M/S. SM ENERGY TEKNIK & ELECTRONICS LTD, THANE V. THE ACIT RG 8(3), MUMBAI

ITA 1858/MUM/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62188 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-02-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 14-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABANIKANT NAYAK
• Assessee Lawyers: S A KANJI
• Keywords: Depreciation; Cost of acquisition; Wrong claim; Valuation report
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 1858/MUM/2008 ASSESSMENT YEAR: 1993-94 SM ENERGY TEKNIK & ELECTRONICS LTD., APPELLANT SM BHAVAN, PLOT NO. B-7 & B-10 ROAD NO. 15, WAGLE INDL. ESTATE THANE 400 604 (PAN - AAACS7372L) VS. ASSTT. COMMISSIONER OF INCOME TAX, RESPONDEN T RANGE 8(3), ROOM NO. 217, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT BY : MR. S.A. KANJI RESPONDENT BY : MR. ABANI KANT NAYAK DATE OF HEARING : 23/02/2012 DATE OF PRONOUNCEMENT : 11/04/2012 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)-XXIX, MUMBAI, PASSED ON 31/12/2007 FOR THE A SSESSMENT YEAR 1993-94 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUND OF APPEAL:- THE LEARNED CIT(A) ERRED IN PARTLY CONFIRMING THE PENALTY LEVIABLE U/S 271(1)(C) OF THE ACT, IN RESPECT OF DI SALLOWANCE OF DEPRECIATION ON PLANT & MACHINERY STATING THAT THE COST OF ACQUISITION WAS INFLATED. THE APPELLANT PRAYS THAT PENALTY U/S 271(1)(C) OF THE ACT MAY LEASE BE CANCELLED. ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME ON 31/12/1993 DECLARING TOTAL INCOME OF RS. 13,01,3 50/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT, ON 26/03/1996 ASSE SSING TOTAL INCOME AT RS. 83,74,930/- DISALLOWING DEPRECIATION OF RS. 52,49,322/- , THE DETAILS OF WHICH ARE AS UNDER:- I) 100% DEPRECIATION ON DG SET OF RS. 41,60,000/- 41,60,000/- II) 25% DEPRECIATION ON PLANT & MACHINERY OF RS. 41,60,000/- 10,40,000/- III) 25% DEPRECIATION ON OFFICE EQUIPMENT OF RS. 1,97,288/- 49,322/- RS. 52,49,322/- 3. WHEN THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A), THE CIT(A) SET ASIDE THE ISSUE OF DEPRECIAT ION AND EXPENSES PERTAINING TO EARLIER YEARS, DIRECTED THE AO TO GRA NT PROPER OPPORTUNITY TO THE ASSESSEE. THE REASSESSMENT HAD B EEN MADE US/ 143(3) R.W.S. 250 ON 22/03/2001, ASSESSING TOTAL IN COME AT RS. 1,11,86,322/-. THE ASSESSEE AGAIN FILED APPEAL BEFO RE THE CIT(A), WHO GAVE RELIEF OF RS. 10,89,322/-. THE ASSESSEE FILED APPEAL BEFORE THE ITAT AND THE ENTIRE ISSUE RESTORED TO THE FILE OF T HE AO BY ITAT FOR DECIDING AFRESH ON MERITS. THE AO PASSEED ASSESSMEN T ORDER U/S 143(3) R.W.S 250 ASSESSING TOTAL INCOME AT RS. 1,00 ,97,008/- DISALLOWING DEPRECIATION AMOUNTING TO RS. 52,49,722 /-. ON APPEAL, THE CIT(A) ALLOWED DEPRECIATION ON OFFICE EQUIPMENT @ 25% ON ALL THE ASSETS AT 50% OF COST SHOWN BY THE ASSESSEE AND GRA NTED PARTLY RELIEF TO THE ASSESSEE. THEREAFTER, THE AO INITIATED PENAL TY PROCEEDINGS U/S 271(1)(C) BY OBSERVING AS UNDER:- IN THIS CASE THE ASSESSEE HAS CLAIMED 100% DEPRECIA TION ON DIESEL GENERATOR SET OF RS. 41,60,000/- AND 25% OF PLANT & MACHINERY AND OFFICE EQUIPMENT AND THE AO WHILE PAS SING THE ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 3 ORDER U/S 143(3) OF THE ACT HAS DISALLOWED THE ABOV E SAID DEPRECIATION AND REDUCED THE SAME FROM THE ACTUAL D EPRECIATION CLAIMED BY THE ASSESSEE AS PER IT RULES. IT IS SEEN THAT THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION ON DG SETS . THE RATE OF DEPRECIATION ON THESE ITEMS IS 25% INSTEAD THE ASSE SSEE HAS CLAIMED IT AT 50%. THOUGH THE ASSESSEE WAS AWARE TH AT THIS EXCESSIVE DEPRECIATION CLAIMED IS NOT ALLOWABLE AS PER THE ACT, IT WAS CLAIMED IN THE RETURN OF INCOME. THIS AMOUNTS T O FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. FINALLY, THE AO IMPOSED PENALTY ON THE AMOUNT OF RS. 31,20,400/-, ON WHICH THE TAX SOUGHT TO BE EVADED B Y THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH IT S CLAIMS ARE GENUINE. ACCORDINGLY, THE AO COMPUTED THE PENALTY B EING 100% ON THE SAID AMOUNT AT RS. 16,14,810/-. AGGRIEVED, THE ASS ESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE BESIDES REITERAT ING THE SUBMISSIONS AS MADE BEFORE THE AO, SUBMITTED THAT T HE AO HAD REPEATEDLY DISALLOWED THE DEPRECIATION AMOUNTING TO RS. 52,49,722/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND REA SSESSMENT PROCEEDINGS IN-SPITE OF THE FACT ALL THE DETAILS WE RE FURNISHED BY THE AO. IT WAS STATED THAT THE VARIATION IN ALLOWING DE PRECIATION LESS THAN WHAT WAS CLAIMED BY ESTIMATING COST OF ACQUISITION IS A MATTER OF OPINION ON THE PART OF THE CIT(A). IT WAS FURTHER S TATED THAT THE ASSESSEE HAD NOT FILED INACCURATE PARTICULARS OR CO NCEALED ANY INCOME AND THE AO HAD ALSO NOT BEEN ABLE TO FIND ANY CONCE ALMENT OF INCOME AS THE ALLOWANCE OF LOWER DEPRECIATION WAS BY WAY O F ESTIMATING OF DEPRECIATION BY CIT(A). AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE ARID SU BMISSION MADE 1BY THE APPELLANT. A.O. HAVE LEVIED PENALTY U/S. 27 1(1) ON AN INCOZM. OF RS.3L.20.400/- VHICH IN HIS OPINION WAS SOUGHT TO BE EVADED. HOWEVER, THE QUANTIFICATION OF THIS AMOUNT IS NOT CLEAR. ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 4 THE PENALTY HAS BEEN LEVIED ON THE ISSUE OF DISALLO WANCE OF DEPRECIATION IN THIS CASE. AS NOTED ABOVE THE DEPRE CIATION CLAIMED BY THE APPELLANT WERE RS.52.49,722/- DURING THE YEAR WHICH WAS DISALLOWED IN TOTALITY BY THE A.O. LD.CIT (A) ALLOWED PART OF THE CLAIM AMOUNTING TO RS.10,64,661/- AND B ALANCE AMOUNT WHICH REMAINED DISALLOWED WAS RS.4L,84,661/- . IF IN THE OPINION OF A.O. THE WHOLE AMOUNT OF DISALLOWANCE ME RITS LEVY OF PENALTY THEN THE PENALTY SHOULD HAVE BEEN LEVIED ON THE AMOUNT OF RS.41,84,661/-. 6. COMING TO THE MERIT OF THE PENALTY, AS NOTED ABO VE THERE HAS BEEN DISALLOWANCE ON ACCOUNT OF CLAIM OF DEPRECIATI ON IN THIS CASE. THE DISALLOWANCE CONSISTS OF TWO ITEMS. ONE I S THE REDUCTION IN THE COST OF ACQUISITION OF THE ASSETS ON WHICH DEPRECIATION HAS BEEN CLAIMED AND SECONDLY REDUCTIO N IN THE RATE OF DEPRECIATION CLAIMED. IT IS NOTED THAT IN THIS C ASE ORIGINAL ASSESSMENT WAS FRAMED ON 26.03.1996 WHEREIN THE CLA IM WAS DISALLOWED IN TOTALITY. THE LD.CIT(A) ALLOWED THE C LAIM. HOWEVER, THE HONBLE TRIBUNAL DID NOT AGREE WITH THE FINDING OF LD.CIT(A) AND RESTORED THE MATTER TO THE FILE OF A.O. WHEREIN THE HONBLE ITAT HELD THAT A.O. WAS ENTITLED TO EXAMINE AMONG O THER THINGS WHETHER THERE WAS ANY GENUINE PURCHASE AND USE OF A SSETS IN QUESTION BY THE ASSESSEE. IN THE REASSESSMENT PROCE EDINGS A.O. AGAIN DISALLOWED THE TOTAL CLAIM. THE LD.CIT(A) HOW EVER, AFTER EXAMINATION THE DETAIL GAVE FINDING THAT APPELLANT HAS PURCHASED THE ASSETS. HOWEVER, HE ALSO HELD THAT THE COST OF ACQUISITION SHOWN BY THE APPELLANT WAS HIGHLY EXAGGERATED AND H E REDUCED THE COST TO 50% OF THE CLAIM. HE ALSO HELD THAT DEP RECIATION IS ALLOWABLE @ 25% ON D.G. SET AND NOT 100% AS CLAIMED BY THE APPELLANT. IN MY CONSIDERED OPINION WHILE PENALTY U /S.271(L)(C) IS LEVIABLE TO THE EXTENT THE COST OF ACQUISITION OF A SSETS WAS INFLATED, THE PENALTY IS NOT LEVIABLE ON REDUCTION IN THE DEPRECIATION RATE ON THOSE ASSETS. THE APPELLANT HA D PURCHASED D.G. SET AND OTHER EQUIPMENTS FROM ITS SISTER CONCE RN. THE BOOK VALUE OF THESE ASSETS IN THE BOOKS OF SISTER CONCER N WAS NEGLIGIBLE WHICH IS AS FOLLOWS: (I) OFFICE EQUIPMENT RS.40,977/- (AS ON 1 .4.92) (II) DIESEL GENERATOR SET (IN THEBOOKS OF SHERAI ENGINEERING PVT. LTD.) RS. 15,356/- (AS ON 1.4.92) III) PROTO-TYPE RE-MACHINE RS.8,43,171/- (AS ON 1.4 92) (IV) DIESEL GENERATOR SET ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 5 (SBM ENGG. PVT. LTD.) RS. I ,12,902/- (AS ON 1 .4.9 2) THE APPELLANT HOWEVER, LAS SHOWN THE COST OF ACQUIS ITION AT RS.4L,60.000/- IN RESPECT OF DG SET AND RS.1,97,28 8/- IN THE CASE OF OTHER EQUIPMENTS. THE APPELLANT HAS TRIED T O JUSTIFY THE HUGE DIFFERENCE BETWEEN BOOK/DEPRECIATED VALUE OF T HE OLD MACHINE AND THE PAYMENT MADE TO SISTER CONCERN FOR ACQUISITION OF THOSE MACHINES. ACCORDING TO APPELLANT, THE COST OF NEW MACHINES IN THE MARKET WERE VERY HIGH AND COMPARED TO THAT THE COST OF ACQUISITION OF THESE MACHINE WITH INDEXATIO N WOULD BE COMPARABLE. THAT IS, IF IN THE DEPRECIATED VALUE, C OST OF INDEXATION IS ADDED, THE COST SHOWN BY THE APPELLAN T WOULD BE COMPARABLE. THE EXPLANATION OF THE APPELLANT IS NOT REASONABLE AND SATISFACTORY. OLD AND USED MACHINE CANNOT BE CO MPARED TO NEW MACHINES AS IT WOULD DEF THE WHOLE CONCEPT OF DEPRECIATION. MOREOVER, THE MARKET RATE GIVEN IN RESPECT OF NEW M ACHINES ARE NOT COMPARABLE BECAUSE THE MACHINE WHICH HAVE BEEN PURCHASED FROM SISTER CONCERN AS SEEN FROM THE VOUCHERS IS OF 65KVA WHILE RATES GIVEN IN RESPECT OF NEW MACHINE WAS IN RESPEC T OF 625 AND 750 KVA. FOR EXAMPLE HARP ENGINEERING PVT. LTD. HAD QUOTED 800/1000 KVA DIESEL GENERATOR SET FOR KIRLOSKAR MAC HINE FOR RS.39,32,000/-. SIMILARLY, MULTIQUIP MARKETING PVT. LTD. HAS QUOTED FOR 910 KVA D.G. SET FOR RS.39 LAKHS. THIS T HE COST SHOWN BY THE APPELLANT IS HIGHLY EXAGGERATED AS ALSO HELD BY LD.CIT(A) IN QUANTUM APPEAL AND THE EXPLANATION FURNISHED IN THIS REGARD CANNOT BE CONSIDERED AS SATISFACTORY AND REASONABLE . IT HAS TO BE HELD THAT THE COST OF ACQUISITION OF D.G. SET AND O THER MACHINES WERE HIGHLY INFLATED WITH THE SOLE INTENTION TO MAK E BOGUS CLAIM OF DEPRECIATION ALLOWANCE AND THEREBY REDUCE PROFIT . IN MY CONSIDERED OPINION, PENALTY IS LEVIABLE TO THE EXTE NT INCOME HAS BEEN SOUGHT TO BE EVADED BY INFLATING THE COST OF M ACHINES. HOWEVER, THE CLAIM OF DEPRECIATION AT 100% WHICH WA S REDUCED 25% BY LD.CIT(A) DO NOT WARRANT LEVY OF PENALTY. TH E APPELLANT HAD CLAIMED 100% DEPRECIATION ON THE ARGUMENT THAT D.G. SETS ARE ALSO ENERGY SAVING DEVICE WHICH HAS BEEN DISALL OWED ON THE GROUND THAT D.G. SETS HAS NOT BEEN SPECIFICALLY MEN TIONED IN THE APPENDIX IN THIS REGARD. IN MY CONSIDERED OPINION W HILE RESTRICTING THE CLAIM OF DEPRECIATION TO 25% WAS JU STIFIED THE SAME DOES NOT MERIT LEVY PENALTY ULS.271(1)(C). ACC ORDINGLY, A.O. IS DIRECTED TO RECOMPUTE THE WORKING OF PENALTY ONL Y ON THE DEPRECIATION AMOUNT CLAIMED ON THE EXAGGERATED COST OF ACQUISITION OF ASSETS. THE APPEAL IS PARTLY ALLOWED . ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 6 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE DG SET IS NOT AVAILABLE IN THE OPEN MARKE T, THE ASSESSEE PURCHASED FROM ITS SISTER CONCERN. IT IS SUBMITTED THAT THE COST OF NEW MACHINES IN THE MARKET WERE VERY HIGH AND COMPARED TO THAT THE COST OF ACQUISITION OF THESE MACHINE WITH INDEXATION WOU LD BE COMPARABLE AND, THEREFORE, IF IN THE DEPRECIATION VALUE, INDEX ATION IS ADDED, THE COST SHOWN BY THE ASSESSEE WOULD BE COMPARABLE. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIONS IN THE C ASE OF WALTER SALDHANA VS. DCIT, IN 44 SOT 72(MUM.) AND IN THE C ASE OF RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158. 8. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT NO DETAILS WERE FILED BY THE ASSESSEE BEFORE THE AO REGARDING PURCHASE OF OLD DG SET FROM ITS SISTER CONCERN AND ALSO NO VALUATION R EPORT WAS FILED. THE DR CONTENDED THAT THE COST OF ACQUISITION OF DG SET AND OTHER MACHINES WERE HIGHLY INFLATED BY THE ASSESSEE WITH THE SOLE INTENTION TO MAKE BOGUS CLAIM OF DEPRECIATION ALLOWANCE AND T HEREBY REDUCE PROFIT. HE, THEREFORE, SUBMITTED THAT THE AO HAS RI GHTLY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, AND A CCORDINGLY IMPOSED PENALTY ON THE INCOME ON WHICH THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. THE LEARNED DR RELIED UPON THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD M ORE [1971] 82 ITR 540 (SC). 9. WE HAVE HEARD THE LEARNED REPRESENTATIVE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN THE PRESENT CASE, THE AO HAS IMPOSED THE PENALTY ON TWO COUNTS, VIZ., THE ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 7 COST OF ACQUISITION OF DIESEL SET IS HIGHLY INFLATE D AND THE CLAIM OF DEPRECIATION ON THE DIESEL SET CLAIMED @ 100% INSTE AD OF 25%, FOR WHICH HE IS ELIGIBLE. IN THE REASSESSMENT PROCEEDIN GS, THE AO REPEATED THE SAME ASSERTIONS AS WAS DONE IN THE ORIGINAL ASS ESSMENT EARLIER AND DISALLOWED THE DEPRECIATION. IN THE COURSE OF P ENALTY PROCEEDINGS, THE LEARNED CIT(A) HAS CONSIDERED THE ISSUE AND HEL D THAT THE CLAIM OF HIGHER DEPRECIATION DO NOT WARRANT LEVY OF PENALTY AND TO THAT EXTENT DIRECTED THE AO TO DELETE THE PENALTY. SINCE NO APP EAL HAS BEEN FILED AGAINST SAID ORDER OF THE CIT(A), THE ORDER OF THE CIT(A) HAS BECOME FINAL. 10. THE ONLY ISSUE FOR OUR CONSIDERATION IN THIS AP PEAL IS WITH REGARD TO HIGHLY INFLATED COST OF ACQUISITION OF DI ESEL GENERATION SET AT RS. 41,60,000/-. THE CASE OF THE REVENUE IS THAT TH E ASSESSEE HAD PURCHASED DIESEL GENERATOR SET WITH HIGHLY INFLATE D RATE WITH THE SOLE INTENTION TO MAKE BOGUS CLAIM OF DEPRECIATION ALLOW ANCE AND THEREBY REDUCE THE PROFIT. WHEN THE AO ASKED THE ASSESSEE A S TO WHY THE OLD AND USED MACHINE PURCHASED AT A HIGHER RATE, IT WAS SUBMITTED THAT THE DG SET, WHICH IS NOT AVAILABLE IN THE MARKET AN D BECAUSE OF BUSINESS EXIGENCY, THE ASSESSEE WAS COMPELLED TO PU RCHASE THE SAID DG SET FROM ITS SISTER CONCERN. ON APPEAL, THE CIT( A) OBSERVED THAT THE PURCHASE OF THE ASSET BY THE ASSESSEE CANNOT BE DOUBTED, HOWEVER WITH REGARD TO PURCHASE PRICE IT IS SEEN THAT VALUE OF THESE PLANT AND MACHINERY IN THE BOOKS OF THE SUPPLIERS IS VERY NOM INAL WHICH HAS BEEN PURCHASED BY THE ASSESSEE AT A VERY EXAGGERATE D PRICE. HE FURTHER OBSERVED THAT NO EVIDENCE WHATSOEVER HAS BE EN FILED TO JUSTIFY SUCH A HUGE PRICE OF ASSETS PURCHASED FROM ITS SIST ER CONCERN. THOUGH, THE ASSESSEE HAS FILED QUOTATIONS, WHICH AR E NOT SUFFICIENT TO SUPPORT THE ASSESSEES CLAIM WITH REGARD TO SO HIGH LY EXAGGERATED VALUE AT WHICH THE ASSESSEE HAS PURCHASED THE ABOVE PLANT & ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 8 MACHINERY. THERE IS NO VALUATION REPORT. WDV OF ASS ET IN THE HANDS OF THE SUPPLIERS WAS VERY LOW. HE, THEREFORE, HELD THA T THE ASSESSEE HAS GROSSLY OVERVALUED THE PURCHASE PRICE IN ORDER TO G ET BENEFIT OF HIGHER DEPRECIATION. THEREFORE, THE PURCHASE PRICE OF THE ASSESSEE IN THE PLANT & MACHINERY, REMAIN UN-SUSTAINED AND THE SAME THEREFORE CANNOT BE ADOPTED FOR THE PURPOSE OF ALLOWING DEPRE CIATION. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE ABO VE FINDING OF THE CIT(A) OVERTURNED BY THE HIGHER FORUMS. WHEN THE AO HAS ASKED THE DETAILS IN RESPECT OF COST OF NEW DG SET, ASSESSEE HAS GIVEN COST OF NEW DG SET IN RESPECT OF 625 KVA AND 750 KVA. SIMIL ARLY, ASSESSEE GAVE A TWO COMPARABLE CASES, ONE IS HARP ENGINEERIN G PVT. LTD. HAD QUOTED FOR 800/1000 KVA DG SET, KIRLOSKAR MAKE, FOR RS. 39,32,000/- AND MULTIQUIP MARKETING LTD. HAD QUOTED FOR 910 KVA DG SET FOR RS. 39,00,000/-. THE SAID COMPARABLE CASES GIVEN BY THE ASSESSEE NEITHER ACCEPTED BY THE AO NOR BY THE CIT(A). IN FACT, THE ASSESSEE HAS NOT GIVEN THE MARKET PRICE OF 65 KVA DG SET PURCHASED FROM ITS SISTER CONCERN FOR RS. 41,60,000/-. EVEN DURING THE COURSE OF PENALTY PROCEEDINGS BEFORE THE CIT(A) THE ASSESSEE HAS EXPL AINED THAT THE NEW DG SET IS NOT AVAILABLE, THEREFORE, IT WAS PURCHASE D FROM ITS SISTER CONCERN BECAUSE OF BUSINESS EXIGENCY. THE ASSESSEE HAS FAILED TO PRODUCE THE EXACT MARKET PRICE OF NEW DG SET AND NO T EXPLAINED ABOUT THE BUSINESS EXIGENCY. EVEN BEFORE US, EXCEPT STATI NG WHAT WAS STATED BEFORE THE CIT(A), NO MATERIAL HAS BEEN PRODUCED TO ESTABLISH THAT THE OLD DG SET WAS ACQUIRED FROM ITS SISTER CONCERN FOR BUSINESS NECESSITY. WE ARE, THEREFORE, OF THE OPINION THAT T HE EXPLANATION OFFERED BY THE ASSESSEE IS NOT BONA-FIDE FOR THE RE ASON THAT HE FAILED TO PRODUCE MATERIAL EVIDENCE TO SUBSTANTIATE HIS CL AIM BEFORE THE REVENUE AUTHORITIES. THEREFORE, IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE AO IN LEVYING PENALTY U/S ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 9 271(1)(C) OF THE ACT, ON THE GROUND OF FURNISHING I NACCURATE PARTICULARS OF INCOME. 11. IN SO FAR AS CASE LAWS RELIED UPON BY THE LEARN ED COUNSEL FOR THE ASSESSEE IS CONCERNED, IN THE CASE OF WALTER SALDHA NA (SUPRA), THE MUMBAI BENCH OF ITAT HAS HELD THAT MERE MAKING A CL AIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSE SSEE AND, THEREFORE, PENALTY U/S 271(1)(C) IS NOT SUSTAINABLE . THIS CASE IS NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE FOR THE SIMPLE REASON THAT ASSESSEE HAS INFLATED THE RATE OF THE A SSET AND THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT BONA-FID E. IN SO FAR AS THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) IS CONCERNED , THE FACTS ARE ENTIRELY DIFFERENT IN THE CASE IN HAND FROM THE SAI D CASE, THEREFORE, IT HAS NO APPLICATION TO THE CASE OF THE ASSESSEE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 11 TH APRIL, 2012. SD/- SD/- (P.M. JAGTAP) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 11 TH APRIL, 2012 KV ITA NO. 1858/MUM/08 SM ENERGY TEKNIK & ELECTRONICS LTD. 10 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.