Tecnotree Convergence Limited , Bangalore V. Deputy Commissioner of Income TAx Circle-7(1)(1), Bangalore

ITA 1518/BANG/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8942 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 04-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R VASUDEVAN M S NEER
• Keywords: Business income; Wrong claim; Capital Gains
• Section: 271(1)(c); 14A; 274; 10(33); 10(33); 13; 63; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO . 1518/BA NG/2017 ASSESSMENT YEAR : 2009 - 10 TECNOTREE CONVERGENCE LTD., [NOW TECNOTREE CONVERGENCE PRIVATE LIMITED], NO.65/2, B-BLOCK, 6 TH FLOOR, LEVEL 07, BAGMANE TRIDIB, 6 TH FLOOR, BAGMANE TECH PARK, C V RAMAN NAGAR, BYRASANDRA, BANGALORE 560 093. PAN: AAACL 7345L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. VASUDEVAN, ADVO CATE RESPO NDENT BY : M S. NEERA MALHOTRA, C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 11. 0 8 .2021 DATE OF PRONOUNCEMENT : 11 .0 8 .202 1 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF CIT(APPEALS)-15, DELHI DATED 13.3.2017 FOR THE ASSE SSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 16(1), NE W DELHI (HEREINAFTER REFERRED TO AS `LD. AO') ERRED IN PASS ING THE ORDER ITA NO.1518/BANG/2017 PAGE 2 OF 13 UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (`ACT') (`PENALTY ORDER') LEVYING PENALTY OF INR 4,37,47,66 0 AND THE COMMISSIONER OF INCOME-TAX (APPEALS)-15 [LD.CIT(A) '] ERRED IN UPHOLDING THE SAID ORDER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. AO AND THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE ASSESSMENT PROCEEDINGS, AND ANY ADDITIONS/ DISALLOWANCES MADE IN THE ASSESSMENT ORDER COULD NOT MECHANICALLY LEAD TO A L EVY OF PENALTY, UNLESS IT IS PROVED THAT THE APPELLANT HAS DELIBERATELY FURNISHED ANY INACCURATE PARTICULARS / CONCEALED PA RTICULARS OF ITS INCOME. 3. THE LD. AO AND THE LD. CIT(A) HAVE ERRED ON FACT S AND IN LAW IN HOLDING THAT THE APPELLANT HAS FURNISHED INA CCURATE PARTICULARS OF INCOME WITHOUT APPRECIATING THE FACT THAT ADEQUATE DISCLOSURES WERE MADE IN THE RETURN OF INCOME AND/O R SUBMISSIONS FILED DURING THE COURSE OF ASSESSMENT/ PENALTY PROC EEDINGS. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO ERRED IN NOT APPRECIATING THAT PENALTY UNDER SECTION 271(1)(C) I S LEVIABLE WITH RESPECT TO THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' (I.E. TAX ON ASSESSED INCOME LESS TAX ON RETURNED INCOME). 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO ERRED IN COMPUTING THE PENALTY ON THE TOTAL AMOUNT OF REDUCT ION IN SECTION 10A CLAIM WITHOUT APPRECIATING THAT IN THE PENALTY ORDER, CONCEALMENT OF INCOME HAS BEEN ALLEGED ONLY IN RELA TION TO THE NON-REALISATION OF EXPORT PROCEEDS. RELIEF ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE APPELLANT PRAYS THAT THE LD. AO BE DIRECTED TO DELE TE THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE APPELLANT SUBMITS THAT THE ABOVE GROUNDS ARE IN DEPENDENT OF AND WITHOUT PREJUDICE TO ONE ANOTHER. 3. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS OF APPEAL AS FOLLOWS:- ITA NO.1518/BANG/2017 PAGE 3 OF 13 1. IN THE LIGHT OF THE BINDING JUDGEMENT OF THE JU RISDICTIONAL HIGH COURT OF KARNATAKA IN CIT V. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565 (KAR.), THE LEARNED CIT( A) ERRED IN UPHOLDING THE LEVY OF PENALTY AS THE NOTICE UNDER S ECTION 274 ISSUED BY THE LEARNED AO DID NOT INDICATE WHETHER T HE IMPUGNED PROCEEDINGS WERE INITIATED ON THE GROUND THAT THE A PPELLANT HAS CONCEALED PARTICULARS OF ITS INCOME OR ON THE GROUN D THAT IT FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER, VARY AND/ OR WITHDRAW ANY OR ALL OF THESE GROUNDS OF APP EAL. FOR THESE GROUNDS (BOTH THOSE ORIGINALLY URGED AND THOSE URGE D HEREIN) AND OTHERS THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE IMPUGNED ORDER OF THE LEARNED CIT(A) MAY BE QUASHED AND THE APPEAL ALLOWED. 4. AT THE TIME OF HEARING, THE ADDITIONAL GROUNDS O F APPEAL WERE NOT PRESSED AND AS SUCH, THE SAME ARE DISMISSED AS NOT PRESSED. 5. REGARDING THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 [THE ACT], THE LD. AR SUBMITTED THAT PENALTY I N THIS CASE WAS LEVIED ON THE FOLLOWING ISSUES:- (I) EXPORT PROCEEDS WERE NOT REALIZED WITHIN THE TIME PRESCRIBED U/S. 10A OF THE ACT. AS SUCH, PENALTY LE VIED ON THE AMOUNT OF RS.12,86,23,096 TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED. (II) THE ASSESSEE WRONGLY CLAIMED THE SHORT TERM CAPITAL LOSS ON CERTAIN SHARES WHICH ATTRACTED PROVISIONS OF SEC TION 94 AND PENALTY LEVIED ON THE AMOUNT OF RS.87,048 AS SU CH, PENALTY LEVIED ON THE AMOUNT OF RS.12,86,23,096 TO THE EXTENT OF 100% OF TAX SOUGHT TO BE EVADED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE LD. AR SUBMITTED THAT THE ISSUE RELATING TO CLA IM OF DEDUCTION U/S. 10A ON THE QUANTUM ADDITION WAS SUBJECT MATTER OF APPEA L BEFORE THIS TRIBUNAL AND VIDE ORDER DATED 03.06.2020 THE TRIBUNAL IN ITA NOS.2815/DEL/2013 HELD AS FOLLOWS:- ITA NO.1518/BANG/2017 PAGE 4 OF 13 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER THE GROUNDS RAISED BY THE REVENUE AS REPRODUCED ABO VE, THIS IS THE GRIEVANCE OF THE REVENUE THAT LEARNED CIT(A) HA S ERRED IN DIRECTING THE AO TO EXCLUDE THE EXPENSES INCURRED I N FOREIGN CURRENCY OUTSIDE INDIA FROM THE TOTAL TURNOVER OF T HE ASSESSEE FOR COMPUTING DEDUCTION ALLOWABLE U/S 10A. ON THIS ISSU E, IT WAS HELD BY HONBLE KARNATAKA HIGH COURT THAT TOTAL TUR NOVER IS SUM TOTAL OF DOMESTIC TURNOVER AND EXPORT TURNOVER. THE REFORE, IF AN AMOUNT IS REDUCED FROM EXPORT TURNOVER, THEN TOTAL TURNOVER ALSO GOES DOWN BY THE SAME AMOUNT AUTOMATICALLY. IN VIEW OF THIS, WE FIND THAT THE DIRECTION OF THE LEARNED CIT(A) IS IN LINE WITH THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT AND RESPEC TFULLY FOLLOWING THE SAME, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. 7. AS SUCH, THERE WAS NO SUSTENANCE OF ADDITION ON ACCOUNT OF CLAIM OF DEDUCTION U/S. 10A OF THE ACT. BEING SO, THERE IS NO QUESTION OF LEVYING PENALTY U/S. 271(1)(C) OF THE ACT ON THIS ISSUE. 8. FURTHER, REGARDING THE LEVY OF PENALTY FOR CLAIM OF SHORT TERM CAPITAL LOSS BY INVOKING THE PROVISIONS OF SECTION 94(7) OF THE ACT, THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY HAD DISCLOSED T HESE TRANSACTIONS AND FROM THE DETAILS FURNISHED BY THE ASSESSEE, THE AO HAS COME TO THE CONCLUSION THAT CAPITAL LOSS TO THE EXTENT OF DIVID END INCOME CLAIMED EXEMPT CANNOT BE ALLOWED. HE SUBMITTED THAT THERE WAS NO FURNISHING OF ANY INACCURATE PARTICULARS OR CONCEALMENT OF INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE WAS UNDER A BONAFID E BELIEF THAT IT WAS NOT COVERED U/S. 94(7) AND SUBMITTED THAT SIMILAR I SSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF ADMINISTRATOR OF THE ESTATE OF LATE MR. E.F. DINSHAW IN ITA NO.350/MUM/2010 DATED 28.09.2012 WHEREIN IT WAS HELD AS UNDER:- 9. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE SUBMISSIONS OF THE REPRESENTATIVES OF THE PARTIES. WE HAVE ALSO CONSIDERED THE CASES RELIED UPON BY TH E LEARNED REPRESENTATIVES BEFORE US (SUPRA) AND HAVE ALSO CON SIDERED THE ITA NO.1518/BANG/2017 PAGE 5 OF 13 CASES AS MENTIONED BY THE AUTHORITIES BELOW IN THEI R RESPECTIVE ORDERS. 10. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESS EE PURCHASED 35,60,228,461 UNITS OF SUN F & C MONEY VALUE FUND F OR `.4,70,00,000/- ON 21ST MARCH, 2002 AND RECEIVED DI VIDEND OF `.97,90,628/- ON 22ND MARCH, 2002. THE SAID DIVIDEN D INCOME IS EXEMPT UNDER SECTION 10(33) OF THE ACT. FURTHER, THE ASSESSEE ALSO SOLD THE SAID UNITS ON 16TH APRIL, 2002 AT A LOSS O F `.1,06,03,428/-. THERE IS NO DISPUTE TO THE FACT THAT IN THE RETURN FILED, THE ASSESSEE DID NOT ADJUST THE DIVIDEND INCOME AGAINST THE SHOR T TERM CAPITAL GAIN AS PER PROVISIONS OF SECTION 94(7) OF THE ACT. HOWEVER, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSEE FIRSTLY SUBMITTED THAT THE SAID UNITS WERE NOT SOLD OR TRANSFERRED BUT WERE REDEEMED AND AS SUCH THE SAME WERE NOT COV ERED BY THE PROVISIONS OF SECTION 94(7) OF THE ACT. WE AGREE WITH THE AUTHORITIES BELOW THAT THE SAID CONTENTION OF THE A SSESSEE HAS NO MERITS AS THE TRIBUNAL HAS HELD IN THE CASE OF MRS. PARVIZ WANG CHUK BASI (SUPRA), THAT REDEMPTION OF BONDS/UNITS A FTER MATURITY IS A TRANSFER WITHIN THE MEANING OF THE SECTION 2(47) OF THE ACT. NOT ONLY THIS, IN THE APPEAL FILED BY THE ASSESSEE, THE TRIBUNAL VIDE ITS ORDER DATED 27TH OCTOBER, 2010, IN ITA NO. 347/M/2007 ALSO HELD THAT THE UNITS WHICH HAVE BEEN REDEEMED W OULD CONSTITUTE TRANSFER FOR THE PURPOSE OF SECTION 94(7) OF THE ACT. HENCE, THE SAID PLEA OF THE ASSESSEE HAS RIGHTLY BE EN REJECTED BY THE AUTHORITIES BELOW. NOW, THE QUESTION ARISES AS TO WHETHER IT WAS A BONAFIDE CLAIM OF THE ASSESSEE OR THE ASSESSE E HAS DELIBERATELY/INTENTIONALLY FURNISHED INACCURATE PAR TICULARS OF INCOME. IF THE ASSESSEE HAS CONSCIOUSLY FURNISHED T HE INACCURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME, THERE IS NO DISPUTE TO THE FACT THAT THE PENALTY UN DER SECTION 271 (10(C) OF THE ACT IS ATTRACTED. HOWEVER, IF THE CLA IM FOR DEDUCTION MADE IS BONAFIDE CLAIM AND THERE IS NO IN TENTION TO HIDE PARTICULARS OF INCOME, WE ARE OF THE CONSIDERED VIE W THAT THE PROVISION OF SECTION 271(1)(C) OF THE ACT ARE NOT ATTRACTED. 11. WE OBSERVE THAT THE ASSESSEE HAS FURNISHED REQU ISITE DETAILS OF THE PURCHASE AND SALE OF THE SAID UNITS AS WELL AS RECEIPT OF DIVIDEND INCOME AND ALSO THE SHORT TERM CAPITAL LOS S INCURRED THEREON. THE HON'BLE SUPREME COURT HAS HELD IN THE CASE OF UNION OF INDIA & ORS VS. DHARAMENDRA TEXTILE PROCES SORS & ITA NO.1518/BANG/2017 PAGE 6 OF 13 ORS. (SUPRA), THAT PENALTY UNDER SECTION 271(1)(C) IS ONLY A CIVIL LIABILITY TO COMPENSATE FOR LOSS OF REVENUE. THE HO N'BLE APEX COURT IN THE SAID CASE HAS ALSO HELD THAT NEXUS OF WILFUL CONCEALMENT IS NOT REQUIRED TO BE PROVED BY THE REV ENUE. THUS, THE CASE OF PENALTY IS TO BE EVALUATED UNDER THE PR OVISION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, AND IN CASE, IN RESPECT OF ADDITIONS, THE ASSESSEE OFFERS AN EXPLAN ATION, WHICH HE IS ABLE TO SUBSTANTIATE AND IS ABLE TO PROVE THAT T HE EXPLANATION IS BONAFIDE AND ALL NECESSARY DETAILS IN RELATION TO T HE CLAIM HAVE BEEN GIVEN, PENALTY IS NOT LEVIABLE. IN THE CONTEXT OF THE ABOVE DECISION, WE OBSERVE THAT IN THE CASE BEFORE US, TH E ASSESSEE HAS NOT CONCEALED ANY FACTS OF MAKING THE INVESTMENT IN PURCHASE OF UNITS OF SUN F & C MONEY VALUE FUND NOR THERE IS AN Y CONCEALMENT OF RECEIPT OF DIVIDEND INCOME THEREON A ND ALSO THE LOSS INCURRED ON REDEMPTION OF THE SAID BONDS. WE F IND MERIT IN THE CONTENTION OF THE LEARNED AR THAT IF THE ASSESS EE HAS RAISED A LEGAL ISSUE ON INTERPRETATION THE ASSESSEE'S BELIEF THAT INCOME WAS NOT TAXABLE AND EVEN IF THE SAID EXPLANATION IS NOT FOUND TO BE ACCEPTABLE, THE PENALTY UNDER SECTION 271(1)(C) COULD NOT BE LEVIED AS OBSERVED BY THE HON'BLE APEX COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA LTD. (SUPRA). WE ALSO OBSERVE THAT THE ASSESSEE HAS NOT HIDDEN OR WRONGLY MENTIONED AN Y FACTS IN RESPECT OF SAID TRANSACTION. THEREFORE, ON CONSIDER ATION OF FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW, THAT IT CO ULD NOT BE SAID THAT THERE WAS A DESIRE ON THE PART OF THE ASSESSEE TO CONCEAL OR HIDE THE INCOME SO AS TO AVOID TO PAY THE TAX. FURT HER IN THE CASE OF WALTER SALDHANA (SUPRA), THE ITAT MUMBAI BENCH H AS ALSO HELD THAT IF THE ASSESSING OFFICER HAS MADE THE ADD ITION ONLY ON THE BASIS OF MATERIAL AND INFORMATION FURNISHED BY THE ASSESSEE, THE LEVY OF PENALTY UNDER SECTION271(1)(C) OF THE A CT IS NOT JUSTIFIED. IN THIS REGARD, WE CONSIDER IT'S PRUDENT TO REPRODUCE PARA 16 OF THE SAID CASE, WHICH READS AS UNDER :- '16.... ON PERUSAL OF THE ORDERS OF REVENUE AUTHORI TIES, WE FIND THAT THE PENALTY UNDER SECTION 271(1)(C) WAS LEVIED ON THE GROUND THAT THE ASSESSEE VIOLATED OF PROVISIONS OF SECTION 94(7) OF THE ACT BY NOT IGNORING LOSSES WHILE COMPUTING SHORT-TERM CAPITAL GAINS ON TRANSACTIONS RELATED TO SECTION 94(7) OF THE ACT. IT IS IMPORTANT TO STATE HERE THAT THE ASSESSING OFFICER MADE THE ADDITION O NLY ON THE BASIS OF MATERIAL AND INFORMATIONS FURNISHED BY THE ASSESSEE. THE APEX COURT IN THE CASE OF RELIANCE ITA NO.1518/BANG/2017 PAGE 7 OF 13 PETROPRODUCTS (P.) LTD. (SUPRA) REGARDING THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) HAS HELD THAT THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHE RE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. BUT IN THE CASE UNDER CONSIDERATION WE FIND THAT THE ASSESSEE HAS FURNISHED FULL DETAIL AND HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR HAS FURNISHE D ANY INACCURATE PARTICULAR OF INCOME. FURTHER, WE NOTICE D THAT THERE WERE NO SUCH SPECIFIC REQUIREMENTS IN THE RET URN FORM APPLICABLE TO THE YEAR UNDER CONSIDERATION. SU CH REQUIREMENT OF THE COLUMN IN THE RETURN HAS BEEN IN SERTED BY AMENDMENT IN RETURN FORM, ITR-6, AT PAGE 17, 'SCHEDULE CG CAPITAL GAIN' S.N.3(D) WHICH IS APPLIC ABLE FROM ASSESSMENT YEAR 2007-08. IN THE CASE OF RELIAN CE PRETROPRODUCTS LTD. (SUPRA) THE HON'BLE SUPREME COU RT HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAIL S SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 271(1)(C) . A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURAT E PARTICULARS. THE CASE OF THE ASSESSEE UNDER CONSIDE RATION IS SQUARELY COVERED BY THE ABOVE JUDGMENT OF THE AP EX COURT THE ASSESSEE DEMONSTRATED THAT THEIR CLAIM WA S BONA FIDE CLAIM. IN THE LIGHT OF ABOVE DISCUSSION, WE DON'T FIND THAT THE CASE UNDER CONSIDERATION IS A FIT CAS E FOR LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT WE THEREFORE CANCELLED THE PENALTY LEVIED.' 12. SIMILARLY, IN THE CASE OF HINDALCO INDUSTRIES L TD. (SUPRA), THE TRIBUNAL HAS HELD THAT A MERE MAKING OF CLAIM, WHIC H IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE SAID CASE, THE ASSESSEE CLAIMED SHORT-TERM CAPITAL LOSS ON SALE OF SECURITIES IN TERMS OF SECTION 94(7) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND LE VIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE HAD DEMONSTRATED THAT ITS CLAIMS WERE BONAFIDE CLAIM AF TER MAKING FULL DISCLOSURE. IT WAS ALSO NOTICED THAT THERE WER E NO SPECIFIC REQUIREMENTS IN THE RETURN FORM APPLICABLE TO THE Y EAR UNDER ITA NO.1518/BANG/2017 PAGE 8 OF 13 CONSIDERATION. REGARDING TO FURNISH DETAILS OF CAPI TAL GAIN/LOSS, SUCH CLAIM IN THE RETURN HAS BEEN INSERTED BY AMEND MENT IN THE RETURN FORM, ITR 6, WHICH IS APPLICABLE FOR THE ASS ESSMENT YEAR 2007-08. THE TRIBUNAL CONSIDERED THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., REPORTED IN 322 ITR 158, WHEREIN IT WAS HELD THAT THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. BUT IN THE CASE WHEN IT WAS FOUND THAT THE ASSESSEE HAD FURNISHED F ULL DETAIL AND HAD NOT CONCEALED ANY PARTICULARS OF INCOME AND WHE N THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE I N ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE I S NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS ALSO OBSERVED THAT A MERE MAKING OF A CLAIM, WHICH WAS N OT SUSTAINABLE IN LAW, BY ITSELF, WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISH ING INACCURATE PARTICULARS. THE TRIBUNAL ALSO HELD THAT THE ASSESS EE HAD DEMONSTRATED THAT ITS CLAIMS WERE BONAFIDE CLAIMS A ND ACCORDINGLY THE PENALTY LEVIED WAS CANCELLED. NOT O NLY THIS, WE ALSO OBSERVE THAT THE HON'BLE JURISDICTIONAL HIGH C OURT IN ITA NO.3899/2010 (CIT VS. M/S ADITYA BIRLA NOVA LIMITED ), VIDE ORDER DATED 14TH AUGUST, 2012, AFTER CONSIDERING TH E DECISION OF THE HON'BLE APEX COURT IN THE CASE OF UNION OF INDI A & ORS. VS. DHARAMENDRA TEXTILE PROCESSORS & ORS. (SUPRA) AND T HE DECISION OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) , HAS HELD THAT THE LEVY OF PENALTY EVEN WHERE A CLAIM FOR DEDUCTIO N IS NOT UPHELD, EVEN THOUGH THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS AND HAS NOT SUPPRESSED ANY MATERIAL FACTS, THE LEVY OF PENALTY IS NOT JUSTIFIED. IN THE SAID CASE, THE ASSESSEE CLAIM ED DEDUCTION OF `.9,94,399/- ON ACCOUNT OF DIMINUTION IN THE VALUE OF SHARES HELD BY IT. THE SAME WERE DISALLOWED ON THE GROUND THAT THE SHARES WERE HELD AS INVESTMENTS, AND PROFITS AND LOSSES ON THE SALE THEREOF WERE TO BE CONSIDERED UNDER THE HEAD 'CAPIT AL GAINS'. THEREFORE, THE QUANTUM PROCEEDING WAS CONCLUDED AGA INST THE ASSESSEE. THE ASSESSING OFFICER LEVIED PENALTY UNDE R SECTION 271(1)(C) OF THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURT HELD THAT IT WAS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE WITHHELD ANY INFORMATION OR FURNISHED ANY FALSE INF ORMATION. THE ITA NO.1518/BANG/2017 PAGE 9 OF 13 FACTS NECESSARY FOR CARRYING OUT THE ASSESSMENT PRO CEEDINGS WERE ADMITTEDLY DISCLOSED IN THE RETURN FILED BY THE ASS ESSEE. IT WAS HELD THAT THE ASSESSEE HAD WRONGLY CLAIMED DEDUCTIO N AND IT WAS NOT ENTITLED TO THE SAME AS IT IS A PURE QUESTION O F LAW. IN THAT CONTEXT, THE HON'BLE JURISDICTIONAL HIGH COURT HELD THAT BY MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 13. IF WE APPLY THE ABOVE DECISION AS WELL AS THE DECISIONS DISCUSSED HEREINABOVE TO THE FACTS OF THE CASE BEFO RE US, WE ARE OF THE CONSIDERED VIEW THAT THE LEVY OF PENALTY IN THE CASE OF THE ASSESSEE IS NOT JUSTIFIED MERELY BECAUSE THE CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY THE DEPARTMENT. WE ARE OF THE CONS IDERED VIEW THAT THE ASSESSEE HAS STATED ALL THE DETAILS OF THE LOSS CLAIMED AND THE ASSESSEE HAS MADE ONLY AN INCORRECT CLAIM BONAFIDE AND THIS CANNOT TANTAMOUNT TO FURNISHING ANY PARTICULARS OF INCOME BY THE ASSESSEE. THEREFORE, THE LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT IS NOT JUSTIFIED. ACCORDINGLY, WE CANCEL THE LEVY OF P ENALTY BY ALLOWING THE GROUNDS OF APPEAL RAISED BY THE ASSESS EE. 9. THE LD. AR SUBMITTED THAT IN VIEW OF THE ABOVE D ECISION OF THE TRIBUNAL, PENALTY CANNOT BE LEVIED ON THIS ISSUE AL SO. 10. THE LD. DR RELIED ON THE ORDERS OF LOWER AUTHOR ITIES. 11. IN OUR OPINION, IN SIMILAR FACTS AND CIRCUMSTAN CES OF THE CASE, THE TRIBUNAL DELETED THE PENALTY IN THE CASE OF ADMINISTRATOR OF THE ESTATE OF LATE MR. E.F. DINSHAW CITED SUPRA . AS SUCH, PENALTY CANNOT BE LEVIED ON THIS COUNT ALSO. MORE SO, THE HONBLE SUPREME COUR T IN CIT AHMEDABAD V. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) HELD AS FOLLOWS:- A GLANCE OF PROVISION OF SECTION 271(1)(C ) WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESS EE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT CASE WAS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE EITHER. IT WAS AN ADMITTED POSI TION IN THE INSTANT CASE THAT NO INFORMATION GIVEN IN THE RETUR N WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY ST ATEMENT MADE OR ITA NO.1518/BANG/2017 PAGE 10 OF 13 ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCOR RECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE REVENUE ARGU ED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEND ITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICUL ARS OF SUCH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CO NCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM I N LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. [PARA 7] THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UND ER SECTION 271(1)(C ) EXIST BEFORE THE PENALTY IS IMPOSED. THE RE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETUR N FILED, BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESS EE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. [PARA 8] THE WORD 'PARTICULARS' MUST MEAN THE DETAILS SUPPLI ED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE W AS NO FINDING THAT ANY DETAILS SUPPLIED BY THE 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 THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF I NACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. [PARA 9] THE REVENUE CONTENDED THAT SINCE THE ASSESSEE HAD C LAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY WERE INCORRE CT, IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS: (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AM OUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXAB LE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PA RTICULARS OF INCOME. SUCH CONTENTION COULD NOT BE ACCEPTED AS TH E ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME ITA NO.1518/BANG/2017 PAGE 11 OF 13 IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE N OT 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 IT S CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAI MED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE W AS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, T HE ASSESSEE WOULD INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. [PARA 10] 12. THE TRIBUNAL IN THE CASE OF DCIT V. MASTEK LTD . IN ITA NO.118/AHD/2007 VIDE ORDER DATED 16.04.2010 HELD AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AVAILABLE ON RECORD. IT IS ADMITTED FACT THAT ASSES SEE DISCLOSED ALL THE PARTICULARS OF THE ABOVE DISALLOWANCES IN THE R ETURN OF INCOME. THE AO MADE PART OF THE DISALLOWANCES OUT OF THE AB OVE EXPENDITURE WHICH HAS BEEN SUBSTANTIALLY REDUCED BY THE LEARNED CIT(A). IT WOULD, THEREFORE, SHOW THAT THE ASSESSEE DISCLOSED ALL THE RELEVANT FACTS AND MATERIALS IN THE RETURN OF I NCOME AS WELL AS BEFORE THE AUTHORITIES BELOW ON MERIT. IT IS NOT A CASE OF THE AO THAT THE ASSESSEE HAS MADE FALSE CLAIM OR SUPPRESSE D THE FACTS RELATING TO THE ABOVE CLAIMS OF THE EXPENDITURE. TH E DISALLOWANCES HAVE BEEN MADE ON THE QUESTION OF INT ERPRETATION OF LAW AS TO WHETHER THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION AND WHETHER THE INCOME OF THE ASSESSEE FALSE UNDER THE CATEGORY OF BUSINESS INCOME. SINCE THE ASSESSEE DISCLOSED AL L THE FACTS BEFORE THE AUTHORITIES BELOW AT PROPER LEVEL, THE P ART DISALLOWANCES OF THE EXPENDITURE WOULD NOT PAR-SE L EAD TO AN INFERENCE THAT THE ASSESSEE CONCEALED THE PARTICULA RS OF MASTEK LIMITED INCOME OR FILED INACCURATE PARTICULARS OF I NCOME. ON DISALLOWANCE OF THE EXPENDITURE IMPOSITION OF PENAL TY IS NOT AUTOMATIC. 6. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) HELD THAT 'A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C ) OF THE INCOME -TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE COVERED BY IT, THERE HA S TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASS ESSEE. ITA NO.1518/BANG/2017 PAGE 12 OF 13 SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(1) ( C ) WOULD EMBRACE THE DETAILS OF T HE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAU SE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PA RTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE I NACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETA ILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING T HAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1) ( C ). A MERE MAKING OF A CLAI M WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISH ING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFF IRMED.' 7. THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASES OF CIT VS DHILLON RICE MILLS [2002] 256 ITR 447 (P. & H.) AND IN THE CASE OF HARIGOPAL SINGH VS CIT [2002] 258 ITR 8 5 (PH) HELD THAT 'NO PENALTY FOR CONCEALMENT LEVIABLE WHERE INC OME ASSESSED IS A MATER OF ESTIMATE'. HON'BLE SUPREME COURT IN T HE CASE OF M/S. RAJASTHAN SPINNING & WEAVING MILLS 2009 - PIOL - 63 - SC HELD THAT 'ON EVERY DEMAND PENALTY IS NOT AUTOMATIC '. 8. CONSIDERING THE FACTS OF THE CASE AS NOTED ABOVE IN THE LIGHT OF THE ABOVE DECISIONS AND IN THE LIGHT OF THE FINDING S OF THE LEARNED CIT(A), IT IS CLEAR THAT ADDITIONS HAVE BEEN SUSTAI NED PARTLY BY DISALLOWING THE EXPENDITURE ON INTERPRETATION OF TH E PROVISIONS OF LAW AND EVEN THE DISALLOWANCE OF RS.2,00,000/- U/S 14A HAS BEEN RESTORED TO THE FILE OF THE AO FOR RE-CONSIDERATION . THEREFORE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE HAS F URNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF ITA NO.1518/BANG/2017 PAGE 13 OF 13 INCOME. WE ACCORDINGLY DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WE ACCORDINGL Y CONFIRM HIS FINDINGS AND DISMISS THE APPEAL OF THE REVENUE. 13. IN LIGHT OF THE ABOVE, IN OUR OPINION, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT ON BOTH THE COUNT S. ACCORDINGLY, WE DELETE THE PENALTY. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF AUGUST, 2021. SD/- SD/- ( N V VASUDEV AN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH AUGUST, 2021. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.