AO DISALLOWED THE SAID CLA IM ON THE GROUND THAT THE INCOME DERIVED FROM DUTY DRAW BACK WAS NOT INCOME DERIVED FROM INDUSTRIAL UNDERTAKING, AS HELD BY THE HON'BLE SUPREME COURT IN CIT VS. STERLING FOODS INDIA (1999) 153 CTR (SC) 43 9 : (1999) 237 ITR 579 (SC). PENALTY WAS ALSO LEVIED. THE CIT(A) UPHEL D THE VIEW OF THE AO BUT THE TRIBUNAL DELETED THE PENALTY WITH THE FOLLO WING OBSERVATIONS : ...................THUS, PRIMA FACIE, IT INDICATES THAT THIS ISSUE WAS A DEBATABLE ONE. 4. IN VIEW OF FACTUAL FINDING OF THE TRIBUNAL, IT C ANNOT BE DISPUTED THAT THE ISSUE WAS DEBATABLE AND DEDUCTION CLAIMED BY THE AS SESSEE DID NOT LACK BONA FIDES. IN SUCH A SITUATION, PENALTY UNDER S. 7 1(C) OF THE ACT WAS NOT ATTRACTED. IN RECENT JUDGMENT OF THE HON'BLE SUPREM E COURT IN CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 230 CTR (SC) 320 : (2010) 36 DTR (SC) 449 THE LEGAL POSITION TO THIS EFFECT HAS BEEN REITERATED. IF THE ASSESSEE HAS MADE FULL DISCLOSURE IN THE RETURN, CL AIM FOR DEDUCTION CANNOT BE HELD TO BE GIVING OF INACCURATE PARTICULA RS. THE VIEW TAKEN BY THE TRIBUNAL IS, THUS, A POSSIBLE VIEW. 48. ANOTHER ASPECT OF THE APPEAL BEFORE US, AS POIN TED OUT BY THE LD. AR FOR THE ASSESSEE WAS THAT THE PRESENT APPEAL WAS DISMISSED AGAINST 29 THE ASSESSEE IN VIEW OF THE RATIO LAID DOWN IN ANDH RA PRADESH HOUSING BOARD VS DCIT (SUPRA) AGAINST WHICH AN APPEAL HAS B EEN ADMITTED BY THE HON'BLE ANDHRA PRADESH HIGH COURT IN IT APPEAL NO. 611 OF 2013 AND THE SAID ISSUE IS PENDING BEFORE THE HON'BLE HI GH COURT. IN VIEW THEREOF, IT WAS POINTED OUT BY THE LD. AR FOR THE A SSESSEE THAT AS AN APPEAL IS PENDING BEFORE THE HON'BLE HIGH COURT, TH E ISSUE BECOMES DEBATABLE AND NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE. IN RELATION THERETO, THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE DELH I HIGH COURT IN CIT VS LIQUID INVESTMENT TRADING CO. (SUPRA). 49. THE HON'BLE DELHI HIGH COURT IN CIT VS LIQUID I NVESTMENT & TRADING CO. (SUPRA) HELD THAT IN CASES WHERE THE AP PEAL HAS BEEN PREFERRED AGAINST THE ORDER OF THE TRIBUNAL AND THE SAME HAVE BEEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED SHO WS THAT THE ISSUE IS DEBATABLE AND FOR THESE REASONS, NO PENALTY UNDE R SECTION 271(1)(C) OF THE ACT COULD BE LEVIED. 50. THE LD. DR FOR THE REVENUE, HOWEVER IN REPLY, R ELIED UPON THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN CIT VS SPLENDOUR CONSTRUCTION IN IT APPEAL 1977 OF 2010, DATE OF JUD GEMENT 14.01.2011 WHEREIN THE ISSUE WAS CONSIDERED AND IT WAS HELD TH AT IN EACH CASE WHEREIN APPEAL HAS BEEN PREFERRED, IT CANNOT BE SAI D THAT THE ISSUE WAS DEBATABLE AND THE ASSESSEE WAS LIABLE TO LEVY OF PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. 51. THE LD. DR FOR THE REVENUE, IN REPLY HAD PLACED RELIANCE ON CIT VS ATUL MOHAN BINDAL (SUPRA) WHEREIN IT HAS BEEN HE LD THAT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS A ST RICT CIVIL LIABILITY. WE ARE IN CONFORMITY WITH THE PLEA OF THE LD. DR FO R THE REVENUE IN THIS REGARD. THE HON'BLE SUPREME COURT IN DHARMINDE RA TEXTILE & 30 PROCESSORS CASE (SUPRA) HAVE EARLIER LAID DOWN THE PROPOSITION THAT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS CIVIL LIABILITY AND THE SAME PROPOSITION HAS BEEN UPHELD BY THE LAT ER DECISION OF THE HON'BLE SUPREME COURT. HOWEVER, IN EACH CASE, WHERE AN ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE, THE ISSUE T O BE CONSIDERED IS WHETHER THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND COMPLETE INFORMATION IN THIS REGARD WAS FURNISHED IN THE RET URN OF INCOME. THE ISSUE HAVING BEEN DECIDED AGAINST THE ASSESSEE PERS E DOES NOT ATTRACT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS HELD BY VARIOUS COURTS AND FURTHER, WHERE SUCH CLAIM OF THE ASSESSEE IS A DEBATABLE ISSUE THEN, THERE IS NO MERIT IN ANY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHICH PROPOSITION HAS ALSO BEEN HELD BY VARIOUS COURTS AS REFERRED TO BY US IN THE PARAS HE REIN ABOVE. 52. NOW COMING TO THE FACTS OF THE PRESENT CASE, TH E ISSUE ARISING IN THE PRESENT APPEAL IS WHETHER THE ASSESSEE IS LIABL E TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE HON'BLE SUP REME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUP RA) HAVE LAID DOWN THE PROPOSITION THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCU RATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE . 53. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (SUPRA) ON THE IS SUE WHETHER THE AMOUNT OF GRANT-IN-AID WAS CAPITAL RECEIPT OR REVEN UE RECEIPT BEING DEBATABLE ISSUE HELD THAT THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT IMPOSABLE. THE RELEVANT FINDINGS OF THE HON'BLE PUNJAB & HARYANA 31 HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUG AR MILLS (SUPRA) ARE AS UNDER: 3. WE FIND THAT THE RELIANCE ON THE ABOVESAID JUDGM ENT IS NOT TENABLE, AS IN THE AFORESAID CASE, THE DEDUCTIONS UNDER SECT ION 80-O OF THE ACT WAS DECLINED FOR THE REASON THAT THE ASSESSEE HAS NOT P RODUCED ANY DETAILS OF THE EXPENSES ALLEGEDLY INCURRED BY IT. THE DELHI HI GH COURT OBSERVED (PAGE 170): 'THE ASSESSEE, FOR CLAIMING DEDUCTION UNDER SECTION 80-O OF THE ACT, WANTED THE SAME AT 50 PER CENT OF THE GROSS INCOME RECEIVE D IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA PROVIDED BY IT TO ITS FOREIGN CLI ENTS. THE ASSESSING OFFICER, HOWEVER, WAS OF THE VIEW THAT ON CORRECT INTERPRETA TION UNDER SECTION 80-O, DEDUCTION IS RESTRICTED TO THE NET INCOME AND, THER EFORE, EXPENDITURE INCURRED IN INDIA FOR EARNING THE FOREIGN EXCHANGE HAD TO BE DE DUCTED. THE ASSESSING OFFICER, THEREFORE, WANTED THE ASSESSEE TO FURNISH THE DETAILS OF EXPENSES. AS THE ASSESSEE FAILED TO DO THE NEEDFUL IN RESPECT OF VAR IOUS PARTICULARS DEMANDED, THE ASSESSING OFFICER WAS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE SUCH EXPENDITURE IN THE RATIO OF PROPORTION OF FOREIGN INCOME TO THE TO TAL INCOME.' 4. IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT-IN-AID FROM THE STATE GOVERNMENT. THE ASSESSE E REFLECTED THE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVENUE RECEIPT. THE ISSUE WHETHER THE AMOUNT OF GRANT-IN-AID IS CAPITAL RECEI PT OR A REVENUE RECEIPT, IS A DEBATABLE ISSUE. THE FINDINGS RETURNED IN THE JUDGM ENT RELIED UPON IS ON FEET OF NON-FURNISHING OF DETAILS OF EXPENSES. THE ISSUE WA S NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RELIANCE ON THE DIVISI ON BENCH JUDGMENT IS MISCONCEIVED. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR I N THE FINDINGS RECORDED BY THE TRIBUNAL WHILE SETTING ASIDE THE PENALTY. CO NSEQUENTLY, WE DO NOT FIND THAT THE ORDER OF THE TRIBUNAL GIVES RISE TO A NY SUBSTANTIAL QUESTION OF LAW FOR THE OPINION OF THIS COURT. 54. IN VIEW OF THE ABOVE, IT IS TO BE SEEN WHETHER CLAIM OF THE ASSESSEE WAS BONAFIDE OR MALAFIDE WITH AN INTENTION TO EVADE TAXES. ADMITTEDLY, THE ASSESSEE HAD ACTED ON THE ADVICE OF STATE GOVERNMENT AND PAID RS. 225 CR FOR THE DEVELOPMENT OF INTERNAT IONAL AIRPORT AT MOHALI, WITH THE AIM THAT SUCH ESTABLISHMENT OF INT ERNATIONAL AIRPORT IN THE REGION WOULD PROVIDE BETTER INFRASTRUCTURAL FACILITIES, WHICH IN TURN WOULD BOOST URBAN DEVELOPMENT OF THE STATE OF PUNJAB AND BOOST THE ACTIVITIES UNDERTAKEN BY IT, RESULTING IN HIGHE R PROFITS TO THE ASSESSEE. EXPLANATION 1 TO SECTION 271(1) DOES PRO VIDE A LEGAL FICTION UNDER WHICH THE ONUS IS UPON THE ASSESSEE TO ESTABL ISH THAT ALL FACTS RELATING TO THE CLAIM AND MATERIAL FACTS RELATING T O THE COMPUTATION OF 32 INCOME HAD BEEN DISCLOSED IN THE RETURN OF INCOME A ND ALSO THAT DEDUCTION OR EXPENDITURE WAS ALLOWABLE IN ITS HANDS AND MERELY BECAUSE THE ADDITION OR DISALLOWANCE HAS BEEN MADE TO ITS TOTAL INCOME, DOES NOT ESTABLISH CONCEALMENT IN THE HANDS OF ASSE SSEE. HENCE, WHERE THERE IS NO FINDING THAT ANY OF THE DETAILS SUPPLIE D BY ASSESSEE IN RETURN OF INCOME WERE FOUND TO BE INCORRECT OR ERRO NEOUS OR FALSE, THE ASSESSEE IS NOT LIABLE FOR LEVY OF PENALTY FOR CON CEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 55. THE ASSESSEE IN PRESENT CASE HAVING PAID FOR TH E ESTABLISHMENT OF INTERNATIONAL AIRPORT AT MOHALI WAS UNDER THE BONAF IDE BELIEF THAT THE EXPENDITURE IS DULY ALLOWABLE AS REVENUE EXPENDITUR E AND SAME WAS SO CLAIMED IN THE PROFIT & LOSS ACCOUNT. THE SAID EXP ENDITURE HAS BEEN HELD BY THE TRIBUNAL NOT TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. IT HAS ALSO BEEN HELD BY THE TRIBUNAL TH AT THE EXPENDITURE IS IN NATURE OF CAPITAL EXPENDITURE AND THEREFORE, THE SAME IS NOT ALLOWABLE. MERE DISALLOWANCE OF EXPENDITURE IN THE HANDS OF ASSESSEE DOES NOT ESTABLISH THE CHARGE OF CONCEALMENT IN THE HANDS OF ASSESSEE. VARIOUS COURTS HAVE TIME AND AGAIN LAID DOWN THE PR INCIPLE THAT WHERE THE ASSESSEE HAS BONAFIDE EXPLANATION OF NON-EXCLUS ION OF RECEIPTS AS ITS INCOME OR FOR CLAIMING PARTICULAR ITEM OF EXPEN DITURE AS DEDUCTION, EVEN WHERE CLAIM OF ASSESSEE IS REJECTED, NO PENALT Y FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME COULD BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE ASS ESSEE HAVING DECLARED COMPLETE FACTS WITH REGARD TO EXPENDITURE OF RS. 225 CR AND THE CLAIM OF THE ASSESSEE BEING BONAFIDE, THOUGH NO T ALLOWED AS EXPENDITURE IN THE HANDS OF ASSESSEE, DOES NOT JUST IFY LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, MUCH LESS PENAL TY @ 150% OF THE TAX SOUGHT TO BE EVADED. 33 56. FURTHER, IN THE TOTALITY OF THE FACTS AND FOLLO WING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AND THE VARIOUS O THER HIGH COURTS IN SERIES OF THE DECISIONS, WE HOLD THAT IN VIEW OF THE FINDINGS OF THE TRIBUNAL IN ASSESSEE'S OWN CASE, WHEREIN THE ADDIT ION IN THE HANDS OF THE ASSESSEE HAS BEEN MADE ON TWO ACCOUNTS I.E., TH E EXPENDITURE HAVING BEEN INCURRED FOR THE PURPOSE OF BUSINESS BE ING NOT ALLOWABLE. FURTHER FINDING OF THE TRIBUNAL IN ASSESSEE'S CASE IS THAT THE EXPENDITURE IN ANY CASE IS IN THE NATURE OF CAPITAL EXPENDITURE AND THEREFORE, THE SAME WAS NOT ALLOWABLE. THE ISSUE B EING DEBATABLE DOES NOT WARRANT LEVY OF PENALTY FOR CONCEALMENT UNDER S ECTION 271(1)(C) OF THE ACT. 57. IN VIEW OF THE ABOVESAID FINDINGS, WE HOLD THAT THE ASSESSEE, IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES, IS N OT EXIGIBLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHERE THE CLAIM OF THE ASSESSEE VIS--VIS EXPENDITURE INCURRED ON E STABLISHMENT OF INTERNATIONAL AIRPORT HAD BEEN REJECTED. ACCORDING LY, WE DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE A CT AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. ITA NOS. 26,27/CHD/2012 & ITA NOS. 814, 254 AND 81 5/CHD/2013 REVENUES APPEALS (A.YS : 2004-05, 2005-06, 2007-08 TO 2009-10 58. IN ALL THE APPEALS, THE REVENUE HAS RAISED IDEN TICAL GROUNDS OF APPEAL. THEREFORE, THE GROUNDS OF APPEAL AS RAISED IN ITA NO. 254/CHD/2013 READ AS UNDER : 1. T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. C1T(A) HAS ERRED IN ALLO WING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN IN LAW, THE 34 3. LD. C1T(A), HAS ERRED IN DELETING THE PENALTY AMOUN TING TO RS.14,26,215/- WHICH WAS LEVIED BY THE ASSESSI NG OFFICER U/S 271(L)(C) WITH RESPECT TO ADDITION OF RS.46,15,584/- MADE ON ACCOUNT OF INSTALLMENTS RECE IVED DURING THE YEAR ON ACCOUNT OF FOR SALE OF HOUSES/FL ATS. 59. IDENTICAL ISSUE HAS BEEN RAISED BY THE REVENUE IN ALL THE APPEALS AND WE PROCEED TO DECIDE THE SAME AFTER HEARING BOT H THE AUTHORIZED REPRESENTATIVES BY WAY OF THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 60. THE REVENUE IS IN APPEAL AGAINST THE DELETION O F PENALTY ON THE ISSUE OF ADDITION MADE ON ACCOUNT OF INSTALLMENT RE CEIVED ON SALE OF HOUSES/FLATS. 61. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CHANGED ITS M ETHOD OF ACCOUNTING TO MERCANTILE SYSTEM OF ACCOUNTING. HOW EVER, THE INSTALLMENTS RECEIVED ON SALES OF HOUSES/FLATS UNDE R VARIOUS SCHEMES WERE NOT RECOGNIZED AS INCOME BY THE ASSESSEE, WHIL E COMPUTING ITS INCOME FOR THE DIFFERENT YEARS UNDER CONSIDERATION. THE ASSESSING OFFICER, IN VIEW OF THE ADDITION MADE IN THE HANDS OF THE ASSESSEE WHICH IN TURN WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HOLDING THE ASSESSEE TO BE LIABLE FOR PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT AND THE SAME WAS LEVIED UPON T HE ASSESSEE. 62. THE COMMISSIONER OF INCOME TAX (APPEALS), IN TH E APPEAL FILED AGAINST THE ORDER LEVYING PENALTY UNDER SECTION 271 (1)(C) OF THE ACT DELETED THE PENALTY ON THE ISSUE OF INSTALLMENTS RE CEIVED ON SALE OF HOUSES/FLATS. 35 63. THE REVENUE IS IN APPEAL AGAINST THE SAID PART DELETION OF PENALTY LEVIABLE UNDER SECTION 271(1)(C) OF THE ACT. 64. WE FIND THAT THE PRESENT ISSUE OF ADDITION ON A CCOUNT OF INSTALLMENTS RECEIVED ON SALE OF HOUSES/FLATS HAS B EEN REMITTED BACK TO THE FILE OF ASSESSING OFFICER WITH DIRECTIONS TO RE COMPUTE THE INCOME IN THE HANDS OF THE ASSESSEE ARISING ON ACCOUNT OF THE INSTALLMENTS RECEIVED ON SALE OF HOUSES/FLATS AFTER HOLDING THAT THE SAME ARE INCLUDIBLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE MERCANTILE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE. THE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTE THE INCOME AFTER CONSIDER ING THE RECEIPTS AND EXPENDITURE INCURRED BY THE ASSESSEE ON THIS AC COUNT. CONSEQUENTLY, THE ADDITION ON THIS ISSUE HAS BEEN C ANCELLED AND THE ISSUE SENT BACK TO THE ASSESSING OFFICER WITH DIREC TIONS TO DECIDE THE SAME DENOVO. IN VIEW THEREOF, WE HOLD THAT THE ISS UE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RELAT ION TO THE AFORESAID ADDITION ON ACCOUNT OF INSTALLMENTS RECEIVED ON SAL E OF FLATS/HOUSES DOES NOT STAND AS THE SAID ADDITION HAS NOT BEEN UP HELD BY THE TRIBUNAL AND THE MATTER HAS BEEN SENT BACK TO THE FILE OF AS SESSING OFFICER. HOWEVER, IN THE INTEREST OF JUSTICE, WE HOLD THAT T HE ASSESSING OFFICER SHALL BE AT LIBERTY TO INITIATE AND COMPLETE THE PE NALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AFTER DECIDING T HE ISSUE OF ADDITION ON ACCOUNT OF INSTALMENTS RECEIVED ON SALE OF HOUSE S/FLATS AND THE PROPORTIONATE EXPENDITURE ALLOWABLE AGAINST THE SAM E, UNDER THE REGULARLY EMPLOYED METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. IN VIEW THEREOF, WE DELETE THE PENALTY LEVIED UNDER SE CTION 271(1)(C) OF THE ACT ON THE ADDITION MADE ON ACCOUNT OF SALE/PUR CHASE OF HOUSES/FLATS WITH THE LIBERTY TO RE-INITIATE THE SA ID PROCEEDINGS AFTER 36 GIVING APPEAL EFFECT TO THE ORDER OF THE TRIBUNAL. THUS, THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN ALL THE APPEALS ARE DISMISSED. 65. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D AND ALL THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED:26 TH FEBRUARY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.