The Dy. Commissioner of Income Tax, Circle-1(1)(1), Ahmedabad V. M/s. Applitech Solutions Ltd., Ahmedabad

ITA 2004/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9052 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 01-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALIT P JAIN
• Keywords: Depreciation; Question of law; Bad and doubtful debts; Difference of opinion; Capital expenditure
• Section: 271(1)(c); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 2004/AHD/2016 (ASSESSMENT YEAR: 2004-05) DCIT, CIRCLE-1(1), AHMEDABAD V/S APPLITECH SOLUTIONS LTD., 503, PARITOSH BUILDING, USMANPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA 8332P APPELLANT BY : SHRI ANIL KSHATRIYA, A.R. RESPONDENT BY : SHRI LALIT P. JAIN, SR. D.R. ( )/ ORDER DATE OF HEARING : 26 -11-201 8 DATE OF PRONOUNCEMENT : 06 -12-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-4, AHMEDABAD DATED 23.05.2016 PERTAINING TO A.Y. 2004- 05 AND FOLLOWING GROUND HAS BEEN TAKEN: ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 2 1. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DE LETING THE PENALTY AMOUNT OF RS. 1,94,27,849/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT IN THE CASE, RETURN OF INCOME WAS FILED ON 01/11/2004 DECLARING TOTAL LOSS AT RS.20,55,32,687 /-. THE ASSESSMENT U/S. 143 (3) OF THE IT. ACT WAS COMPLETED ON 26/12/2006 DETE RMINING TOTAL LOSS AT RS. 15,13,78,404/- AFTER MAKING THE FOLLOWING ADDITIONS /DISALLOWANCES: 1. DISALLOWANCE OF CLAIM OF DEPRECIATION ON COMPUTE RS 209,69,161/- 2. DISALLOWANCE OF INTEREST EXPENSES 21,12,514/- 3. DISALLOWANCE OF EXPENSES RELATED TO INCREASE IN SHARE CAPITAL 1,59,028/- 4. DISALLOWANCE OUT OF CLAIM OF BAD-DEBTS 308,76,140/- 5. LATE PAYMENT OF E.S.I /P.P. IN THE GOVT. A/C. 37,440-/- 2.1 PENALTY NOTICE U/S 274 R.W.S.271(1)(C) OF THE A CT WAS ISSUED ON 26/12/2006 FOR CONCEALING PARTICULARS OF INCOME/FURNISHING INA CCURATE PARTICULARS OF INCOME. HOWEVER, NO REPLY WAS MADE IN ANY MODE. 2.2 BEING AGGRIEVED WITH THE ABOVE, THE ASSESSEE PR EFERRED APPEAL BEFORE HON'BLE CIT(A), WHO VIDE HIS ORDER DTD. 14/02/2011 DISMISSED THE APPEAL OF THE ASSESSEE. 2.3 IN VIEW OF THE CONFIRMATION OF DISALLOWANCE BY THE ID. CIT(A) VIDE THE ABOVE MENTIONED ORDERS, PENALTY NOTICE U/S. 271(1)( C) WAS ISSUED ON 12/03/2012. IN RESPONSE, THE ASSESSEE HAS NEITHER S UBMITTED THE DETAILS NOR ATTENDED THIS OFFICE. 3. BEFORE A DISCUSSION IN RESPECT OF THE LEVIABILIT Y OF PENALTY IN THE CASE OF THE ASSESSEE IS UNDERTAKEN A LOOK AT THE PENALTY PROVIS IONS IS NECESSARY. SECTION 271(1)(C) READS AS UNDER: ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 3 [FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, C ONCEALMENT OF INCOME, ETC, 271. (1) IF THE [ASSESSING] OFFICER OR THE [***] [ COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT AMI PERSON (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS [SUCH INCOME, OR] . HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, [(IN) IN THE CASES REFERRED TO IN CLAUSE (C) [OR CL AUSE (D)], [IN ADDITION TO TAX., IF ANY, PAYABLE] BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED [THREE TIMES], THE AMOUNT OF TAX SOUGHT TO B E EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME [OR FRINGE BENEFITS] OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME 3.1 IN THIS CONNECTION, IT MAY BE MENTIONED THAT TH E TERM 'INACCURATE PARTICULARS' HAS NOT BEEN DEFINED IN THE ACT. AS PE R LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS; THE D ETAILS OF A CLAIM OR THE SEPARATE ITEMS OF AN ACCOUNT. SIMILARLY, IN WEBSTER'S DICTIO NARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS 'NOT ACCURATE, NOT EXACT OR COR RECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. THUS READING THE WORLDS IN CONJUNCTION, IT MEANS THE DETAILS SUPPLIE D IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. 3.2 THE GUJARAT HIGH COURT, WHICH IS ALSO THE JURIS DICTIONAL HIGH COURT IN THE CASE AT HAND, HAS NOTED IN THE CASE OF A. M. SHAH & CO. V. CIT [2000] 108 TAXMANN 137(GUJ.) THAT: ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 4 'ANY CONCEALMENT OR INACCURACY IN THE PARTICULARS O F INCOME IN THE RETURN OCCURRING AT ANY STAGE UPTO AND INCLUSIVE OF THE UL TIMATE STAGE OF WORKING OUT OF TOTAL INCOME WOULD ATTRACT THE PENALTY PROVISION OF SECTION 271(1)(C). EVERY FIGURE IN THE RETURN WHICH IS SET OPPOSITE TO THE I TEM OF INCOME IS A PARTICULAR INCOME, WHETHER THE FIGURE IS ONE WHICH IS STATED I NDEPENDENTLY OF ANY THING ELSE THAT APPEARS IN THE RETURN OR THE DOCUMENTS AC COMPANYING IT OR WHETHER IT IS SOMETHING DERIVED FROM OTHER FIGURES ELSEWHERE S TATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED BY THE FALS ITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORDS 'INACCUR ATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE E ND RESULT'. LN THE SAID CASE, HON'BLE GUJARAT HIGH COURT HAS, I N GREAT DETAIL, DEALT WITH THE ISSUES PERTAINING TO SECTION 271(1)(C). HOWEVER, FO R THE SAKE OF BREVITY, ONLY A PART OF THE OBSERVATION OF THE COURT HAS BEEN PRODU CED HERE. VIDE THE ABOVE JUDGEMENT, THE HON'BLE HAS CLARIFIED AS REGARDS WHA T COULD FALL WITHIN THE PURVIEW OF THE TERM 'INACCURATE PARTICULARS OF INCO ME' 3 IT IS ALSO PERTINENT TO NOTE THAT THE OBSERVATION OF HON'BLE SUPREME COURT IN THE CASE OF CIT, AHMEDABAD VS. RELIANCE PETROPRODUC T (P) LTD. (322 ITR 158). THE HON'BLE SUPREME COURT IN THE SAID JUDGEMENT HAS NOTED AS UNDER: '......THE MEANING OF THE WORD 'PARTICULARS' USED I N SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS... .......... FURTHER, THE HON'BLE COURT HAS NOTED: ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 5 THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE.' 3.4 IT IS FURTHER NOTED THAT THE HON'BLE SUPREME CO URT IN THE CASE OF DHARAMENDRA TEXTILES PROCESSORS 306 ITR 277 (2008) (SC) HAS NOTED THAT THE EXPLANATIONS APPENDED TO SEC. 271(1)(C) ENTIRELY IN DICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. IT IS ALSO HELD THAT THE SECTI ON HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE AND THAT WILIFUL C ONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS U/S. 2 71(1)(C) OF THE ACT. 3.5 IN VIEW OF THE DECISIONS DISCUSSED ABOVE, IT CL EARLY EMERGES THAT IN CASE ANY WHERE ANY PARTICULAR FILED IN THE RETURN OF INCOME BY THE ASSESSEE IS FOUND TO BE INACCURATE, ERRONEOUS OR FALSE AND WHICH HAS AN IMP ACT ON TOTAL INCOME RETURNED BY THE ASSESSEE, IT WOULD ATTRACT LIABILIT Y FOR PENALTY U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. MOREOV ER, AFTER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF DHARAMENDRA TE XTILES PROCESSORS (DISCUSSED ABOVE), PENALTY U/S. 271(1)(C) IS A 'CIV IL LIABILITY' AND 'MENS ERA' NEED NOT BE PROVED FOR THE LEVY OF PENALTY. MERE, ESTABL ISHING OF INACCURACY IN PARTICULARS OF INCOME WOULD BE ADEQUATE FOR ATTRACT ING THE 'CIVIL LIABILITY' OF PENALTY U/S. 271(1 )(C) OF THE ACT. 3.6 IN THE PRESENT CASE, THE ISSUE IS OF FILING OF INACCURATE PARTICULARS OF INCOME AND NOT OF CONCEALMENT OF PARTICULARS OF INCOME. IT IS PERTINENT TO NOTE HERE THAT HON'BLE SUPREME COURT IN THE CASE OF DHARAMEND RA TEXTILES PROCESSORS 306 ITR 277 (2008) (SC) HAS ALREADY LAID DOWN THAT PENALTY IS A 'CIVIL LIABILITY' THUS MENS REA IS NOT ESSENTIAL. THUS, RELIED BY ASS ESSEE ON THIS COUNT ARE NOT APPLICABLE. IT IS FURTHER NOTED HERE THAT PENALTY I N THE PRESENT CASE IS BEING ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 6 LEVIED ON THE BASIS OF FACTS OF THE CASE AND POSITI ON OF LAW AND NOT MERELY BECAUSE THERE IS AN ADDITION OR DISALLOWANCE OF AN EXPENSE. FURTHER IN THE PRESENT CASE, THERE CANNOT BE SAID TO BE A DIFFEREN CE OF OPINION. 4. THE ISSUE WISE DISCUSSION AS UNDER:- 4.1 DISALLOWANCE OF CLAIM OF DEPRECIATION ON C OMPUTERS: IT WAS SEEN FORM THE ROL THAT THE ASSESSEE HAS CLAI MED DEPRECIATION OF RS. 2,35,68,8177-. IT WAS SEEN THAT DURING F.Y.2002-03 THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS PURCHASED COMPUTERS OF RS. 9131900 7- FROM THIRD WAVES SYSTEMS PVT. LTD. THE AEEEESEC HAS PRODUCED BILLS I SSUED BY THIRD WAVES SYSTEMS PVT. LTD. AS WELL AS COPY OF ILC OF UNION B ANK OF INDIA SNOWING THAT PAYMENT IS MADE TO THIRD WAVES SYSTEMS PVT. LTD. FO R PURCHASE OF THE COMPUTERS, ACCORDINGLY, DEPRECIATION OF RS. 55,99,1 40/- WAS GRANTED TO ASSESSEE IN THAT HERE LEAVING BEHIND WDV OF RS. 43,72,7607-. DURING THE YEAR UNDER CONSIDERATION FURTHER DEPRECIATION ON THESE COMPUTE RS %60% WHICH COMES TO RS. 25,99,656/- WAS HEREBY GRANTED. THE LD. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME. BUT, THE ASSESSEE COMPANY HAS INACCURATELY NOTED 'NIL' IN THE SAID CO LUMN, WHEREAS, RS.2,09,69,161/- WAS REQUIRED TO BE NOTED. THIS AMO UNTS TO FILING OF INACCURATE PARTICULARS OF INCOME. SIMILAR VIEW HAS BEEN TAKEN BY JURISDICTIONAL HIGH COURT IN THE CASE OF A. M. SHAH VS. CIT (DISCUSSED IN PAR A 3.3 ABOVE). HAD THE ASSESSEE'S CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE COULD HAVE BEEN BENEFITED BY FILLING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT DET ECTED THE INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS OF FILING INACCURATE OF PARTICULARS OF INCOME AND W OULD HAVE CAUSED LOSS TO THE REVENUE. ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 7 IN VIEW OF ABOVE FACTS AND LEGAL POSITION DISCUSSED IN PARA 3 (SUPRA), THE ASSESSEE IS HELD TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM AND AS PER DECISION OF HON'B LE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT (P) LTD. (NOTED ABOVE ) THE LIABILITY OF PENALTY ARISES. 4. 2 DISALLOWANCE OF INTEREST EXPENSES :- IT WAS SEEN THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS. 21,12,5147- ON THE LOAN TAKEN BY IT. THE ENTIRE AMOUNT OF INTER EST PAID WAS IN RESPECT OF SUCH LOAN WHICH WAS SHOWN TO HAVE BEEN UTILIZED FOR THE PURPOSE OF PURCHASING THE COMPUTER HARDWARE. .THE WHOLE AMOUNT OF INTEREST DEBITED WAS DISALLOWED U/S 37(1) OF THE ACT AS NOT MADE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE AND WAS ADDED BANK TO THE TOTAL INCOME OF T HE ASSESSEE. THE ID. CIT(A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. IT IS PERTINENT TO NOTE HERE THAT IT IS SETTLED POS ITION OF LAW THAT SUCH EXPENDITURE IS OF CAPITAL NATURE AND AS PER PROVISI ONS OF SEC.37(1) OF THE ACT IS NOT ALLOWABLE AS EXPENDITURE. THERE CAN BE NO AMBIG UITY OR DIFFERENCE OF OPINION SO AS TO THE TREATMENT OF SUCH EXPENDITURE. THE ASSESSEE IS REQUIRED TO FILL IN THE PARTICULAR OF 'AMOUNTS DEBITED TO P&L A /C. TO THE EXTENT DISALLOWABLE U/S.37' IN THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY DULY SIGNED AND VERIFIED. HOWEVER, IN THE PRESENT CASE, THE INFORMATION FILED AT THE RELEVANT COLUMN BY THE ASSESSEE IS 'NIL'. THE CAPIT AL EXPENSES AMOUNTING TO RS. 1,12,514/- DEBITED TO P&L A/C., BEING CAPITAL IN NA TURE HAVE NOT BEEN NOTED THERE BY THE ASSESSEE COMPANY AT THE RELEVANT COLUM N IN THE RETURN OF INCOME. IT IS PERTINENT TO NOTE HERE LHAL THE ID. CIT(A) CO NFIRMED THE DISALLOWANCE. HAD THE ASSESSEE'S CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE COULD HAVE BEEN BENEFITED BY FILLING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT DET ECTED THE INACCURATE ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 8 PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS OF FILING INACCURATE OF PARTICULARS OF INCOME ARID WOULD HAVE CAUSED LOSS TO THE REVENUE. IT HAS BEEN CLEARLY LAID DOWN IN THE CASE OF A.M. S HAH VS. CIT (DISCUSSED ABOVE) THAT 'EVERY FIGURE IN THE RETURN WHICH IS SE T OPPOSITE TO THE ITEM OF INCOME IS A PARTICULAR INCOME, WHETHER THE FIGURE I S ONE WHICH IS STATED INDEPENDENTLY OF ANY THING ELSE THAT APPEARS IN THE RETURN OR THE DOCUMENTS ACCOMPANYING IT OR WHETHER IT IS SOMETHING DERIVED FROM OTHER FIGURES ELSEWHERE STATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORDS 'INACCURATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD ME AN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT' WHETHER IN THE CONSTI TUENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT'. IN VIEW OF ABOVE FACTS AND LEGAL POSITION DISCUSSED IN PARA 3 (SUPRA), THE ASSESSEE IS HELD TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM, THE LIABILITY OF PENALTY AR ISES. 4.3. DISALLOWANCE OF EXPENSES RELATED TO INCREAS E IN SHARE CAPITAL:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SEEN THAT THE ASSESSEE HAS CLAIMED WRITTEN OF PRELIMINARY EXPENSES OF RS.1,59, 028/.- U/S.35D OF THE ACT. ACCORDINGLY, THE DEDUCTION U/S. 35D OF THE ACT OF R S/ 1,59,028/- AS WRITTEN OF PRELIMINARY EXPENSES CLAIMED BY THE ASSESSEE WAS DI SALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IT IS PERTINENT TO NO TE HERE THAT IT IS SETTLED POSITION OF LAW THAT SUCH EXPENDITURE IS OF CAPITAL NATURE AND AS PER PROVISIONS OF SEC.37(1) OF THE ACT IS NOT ALLOWABLE AS EXPENDI TURE. THE HON'BLE SUPREME COURT IN THE CASE OF BROOKE BOND INDIA LTD. VS. CIT (1997) 225 ITR 798 HAS LAID DOWN THAT EXPENDITURE INCURRED FOR EXPANSION O F CAPITAL BASE OF THE ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 9 COMPANY IS CAPITAL EXPENDITURE. IN LIGHT OF THE DEC ISION OF HON'BLE SUPREME COURT, THERE CAN BE NO AMBIGUITY OR DIFFERENCE OF O PINION SO AS TO THE TREATMENT OF SUCH EXPENDITURE. THE ASSESSEE IS REQU IRED TO FILL IN THE PARTICULAR OF 'AMOUNTS DEBITED TO P&L '~ A/C., TO THE EXTENT D ISALLOWABLE U/S.37' IN THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY DULY SIGNED AND VERIFIED. HOWEVER, IN THE PRESENT CASE, THE INFORMATION FILED AT THE RELEVANT COLUMN BY THE ASSESSEE IS 'NIL'. THE CAPITAL EXPENSES AMOUNTI NG TO RS. 1,59,028/- DEBITED TO P&L A/C., BEING CAPITAL IN NATURE HAVE NOT BEEN NOTED THERE BY THE ASSESSEE COMPANY AT THE RELEVANT COLUMN IN THE RETURN OF INC OME. IT HAS BEEN CLEARLY LAID DOWN IN THE CASE OF A.M. S HAH VS. CIT (DISCUSSED ABOVE THAT 'EVERY FIGURE IN THE RETURN WHICH IS SET OPPOS ITE TO THE ITEM OF INCOME IS A PARTICULAR INCOME, WHETHER THE FIGURE IS ONE WHICH IS STATED INDEPENDENTLY OF ANY THING ELSE THAT APPEARS IN THE RETURN OR THE DO CUMENTS ACCOMPANYING IT OR WHETHER IT IS SOMETHING DERIVED FROM OTHER FIGURES ELSEWHERE STATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED B Y THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WO RDS 'INACCURATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT'. IT IS CLEAR AND ESTABLISHED THAT ASSESSEE COMPANY H AS FILED INACCURATE PARTICULARS IN HIS RETURN OF INCOME, AS DISCUSSED IN PRECEDING PARAGRAPHS. FURTHER, IN THE DECISION OF DHARAMENDRA TEXTILES PROCESSORS (NOTED ABOVE) IT HAS BEEN ESTABLISHED THAT 'MENS REA' OR DELIBERATE ATTEMPT I S NOT ESSENTIAL FOR LEVY OF PENALTY, IF IT IS ESTABLISHED THAT ASSESSEE HAS FUR NISHED INACCURATE PARTICULARS OR CONCEALMENT OF PARTICULARS OF INCOME, PENALTY IS LE VIABLE. IN LIGHT OF DISCUSSION HELD IN PARA ABOVE, NONE OF THE CASES CITED BY THE ASSESSEE ARE APPLICABLE TO THE PRESENT CASE. ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 10 HAD THE ASSESSEE'S CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE COULD HAVE BEEN BENEFITED BY FILLING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT DET ECTED THE INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS OF FILING INACCURATE OF PARTICULARS OF INCOME AND W OULD HAVE CAUSED LOSS TO THE REVENUE. IN VIEW OF ABOVE FACTS AND LEGAL POSITION DISCUSSED IN PARA 3 (SUPRA), THE ASSESSEE IS HELD TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM, THE LIABILITY OF PENALTY AR ISES. 4. 4 BAD DEBTS:- THE ASSESSEE WAS SHOWN BAD DEBTS OF RS.3, 08,76, 14 0/- IN P&L ACCOUNT. THEREFORE, YOUR COMPANY WAS REQUESTED TO PROVE THAT THESE DEBTS HAVE ACTUALLY BECOME BAD. THE ASSESSING OFFICER DISALLOWED THE CL AIM OF BAD-DEBTS OF THE ASSESSEE NOTING THAT THE ASSESSEE HAS NOT ESTABLISH ED THAT THE DEBTS BECOME BAD IN THE RELEVANT YEAR AND THEREFORE THE CLAIM OF BAD DEBTS WAS NOT ALLOWABLE. FURTHER, ON APPEAL OF THE ASSESSEE, THE ID. CIT(A) CONFIRMED THE DISALLOWANCE OF RS. 3,08,76,140/-. IT IS NOTED THAT, NEITHER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS NOR PENALTY PROCEEDINGS, NO CONCRETE EVIDENCE HAS BEEN SUBMITTED TO SHOW THAT DEBT HAD ACTUALLY BECOME BAD. IT IS, THEREFORE, CLE AR THAT THE ASSESSEE HAS PASSED ACCOUNTING ENTRY FOR BAD DEBTS WITHOUT PROPER JUSTI FICATION FOR DOING SO KNOWING VERY WELL THAT THE DEBTS WERE NOT BAD. THE ASSESSEE HAS, THUS, CLEARLY FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS PERTINENT TO NOTE HERE THAT HON'BLE SUPREME C OURT IN THE CASE OF DHARAMENDRA TEXTILES PROCESSORS 306 1TR 277 (2008) (SC) HAS ALREADY LAID DOWN THAT PENALTY IS A 'CIVII LIABILITY' THUS MENS REA IS NOT ESSENTIAL. THUS, CASES ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 11 RELIED BY ASSESSEE ON THIS COUNT ARE NOT APPLICABLE . IT IS FURTHER NOTED HERE THAT PENALTY IN THE PRESENT CASE IS BEING LEVIED ON THE BASIS OF FACTS OF THE CASE AND POSITION OF LAW AND NOT MERELY BECAUSE THERE IS AN ADDITION OR DISALLOWANCE OF AN EXPENSE. FURTHER, IN THE PRESENT CASE, THERE CAN NOT BE SAID TO BE A DIFFERENCE OF OPINION. IT HAS BEEN CLEARLY LAID DOWN IN THE CASE OF A.M. S HAH VS. CIT (DISCUSSED ABOVE) THAT 'EVERY FIGURE IN THE RETURN WHICH IS SE T OPPOSITE TO THE ITEM OF INCOME IS A PARTICULAR INCOME, WHETHER THE FIGURE I S ONE WHICH IS STATED INDEPENDENTLY OF ANY THING ELSE THAT APPEARS IN THE RETURN OR THE DOCUMENTS ACCOMPANYING IT OR WHETHER IT IS SOMETHING DERIVED FROM OTHER FIGURES ELSEWHERE STATED IN SUCH RETURN OR DOCUMENTS. FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORDS 'INACCURATE PARTICULARS' WOULD COVER FALSITY IN THE FINAL FIGURE AS ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD ME AN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT V/HETHER IN THE CONSTI TUENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT'. IT IS CLEAR AND ESTABLISHED THAT ASSESSEE COMPANY H AS FILED INACCURATE PARTICULARS IN HIS RETURN OF INCOME, AS DISCUSSED IN PRECEDING PARAGRAPHS. FURTHER, IN THE DECISION OF DHARAMENDRA TEXTILES PROCESSORS (NOTED ABOVE) IT HAS BEEN ESTABLISHED THAT 'MENS REA' OR DELIBERATE ATTEMPT I S NOT ESSENTIAL FOR LEVY OF PENALTY, IF IT IS ESTABLISHED THAT ASSESSEE HAS FUR NISHED INACCURATE PARTICULARS OR CONCEALMENT OF PARTICULARS OF INCOME, PENALTY IS LE VIABLE. IN LIGHT OF DISCUSSION HELD IN PARA ABOVE, NONE OF THE CASES CITED BY THE ASSESSEE ARE APPLICABLE TO THE PRESENT CASE. HAD THE ASSESSEE'S CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE COULD HAVE BEEN BENEFITED BY FILLING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT DET ECTED THE INACCURATE ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 12 PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS OF FILING INACCURATE OF PARTICULARS OF INCOME AND W OULD HAVE CAUSED LOSS TO THE REVENUE. IN VIEW OF ABOVE FACTS AND LEGAL POSITION DISCUSSED IN PARA 3 (SUPRA), THE ASSESSEE IS HELD TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM THE LIABILITY OF PENALTY ARI SES. 4.5 LATE PAYMENT OF PF & ESI:- THE ASSESSEE COMPANY MADE A DEFAULT IN DEPOSITING P F & ESI CONTRIBUTION OF EMPLOYERS AMOUNTING TO RS.37,440/-, BUT CLAIMED SAM E AS EXPENSES U/S.36(1)(V)(A) OF THE I. T. ACT. IT HAS BEEN CLEAR LY LAID DOWN IN SECTION 36(1)(VA) OF THE I. T. ACT THAT EMPLOYEES' CONTRIBU TION TO PF, ESI ETC. SHALL BE ALLOWED AS DEDUCTION ONLY WHEN IT IS CREDITED BY TH E ASSESSEE TO EMPLOYEES' ACCOUNT IN THE RESERVE FUND ON OR BEFORE THE DUE DA TE. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE HAS MADE A DEFAULT IN DEPOSITING THE AMOUNT OF RS. 37,440/- IN THE SAID ACCOUNT BEFORE THE DUE DATE. BUT, THE A SSESSEE INSPITE OF THE FACT THAT THE DEFAULT WAS POINTED OUT IN THE TAX AUDIT REPORT CLAIMED A DEDUCTION WITH RESPECT TO THE SAME IN VIOLATION OF CLEAR AND UNAMB IGUOUS PROVISIONS OF THE ACT. IT WAS ONLY DURING THE ASSESSMENT PROCEEDINGS THAT THE INACCURACY IN THE PARTICULARS OF EXPENDITURE CLAIMED IN RETURN OF INC OME WAS DETECTED. IT IS PERTINENT TO NOTE HERE THAT THE RETURN OF INC OME FILED BY THE ASSESSEE COMPANY DULY SIGNED AND VERIFIED TO BE CORRECT AND TRUE. THE ASSESSEE WAS REQUIRED TO MENTION THE AMOUNTS DEPOSITED AFTER DUE DATE. BUT, THE ASSESSEE COMPANY HAS INACCURATELY NOTED 'N IL' IN THE SAID COLUMN, WHEREAS, RS. 37,4407- WAS REQUIRED TO BE NOTED. THI S AMOUNTS TO FILING OF INACCURATE PARTICULARS OF INCOME. SIMILAR VIEW HAS BEEN TAKEN BY JURISDICTIONAL HIGH COURT IN THE CASE OF A. M. SHAH VS. CIT (DISCU SSED IN PARA 3.3 ABOVE). ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 13 HAD THE ASSESSEE'S CASE NOT BEEN SELECTED FOR SCRUT INY, THE ASSESSEE COULD HAVE BEEN BENEFITED BY FILLING INACCURATE PARTICULARS OF INCOME. THE ASSESSEE TOOK CHANCE WITH THE DEPARTMENT. HAD THE REVENUE NOT DET ECTED THE INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, THE ASSESSEE COULD HAVE ENJOYED THE FRUITS OF FILING INACCURATE OF PARTICULARS OF INCOME AND W OULD HAVE CAUSED LOSS TO THE REVENUE. IN VIEW OF ABOVE FACTS AND LEGAL POSITION DISCUSSED IN PARA 3 (SUPRA), THE ASSESSEE IS HELD TO HAVE FURNISHED INACCURATE PARTI CULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM THE LIABILITY OF PENALTY ARI SES. 5. IN VIEW OF THE ABOVE FACTS I AM SATISFIED THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND IS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT. I, THEREFORE, LEVY A MINIMUM PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED ON ACCOUNT OF FILING OF INACCURATE PAR TICULARS OF INCOME, WHICH WORKS OUT OF RS. 1,94,27,849/- AGAINST THE MAXIMUM PENALTY OF RS. 5,82,83,547/- ON THE ASSESSEE. ISSUE DEMAND NOTICE AND CHALLAN FOR PENALTY LEV IED OF RS. 1,94,27,849/- 3. AGAINST THE IMPOSITION OF PENALTY, ASSESSEE PREFER RED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASS ESSEE. 4. NOW APPELLANT IS BEFORE US. 5. IN THIS CASE, ASSESSEE HAS CLAIMED FOLLOWING AMOUNT : (I) CLAIM OF DEPRECIATION OF RS. 2,09,69, 161/- (II) CLAIM OF INTEREST OF RS. 21,1 2,514/- (III) DEFERRED REVENUE EXPENSES OF RS. 1,59,028/- (IV) PAYMENT OF PF/ESI OF RS. 37,440/- ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 14 6. BUT LD. A.O. PARTLY ALLOWED THE CLAIM OF THE ASSESS EE. 7. IN THE CASE OF CIT VS. SAMBHAV MEDIA LTD. [2013] 3 3 TAXMANN.COM 97 (GUJ.) WHEREIN IT IS HELD: SECTION 271(1)(C), READ WITH SECTION 36(1)(VII), O F THE INCOME-TAX ACT, 1961 - PENALTY - FOR CONCEALMENT OF INCOME [BONA FIDE CLAI M, DISALLOWANCE OF] -ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) UPO N ASSESSEE ON ACCOUNT OF DISALLOWANCE OF BAD DEBT - TRIBUNAL DELETED PENALTY HOLDING THAT IT WAS A CASE OF DIFFERENCE OF OPINION ON ALLOWABILITY OF CERTAIN DE DUCTIONS AND IN ABSENCE OF ANY MATERIAL TO INDICATE ANY DISHONEST ATTEMPT ON PART OF ASSESSEE TO CONCEAL INCOME, NO PENALTY COULD BE IMPOSED - WHETHER TRIBUNAL WAS JUS TIFIED IN DELETING PENALTY - HELD, YES [PARA 4] [IN FAVOUR OF ASSESSEE] 8. AND IN THE CASE OF CIT VS. KEVIN PROCESS TECHNOLOGI ES (P.) LTD. [2013] 40 TAXMANN.COM 249 (GUJ.) WHEREIN IT IS HELD: SECTION 271(1)(C), READ WITH SECTIONS 36(1)(VII) A ND 37(1), OF THE INCOME-TAX ACT, 1961-PENALTY- FOR CONCEALMENT OF INCOME [DISALLOWAN CE OF CLAIM, EFFECT OF] - IN COURSE OF ASSESSMENT, ASSESSING OFFICER MADE DISALLOWANCE ON ACCOUNT OF BAD DEBTS AND PRIOR PERIOD EXPENSES -COMMISSIONER (APPEALS) AS WELL AS TRIBUNAL CONFIRMED SAID ADDITION -THEREUPON, ASSESSING OFFICER PASSED A PEN ALTY ORDER UNDER SECTION 271(1 )(C) - TRIBUNAL FINDING THAT THERE WAS NEITHER ANY OCCASION OF FURNISHING INACCURATE PARTICULARS NOR THERE WAS ANY CONCEALMENT ON PART O F ASSESSEE, SET ASIDE PENALTY ORDER HOLDING THAT MERELY BECAUSE CERTAIN CLAIMS WERE MAD E AND THOSE CLAIMS WERE DISALLOWED, THAT WOULD NOT IPSO FACTO LEAD TO LEVY OF PENALTY - WHETHER ON FACTS, NO SUBSTANTIAL QUESTION OF LAW AROSE FROM TRIBUNAL'S O RDER - HELD, YES [IN FAVOUR OF ASSESSEE] ITA NO. 2004 /AHD/2016 . A.Y. 2004-0 5 15 9. IF ASSESSEE HAS MADE SOME CLAIM AND SAME WAS NOT AC CEPTABLE TO THE REVENUE. IN SUCH CIRCUMSTANCES, PENALTY CANNOT BE LEVIED BEC AUSE PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS. THEREFOR E, RESPECTFULLY FOLLOWING THE AFORESAID JUDGMENT AND IN OUR CONSIDERED OPINIO N, LD. CIT(A) HAS PASSED DETAILED AND REASONED ORDER AND SAME DOES NOT REQUI RE ANY KIND OF INTERFERENCE AT OUR END. THUS, WE DISMISS THE APPEAL OF THE REVE NUE. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON 06 - 12- 2018 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 06 /12/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD