Sanchay Vanijaya Rasayan, New Delhi V. ITO, New Delhi

ITA 1949/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3615 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 17-06-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 11-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Bonafide belief; Wrong claim; Corroborative evidences; Set aside
• Section: 271(1)(c)

Judgement Text

ITA NO. 1949/DEL/2009 A.Y. 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1949/DEL/2009 A.Y. : 2002-03 M/S SANCHAY VANIJAYA RASAYAN, VS. INCOME TAX OF FICER, WARD 7(3), 70-A, YOUJNA VIHAR, NEW DELHI NEW DELHI (PAN: AAACS1508E) [APPELLANT] (RESPONDENT) ASSESSEE BY : SHRI ANIL SHARMA, ADVOCATE DEPARTMENT BY : MRS. PRATIMA KAUSHIK, DR PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONERS OF INCOME TAX (APPEALS) DATED 12.2.20 09 PERTAINING TO ASSESSMENT YEAR 2002-03. 2. THE ISSUE RAISED READS AS UNDER:- THAT THE LD. C.I.T.(A) HAS ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING PENALTY U/S 271(1)(C) OF THE ACT AT RS. 3,24,926/- AGAINST THE PENALTY OF RS. 4,02,300/- LEVIED BY THE ASSESSING OFFICER INS TEAD CANCELLING THE PENALTY ALTOGETHER. 3. IN BRIEF THE FACTS ARE THAT THE APPELLANT COMPAN Y IS ENGAGED IN THE BUSINESS OF TRADING IN CHEMICALS AND IS AN AUTHORIZED DISTRI BUTOR OF NATIONAL FERTILIZER LTD. (NFL) AND PURCHASED ITS CHEMICAL WASTE BYE PRODUCT FROM UREA PLANTS AND SELL TO DIFFERENT PARTIES. DURING THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE HAS SHOWN IN THE P&L A/C, NET PURCHASE OF MATERIAL FOR RS. 8,53, 90,412/-. DURING THE ITA NO. 1949/DEL/2009 A.Y. 2002-03 2 ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBTA INED A COPY OF ACCOUNT OF THE ASSESSEE FROM M/S NFL ACCORDING TO WHICH THE TOTAL SALE TO THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS RS. 10,31,54,483/- . THUS, THE ASSESSEE HAD NOT DECLARED PURCHASE OF GOODS WORTH RS. 1,77,64,021/-. THE DISCREPANCY WAS POINTED OUT TO THE ASSESSEE WHO STATED THAT NFL HAD APPOINTED THE REGISTERED AUTHROISED DEALERS AND SALE WERE MADE THROUGH THEM ONLY; THE DEALERS WERE ALLOWED QUANTITATIVE REBATE AND NFL ALSO ALLOWED DI STANCE REBATE TO AUTHROISED DEALERS. THE COMPANY PURCHASED GOODS FROM NFL PLA NTS BY MAKING PAYMENT IN ADVANCE THROUGH DEMAND DRAFT; SOMETIMES OTHER SMALL PARTIES LIFTED THE GOODS DIRECTLY FROM NFL BY MENTIONING THE CODE NUMBER OF THE ASSESSEE AND BY MAKING PAYMENT THROUGH DEMAND DRAFT IN FAVOUR OF NFL. TH E ASSESSEE CLAIMED THAT IT HAD RECEIVED QUANTITATIVE REBATE OF RS. 12,19,907/ - FROM NFL FOR THE GOODS DIRECTLY LIFTED BY THE SMALL PARTIES BY USING THE A SESSEES CODE NUMBER. HOWEVER, THE ASSESSEE DID NOT FURNISH THE DETAILS OF SMALL P ARTIES WHO HAD LIFTED THE GOODS DIRECTLY BY USING CODE NUMBER OF THE ASSESSEE. AS THE ASSESSEE HAD NOT SUBMITTED EVIDENCE FOR ITS CLAIM, THE ASSESSING OFF ICER CONCLUDED THAT THE ASSESSEE HAD NOT DECLARED ALL THE PURCHASES IN ITS BOOKS OF ACCOUNTS; HE REJECTED THE BOOKS OF ACCOUNTS AND HELD THAT PURCHASE OF GO ODS WORTH RS. 1,77,64,021/- WAS PURCHASES FROM UNDISCLOSED INCOME AND ESTIMATED PROFITS OF RS. 5,15,516/- I.E. 2.90% OF THE SAID AMOUNT AS PROFIT EARNED ON UNDISCLOSED PURCHASE AND SALE. HE FURTHER HELD THAT FOR MAKING AN UNDISCLOSED PURC HASE OF GOODS WORTH RS. 1,77,64,021/-, THE ASSESSEE NEEDED AN INVESTMENT O F RS. 6,11,487/- AND, THEREFORE, ADDED RS. 6,11,487/- AS PEAK OF INVESTME NT ON UNRECORDED PURCHASES. 3.1 IN THE QUANTUM APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORDER NO. 33/07-08 DATED 19.3.2008 IN PARA 5.3 HELD THAT GROSS PROFIT RATE OF ITA NO. 1949/DEL/2009 A.Y. 2002-03 3 1.70% SHOULD BE APPLIED ON UNACCOUNTED TRANSACTIONS AND, ACCORDINGLY, ADDITION IN GP RATE WOULD WORK OUT AT RS. 2,98,679/- AND, HE NCE, CONFIRMED THE ADDITION IN GROSS PROFIT TO THE EXTENT OF RS. 2,98,679/- AS AGA INST ADDITION OF RS. 5,15,617/- MADE BY THE ASSESSING OFFICER . 4. THE MATTER TRAVELLED TO THE ITAT AND THE ITAT CO NFIRMED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HOLDING AS UNDER:- BEFORE US ALSO, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS REGARDING NAMES OF THE PARTIES WHO ARE ALLEGED TO HAVE MADE PURCHAS ES IN THE NAME OF THE ASSESSEE OR ANY PARTICULARS AND EVIDENCE. IN THE CI RCUMSTANCES, IN OUR OPINION, THE ASSESSEES CLAIM THAT THE PURCHASES WE RE MADE BY SMALL TRADERS, CANNOT BE ACCEPTED. IT WAS RIGHTLY REJECTED BY REVENUE AUTHORITIES PARTICULARLY IN VIEW OF THE FACT THAT NFL STATED TH AT THE ASSESSEE HAD MADE THE PURCHASES AND NO REBUTTAL THEREOF COULD BE MADE BY THE ASSESSEE EFFECTING THE PEAK ADDITION MADE BY THE ASSESSING O FFICER AND SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS PERFECTLY JUSTIFIED AND NO INTERFERENCE IS CALLED FOR IN THE ORDERS OF THE REVENUE AUTHORITIES BELOW. AS THE PURCHASES HAVE BEEN MADE, THEY MIGHT HAVE BEEN SOLD ALSO AS NO STO CK IS CLAIMED AND ASSESSEE WOULD HAVE MADE PROFIT THEREON. CONSEQUENT LY, THE PROFIT ESTIMATED THEREON WAS RIGHTLY ADDED TO THE INCOME O F THE ASSESSEE ON SUCH PURCHASES. 5. IN THE PENALTY PROCEEDINGS THE ASSESSEE CLAIMED THAT IT HAD PURCHASED GOODS FROM NFL BY MAKING PAYMENT IN ADVANCE THROUGH DD IN FAVOUR OF NFL ONLY. NO PAYMENT IS MADE IN CASH. SOMETIMES OTHER SMALL PARTIES WERE ALSO INTERESTED TO LIFT THE GOODS AT PRICE FIXED BY THE NFL, BY MAK ING PAYMENT THROUGH DD IN FAVOUR OF THE NFL. AS THERE ARE OTHER AUTHORIZED DEALER ALSO, THERE IS COMPETITION AND THE ASSESSEE HAD TO SELL THEM THE G OODS ON COST PRICE FIXED BY NFL, BUT WITH THE CONDITION THAT QUANTITATIVE REBAT E WOULD NOT BE GIVEN TO THEM. ITA NO. 1949/DEL/2009 A.Y. 2002-03 4 THE ASSESSEE CLAIMED THAT IT DID NOT INVEST ANY MON EY ON THIS TYPE OF PURCHASES BUT HAD EARNED QUANTITY REBATE. THE ASSESSEE FURTH ER CLAIMED THAT THE DETAILS OF PARTIES WHO HAD LIFTED GOODS DIRECTLY BY MENTIONING THE ASSESSEES CODE NUMBER ARE NOT INTIMATED TO THE ASSESSEE BY NFL. HENCE THE ASSESSEE WAS NOT IN A POSITION TO RECORD THOSE ENTRIES IN THEIR ACCOUNT. 6. THE ASSESSEE FURTHER RELIED UPON THE DECISIONS I N THE CASE OF M/S HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26 AND C.I.T. VS. GAKULDAS HARI VALLAUDHADAS (1958) 34 ITR 98 (BOM.). 7. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCE D BY THESE SUBMISSIONS. ASSESSING OFFICER HELD THAT THE ASSESSEE IS NOT ABL E TO GIVE THE PARTICULARS OF SMALL PARTIES WHO HAVE PURCHASED GOODS FROM ASSESSEES CO DE NUMBER. HE OBSERVED THAT IF ASSESSEE HAD GIVEN ITS CODE NUMBER TO OTHER SMALL PARTIES, ASSESSEE SHOULD HAVE KNOWN THEIR NAMES. AS ASSESSEE WAS NOT ABLE T O PROVE ITS CLAIM WITH SUPPORTING EVIDENCE. HE HELD THAT IT WAS CLEAR T HAT ALL THE PURCHASES WERE MADE BY THE ASSESSEE. HE FURTHER HELD AS ASSESSEE HAD NO T DISCLOSED ALL THE PURCHASES IN ITS BOOKS OF ACCOUNTS, IT WAS PRESUMED THAT ASSESS EE HAD PURCHASED GOODS WITH ITS INCOME WHICH HAS NOT BEEN DISCLOSED IN THE BOOK S OF ACCOUNTS. ACCORDINGLY, PENALTY OF RS. 4,02,300/- WAS LEVIED. 8. UPON ASSESSEES APPEAL AGAINST THE IMPOSITION OF PENALTY, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT SINC E THE ACCOUNTS AS PER ASSESSEES BOOK IS NOT RECONCILED WITH ACCOUNT AS P ER NFLS BOOK AND THE EXPLANATION OF THE ASSESSEE THAT THE DIFFERENCE IS DUE TO LIFTING OF GOODS DIRECTLY FROM NFL BY SMALL CUSTOMERS BY UTILIZING ITS CODE IS NOT SUBSTANTIATED, THE IMPOSITION OF PENALTY ON THE DIFFERENCE OF ADDITIO N ON ACCOUNT OF GROSS PROFIT ON ITA NO. 1949/DEL/2009 A.Y. 2002-03 5 SALE OF UNRECORDED PURCHASES AND THE PEAK OF INVEST MENT ON UNRECORDED INVESTMENT WAS CORRECT. HOWEVER, IN VIEW OF THE FAC T THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REDUCED THE ADDITION ON ACCOUN T OF GROSS PROFIT ON ALLEGED UNRECORDED PURCHASES, THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) GRANTED CONSEQUENT RELIEF AND CONFIRMED THE TOTAL PENALTY O F RS. 3,24,926/- IN THIS REGARD. 9. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPE AL BEFORE US. 10. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT PENA LTY U/S 271(1)(C) CANNOT BE LEVIED IN THIS CASE. HE SUBMITTED THAT PENALTY P ROCEEDINGS ARE SEPARATE PROCEEDINGS. HE CLAIMED THAT ASSESSING OFFICER HAD NOT MADE ANY ENQUIRY FROM THE NFL. HENCE THERE IS NO BASIS FOR LEVY OF PENALT Y. HE RELIED UPON THE FOLLOWING CASE LAWS:- I) C.I.T. VS. RELIANCE PRODUCTS PVT. LTD. (2010) 3 22 ITR 58 (SC). II) MADHUSHREE GUPTA VS. UOI 317 ITR 107 (DEL) III) C.I.T. VS BUDHEWATI COOPERATIVE SUGAR MILLS L TD. (2008) 6 DTR (P&H) 31. IV) ITO VS. FLORA EXPORTS (2010) 40 DTR (DEL) 70. V) C.I.T. VS. DEEPAK KUMAR 232 CTR 78 (P&H). VI) C.I.T. VS. ARETIC INVESTMENT (P) LTD. (2010) 39 DTR (DEL) 243. VII) PRADEEP AGENCIES JOINT VENTURE VS. ITO (2010) 39 DTR (DEL) (TRI) 202 VIII) MRS. MANINDER SIDHU VS. ACIT (2010) 39 DTR ( DEL) TRIO) 233. IX) METALLIZING EQUIPMENT CO. (P) LTD. VS. ACIT (2 010) 130 TTJ (JD.) 610. 11. LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND SUBMITTED THAT IT WAS A FIT CASE FOR LEVY OF PENALTY. SHE CLAIMED THAT AS SESSEE HAS NOT AT ALL SUBSTANTIATED THAT ITS NON-RECORDING OF PURCHASE WAS DUE TO CLAIM THAT OTHER PARTIES HAVE LIFTED THE QUANTITIES ON ITS ACCOUNT. SHE SUBMITTED THAT NEITHER IN THE APPELLATE PROCEEDINGS NOR IN THE PENALTY PROCEEDINGS, ASSESSE E HAS BEEN ABLE TO GIVE THE ITA NO. 1949/DEL/2009 A.Y. 2002-03 6 NAMES OF THE PARTIES WHO LIFTED THE GOODS BY UTILI ZING THE CODE OF THE ASSESSEE. HENCE SHE CLAIMED THAT LEVY OF PENALTY WAS JUSTIFIED . 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT ASSESSING OFFICER IN THIS CASE HAS FOUND THAT PURCHASES BOOK ED BY THE ASSESSEE FROM THE NFL ARE DIFFERENT FROM THAT RECORDED IN THE NFL BOO KS. BUT ASSESSEES EXPLANATION IN THIS REGARD WAS THAT THE ASSESSEE WAS APPOINTED AUTHORIZED DEALER FOR NITRIC ACID BY NFL. IT WAS A LOW VALUE GOODS COSTING LES S THAN RS. 5 /KG APPROXIMATELY. SINCE THERE WAS A CONTINUOUS PROCESS OF PRODUCTION, THE NFL HAD TO SALE AND CLEAR THIS BYE-PRODUCT WITHIN THE PRESCRIBED PERIOD AS TH E SAME WILL CAUSE HINDRANCE/BOTTLENECK IN THE MANUFACTURING OF MAIN P RODUCTS I.E. UREA. HENCE IT HAS TO BE LIFTED ON TIME BOUND SCHEDULE. FOR THI S REASON, NFL HAD TO GIVE QUANTITATIVE REBATE TO THE AUTHORIZED DEALERS FOR E ARLY LIFTING OF TOTAL QUANTITY PRODUCTS FROM NFL AMOUNTING TO RS. 7155301/- OUT OF WHICH RS. 1290907/- HAS BEEN EARNED ON THE DIRECT LIFTING OF THE GOODS FROM THE NFL BY THE SMALL CUSTOMERS WHO HAVE MENTIONED ITS CODE NUMBER BY MA KING FULL PAYMENT OF THE LIFTING OF THE GOODS FROM THE NFL. THE ASSESEE FU RTHER EXPLAINED THAT THE ONLY REASON THAT THEY HAD NOT OBJECTED FOR THE USE OF THE IR CODE WAS THE INCENTIVE RECEIVED FROM THE FIRM THAT QUANTITATIVE REBATE FRO M NFL. THE ASSESSEE FURTHER CLAIMED THAT IT WAS A CUSTOM AND USUAL PRACTICE IN THE BUSINESS. NOW IN THIS REGARD, THE ASSESSING OFFICER HAS HELD THAT THE VE RSION OF THE ASESSEE THAT IT HAD MADE DIRECT SALES AT A ZERO PERCENT PROFIT TO EARN THE QUANTITY REBATE CANNOT BE ACCEPTED AS THE ASSESSEE HAD ADDUCED NO EVIDENCE T O SUBSTANTIATE HIS CLAIM. ASSESSING OFFICER FURTHER OBSERVED THAT IT IS TRUE THAT REBATE EARNED ON THESE PURCHASE IS ATTRACTIVE AND THE ASSESSEE HAS ACCOUN TED RECEIPT OF IT IN ITS BOOKS OF ACCOUNT. BUT EARNING SOME PROFIT ON THE SAME CANNOT BE RUL ED OUT THEREFORE, ITA NO. 1949/DEL/2009 A.Y. 2002-03 7 GROSS PROFIT @ 2.90% (I.E. THE RATE OF GP REPORTED BY THE ASSESSEE) IS ADDED TO THE INCOME OF THE ASSESSEE. FURTHER, THE ASSESSING OF FICER DID NOT ACCEPT THE ASSESSEES CONTENTION THAT THESE GOODS WERE DIRECT LY LIFTED BY THE SMALL CUSTOMERS. HE HELD THAT THE PURCHASES MUST HAVE BEEN MADE BY THE ASSESSEE AND FOUND TIME PERIOD OF 7-10 DAYS TIME A REASONABL E PERIOD OR ROTATION FOR THE PURCHASE AND SALE OF THE MATERIAL AND TO ROTATE THE INVESTMENT HELD IN STOCK. THEREFORE, HE HAD TAKEN RS. 6,11,487 AS THE PEAK OF INVESTMENT AND ADDED IN THE INCOME OF THE ASSESSEE. 13. NOW IT IS CLEAR IN THIS CASE THAT ASSESSEE HAS ACCOUNTED FOR THE TOTAL QUANTITATIVE REBATE GRANTED BY THE NFL INCLUDING T HAT OF QUANTITIES LIFTED DIRECTLY BY THE SMALL PARTIES ON HIS BEHALF. IT IS THE ASSESSEES CLAIM THAT THIS IS A CUSTOM AND USUAL PRACTICE IN THE BUSINESS. THE ASSESSEE HAD ON THESE QUANTITIES LIFTED BY THE OTHER PARTIES OBTAINED REB ATE FROM NFL WHICH THE ASSESSING OFFICER HAD HIMSELF FOUND ATTRACTIVE. HE NCE IT CANNOT BE SAID THAT BY THIS METHOD OF BUSINESS IN WHICH ASSESSEE ALLOWED Q UANTITIES TO BE LIFTED BY OTHER PARTIES ON ITS CODE, THE ASSESSEE DID NOT MAKE PROF IT. HENCE THIS CLAIM OF THE ASSESSEE CANNOT BE SAID TO BE MALAFIDE OR BOGUS. IF ASSESSEE WISHED TO CONCEAL PARTICUARLS, IT NEED NOT HAVE DISCLOSED THE QUANTIT Y REBATE ON MATERIALS LIFTED BY THE OTHER PARTIES. FURTHER ASSESSEE HAS CLAIMED THA T THERE WAS COMPETITION IN THE BUSINESS AND NFL WAS IN NEED OF SELLING THE STOCK C LEARING BYE-PRODUCT IN A SHORT TIME TO CLEAR THE HINDRANCE/BOTTLENECK IN THE MANU FACTURING OF THE MAIN PRODUCT I.E. UREA. THIS ALSO WAS THE REASON OTHER PARTIES WERE ALLOWED TO LIFT GOODS ON ASSESSEES CODE. THIS IN OUR CONSIDERED OPINION CA NNOT BE SAID TO BE A BOGUS CLAIM IN ORDER TO ATTRACT LEVY OF PENALTY U/S 271(1 )(C). IF THESE GOODS WERE LIFTED AT ITA NO. 1949/DEL/2009 A.Y. 2002-03 8 COST PRICE AND ONLY BENEFIT THE ASSESSEE GOT WAS QU ANTITATIVE REBATE, REFLECTION OF THE QUANTITATIVE REBATE SUFFICIENTLY REFLECTS THE I NCOME OF THE ASSESSEE. HENCE IN OUR CONSIDERED OPINION, THE NON-ACCEPTANCE OF ASSES SEES CLAIM THAT IT HAD PERMITTED USE OF ITS CODE FOR OTHER PARTIES TO LIFT THE MATERIALS ON WHICH THE ASSESEE OBTAINED ATTRACTIVE QUANTITATIVE REBATE CA NNOT AUTOMATICALLY ATTRACT LEVY OF PENALTY. 14. IN THIS REGARD WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSH IPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGA TION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARI LY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDIC IALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OF FENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 15. WE WOULD ALSO LIKE TO REFER TO THE HONBLE AP EX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 VIDE ORDER DATED 17.3.2010 HAS HELD THAT THE LAW LAID DO WN IN THE DILIP SHEROFF CASE ITA NO. 1949/DEL/2009 A.Y. 2002-03 9 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEAL MENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CA SE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE R EVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 16 IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE LEVY OF PENALTY. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/06/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 25/06/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES