ITO, Pune V. M/S Sharada Construction & Investment Co., Pune

ITA 1619/PUN/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80043 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-04-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 27-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion
• Section: 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1619/PN/2012 (A.Y: 2004-05) ITO, WARD 3(1), PUNE APPELLANT VS. M/S. SHARADA CONSTRUCTION & INVESTMENT COMPANY SHARADA CENTRE, 11/1, ERANDWANE, PUNE 411004 PAN: AADFS6325H RESPONDENT APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI SUHA S P BORA DATE OF HEARING: 21.07.2014 DATE OF ORDER : 30.07.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, PUNE, DA TED 30.03.2012 FOR A.Y. 2004-05 ON THE FOLLOWING GROUND S. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S APPEAL BY DELETING THE PENALTY LEVIED U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 3. THE LEARNED CIT(A) GROSSLY ERRED IN CANCELLING THE PENALTY U/S 271(1)(C) WITHOUT IN ANY MANNER EXAMINING THE F ACTS & EVIDENCES AVAILABLE ON RECORDS AND BROUGHT OUT BY T HE ASSESSING OFFICER IN THE PENALTY ORDER IN SUPPORT O F LEVY OF PENALTY U/S 271(1)(C). 2 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN NOT APPRECIATING THAT THE WORDS US ED IN SECTION 80IA IS 'DERIVED' AND NOT 'FROM' WHICH IS A MUCH WIDER TERM AND THOUGH THE BENEFIT IS PROVIDED TO TH E ASSESSEE BY STATE GOVT. BECAUSE OF INSTALLATION OF WINDMILL BUT THE SALES TAX BENEFIT SUBSIDY AND ITS SALE TO T HE OUTSIDE PARTY CANNOT BE SAID TO BE DERIVED FROM GENERATION, DISTRIBUTION OR TRANSMISSION OF POWER FROM WINDMILL , 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED ANY INCOME WHEN THE ASSESSEE HAS WILLFULLY CLAIMED WRONG DEDUC TION U/S.80IA OF THE I.T.ACT, 1961 AND HAS THEREBY ATTEM PTED TO EVADE TAX BY FURNISHING INACCURATE PARTICULARS OF I NCOME AND CONCEALING ITS INCOME. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT (APPE ALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RES TORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OR ALL THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS O F BUILDING & DEVELOPING PROPERTIES AS ALSO PRODUCTION OF POWER F ROM WINDMILL. THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS. 10,14,385/- AS AGAINST RETURNED INCOME OF RS.NIL. WHILE COMPUT ING THE INCOME, THE DEDUCTION U/S.80IA OF THE ACT WAS RECOM PUTED BY THE ASSESSING OFFICER BY EXCLUDING THE VALUE OF SAL ES TAX BENEFIT OF RS.18,40,000/-. THE ASSESSING OFFICER EXCLUDED THE SAID AMOUNT BEING NOT DERIVED FROM ELIGIBLE BUSINESS AND IN ORD ER TO CALCULATE ELIGIBLE DEDUCTION U/S.80IA, THE ASSESSING OFFICER RECASTED THE TRADING AND PROFIT AND LOSS ACCOUNT OF THE WINDMILL FOR THE YEAR UNDER CONSIDERATION AND HELD THAT THE SAID DEDUCTIO N WAS AVAILABLE ONLY FOR THE INCOME ON PROFIT DERIVED ON ELIGIBLE BUSINESS. THE METHOD ADOPTED BY THE ASSESSEE OF PR EPARING COMBINED PROFIT AND LOSS ACCOUNT ALONG WITH OTHER A UDIT ENTRIES AND CLAIMING DEDUCTION AGAINST THE ENTIRE GROSS TOT AL INCOME WAS FOUND TO BE INCORRECT BY THE ASSESSING OFFICER. TH E PLEA OF THE 3 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. ASSESSEE THAT SALES TAX BENEFIT BE TREATED AS PART OF TRADING RECEIPT WAS NOT ACCEPTED BY THE ASSESSING OFFICER A ND THE SAME WAS CONSIDERED AS SUPPLEMENTARY INCOME FROM BUSINES S. THUS, THE QUANTUM OF DEDUCTION U/S.80IA OF THE ACT AS CLA IMED BY THE ASSESSEE WAS REDUCED AND TAXABLE INCOME RESULTED. THUS, THE ADDITION WAS MAINLY ON ACCOUNT OF REJECTION OF DEDU CTION CLAIMED BY THE ASSESSEE U/S.80IA. SUBSEQUENTLY, THE ASSESS ING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT ON THE SAID DISALLOWANCE OF THE CLAIM OF THE DEDUCTION U/S.80IA OF THE ACT. HE HELD THAT THE ASSESSEE HAS FILED INADEQUATE PART ICULARS OF INCOME DELIBERATELY AND THEREBY CONCEALED ITS INCOM E. 3. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) DELETED THE PENALTY IN QUESTION. THE SAME HAS BEEN OPPOSED BEFORE US ON B EHALF OF REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE ASSESSEE'S APPEAL BY DELETING THE PENA LTY LEVIED U/S.271(1)(C) OF THE ACT. THE CIT(A) ERRED IN CANC ELLING THE PENALTY U/S 271(1)(C) OF THE ACT WITHOUT IN ANY MAN NER EXAMINING THE FACTS & EVIDENCES AVAILABLE ON RECORDS AND BROU GHT OUT BY THE ASSESSING OFFICER IN THE PENALTY ORDER IN SUPPORT O F LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. HE ERRED IN NOT APPRECIATING THAT THE WORDS USED IN SECTION 80IA IS 'DERIVED' AN D NOT 'FROM' WHICH IS A MUCH WIDER TERM AND THOUGH THE BENEFIT I S PROVIDED TO THE ASSESSEE BY STATE GOVT. BECAUSE OF INSTALLATION OF WINDMILL BUT THE SALES TAX BENEFIT SUBSIDY AND ITS SALE TO T HE OUTSIDE PARTY CANNOT BE SAID TO BE DERIVED FROM GENERATION, DISTR IBUTION OR TRANSMISSION OF POWER FROM WINDMILL. THE CIT(A) AL SO ERRED IN HOLDING THAT THE ASSESSEE HAS NOT FURNISHED INACCUR ATE PARTICULARS OF INCOME AND CONCEALED ANY INCOME WHEN THE ASSESSEE HAS WILLFULLY CLAIMED WRONG DEDUCTION U/S. 80IA OF THE ACT AND HAS THEREBY ATTEMPTED TO EVADE TAX BY FURNI SHING 4 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. INACCURATE PARTICULARS OF INCOME AND CONCEALING ITS INCOME. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNE D AUTHORIZED REPRESENTATIVE HAS SUPPORTED THE ORDER OF CIT(A) AN D FILED CASE LAWS AND BRIEF SUMMARY OF THE CASE TO SUPPORT THE O RDER OF CIT(A). 4. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE MAIN STAND OF THE ASSESSEE HAS BEEN THAT ALL THE FACTS WERE ALREADY DISCLOSED AT THE TIME OF FILING OF RETURN AS WELL AS DURING THE COURSE OF ASSESSMENT. THE PR ESUMPTION AS PER EXPLANATION I TO SECTION 271(1)(C) IS REBUTTABL E WHERE THE ASSESSEE HAS OFFERED AN EXPLANATION AND SUCH EXPLAN ATION WAS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME DISCLOSED, THE ASSESSEE HAS ACTED IN A BONAFIDE MANNER. THE DEDUCTION U/S 80IA OF THE A CT WAS CLAIMED BY THE ASSESSEE IN THE ORIGINAL RETURN OF I NCOME AND THE HE HAD FILED EXPLANATION AND ALSO SUBMITTED THE OPI NION ADDUCED TO THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA WHICH PROVES THE BONAFIDE OF THE ASSESSEE. IT WAS THE STAND OF THE ASSESSEE THAT THE ISSUE OF DEDUCTION U/S 80IA OF THE ACT IS A COMPLEX MATTER AND THAT THERE COULD BE A GENUINE DIFFERENCE OF OPINION BETWEEN THE REVENUE AND THE TAXPAYER AND INVOLVING GENUINE DIFFERENCE OF OPINION ON MATTER OF LAW ARE CLEARLY OUTSIDE THE SCOPE OF EXPLANATION I TO SECTION 271(1)(C) OF THE ACT. THE ISSUE BEFORE US IS WHETHER THE IMPUGNED ADDITION / DISALL OWANCE MADE IN THE ASSESSMENT ORDER IN THE CASE OF ASSESSEE ATT RACTS PENAL PROVISIONS U/S.271(1)(C) OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE REFER THE RELEVANT PROVISIONS OF SECTION 271(1)( C) OF THE ACT AND EXPLANATION 1 THERETO, AS APPLICABLE FOR THE YEAR U NDER CONSIDERATION, WHICH READ AS UNDER: '271 FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICE S, CONCEALMENT OF INCOME, ETC. (1) IF THE AO OR THE CIT(A) OR 5 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) .................. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, (I) AND (II) ........ .......... (III) IN THE CASES REFERRED TO IN CL. (C) OR CL. (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 A MOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMEN T OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS THE FU RNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BEN EFITS: 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 AO OR THE CIT(A) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLAN ATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CL. (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED.' 4.1 A PLAIN READING OF THE ABOVE PROVISION OF LAW M AKES IT CLEAR THAT THE SCHEME OF SEC. 271(1)(C) VISUALIZES IMPOSI TION OF PENALTY WHEN THE ASSESSEE HAS CONCEALED INCOME OR WHEN THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN ADDITION TO THESE TWO SITUATIONS, PENALTY CAN ALSO BE IMPOSED, INTER ALIA, WHEN ASSESSEE IS DEEMED TO HAVE CONCEALED PARTICULA RS OF INCOME UNDER EXPLANATION 1 TO SEC. 271(1)(C). A DEEMING F ICTION UNDER EXPLANATION 1 TO SECTION ENVISAGES TWO SITUATIONS (A) WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE C OMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, TH E ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY THE 6 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. ASSESSES WAS FOUND TO BE FALSE BY THE ASSESSING OFF ICER OR THE CIT(A); AND, (B) SECOND, WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THIS ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE E XPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATI ON WAS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. IN THE FIRST SITUATION, THE DEEMING FICTION HAS COM E INTO PLAY BY THE INACTION OF THE ASSESSEE BY HIS NOT GIVING T HE EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME, OR BY ACTION OF THE ASSESSING OFFICER OR TH E CIT(A) BY GIVING CATEGORICAL FINDING TO THE EFFECT THAT THE E XPLANATION GIVEN BY THE ASSESSEE WAS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION HAS COME INTO PLAY BY THE FAILURE OF THE AS SESSEE LEADING TO SATISFACTION OF CONDITIONS LAID DOWN IN CLAUSE (B) OF EXPLANATION 1 NAMELY THAT THE ASSESSEE IS NOT ABLE TO SUBSTANTIAT E AN EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME, AND THE ASSESSEE WAS ALSO NOT ABLE TO ESTABLISH THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL I NCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. WHEN THIS DEEMING FICTION COMES INTO PLAY, WHICH CAN ONLY HAPPEN IN ONE OF THE ABOV E SITUATIONS, THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING T HE TOTAL INCOME OF THE ASSESSEE, FOR THE PURPOSES OF SECTION 271(1)(C), IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH INACCURATE PARTICULARS HAVE BEEN FURNISHED. THUS, IT IS BY V IRTUE OF EXPLANATION 1 TO SEC. 271(1)(C) ONLY THAT THE ASSES SING OFFICER HAS BEEN GIVEN A RIGHT TO RAISE A PRESUMPTION TO DEEM C ERTAIN SUM ADDED TO INCOME OR DISALLOWED IN COMPUTING THE INCO ME OF A PERSON, TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED, IF THE ASSESSEE DID NOT FURNIS H AN EXPLANATION OR WHEN EXPLANATION FURNISHED WAS FOUND TO BE FALSE; 7 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. AND ALSO WHEN SUCH PERSON OFFERS AN EXPLANATION WHI CH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION WAS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DI SCLOSED BY HIM. THE PENALTY U/S. 271(1)(C) IS A PENALTY FOR C ONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS, OR, UNDER THE EXTENDED DEFINITION BY VIRTUE OF EXPLANATION 1 TO SECTION 271(1)(C), FOR CONCEALMENT OF INCOME. AS A COROLLA RY TO THIS LEGAL POSITION, UNLESS IT IS ESTABLISHED THAT THERE IS CO NCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OR I T IS ESTABLISHED THAT, ON THE FACTS OF THE CASE, CONCEALMENT OF INCO ME COULD BE DEEMED IN ACCORDANCE WITH THE PROVISIONS OF THE EXP LANATION, PENALTY CANNOT BE IMPOSED U/S. 271(1)(C) OF THE ACT . 4.2 NOW LET US ANALYSE THE ABOVE LEGAL POSITION VIS -A-VIS FACTS OF THE PRESENT CASE TO EXAMINE WHETHER THE PRESENT CAS E IS COVERED UNDER THE MAIN PART OF THE PROVISIONS OR UNDER THE DEEMING PROVISIONS OF EXPLANATION 1 OF SECTION 271(1)(C) OR NOT. THE NECESSARY PRECONDITION FOR IMPOSITION OF PENALTY UN DER THE MAIN PROVISIONS OF SECTION 271(1)(C) OF THE ACT IS THAT THE ASSESSING OFFICER SHOULD SATISFY HIMSELF THAT THE ASSESSEE CO NCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. THE EXPRESSION CONCEALMENT OF INCOME HAS NOT BEEN DEF INED IN THE ACT, BUT THE NATURAL MEANING OF THE EXPRESSION 'CON CEALMENT' IS 'TO KEEP FROM BEING SEEN, FOUND, OBSERVED, OR DISCO VERED. IT WOULD, THEREFORE, FOLLOW THAT THE EXPRESSION CONCEA LMENT OF INCOME, IN ITS NATURAL SENSE AND GRAMMATICAL MEANIN G, IMPLIES AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED U P SO THAT IT COULD NOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. BUT, IN THE PRESENT CASE, THE ASSESSEE HAS MADE DISCLOSURE BY W AY OF FURNISHING THE FACTS AND MATERIAL TO THE COMPUTATIO N OF INCOME. 8 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. 4.3 THE OTHER EXPRESSION FURNISHING OF INACCURATE P ARTICULARS OF INCOME HAS ALSO NOT BEEN DEFINED IN THE ACT. THE P ENALTY WAS LEVIED ON THE PREMISE THAT THE ASSESSEE FURNISHED I NACCURATE PARTICULARS OF INCOME. IN THE CONTEXT OF FURNISHIN G OF INACCURATE PARTICULARS, THE EXPRESSION 'INACCURATE' REFERS TO 'NOT IN CONFORMITY WITH THE FACT OR TRUTH'. THE EXPRESSION 'PARTICULARS' REFERS TO 'FACTS, DETAILS, SPECIFICS, OR INFORMATIO N ABOUT SOMEONE OR SOMETHING'. THEREFORE, THE PLAIN MEANING OF THE EXPRESSION 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IM PLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH WAS NO T IN CONFORMITY WITH THE FACTS OR BOTH. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS APPARENTLY PROCEEDED ''TO TRE AT ASSESSEES MAKING A LEGAL CLAIM OF INCOME AS FURNISHING OF INA CCURATE PARTICULARS. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, COULD NOT AMOUNT TO FURNIS HING OF INACCURATE PARTICULARS OF INCOME. INACCURATE DEN OTES SOMETHING FACTUALLY INCORRECT AND INTERPRETATION OF LAW CAN N EVER BE A FACTUAL ASPECT. JUST BECAUSE THE ASSESSING OFFICER DID NOT ACCEPT AN INTERPRETATION, SUCH AN INTERPRETATION IS NOT RE NDERED INCORRECT. IN SUCH CIRCUMSTANCES, A BONA FIDE LEGA L CLAIM MADE BY THE ASSESSEE COULD NOT BE VISITED WITH PENAL CON SEQUENCES MERELY BECAUSE IT HAS NOT BEEN ACCEPTED BY THE LOWE R AUTHORITIES. IN THE PRESENT CASE, NO INFORMATION OR STATEMENT GI VEN IN THE RETURN OR DURING THE ASSESSMENT PROCEEDINGS WAS FOU ND TO BE FACTUALLY INCORRECT OR INACCURATE. THE EXPRESSION INACCURATE PARTICULARS OF INCOME DO NOT EXTEND TO THE ISSUES, WHICH ARE CAPABLE OF DIFFERENT INTERPRETATIONS UNDER LAW AND THEREFORE THE CASE OF THE ASSESSEE COULD NOT BE SAID TO BE A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME EITHER. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GUILTY OF FUR NISHING INACCURATE PARTICULARS. 9 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. 4.4 LET US EXAMINE THE ASSESSEES CASE UNDER THE DE EMING PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. THIS DEEMING FICTION, AS MENTIONED EARLIER IN THIS ORDER , COMES INTO PLAY WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (I) WHEN THE ASSESSEE FAILS TO PROVIDE AN EXPLANATION, (II) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH IS FOUND TO BE FALSE, AND (III) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE FAILS TO PROVE THAT TH E EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. 4.5 IN THE INSTANT CASE, CONDITION (I) WAS NOT SATI SFIED AS THE ASSESSEE HAS FILED AN EXPLANATION THAT HE WAS OF TH E BONA FIDE VIEW THAT THE SALES TAX ENTITLEMENT WAS A TRADING R ECEIPT AN ADMISSIBLE DEDUCTION UNDER THE PROVISIONS OF THE AC T. IN VIEW OF THE ABOVE, THE CASE OF THE ASSESSEE IS NOT EVEN HIT BY THE MISCHIEF OF ANY OF THE THREE SITUATIONS ENVISAGED BY THE DEE MING FICTION UNDER EXPLANATION 1 TO S. 271(1)(C) OF THE ACT. AS DISCUSSED ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED THE PA RTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. 4.6 THE PENALTY CAN ONLY BE IMPOSED ONLY WHERE THE CONDITIONS LAID DOWN U/S.271(1)(C) OF THE ACT ARE SATISFIED, A ND THE PENALTY IS NOT AN AUTOMATIC CONSEQUENCE FOR EVERY ADDITION TO RETURNED INCOME. MERELY BECAUSE AN ADDITION IS MADE TO THE INCOME DECLARED BY THE ASSESSEE, PENALTY U/S.271(1)(C) COU LD NOT BE IMPOSED. RAISING A BONA FIDE LEGAL CLAIM IN THE RE TURN OF INCOME, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY NOT AC CEPTABLE, COULD NOT AMOUNT TO CONCEALING PARTICULARS OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE COU LD NOT BE SADDLED WITH PENAL CONSEQUENCES MERELY BECAUSE A BO NA FIDE 10 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. LEGAL CLAIM WAS MADE IN THE RETURN OF INCOME AND TH E SAME HAS NOT BEEN ACCEPTED BY THE TAX AUTHORITIES OR APPELLA TE AUTHORITIES SO FAR. THUS, THE CASE OF ASSESSEE COULD NOT BE SA ID TO BE A CASE OF CONCEALING PARTICULARS OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME AS CONTEMPLATED UNDER SECTIO N 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. (2010) 322 ITR 158 (SC ) HAS OBSERVED AS UNDER: A GLANCE OF PROVISION OF SECTION 271(1)(C) WOULD S UGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT CASE WAS NOT THE CASE OF CONCEA LMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE EI THER. IT WAS AN ADMITTED POSITION IN THE INSTANT CASE THAT N O INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INC ORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT . HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HE LD 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 T HE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CA SE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURN ISHING OF INACCURATE PARTICULARS. [PARA 7] THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UND ER SECTION 271(1)(C) EXIST BEFORE THE PENALTY IS IMPOS ED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECAUSE THAT IS THE ONLY DOCUMENT, WH ERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY 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 CAS E, THERE WAS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASS ESSES IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF 11 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. INVITING THE PENALTY UNDER SECTION 271(1)(C). A MER E MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY IT SELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICUL ARS. [PARA 9] THE REVENUE CONTENDED THAT SINCE THE ASSESSES 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: (\) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (IIJ AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGE RATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE T HE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. SUC H CONTENTION COULD NOT BE ACCEPTED AS THE ASSESSEE HA D FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WEL L AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE N OT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMEN T OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSE SSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT 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 WAS NOT ACCEPTED BY THE ASSESS ING OFFICER FOR ANY REASON, THE ASSESSEE WOULD INVITE P ENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE IN TENDMENT OF THE LEGISLATURE. [PARA 10] (EMPHASIS SUPPLIED). 4.7 IN RELIANCE PETRO PRODUCTS LTD. (SUPRA), THE HO NBLE SUPREME COURT EMPHASIZED THAT MERE MAKING OF A CLAI M OF DEDUCTION WHICH WAS NOT ALLOWABLE BY ITSELF WOULD N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. IN FA CT, EVERY LEGAL DISALLOWANCE UNDER THE PROVISIONS OF THE ACT COULD NOT LEAD TO THE CONCLUSION THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. WE ALSO FIND I N THE CASE OF CIT VS DHARAMPAL PREMCHAND LTD. (2010) 329 ITR 572 (DEL), IT WAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIM ED DEDUCTION U/S.80IA AND 80IB OF THE ACT WHICH CLAIM WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY PROCEEDINGS AS THE SAME COULD NOT BE CONSTR UED AS 12 ITA NO.1619 OF 12 SHARADA CONSTRUCTION & INVESTMENT CO. FURNISHING INACCURATE PARTICULARS OF INCOME U/S.271 (1)(C) OF THE ACT. IN VIEW OF ABOVE FACTUAL AND LEGAL DISCUSSION , THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE CIT(A), WHICH NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHO LD THE SAME. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 30 TH OF JULY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JULY, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE