DCIT, New Delhi V. M/s. Canon India Pvt. Ltd., Gurgaon

ITA 182/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7365 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-10-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: S K AGGARWAL
• Keywords: Depreciation; Transfer pricing; Bonafide belief; Question of law; Difference of opinion; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER & SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 182/DEL/2013 ASSESSMENT YEAR: 2002-03 DCIT, VS. CANON INDIA PVT. LTD., CIRCLE 3(1), 2 ND FLOOR, TOWER-A&B, NEW DELHI. CYBER GREEN, DLF CITY, PHASE-III, GURGAON. AAACC4175D (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PARWINDER KAUR, SR. DR RESPONDENT BY : SH. S.K. AGGARWAL, CA ORDER PER H.S. SIDHU, J.M. THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 23.10.2012 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-VI, NEW DELHI FOR A.Y. 2002-03 ON THE FOL LOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING PENALTY IMPOSED BY THE AO U/S 271(1)(C ) OF THE ACT AMOUNTING TO RS. 6,03,930/- OBSERVING THAT THE INST ANT CASE IS NOT FIT FOR LEVY OF SUCH PENALTY BY FAILING TO A PPRECIATE THAT: A. THE ASSESSEE FURNISHED INACCURATE PARTICULARS AT TH E TIME OF ASSESSMENT PROCEEDINGS AND CLAIMED DEDUCTION U/S 10A AT AN AMOUNT HIGHER THAN THE ACTUAL ELIGIBILITY; B. THE ASSESSEE ITSELF DID NOT PRESS FOR THIS ISSUE BE FORE THE LD. CIT(A) DURING THE APPELLATE PROCEEDINGS AGAINST QUANTUM ADDITION THEREBY CONFIRMING THAT THE ACTION OF THE AO WAS JUSTIFIED AND IT(ASSESSEE) HAD FURNISHED INACCURATE PARTICULARS DURING THE ASSESSMENT PROCEEDINGS; ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 2 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS AP PEAL. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED IN 1996 UNDER THE COMPANY ACT, 1956. THE COMPANY IS ENGAGED IN THE BUSINESS OF MA NUFACTURING/TRADING OF VARIOUS PRODUCTS INCLUDING PHOTOCOPIERS, PRINTER S AND CAMERAS ETC. TOGETHER WITH PROVIDING OF SERVICE SUPPORT AND MAIN TENANCE SERVICES TO ITS CUSTOMERS AND SOFTWARE DEVELOPMENT. FOR THE RELEVA NT ASSESSMENT YEAR, THE APPELLANT FILED ITS ORIGINAL RETURN OF INCOME O N OCTOBER 31, 2002 DECLARING A LOSS OF RS. 9,60,35,600/- AND THEREAFTE R A REVISED RETURN WAS FILED ON 29 TH MARCH, 2004 DECLARING A LOSS OF RS. 8,96,79,220/-. THE ASSESSMENT FOR THE SUBJECT ASSESSMENT YEAR U/S 143( 3) OF THE ACT WAS COMPLETED VIDE ASSESSMENT ORDER DATED 18.03.2005 AF TER MAKING ADDITION ON ACCOUNT OF ARMS LENGTH PRICE AMOUNTING TO RS. 6 ,75,59,378/- AND REDUCING THE DEDUCTION U/S 10A OF THE ACT AS FOLLOW S: S.NO. PARTICULARS AMOUNT (RS.) 1. DEDUCTION U/A 10A CLAIMED IN THE REVISED RETURN 4,66,57,041 2. LESS: INTEREST AND FOREIGN EXCHANGE LOSS ALLOCATED TO STP UNIT BY THE LD. AO ESTIMATED AT 7% OF THE AMOUNT 16,91,685 3. DEDUCTION U/S 10A ALLOWED BY THE LD. AO 4,49,65,356 THE DEDUCTION U/S 10A OF THE ACT WAS REDUCED BY TH E AO BY ESTIMATING INTEREST AND FOREIGN EXCHANGE LOSS ON EXTERNAL COMM ERCIAL BORROWING (ECB) AS ALLOCABLE TO STP UNIT AMOUNTING TO RS. 16, 91`,685/- ESTIMATED AT 7% OF TOTAL AMOUNT. 2.1 AGAINST THE AFORESAID ASSESSMENT ORDER, THE APP ELLANT PREFERRED AN APPEAL WITH THE CIT(APPEALS)-XX, NEW DELHI. HOW EVER, DURING THE APPELLATE PROCEEDING, THE APPELLANT DID NOT PRESS T HE ISSUE OF ALLOCATION OF INTEREST AND FOREIGN EXCHANGE LOSS AND THE APPEAL W AS DECIDED BY THE LD. CIT(A) VIDE ITS ORDER DATED 29 TH JULY, 2009 [APPEAL NO. 140/2007-08], DISPOSING OFF TRANSFER PRICING ISSUES ON MERITS. ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 3 2.2 SUBSEQUENTLY, A NOTICE DATED 17.03.2011 WAS ISS UED BY THE AO PROPOSING TO FINALIZE THE PENALTY PROCEEDINGS U/S 2 71(1)(C ) OF THE ACT. THE APPELLANT FILED ITS WRITTEN SUBMISSIONS DATED 2 3 RD MARCH, 2011. THEREAFTER, THE AO PASSED THE IMPUGNED PENALTY ORDE R DATED 24.03.2011 LEVYING PENALTY OF RS. 6,03,930/- AS PER DETAILS BE LOW: (1) ESTIMATED AMOUNT OF INTEREST AND FOREIGN EXCH ANGE LOSS ALLOCATED TO STP UNIT IN THE ASSESSMENT ORDER AND C ONSEQUENT REDUCTION IN DEDUCTION ALLOWED U/S 10A AND TREATED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR LEVYING PENALTY U/S 271(1)(C ) RS. 16,91,685/- (2) TAX IMPACT OF ABOVE RS. 6,03,930/- (3) PENALTY LEVIED U/S 271(1)(C ) [AT 100% OF TAX IMPACT] RS. 6,03,930/- 2.3 AGGRIEVED BY THE ORDER DATED 24/03/2011 ASSESSE E FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY WHO VIDE I MPUGNED ORDER DATED 23/10/2012 ALLOWED THE APPEAL FILED BY THE ASSESSEE AND QUASHED THE PENALTY ORDER PASSED BY THE AO U/S 271(1)(C ) OF TH E ACT. NOW THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IM PUGNED ORDER DATED 23/10/2012. 3. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDER PASSED BY THE AO DATED 24 TH MARCH, 2011 U/S 271(1)(C ) OF THE IT ACT, 1961 AND CONTENTION RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE IMPUGNED ORDER OF LD. FIRST APPELLATE AUTHORITY AND STATED THAT LD. CIT(A) HAS PASSED THE WELL REASONED ORDER ON THE BASIS OF RELEVANT PROVISION OF LAW AS WELL AS WITH THE SUPPORT OF VARIOUS DECISION S RENDERED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS THE HONB LE HIGH COURTS. HE REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. IN SUPPORT OF HIS CONTENTIN HE HAS ALSO FILED A PAPER BOOK CONTAINING PAGE 1- 458 IN WHICH HE HAS ATTACHED VARIOUS DOCUMENTARY EV IDENCE AND THE ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 4 DECISION OF HONBLE SUPREME COURT OF INDIA, HONBLE HIGH COURTS AND THE DELHI TRIBUNAL. 4.1 WE HAVE HEARD THE BOTH PARTIES AND PERUSED THE RELEVANT RECORD AVAILABLE WITH US AND THE ORDER PASSED BY THE REVEN UE AUTHORITIES SPECIALLY THE IMPUGNED ORDER ALONG WITH ALL DOCUMEN TARY EVIDENCE FILED BY THE LD. COUNSEL FOR THE ASSESSEE. WE ARE OF THE CO NSIDERED VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS DISCUSSED IN DETAIL T HE RELEVANT PROVISION OF LAW ALONG WITH THE VARIOUS CASE LAWS AS WELL AS WRI TTEN SUBMISSIONS FILED BY THE ASSESSEE IN THE IMPUGNED ORDER. LD. CIT(A) HAS FINALLY CONCLUDED HIS FINDING AT PAGE 11 & 12 PARA 5-5.2. FOR THE SA KE OF CONVENIENCE I.E. REPRODUCED AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE LD. AR AND HAVE GONE THROUGH THE PENALTY ORDER. IT IS OBSERVED THAT THERE IS NO DEFAULT ON THE PART OF THE APPELLANT IN DISCLOSING COMPLETE FACTS PERTAINING TO INTEREST AND FOREIGN E XCHANGE LOSS AND COMPUTATION OF PROFIT OF STP UNIT AFTER ALLOCAT ION OF COMMON EXPENSES ELIGIBLE FOR DEDUCTION U/S 10A, AT THE TIME OF FILING THE RETURN OF INCOME. MERELY BECAUSE THE AO DID NOT AGREE WITH THE SUBMISSIONS MADE BY THE APPELLANT, T HE SAME CANNOT BE SAID TO BE FURNISHING OF INACCURATE PARTI CULARS OF INCOME FOR THE PURPOSES OF LEVYING PENALTY U/S 271( 1)(C ). THE AO HAS NOT MENTIONED IN THE PENALTY ORDER AS TO WHI CH PARTICULARS OR FACTS SUBMITTED BY THE APPELLANT ARE INCORRECT. THE DISALLOWANCE OF EXPENDITURE OR REJECTION OF CLA IM CANNOT RESULT IN AUTOMATIC LEVY OF PENALTY U/S 271(1)(C ). THE ASSESSMENT HAS BEEN DONE BY THE AO BY ADOPTING AN A D HOC PERCENTAGE OF 7% OF INTEREST AND FOREIGN EXCHANGE L OSS AS ATTRIBUTABLE TO STP UNIT OF THE APPELLANT AND THUS REDUCING THE DEDUCTION U/S 10A. SIMILAR APPORTIONMENT WAS MADE BY THE AO IN THE PRECEDING ASSESSMENT YEAR 2001-02 WHICH WAS DELETED BY THE HONBLE ITAT, DELHI. AS THE FACTS AND THE ISSU E INVOLVED IS SAME, IT IS CLEAR THAT THE ESTIMATED ADJUSTMENT MAD E BY THE LD. AO IS MERELY DUE TO DIFFERENCE OF OPINION AND NOT D UE TO ANY FAULT OF APPELLANT, WHICH CAN BE SUBJECTED TO PENAL TY PROVISIONS OF SECTION 271(1)(C ). ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 5 IN LIGHT OF THE ABOVE, I AM OF THE VIEW THAT THE A O IS COMPLETELY UNJUSTIFIED IN LEVYING PENALTY IN RELATI ON TO ADJUSTMENT MADE BY HIM ON AN ADHOC/ESTIMATED BASIS. 5.1 IT IS FURTHER OBSERVED THAT COMPLETE FACTS RELA TING TO INTEREST AND FOREIGN EXCHANGE LOSS WERE SUBMITTED A T THE TIME OF FILING OF RETURN OF INCOME. THEREFORE, ONCE COMPLE TE PARTICULARS HAVE BEEN FILED ON A BONAFIDE BELIEF THAT NO INTERE ST OR LOSS ON FOREIGN EXCHANGE FLUCTUATION WAS ALLOCABLE TO THE S TP UNIT, THE SAME CANNOT UNDER ANY CIRCUMSTANCES LEAD TO LEVY OF PENALTY IF A DIFFERENT VIEW IS TAKEN IN THE ASSESSMENT PROCEED INGS. MERELY BECAUSE THE SUBMISSIONS OF THE APPELLANT ARE NOT AC CEPTED, IT CANNOT BE ASSUMED THAT THERE IS CONCEALMENT OF PART ICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME BY THE APPELLANT. THUS, THE PENALTY LEVIED BY THE AO IN T HE INSTANT ASSESSMENT YEAR DESERVES TO BE DELETED. 5.2 IN VIEW OF ABOVE, I ALLOW THE GROUNDS OF APPEAL IN FAVOUR OF THE APPELLANT AND QUASH THE PENALTY ORDER PASSED BY THE LD. AO U/S 271(1)(C ) OF THE ACT. THE AO IS THEREFORE, DIRECTED TO GIVE EFFECT TO THE SAME. 5. KEEPING IN VIEW OF THE IMPUGNED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND THE FACTS OF THE PRESENT CA SE, WE ARE OF THE VIEW THAT NO PENALTY U/S 271(1)(C ) OF THE ACT CAN BE JU STIFIABLY BE LEVIED ON THE FACTS OF THE PRESENT ASSESSEE. THE REVENUE AUTHORI TY HAS FAILED TO ESTABLISH THAT IN THE RETURN OF INCOME THE ASSESSEE HAS EITHER SHOWN AS INCORRECT OR INACCURATE PARTICULARS OF INCOME. MER ELY BECAUSE THE AO DID NOT AGREE WITH THE SUBMISSION MADE BY THE ASSESSEEE , THE SAME CANNOT BE SAID TO BE FURNISHED OF INACCURATE PARTICULARS O F INCOME FOR THE PURPOSE OF LEVYING PENALTY U/S 271(1)(C ) OF THE ACT. THE DISALLOWANCES OF EXPENDITURE CANNOT RESULT IN AUTOMATIC LEVY OF PENA LTY IN DISPUTE. IF AN ASSESSEE HAS BEEN ABLE TO OFFER AN EXPLANATION, WHI CH IS NOT FOUND BY THE REVENUE AUTHORITY TO BE FALSE, AND ASSESSEE HAS BEE N ABLE TO PROVE THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY THE ASSESSEE. THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION1 TO SECTION 271(1)(C ) OF T HE IT ACT AND IN SUCH CASES NO PENALTY SHALL BE IMPOSED. THESE VIEWS HAS ALREADY BEEN ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 6 SUPPORTED BY THE HONBLE HIGH COURT OF DELHI IN VAR IOUS CASES AND AS WELL AS BY THE HONBLE SUPREME COURT OF INDIA IN THE CAS E OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LIMITED REPORTED IN 322 ITR 158 . ALMOST SIMILAR FINDING HAS ALSO BEEN GIVEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RUBBER UDYOG VIKAS PVT. LTD. , 335 ITR 558 (P&H). THE RELEVANT PARAGRAPH OF THE JUDGMENT OF HONBLE D ELHI HIGH COURT ARE REPRODUCED AS UNDER: THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DCM LTD. REPORTED IN 359 ITR 102 HAS BEEN HELD AS UNDER: 10. LAW DOES NOT BAR OR PROHIBIT AN ASSESSEE FOR MAKING A CLAIM, WHICH HE BELIEVES MAY BE ACCEPTED OR IS PLAUSIBLE. WHEN SUCH A CLAIM IS MADE DURING THE COURSE OF REGULAR OR SCRUTINY ASSESSMENT, LIBER AL VIEW IS REQUIRED TO BE TAKEN AS NECESSARILY THE CLA IM IS BOUND TO BE CAREFULLY SCRUTINIZED BOTH ON FACTS AND IN LAW. FULL PROBE AND APPRAISAL IS NATURAL AND NORMAL. THREAT OF PENALTY CANNOT BECOME A GAG AND/OR HAUNT AN ASSESSEE FOR MAKING A CLAIM WHICH MAY BE ERRONEOUS OR WRONG, WHEN IT IS MADE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. NORMALLY , PENALTY PROCEEDINGS IN SUCH CASES SHOULD NOT BE INITIATED UNLESS THERE ARE VALID OR GOOD GROUNDS TO SHOW THAT FACTUAL WERE PROVIDED IN THE COMPUTATION. LAW DOES NOT BAR OR PROHIBIT A PERSON FROM MAKING A CLAIM, WHEN HE KNOWS THE MATTER IS GOING TO BE EXAMINED BY THE ASSESSING OFFICER. THERE IS NO MERIT IN THE PRESENT APPEAL AND THE SAME HAS TO BE DISMISSED. [EMPHASIS SUPPLIED] 332 ITR 334 (DEL) CIT VS. USHA MARKETING PVT. LTD. IF ON THE BASIS OF FURNISHING NECESSARY PARTICULAR S, ADVERSE VIEW IS DRAWN I.E. TO DISALLOW THE SAME, IT DOES NOT RESULT INTO PENAL ACTION FOR LEVY OF PENALTY FO R CONCEALMENT OF PARTICULARS OF INCOME. AS PER EXPLANATION 1 TO SECTION 271(1)(C), PENALTY IS LEVI ABLE ONLY IN A CASE WHERE (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION; OR (B) OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR (C) SUCH PERSON OFFERS AN EXPLANATIO N WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO P ROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. I N THE PRESENT CASE, IT IS SEEN THAT THE ASSESSEE HAS OFFE RED AN EXPLANATION. THE SAME IS SUBSTANTIATED ALSO. THE ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 7 EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND TO BE FALSE BY THE ASSESSING OFFICER. WHEN THE EXPLANATION WAS OFFERED, THE ASSESSEE FILED ALL THE RELEVANT DE TAILS OF THE TRANSACTION IN SALE OF SHARES AND DEBENTURES AN D WHEN THE CLAIM WAS MADE, THE SAME WAS BONA FIDE AS ALL THE FACTS RELATING TO SUCH LOSS AND MATERIAL TO THE COMPUTATION HAVE BEEN DISCLOSED BY HIM. THUS EXPLANATION 1 TO SECTION 271(1)(C) IS NOT ATTRACTED HEREIN. IF ON THE FACTS FURNISHED BY THE ASSESSEE THE VIEW ADOPTED IS THAT SUCH LOSS IS NOT ALLOWABLE WIT HOUT ANY FINDING THAT THE EXPLANATION OFFERED BY THE ASS ESSEE IS FALSE, THE ASSESSEE CANNOT BE VISITED WITH PENAL TY BY INVOKING EXPLANATION 1 TO SECTION 271(1)(C). SINCE THERE IS NO OTHER ALLEGATION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME EXCEPT INVOKING EXPLANATION 1 TO SECTION 271(1)(C) FOR LEV Y OF PENALTY, IN OUR OPINION, SINCE EXPLANATION 1 IS NOT ATTRACTED, PENALTY U/S 271(1)(C) IS TO BE CANCELLED . 330 ITR 545 (DEL) CIT VS. MUSHASHI AUTOPARTS INDIA (P) LTD. THE ASSESSEE COMPUTED PRE-OPERATIVE EXPENSES AFTER DEDUCTING INTEREST INCOME. HOWEVER, THE AO HELD TH AT INTEREST COULD NOT BE ADJUSTED AGAINST PRE-OPERATIV E EXPENSES AS CLAIMED BY THE ASSESSEE. THEREFORE, PE NALTY WAS IMPOSED UPON ASSESSEE U/S 271(1)(C). THE COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL DELETED THE PENALTY HOLDING THAT MERELY BECAUSE ASSESSEES CLAI M WAS NOT ACCEPTED BY THE AO, THAT DID NOT MEAN THAT THER E WAS ANY NON-DISCLOSURE OF MATERIAL FACTS BY ASSESSEE WH ICH COULD WARRANT LEVY OF PENALTY. HELD THAT IT WAS CLEAR FROM ORDERS OF THE APPELLATE AUTHORITIES THAT THERE WAS NO CONCEALMENT ON THE PA RT OF THE ASSESSEE AND IN THESE CIRCUMSTANCES PENALTY COU LD NOT BE IMPOSED. 330 ITR 547 (DEL) CIT VS. KRISHNA MARUTI LTD. CERTAIN EXPENDITURE CLAIMED BY THE ASSESSEE AS REV ENUE EXPENDITURE WAS DISALLOWED BY THE TRIBUNAL HOLDING THE EXPENDITURE TO BE OF CAPITAL NATURE. ON THE BASIS PENALTY PROCEEDINGS WERE ALSO INITIATED BY THE ASSESSING OFFICER U/S 271(1)(C ). THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL, HOWEVER, SET ASIDE THE PENALTY HOLDING TH AT THE CLAIM MADE BY THE ASSESSEE THAT EXPENSES INCURRED WERE REVENUE IN NATURE, WAS DEBATABLE AND, THEREFORE, IT COULD NOT ATTRACT PENALTY. HELD THAT NO QUESTION OF LAW AROSE FROM THE TRIBUNALS ORDER.[EMPHASIS SUPPLIED] ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 8 328 ITR 611 (DEL) CIT VS. IFCI LTD. THE ASSESSEE HAD CLAIMED LOSS ON ACCOUNT OF INVESTM ENT WRITTEN OFF . THE SAID CLAIM WAS DISALLOWED BY THE AO. THEREAFTER, THE AO IMPOSED PENALTY UPON ASSESSEE U/ S 271(1)(C ) ON GROUND THAT ASSESSEE HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME BY WAY OF LOSS UNDER THE HEAD INVESTMENT WRITTEN OFF. HELD THAT THE ASSESSEE HAD FILED THE RETURN AND FUR NISHED ALL PARTICULARS. THE ASSESSEE HAD EXPLAINED DURING THE PENALTY PROCEEDINGS THAT THE INVESTMENTS WERE WRITT EN OFF IN THE BOOKS OF ACCOUNT AND WERE CLAIMED AS DEDUCTI ON ON ACCOUNT OF LOSS INCURRED TO THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME. IT WAS A CASE WHERE A CLAIM PUT FORTH BY THE ASSESSEE AS REGARDS THE LOSS WAS N OT ACCEPTED BUT THAT WOULD NOT PER SE TANTAMOUNT TO FURNISHING ANY KIND OF INACCURATE PARTICULARS. THU S, THERE HAD BEEN NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AND, THEREFORE, IMPOSITION O F PENALTY U/S 271(1)(C ) WAS NOT JUSTIFIED. [EMPHASIS SUPPLIED] 329 ITR 572 (DEL) CIT VS. DHARAMPAL PREMCHAND LTD. 348 ITR 339 (DEL) CIT VS. BRAHMAPUTRA CONSORTIUM LTD. IN FACT, THE AO DID NOT EVEN CONTRADICT THE PLEA O F THE ASSESSEE THAT EXCESS CLAIM OF DEPRECIATION WAS AN INADVERTENT ERROR. THAT PART, OTHER ELEMENT PRESEN T IN THE INSTANT CASE GAVE A STRONG INDICATION THAT THE ERRO R WAS GENUINE AND BONA FIDE. RETURN FOR THE ASSESSMENT YEAR IN QUESTION WAS FILED DECLARING LOSS. THE ASSESSMENT WAS COMPLETED AT LOSS. THEREFORE, EXCESS CLAIM OF DEPRECIATION WAS NOT ADVANTAGEOUS TO THE ASSESSEE. ON THE CONTR ARY, IT WAS BETTER FOR HIM TO CLAIM DEPRECIATION AT THE RAT E OF 25 PER CENT IN THE RELEVANT YEAR RESULTING INTO HIGHER WRITTEN DOWN VALUE IN THE NEXT YEAR FOR CLAIM OF DEPRECIATI ON OF A HIGHER AMOUNT ON HIGHER WRITTEN DOWN VALUE THEREBY REDUCING THE TAX LIABILITY. THEREFORE, THE AO WAS NOT CORRECT IN HOLDING THAT SUBMITTING INACCURATE CLAIM WOULD AMOUNT TO GIVING INACCURATE PARTICULARS.' [EMPHASIS SUPPLIED] 343 ITR 434 (DEL) CIT VS. NOKIA INDIA (P) LTD. 2 DTONLINE 312 (DEL) CIT VS. KIRANJIT FOILS LTD. ASSESSEE COMPANY HAD EARNED INTEREST ON INVESTMENT MADE IN SHORT TERM DEPOSITS WITH BANK PRIOR TO COMMENCEMENT OF BUSINESS ISSUE AS TO WHETHER SAID INTEREST INCOME WAS REVENUE RECEIPT OR CAPITAL RECE IPT WAS DEBATABLE ISSUE AND THERE WERE TWO VIEWS POSSIB LE ON SAME ASSESSEES CLAIM WAS BASED ON ONE OF SUCH ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 9 POSSIBLE VIEWS HOWEVER, ASSESSEES CLAIM WAS REJE CTED AND PENALTY WAS IMPOSED UPON IT U/S 271(1)(C ) TRIBUNAL HELD THAT MAKING OF SUCH CLAIM BONA FIDE O N BASIS OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME BY ASSESSEE OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME SO AS TO ATTR ACT PENAL PROVISIONS OF SECTION 271(1)(C ) AND, THEREFO RE, TRIBUNAL CANCELLED PENALTY WHETHER NO SUBSTANTIAL QUESTION OF LAW AROSE FROM TRIBUNALS ORDER HELD, YES 186 TAXMAN 183 (DEL) CIT VS. M/S DEEKASHA HOLDING L TD. IN RESPECT OF FIRST ADDITION, EXPLANATION OF THE A SSESSEE WAS THAT THOUGH THE ASSESSEE HAD EXCLUDED RS. 2,69, 680/- UNDER THE HEAD? PROFIT AND SALE OF CARS? CAPITAL GAINS IN RESPECT OF SALE OF THESE CARS WAS NOT INCLUDED BY INADVERTENCE LIKEWISE IN RESPECT OF CLAIM OF DEDUCT ION OF EXPENSES UNDER THE HEAD? PROFESSIONAL DEVELOPMENT EXPENSES WAS THAT THE EXPENSES WERE IN FACT INCURRE D FOR SPONSORING ITS DIRECTOR FOR POST GRADUATION COURSE ETC. IN THE FIELD OF LAW AND IT WAS THE BONA FIDE CLAIM MAD E BY THE ASSESSEE. SAME WAS THE PLEA IN RESPECT OF ADVERTIS EMENT EXPENSES. WHERE THE ASSESSEE HAD DISCLOSED ALL THE FACTS BEFO RE THE AO AND THE AO, ON CONSIDERATION OF THE EVIDENCE FURNISHED BY THE ASSESSEE, COME TO THE CONCLUSION T HAT THE CLAIM HAS NOT BEEN SUBSTANTIATED WITH SUFFICIEN T EVIDENCE, DOES NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY. WHERE THE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS IN REGARD TO THE CLAIM MADE THE ONUS PLACED UPON THE ASSESSEE STOOD DISCHARGED. IN THE INSTANT CASE, TH E ASSESSEE HAD DISCLOSED ALL MATERIAL FACTS IN REGARD TO THE CLAIM MADE, THE ONUS PLACED UPON THE ASSESSEE STOOD DISCHARGED. IN THE INSTANT CASE, THE ASSESSEE HAD DISCLOSED ALL THE PARTICULARS OF INCOME. HE AO DIS ALLOWED THE EXPENSES CLAIMED ON THE GROUND THAT THEY WERE N OT INCURRED FOR THE BUSINESS PURPOSE OF THE ASSESSEE A ND THAT THEY HAVE BEEN CLAIMED AGAINST EXEMPTED INCOME. TH US, IT CANNOT BE HELD THAT THE ASSESSEE HAS FILED INACCURA TE PARTICULARS OF INCOME OR HAD CONCEALED ITS INCOME. THUS, THE PENALTY CANNOT BE LEVIED FOR THIS REASON ALSO. WE ALSO OBSERVE THAT THE EXPENSES CLAIMED BY THE ASSESSEE H AVE NOT BEEN FOUND BY THE AO AS BOGUS OR FALSE. THUS THE GENUINENESS OF THE EXPENSES INCURRED BY THE ASSESSE E HAS NOT BEEN DOUBTED BY THE AO AND, THEREFORE, THE PENA LTY CANNOT BE LEVIED ON THE ASSESSEE STILL FURTHER, THE ASSESSEE EXPLAINED THAT IT WAS DUE TO GENUINE MISTAKE THAT I T OMITTED TO SHOW THAT THE CAPITAL GAIN OF RS. 1,47,9 01/- ON THE SALE OF SIX CARS AND THAT AS SOON AS IT WAS POI NTED OUT, THE SAME WAS ACCEPTED BY THE ASSESSEE. IN THIS CON TEXT, THE LD. AR OF THE ASSESSEE BY REFERRING TO THE ORDE R OF THE ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 10 HONBLE SUPREME COURT IN THE CASE OF CIT VS. SURESH CHAND MITTAL, 251 ITR 09, SUBMITTED THAT IT HAS BEE N HELD THAT WHERE THE DEPARTMENT HAS NOT DISCHARGED I TS BURDEN OF PROVING CONCEALMENT AND HAS SIMPLY RESTED ITS THE PENALTY COULD NOT BE IMPOSED . HENCE, FOR THE REASON GIVEN IN THE FOREGOING, WE SET ASIDE THE ORDER OF T HE CIT(A) AND THE AO AND DELETE THE PENALTY OF RS. 8,2 6,160/- [EMPHASIS SUPPLIED] 6. KEEPING IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT NO PENALTY U/S 271(1)(C ) OF THE ACT CAN BE IM POSED IN THE CASE OF PRESENT ASSESSEE BECAUSE WE FOUND THAT THE REVENUE AUTHORITY HAS NOT DISCLOSED ANY FACTS IN ITS RETURN OF INCOME. EVEN OTHERWISE REVENUE AUTHORITY HAS FAILED TO ESTABLISH THAT IN THE RETUR N OF INCOME ASSESSEE HAS EITHER BEEN SHOWN AS INACCURATE OR INCORRECT PARTIC ULARS OF ITS INCOME. WE ARE OF THE VIEW THAT MERELY BECAUSE THE EXPENDIT URE CLAIMED BY THE ASSESSEE HAS BEEN DISALLOWED BY THE REVENUE AUTHORI TY DOES NOT LEAD TO AN INFERENCE THAT IT IS A CASE OF FURNISHING INACCU RATE PARTICULARS OF INCOME. THE ASSESSEE HAS OFFERED ITS BONA FIDE EXP LANATION WHICH WAS NOT PROVED FALSE BY THE REVENUE AUTHORITY. 7. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AS WELL AS THE PROVISION OF LAW ALONG WITH VAR IOUS DECISIONS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. FIRST APPELLATE AUTHORITY HAS PASSED THE WELL REASONED OR DER ON THE BASIS OF VARIOUS DECISIONS RENDERED BY THE HONBLE HIGH COUR TS AND THE HONBLE SUPREME COURT OF INDIA. THERE IS NO NEED TO INTERF ERE IN THE IMPUGNED ORDER. HENCE, WE UPHOLD THE IMPUGNED ORDER DATED 2 3/10/2012 PASSED BY THE CIT(APPEALS) BY DISMISSING THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29/10/2014 SD/- SD/- (S.V. MEHROTRA) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/10/2014 ITA NO. 182/D/2013 CANON INDIA PVT. LIMITED 11 *KAVITA, P.S. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR