DCIT, Pondicherry V. The Pondicherry Co-op Urban Bank Ltd., Pondicherry

ITA 1814/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7717 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M.RAJENDRAN; FURNISHING REVISED
• Keywords: Retrospective amendment; Bad and doubtful debts; Bonafide mistake; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 40(a)(ia); 143(1); 205; 250; 201; 274; 251; 13; 153

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' . #$ % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.1814/MDS./2016 / ASSESSMENT YEAR : 2011-12 & C.O.109/MDS./2016 THE DCIT, PONDHICHERY CIRCLE, NO.378- 386, MAHATMA GANDHI ROAD, PONDICHERRY 605 001. VS. M/S.THE PONDICHERRY CO-OP URBAN BANK LTD., 197,J.N.STREET, PONDICHERRY 605 001 [PAN AABAT 6202 F ] ( () / APPELLANT) ( *+() /RESPONDENT/ CROSS OBJECTOR) / APPELLANT BY : MR.N.MADHAVAN,JCIT,D.R /RESPONDENT BY : MR.M.RAJENDRAN, C.A / DATE OF HEARING : 15 - 0 2 - 201 7 / DATE OF PRONOUNCEMENT : 28 - 02 - 2017 , / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS REVENUES APPEAL AND ASSESSEES CROSS OBJEC TIONS FOR ASSESSMENT YEAR 2009-10, ARE DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PUDUCHERRY DA TED 25.02.2016 PERTAINING TO ASSESSMENT YEAR 2011-12. ITA NO.1814/16 :- 2 -: 2.1 THERE IS A DELAY OF 25 DAYS IN FILING THE APPE AL BEFORE THIS TRIBUNAL. THE DEPARTMENT FILED A CONDONATION PETIT ION DATED 04.06.2016 STATING THAT HE WAS SUB-NODAL OFFICER FO R GENERAL ELECTIONS FOR ASSEMBLY CONSTITUENCY AT PONDHICHERRY AND ENGAG ED IN SURVEILLANCE DUTY. FURTHER, IT WAS SUBMITTED THAT T HE ASSESSING OFFICER HOLD ADDITIONAL CHARGE OF VILUPURAM CIRCLE, CIRCLE. AFTER GOING THROUGH THE REASONS ADVANCED BY THE DEPARTMENT, WE ARE SATI SFIED THAT THERE IS GOOD AND SUFFICIENT REASON IN FILING THE APPEAL BEL ATEDLY. ACCORDINGLY, WE CONDONE THE DELAY OF 25 DAYS IN FILING THE APPEA L AND ADMIT THE SAME FOR ADJUDICATION. 2.2 THE MAIN GRIEVANCE OF REVENUE IN ITS APPEAL IS WITH REGARD TO DELETION OF PENALTY LEVIED U/S. 271(1)(C) OF THE ACT BY THE LD.CIT(A). 2.3. IN CROSS OBJECTIONS, THE ASSESSEE IS IN SUPPO RT OF THE ORDER OF LD.CIT(A). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A CO-OPERATIVE BANK FILED ITS RETURN OF INCOME ON 30.09.2011 FOR T HE ASST. YEAR 201 1-12 ADMITTING TOTAL INCOME OF ` 1 ,22,37,520/-. IN THIS CASE, ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 31.01.2014 DETER MINING THE TOTAL ITA NO.1814/16 :- 3 -: INCOME AT ` 2,51,74,530/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, ON VERIFICATION OF THE RECORDS IT WAS FOUND THAT THE A SSESSEE-CO-OP. BANK CLAIMED THAT THE PROVISION AGAINST NPA AND STANDARD ASSETS TO THE TUNE OF ` 1,09,36,641/- AND EXPENDITURE WITHOUT DEDUCTING TDS TO THE TUNE OF ` 2,44,001/- AND THE SAME HAVE BEEN ADDED TO THE TOTA L INCOME OF THE ASSESSEE. AS THE ASSESSEE-CO-OP. BANK HAD CONCEALED ITS INCOME IN RESPECT OF THE PROVISION AGAINST NPA AND STANDARD ASSETS TO THE TUNE OF ` 1,09,36,641/-, HAVING DISCHARGED THE CREDIT FROM UN DISCLOSED INCOME, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 WAS INITIATED BY ISSUE OF NOTICE U/S 271(1)(C) R.W.S. 274 OF THE INCOME TAX ACT. 1961, DATED 31 .01 .2014. IN RESPONSE TO THE NOTICE, THE ASSESSEE-CO-OP. BANK FILED ITS REPLY ON 22.07.2014 FURNISHED VARIOUS CAS E-LAWS AND REQUEST TO DROP PENALTY PROCEEDINGS. 3.1 FURTHER, LD. ASSESSING OFFICER OBSERVED THAT T HE REASONS GIVEN BY THE ASSESSEE ARE NOT ACCEPTABLE, AS THE ASSESSEES AR H AS FILED A REVISED COMPUTATION OF TOTAL INCOME IN THE COURSE OF THE AS SESSMENT PROCEEDINGS ACCEPTING FOR THE ABOVE DISALLOWANCE. HENCE, AS PER THE PROVISIONS FO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME. THE ABOVE FINDINGS C AME TO LIGHT ONLY DUE TO THE EFFORTS OF THE DEPARTMENT DURING THE COURSE OF SCRUTINY PROCEEDINGS. THEREFORE, THE ACT OF THE ASSESSEE IS NOTHING BUT F URNISHING INACCURATE PARTICULARS OF INCOME. THIS WOULD, THEREFORE WARRAN T LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. THUS, A MINI MUM PENALTY OF ITA NO.1814/16 :- 4 -: RS.33,76,3121- IS LEVIED U/S 271(1)(C) OF THE FOR THE ASST. YEAR 2011-12. AGGRIEVED WITH THE ORDER OF AO, THE ASSESSEE CARRIE D THE APPEAL BEFORE THE LD.CIT(A). 4. ON APPEAL, THE LD.CIT(A) OBSERVED THAT AS PER ASSES SEES SUBMISSION, IT WAS A BONAFIDE MISTAKE OF NOT ADDING BACK THE PR OVISION AGAINST NPA AND STANDARD ASSETS COMMITTED BY ITS AUDITOR WHO PREPAR ED AND FILED THE RETURN OF INCOME AND WHEN THE MISTAKE WAS NOTICED THE ASSE SSEE ITSELF VOLUNTARILY FILED ITS REVISED COMPUTATION AND RECTIFIED THE MIS TAKE DURING THE ASSESSMENT PROCEEDINGS. ACCORDING TO LD.CIT(A), THE AO NOWHER E STATED IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER THAT THE E XPLANATION IS NOT BONAFIDE OR FALSE. FURTHER, LD.CIT(A) OBSERVED THAT THE ASSESSEE IS A QUASI- GOVERNMENTAL ORGANISATION AND MANAGED BY THE REGIST RAR OF COOPERATIVE SOCIETIES AND ITS MANAGING DIRECTOR IS DEPUTY REGIS TRAR APPOINTED BY GOVERNMENT OF PONDICHERRY AND THERE COULD BE NO INT ENTION TO CONCEAL INCOME OR FURNISH INACCURATE PARTICULARS. IF THE EX PLANATION GIVEN IS BONAFIDE, PENALTY U/S 271(1) (C) CANNOT BE LEVIED IN TERMS OF THE EXPLANATION 1 TO THAT SECTION. EVEN IF THE ASSESSEE FAILS TO SUBSTANTIATE ITS EXPLANATION, IF THE EXPLANATION IS BONAFIDE. LD.CIT(A) OBSERVED THAT PE NALTY IS NOT LEVIABLE IN STRENGTH OF THE FOLLOWING CASE LAWS: CIT VS RAHUIJEE & CO. 250 ITR 225 (DEL) CIT VS KERALA SPINNERS 247 ITR 541 (KER) CIT VS GEO SEA GOODS 244 ITR 44 (KER) CIT VS SURESHCHANDRA MITTAL 251 ITR 9 (SC) CIT VS P. GOVINDASWAMY 263 ITR 509 (MAD) ITA NO.1814/16 :- 5 -: THE LD.CIT(A) WAS OF THE OPINION THAT PENALTY PROCE EDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS AND LEVY OF PENALTY CANNOT B E AUTOMATIC; AO HAS TO BRING OUT CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS IN THE PENALTY ORDER [CIT V. DHARAM CHAND L. SHAH, 204 ITR 462 (BO M), KANBAY SOFTWARE INDIA PVT. LTD. (2009) 31 SOT 153 (PUNE)]. HOWEVER, THIS HAS NOT BEEN DONE BY THE AO. IT IS TO BE NOTED THAT THE INADVERTENT M ISTAKE IN THE STATEMENT OF TOTAL INCOME HAS BEEN CORRECTED BY THE ASSESSEE BY FURNISHING REVISED STATEMENT OF TOTAL INCOME TO THE AO AT THE TIME OF ASSESSMENT PROCEEDING ITSELF. THEREFORE, LD.CIT(A) DELETED THE LEVY OF P ENALTY U/S.271(1)(C) OF THE ACT MADE BY THE LD. ASSESSING OFFICER. AGGRIEVED WI TH THE ORDER OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE MADE A CLAIM OF PROVISION AGAINST STANDARD ASSETS TO THE TUNE OF ` 1,09,36,641/-, AND ALSO THERE IS NO DEDUCTION OF TDS ON THE MADE AT ` 2,44,001/-. THIS WAS POINTED OUT TO THE ASSESSEE BY THE AO. ACCORDINGLY, THE ASSESSEE F ILED REVISED COMPUTATION OF INCOME AND HOWEVER, THE CONTENTION O F ASSESSEE WAS NOT ACCEPTABLE TO THE AO. HENCE, THE AO DUE TO THES E TWO DISCREPANCIES, LEVIED THE PENALTY U/S.271(1)(C) OF THE ACT. THE CLAIM OF EXPENDITURE AT ` 2,44,001/- WITHOUT MAKING TDS PAYMENT RESULTED IN DISALLOWANCE OF SAME. THOUGH THIS WARRANTS THE ADDI TION, THE LEVY OF PENALTY CANNOT BE JUSTIFIED BECAUSE THERE ARE CLEAV AGE OF OPINION ON ITA NO.1814/16 :- 6 -: THAT ISSUE. . FURTHER, THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN THE CASE OF SHRI N.PALANIVELU VS. ITO REPORTED IN [2015 ] 40 ITR (TRIB) 325 [CHENNAI] VIDE ORDER DATED 29.04.2015 WHEREIN HELD THAT:- 4. WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT THE SPECIAL BENCH OF THE TRIBU NAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORTS V. ADDL. CI T [2012] 16 ITR (TRIB) 1 (VISAKHAPATNAM) [SB] AND JUDGMENT O F THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. VECTOR S HIPPING SERVICES (P.) LTD. IN [2013] 357 ITR 642 (ALL) HELD THAT SECTION 40(A)(IA) OF THE ACT IS NOT APPLICABLE WHEN THERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE O F THE YEAR RELEVANT TO THE ASSESSMENT YEAR IN RESPECT OF THESE PAYMENTS. HOWEVER, THE ASSESSEE HAS NOT BROUGHT ON RECORD, THE DETAILS OF OUTSTANDING EXPEN SES OR SCHEDULE OF SUNDRY CREDITORS SHOWING WHETHER THE IM PUGNED AMOUNT IS OUTSTANDING AT THE END OF THE CLOSE OF TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR EITHER IN THE NAME OF THE PARTY OR OUTSTANDING EXPENSES. HENCE, IN THE IN TEREST OF JUSTICE, WE ARE REMITTING THE ISSUE BACK TO THE FIL E OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY THE CLAI M OF THE ASSESSEE AND THE ASSESSEE SHALL PLACE NECESSARY EVI DENCE IN SUPPORT OF HIS CLAIM. 5. FURTHER, WE MAKE IT CLEAR THAT IF THE IMPUGNED A MOUNT IS NOT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSE SSMENT YEAR IN RESPECT OF THE EXPENSES EITHER AS OUTSTANDI NG EXPENSES OR AS SUNDRY CREDITORS, THIS AMOUNT CANNOT BE DISALLOWED. THIS GROUND IS REMITTED BACK TO THE ASS ESSING OFFICER FOR FRESH CONSIDERATION. ITA NO.1814/16 :- 7 -: BEING SO, IN OUR OPINION, THIS DISALLOWANCE OF EXPE NDITURE U/S.40(A)(IA) OF THE ACT DOES NOT WARRANT LEVY OF PENALTY. TO THA T EXTENT WE ARE OF THE AGREEMENT ON DELETION OF PENALTY BY LD.CIT(A) ON THE PAYMENT WITHOUT DEDUCTION OF TDS IS JUSTIFIED. 6. HOWEVER, WITH REGARD TO PROVISION AGAINST THE N PA OUR OPINION IS DIFFERENT. 6.1 IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD B Y THE SUPREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. V. CIT [1980] 123 ITR 457; THE FINDING IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS. IT IS, THEREFORE, NECESSARY TO RE-APPRECIATE AND RECONSIDER THE MATTER SO AS TO FI ND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDINGS ACTUALLY R EPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGE D IN SECTION 271(1)(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. EXPLANATION 1 TO SECTION 271(1)(C) IN RESPECT OF ANY FACT RELATING TO THE COMPUTATION OF TOTAL INCOME STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF AN ASSE SSEE SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION FOR CONCEALMENT IS NOT ABSOLUTE O NE. THE PRESUMPTION ITA NO.1814/16 :- 8 -: UNDER THE EXPLANATION 1 IS REBUTTABLE AND NOT CONCL USIVE. THE ASSESSEE CAN SUBMIT THE EXPLANATION AS THE ONUS SHIFTS ON TO THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF THE INCOME. TH E ASSESSEE IN THE INSTANT CASE SUBMITTED AN EXPLANATION, WHEREIN IN RELATION TO THEIR CLAIM FOR PROVISION ON STANDARD ASSETS, IT POINTED OUT ON BEH ALF OF THE ASSESSEE THAT PROVISION WAS MADE AS PER RBI GUIDELINES. THE LD.C IT(A) FOUND THAT IT WAS NO BONA FIDE MISTAKE TO CLAIM PROVISION AS PER R.B.I GUIDELINES . UNDISPUTEDLY, WHAT THE ASSESSEE HAD DEBITED IN THE PROFIT AND LOSS ACCOUNT WAS MERE PROVISION AND NOT BAD DEBTS WRITTEN OFF. T HE RELEVANT PROVISIONS OF SECTION 36(1)(VII) OF THE ACT EFFECTIVE FROM 1-4-19 89 STIPULATE THAT BAD DEBTS WRITTEN OFF OF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE, ALONE WERE DEDUCTIBLE. THE EXPLANATION INTRODUCED BY THE FINAN CE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 1-4-1989 CLARIFIES THAT P ROVISION FOR BAD AND DOUBTFUL DEBTS WERE NOT DEDUCTIBLE. AS POINTED OUT BY THE LD. CIT(A), THE ASSESSEE IS A CO-OPERATIVE URBAN BANK. THE EXPLANAT ION THAT THEY WERE NOT AWARE OF THE PROVISIONS OF INCOME TAX LAW WHILE MAK ING HUGE CLAIMS FOR DEDUCTIONS, IS NOT TENABLE, THERE BEING NO MATERIAL IN SUPPORT OF SUCH CLAIM. APPARENTLY, IN THE COMPUTATION OF INCOME UNDER THE HEAD 'BUSINESS' THE ASSESSEE MADE INCORRECT CLAIMS NOT SUPPORTED BY ANY PROVISION OF LAW. RATHER THE RELEVANT PROVISIONS DID NOT PROVIDE FOR THE DEDUCTION CLAIMED EITHER ON FACTS OR THE EYE OF LAW, SINCE BAD DEBTS WERE NEVER WRITTEN OFF. THERE IS NOTHING TO SUGGEST THAT THE CLAIM REGARDIN G DEDUCTION FOR EITHER PROVISION ON STANDARD ASSETS (DEBTS) WAS BONA FIDE OR SUPPORTED BY ANY PROVISIONS UNDER THE ACT. IT IS WELL ESTABLISHED TH AT SO LONG AS THE ASSESSEE ITA NO.1814/16 :- 9 -: HAS NOT CONCEALED ANY MATERIAL FACT OR THE FACTUAL INFORMATION GIVEN BY HIM HAS NOT BEEN FOUND TO BE INCORRECT, HE WILL NOT BE LIABLE TO IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, EVEN IF THE CLAIM MADE BY HIM IS NOT SUSTAINABLE IN LAW, PROVIDED THAT HE EITHER SUB STANTIATES THE EXPLANATION OFFERED BY HIM OR THE EXPLANATION, EVEN IF NOT SUBS TANTIATED, IS FOUND TO BE BONA FIDE. IF THE EXPLANATION IS NEITHER SUBSTANTIA TED NOR SHOWN TO BE BONA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND THE ASSESSEE WILL BE LIABLE TO FOR THE PRESCRIBED PENAL TY. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSE E, BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE, EXPLANATION 1 TO SECTION 271(1) COMES INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. IN THE PRESENT CASE, DESPITE THE FACT THAT PROVISION O N STANDARD ASSETS WAS EXPRESSLY MADE NOT DEDUCTIBLE IN TERMS OF THE RELEV ANT PROVISIONS OF SECTION 36(1)(VII) OF THE ACT, THE ASSESSEE CLAIMED THE DED UCTION, EVEN WHEN THE AMOUNT HAD NOT BEEN WRITTEN OFF. WE CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICK ED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE, IT WOULD BE DIF FICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(1) (C) OF THE ACT. IF WE TAKE THE VIEW, THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO ITA NO.1814/16 :- 10 - : IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BO NA FIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LICENSE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITH OUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETU RN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASI S OF SELF ASSESSMENT UNDER SECTION 143(1) OF THE ACT AND EVEN IF THEIR C ASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYING THE TA X, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE, ACTUATED BY AN INTENTIO N 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 FOR SCRUTINY . THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. WE FIND THAT THE ASSESSEE BEFORE US DID NOT EXPLAIN EITHER TO TH E ASSESSING OFFICER/LD. CIT(A) AND EVEN TO US AS TO IN WHAT CIRCUMSTANCES A ND ON ACCOUNT OF WHOSE MISTAKE, THE AMOUNTS CLAIMED AS DEDUCTIONS IN THIS CASE WERE NOT ADDED BACK, WHILE COMPUTING THE INCOME OF THE ASSESSEE CO MPANY. WE CANNOT IGNORE THE FACT THAT THE ASSESSEE IS A BANK WHICH I S HAVING PROFESSIONAL ASSISTANCE IN COMPUTATION OF ITS INCOME, AND ITS AC COUNTS ARE COMPULSORILY SUBJECTED TO AUDIT. IN THE ABSENCE OF ANY DETAILS/ EXPLANATION FROM THE ASSESSEE, WE FAIL TO APPRECIATE HOW SUCH DEDUCTIONS COULD HAVE BEEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE AND HOW IT COULD ALSO HAVE ESCAPED THE ATTENTION OF THE AUDITORS OF, ESPECIALL Y WHEN THE DEDUCTION FOR PROVISION ON STANDARD ASSETS WAS CLAIMED IN FLAGRAN T VIOLATION OF PROVISIONS OF LAW. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN EX PLANATION GIVEN BY THE ITA NO.1814/16 :- 11 - : ASSESSEE DURING THE PENALTY PROCEEDINGS HAS NOT BEE N SUBSTANTIATED NOR FOUND TO BE BONA FIDE AND THERE IS NO MATERIAL BEFO RE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE OF THE OPINION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE LEVY OF PENALTY ON ACCOUNT OF FURNI SHING OF INACCURATE PARTICULARS OF INCOME IN RELATION TO PROVISION ON S TANDARD ASSET, WHICH IS NOT NPA. IN TERMS OF PROVISIONS OF SECTION 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 THERETO AND THE JUDICIAL PRONOUNCEMEN TS IN THE CASE OF B.A. BALASUBRAMANIAM & BROS. CO. V. CIT [1999] 236 ITR 9 77(SC), CIT V. B.A. BALASUBRAMANIAM & BROS. CO. [1985] 152 ITR 529(MAD. ), CIT V. MUSSADILAL RAM BHAROSE [1987] 165 ITR 14(SC); CIT V. K.R. SADA YAPPAN [1990] 185 ITR 49(SC); ADDL. CIT V. JEEVAN LAL SAH [1994] 205 ITR 244(SC) AND K.P. MADHUSUDANAN V. CIT [2001] 251 ITR 99(SC), IT IS WE LL ESTABLISHED THAT WHENEVER THERE IS DIFFERENCE BETWEEN THE RETURNED A ND ASSESSED INCOME, THERE IS INFERENCE OF CONCEALMENT. THE EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT RAISES A PRESUMPTION THAT CAN BE REBUTTED B Y THE ASSESSEE WITH REFERENCE TO FACTS OF THE CASE. THUS, THE ONUS IS O N THE ASSESSEE TO REBUT THE INFERENCE OF CONCEALMENT. THE ABSENCE OF EXPLANATIO N ITSELF WOULD ATTRACT PENALTY. THE EXPLANATION OFFERED BY THE ASSESSEE SH OULD NOT BE FALSE. THE ONUS LAID DOWN UPON THE ASSESSEE TO REBUT THE PRESU MPTION RAISED UNDER EXPLANATION 1 WOULD NOT BE DISCHARGED BY ANY FANTAS TIC OR FANCIFUL EXPLANATION. IT IS NOT THE LAW THAT ANY AND EVERY E XPLANATION HAS TO BE ACCEPTED. SINCE THE ASSESSEE FAILED TO SUBSTANTIATE THEIR EXPLANATION IN RESPECT OF AMOUNT IN RELATION TO DISALLOWANCE ON AC COUNT OF PROVISION ON STANDARD ASSETS RS. 1,09,36,641/-, THE ONUS LAID DO WN UPON THE ITA NO.1814/16 :- 12 - : ASSESSEE IN TERMS OF EXPLANATION 1(B) TO SECTION 27 1(1)(C) OF THE ACT REMAINS UNDISCHARGED. THE ASSESSEE HAS NEITHER SUBSTANTIATE D HIS EXPLANATION NOR PROVED THAT SUCH AN EXPLANATION IS BONA FIDE BEFORE THE LOWER AUTHORITIES. THUS, IT CANNOT BE SAID THAT IN SUCH A CASE, THERE COULD BE NO SCOPE FOR SAYING THAT THE ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, WARRANTING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. EVEN IF THE ASSESSING OFFICER/CIT(A) HAVE NOT SPECIFICALLY INVO KED THE EXPLANATION 1 TO SECTION 271(1)(C), IT HAD TO BE CONSIDERED AT THE A PPELLATE STAGE IN VIEW OF DECISION OF HON'BLE BOMBAY HIGH COURT IN CIT V. SMJ BUILDERS [2003] 262 ITR 60 AND OF HON'BLE APEX COURT IN K.P. MADHUSUDAN AN'S CASE (SUPRA). THERE IS NO DISCRETION ON THE ASSESSING OFFICER AS TO WHETHER HE CAN INVOKE THE EXPLANATION OR NOT. WE AGREE WITH THE ASSESSIN G OFFICER THAT THERE IS NO MATERIAL IN SUPPORT OF THE CLAIM FOR DEDUCTION OF T HE AFORESAID PROVISIONS OR FOR NOT ADDING BACK THE PROVISIONS, DEBITED TO PROF IT AND LOSS ACCOUNT WHILE PREPARING THE STATEMENT OF TOTAL INCOME. 6.3 HON'BLE SUPREME COURT IN THE CASE OF K.P. MADH USUDANAN (SUPRA) HELD THAT : 'WE FIND IT DIFFICULT TO ACCEPT AS CORRECT THE TWO JUDGMENTS AFOREMENTIONED. THE EXPLANATION TO SECTION 271(1)(C ) IS A PART OF SECTION 271. WHEN THE INCOME-TAX OFFICER OR THE APPELLATE A SSISTANT COMMISSIONER ISSUES TO AN ASSESSEE A NOTICE UNDER S ECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREO F ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATI ON. BY REASON OF THE EXPLANATION, WHERE THE TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT OF THE TOTAL INCOME ASSESSED UNDER SECTION 143 OR 144 ITA NO.1814/16 :- 13 - : OR 147, REDUCED TO THE EXTENT THEREIN PROVIDED, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAIL URE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR NEGLECT ON H IS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER SECTIO N 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTANCES STATED I N THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DU E TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CONSE QUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS IN VOCATION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECT ION 271 IS, IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLAN ATION THEREIN ARE APPLIED. THE HIGH COURT AT BOMBAY WAS, THEREFORE, I N ERROR IN THE VIEW THAT IT TOOK AND THE DIVISION BENCH IN THE IMPUGNED JUDGMENT WAS RIGHT.' 6.4 SIMILARLY IN THE CASE OF CIT V. SHAMA MAGAZIN E [1995] 213 ITR 64(DELHI), IT WAS HELD BY THE HON'BLE DELHI HIGH CO URT THAT WHENEVER THERE WAS A FAILURE ON THE PART OF THE ASSESSEE IN THE CI RCUMSTANCES REFERRED TO IN EXPLANATION TO SECTION 271(1)(C), THE STATUTORY PRE SUMPTION AUTOMATICALLY FOLLOWED AND IT HAD TO BE DEEMED THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME. THOUGH THE SAID DECISION OF THE DELHI HIGH COURT RELATES TO THE ASSESSMENT YEAR 1964-65, THE PROPOSI TION OF LAW AND THE RATIO LAID DOWN IN THAT CASE IS EQUALLY APPLICABLE TO EXP LANATION 1 TO SECTION 271(1)(C) INSERTED BY TAXATION LAWS (AMENDMENT) ACT , 1975, WITH EFFECT FROM 1-4-1976. 6.5 THE CONTENTION OF LD.A.R IS THAT THAT MERE DI SALLOWANCE OF A CLAIM FOR DEDUCTION OF AFORESAID PROVISIONS WOULD NOT ATTRACT PENALTY, IS TOTALLY MISPLACED SINCE THE ASSESSEE DID NOT PLACE ANY EVID ENCE BEFORE US REGARDING ITA NO.1814/16 :- 14 - : BONA FIDE OF THEIR CLAIM FOR DEDUCTION ON ACCOUNT O F PROVISION ON STANDARD ASSET NOR REFERRED US TO ANY PROVISION IN THE ACT I N SUPPORT OF SUCH CLAIM. 6.6 IN VIEW OF DECISION OF THE HON'BLE APEX COURT IN SOUTHERN TECHNOLOGIES LTD. V. JOINT CIT IN 320 ITR 577, WHER EIN IT WAS POINTED OUT THAT THE ESSENCE OF RBI DIRECTIONS UNDER CHAPTER II I-B OF THE RBI ACT, 1934, DEAL ESSENTIALLY WITH INCOME RECOGNITION. THEY FORC E THE NBFCS TO DISCLOSE THE AMOUNT OF NPA IN THEIR FINANCIAL ACCOUNTS. THEY FORCE THE NBFCS TO REFLECT 'TRUE AND CORRECT' PROFITS. BY VIRTUE OF SE CTION 45Q, AN OVERRIDING EFFECT IS GIVEN TO THE DIRECTIONS, 1998 VIS-A-VIS ' INCOME RECOGNITION' PRINCIPLES IN THE COMPANIES ACT, 1956. THESE DIRECT IONS CONSTITUTE A CODE BY ITSELF. HOWEVER, THESE DIRECTIONS, 1998 AND THE INC OME-TAX ACT OPERATE IN DIFFERENT AREAS. THESE DIRECTIONS, 1998 HAVE NOTHIN G TO DO WITH COMPUTATION OF TAXABLE INCOME. THESE DIRECTIONS CANNOT OVERRULE THE 'PERMISSIBLE DEDUCTIONS' OR 'THEIR EXCLUSION' UNDER THE INCOME-T AX ACT. THE INCONSISTENCY BETWEEN THESE DIRECTIONS AND COMPANIES ACT WAS ONLY IN THE MATTER OF INCOME RECOGNITION AND PRESENTATION OF FINANCIAL ST ATEMENTS. THE ACCOUNTING POLICIES ADOPTED BY AN NBFC CANNOT DETER MINE THE TAXABLE INCOME, THE HON'BLE APEX COURT OBSERVED. IT WAS FUR THER HELD THAT : 'AS STATED ABOVE, SECTION 36(1)(VII) AFTER 1-4-1989 DRAWS A DISTINCTION BETWEEN WRITE OFF AND PROVISION FOR DOU BTFUL DEBT. THE INCOME-TAX ACT DEALS ONLY WITH DOUBTFUL DEBT. IT IS FOR THE ASSESSEE TO ESTABLISH THAT THE PROVISION IS MADE AS THE LOAN IS IRRECOVERABLE. HOWEVER, IN VIEW OF EXPLANATION WHIC H KEEPS SUCH A PROVISION OUTSIDE THE SCOPE OF 'WRITTEN OFF' BAD DEBT, SECTION ITA NO.1814/16 :- 15 - : 37 CANNOT COME IN. IF AN ITEM FALLS UNDER SECTIONS 30 TO 36, BUT IS EXCLUDED BY AN EXPLANATION TO SECTION 36(1)(VII) THEN SECTION 37 CANNOT COME IN. SECTION 37 APPLIES ONLY TO ITEMS WHICH DO NOT FALL IN SECTIONS 30 TO 36. IF A PROVISION FOR DOUBT FUL DEBT IS EXPRESSLY EXCLUDED FROM SECTION 36(1)(VII) THEN SUC H A PROVISION CANNOT CLAIM DEDUCTION UNDER SECTION 37 OF THE INCO ME-TAX ACT EVEN ON THE BASIS OF 'REAL INCOME THEORY' AS EXPLAI NED ABOVE.' 7. THOUGH THE ASSESSEE MADE AN ATTEMPT TO EXPLAIN THEIR CLAIM AS PER THE PROVISIONS OF THE RBI ACT OVERRIDING THE INCOME -TAX ACT, THE SAID CLAIM DOES NOT SURVIVE IN VIEW OF THE DECISION OF THE HON 'BLE MADRAS HIGH COURT IN THE CASE OF T.N. POWER FINANCE & INFRASTRUCTURE DEV ELOPMENT CORPN. LTD. (280 ITR 481(MAD.) ) AND AFORESAID DECISION OF THE HON'BLE APEX COURT. MOREOVER, AS ALREADY POINTED OUT, HON'BLE SUPREME C OURT IN THEIR DECISION IN THE CASE OF K.P. MADHUSDANAN (SUPRA), HELD THAT THE EXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTION 271. WHEN THE ASSESS ING OFFICER OR THE CIT(A) ISSUES TO AN ASSESSEE A NOTICE UNDER SECTION 271, H E MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE TO BE USED AG AINST HIM. THESE PROVISIONS INCLUDE THE EXPLANATION. BY REASON OF TH E EXPLANATION, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULAR S OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FR AUD OR NEGLECT ON HIS PART. THE ASSESSEE IS, THEREFORE, BY VIRTUE OF THE NOTICE UNDER SECTION 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE, IN THE CIRCUMSTAN CES STATED IN THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS CORRECT INCOME WAS NOT DUE TO ITA NO.1814/16 :- 16 - : FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEA LED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CONSEQUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. 7.1 IN THEIR DECISION IN THE CASE OF USHA FERTILIS ERS V. CIT [2004] 269 ITR 591(GUJ.), THE HON'BLE GUJARAT HIGH COURT, WHILE UP HOLDING THE LEVY OF PENALTY OBSERVED THAT : 'THE SUPREME COURT IN THE CASE OF MUSSADILAL RAM BH AROSE [1987] 165 ITR 14 HAS SPECIFICALLY LAID DOWN THE SC OPE OF THE EXPLANATION IN THE FOLLOWING WORDS: THE POSITION, THEREFORE, IN LAW IS CLEAR. IF THE RE TURNED INCOME IS LESS THAN 80 PER CENT, OF THE ASSESSED INCOME, THE PRESUMPTION IS RAISED AGAINST THE ASSESSEE THAT THE ASSESSEE IS GUILTY OF FRAUD OR GROSS OR WILFUL NEGLECT AS A RESULT OF WHICH HE HAS CONCEALED THE INCOME BUT THIS PRESUMPTION CAN BE REBUTTED. TH E REBUTTAL MUST BE ON MATERIALS RELEVANT AND COGENT.' AS TO WHAT COULD BE THE EXPLANATION BY WHICH THE AS SESSEE CAN REBUT THE PRESUMPTION RAISED AGAINST IT, IS STATED BY THE APEX COURT IN THE SAME DECISION IN THE FOLLOWING WORDS W HILE CONFIRMING THE VIEW EXPRESSED BY THE FULL BENCH OF THE PATNA HIGH COURT IN THE CASE OF CIT V. NATHULAL AGARWALA & SONS [1985] 153 ITR 292: 'THE PATNA HIGH COURT EMPHASISED THAT AS TO THE NAT URE OF THE EXPLANATION TO BE RENDERED BY THE ASSESSEE, IT WAS PLAIN ON PRINCIPLE THAT IT WAS NOT THE LAW THAT THE MOMENT A NY FANTASTIC OR ITA NO.1814/16 :- 17 - : UNACCEPTABLE EXPLANATION WAS GIVEN, THE BURDEN PLAC ED UPON HIM WOULD BE DISCHARGED AND THE PRESUMPTION REBUTTE D WE AGREE. WE FURTHER AGREE THAT IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. IT MU ST BE AN ACCEPTABLE EXPLANATION, ACCEPTABLE TO A FACT-FINDIN G BODY. WE ARE AWARE THAT IT WOULD NOT BE POSSIBLE FOR THE HIGH COURT TO ENTER INTO A FACT-FINDING EXERCISE OR REAPPRECIATE THE EVIDENCE AND WE DO NOT PROPOSE TO DO SO. HOWEVER, AT THE SAM E TIME, IT IS APPARENT THAT THE BURDEN WHICH IS CAST ON THE ASSES SEE REMAINS UNDISCHARGED WHEN ONE APPLIES THE PRINCIPLES LAID D OWN BY THE APEX COURT. AS OBSERVED, THE EXPLANATION HAS TO BE ONE WHICH IS NOT FANTASTIC OR UNACCEPTABLE. IT IS NOT THE LAW TH AT ANY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED. . . .' 7.2 THE ASSESSEE BEFORE US FAILED TO SUBSTANTIATE THEIR EXPLANATION THAT THEY WERE NOT AWARE OF PROVISIONS OF EXPLANATION IN TRODUCED BY THE FINANCE ACT, 2001 WITH EFFECT FROM 1-4-1989 OR THAT THE RBI GUIDELINES OVERRIDE THE PROVISIONS OF THE ACT OR THAT THEIR EXPLANATION WAS BONA FIDE. EVEN IT HAS NOT BEEN STATED AS TO ON ACCOUNT OF WHOSE MISTAKE, THES E DEDUCTIONS WERE CLAIMED AND CONSEQUENTLY THE AMOUNTS WERE LEFT TO B E ADDED BACK. RELIANCE ON CERTAIN DECISIONS BY CIT(A) WHILE DELETING THE P ENALTY IS MISPLACED IN VIEW OF AFORESAID DECISION IN THE CASE OF SOUTHERN TECHN OLOGIES LTD. (SUPRA). NEEDLESS TO SAY THAT DECISION OF AN APEX COURT ONLY CLARIFIES THE LAW AND NO NEW LAW IS LAID DOWN. IT IS ONLY THE LEGISLATURE WH ICH CAN CREATE A LAW AND NOT THE COURT. THE COURTS DO NOT LEGISLATE. SINCE T HE ASSESSEE FAILED TO ESTABLISH THE BONA FIDE OF THEIR CLAIM, THEREFORE, IN TERMS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT THE ONUS IS NOT DISCHA RGED BY THE ASSESSEE, ITA NO.1814/16 :- 18 - : DESPITE SUFFICIENT OPPORTUNITY ALLOWED BY THE ASSES SING OFFICER. THUS, LEVY OF PENALTY IS JUSTIFIEDCIT V. ALTRON ELECTRONICS INDI A LTD. [2008] 301 ITR 66(KAR.). 7.3 MOREOVER, IT IS A SETTLED LAW THAT IN ECONOMI C OFFENCES, THE STATUTORY LIABILITY TO PAY EITHER DUTY OR TAX IS NOTHING BUT A STRICT LIABILITY WHERE THE QUESTION OF PROVING BEYOND THE SHADOW OF DOUBT ONE' S EXISTENCE OF BONA FIDE BELIEF THAT AMOUNT IS NOT TAXABLE DOES NOT ARISE. I T GOES WITHOUT SAYING THAT ANY VIOLATION OF THE LAW OR RULES RELATING TO ECONO MIC OFFENCES, EITHER RELATING TO THE PAYMENT OF DUTY OR TAX AS THE CASE MAY BE, T HE THEORY OF MENS REA IS NOT ATTRACTED. IN SUCH MATTERS, THE RULES OF INTERP RETATION CONTEMPLATE A STRICT INTERPRETATION RATHER THAN A LIBERAL AND WID ER INTERPRETATION. THE BREACH OF CIVIL OBLIGATION WHICH ATTRACTS A PENALTY UNDER THE PROVISIONS OF AN ACT WOULD IMMEDIATELY ATTRACT THE LEVY OF PENALTY IRRES PECTIVE OF THE FACT WHETHER THE CONTRAVENTION WAS MADE BY THE DEFAULTER WITH AN Y GUILTY INTENTION OR NOT VIDE CHAIRMAN, SEBI V. SHRIRAM MUTUAL FUND [2006] 1 31 COMP. CAS. 591 (SC). THIS VIEW HAS BEEN REITERATED BY THE HON'BLE SUPREME COURT IN THEIR DECISION DATED 29-9-2008 IN THE CASE OF UNION OF IN DIA V. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277(SC).IN THE LI GHT OF THE SAID DECISION, RELIANCE ON THE DECISION IN THE CASE OF DAHOD SAHAK ARI KHARID VECHAN SANGH LTD. (SUPRA) IS TOTALLY MISPLACED. WE ARE OF THE OP INION THAT NO DISTINCTION CAN BE MADE WHILE CONSIDERING APPLICABILITY OF EXPL ANATION 1 TO SECTION ITA NO.1814/16 :- 19 - : 271(1)(C) OF THE ACT BETWEEN A GOVERNMENT COMPANY A ND OTHER COMPANIES, SINCE THERE IS NO SUCH PROVISION IN THE ACT 7.4 AS REGARDS RELIANCE ON BEHALF OF THE ASSESSEE ON THE DECISION OF HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS (P. ) LTD.'S CASE (SUPRA), IS CONCERNED, IN THAT CASE, THE ASSESSEE HAD CLAIMED I NTEREST UNDER SECTION 36(1)(III) OF THE ACT. THE INTEREST WAS PAID ON THE LOAN WHICH THE ASSESSEE HAD UTILIZED FOR PURCHASING SOME IPL SHARES BY WAY OF ITS BUSINESS POLICIES. HOWEVER, THE ASSESSEE DID NOT EARN ANY INCOME BY WA Y OF DIVIDEND FROM THOSE SHARES. IT WAS SUBMITTED BEFORE THE SUPREME C OURT THAT THE ASSESSEE COMPANY WAS AN INVESTMENT COMPANY AND THAT IN ITS O WN CASE FOR THE ASSESSMENT YEAR 2000-01 THE COMMISSIONER (APPEALS) HAD DELETED THE DISALLOWANCE OF INTEREST MADE BY THE ASSESSING OFFI CER AND THE TRIBUNAL HAD ALSO CONFIRMED THE STAND OF THE COMMISSIONER (APPEA LS) FOR THAT YEAR AND IT WAS ON THE BASIS OF THIS THAT THE EXPENDITURE WAS C LAIMED. THE INCOME-TAX APPELLATE TRIBUNAL HAD, HOWEVER, RESTORED THE ISSUE BACK TO THE ASSESSING OFFICER. IN THE APPEAL ARISING OUT OF PENALTY PROCE EDINGS, THE TRIBUNAL, IN THESE CIRCUMSTANCES, WAS OF THE VIEW THAT THE CONFI RMATION OF DISALLOWANCE BY THE TRIBUNAL DID NOT MEAN THAT THE ASSESSEE HAD CONCEALED THE INCOME OR HAD FILED INACCURATE PARTICULARS THEREOF. THE TRIBU NAL FELT THAT THE BONA FIDES OF THE EXPLANATION WERE CLEARLY PROVED FROM THE FAC T THAT THE HIGH COURT ADMITTED THE APPEAL OF THE ASSESSEE ABOUT THE DISAL LOWANCE OF THE INTEREST. ITA NO.1814/16 :- 20 - : THE TRIBUNAL HELD THAT IF THERE COULD BE TWO VIEWS ABOUT THE CLAIMS OF THE ASSESSEE, THE EXPLANATION OFFERED BY IT CANNOT BE S AID TO BE FALSE. THE PENALTY WAS ACCORDINGLY DELETED BY THE TRIBUNAL. TH E ORDER OF THE TRIBUNAL WAS MAINTAINED BY THE HIGH COURT. THE SUPREME COURT WAS OF THE VIEW THAT UNDER SECTION 271(1)(C), THERE HAS TO BE CONCEALMEN T OF INCOME OF THE ASSESSEE OR HE MUST HAVE FURNISHED INACCURATE PARTI CULARS OF HIS INCOME. THE CONTENTION OF THE REVENUE THAT IT WAS A CASE OF FUR NISHING OF INACCURATE BY MAKING INCORRECT CLAIM FOR THE EXPENDITURE ON INTER EST WAS REJECTED NOTICING THAT THE WORDS 'PARTICULARS' USED IN SECTION 271(1) (C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE BY THE ASS ESSEE AND THAT THE ASSESSEE BEFORE THE COURT HAD NOT GIVEN ANY SUCH IN FORMATION WHICH WAS FOUND TO BE INCORRECT OR INACCURATE. AFTER CONSIDER ING THE MEANING OF 'INACCURATE' GIVEN IN WEBSTER'S DICTIONARY, THE COU RT WAS OF THE VIEW THAT INACCURATE PARTICULARS WOULD MEAN THE DETAILS SUPPL IED IN THE RETURN WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDI NG TO TRUTH, OR ERRONEOUS. IN THE CASE BEFORE US, THE ASSESSEE CLAIMED DEDUCTI ON FOR PROVISION ON STANDARD ASSETS IN VIOLATION OF PROVISIONS OF THE A CT AND NOT AN IOTA OF EVIDENCE WAS PLACED BEFORE THE AO/CIT(A) OR EVEN BE FORE US, IN RELATION TO THE BONA FIDE OF THE CLAIM. AS IS APPARENT FROM THE FINDINGS OF THE AO, THE CLAIM MADE IN THE RETURN WAS NOT SUPPORTED EITHER O N FACTS OR IN LAW. THUS, THE ASSESSEE WHILE CLAIMING DEDUCTION OF THE AFORES AID PROVISIONS FURNISHED ITA NO.1814/16 :- 21 - : IN-ACCURATE PARTICULARS. THUS, RELIANCE ON THE SAID DECISION, IN OUR OPINION, IS TOTALLY MISPLACED. ACCORDINGLY, WE REVERSE THE ORD ER OF CIT(A) AND RESTORE THAT OF AO ON THIS ISUSE.. 8. SINCE WE HAVE PARTLY ALLOWED THE APPEAL OF THE REVENUE, CROSS OBJECTIONS FILED BY THE ASSESSEE IS ALSO PARTLY ALL OWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CO STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON 28 TH FEBRUARY, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) % / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 28H FEBRUARY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 4. - 1 / CIT 2. / RESPONDENT 5. /23- 4 / DR 3. - 1-!' / CIT(A) 6. 3&-5 / GF