A.C.I.T., Circle-3(1), Gwalior V. M/s K.P.S.Bhadoria, Gwalior

ITA 192/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0505 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business expenditure; Question of law; Difference of opinion; Onus to prove; Revised return; TDS
• Section: 271(1)(c); 260A; 40(a)(ia); 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 192/AGRA/2012 ASSTT. YEAR : 2005-06 A.C.I.T., CIRCLE 3(1), VS. M/S. K.P.S. BHADORIA , GWALIOR. E-46, BALWANT NAGAR, GWALIOR (M.P.) (PAN: AAFFK 6124 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE DATE OF HEARING : 31.12.2012 DATE OF PRONOUNCEMENT OF ORDER : 04.01.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 16.02.2012 FOR THE ASSESSMENT YEAR 20 05-06, CHALLENGING THE CANCELLATION OF PENALTY U/S. 271(1)(C) OF THE IT AC T. 2. THE BRIEF FACTS OF THE CASE ARE THAT VIDE RETURN FILED ON 31.10.05, THE ASSESSEE HAS DECLARED INCOME OF RS. 1,42,981,70/-. THE SAME HAS BEEN ASSESSED AT RS. 4,81,88,990/- VIDE ORDER DTD. 31.12.07 BY MAKING AD DITION OF RS. 3,20,91,738/- U/S 40(A)(IA) FOR LATE DEPOSIT OF TDS, OF RS. 6,74,000/ - FOR UNEXPLAINED CASH CREDITS OF ITA NO. 192/AGRA/2012 2 RS. 2,00,000/- FOR VARIOUS EXPENSES WHICH HAVE BEEN SURRENDERED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, RS. 6, 88,584/- FOR CLOSING STOCK, RS. 79402/- FOR DIFFERENCE IN CONTRACT RECEIPTS, RS. 21 ,215/- FOR TELEPHONE EXPENSES DISALLOWANCE AND OF RS. 1,35,885/- FOR VALUATION OF DIESEL. THE THEN CIT(A), GWALIOR VIDE ORDER DTD. 14.05.09 IN APPEAL NO. 264/ IT/07-08/GWL., HAS UPHELD ADDITION OF RS. 3,00,000/- FOR CASH CREDIT, RS. 2,0 0,000/- FOR DISALLOWANCE OF EXPENSES BEING SURRENDERED AND OF RS. 9215/- (OUT O F RS. 21215/-) FOR TELEPHONE EXPENSES. IN RESPECT OF ADDITION MADE U/S 40(A)(IA) DISALLOWANCE OF RS. 1,95,58,366/- HAS BEEN DELETED WHEREAS FOR THE BALA NCE AMOUNT OF RS. 1,25,33,372/-, THE CREDIT HAS BEEN ALLOWED FOR SUCC EEDING ASSTT. YEAR I.E. 2006-07. ACCORDINGLY A.O. HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). REPLY OF THE ASSESSEE STATING THAT THERE HAS BEEN NO ELEMENT OF CONSCIOUS CONCEALMENT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME ON A NY OF THE ADDITIONS SUSTAINED BY CIT(A) HAS NOT BEEN ACCEPTED BY THE A.O. WHO HAS HE LD THAT THE ASSESSEE INTENTIONALLY DID NOT PAY ON TIME THE TAX DEDUCTED AT SOURCE, THE CREDITOR VIZ. SHRI JANG BAHADUR SINGH IS NOT GENUINE AND THE ASSESSEE HAS INTRODUCED HIS INCOME EARNED OUT OF UNDISCLOSED SOURCES. SIMILARLY, THE S URRENDER OF RS. 2,00,000/- HAS BEEN MADE AFTER A LOT OF DISCUSSION AND PROVES THAT THE ASSESSEE INTENDED TO CONCEAL FACTS REGARDING REPAIR AND MAINTENANCE AND OTHER HE ADS BY CLAIMING EXTRA EXPENSES WHICH WERE NOT ACTUALLY INCURRED BY IT. A.O. HAS LE VIED PENALTY OF RS. 47,73,627/- ITA NO. 192/AGRA/2012 3 WITHOUT MENTIONING THE SCALE OF PENALTY WITH REFERE NCE TO TAX SOUGHT TO BE EVADED, AS THE SAME IS IMPOSABLE @ 100% TO 300% OF THE EVAS ION AMOUNT. 3. DURING THE COURSE OF APPEAL PROCEEDINGS, THE ASS ESSEE HAS MADE FOLLOWING SUBMISSIONS : AS REGARDS THE DISALLOWANCE U/S 40(A)(IA) IT IS SU BMITTED :- THE PROVISION OF SECTION 40(A)(IA) HAVE BEEN INTRODUCED FOR THE FIRST TIME IN A/Y 2005-06. THE ASSESSEE FIRM DID DEDUCT TAX AT SOURCE FROM PAYMENT MADE TO THE SUB CONTRACTOR BUT IN RESPECT O F CERTAIN PAYMENTS, TAX WAS DEDUCTED AND PAID BELATEDLY. THES E PARTICULARS WERE DULY DISCLOSED BY THE ASSSESSEE FIRM. ON MOST OF THE ITEM/PAYMENT TDS WAS MADE AND DEPOSITED ON TIME AND LARGE AMOUNT OF DISALLOWANCE IN THIS MATTER HAS BEEN DELETED IN APPEAL. THE BALANCE OF THE DISALLOWANCE HAS BEEN ALLOWED IN THE FOLLOWI NG A/Y 2006-07. MERE MAKING A CLAIM NOT SUSTAINABLE IN LAW BY ITSEL F DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS 15 ITJ 175 (CG). THERE WAS NO PROCEEDINGS ARE QUASI CRIMINAL PROCEEDINGS & FOR VE NAL BREACH PENALTY IS NOT LEVIABLE. PENALTY IS ALSO NOT LEVIAB LE BECAUSE THE LAW PRESCRIBES FOR PENALTY. THERE WAS NOT CONTUMACIOUS ACT OR DISHONEST INTENSION ON THE PART OF THE ASSESSEE. PENALTY U/S 271(1)(C) IS NOT ATTRACTED IN RESPECT OF PART OF DISALLOWANCE U/S 40 (A)(IA) WHICH IS OTHERWISE ALLOWED IN THE FOLLOWING ASSESSMENT YEAR 2006-07. THERE IS NO ELEMENT OF CONSCIOUS CONCEALMENT. AS REGARDS ADDITION OF RS. 3 LACS: IN RESPECT OF CASH CREDIT IN THE NAME OF JUNG BAHADUR SINGH BHADORIA FOLLOWING EXPLANATIO N AND PROOF WAS FURNISHED BEFORE THE A.O. VIDE LETTERS DATED 04.05. 2009. SHRI JUNG BAHADUR SINGH BHADORIA IS A RETIRED PERSO N OF U.P. POLICE AND HAS ALSO GOT AGRICULTURAL LAND AND GOT HIS RETI REMENT BENEFITS AND OLD LIFE LONG SAVINGS. HE HAS PAID THE AMOUNT BY A/ C PAYEE CHEQUE/DRAFT. THE ASSESSEE, DURING THE STAGE OF ASS ESSMENT, HAS PRIMARILY DISCHARGED THE ONUS CAST UPON HIM. ON THE OTHER HAND THERE IS NO MATERIAL WHICH IS AGAINST ADVERSE TO THE ASSE SSEE AND CONTRADICTING THE ABOVE FACT AND ONUS IS NOT SHIFTE D BACK TO THE ITA NO. 192/AGRA/2012 4 ASSESSEE. THE ADDITION OF RS. 3 LACS MADE U/S 68 IN RESPECT OF JUNG BAHADUR SINGH BHADORIA IS CHALLENGED IN APPEAL ON T HE GROUND OF ABOVE EVIDENCE AND IN SUPPORT OF THE CONTENTION THA T THE SAID JUNG BAHADUR SINGH BHADORIA HAD GOT AGRICULTURAL LAND AS WELL. CONFIRMATION LETTER, PROOF OF HIS IDENTITY, CREDITW ORTHINESS I.E. OWNING OF AGRICULTURAL LAND AND GENUINENESS OF TRANSACTION WERE ALSO FILED BEFORE THE A.O. COPY OF THE ABOVE PAPER IS AGAIN EN CLOSED (AS PER ANNEXURE-A) THE ARGUMENT THAT WHEN THE ADDITIONS HAVE BEEN UPHE LD, THE PENALTY SHOULD AUTOMATICALLY BE UPHELD IS NOT THE POSITION IN LAW AS THE PENALTY PROCEEDINGS ARE INDEPENDENT. THUS IN RESPEC T OF ADDITION OF RS. 3 LACS ON ACCOUNT OF CASH CREDIT AS RETAINED IN JUNG BAHADUR SINGH BHADORIA PENALTY IS NOT EXIGIBLE. AS REGARDS THE ADDITION OF RS. 2 LACS OUT OF REPAIR & MAINTENANCE, THE ASSESSEE HAS VOLUNTARILY AT THE INSISTENCE OF THE A .O. AGREED & SURRENDERED AN AMOUNT OF RS. 2 LACS TO BUY PEACE & CUT SHORT VEXED LITIGATION & PENALTY WAS NOT LEVIABLE FURTHER EXAMI NATION DONE BY THE A.O. OF REPAIR & MAINTENANCE EXPENDITURE. THUS, THE A.O. HAS NOT LAID HIS FINGERS ON ANY MISSING VOUCHER & NOT SPOTTED AN Y FAKE OR FRAUDULENT VOUCHER. IN SUCH A CIRCUMSTANCES THERE I S NOT CASE FOR PENALTY U/S 271(1)(C). IT IS ALSO SUBMITTED THAT IN A CASE CONTRACTOR EXEC UTING WORKS IN FAR FLUNG INTERIOR & RURAL AREAS IT I S NOT POSSIBLE TO MAINTAIN VOUCHER FOR EACH & EVERY ITEM OF REPAIRS & MAINTENANCE OF MACHI NE ETC. THE ASSESSEE FIRM HAS VOLUNTARILY AT INSTANCE & INSISTE NCE OF THE A.O. AGREED AND SURRENDERED AN AMOUNT OF RS. 2 LACS TO B UY PEACE & CUT SHORT VEXED LITIGATION. THEREAFTER THERE WAS NO FUR THER EXAMINATION OF REPAIRS & MAINTENANCE EXPENDITURE. THE A.O. HAS NOT LED HIS FINGERS ON ANY MISSING VOUCHER & NOT SPOTTED ANY FAKE OR FR AUDULENT VOUCHER. IN SUCH A CIRCUMSTANCES, THERE IS NO CASE FOR PENAL TY U/S 271(1)(C). 3.1 THE LD. CIT(A) CONSIDERING THE EXPLANATION OF T HE ASSESSEE AND THE MATERIAL ON RECORD, CANCELLED THE PENALTY AND ALLOWED THE AP PEAL OF THE ASSESSEE. THE ITA NO. 192/AGRA/2012 5 FINDINGS OF THE LD. CIT(A) IN PARAS 4 TO 5 OF THE A PPELLATE ORDER ARE REPRODUCED AS UNDER : 4. APPELLANTS SUBMISSIONS HAVE BEEN CONSIDERED CA REFULLY ALONGWITH PENALTY, ASSESSMENT AND APPEAL ORDERS AND ARE FOUND ACCEPTABLE. IN RESPECT OF ADDITION MADE U/S 40(A)(I A), PART CREDIT HAS BEEN ALLOWED FOR THE A/Y 2006-07, SINCE TDS IN EACH CASE HAS BEEN DEDUCTED DURING THE MONTH OF FEBRUARY, 2005, BUT DE POSITED IN THE GOVT. ACCOUNT IN MAY, 2005, WHEREAS OTHER PORTION H AS BEEN DELETED. REVISED RETURN TO THIS EXTENT HAS ALSO BEEN SUBMITT ED FOR A/Y 2006-07 BY THE APPELLANT. THE APPELLANT HAS NEITHER CONCEAL ED THE PARTICULARS NOR FURNISHED ANY INACCURATE PARTICULARS AS PER HIS RETURN, SINCE ALL THE DETAILS ARE AVAILABLE IN THE RETURN ITSELF. HON BLE SUPREME COURT IN CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA (1972) 83 ITR 26(SC) HAS HELD THAT MERELY BECAUSE TAXING PROVISIONS PROVIDE FOR A POWER TO IMPOSE PENALTY THAT IN ITSELF DOES NOT ENTITLE THE AUTHORITIES TO IMPOSE A PENALTY FOR EVERY BREACH HOWSOEVER VENIAL OR TECH NICAL IT MAY BE. IN ORDER TO IMPOSE PENALTY, THE A.O. MUST SEE THE COND UCT AND DELIBERATE INTENTION ON THE PART OF THE APPELLANT IN CONCEALIN G HIS TRUE INCOME. SIMILAR IS THE POSITION WITH RESPECT TO ADDITION SU STAINED BY CIT(A) FOR UNEXPLAINED CASH CREDIT AND SOLELY ON THE BASIS OF WHICH A.O. HAS IMPOSED THE PENALTY, AS THE EXPLANATION GIVEN BY HE APPELLANT HAS NOT BEEN FOUND FALSE. IN RESPECT OF SURRENDERED AMOUNT OF RS. 2 LACS OF BUSINESS EXPENSES AND OF TELEPHONE EXPENSE, A.O. HA S NOT DOUBTED ANY VOUCHER TO PROVE THAT HE APPELLANT HAS CLAIMED FRAU DULENT OR BOGUS EXPENSES. HONBLE APEX COURT HAS ALSO HELD IN CASE OF SIR SHADI LAL SUGAR & GENERAL MILLS VS. CIT, 168 ITR 705 THAT MER E SURRENDER WITHOUT FURTHER DETECTION OF CONCEALMENT DOES NOT A TTRACT PENALTY U/S. 271(1)(C). 4.1THE EXPRESSIONS HAS CONCEALED THE PARTICULARS O F INCOME AND HAS FURNISHED INACCURATE PARTICULAR OF INCOME HAV E NOT BEEN DEFINED EITHER IN SECTION 271(1)(C)OR ELSEWHERE IN THE ACT. THESE TWO CIRCUMSTANCES ARE NOT IDENTICAL IN DETAILS ALTHOUGH THEY MAY LEAVE THE SAME EFFECT NAMELY KEEPING OFF CERTAIN PORTION OF I NCOME. THE FORMER IS DIRECT AND THE LATTER MAY BE INDIRECT IN ITS EXE CUTION. THE WORD CONCEAL IS DERIVED FROM THE LATIN WORD CONCOLARE WHICH IMPLIES TO HIDE. WEBSTER NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEPT FROM SIGHT; TO PREVENT THE DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF ITA NO. 192/AGRA/2012 6 CONCEALMENT IS THUS THE DIRECT ATTEMPT TO HIDE AN I TEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF INCOME TAX AU THORITIES. EXPLANATION TO SECTION 271(1)(C) STIPULATES THAT IN THE CASE OF DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME , THE BURDEN OF PROOF IS ON THE TAX PAYER TO SHOW THAT IT HAS NOT C ONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULAR OF INCOME. IT HAS BEEN CLARIFIED N THE CASE OF MUSADDI LAL RAMBHA ROSE 165 ITR PAGE 14 (SC) THAT TO ESCAPE PENALTY, DIFFERENCE IN RETURNED INCOME AND ASSESSED INCOMER SHOULD NOT ARISE DUE TO ANY GR OSS OR WILLFUL NEGLIGENCE OR ON ACCOUNT OF FRAUD. AS LONG AS ASSES SEE GIVES AN EXPLANATION AND GIVES ALL DOCUMENTS WITHOUT WITHHOL DING ANY INFORMATION, THE ASSESSEES EXPLANATION, UNLESS FAL SE, WILL DESERVE ACCEPTANCE FOR NON LEVY OF PENALTY WHETHER OTHERWIS E ACCEPTABLE FOR ASSESSMENT OR NOT. IT IS NOT THAT EVERY ADDITION WA RRANTS PENALTY. AN INCOME MAY BE INFERRED FROM CIRCUMSTANCES, SO AS TO JUSTIFY THE ADDITION BUT WHERE THERE IS NO DECISIVE EVIDENCE TH AT THE INFERRED INCOME WAS ACTUALLY RECEIVED BY THE ASSESSEE, PENAL TY CANNOT BE JUSTIFIED. IT WAS SO HELD IN CIT VS. TRADERS & TRAD ERS, 242 ITR 367 (MAD.) NOTWITHSTANDING THAT THE EXPLANATION TO SECT ION 271(1)(C), WHICH DEEMS CONCEALMENT. THIS DECISION HIGHLIGHTS T HE FACT THAT WHERE THE ADDITIONAL INCOME IS CLEARLY ONE, WHICH IS BASE D ON EVIDENCE OF CONCEALMENT AS IN CASE OF PROVED UNACCOUNTED EXPEND ITURE OR OUTLAY ON INVESTMENT OR WHERE THE AMOUNT ADDED IS CAPITALI ZED BY THE ASSESSEE, AS IN CIRCUMSTANCES COVERED UNDER EXPLANA TION 2 TO SECTION 271(1)(C), PENALTY SHOULD BE EXIGIBLE, BUT NOT IN C ASES WHERE INCOME IS MERELY INFERRED WITHOUT ANY EVIDENCE OF ENJOYMENT O F SUCH INCOME BY THE TAX PAYER. HOWEVER, A READING OF SECTION 271(1)(C) OF THE INCO ME TAX ACT, 1961 AND THE EXPLANATION THERETO MANIFESTLY MAKES IT CLE AR THAT EVERY ADDITION OF INCOME BY THE ASSESSING OFFICER WILL NO T AUTOMATICALLY ATTRACT LEVY OF PENALTY. THE ORDER IMPOSING PENALTY IS QUASI-CRIMINAL IN NATURE AND THE BURDEN LIES ON THE AO TO ESTABLIS H THAT ASSESSEE HAD CONCEALED THE INCOME. 4.2IN VIEW OF FACTS AND AFTER PERUSAL OF RECORDS, T HE APPELLANT IS NOT HELD LIABLE FOR CONCEALMENT OF PARTICULARS OF HIS I NCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. A CCORDINGLY, PENALTY IMPOSED U/S 271(1)(C) SOLELY ON THE BASIS O F PART CONFIRMATIONS OF ADDITIONS MADE BY THE A.O. WITHOUT PROVING ANY DELIBERATE CONCEALMENT IS, HEREBY, CANCELLED. 5.IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO. 192/AGRA/2012 7 4. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE ASSESSEE DEDUCTED THE TAX BUT THE SAME HAVE NOT BEEN DEPOSIT ED IN TIME AS PRESCRIBED UNDER THE ACT, THEREFORE, THE ADDITION WAS MADE U/S. 40(A )(IA) OF THE IT ACT AND THE ADDITION IS SUSTAINED BY THE LD. CIT(A). THEREFORE, IT WAS A FIT CASE FOR LEVY OF PENALTY. THE LD. CIT(A) HAS FAILED TO CONSIDER THE FACTS OF THE CASE THAT THE AMOUNT OF TDS WAS NOT DEPOSITED AS PER LAW. THE LAW ON THE DATE OF OFFENCE SHOULD BE CONSIDERED AND NOT ON LATER DECISIONS. THE AO ON TH E PENALTY STAGE FOUND THAT THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF CREDITORS OWNERSHIP OF LAND WAS UNTRUE. IT IS, THEREFORE, A CLEAR CASE OF INTENTIONAL CONCEALM ENT OF INCOME, FOR WHICH THE PENALTY WAS RIGHTLY IMPOSED BY THE AO. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE T DS WAS TO BE DEDUCTED IN THE MONTH OF FEBRUARY AND MARCH 2005. IT WAS MERELY THE AMOUNT DEPOSITED WITH DELAY FOR THESE TWO MONTHS. THE LD. CIT(A) CONFIRME D THE ADDITION IN RESPECT OF THE AMOUNT OF TDS FOR FEBRUARY, 2005, BUT DELETED T HE ADDITION FOR THE AMOUNT OF TDS FOR THE MONTH OF MARCH, 2005. THE ASSESSEE DISC LOSED ALL THE PARTICULARS BEFORE THE AO. MERE MAKING A CLAIM IS NOT SUSTAINAB LE IN LAW BY ITSELF DOES NOT AMOUNT OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME. WITH REGARD TO THE ITA NO. 192/AGRA/2012 8 ADDITION OF CASH CREDIT IN THE NAME OF JANG BAHADUR SINGH BHADORIA, THE ASSESSEE FILED HIS CONFIRMATION LETTER, PROOF OF IDENTITY AN D EVIDENCE OF CREDITWORTHINESS IN THE FORM OF LAND HOLDING, WHICH WERE FILED BEFORE T HE AO, BUT THE CASH CREDIT WAS NOT HELD TO BE BOGUS OR FALSE. WITH REGARD TO SURRE NDER OF RS.2,00,000/-, THE ASSESSEE SURRENDERED THE AMOUNT IN RESPECT OF MISSI NG VOUCHERS WHICH THE ASSESSEE FAILED TO PRODUCE BEFORE THE AO AT ASSESSMENT STAGE AND ADHOC ADDITIONS HAVE BEEN MADE IN RESPECT OF TELEPHONE EXPENSES, THEREFORE, I T IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING INACCURATE PARTICULARS OF INCOME. APART FROM THE ABOVE SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE AO IN THE ASSESSMENT ORDER WITH REGARD TO THE ABOVE ADDITIONS , WHICH HAVE BEEN CONSIDERED FOR THE PURPOSE OF LEVY OF PENALTY HAS MENTIONED TH AT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME INVITING THE P ENALTY AND AS REGARDS TELEPHONE EXPENSES, NO SUCH FACTS HAVE BEEN NOTED. HOWEVER, I N THE PENALTY ORDER, THE AO HAS DIFFERENTLY NOTED THAT HE WAS SATISFIED FOR LEV Y OF PENALTY BECAUSE THE ASSESSEE HAS INTENTIONALLY CONCEALED THE PARTICULARS OF INCO ME WITH A VIEW TO AVOID THE TAX. HE HAS SUBMITTED THAT ON THIS SCORE ITSELF THE PENA LTY WAS LIABLE TO BE CANCELLED AND RELIED UPON THE ORDER OF THE ITAT, AGRA BENCH IN TH E CASE OF ADDITIONAL CIT, CIRCLE -1, GWALIOR VS. SHRI RAMENDRA SINGH KUSHWAHA IN ITA NO. 77/AGRA/2009 VIDE ORDER DATED 29.10.2010, IN WHICH THE TRIBUNAL HELD AS UNDER IN PARA 13 TO 21 : 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ITA NO. 192/AGRA/2012 9 ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED, IN THE INSTANT CASE, THE A.O. HAS LEVIED THE PENALTY UNDER SECTION 271(1)(C) ON THE ASSESSEE IN RESPECT OF THE FOLLOWING @ 100% ON THE TAX SOUGHT T O BE EVADED ON THE FOLLOWING INCOME:- A) DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF RS.73,38,805/- B) ADDITION ON ACCOUNT OF WORK IN PROGRESS OF RS.4, 11,615/- C) ADDITION UNDER SECTION 68 OF RS.50,000/- EACH ON LOAN FROM SHRI RAVI VERMA & SHRI BALVIR SINGH. WHILE LEVYING THE PENALTY, THE A.O. OBSERVED AS UND ER :- IN VIEW OF ABOVE DISCUSSION, I AM SATISFIED THAT A SSESSEE HAS CONCEALED INCOME AND HAS FURNISHED INACCURATE PARTI CULARS OF HIS INCOME IN RESPECT OF ABOVE MENTIONED AMOUNTS OF RS. 73,38,805 + 4,11,615 + 1,00,000 AND IS LIABLE FOR LEVY OF PENAL TY U/S 271(1)(C) OF THE I.T. ACT, 1961. 14. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE PENALTY IMPOSED IN RESPECT OF ADDITION MADE ON ACCOUNT OF THE DISALLOWANCE UNDER SECTION 40(A)(IA) AND THE AD DITION MADE ON ACCOUNT OF WORK IN PROGRESS BUT SUSTAINED THE PENAL TY IN RESPECT OF ADDITION MADE UNDER SECTION 68 OF THE ACT AGAINST T HE REDUCTION OF PENALTY. THE REVENUE HAS COME IN APPEAL BUT THE AS SESSEE HAS NOT FILED ANY APPEAL IN RESPECT OF SUSTENANCE OF THE PE NALTY UNDER SECTION 271(1)(C) FOR THE ADDITION OF RS.1,00,000/-. THE R ELEVANT PROVISIONS OF SECTION 271(1)(C) ARE LAID DOWN AS UNDER :- 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDI NGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON - (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - ITA NO. 192/AGRA/2012 10 (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLANAT ION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE P URPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCO ME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 15. FROM THE PERUSAL OF SECTION 271(1)(C), IT IS NE CESSARY THAT THE SATISFACTION SHOULD HAVE BEEN ARRIVED AT BY THE A.O . OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER DURING T HE COURSE OF PROCEEDINGS UNDER THE INCOME-TAX ACT THAT THE ASSES SEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURA TE PARTICULAR OF SUCH INCOME. THE PENALTY UNDER THIS SECTION CAN BE LEVIED ON TWO CHARGES I.E. FOR CONCEALMENT OF PARTICULARS OF INCO ME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IF THE PENALT Y PROCEEDINGS ARE INITIATED ON THE CHARGE OF CONCEALMENT OF PARTICULA RS OF INCOME THEN PENALTY CANNOT BE LEVIED FOR CHARGE OF FURNISHING O F INACCURATE PARTICULARS OF INCOME AND VISE VERSA. THIS WAS SO HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. LAKHDIR L ALJI, 85 ITR 77 (GUJ.). IN VIEW OF PROVISIONS OF SECTION 271(1)(C) , WE ARE OF THE VIEW THAT THERE MUST BE CLEAR FINDING ABOUT THE CHARGE O F THE PENALTY. IT IS INCUMBENT ON THE A.O. OR THE OFFICER IMPOSING THE P ENALTY TO STATE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMEN T OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH A FINDING, AN ORDER PASSED BY THE C ONCERNED AUTHORITY IMPOSING PENALTY UNDER SECTION 271(1)(C) WILL BE VO ID. THIS VIEW HAS BEEN TAKEN IN THE FOLLOWING CASE BY THE HIGH COURTS :- 1) CIT VS. MANU ENGINEERING WORKS, 122 ITR 306 (GUJ ) 2) NEW SORATHIA ENGINEERING CO. VS. CIT, 282 ITR 64 2 (GUJ) 3) PADMA RAM BHARALI VS. CIT, 110 ITR 54 (GAUHATI) 16. IN THIS CASE, WE NOTED FROM THE PENALTY ORDER P LACED BEFORE US THAT THE A.O. HAS NOT BROUGHT OUT ANY SPECIFIC CHAR GE FOR WHICH THE ITA NO. 192/AGRA/2012 11 PENALTY HAS BEEN IMPOSED ON THE ASSESSEE UNDER SECT ION 271(1)(C). HE HAS SIMPLY MENTIONED THAT I AM SATISFIED THAT THE A SSESSEE HAS CONCEALED THE INCOME AND HAS FURNISHED INACCURATE P ARTICULARS OF INCOME. THIS FACT IS APPARENT FROM THE FINDING OF THE A.O. GIVEN IN THE LAST PARAGRAPH OF THE ORDER REPRODUCED HEREINABOVE. THE WORD CONCEAL AS PER WEBSTER DICTIONARY MEANS TO HIDE, WITH DRAW OR REMOVE FROM OBSERVATION, COVER OR KEEP AWAY FROM SI GHT, TO KEEP SECRET, TO AVOID DISCLOSING OR DIVULGING. THAT MEA NS NON-DISCLOSURE OF PARTICULARS OF INCOME, ON THE OTHER HAND, WHERE THE PARTICULARS ARE DISCLOSED BUT SUCH DISCLOSURE IS NOT CORRECT AND TR UE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULAR S OF INCOME. FOR EXAMPLE, IN A CASE OF A BUSINESSMAN EVEN THE PARTIC ULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS IT WOULD AMOUNT TO C ONCEALMENT OF PARTICULARS OF INCOME WHILE THE SALE IS SHOWN BUT A DDED A LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS PERTINENT TO NOTE THAT THRUST OF LEV Y IS UPON THE PARTICULARS OF INCOME WHICH ARE EITHER CONCEALED OR FURNISHED INACCURATELY BY THE ASSESSEE. THE EXPRESSION PARTI CULARS REFERS TO THE FACTS, DETAILS, SPECIFIC OR THE INFORMATION ABOUT S OMEONE OR SOMETHING. THUS, THE DETAILS OR INFORMATION ABOUT THE INCOME W OULD DEAL WITH FACTUAL DETAILS OF THE INCOME AND CANNOT BE UNDERST OOD TO AREAS WHICH ARE SUBJECTIVE SUCH AS STATUS OF TAXABILITY OF AN I NCOME, ADMISSIBILITY OF DEDUCTION AND INTERPRETATION OF LAW. THE HONBL E SUPREME COURT IN THE DECISION OF CIT VS. RELIANCE PETROPRODUCTS P VT. LTD., 322 ITR 158 (SC) HAS LAID DOWN THAT AS PER LAW LEXICON THE MEANING OF THE WORD PARTICULARS IS DETAIL OR DETAILS (IN PLURAL SENSE), THE DETAILS OF A CLAIM OR SUPPORTING ITEMS OF AN ACCOUNT. THUS, I T WAS HELD THAT THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. IN THE CASE OF THE ASSESSEE, IT IS A FACT THAT NO INFORMATION GIVEN IN THE RETURN W AS FOUND TO BE INCORRECT OR INACCURATE. EVEN NO STATEMENT MADE OR DETAILS SUPPLIED WERE FOUND TO BE FACTUALLY INCORRECT HENCE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT, APPARENTLY THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THIS CASE CAN ALSO NOT BE REGARDED TO BE CONCEALMENT OF PARTICULARS OF INCOME . THE ASSESSEE HAS DULY DISCLOSED THE PARTICULARS. THE ASSESSEE H AS GIVEN ALL THE DETAILS SO FAR THE CLAIM MADE BY HIM. MERELY THE C LAIM MADE BY THE ASSESSEE WAS NOT SUSTAINABLE IN LAW DOES NOT MEAN T HAT THE ASSESSEE HAS CONCEALED THE PARTICULAR OF INCOME. OUR AFORES AID VIEW IS DULY SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ITA NO. 192/AGRA/2012 12 CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IN WHICH THE HONBLE SUPREME COURT HAS HELD AS UNDER :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2711C WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RE TURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH P ARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCU RATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN C ANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 17. WE MAY POINT OUT AT THIS STAGE THAT THE EXAPLAN ATION-1 TO SECTION 271(1)(C) IS APPLICABLE ONLY FOR CONCEALMEN T OF PARTICULARS OF INCOME. IT CANNOT BE APPLIED WHERE CHARGE AGAINST THE ASSESSEE IS FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WH ERE THE CHARGE AGAINST THE ASSESSEE IS CONCEALMENT OF PARTICULARS OF INCOME, THE ONUS IS ON THE A.O. TO ESTABLISH EITHER THAT THE ASSESSE E HAS NOT DISCLOSED THE PARTICULARS OF INCOME UNDER THE MAIN PROVISIONS OR THE CASE OF THE ASSESSEE FALLS WITHIN THE EXPLANATION GIVEN UNDER S ECTION 271(1)(C). EXPLANATION 1 TO SECTION 271(1)(C) STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASS ESSEE SHALL BE ITA NO. 192/AGRA/2012 13 DEEMED TO BE THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS REBUT TABLE ONE. IT ONLY SHIFTS THE ONUS ON THE ASSESSEE . EXPLANATION 1 REFERS TO THE TWO SITUATIONS IN WHICH PRESUMPTION O F THE CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COM PUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN E XPLANATION, WHICH IS FOUND BY THE AO OR THE COMMISSIONER TO BE FALSE. T HE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY F ACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATI ON, WHICH THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE ONE AND THAT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESUMPTION AVAILABLE UNDER EXPLANATION TO SECTION 271(1), CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FALLS UNDE R EITHER OF THE CLAUSES (A) OR (B). THIS EXPLANATION, THEREFORE, D OES NOT AND CANNOT APPLY TO THE CASE WHERE ADDITION/DISALLOWANCE HAS B EEN MADE BY REJECTION OF LEGAL CLAIM MADE BY THE A.O. BONAFIDE OF LEGAL CLAIM IS NOT THE SUBJECT MATTER OF THE EXAPLANATION-1. THER EFORE, HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) HAS HELD THAT MERE REJECTION OF LEGAL CLAIM WOULD NOT INVITE PENALTY. THIS WOULD ALSO APPLY WHERE THE CHARGE AGAINST THE ASSES SEE IS CONCEALMENT OF PARTICULARS OF INCOME. IF WE LOOK A T THE PROVISIONS OF SECTION 271(1)(C) AND EXPLANATION-1 FROM A DIFFEREN T ANGLE, THE A.O. IS BOUND TO BRING ON RECORD SPECIFIC CHARGE AGAINST THE ASSESSEE WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE CASE OF CONCEALMENT OF PARTICULARS OF INCOME, INITIAL ONUS WILL GET SHIFTED ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF INCOME DUE TO THE APPLICABILITY OF EXPLANATION I. WHILE, IN THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE ONUS REMAINS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF INCOME. IF THE A.O. FAILED TO BRING OUT OR LEVY SPECIFIC CHARGE ON THE ASSESSEE, THE PENALTY IMPOSED CANNOT BE SUSTAINED. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW SORATHIA ENGI NEERING CO. LTD., 282 ITR 642 IN WHICH IT WAS HELD AS UNDER :- IT IS INCUMBENT UPON THE ASSESSING OFFICER TO STA TE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICU LARS OF INCOME BY ITA NO. 192/AGRA/2012 14 THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASSESSEE. --------------------------------------------------- ------------------------ --------------------------------------------------- ------------------------ HELD, THAT THE PENALTY ORDER AND THE ORDER OF THE C OMMISSIONER (APPEALS) SHOWED THAT NO CLEAR CUT FINDING HAD BEEN REACHED. THE TRIBUNAL HAD FAILED TO APPRECIATE THIS LEGAL. ISSUE . THE RATIO IN CIT V. MANU ENGINEERING WORKS 122 ITR 306(GUJ) WAS APPLICA BLE AND THE ORDER OF PENALTY COULD NOT BE UPHELD BY THE TRIBUNA L. THE ORDER WAS INVALID. 18. SIMILAR VIEW HAS BEEN TAKEN BY US IN THE FOLLOW ING JUDGMENTS :- ITO VS. SMT. LALITA IN ITA NO.433/AGR/2009 FOR A.Y. 1998-99 KM. RUCHI RATHORE VS. ITO IN ITA NO.97/AGR/2007 FOR A.Y. 1998-99 SMT. RAJ RANI MITTAL VS. ITO IN ITA NO.2275/DEL/200 9 OF ITAT DELHI BENCH A ACIT VS. DR. S.D. MAURYA IN ITA NO.619/AGR/2008 FOR A.Y. 2003-04 19. EVEN ON THIS BASIS, WE ARE OF THE VIEW THAT THE RE IS NO MERIT IN THE APPEAL TAKEN BY THE REVENUE. 20. WE HAVE ALSO GONE THROUGH VARIOUS DECISIONS REL IED ON BY THE LD. A.R. BEFORE US. WE NOTED THAT THESE DECISIONS ARE IN FAVOUR OF THE ASSESSEE. THE MUMBAI BENCH OF ITAT IN THE CASE OF BAPUSAHEB NANASAHEB DHUMAL VS. ACIT IN ITA NO.6268/MUM/2009 A ND JAIPUR BENCH OF ITAT IN THE CASE OF JAIPUR VIDYUT VITRAN N IGAM LIMITED VS. DCIT, 123 TTJ (JP.) 888 HAS TAKEN THE VIEW THAT SEC TION 40(A)(IA) IS NOT APPLICABLE WHERE THE EXPENDITURE IS PAID. IT I S APPLICABLE ONLY IN CASES WHERE THE PAYMENTS ARE DUE AND OUTSTANDING. THE ASSESSEE IN THE INSTANT CASE DEDUCTED THE WHOLE OF THE TDS ON 3 1.03.2005 AND DEPOSITED THE SAME BEFORE FILING OF THE RETURN. TH EREFORE, IN VIEW OF THESE DECISIONS THERE CAN BE A VIEW THAT DISALLOWAN CE UNDER SECTION 40(A)(IA) IS NOT SUSTAINABLE. THESE DECISIONS PROV E THAT THE CLAIM OF ITA NO. 192/AGRA/2012 15 THE ASSESSEE WAS BONAFIDE ONE. SIMILARLY, WE NOTED IN RESPECT OF WORK IN PROGRESS THAT THE ASSESSEE WAS ACCOUNTING THE RE CEIPTS ON THE BASIS OF THE TDS CERTIFICATES. THEREFORE, HE HAS ACCOUNT ED FOR WORKING IN PROGRESS DURING THE A.Y. 2006-07 ON THE BASIS OF TH E TDS CERTIFICATES. THIS, IN OUR OPINION, CANNOT BE REGARDED TO BE CONC EALMENT OF PARTICULARS OF INCOME AS ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE WAS DULY ACCEPTED BY THE REVENUE IN THE EARLIER YEA RS. IN VIEW OF THESE FACTS AND DECISIONS RELIED ON, WHICH WE PERUS ED, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE ORDE R OF THE CIT(A) REDUCING THE PENALTY UNDER SECTION 271(1)(C). WE, ACCORDINGLY, CONFIRM THE ORDER OF CIT(A). 21. IN THE RESULT, APPEAL FILED BY THE REVENUE STAN DS DISMISSED. 5.1 HE HAS SUBMITTED THAT SIMILAR DECISION HAS BEEN FOLLOWED BY ITAT, AGRA IN THE SUBSEQUENT ASSESSMENT YEAR IN THE CASE OF SAME ASSESSEE IN ITA NO. 302/AGRA/20012 FOR THE ASSESSMENT YEAR 2007-08 AND THE DEPARTMENTAL APPEAL HAS BEEN DISMISSED VIDE ORDER DATED 14.12.2012. COPIES OF THE ORDERS ARE PLACED ON RECORD. HE HAS SUBMITTED THAT BOTH THESE DECISIONS ARE APPLICABLE WITH REGARD TO THE CANCELLATION OF PENALTY IMPOSED ON THE ADDITIONS U/ S. 40(A)(IA) OF THE IT ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED UPON T HE FOLLOWING DECISIONS : (I). ORDER OF ITAT, DELHI BENCH IN THE CASE OF NEW HORIZON INDIA LTD. VS. DCIT, 50 SOT 53, IN WHICH IT WAS HELD PENALTY UNDER S. 271(1)(C) WAS NOT LEVIABLE WHERE E XPENDITURE WAS DISALLOWED UNDER S. 40(A)(IA) AS THE AUDIT REPO RT MENTIONED THE DISALLOWABLE AMOUNT AND ASSESSEE HAD INADVERTENTLY, NOT REDUCED THE SAID AMOUNT IN COMPUTATION OF INCOME; SINCE THE TAX WAS DEDUCTED AND PAID IN THE NEXT YEAR AND THE AO HAD REMARKED T HAT THE ITA NO. 192/AGRA/2012 16 EXPENDITURE WILL BE ALLOWED IN THE NEXT YEAR, ASSES SEE CANNOT BE HELD GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. (II). ORDER OF ITAT, HYDERABAD BENCH IN THE CASE O F ACIT VS. MEDVERSITY ONLINE LTD., 145 TTJ 398, IN WHICH IT WAS HELD HONEST DIFFERENCE OF OPINION BETWEEN THE ASSESSEE A ND THE REVENUE REGARDING THE APPLICABILITY OF THE PROVISIO NS OF S. 40(A)(IA) DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. (III). DECISION OF HONBLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD., 322 ITR 158, IN WHICH IT W AS HELD MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF IN TEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVE NUE, PENALTY UNDER S. 271(1)(C) IS NOT ATTRACTED; MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. (IV). DECISION OF GUJRAT HIGH COURT IN THE CASE OF CIT VS. BACKBONE ENTERPRISES, 344 ITR 450, IN WHICH IT WAS HELD WHERE THE ASSESSEE HAD MADE A CLAIM FOR DEDUCTION U NDER S. 80-IA UNDER BONA FIDE BELIEF, WHICH CAME TO BE RECT IFIED BY FILING A REVISED RETURN WITHDRAWING THE CLAIM, THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME TO W ARRANT LEVY OF PENALTY UNDER S. 271(1)(C). ITA NO. 192/AGRA/2012 17 (V). DECISION OF M.P. HIGH COURT IN THE CASE OF CI T VS. S.V. ELECTRICALS (P) LTD., 274 ITR 334, IN WHICH IT WAS HELD TRIBUNAL HAVING RIGHTLY UPHELD THE ORDER OF CIT(A) SETTING ASIDE THE PENALTY UNDER S. 271(1)(C) AS THE ASSESSE E HAD SURRENDERED ITS FULL INCOME AND THERE WAS NO QUESTION OF ANY CO NCEALMENT, APPEAL UNDER S. 260A THOUGH ADMITTED DOES NOT INVOLVE ANY QUESTION OF LAW, MUCH LESS SUBSTANTIAL QUESTION OF LAW, VIEW TAKEN B Y THE TRIBUNAL DOES NOT REQUIRE ANY INTERFERENCE; APPEAL DISMISSED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FI NDINGS OF THE LD. CIT(A) IN CANCELING THE PENALTY. IN RESPECT OF THE ADDITION M ADE U/S. 40(A)(IA), PART ADDITION HAS BEEN DELETED BY THE LD. CIT(A) IN ASSESSMENT YE AR UNDER APPEAL AND FURTHER RELIEF HAS BEEN ALLOWED IN SUBSEQUENT ASSESSMENT YE AR 2006-07, IN RESPECT OF WHICH, PENALTY HAS BEEN IMPOSED IN ASSESSMENT YEAR UNDER APPEAL. FOR THIS PART ADDITION, SINCE TDS IN EACH CASE HAS BEEN DEDUCTED DURING THE MONTH OF FEBRUARY, 2005, BUT DEPOSITED IN THE GOVERNMENT ACCOUNT IN MA Y, 2005, WHEREAS OTHER PORTION HAS BEEN DELETED. REVISED RETURN WAS ALSO F URNISHED IN ASSESSMENT YEAR 2006-07 BY THE ASSESSEE. THE ASSESSEE DECLARED ALL THE FACTS BEFORE THE AO AND HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FILED IN ACCURATE PARTICULARS OF INCOME. SINCE THE ASSESSEE DISCLOSED ALL THE FACTS BEFORE T HE AO, THEREFORE, MERE MAKING A CLAIM NOT SUSTAINABLE IN LAW, WOULD NOT AMOUNT TO F URNISHING OF INACCURATE PARTICULARS OF INCOME. FOR CASH CREDIT IN THE NAME OF SHRI JANG BAHADUR SINGH ITA NO. 192/AGRA/2012 18 BHADORIA, THE ASSESSEE FURNISHED ALL PRIMARY EVIDEN CES BEFORE THE AO TO PROVE THE IDENTITY OF THE CREDITORS AND GENUINENESS OF THE TR ANSACTION. IN RESPECT OF SURRENDER OF RS.2,00,000/-, THE ASSESSEE MADE A SURRENDER BEC AUSE THE ASSESSEE WAS NOT ABLE TO PRODUCE MISSING VOUCHERS BEFORE THE AO FOR EXAMI NATION. IN RESPECT OF TELEPHONE EXPENSES, IT WAS A ADHOC ADDITION, WHICH HAS BEEN REDUCED SUBSTANTIALLY BY THE LD. CIT(A). THEREFORE, ON SUCH FACTS, IT IS DIFFICULT TO BELIEVE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS ALSO SUBMITTED THAT IN THE ASSESSMENT ORDER ON ALL THE ABOVE ITEMS ON WHICH THE PENALTY HAS BEEN IMPOSED E XCEPT IN CASE OF DISALLOWANCE OUT OF TELEPHONE EXPENSES, THE AO HAS MENTIONED THA T HE WAS SATISFIED THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS. NO SUCH FINDING HAS BEEN GIVEN ON DISALLOWANCE OF TELEPHONE EXPENSES, BUT IN THE PENA LTY ORDER, THE AO LEVIED PENALTY ON DIFFERENT REASON THAT THE ASSESSEE INTEN TIONALLY CONCEALED THE PARTICULARS OF INCOME. THIS ISSUE HAS ALREADY BEEN ADDRESSED TO IN DETAIL BY THE ITAT, AGRA BENCH IN THE CASE OF ASSESSEE, SHRI RAMENDRA SINGH KUSHWAHA (SUPRA) AND OTHER DECISIONS CITED ABOVE ALSO FORTIFY THE FINDINGS OF LD. CIT(A) THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. CONSIDERING THE FACTS OF THE C ASE IN THE LIGHT OF THE FINDINGS OF LD. CIT(A) AND THE DECISIONS QUOTED ABOVE, WE DO NO T FIND THAT IT WAS A FIT CASE FOR LEVY OF PENALTY. THEREFORE, THE LD. CIT(A) CORRECTL Y EXERCISED HIS DISCRETION IN ITA NO. 192/AGRA/2012 19 CANCELING THE PENALTY. IN THE RESULT, WE DO NOT FIN D ANY MERIT IN THE DEPARTMENTAL APPEAL AND THE SAME IS, ACCORDINGLY, DISMISSED. 7. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE CO PY