The ACIT(OSD),-1,Range-4, Ahmedabad V. Mazda Limited., Ahmedabad

ITA 1552/AHD/2011

• Counselvise Citation: 155220514 RSA 2011
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-04-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR SRDR
• Assessee Lawyers: S N SOPARKAR SRAR
• Keywords: Wrong claim
• Section: 27; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1552/AHD/2011 ASSESSMENT YEAR:2000-01 ITA NO.1455-1456/AHD/2010 ASSESSMENT YEARS: 1996-97 & 1998-99 ACIT (OSD)-I, CIRCLE-4, AHMEDABAD NAVJIVAN TRUST BLDG., OFF. ASHRAM ROAD, AHMEDABAD V/S . MAZDA LTD., MAZDA HOUSE, 650-651, PANCHVATI LANE, AMBAWADI, AHMEDABAD PAN NO.AABCM9273H (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI S.N.SOPARKAR, SR-AR /BY REVENUE SHRI RAHUL KUMAR, SR-DR /DATE OF HEARING 19-04-2012 /DATE OF PRONOUNCEMENT 07-06-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THESE THREE APPEALS OF REVENUE ARE DIRECTED AGAINS T OF DIFFERENT ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XX & VI II, AHMEDABAD DATED 06-04-2011, 19-02-2010 & 24-02-2010 FOR THE ASSESSM ENT YEARS 2000-01, 1996-97 AND 1998-99. THE PENALTY UNDER DISPUTE WAS LEVIED BY THE ACIT (OSD)-I, RANGE-4, AHMEDABAD U/S 271(1)(C) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER D ATED 30-03-2009. SINCE THE COMMON ISSUE IS INVOLVED IN ALL THE THREE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A CONSOLIDATED ORDER. ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 2 FIRST WE TAKE UP ITA NO.1455/AHD/2010 A.Y. 1996-97. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.404,800/- LEVIED U/S. 271(1)(C) OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS WRONG CLAIM OF TECHNICAL KNOW-HOW AND FAILED TO PROVE THAT THE EXPLANATION O FFERED IN THIS RESPECT WAS BONAFIDE AND THEREFORE PENALTY U/S. 271(1)(C) WAS CORRECTLY LEVIED BY THE A.O AS PER EXPLANATION 11 TO SECTION 271(1)(C) OF THE ACT. 3. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS IN NOT TAKING COGNIZANCE OF THE DECISION OF HONLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES 306 ITR 277, WHEREIN IT IS CLEA RLY HELD BY THE HOPNBLE APEX COURT THAT A WILFULL DEFAULT BY THE ASSESSEE I S NOT ON ESSENTIAL INGREDIENT FOR LEVY OF PENALTY U/S. 271(1)(C). 4. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN CAN CELING THE SAID PENALTY, WITHOUT APPRECIATING THE RATIO OF THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF CASE OF CIT VS. SOHON SINGH REPORTE D IN 244 ITR 177, IN WHICH THE HOBLE COURT HAS HELD THAT THE ASSESSEE MUST OF FER AN EXPLANATION TO SHOW THAT THERE WAS NO FRAUD, GROSS OR WILLFUL NEGL IGENCE INVOLVED IN NOT RETURNING THE CORRECT INCOME IN HIS RETURN AND IT I S NOT SUFFICIENT IF ANY FANCIFUL OR TOTALLY UNTENABLE EXPLANATION IS OFFERED. 3. THE FACTS IN BRIEF AS BORNE OUT OF THE RECORD IS THAT THE ASSESSEE IS A COMPANY WITH LIMITED LIABILITY AND IS ENGAGED IN TH E BUSINESS OF MANUFACTURING OF PROCESS CONTROL EQUIPMENT. THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT FOR THE YEAR UNDER CONSIDERATION DISALLO WED ASSESSEES CLAIM FOR ROYALTY PAYMENT UNDER THE PROVISIONS OF SECTION 40( A)(IA) OF THE ACT AMOUNTING TO RS.12,00,401/- AND ALSO DISALLOWED 1/6 TH OF TECHNICAL KNOW-HOW EXPENSES OF RS.8.80 LAKH UNDER THE PROVISIONS OF SE4CTION 35 AB OF THE ACT. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) . THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A) AGAINST THE DISALLOWANCE AS MADE IN THE ASSESSMENT ORDER. THE LD. CIT(A) VIDE HIS ORDER DATED 16-07-2003 DELE TED THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S. 35AB OF THE ACT. THE REVENU E AGAINST THIS ORDER OF LD. CIT(A) FILED AN APPEAL BEFORE THE HONBLE ITAT AHM EDABAD. THE HONBLE ITAT IN ITA NO.3698, 3699, 3700 & 3701/AHD/2003 FOR THE A.YS. 1996-97 TO 2000-01 CONFIRMED THE DISALLOWANCE OF RS.8.80 LAKH U/S 35AB OF THE ACT AS MADE BY AO. AFTER RECEIPT OF THE ORDER OF HONBLE CO-ORDINATE BENCH, THE AO ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 3 CARRIED OUT THE PENALTY PROCEEDINGS AND LEVIED A PE NALTY OF RS.4,04,800/- IN RESPECT OF DISALLOWANCE OF RS.8.80 LAKH QUA THE CLA IM OF TECHNICAL KNOW-HOW. AGAINST THE PENALTY ORDER, THE ASSESSEE FILED AN AP PEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND V ARIOUS CASE LAWS DELETED THE PENALTY. 4. LD. SR-DR SUBMITTED THAT THE ORDER OF LD. CIT(A) IS ERRONEOUS AND STRONGLY SUPPORTED THE PENALTY ORDER PASSED BY ASSE SSING OFFICER. 5. ON THE CONTRARY, LD. AUTHORIZED REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT NO INTERFERENCE IS CALLED FOR AS OF THE ORDER OF LD. CIT(A) AND HE RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF CIT V. RELIANCE PETROPRODUCT PVT. LTD. (2010) 322 ITR 174 (SC). HE SUBMITTED THAT PENALTY CANNOT BE IMPOSED MERELY ON THE GROUND THAT THE CLAIM MADE BY THE ASSESSEE IS REJECTED. HE SUBMITTED THAT THE HONBLE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.789 TO 791AHD/2007 DATED 30-07-2010 HAS CONFIRMED DELETION OF PENALTY AS LEVIED IN RESPECT OF DISALLOWING PAYMENT OF ROYALTY TO THE NON-RESIDENT FOREIGN COLLABORATOR OF THE ASSESSEE. HE SUBMITTED IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS NO FAULT CAN BE FOUND IN THE FINDING OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED BY THE PARTIES. WE FI ND THAT LD. CIT(A) HAS CONSIDERED THE SUBMISSION OF THE CAME TO THE CONCLU SION THAT THE PENALTY LEVIED BY ASSESSING OFFICER IN RESPECT OF DISALLOWA NCE OF DEDUCTION U/S. 35AB OF THE ACT CANNOT BE SUSTAINED. THE FINDING OF LD. CIT(A) IN PARA 4.5 TO 4.16. READS AS UNDER:- 4.5 I HAVE CONSIDERED THE FACTS AND SUBMISSIONS OF THE LD. A.R CAREFULLY. IT IS SEEN THAT THE A.O HAS LEVIED THE PENALTY IN RESPECT OF THE AMOUNT WHICH HAS BEEN FINALLY CONFIRMED BY THE HONBLE ITAT AS REFER RED TO ABOVE. IT MAY BE POINTED OUT THAT THE APPELLANT CREDITED TECHNICAL K NOW HOW GOES TO THE COLLABORATOR TO THE TUNE OF RS.52,80,000/- WITHOUT DEDUCTING TAX AT SOURCE AND SAME WAS CAPITALIZED. THE APPELLANT CLAIMED 1/6 TH OF THE EXPENDITURE FOR ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 4 RS.52,80,000/- I.E. RS.8,80,000/- UNDER THE PROVISI ONS OF SEC. 35AB OF THE ACT. WHEN THE APPELLANT WAS QUESTIONED DURING THE ASSESS MENT PROCEEDINGS THAT AS TO WHY THE TDS WAS NOT MADE, THE APPELLANT CONTE NDED THAT WHEN AN ASSET IS CREATED BY WAY OF AMALGAMATION IN WHICH ALL ASSE TS OF AMALGAMATING COMPANY I.E. MCR BECAME THE ASSET OF THE AMALGAMATE D COMPANY I.E. MCL THE QUESTION OF DEDUCTION WILL NEVER ARISE. THE TEC HNICAL KNOW HOW WAS AMORTIZED AT 1/6 TH OF THE VALUE EVERY YEAR AS LAID DOWN IN THE ACT. 4.6 THE AO HOWEVER, REJECTED THE APPELLANTS CLAIM FOR DEDUCTION HOLDING THAT THE AMOUNT UNDER REFERENCE WAS CREDITED WITHOUT DED UCTION OF TAX AT SOURCE AS ENVISAGED U/S. 195 OF THE ACT. HE DISALLOWED THE CLAIM FOR DEDUCTION U/S. 40(A)(IA) OF THE ACT. 4.7 ON APPEAL THE LLD. CITAA-VIII, AHMEDABAD HELD A S UNDER: THUS, IT IS CLEAR THAT THE APPELLANT ACQUIRED THE TECHNICAL KNOW HOW BY ALLOTMENT OF SHARES WHICH TOOK INTO CONSIDERATION D ISCHARGE OF LIABILITY OF BALANCE PAYMENT OF KNOW HOW. THERE BEING A DIREC T NEXUS TO THE ASSETS AND THE LIABILITY, THE CONSIDERATION FOR KNO W HOW IN CASE OF MCL IS CORRECTLY TAKEN AT RS.52.80 LAS. THERE APPEARS T O BE NO COLOURABLE DEVICE. THIS IS ALSO NOTED FROM PARA 9 OF THE SCHEM E QUOTED ABOVE THAT UNDER THIS SCHEME, THE APPELLANT ASSUMED RECUR RING LIABILITY OF ROYALTY WHICH IS BEING ALLOWED BY THE AO IN THE YEA R OF PAYMENT AN DEDUCTION OF TAX. THIS ALSO INDICATE THAT THE ARRAN GEMENT IS NOT HELD AS NON GENUINE OR COLOURABLE. NOW TO THE VALUE OF ASSE T, SECTION 35AB WILL BE APPLICABLE. THE CLAIM OF 1/6 TH DEDUCTION IS, THEREFORE, HELD AS ALLOWABLE. 4.8. THE DEPARTMENT DID NOT ACCEPT THE AFORESAID DE CISION OF LD. CIT(A) AND FILED AN APPEAL BEFORE THE HONBLE ITAT. THE HONBL E ITAT SET ASIDE THE DECISION OF LD. CIT(A) AND RESTORED THE ORDER OF AS SESSING OFFICER. 4.9 THE AFORESAID FACTS CLEARLY SHOW THAT THE APPEL LANT DISCLOSED ALL THE RELEVANT FACTS CONCERNING THE CLAIM MAD BY IT WHILE FILING THE RETURN OF INCOME UNDER REFERENCE. THE AO WHILE LEVYING THE PENALTY I N RESPECT OF THESE AMOUNTS HAS NOT HELD THAT APPELLANTS EXPLANATION WI TH REFERENCE TO THESE CLAIMS WAS FALSE4 OR FABRICATED. 4.10 SECTION 271(1)(C) OF THE ACT PROVIDES HAT IF THE ASSESSING OFFICER, IN THE COURSE OF THE PROCEEDINGS UNDER THE ACT IS SATISFIE D THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL P AY BYWAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NO T EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASONS OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME. EXPLANATION 1 TO SECTION STATES THAT WHERE IN RESPECT OF AN FACTS MATERIAL TO THE COMPUTATION OF TOTAL IN COME OF ANY PERSON UNDER HIS ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE AO FALSE OR SUCH PERSON OFFER AN EXPLA NATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF THE ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 5 TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PE RSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE OF THIS SUB-SEC TION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. THE EFFECT OF THIS EXPLANATION IS THAT IF THE NECES SARY INGREDIENTS AS STATED HEREIN ARE SATISFIED THEN THE AMOUNT DISALLOWED IN COMPUTING TOTAL INCOME SHALL FOR THE PURPOSES OF CLAUSE OF THIS SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. THE NECESSARY ELEMENTS FOR ATTRACTING THIS EXPLANATION ARE THREE FOLD:- A) THE PERSON FAILS TO OFFER HIS EXPLANATION, OR B) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO TO BE FALSE, OR C) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT AB LE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING THE SAME HAVE BEEN DISCLOSED BY HIM. 4.11 IF THE CASE FALLS IN ANY THREE OF INGREDIENTS, THEN THE DEEMING PROVISION COMES INTO PLAY AND THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME IS CONSIDERED AS THE INCOME IN RESPECT OF WH ICH PARTICLES HAVE BEEN CONCEALED FOR THE PURPOSE OF CLAUSE OF SECTION 27 1(1) AND THE PENALTY FOLLOWS. IF THE ASSESSEE SUCCESSFULLY COMES OUT OF THE ABOVE THREE CONSEQUENTS THEN HE CANNOT BE DEEMED TO HAVE CONCEA LED HIS PARTICULARS OF INCOME WITH REFERENCE TO THE AMOUNT ADDED OR DISALL OWED IN COMPUTATION OF TOTAL INCOME. 4.12 THE EXPRESSING FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS BEEN DEFINED IN THE ACT. THE EXPRESSION INACCURATE REFERS TO NOT IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS THE MEANING WHICH, IS RELEVANT IN THE CONTEXT OF FURNISHING OF INACCURATE PARTICULARS . THE EXPRESSION PARTICULARS REFERS TO FACTS, DETAILS, SPECIFIES, OR INFORMATION ABOUT SOM EONE OR SOMETHING . THEREFORE, THE PLAIN MEANING OF THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOU T INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH . THE DETAILS OR INFORMATION ABOUT INCOME DEAL WITH THE FACTUAL DETAILS OF INCOM E AND THIS CANNOT BE EXTENDED TO AREAS WHICH ARE SUBJECTIVE SUCH AS THE STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETA TION OF LAW. THE FURNISHING OF INACCURATE INFORMATION THUS RELATES TO FURNISHIN G OF FACTUALLY INCORRECT DETAILS AND INFORMATION ABOUT INCOME. IN THE PRESENT CASE, HOWEVER, WHAT HAS BEEN TREATED AS FURNISHING OF INACCURATE PARTICULARS IS MAKING OF A CLAIM WHICH WAS NOT ADMITTED BY THE ASSESSING OFFICER. THE ADMISSIO N OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE AND WHETHER A CLAIM IS ACCEPT ED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO HAS APPARENTLY PROCEEDED TO TREAT APPELLANTS CLAIM FOR DEDUCTION OF BAD DEBT AND PRIOR PERIOD EXPENSES AS FURNISHING OF INACCURATE P ARTICULARS. WHAT IS A CORRECT CLAIM AND WHAT IS AN INCORRECT CLAIM IS A MATTER OF PERCEPTION. IT IS A SETTLED POSITION OF LAW THAT RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT OF FURNISHING O F INACCURATE PART5ICULARS OF INCOME. INACCURATE AS NOTED ABOVE, IS SOMETHING FACTUALLY INCORRECT A ND INTERPRETATION OF LAW CAN NEVER BE A FACTUAL ASPECT . JUST BECAUSE AN ASSESSING OFFICER DOES NOT ACCEPT AN INTERPRETATION , SUCH AN INTERPRETATION IS ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 6 NOT RENDERED INCORRECT. IN ANY EVENT, AS NOTED ABOV E, THE CONNOTATIONS OF EXPRESSION PARTICULARS OF INCOME DO NOT EXTEND TO THE ISSUES OF INTERPRETATION OF LAW AND AS SUCH MAKING A CLAIM, WHICH IS FOUND T O BE UNACCEPTABLE IN LAW, CANNOT BE TREATED AS FURNISHING OF INACCURATE PARTI CULARS OF INCOME. IN THIS VIEW OF THE MATTER, THE CASE OF THE APPELLANT CANNO T BE SAID TO BE A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, I N ITS NATURAL SENSE, EITHER. IN THIS REGARD RELIANCE IS PLACED ON THE DECISION OF H ONBLE ITAT, PUNE A BENCH IN THE CASE OF KANBAY SOFTWARE INDIA PVT. LTD. VS. DCIT IN ITA NO.300/PN/07 A.Y 2002-03. 4.13 WITH THIS BACKGROUND IN MIND, IF WE TEST THE F ACTS OF THE CASE ON THE TOUCHSTONE OF THE ABOVE REFERRED THREE INGREDIENTS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT, WE FIND THAT THE ADDITIONS M ADE BY THE AO DO NOT HIT BY ANY ONE OF THEM. THE AO WHILE MAKING THE DISALLOWAN CE HAS HELD THAT SAME IS NOT ALLOWABLE IN THE GIVEN SET OF CIRCUMSTANCES, HOWEVER, THERE IS NOTHING IN THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDE R TO SHOW THAT THE APPELLANTS CLAIM FOR SUCH DEDUCTION WAS FABRICATED AND FALSE. THEREFORE, IN THESE CIRCUMSTANCES THE LEVY OF PENALTY IN RESPECT OF ADDITION UNDER REFERENCE CANNOT BE SUSTAINED. HONBLE RAJASTHAN HIGH COURT I N THE CASE OF SHSIV LAL TAK VS. CIT REPORTED IN 251 ITR 373 HAS HELD THAT: THE STATUTE HAS CLEARLY DRAWN A DISTINCTION BETWEE N A DELIBERATE FALSE EXPLANATION FURNISHED BY THE ASSESSEE AND AN EXPLAN ATION, WHICH MAY NOT BE FALSE BUT IS NOT ACCEPTED BECAUSE THE ASSESS EE WAS NOT ABLE TO SUBSTANTIATE IT. WHILE THERE IS NO RELAXATION IN TH E RIGOUR OF THE EXPLANATION IN RAISING A PRESUMPTION AGAINST THE AS SESSEE IN THE FORMER CASE, IN THE LATTER CLASS OF CASES, THE STAT UE ITSELF RELAXES ITS RIGOUR BY DIRECTING THAT WHERE IN RESPECT OF ANY AM OUNT, ADDED OR DISALLOWED AND ANY EXPLANATION IS OFFERED BY SUCH PERSON WHICH IS SOT ACCEPTED BECAUSE THE ASSESSEE HAS FAILED TO SUBSTAN TIATE THE SAME, BUT SUCH EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE EXPLANATION SHALL NOT APPLY 4.14 HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V/S HARSHVARDHAN CHEMICALS AND MINERALS LTD. 259 ITR 212 HAS CONFIRMED THE DECISION OF HONBLE ITAT FOR DELETING THE PENALTY U/S. 271(1)(C ) OF THE ACT. THE HONBLE TRIBUNAL WHILE DELE4TING THE PENALTY HELD THAT WHERE AN ARGUABLE, CONTROVERSIAL OR DEBATABLE DEDUCTION IS CLAIMED, TH E CLAIM COULD NOT BE SAID TO BE FALSE, OTHERWISE IT WOULD BECOME IMPOSSIBLE FOR ANY ASSESSEE TO RAISE ANY CLAIMS OR DEDUCTIONS WHICH MIGHT BE DEBATABLE, AND IT WAS NOT THE INTENTION OF THE LEGISLATURE TO MAKE PUNISHABLE SUCH CLAIMS, IF THEY WERE NOT ACCEPTED; HELD, AFFIRMING THE DECISION OF THE APPELLATE TRIBU NAL, THAT NO PENALTY WAS LEVIABLE IN VIEW OF THE FINDING OF THE TRIBUNAL THA T WHEN THE ASSESSEE HAS CLAIMED DEDUCTION OF AN AMOUNT THAT WAS DEBATABLE I T COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 7 FOR EVASION OF TAX, AND, IN VIEW OF THE FINDINGS OF THE TRIBUNAL, NO CASE WAS MADE OUR FOR INTERFERENCE. 4.15 FURTHER, HOBLE ITAT AHMEDABAD BENCH IN THE CA SE OF GUJARAT CREDIT CORPORATION LT. V/S ACIT 113 ITD 133 HAS HELD THAT IT IS TRITE LAW THAT CONCEALMENT PROCEEDINGS ARE PENAL IN CHARACTER AND UNDER THE SUBSTANTIVE PROVISIONS OF SECTION 271(1)(C) , IT IS FOR THE DEP ARTMENT TO PROVE THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOM E OR FURNISHED INACCURATE PARTICULARS THEREOF TO BRING THE CASE OF THE ASSESS EE WITHIN THE MISCHIEF OF THE MAIN PROVISIONS OF SECTION 271(1)(C) . MERE REJECTI ON OF ASSESSEES CLAIM WOULD NOT BE SUFFICIENT TO HOLD THAT ASSESSEE TO BE GUILTY OF CONCEALMENT. IF THERE IS NO EVIDENCE ON RECORD EXCEPT THE EXPLANATI ON OF THE ASSESSEE WHICH EXPLANATION IS EITHER FOUND TO BE FALSE OR IS UNACC EPTABLE, IT DOES NOT FOLLOW THAT CONCEALMENT HAS BEEN ESTABLISHED. IT IS BY VIRTUE OF EXPLANATION ONLY TAT THE ASSESSI NG OFFICER HAS BEEN GIVEN A RIGHT TO RAISE A PRESUMPTION TO DEEM CERTAIN SUM AD DED TO INCOME OR DISALLOWED IN COMPUTING THE INCOME OF A PERSON, TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED, I F THE ASSESSEE DID NOT FURNISH AN EXPLANATION OR WHEN EXPLANATION FURNISHE D WAS FOUND FALSE; AND ALSO WHEN SUCH PERSON OFFERS AN EXPLANATION WHICH H E IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. IN OTHER WORDS, IN A LATER CASE, THE EXPLANATION EX ONERATES AN ASSESSEE, IF THAT HE IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. IN THE INSTANT CASE, IT WAS NOT THE CASE OF THE REV ENUE THAT THE ASSESSEE HAD FAILED TO OFFER AN EXPLANATION OR THAT ITS EXPLANAT ION WAS FOUND FALSE AND, THEREFORE, PART A OF THE EXPLANATION DID NOT HIT THE ASSESSEE. THE CASE OF THE REVENUE AGAINST THE ASSESSEE WAS TH AT IT FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY MAKING A WRONG CLAIM. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WAS MERE REJECTION OF ASSESSEES CLAIM FOR LOSS THAT TOO ON A DIFFERENT GROUND BY THE APPELLATE AUT HORITY AND, THEREFORE, IT COULD NOT IN ANY CASE BE EQUATED WITH CONCEALMENT. 4.16 THEREFORE, IN VIEW OF THE ABOVE THE PENALTY LE VIED BY THE AO IN RESPECT OF THE DISALLOWANCE OF DEDUCTION UNDER SECTION 35AB CA NNOT BE SUSTAINED. IN VIEW OF THIS, THE PENALTY AMOUNTING TO RS.4,04,800/ - IS HEREBY DELETED. WE FIND THAT THE HONBLE CO-ORDINATE BENCH IN ASSES SEES OWN CASE IN ITA NO.789 TO 791/AHD/2007 (SUPRA) WHILE UPHOLDING THE DELETION OF PENALTY AS LEVIED IN RESPECT OF DISALLOWANCE OF CLAIM OF PAYME NT OF ROYALTY HAS EXAMINED THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT IN THE LIGHT OF VARIOUS JUDICIAL ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 8 PRONOUNCEMENTS. THE RELEVANT CONTENTS ARE REPRODUCE D HEREINBELOW FOR THE SAKE OF CLARITY:- IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HONBLE SU PREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT 123 ITR 457, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARD AS CONC LUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMI NG THE ADDITIONS. IT IS, THEREFORE, NECESSARY TO RE-APPRECIATED AND RECONSID ER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSES SEE AS ENVISAGED IN SEC. 271(1)(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. THE PROVISIONS OF SEC TION 271(1)(C) OF THE ACT STIPULATED THAT IF THE ASSESSING OFFICER OR THE CIT (APPEALS) OR THE COMMISSIONER IN THE COURSE OF PROCEEDINGS UNDER THI S ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INC OME OR FURNISHED INACCURATE PARTICULARS THEREOF, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN O UT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED B Y A REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME. EXPLANATI ON 1 TO SECTION 271(1)(C) OF THE ACT MENTIONS THAT WHERE IN RESPECT OF ANY FA CTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WH ICH IS FOUND BY THE AO ON THE CIT(APPEALS) OR THE COMMISSIONER TO BE FALSE, O R SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AN D FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE ACTS RELA TING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DI SCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL I NCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSE OF CLAUSE OF SECTION 271(1)(C), BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN OTHER WORDS, THE NECESSARY INGREDIENT S FOR ATTRACTING EXPLANATION 1 TO SECTION 271(1)(C) ARE THAT (I) THE PERSON FAILS TO OFFER THE EXPLANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY TH E AO OR THE CIT(APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. 5.1 I THE CASE OF ANY ASSESSEE FALLS IN ANY OF THES E THREE CATEGORIES, THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECT ION 271(1)(C) COMES INTO PLAY, AND THE AMOUNT ADDED OR DISALLOWED IN COMPUTI NG THE TOTAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHICH PAR TICULARS HAVE BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE OF SECTION 271(1)(C), AND THE PENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER AN EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 9 TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, AND IN THAT CASE, THE PENALTY SHALL NOT BE IMPOSED HONBLE SUPREME COURT IN THE C ASE OF DILIP N SHROFF V. JT.CIT; [2007] 291 ITR 519 (SC) WHILE CONSIDERING T HE SCOPE OF THESE PROVISIONS U/S. 271(1)(C) OF THE ACT OBSERVED IN T HE FOLLOWING TERMS: THE LEGAL HISTORY OF SECTION 271(1)(C) OF THE ACT TRACED FROM THE 1922 ACT PRIMA FACIE SHOWS THAT THE EXPLANATIONS WERE AP PLICABLE TO BOTH THE PARTS. HOWEVER, EACH CASE MUST BE CONSIDERED ON ITS OWN FACTS. THE ROLE OF THE EXPLANATION HAVING REGARD TO THE PRINCI PLE OF STATUTORY INTERPRETATION MUST BE BORNE IN MIND BEFORE INTERPR ETING THE AFOREMENTIONED PROVISIONS CLAUSE OF SUB-SECTION ( 1) OF SECTION 271 CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVI ABLE IF THE ASSESSEE CONCEALS THE PARTICULARS OF HIS INCOME OR FURNISHES INACCURATE PARTICULARS THEREOF. BY REASON OF SUCH CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENALTY, IMPOSITION OF PENALTY IS NOT AU TOMATIC. LEVY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE BUT SUCH DISCRE TION IS REQUIRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEP ING THE RELEVANT FACTORS IN MIND. SOME OF THOSE FACTORS APART FROM B EING INHERENT IN THE NATURE OF PENALTY PROCEEDINGS AS HAS BEEN NOTICED I N SOME OF THE DECISIONS OF THIS COURT, INHERES ON THE FACT OF THE STATUTORY PROVISIONS. PENALTY PROCEEDINGS ARE NOT BE INITIATED, AS HAS BE EN STATUTORY PROVISIONS. PENALTY PROCEEDINGS ARE NOT TO BE INITI ATED AS HAS BEEN NOTICED BY THE WANCHOO COMMITTEE, ONLY TO HARASS TH E ASSESSEE. THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MU ST BE FAIR AND OBJECTIVE. THE TERM INACCURATE PARTICULARS IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT BY ITSE LF BE FURNISHING OF INACCURATE PARTICULARS. EVEN IF THE EXPLANATIONS AR E TAKEN RECOURSE TO, A FINDING HAS TO BE ARRIVED AT HAVING REGARD TO CLA USE (A) OF EXPLANATION 1 THAT THE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE, IN THE EVENT HE OFFERS ONE, WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO PROVE THA T SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING T O THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. THUS, APAR T FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD HAVE BEE N FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS M ATERIAL TO THE COMPUTATION OF HIS INCOME. SECTION 271(1)(C) REMAINS A PENAL STATUTE. THE RUL E OF STRICT CONSTRUCTION SHALL APPLY THERETO. THE INGREDIENTS F OR IMPOSING PENALTY REMAINS THE SAME. THE PURPOSE OF THE LEGISLATURE TH AT IT IS MEANT TO BE DETERRENT TO TAX EVASION IS EVIDENCE THE INCREASE I N THE QUANTUM OF PENALTY, FROM 20 PER CENT, UNDER THE 1922 ACT TO 30 0 PER CENT, IN 1985 5.2 IN THE LIGHT OF AFORESAID OBSERVATIONS OF THE H ONBLE APEX COURT, WHAT IS TO BE SEEN IN THE INSTANT CASE, IS WHETHER THE SAID CL AIM MADE BY THE ASSESSEE ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 10 WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RE LEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESS EE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U./S. 271(1)(C) OF THE ACT. A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETAT IONS DOES TO AMOUNT TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. AJAIB SINGH & CO (2001) 170 CTR (P&H) 489 ; (2002) 253 ITR 630 (P&H) HAVE OBSERVED THAT MERELY BECAUSE CERTAIN EXPENSES CLAIMED BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY, IT CANNOT MEAN THAT PARTICULARS FURNISHED BY THE ASSESSEE WERE WRONG. IT WAS HELD T HAT MORE DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN THAT ASSESSEE HAS FURNI SHED INACCURATE PARTICULARS OF INCOME. IN THE CASE UNDER CONSIDERAT ION, AS POINTED OUT BY THE LD. CIT(A), THE ASSESSEE HAD GIVEN ALL THE PARTICUL ARS OF INCOME AND HAD DISCLOSED ALL FACTS TO THE AO. THE LD. CIT(A) ACCOR DINGLY CONCLUDED THAT THERE WAS A BONA FIDE MISTAKE IN CLAIMING THE DEDUCTION F OR ROYALTY WITHOUT DEDUCTING TAX AT SOURCE AND THE DISALLOWANCE WAS MO STLY TECHNICAL IN NATURE. MERE DISALLOWANCE OF A CLAIM WILL NOT AMOUNT TO FIL ING OF INACCURATE PARTICULARS OF INCOME. IT CAN AT BEST BE A WRONG CLAIM NOT A FALSE CLAIM . N SUCH CIRCUMSTANCES, HONBE DELHI HIGH COURT HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. BACARDI MARTINI INDIA LIMITED, 288 ITR 585 (DEL) THAT NO PENALTY WAS LEVIABLE. RECENTLY, HONBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS, ARISING OUT OF SLP (C) NO.27161 OF 2008, VIDE THEIR ORDER DATED 17.3.2010 HELD THAT A MERE MAKING OF THE CLAIM, WHI CH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE AS. SUCH CLAIM MADE IN THE RETURN CAN NOT AMOUNT TO THE INACCURATE PARTICULARS, HONBLE APEX COURT CONCLUDE D. THUS, MERELY BEAUS ETH ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT THE PENALTY U/S. 271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE ARE OF THE OPINION THAT THE DISALLOWANCE OF CLAIM FOR DEDUCTION OF ROYALTY, BY MERELY HAVING RECOURSE TO PROVISIONS OF SEC. 40(A)(IA) OF THE ACT CANNOT BE C ONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF . 5.3 THE AFORESAID VIEW TAKEN BY US IS ALSO SUPPORTE D BY THE DECISION DATED 19.6.2009 IN THE ASSESSEES OWN CASE IN THE AY 1997 -98 IN ITA NO.4236/AHD/2007 , WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, ORDER OF THE LD. CIT(A), CANCELING THE PENALTY WAS UPHELD. THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCT PVT. LTD. (SUPRA) HAS HELD A MERE MAKING OF THE CLAIM WHICH IS NOT SU STAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S OF INCOME IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE MADE A CLAIM IN RESPE CT OF TECHNICAL KNOW-HOW U/S. 35AB OF THE ACT, HOWEVER, SAME WAS REJECTED BY ASSESSING OFFICER AND DISALLOWANCE WAS CONFIRMED BY THE HOBLE ITAT. RESP ECTFULLY, FOLLOWING THE RATIO IN THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF RELIANCE ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 11 PETROPRODUCT PVT. LTD. (SUPRA), AND THE ORDER OF HONBLE CO-ORDINATE BENC H IN ASSESSEES OWN CASE IN ITA NO. 789 TO 791/AHD/2007 (SUPRA) WE DO NOT FIND ANY INFIRMITY INTO THE ORDER PASSED BY LD. CIT(A). THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED NOW COMING TO ITA NO.1456/AHD/2010. 8. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL:- 1.1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE PENALTY OF RS.308000/- LEVIED U/S. 271(1)(C) OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS WRONG CLAIM OF TECHNICAL KNOW-HOW AND FOILED TO PROVE THAT THE EXPLANATION O FFERED IN THIS RESPECT WAS BONAFIDE AND THEREFORE PENALTY U/S. 271(1)(C) WAS CORRECTLY LEVIED BY THE A.O AS PER EXPLANATION 11 TO SECTION 271(1)(C) OF THE ACT. 3. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS IN NOT TAKING COGNIZANCE OF THE DECISION OF HONLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES 306 ITR 277, WHEREIN IT IS CLEA RLY HELD BY THE HOPNBLE APEX COURT THAT A WILFULL DEFAULT BY THE ASSESSEE I S NOT ON ESSENTIAL INGREDIENT FOR LEVY OF PENALTY U/S. 271(1)(C). 4. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN CAN CELING THE SAID PENALTY, WITHOUT APPRECIATING THE RATIO OF THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF CASE OF CIT VS. SOHON SINGH REPORTE D IN 244 ITR 177, IN WHICH THE HOBLE COURT HAS HELD THAT THE ASSESSEE MUST OF FER AN EXPLANATION TO SHOW THAT THERE WAS NO FRAUD, GROSS OR WILLFUL NEGL IGENCE INVOLVED IN NOT RETURNING THE CORRECT INCOME IN HIS RETURN AND IT I S NOT SUFFICIENT IF ANY FANCIFUL OR TOTALLY UNTENABLE EXPLANATION IS OFFERED. 9. THE FACTS AND ISSUE ARE SAME AS IN ITA NO.1455/AHD/2010 OF REVENUES APPEAL FOLLOWING OUR DISCUSSION ON THIS I SSUE AS EMBODIED IN PARA- 6 OF THIS ORDER, THE APPEAL OF REVENUE IS ALSO DISM ISSED. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. NOW COMING TO ITA NO.1552/AHD/2011 ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 12 11. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- 1. THE LD CIT(A)-XX, AHMEDABAD, HAS ERRED IN LAW AN D ON FACTS IN DELETING THE PENALTY OF RS.5,22,911/- LEVIED U/S 271(1)(C). 12. THE FACTS AND ISSUE ARE SAME AS IN ITA NO.1455/AHD/2010 OF REVENUES APPEAL FOLLOWING OUR DISCUSSION ON THIS I SSUE AS EMBODIED IN PARA- 6 OF THIS ORDER, THE APPEAL OF REVENUE IS ALSO DISM ISSED. 13. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 14. IN COMBINED RESULT, ALL THE THREE APPEALS OF REVENU E ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 07/06/2012 '#$ % & ' ' ' ' ())*+, ())*+, ())*+, ())*+, '-+ '-+ '-+ '-+ / COPY OF ORDER FORWARDED TO:- 1. ',/* 01 / APPELLANT 2. (2301 / RESPONDENT 3. %)5 3 36 / CONCERNED CIT 4. 3 36- ',/* / CIT (A) 5. +9 :/3 ()))5, 3 ',/*/3 ')5, '#$ % / DR, ITAT, AHMEDABAD 6. : <= > ?* / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ @,/# 3 , / 3 ',/*/3 ')5, '#$ % & STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 18/05 2) DIRECT DICTATION BY MEMBER STRAIGHT ON NO ITA NO.1552/AHD/2011 & 1455-56/AHD/2010 A.YS. 00-01,96-97, 98-99 ACIT(OSD)-I CIR-4, ABD V. MAZDA LTD. PAGE 13 COMPUTER/LAPTOP/DRAGON DICTATE 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 18/05, 21/05 4) DATE OF CORRECTION 04/06 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 05/06 7) ORDER UPLOADED ON 07/06 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 07/06