DCIT, CHENNAI V. M/s. Ashok Leyland Ltd., CHENNAI

ITA 1918/CHNY/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7443 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-03-2012
• Assessment Year: 1993-1994
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: THANGADURAI V P
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NOS. 1917 & 1918/MDS/2010 (ASSESSMENT YEARS : 1992-93 & 1993-94) THE DEPUTY COMMISSIONER OF INCOME TAX, LARGE TAXPAYER UNIT, CHENNAI - 600 101. (APPELLANT) V. M/S ASHOK LEYLAND LTD., SARDAR PATEL ROAD, CHENNAI - 600 032. PAN : AAACA4651L (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR SHRI K.E.B. RENGARAJAN, JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI THAN GADURAI, V.P. DATE OF HEARING : 01.03.2012 DATE OF PRONOUNCEMENT : 01.03.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THESE APPEALS OF THE REVENUE, FILED AGAINST A COMMON ORDER DATED 30.8.2010 OF COMMISSIONER OF INCOME TAX (APPE ALS), LARGE TAXPAYER UNIT, CHENNAI, ITS GRIEVANCE IS THAT THE P ENALTY LEVIED UNDER SECTION 271(1)(C) OF INCOME-TAX ACT, 1962 (IN SHORT 'THE ACT') WAS DELETED. AS PER THE REVENUE, ASSESSEE FURNISHED IN ACCURATE I.T.A. NOS. 1917 & 1918/MDS/10 2 PARTICULARS BY WRONGLY CLAIMING EXEMPTION UNDER SEC TION 10(15)(IV)(H) OF THE ACT AND THE CIT(APPEALS) FAILED TO CONSIDER THAT ASSESSEE HAD MISLED THE DEPARTMENT BY FURNISHING WRONG DATES OF ACQUISITION OF BONDS. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FOR TH E IMPUGNED ASSESSMENT YEARS CLAIMED EXEMPTION UNDER SECTION 10 (15)(IV)(H) OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM PUBLIC SECTOR UNIT BONDS TAKEN IN MTNL, REC AND NHPC. AS PER THE A.O., CLAI M OF THE ASSESSEE WAS NOT TENABLE SINCE THE BONDS WERE REGIS TERED WITH THE RESPECTIVE COMPANIES BY THE ASSESSEE AFTER THE DATE OF COUPON INTEREST PERIOD. THE AMOUNT OF INTEREST, PERIOD OF INTEREST AND DATE OF REGISTRATION OF THE BONDS WITH RESPECTIVE PUBLIC SE CTOR UNDERTAKINGS WERE AS UNDER:- NAME OF THE PSU BONDS/ COUPON DATE FV OF BONDS AMOUNT OF INTEREST @ 4.5% PERIOD OF INTEREST DATE OF REGISTRATION OF BOND BY THE PSU MTNL (6/3) 11 CR. 49,50,000 7.9.91 TO 6.3.92 22.10.92 REC (29/3) 12 CR. 54,0 0,000 30.9.91 TO 29.3.92 30.3.92 NHPC (29/3) 1 CR. __4,50,000 30.9.91 TO 29.3.92 30.3.92 TOTAL 1,08,00,000 THE A.O. PUT THE ASSESSEE ON NOTICE THAT IT WAS NOT ENTITLED TO THE INTEREST EXEMPTION AS CLAIMED SINCE THE BONDS WERE REGISTERED AFTER THE COUPON DATE ON WHICH THE INTEREST WAS RECEIVED BY THE ASSESSEE. I.T.A. NOS. 1917 & 1918/MDS/10 3 FOR THIS, REPLY OF THE ASSESSEE WAS THAT (I) REC BO NDS WERE REGISTERED BY M/S REC ON 18.3.92 AND THE SAID BONDS WERE FORWARDED TO REC FOR SUCH REGISTRATION, AS EARLY AS 4.3.92, (II) FOR THE NHPC BONDS, THE COUPON DATE WAS 29.3.92 AND NOT 30. 3.92, (III) FOR THE MTNL BONDS, THE DELAY IN REGISTRATION WAS DUE T O INSISTENCE OF MTNL FOR A BOARD RESOLUTION AUTHORIZING THE SIGNATO RIES TO SIGN ON BEHALF OF THE ASSESSEE, IN THE TRANSFER DEEDS AND T HE DELAY WAS SOLELY ATTRIBUTABLE TO M/S MTNL, (IV) TRANSFERS OF OWNERS HIP ONCE EFFECTED BY CONCERNED PSUS RELATED BACK TO DATE OF EXECUTION OF TRANSFER DEED, AND (V) DATES ON WHICH THE BONDS WERE REGIST ERED BY THE RESPECTIVE PSU WAS NOT RELEVANT FOR A CLAIM OF EXEM PTION UNDER SECTION 10(15)(IV)(H) OF THE ACT. 3. THUS, IN A NUTSHELL, THE CLAIM OF THE ASSESSEE W AS THAT ITS INTEREST WAS EXEMPT UNDER SECTION 10(15)(IV)(H) OF THE ACT. HOWEVER, ASSESSING OFFICER WAS NOT IMPRESSED. ACCORDING TO HIM, INSOFAR AS BONDS OF REC WERE CONCERNED, LETTER DATED 1.4.92 OF M/S REC NEVER MENTIONED THAT SUCH BONDS WERE REGISTERED IN ASSESS EES NAME ON 18.3.92. AS AGAINST THIS, AS PER THE A.O., THERE W AS A LETTER FROM M/S ANZ GRINDLAYS BANK WHICH HAD SOUGHT REGISTRATION OF THE BONDS IN THE NAME OF THE ASSESSEE AND THIS LETTER CLEARLY SHOWED THAT THE BONDS I.T.A. NOS. 1917 & 1918/MDS/10 4 WERE SENT BY M/S ANZ GRINDLAYS BANK TO M/S REC ONLY ON 20.3.92. INSOFAR AS NHPC BONDS WERE CONCERNED, AS PER THE A. O., THE ACTUAL COUPON DATE WAS 29.3.92 AND NOT 30.3.92. INSOFAR A S MTNL BONDS WERE CONCERNED, A.O. NOTED THAT EVEN AS PER ASSESSE E, THE BONDS WERE REGISTERED IN ASSESSEES NAME AFTER THE COUPON DATE. A.O. WAS OF THE OPINION THAT FOR A CLAIM OF EXEMPTION UNDER SECTION 10(15)(IV)(H) OF THE ACT, IT WAS NECESSARY THAT AS ON THE DATE OF RECEIPT OF INTEREST, THE HOLDER OF BONDS SHOULD BE REGISTERED WITH THE CONCERNED PSUS. ASSESSEE HAVING NOT COMPLIED WITH THIS REQUIREMENT, ASSESSING OFFICER DENIED THE CLAIM OF EXEMPTION MADE BY THE ASSESSEE AND COMPLETED THE ASSESSMENT ACCORD INGLY FOR THE RESPECTIVE ASSESSMENT YEARS. 4. ASSESSEE FILED APPEALS BEFORE CIT(APPEALS) AGAIN ST THE ADDITION, BUT, DID NOT MEET WITH ANY SUCCESS. FURT HER APPEALS WERE FILED FOR BOTH THE YEARS BY THE ASSESSEE BEFORE THI S TRIBUNAL AND THIS TRIBUNAL CONFIRMED THE ORDERS OF LOWER AUTHORITIES. RELEVANT PART OF THE ORDER OF THE TRIBUNAL IS REPRODUCED HEREUNDER:- 1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY IN THE LIGHT OF MATERIAL ON RECORD . SECTION 10(15)(IV)(H) READS AS UNDER : - ' BY ANY PUBLIC SECTOR COMPANY IN RESPECT OF SUCH BON DS OR DEBENTURES AND SUBJECT TO SUCH CONDITIONS , INCLUDING THE CONDITION THAT THE HOLDER OF SUCH I.T.A. NOS. 1917 & 1918/MDS/10 5 BONDS OR DEBENTURES REGISTERS HIS NAME AND THE HOLD ING WITH THAT COMPANY , AS THE CENTRAL GOVERNMENT MAY , BY NOTIFICATION IN THE OFFICIAL GAZETTE , SPECIFY I N TH I S BEHALF ; ' THE PLAIN READING OF THIS SECTION WOULD MAKE I T CLEAR THAT FOR CLAIMING THE EXEMPTION , BONDS OR DEBENTURES WERE REQUIRED TO BE REGISTERED IN THE NAME OF THE ASSESSEE CLAIMING EXE MPTION . THE WAY THIS CONDITION HAS BEEN PUT , I T BECOMES CLEAR THAT THIS OF MANDATORY NATURE. IF NO REGISTRATION IS THERE AND BONDS ARE T RANSFERRED MERELY BY ENDORSEMENT , THEN TWO PARTIES MAY BE CLAIMING EXEMPTION AND TO AVOID SUCH CONFLICT SITUATION , THE CONDITION REGARDING REGISTRATION OF BONDS IN THE NAME OF ASSESSEE CLAIMING EXEMPTION HA S BEEN PLACED . THERE IS NO AMBIGUITY IN THIS PROVISION AND IT HAS TO BE SIMPLY INTERPRETED THAT REGISTRATION IS MANDATORY . AGAIN , THE PURPOSE OF REGISTRATION WOULD GET DEFEATED IF SUCH REGISTRATIO N I S ALLOWED TO BE CARRIED ON EVEN AFTER THE COUPON DATE . BECAUSE REGISTRATION IS REQUIRED FOR THE PURPOSE OF CLAIMING EXEMPTION AND ONCE SUCH REGISTRATION IS DONE AFTER THE COUPON DAT E , THEN EXEMPTION CANNOT BE GRANTED . WE ARE UNABLE TO AGREE WITH THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO CONDITION HAS BEEN PRESCRI BED AND THEREFORE , EVEN THE CONDITION REGARDING REGISTRATION OF BONDS COULD NOT BE EMPHASIZED . IN FACT , THE PHRASE ' AS THE CENTRAL GOVERNMENT MAY , BY NOTIFICATION IN THE OFFICIAL GAZETTE , SPECIFY IN THIS BEHALF PERTAINS TO NAME OF COMPANIES WHOSE BONDS ARE ELIGIBLE FOR EXEM PTION . IN FACT , THERE ARE HUNDREDS OF GOVERNMENT COMPANIES AND MANY OF THEM ARE I SSUING BONDS OR DEBENTURES. BUT , GOVERNMENT IN ITS OWN WISDOM GENERALLY ALLOWS EXEMPTION TO ONLY SELECTED COMPANI ES , WHICH ARE ENGAGED IN THE PROJECTS , W H ICH HAVE SOCIAL WELFARE AS ONE OF THE PURPOSES . FOR EXAMPLE , IN THE CASE OF HUDCO WHICH IS ENGAGED IN THE CONSTRUCTION OF HO USES OR REC , WHICH IS ENGAGED I N THE BUSINESS PROVIDING ELECTRICITY IN RURAL AREAS . IN FACT , THE FOOTNOTE GIVEN IN THE AC T I.T.A. NOS. 1917 & 1918/MDS/10 6 READS AS FOLLOWS : - ' FOR SPECIFIED BONDS/DEBENTURES OF PUBLIC SECTOR COMPANIES , SEE TAXMANN'S DIRECT TAXES CIRCULARS . ' 1 . THIS ALSO SHOWS THAT IT PERTAINS TO ONLY THE NAMES OF THE COMPANIES. WE FURTHER FIND NO FORCE THAT AS PER BONDS ITSELF THE SAME CAN BE TRANSFERRED BY ENDORSEMENT , BECAUSE SUCH CONDITION CANNOT OVERRIDE THE SPECIFIC PROVISIONS O F THE ACT DEALING WITH EXEMPTION . 2 . IN THE LIGHT OF THIS DISCUSSION LET US SEE WHETHER THE ASSESSE HAS COMPLIED WITH THIS CONDITION OR NOT . WE FIND THAT THE ASSESSING OFFICER HAD ISSUED A SPEC I F I C LETTER RAISING QUERIES WHY INTEREST IN THE CASE OF THREE COMPANIES , I . E . MTNL , REC AND NHPC SHOULD BE ALLOWED EXEMPTION WHEN SUCH BONDS WE RE NO T REGISTERED IN THE NAME OF THE ASSESSEE. THOUGH THE ASSESSEE TRIED TO EXPLA I N , BUT NONE OF THOSE REASONS , WHICH HAVE BEEN REPRODUCED WHILE QUOTING FROM THE O BSERVATIONS OF THE ASSESSING OFFICER IN THE ABOVE PARAS , SAME ARE CONV I NCING. FOR EXAMPLE , IN THE CASE OF MTNL BONDS , IT WAS STATED THAT MTNL WAS INSISTING ON BOARD RESO LUTION , BUT THE ASSESSEE-COMPANY IS A VERY LARGE COMPANY AND BONDS SHOULD HAVE BEEN SENT RIGHT FROM BEGINNING UNDER THE AUTHORISATION O F BOARD ONLY . SINCE IT IS A PART OF INTERNAL MANAGEMENT OF COMPANY , NO AUTHORITY OR OUTSIDER CAN LOOK INTO WHAT WAS HAPPENING INSIDE THE COMPANY AND WHETHER ON EAR LIER OCCASION SOME BOARD RESOLUTION WAS PASSED OR NOT . IN CASE OF REC BONDS , THE ASSESSING OFFICER HAS SPECIFICALLY REPRODUCED FROM THE LETTER OF REC DATED 1 . 4 . 92 WHICH WE ARE REPRODUCING AGAIN , WHICH SHOWS THAT BONDS REGISTER ONLY ON 30.3.92 AND NOT ON 18 . 3 . 92 : - ' WE ACKNOWLEDGE THE RECEIPT OF YOUR LETTER NO . CT/CMU8402 DATED 4.3 . 1992 (BEFORE/AFTER 60 DAYS OF PURCHASE OF BONDS) AND THE INTIMATION GIVEN THEREIN REGARD I NG PURCHASE OF 9% (TAX-FREE) SECURED REDEEMABLE REC BONDS-1999 ( TWENT I ETH SERIES) NOTED IN THE MARGIN ON 18 . 3 . 92 FROM ANZ GRINDLAYS BAI I N TERMS OF NOTIFICATION F . NO.8599/328/98/89-WT DATED 13.03.1990 OF THE M I NISTRY OF FINANCE , DEPARTMENT REVENUE , (WEALTH TAX) '. 36. REGARD I NG NHPC AND MTNL BONDS , THE OBSERVATION OF THE ASSESSING OFF I CER IN PARA 6 . 5 AND 6 . 6 ARE RELEVANT WHICH ARE AS UNDER :- 6.5) REGARD I NG THE NHPC BONDS ( FV RS . 1 CR . ) , IT IS STATED BY THE ASSESSEE THAT THE COUPON DATE IS NOT 29 . 3 . 92. THIS IS FACTUALLY INCORRECT. THE INTEREST WARRANT I S DATED 30.3.92 . HOWEVER , ON THE FACE OF THIS I NTEREST WARRANT IT IS CLEARLY MENTIONED THAT THE IN TEREST IS FOR THE PER I OD 30/9 TO 2913. THE COUPON DATE HAS ALSO BEEN CERT IFIED TO BE 2913 / 92 V I DE M/S ANZ GR I NDLAYS BANK ' S LETTER DATED 24 . 3.92 ADDRESSEE TO M/S ASHOK LEYLAND LTD , THE ASSESSEE . 6 . 6) AS REGARDS THE MTNL BONDS (FV RS.1 CRORE) , THE ASSESSEE ACCEP T ED THE FACT THAT THE SAID BONDS WERE NOT REGISTERED IN THEIR NAME I.T.A. NOS. 1917 & 1918/MDS/10 7 ON OR BEFORE THE COUPON DATE I . E . 6 . 3 . 92 , BUT ONLY ON 20 . 10 . 92. 37 . FROM THE ABOVE FACTS , IT BECOMES CLEAR THAT THE ASSESSEE HAD NOT COMPLIED WI TH T HE R EQUIREMENTS OF THE EXEMPTION PROVISION OF SECTION 1 0(15)(IV)(H) OF THE AC T. THEREFORE , LOWER AUTHORITIES HAVE CORRECTLY DENIED THE EXEMPTI ON UNDER THIS CLAUSE. IN THESE CIRCUMSTANCES, WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT(A)AND CONFIRM THE SAME. 5. AS PER THE A.O., ASSESSEE HAD INDULGED IN WHAT C OULD BE TERMED AS BOND WASHING TRANSACTIONS. ACCORDING T O HIM, EVEN IF IT WAS CONSIDERED THAT RELEVANT FIGURES OR PARTICULARS WERE DISCLOSED, AND EVEN IF THIS TOOK THE CASE OUT OF A NON-DISCLOS URE, BUT, STILL IT WOULD VERY MUCH BE A CASE OF FURNISHING INACCURATE PARTICULARS. AS PER THE A.O., ASSESSEE HAD FURNISHED INACCURATE PAR TICULARS WHILE MAKING A CLAIM OF EXEMPTION UNDER SECTION 10(15)(IV )(H) OF THE ACT WHEN SUCH AN EXEMPTION WAS NOT LEGITIMATELY AVAILAB LE TO IT. THOUGH ASSESSEE ARGUED THAT THE REGISTRATION WAS SIMPLY BA SED ON DIFFERENCE IN INTERPRETATION OF LAW, ASSESSING OFFICER WAS OF THE OPINION THAT WHEN RULINGS OF TWO APPELLATE AUTHORITIES WENT AGAI NST ASSESSEE, A CLAIM OF POSSIBLE DIFFERENCE IN INTERPRETATION COUL D NEVER BE ACCEPTED. THUS, HE WAS OF THE OPINION THAT THE PENALTY UNDER SECTION 271(1)(C) WAS ATTRACTED AND LEVIED SUCH PENALTIES FOR BOTH TH E YEARS. 6. ASSESSEE MOVED IN APPEALS BEFORE LD. CIT(APPEALS ) FOR BOTH THE YEARS. ARGUMENT OF THE ASSESSEE BEFORE LD. CIT (APPEALS) WAS THAT THE TRANSFEREE WAS ONLY REQUIRED TO FURNISH NA ME AND ADDRESS FOR I.T.A. NOS. 1917 & 1918/MDS/10 8 AVAILING TAX EXEMPTION AND IT WAS NOT NECESSARY THA T BONDS SHOULD HAVE BEEN REGISTERED WITH THE CONCERNED PSUS. AS P ER THE ASSESSEE, THERE WAS NO DOUBT THAT IN THE CASE OF RE C AND NHPC BONDS, THE REQUIRED RECORDS WERE FORWARDED TO THE C ONCERNED PSUS BEFORE THE DATE OF RECEIPT OF THE INTEREST. INSOFA R AS MTNL WAS CONCERNED, ARGUMENT OF THE ASSESSEE WAS THAT DELAY IN REGISTRATION WAS ONLY DUE TO CERTAIN REQUIREMENTS MADE BY M/S MT NL. IT WAS ALSO ARGUED THAT THE APPLICATION WAS MADE ON TIME A ND REGISTRATION WHEN EFFECTED, IT DATED BACK TO THE DATE OF APPLICA TION. AGAIN, AS PER THE ASSESSEE, IT WAS UNDER A BONAFIDE IMPRESSION TH AT IT HAD COMPLIED WITH REQUIREMENTS OF SECTION 10(15)(IV)(H) OF THE A CT AND EXEMPTION WAS NOT ALLOWED BY THE AUTHORITIES ONLY BECAUSE OF A DIFFERENT INTERPRETATION OF LAW. LD. CIT(APPEALS) WAS APPREC IATIVE OF THESE CONTENTIONS. HE WAS OF THE OPINION THAT IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT V. RELIANCE P ETROPRODUCTS PVT. LTD. (322 ITR 158), A LEVY OF PENALTY WOULD NOT STA ND IN THE GIVEN CIRCUMSTANCES. ACCORDING TO HIM, ASSESSEE HAD MADE THE CLAIM WHICH MIGHT NOT HAVE BEEN FOUND SUSTAINABLE, BUT TH IS DID NOT AMOUNT TO FURNISHING OF ANY INACCURATE PARTICULARS OF INCO ME. I.T.A. NOS. 1917 & 1918/MDS/10 9 7. NOW BEFORE US, LEARNED D.R. STRONGLY ASSAILING T HE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT ASSESSEE WAS WELL AWAR E OF NON- REGISTRATION OF THE BONDS WITH RESPECTIVE PSUS, BUT , STILL HAD MADE A DECISION TO CLAIM AN EXEMPTION. SUCH A CLAIM WAS P ATENTLY NOT TENABLE. MAKING A CLAIM, WHICH WAS PATENTLY ILLEGA L AND UNLAWFUL, WAS EQUIVALENT TO FILING INACCURATE PARTICULARS. HAD T HE CLAIM BEEN LEGALLY POSSIBLE, ASSESSEE COULD HAVE ARGUED THAT IT WAS A BONAFIDE CLAIM MADE BY IT. THIS WAS NOT SO. ACCORDING TO LEARNE D D.R., ASSESSEE WAS A BIG CORPORATION AND IT WAS AWARE THAT INTERES T ON BONDS WERE ENTITLED FOR EXEMPTION ONLY WHEN SUCH BONDS WERE RE GISTERED WITH CONCERNED PSUS AND WITH SUCH KNOWLEDGE, IT HAD MADE THE CLAIM. 8. PER CONTRA, LEARNED A.R. SUBMITTED THAT THERE WA S NO FURNISHING OF INACCURATE PARTICULARS. ACCORDING TO HIM, ASSES SEE HAD CLEARLY SHOWN RECEIPT OF INTEREST IN ITS ANNUAL REPORT FOR RELEVANT FINANCIAL YEAR AND THE INVESTMENTS WERE REFLECTED IN SCHEDULE 1.7 OF BALANCE SHEET. LEARNED A.R. SUBMITTED THAT SUCH INTEREST RECEIPTS WERE ALSO CLEARLY SHOWN IN ENCLOSURE-8 TO THE RETURNS OF INCOME. THE REFORE, IT HAD DISCLOSED ALL MATERIAL FACTS RELATING TO INVESTMENT S RESULTING IN THE INTEREST INCOME AND HENCE IT COULD NOT BE FASTENED WITH A LIABILITY FOR CONCEALMENT. AGAIN AS PER LEARNED A.R., ASSESSMENT ITSELF WAS I.T.A. NOS. 1917 & 1918/MDS/10 10 BASED ON INTERPRETATION OF LAW AND ASSESSEES POINT OF VIEW MIGHT HAVE BEEN LEGALLY NOT FOUND TENABLE, BUT, IT WAS NO T PATENTLY UNLAWFUL OR ILLEGAL. ASSESSEE HAD TAKEN A POSSIBLE INTERPRE TATION AND MADE A BONA-FIDE CLAIM, BUT THE REVENUE HAD NOT ALLOWED TH E CLAIM. HIGHER AUTHORITIES HAD FOUND THE STAND OF THE REVENUE TO B E CORRECT. BUT, THERE WAS NO FINDING THAT THE ASSESSEE HAD MADE ANY CLAIM WHICH WAS TOTALLY UNTENABLE IN LAW OR WHICH WAS UNLAWFUL. HAVING FURNISHED ALL THE PARTICULARS AND HAVING MADE NO EFFORT TO CO NCEAL ANY INCOME, ASSESSEE COULD NOT HAVE BEEN FASTENED WITH LEVY OF PENALTY. AS PER LEARNED A.R., LD. CIT(APPEALS) HAD RIGHTLY DELETED THE PENALTY FOR BOTH THE YEARS. 9. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. NO DOUBT, TRIBUNAL IN THE QUANTUM ASSESSMENT HAD CL EARLY HELD AGAINST ASSESSEE HOLDING THAT ASSESSEE HAD NOT COMP LIED WITH REQUIREMENTS FOR CLAIMING EXEMPTION UNDER SECTION 1 0(15)(IV)(H) OF THE ACT. AS PER THE TRIBUNAL, THE PLAIN READING OF SECTION 10(15)(IV)(H) OF THE ACT CLEARLY SHOWED THAT FOR CLAIMING EXEMPTI ON, BONDS OR DEBENTURES HAD TO BE REGISTERED IN THE NAME OF ASSE SSEE. TRIBUNAL HAD GIVEN A FINDING THAT THE PROVISION DID NOT HAVE ANY AMBIGUITY BUT IT HAD TO BE INTERPRETED TO MEAN THAT REGISTRATION WAS MANDATORY. THE I.T.A. NOS. 1917 & 1918/MDS/10 11 QUESTION HERE IS WHETHER THIS FINDING OF THE TRIBUN AL CAN LEAD TO A CONCLUSION THAT THE CLAIM OF ASSESSEE WAS PATENTLY ILLEGAL OR UNLAWFUL. SECTION 10(15)(IV)(H) OF THE ACT IS REPRODUCED AT P ARA 4 ABOVE, BY THE TRIBUNAL IN ITS ORDER DATED 14.7.2006 ON THE APPEAL S OF THE ASSESSEE IN THE QUANTUM ASSESSMENTS. IN OUR VIEW, INTERPRET ATION TAKEN BY THE ASSESSEE WAS A POSSIBLE ONE THOUGH IT MIGHT HAVE NO T BEEN FOUND ULTIMATELY TENABLE IN LAW. ASSESSEE COULD HAVE COM E TO A BONA-FIDE BELIEF THAT CONDITION FOR REGISTRATION THOUGH MANDA TORY, IT WAS NOT NECESSARY THAT SUCH REGISTRATION SHOULD BE THERE ON THE DATE OF RECEIPT OF THE INTEREST. INTEREST IS EXEMPT WITH A CONDITION THAT HOLDER OF SHARE OR DEBENTURE HAS REGISTERED HIS NAME WITH HOLDING CONCERN/PSU. CLAIM OF THE ASSESSEE THAT ULTIMATELY ALL THESE BONDS WERE REGISTERED WITH THE CONCERNED PSUS HAVE BEEN N EVER FOUND FALSE OR INCORRECT. CLAIM OF THE ASSESSEE WAS MENT IONED BY IT IN SCHEDULE 1.7 OF BALANCE SHEET AND ALSO ENCLOSURE-8 TO ITS RETURNS OF INCOME. ASSESSEE HAD DISCLOSED MATERIAL FACTS, AND ALSO UNDER A BONA-FIDE IMPRESSION THAT DATE OF REGISTRATION WAS NOT A VITAL FACTOR FOR DETERMINING THE ELIGIBILITY FOR EXEMPTION UNDER SEC TION 10(15)(IV)(H) OF THE ACT AND EVEN IF SUCH REGISTRATION WAS DELAYED, INTEREST WOULD STILL BE EXEMPT. AS ALREADY MENTIONED BY US, THERE IS NO CASE FOR THE REVENUE THAT THE BONDS WERE NEVER REGISTERED AT ALL . JUST BECAUSE I.T.A. NOS. 1917 & 1918/MDS/10 12 HIGHER AUTHORITIES AND ASSESSING OFFICER DID NOT FI ND FAVOUR WITH ARGUMENTS OF THE ASSESSEE, WE COULD NOT SAY THAT TH ERE WAS FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRO DUCTS PVT. LTD. (SUPRA) HAS HELD IN PARAS 8 TO 11 IN ITS ORDER, AS UNDER:- 8. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER S. 271(1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WO ULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCU MENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JT. CIT & ANR. (2007) 210 CTR (SC) 228 : (2007) 6 SCC 329, THIS COURT EXPLAINED THE TE RMS 'CONCEALMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRACT THE PENALTY UNDER S. 271(1)(C), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD 'INACCURATE' SIGNIFIED A DEL IBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON TO H OLD THAT CL.(III) OF S. 271(1) PROVIDED FOR A DISCRETIONARY JURISDICT ION UPON THE ASSESSING AUTHORITY, IN AS MUCH AS THE AMOUNT OF PE NALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVA DED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME , BUT IT MAY NOT EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWH ERE IN THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE F URNISHING INACCURATE PARTICULARS. IT WAS FURTHER HELD THAT TH E ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPL ANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO TH E SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WENT ON TO HOLD THAT THE ELEMENT OF MENS REA WAS ESSENTIAL. IT WAS ONLY ON I.T.A. NOS. 1917 & 1918/MDS/10 13 THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHROFF VS. JT. CIT & ANR. (SUPRA) WAS UPSET. IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FRO M S. 271 EXTENSIVELY AND ALSO CONSIDERING S. 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SINCE S. 271(1)(C) INDICATED TH E ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMEN T OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN, THERE W AS NO NECESSITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJ ECTIVE BEHIND ENACTMENT OF S. 271(1)(C) R/W EXPLANATIONS INDICATE D WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF R EVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AND, THEREFORE , WILFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTR ACTING CIVIL LIABILITY AS WAS THE CASE IN THE MATTER OF PROSECUT ION UNDER S. 276C OF THE ACT. THE BASIC REASON WHY DECISION IN D ILIP N. SHROFF VS. JT. CIT & ANR. (CITED SUPRA) WAS OVERRULED BY T HIS COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS ( CITED SUPRA), WAS THAT ACCORDING TO THIS COURT THE EFFECT AND DIF FERENCE BETWEEN S. 271(1)(C) AND S. 276C OF THE ACT WAS LOS T SIGHT OF IN CASE OF DILIP N. SHROFF VS. JT. CIT & ANR. (CITED S UPRA). HOWEVER, IT MUST BE POINTED OUT THAT IN UNION OF INDIA VS. D HARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), NO FAULT WAS FOUN D WITH THE REASONING IN THE DECISION IN DILIP N. SHROFF VS. JT . CIT & ANR. (CITED SUPRA), WHERE THE COURT EXPLAINED THE MEANIN G OF THE TERMS 'CONCEAL' AND 'INACCURATE'. IT WAS ONLY THE U LTIMATE INFERENCE IN DILIP N. SHROFF VS. JT. CIT & ANR. (CI TED SUPRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIEN T FOR THE PENALTY UNDER S. 271(1)(C) THAT THE DECISION IN DIL IP N. SHROFF VS. JT. CIT & ANR. (CITED SUPRA) WAS OVERRULED. 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH TH E MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE P ARTICULARS. IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEE N DEFINED AS: 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT.' I.T.A. NOS. 1917 & 1918/MDS/10 14 WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WOR DS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT A CCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEO US OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE ACT. A MERE M AKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. 10. IT WAS TRIED TO BE SUGGESTED THAT S. 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHA RES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFOR E, REITERATED BEFORE US THAT THE AO HAD CORRECTLY REACHED THE CON CLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACC OUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FA LSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUN T TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGRE E, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELV ES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE C ONCEALMENT 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 , IN OUR OPINION, ATTRACT THE PENALTY UNDER S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RET URN WHERE I.T.A. NOS. 1917 & 1918/MDS/10 15 THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON , THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). TH AT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN OUR OPINION, PENALTY COULD NOT HAVE BEEN FASTENE D ON THE ASSESSEE IN THE CIRCUMSTANCES MENTIONED. LD. CIT(APPEALS) C ORRECTLY APPRECIATED THE FACTS AND DELETED THE LEVY OF PENAL TY FOR BOTH THE YEARS. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS). 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 1 ST MARCH, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 1 ST MARCH, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A), LTU, CHENNAI (4) CIT, LTU, CHENNAI (5) D.R. (6) GUARD FILE