ACIT, CHENNAI V. M/s. Shree Laxmi Jewellery Ltd., CHENNAI

ITA 1959/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51677 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MEGHANATH CHOWHAN JT
• Assessee Lawyers: T BANUSEKAR
• Keywords: Opportunity of being heard; Revised return
• Section: 273B; 143(3); 133A; 14A; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C : CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER] I.T.A.NOS.1959 & 1960/MDS/2010 ASSESSMENT YEARS : 2006-07 & 2007-08 THE ACIT COMPANY CIRCLE VI(2) CHENNAI VS M/S SHREE LAXMI JEWELLERY LTD 99, USMAN ROAD T. NAGAR CHENNAI 600 017 [PAN AAACL1289M ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. MEGHANATH CHOWHAN, JT. CIT/DR RESPONDENT BY : SHRI T. BANUSEKAR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS HAVE BEEN FI LED BY THE REVENUE AGAINST SEPARATE ORDERS OF THE LD. CIT(A), CHENNAI, DATED 6.9.2010. I.T.A.NO. 1959/MDS/2010 2. IN THIS APPEAL OF THE REVENUE, FOR ASSESSMENT Y EAR 2006-07, ONLY ONE ISSUE REGARDING DELETION OF ADDITION OF ` 56,36,194/- ADDED ON ACCOUNT OF ALLEGED CHANGE OF METHOD OF VALUATION OF THE CLOSING STOCK IS INVOLVED. THE FACTS APROPOS THIS ISSUE AR E THAT THE ASSESSEE- COMPANY IS ENGAGED IN THE MANUFACTURING OF GOLD JEW ELLERY AND ALSO ITA 1959&1960/10 :- 2 -: DOING IMPORT AND EXPORT OF BULLION. ON 26.3.2007, A SURVEY U/S 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSES SEE-COMPANY AND DISCREPANCY IN THE VALUATION OF DIAMOND JEWELLERY W AS FOUND. IT WAS FOUND THAT THE DIAMOND JEWELLERY WAS BEING VALUED W ITH REFERENCE TO GOLD WEIGHT AND GOLD RATE WITHOUT TAKING INTO ACCOU NT THE VALUE OF DIAMOND. WHEN SO POINTED OUT THE ASSESSEE TOOK INT O ACCOUNT THE VALUATION OF THE DIAMOND AND OFFERED IT BY FILING A REVISED RETURN FOR ASSESSMENT YEARS 2004-05 TO 2006-07, AS UNDER: A.Y ADDITION IN OPENING STOCK AFTER SEPARATING DIAMOND ADDITION IN CLOSING STOCK AFTER SEPARATING DIAMOND DIFFERENCE LOSS CARRIED FORWARD NET LOSS CARRIED FORWARD (A) (B) (B-A) AS PER ORIGINAL RETURN AFTER GIVING EFFECT TO (C) 04-05 -- 1,671,476.83 1,671,476.83 4,359,272 2,687,795 05-06 1,671,476.83 2,474,278.7 802,801.87 5,228,090 2,753,813 06-07 2,474,278.2 -2,467,273 -4,941,551.2 5,887,193 8,344,467 3. FOR ASSESSMENT YEAR 2006-07, WHICH IS UNDER REFEREN CE, IT WAS FOUND THAT VALUE OF CLOSING STOCK HAS BEEN REDUCED BY ` 24,67,273/-. IN THE ORIGINAL RETURN, THE CLOSING STOCK WAS VALUE D ON THE BASIS OF AVERAGE COST METHOD AND THE FINISHED GOODS ON THE BASIS OF FIRST IN FIRST OUT (FIFO) METHOD AS AGAINST WHICH IN THE RE VISED RETURN, THE VALUATION OF ENTIRE STOCK WAS DONE ON THE BASIS OF AVERAGE COST METHOD. THE UNDISPUTED FACTS OF THIS ISSUE ARE TH AT THE ASSESSEE HAS BEEN FOLLOWING THE AVERAGE COST METHOD IN RESPE CT OF THE ENTIRE ITA 1959&1960/10 :- 3 -: STOCK FOR THE LAST MANY YEARS AND IN THE REVISED RE TURN FILED WITHIN TIME AS PRESCRIBED U/S 139(5), HAS ALSO ADOPTED THE SAME METHOD I.E AVERAGE COST METHOD, BUT IN THE ORIGINAL RETURN F ILED FOR THIS YEAR THE ASSESSEE HAD ADOPTED FIFO METHOD. THE ASSESSING OF FICER CONSIDERED THIS ACT OF THE ASSESSEE AS INSIDIOUS AND THEREFORE , HAS INSISTED THAT THE ASSESSEE CANNOT CHANGE THE METHOD BY BREAKING T HE CONSISTENT METHOD FOLLOWED REGULARLY. HENCE, BY IGNORING ALL ARGUMENTS OF THE ASSESSEE, HE HAS VALUED THE STOCK ON THE BASIS OF FIFO METHOD. AGAINST THIS, THE ASSESSEE FILED FIRST APPEAL AND T HE LD. CIT(A) HAS REVERSED HIS FINDING BY HOLDING IN PARA 5 OF HIS O RDER AS UNDER: 5. I HAVE CONSIDERED THE CONTENTS OF THE ASSESSM ENT ORDER AS WELL AS THE ARGUMENTS OF THE LEARNED AUTHORIZED REPRESENTATIVE. IT IS CLEAR THAT THE APPELLANT HAS BEEN CONSTANTLY FOLLOWING AVERAGE COST METHOD OF VALUATI ON OF CLOSING STOCK. IN THE ORIGINAL RETURN FILED, THE AP PELLANT HAS WRONGLY CALCULATED STOCK AT FIFO METHOD AND LATER O N CORRECTED THE SAME, BY FILING REVISED RETURN. REVIS ED RETURN WAS FILED WELL WITHIN THE TIME ALLOWED UNDER SECTIO N 139(5). SECTION 139(5) CLEARLY PROVIDES AN OPPORTUNITY TO T HE ASSESSEE TO CORRECT THE MISTAKE, IF ANY IN THE RETURN OF INC OME FILED, PROVIDED SUCH REVISED RETURN IS FILED WITHIN THE TI ME ALLOWED UNDER SECTION 139(5). I DO NOT UNDERSTOOD WHY THE A SSESSING OFFICER HAS NOT ACCEPTED THE LEGITIMA1E RIGHT OF TH E ASSESSEE IN FILING REVISED RETURN TO CORRECT ANY MISTAKE. EV EN THE ADDITION WAS TAX- NEUTRAL, IT HAD RESULTED IN INCREASE IN THE VALUE OF STOCK AND CONSEQUENTLY REDUCTION IN CARRY FORWARD LOSS. THE EFFECT OF BOTH CHANGES PUT TOGETHER WOUL D HAVE NEUTRALIZED THE EFFECT ON INCOME OF NEXT ASSESSMENT YEAR ALSO. ITA 1959&1960/10 :- 4 -: 4. NOW THE REVENUE IS AGGRIEVED. IT WAS ARGUED BY TH E LD.DR THAT THE ASSESSEE HAS SHIFTED TO FIFO METHOD BUT WHEN P OINTED OUT, IT HAS ADOPTED THE CONSISTENT METHOD FOLLOWED BY IT FOR T HE LAST MANY YEARS I.E AVERAGE COST METHOD. ON THE OTHER HAND, THE LD.AR HAS GIVEN THE SAME REASONING AS IS AVERRED IN THE EXTRACTED PARAG RAPH FROM THE ORDER OF THE LD. CIT(A). HE HAS STERNLY ARGUED THA T THE PROVISION OF REVISION HAS BEEN PROVIDED TO CORRECT ANY MISTAKES IF ANY COMMITTED WHILE FILING ORIGINAL RETURN OF INCOME. 5. WE HAVE EXAMINED THE RIVAL STANDS IN THE LIGHT OF THE OBTAINING FACTS OF THE CASE. A QUERY WAS PUT TO BOTH LD.AR AND LD.DR AND IT WAS ASCERTAINED THAT THE ASSESSEE HAS BEEN FOLLOWI NG THE AVERAGE COST METHOD FOR THE LAST MANY ASSESSMENT YEARS AND HAS FOLLOWED THE SAME METHOD SUBSEQUENTLY. THE ASSESSEE HAS REVISED THE RETURN WITHIN THE PERMITTED TIME AND THUS, IT IS A VALID R ETURN OF INCOME WHICH HAS TO BE TREATED TO HAVE BEEN FILED FOR ASSESSMENT YEAR 2006-07. A VALID REVISED RETURN SUBSTITUTES THE ORIGINAL RETUR N OF INCOME. THE ORIGINAL RETURN WAS FILED BASED ON FIFO METHOD. TH IS HAS TO BE IGNORED AND SUBSTITUTED BY THE VALID REVISED RETURN IN TERMS OF THE EXPRESS PROVISIONS OF THE INCOME-TAX ACT, 1961. TH EREFORE, WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE LD. CIT(A) WHO HAS AGREED WITH THE SUBMISSION OF THE ASSESSEE BY ACCEPTING THE REV ISED RETURN. WE ITA 1959&1960/10 :- 5 -: ARE IN AGREEMENT WITH BOTH LD.AR AND THE LD. CIT(A) AND CONFIRM THE IMPUGNED DELETION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. I.T.A.NO. 1960/MDS/2010 7. THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YEAR 200 7-08, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DATED 6.9.2010 VIDE WHICH HE HAS DELETED THE PENALTY OF ` 13,06,422/- IMPOSED ON THE ASSESSEE BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT, VIDE ORDER DATED 22.4.2010. 8. THE FACTS LEADING TO THE LEVY OF THE IMPUGNED PENAL TY ARE THAT THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERAT ION WAS PASSED U/S 143(3) ON 23.12.2009 ARRIVING AT A TAXABLE INCOME O F ` 1,31,11,288/- AS AGAINST THE LOSS OF ` 6,49,103/- DECLARED BY THE ASSESSEE-COMPANY. THE FOLLOWING ADDITIONS WERE MADE IN THE ASSESSMENT ORDER: 1. TRADING ACCOUNT GOLD & JEWELLERY ` 1,04,861 2. VALUATION OF DIAMOND ` 35,04,170 3. STONE ` 2,72,200 TOTAL ` 38,81,231 9. CONSEQUENTLY, THE ASSESSING OFFICER INITIATED PENAL TY PROCEEDINGS AND ISSUED A NOTICE DATED 23.12.2009 U/S 274 R.W.S 271(1)(C) OF THE ITA 1959&1960/10 :- 6 -: ACT, SEEKING EXPLANATION AGAINST THE PROPOSED PENAL TY. IN COMPLIANCE THEREOF, ON 9.2.2010, THE ASSESSEE FILED A DETAILED WRITTEN SUBMISSION STATING AS UNDER: WITH REFERENCE TO THE ABOVE, PENALTY PROCEEDINGS U NDER SECTION 271(1)(C) HAVE BEEN INITIATED FOR THE ABOVE ASSESSMENT YEAR AND WE ARE IN RECEIPT OF THIS AUTHORITY'S NOTI CE IN THIS REGARD. IN THIS CONNECTION IT IS SUBMITTED AS FOLLOWS: WE ARE ASSESSED TO TAX BY THIS AUTHORITY. FOR THE A SSESSMENT YEAR 2007-08, WE HAVE FILED A RETURN OF INCOME ADMI TTING A TOTAL INCOME OF ` 92,08,400/- AND THE RETURN WAS PROCESSED U/S 143( 1). SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY BY ISSUE OF NOTICE U/S 143(2). THIS AUTHORITY COMPLETED THE ASSESSMENT U/S 143(3) BY ORDER DATED 23.12.2009 ASSESSING THE TOTAL INCOME AT ` 1,31,11,288/- AND RAISING A DEMAND OF ` 18,87,138/-. IN COMPLETING THE ASSESSMENT THIS AUTHORITY HAS DIS ALLOWED A SUM OF ` 35,04,170/- ON ACCOUNT OF THE FOLLOWING: A) TRADING ACCOUNT - GOLD 1,04,861 B) VALUATION OF DIAMOND 35,04,170 C) STONE 2,72,200 D) CASH DISCREPANCY 3,460 E) DIVIDEND DISALLOWED U/S 14A AS PER RULE 8D 18,200 TOTAL 39,02,891 IN THIS CONNECTION, WE SUBMIT THE FOLLOWING : 1. WE HAVE RECONCILED THE PHYSICAL STOCK AND BOOK STOC K AND THERE IS VERY SMALL DIFFERENCE, IF STOCK OF BOTH TH E FIRMS SHREE LAXMI JEWELLERY LTD., AND LAXMI EXPORT ARE CONSIDER ED TOGETHER. 2. THERE WAS SMALL PERCENTAGE OF SHORTFALL OF GOLD AND SALE OF SUCH SHORTFALL OF GOLD IS USED FOR THE PURCHASE OF DIAMOND. ITA 1959&1960/10 :- 7 -: HENCE WE SUBMIT THAT WHEN, YOUR KIND AUTHORITY HAS ADDED GROSS PROFIT ON SALE OF SUCH GOLD, THEN ADDITION ON ACCOUNT OF EXCESS OF DIAMOND, WHICH IS PURCHASED OUT OF SUCH A CCEPTED AMOUNT OF SALE OF GOLD, DOES NOT ARISE. 3. WE HAVE AGREED TO THE ADDITION OF CASE OF DIAMONDS ONLY TO BUY PEACE FROM THE DEPARTMENT. 4. WE HAVE COOPERATED FULLY DURING THE ASSESSMENT PROC EEDING. 5. WE HAVE PAID THE TAX DEMANDED BY WAY OF REQUEST FOR THE ADJUSTMENT OF REFUND DUE. 6. THE DIFFERENCE IN STOCK IS MERELY 2% OF TOTAL STOCK , WHICH IS VERY NEGLIGIBLE. IN THIS CONNECTION ATTENTION OF THIS AUTHORITY IS A LSO DRAWN TO THE DECISION OF THE SUPREME COURT IN THE CASE OF AKBAR BADRUDDIN JIWANI V. COLLECTOR OF CUSTOMS BOMBAY (19 90) AIR 1579 (SC) WHERE IT HAS BEEN HELD THAT 'NO PENALTY C AN BE IMPOSED MERELY BECAUSE OF THE DEFAULT AND THAT THE LEVY OF PENALTY WHICH CLEARLY IS THE MATTER OF DISCRETION O F THE AUTHORITY CONCERNED NECESSARILY INVOLVES MENS REA (GUILTY MIN D) OF THE TAX PAYER TO BE ESTABLISHED BY THE REVENUE BEFORE IMPOS ING THE PENALTY. THE LEVY OF PENALTY HAS ALSO BEEN HELD TO BE NOT AUTOMATIC OR MANDATORY BUT CLEARLY DISCRETIONARY A ND THE DISCRETION HAS NECESSARILY TO BE EXERCISED HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, IN A FAIR AND OBJECTIVE MANNER'. ATTENTION OF THIS AUTHORITY IS ALSO DRAWN TO THE DE CISION OF THE SUPREME COURT IN HINDUSTAN STEEL LIMITED V STATE OF ORISSA (1972) 83 ITR 26 (SC) WHERE THE SUPREME COURT EXPLA INS THE SCOPE OF PENAL PROVISION AS UNDER: 'AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF QUASI JUDICIAL PROCEEDI NGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBL IGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DIS REGARD 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 DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSI DERATION OF ALL ITA 1959&1960/10 :- 8 -: THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENAL TY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE P ENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE'. IT IS FURTHER SUBMITTED THAT PENALTY PROCEEDINGS AR E INDEPENDENT OF THE PROCEEDINGS OF THE ASSESSMENT. SINCE WE HAVE NOT MADE ANY EFFORT TO CONCEAL PARTIC ULARS OF INCOME/FURNISH INACCURATE PARTICULARS OF INCOME, NO PENALTY U/S 271(1)(C)CAN BE LEVIED. IN THIS CONTEXT ATTENTI ON OF THIS AUTHORITY IS DRAWN TO THE MEANING OF THE TERM 'CONC EAL' WHICH MEANS THAT THERE HAS TO BE A DELIBERATE ACT ON THE PART OF THE ASSESSES (HINDUSTAN STEEL LTD. V. STATE OF ORISSA ( 1972) 82 ITR 26) WHICH IS NOT SO IN THIS CASE. IN LIGHT OF THE ABOVE FACTS AND IN LIGHT OF THE DEC ISIONS CITED ABOVE, IT IS MOST HUMBLY PRAYED THAT THIS AUTHORITY MAY BE PLEASED TO DROP THE PROCEEDINGS OF PENALTY INITIATE D UNDER SECTIONS 271 (1)(C). IT IS FURTHER PRAYED THAT THIS AUTHORITY MAY BE PLE ASED TO GIVE US AN OPPORTUNITY OF BEING HEARD BEFORE TAKING THE FINAL DECISION IN THE MATTER. WE SHALL BE PLEASED TO FURNISH ANY FURTHER INFORMAT ION THAT THIS AUTHORITY MAY REQUIRE IN THIS REGARD. ' 10. AFTER REJECTING THE ABOVE SUBMISSIONS OF THE ASSESS EE, THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT IT IS A FIT CASE FOR LEVY OF PENALTY. BUT HE HAS NOT DEFINED UNDER WHICH ONE OF THE TWO DEFAULTS OF SECTION 271(1)(C) OF THE ACT THIS PENALTY IS BEING LEVIED. WHEN THIS PENALTY WAS CHALLENGED BEFORE THE LD. CIT(A), HE HA S FOUND FAVOUR WITH ITA 1959&1960/10 :- 9 -: THE ASSESSEE BY CANCELING THE ENTIRE PENALTY. NOW THE REVENUE IS AGGRIEVED. FOLLOWING GROUNDS HAVE BEEN RAISED: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1. THE LEARNED CIT(A) HAS ERRED IN DELETED THE P ENALTY LEVIED U/S.271 (1 )(C) OF ` 13,06,422/- . 2.2 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT SI NCE THE ASSESSING OFFICER HAS ADDED GROSS PROFIT ON SALE OF GOLD ADDITION ON ACCOUNT OF EXCESS DIAMOND WHICH IS PURC HASED OUT OF SUCH ACCEPTED AMOUNT OF SALE OF GOLD DOES NOT AR ISE. 2.3 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT AD DITION ON ACCOUNT OF GROSS PROFIT ON SALE OF GOLD WAS ` 1,04,861 ONLY WHICH CANNOT EXPLAIN THE EXCESS DIAMOND FOUND DURIN G SURVEY OF ` 35,04,170. 2.4 THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ASS ESSING OFFICER'S ORDER IN VIEW OF THE DECISIONS OF THE HON 'BLE SUPREME COURT IN THE CASE OF K P MADHUSUDANAN (251 ITR 99) AND HON'BLE HIGH COURT OF KERALA IN THE CASE OF K MAHIM VS CIT (149 ITR 737) 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING O FFICER RESTORED. 11. WE HAVE HEARD THE RIVAL ORAL SUBMISSIONS AND HAVE P ERUSED THE ENTIRE RECORD CIRCUMSPECTIOUSLY. WITH REGARD TO AD DITION MADE ON ACCOUNT OF EXCESS DIAMOND NOTICED DURING SURVEY, IT WAS ARGUED BY THE LD.DR THAT THE PENALTY QUA THIS ADDITION HAS BE EN WRONGLY DELETED BECAUSE THE ADDITION ON ACCOUNT OF GROSS PROFIT ON SALE OF GOLD AT ` 1, 04,861/- CANNOT EXPLAIN THE EXCESS DIAMOND FOU ND DURING SURVEY OF ` 35,04,170/-. IT WAS FURTHER ARGUED THAT THE LD. C IT(A) HAS NOT ITA 1959&1960/10 :- 10 - : CONSIDERED EXTRA DIAMOND AT ALL. ON THE CONTRARY, THE LD.AR HAS SUPPORTED THE FINDING OF THE LD. CIT(A), WHO HAS ST ATED THAT APART FROM ESTIMATING THE ADDITION, PROPER TAX HAS BEEN PAID T HEREON. THIS ADDITION IS ONLY AN ESTIMATED ADDITION ON WHICH NO PENALTY CAN BE IMPOSED. 12. AFTER HEARING BOTH SIDES, WE FIND THAT THERE WAS A SMALL PERCENTAGE OF SHORTFALL OF GOLD AND SALE PRICE OF S UCH SHORTFALL OF GOLD MAY HAVE BEEN USED FOR THE PURCHASE OF DIAMOND AS H AS BEEN CLAIMED. WHEN GROSS PROFIT ON SALE OF THIS GOLD HA S BEEN ADDED, THE ADDITION ON ACCOUNT OF EXCESS DIAMOND, APPARENTLY , AND PROBABLY USED IN PURCHASE OUT OF ACCEPTED AMOUNT OF SALE OF GOLD WOULD HAVE NOT RESULTED IN FURTHER ADDITION ON ACCOUNT OF EXC ESS DIAMOND BUT THE ASSESSEE HAS AGREED TO THIS ADDITION ON ACCOUNT OF COST OF DIAMOND TO BUY PEACE FROM THE DEPARTMENT. THE ASSESSEE HAS PAID ENTIRE TAX ON THIS OFFERED AMOUNT, THEREFORE, IN OUR CONSIDERE D OPINION, THIS CANNOT BE A FIT CASE FOR LEVY OF PENALTY U/S 271(1) (C) OF THE ACT IN VIEW OF THE PROVISIONS OF SECTION 273B OF THE ACT. IN SO FAR AS DIFFERENCE IN STOCK IS CONCERNED, THIS IS MERELY 2% OF THE TOTAL STOCK AND THE SAME CAN BE IGNORED BECAUSE IN CALCULATING SUCH ITEMS AN D VALUATION THEREOF, A SMALL DIFFERENCE IS ALWAYS POSSIBLE. INASMUCH AS SUCH A ITA 1959&1960/10 :- 11 - : SMALL DIFFERENCE IN VALUATION CANNOT TANTAMOUNT TO EITHER CONCEALMENT OF PARTICULARS OF INCOME OR TO FURNISHING OF INACCU RATE PARTICULARS OF INCOME. THERE ARE NO TWO OPINIONS ABOUT THE SETTLED POSIT ION OF LAW THAT REGULAR ASSESSMENT PROCEEDINGS AND PENALTY PRO CEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHICH OPERATE IN DIST INCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFERENT PARAMETE RS ARE APPLICABLE FOR MAKING QUANTUM ADDITION AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE CAN BE NO DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) A PENA LTY CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICUL ARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS, ALBEIT, THEY REFER TO DELIBERATE ACT ON T HE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT C ONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGEST IO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACT O, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN ITA 1959&1960/10 :- 12 - : NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPI NG THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CA SE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DH ARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF I NDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY 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 PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) 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 F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, 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 ITA 1959&1960/10 :- 13 - : 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 REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 13. THEREFORE, WE ARE OF THE CONSIDERED OF THE OPINION THAT THIS IS NOT A CASE OF EITHER CONCEALMENT OF INCOME OR OF FU RNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OF FICER IS NOT EVEN CERTAIN ABOUT THE ALLEGED DEFAULT HAVING BEEN COMMI TTED BY THE ASSESSEE. HENCE, ON ANY OF THE COUNTS, PENALTY CAN NOT BE IMPOSED IN THIS CASE. CONSEQUENTLY, WE CONFIRM THE FINDING O F THE LD. CIT(A) IN DELETING THE IMPUGNED PENALTY. 14. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAN D DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 05.08.11. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 5 TH AUGUST, 2011 RD COPY TO: APPELLANT /RESPONDENT/CIT(A)/CIT/DR