ANURAG TOSHNIWAL, MUMBAI V. DCIT 1(3), MUMBAI

ITA 210/MUM/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3152 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY SANGHAVI ASHISH MEHTA
• Keywords: Capital asset; Business income; Salary income; Wrong claim; Capital receipt
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.210/MUM/2015 (ASSESSMENT YEAR : 2009-10) ANURAG TOSHNIWAL, 12 ISHWAR BHAVAN, AROAD,CHURCHGATE, MUMBAI 400 020 PAN: AADPT 9118P ... APPELLANT VS. THE DCIT-1(3) ROOM NO.540, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 .... RESPONDENT ITA NO.211/MUM/2015 (ASSESSMENT YEAR : 2009-10) ARUN TOSHNIWAL, 12 ISHWAR BHAVAN, AROAD,CHURCHGATE, MUMBAI 400 020 PAN: AADPT 9121P ... APPELLANT VS. THE DCIT-1(3) ROOM NO.540, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400 020 .... RESPONDENT APPELLANTS BY : S/SHRI SANJAY SANGHAVI/ ASHISH MEHTA REVENUE BY : SH RI YOGESH KAMAT DATE OF HEARING : 09/06/2015 DATE OF PRONOUNCEMENT : 30/09/2015 2 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) ORDER PER G.S. PANNU,AM: THE CAPTIONED ARE TWO APPEALS RELATING TO TWO INDI VIDUALS OF THE SAME FAMILY AND INVOLVE A COMMON ISSUE. THE APPEA LS ARE DIRECTED AGAINST SEPARATE BUT SIMILARLY WORDED ORDERS OF THE CIT(A) DATED 26/12/2014, WHEREBY THE PENALTY LEVIED BY THE ASSES SING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT ) FOR ASSESSMENT YEAR 2009-10 VIDE RESPECTIVE ORDERS DAT ED 12/3/2013 HAVE BEEN AFFIRMED. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE APPEALS ARE COMMON, THE APPEAL IN THE CASE OF SHRI ARUN TOS HNIWAL IN ITA NO.211/MUM/2015 IS TAKEN AS THE LEAD CASE. 2. THE APPELLANT IN ITA NO.211/MUM/2015 IS AN INDIV IDUAL, WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009 -10 ON 30/07/2009 DECLARING TOTAL INCOME AT RS.88,33,904/-. THE INCO ME RETURNED BY THE ASSESSEE COMPRISED OF INCOME FROM SALARY FROM M/S . TOSHBRO MEDICALS PVT. LTD. AND CHEMITO TECHNOLOGIES PVT. LTD. ALONG WITH INCOME FROM HOUSE PROPERTY, INCOME FROM CAPITAL GAINS AND INCOM E FROM OTHER SOURCES. THE ASSESSMENT UNDER SECTION 143(3) OF TH E ACT WAS COMPLETED ON 30/9/2011, WHEREBY THE TOTAL INCOME WA S ASSESSED AT RS.5,88,33,904/-. THE DIFFERENCE BETWEEN THE REPOR TED AND THE ASSESSED INCOME OF RS.5.00 CRORES WAS ON ACCOUNT OF NON-COMPETE FEES RECEIVED BY THE ASSESSEE FROM M/S. TERMO ELE CTRON LLS INDIA PVT. LTD. IN THE RETURN OF INCOME ASSESSEE HAD DECLARE D THE SAID SUM OF RS.5.00 CRORES AS A LONG TERM CAPITAL GAIN AGAINST WHICH HE CLAIMED DEDUCTION UNDER SECTION 54EC TO THE TUNE OF RS.50.0 0 LACS AND THE BALANCE AMOUNT OF RS.4.50 CRORES WAS DEPOSITED IN THE CAPITAL GAIN 3 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) SAVING ACCOUNT. THE ASSESSING OFFICER HOWEVER, DIF FERED WITH THE ASSESSEE AND HELD THAT THE NON-COMPETE FEE WAS L IABLE TO BE TREATED AS AN INCOME UNDER THE HEAD PROFITS OR GAINS FROM BUSINESS OR PROFESSION ON THE STRENGTH OF SECTION 28(VA) OF TH E ACT. THIS STAND OF THE ASSESSING OFFICER HAS SINCE BEEN UPHELD BY THE CIT(A) AS WELL AS BY THE TRIBUNAL VIDE ORDER ITA NO.7034/MUM/2012 & OTH ERS DATED 16/1/2013. 3. SUBSEQUENTLY, THE ASSESSING OFFICER HAS HELD TH E ASSESSEE GUILTY OF CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT, QUA TH E AFORESAID AMOUNT. AS A CONSEQUENCE THE ASSESSING OFFICER LEVIED A PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED ON THE AFORESAID SUM, WHICH CAME TO RS.1.50 CRORES. AS PER THE ASSESSING OFFICER, ASSESSEE HAD WILLFULLY CLAIMED T HE NON-COMPETE FEE OF RS.5.00 CRORES AS LONG TERM CAPITAL GAIN TO AVOI D TAXABILITY OF BUSINESS INCOME WHICH HAD RESULTED IN A LOSS OF REVENUE. TH E PENALTY SO IMPOSED BY THE ASSESSING OFFICER WAS CARRIED IN AP PEAL BEFORE THE CIT(A), WHO HAS ALSO AFFIRMED THE ACTION OF THE ASS ESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESS EE HAS ASSAILED THE LEVY OF PENALTY ON FACTS AND IN LAW. IT IS SOU GHT TO BE POINTED OUT THAT IN THE RETURN OF INCOME FILED, ASSESSEE HAD MA DE COMPLETE DISCLOSURE OF THE RECEIPT AS A CAPITAL RECEIPT AND, THEREFORE, THERE WAS NO CONCEALMENT. SECONDLY, IT IS POINTED OUT THAT T HE ADDITION MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 28(VA) OF THE ACT WAS MERELY 4 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) BASED ON AN INTERPRETATION OF LAW, WHICH WAS IN VAR IANCE WITH THAT OF THE ASSESSEE. ACCORDING TO THE APPELLANT, AT THE T IME OF FILING OF THE RETURN OF INCOME THE DECISION OF MUMBAI BENCH OF TH E TRIBUNAL IN THE CASE OF MRS. HAMI ASPI BALSARA VS. ACIT, 126 ITD 1 00(MUM) SUPPORTED THE STAND OF THE ASSESSEE AND, THEREFORE, THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME WAS A BONA-FIDE CL AIM. THIRDLY, IT IS POINTED OUT THAT IT IS A CASE WHERE A CLAIM MADE IN THE RETURN OF INCOME HAD BEEN FOUND TO BE UNSUSTAINABLE AND, NO PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS LEVIABLE HAVING REGARD TO T HE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIA NCE PETRO PRODUCTS LTD., 322 ITR 158(SC). IT HAS ALSO BEEN POINTED OU T THAT THERE IS NO VARIATION IN THE AMOUNT OF NON-COMPETE FEE DISCLO SED AND THE AMOUNT ASSESSED BY THE ASSESSING OFFICER AND THAT MERELY THE HEAD OF INCOME HAS BEEN CHANGED, WHICH DOES NOT JUSTIFY THE LEVY O F PENALTY AND IN SUPPORT RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BENNET CO ELMAN & CO. LTD., INCOME TAX APPEAL (LOD) NO. 2117 OF 2012 DATED 26/2 /2013, A COPY OF WHICH HAS BEEN PLACED ON RECORD. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE HAS DEFENDED THE LEVY OF PENALTY B Y POINTING OUT THAT APPLICABILITY OF SECTION 28(VA) OF THE ACT WAS CLEA RLY ESTABLISHED IN THE PRESENT CASE AND, THEREFORE, THE ACTION OF THE ASSE SSEE IN CONSIDERING NON-COMPETE FEE AS A LONG TERM CAPITAL GAIN WAS E RRONEOUS. LD. DEPARTMENTAL REPRESENTATIVE ALSO POINTED OUT THAT IT COULD NOT BE SAID THAT THE ISSUE WAS DEBATABLE SO AS TO MITIGATE THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AT THE TIME OF HEARI NG LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE JUDGMENT OF HON BLE SUPREME 5 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT, 358 ITR 593(SC) TO SUBMIT THAT EVEN IN A CASE OF A VOLUNTARY ADDITION, PENALT Y UNDER SECTION 271(1)(C) IS JUSTIFIED. LD. DEPARTMENTAL REPRESENTA TIVE HAS REFERRED TO THE DISCUSSION MADE BY THE CIT(A) IN HIS ORDER WHER EBY IT HAS BEEN CONCLUDED THAT THE EXPLANATION OF THE ASSESSEE REGA RDING NON- APPLICATION OF SECTION 28(VA) OF THE ACT WAS INCORR ECT AND NOT BONAFIDE. THEREFORE, THE PENALTY LEVIED UNDER SECTION 271(1)( C) OF THE ACT HAS BEEN SOUGHT TO BE DEFENDED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 271(1)(C) OF THE ACT PROVIDES FOR A LEVY OF PENALTY WHERE THE ASSESSING OFFICER IS SATISFIED THAT AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF S UCH INCOME. NOTABLY, THE IMPOSITION OF PENALTY IS CIRCUMSCRIBE D BY FULFILLMENT OF THE CONDITION THAT THE ASSESSEE HAS EITHER CONCEALE D THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 6.1 IN THE PRESENT CASE, THE PENALTY HAS BEEN LEVIE D WITH REGARD TO AN AMOUNT OF RS.5.00 CRORES, WHICH HAS BEEN FOUND TO B E ASSESSABLE AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINES S OR PROFESSION BY INVOCATION OF SECTION 28(VA) OF THE ACT. IN SO FAR AS THE MERIT OF THE SAID STAND OF THE ASSESSING OFFICER IS CONCERNED, T HE SAME IS NOT THE ISSUE BEFORE US. WHAT WE ARE CONCERNED IS THE PURP ORTED SATISFACTION OF THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR LEV Y OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSE E HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IN THIS CONTEXT, WE MAY BRIEFLY TOUCH UPON THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME AND THE MANNER IN WHICH IT DID NOT 6 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) FIND FAVOUR WITH THE ASSESSING OFFICER IN THE QUANT UM ASSESSMENT PROCEEDINGS. BRIEFLY PUT, THE RELEVANT FACTS ARE T HAT ASSESSEE IS ONE OF THE DIRECTORS OF A COMPANY CALLED CHEMITO TECHNOLOG IES PVT. LTD. SINCE 1/7/1983. THE SAID CONCERN IS ENGAGED IN THE MANUF ACTURE AND ASSEMBLING OF VARIOUS TYPES OF LABORATORY EQUIPMENT S. THE SAID CONCERN SOLD ONE OF ITS DIVISION CALLED ANALYTIC AL TECHNOLOGIES AND INSTRUMENTATION TO M/S. TERMO ELECTRON LLS INDIA PVT. LTD. ON SLUMP SALE BASIS VIDE AGREEMENT DATED 27/5/2008 FOR A CON SIDERATION OF RS.58,00,00,000/-. IN THE SAID AGREEMENT THERE WAS A NON-COMPETE CLAUSE, IN TERMS OF WHICH THE SELLER FOR AN AGREED PERIOD OF FOUR YEARS WAS PROHIBITED, WITHOUT THE PRIOR WRITTEN CONSENT OF THE PURCHASER DIRECTLY OR INDIRECTLY, WHETHER THROUGH AFFILIATE O R OTHERWISE, ENGAGE IN ANY BUSINESS INVOLVING PRODUCTION, MANUFACTURE SALE OR DISTRIBUTION OF PRODUCTS THAT WERE THE SAME OR SIMILAR TO THE PRODU CTS PRODUCED, MANUFACTURED, MARKETED, SOLD OR DISTRIBUTED BY THE ACQUIRED BUSINESS AS OF DATE THEREON. THE RESTRICTIVE COVENANT ALSO PROHIBITED THE SELLER FROM ASSISTING THIRD PARTIES WHETHER AS CONSULTANT OR OTHERWISE IN CARRYING OUT ACTIVITIES OF THE ACQUIRED BUSINESS. SUBSEQUENTLY ON 2/6/2008, PURCHASER COMPANY M/S. M/S. TERMO ELECTRO N LLS INDIA PVT. LTD. ENTERED INTO A SEPARATE NON-COMPETE AND NON-SO LICITATION AGREEMENT WITH THE ASSESSEE WHEREBY THE ASSESSEE RE CEIVED A SUM OF RS.5.00 CRORES. IN THE RETURN OF INCOME FILED, ASS ESSEE TREATED SUCH RECEIPT ON ACCOUNT OF NON-COMPETE AND NON-SOLICITAT ION AGREEMENT AS A LONG TERM CAPITAL GAIN. SO HOWEVER, THE ASSESSIN G OFFICER WAS OF THE VIEW THAT SUCH RECEIPT WAS ASSESSABLE AS A BUSINESS INCOME UNDER SECTION 28(VA) OF THE ACT. BROADLY SPEAKING, THE A MOUNT OF RS.5.00 CRORES RECEIVED BY THE ASSESSEE FROM M/S. TERMO E LECTRON LLS INDIA 7 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) PVT. LTD. WAS FOR NOT CARRYING OUT THE BUSINESS O F THE SIMILAR NATURE FOR FOUR YEARS. THE ASSESSING OFFICER STRESSED ON THE PROVISIONS OF SECTION 28(VA) OF THE ACT, WHICH ARE AS FOLLOWS:- (VA) ANY SUM, WHETHER RECEIVED OR RECEIVABLE, IN C ASH OR KIND, UNDER AN AGREEMENT FOR (A) NOT CARRYING OUT ANY ACTIVITY IN RELATION TO ANY B USINESS; OR...... AND CONCLUDED THAT THE SUM OF RS.5 CRORES WAS AN AMOUNT ASSESSABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION AND NOT AS CAPITAL GAINS. 6.2 AS PER THE REVENUE, THE AFORESAID PROVISION INS ERTED BY FINANCE ACT, 2002 W.E.F. 1/4/2003 CLEARLY ESTABLISHED THAT THE SUM OF RS.5.00 CRORES RECEIVED BY THE ASSESSEE FOR NOT CARRYING OU T ANY ACTIVITY IN RELATION TO THE BUSINESS ACQUIRED BY M/S. TERMO ELE CTRON LLS INDIA PVT. LTD. WAS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND NOT AS CAPITAL GAINS, CONTENDE D BY THE ASSESSEE. AT THIS STAGE, WE MAY POINT OUT THAT WE ARE NOT CONSI DERING THE MERITS OF THE RESPECTIVE STANDS OF THE ASSESSEE AND THE REVE NUE, BUT ARE MERELY TRYING TO ASCERTAIN AS TO WHETHER THE CLAIM MADE BY THE ASSESSEE IN HIS RETURN OF INCOME THAT THE SUM OF RS.5.00 CRORES REC EIVED FROM M/S. TERMO ELECTRON LLS INDIA PVT. LTD. WAS CHARGEABLE TO TAX AS A LONG TERM CAPITAL GAIN WAS A BONAFIDE CLAIM OR NOT. IN SUPPO RT OF THE BONAFIDES OF ASSESSEES CLAIM, IT HAS BEEN ASSERTED BEFORE US THAT AT THE TIME OF FILING OF THE RETURN OF INCOME THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MRS. HAMI ASPI BALSARA(SUPR A) DATED 22/5/2009 WAS PREVAILING WHICH WAS IN FAVOUR OF ASSESSEES ST AND. IN THE SAID DECISION, THE TRIBUNAL WAS DEALING WITH RECEIPT OF NON-COMPETE FEE FOR ASSESSMENT YEAR 2005-06, WHICH WAS AFTER INSERT ION OF SECTION 8 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) 28(VA) OF THE ACT, AND YET IT WAS HELD THAT THE NON -COMPETE FEE WAS CHARGEABLE TO TAX UNDER THE HEAD CAPITAL GAINS, H AVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE SAID DECISION, THE TRIBUNAL OBSERVED THAT THE PROVISIONS OF SECTION 28(VA) WOUL D BE ATTRACTED, WHERE THE NON-COMPETE FEE WAS RECEIVED BY THE ASSES SEE WHO WAS CARRYING ON BUSINESS AND NOT WHERE ASSESSEE ONLY HA D A RIGHT TO CARRY ON BUSINESS IN THE FORM OF A CAPITAL ASSET. ON TH E STRENGTH OF THE AFORESAID, THE POINT MADE OUT BY THE ASSESSEE IS TH AT THE BUSINESS WHICH HAS BEEN TRANSFERRED WAS BEING CARRIED OUT BY CHEMI TO TECHNOLOGIES PVT. LTD. AND NOT BY THE ASSESSEE HIMSELF BECAUSE A SSESSEE WAS A DIRECTOR OF CHEMITO TECHNOLOGIES PVT. LTD. 6.3 FACTUALLY SPEAKING, THE PROPOSITION SOUGHT TO B E CANVASSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 30/7/2009 WAS INDEED SUPPORTED BY THE THEN PREVAILING DECISION OF THE MU MBAI BENCH OF THE TRIBUNAL IN THE CASE OF MRS. HAMI ASPI BALSARA(SUPR A). IT IS ONLY SUBSEQUENTLY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DR. B.V. RAJU , 135 ITD 1(HYD)(SB) UPHELD A PROPOSITION WHIC H IS CONTRARY TO THAT LAID DOWN BY THE MUMBAI TRIBUNAL IN THE CASE OF MR S. HAMI ASPI BALSARA(SUPRA). THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DR. B.V. RAJU(SUPRA) NOTED THAT WHEN A BUSINESS IS SO LD AND THE PURCHASER ENTERS INTO AN AGREEMENT THAT THERE IS NO COMPETIT ION, HE MAY ENTER INTO SUCH AGREEMENT NOT ONLY WITH THE TRANSFEROR OF THE BUSINESS BUT ALSO WITH PERSONS CONNECTED WITH THE TRANSFEROR. A CCORDINGLY, AS PER SPECIAL BENCH THE PURCHASER OF BUSINESS MAY PAY CON SIDERATION TO THE TRANSFEROR OF BUSINESS FOR NOT ENGAGING IN ANY CO MPETITION BUT ALSO TO PERSONS ASSOCIATED WITH THE TRANSFEROR FOR NOT ENGA GING IN COMPETITION. AS PER THE SPECIAL BENCH, THE RECEIPT OF NON-COMPET E FEE BY THE 9 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) PERSONS CONNECTED WITH THE TRANSFEROR FOR NOT INDUL GING IN COMPETITION WOULD ALSO FALL FOR CONSIDERATION UNDER SECTION 28 (VA) OF THE ACT. IT IS THIS PROPOSITION WHICH HAS PREVAILED AND THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN THE QUANTUM ASSESSMENT PROC EEDINGS. 6.4 BE THAT AS IT MAY, THE AFORESAID DISCUSSION CLE ARLY BRINGS OUT THAT THE CLAIM MADE BY THE ASSESSEE IN HIS RETURN OF INC OME TO THE EFFECT THAT THE NON-COMPETE FEE AND NON-SOLICITATION FEE R ECEIVED FROM M/S. TERMO ELECTRON LLS INDIA PVT. LTD. WAS A LONG TERM CAPITAL GAIN, CANNOT BE CONSTRUED TO BE NON-BONAFIDE OR FANCIFUL, BECAU SE IT WAS SUPPORTED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF MRS. HAMI ASPI BALSARA(SUPRA), WHICH WAS PREVAILING AT THE RELEVAN T TIME. IN FACT THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO AN OTHER DECISION OF THE TRIBUNAL IN THE CASE OF SAVITA MANDHANA IN ITA NO.3 900/MUM/2010 FOR ASSESSMENT YEAR 2006-07 DATED 7/10/2011, WHEREIN AL SO THE PROPOSITION LAID DOWN BY THE TRIBUNAL IN THE CASE MRS. HAMI ASPI BALSARA(SUPRA) HAS BEEN AFFIRMED. THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DR. V.V. RAJU (SUPRA), WHICH HAS DISAGREED WITH THE EARLIER RULINGS HAS BEEN PRONOUNCED ON 13/ 02/2012, WHICH IS MUCH AFTER THE RETURN OF INCOME FILED BY THE ASSESS EE ON 30/07/2009. THEREFORE, IN OUR VIEW, THE RETURN OF INCOME FILED BY THE ASSESSEE CLAIMING THE IMPUGNED SUM AS A LONG TERM CAPITAL G AIN CANNOT BE CONSTRUED AS A CLAIM MADE TO AVOID TAXABILITY OF THE BUSINESS INCOME , AS CHARGED BY THE ASSESSING OFFICER IN THE IMPUGNE D PENALTY ORDER. 6.5 PERTINENTLY, THE SCENARIO CAN ALSO BE LOOKED A T FROM ANOTHER ANGLE, WHICH IS BASED ON A PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S PVT. LTD. (SUPRA). 10 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) AS PER HONBLE SUPREME COURT, WHERE NO INFORMATION GIVEN IN THE RETURN OF INCOME IS FOUND TO BE INCORRECT OR INACC URATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PAR TICULARS. AS PER THE HONBLE SUPREME COURT, MERE MAKING OF WRONG CLAIM IN THE RETURN OF INCOME WOULD NOT TANTAMOUNT TO FURNISHING OF INACC URATE PARTICULARS OF INCOME. QUITE CLEARLY, IN THE PRESENT CASE, THERE IS NO CHARGE MUCH LESS A FINDING BY THE REVENUE THAT ANY OF THE PARTICULAR S REGARDING THE RECEIPT OF RS.5.00 CRORES FROM M/S. TERMO ELECTRON LLS INDIA PVT. LTD. HAVE BEEN FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE. THE ONLY POINT OF DIFFERENCE BETWEEN THE ASSESSEE AND THE REVENUE IS THE RELEVANT HEAD OF INCOME UNDER WHICH THE RECEIPT FROM M/S. T ERMO ELECTRON LLS INDIA PVT. LTD. IS LIABLE TO BE TAXED. THEREFORE, IT IS A CASE WHERE A CLAIM MADE IN THE RETURN OF INCOME OF TAXING THE RECEIPT FROM M/S. TERMO ELECTRON LLS INDIA PVT. LTD. UNDER THE HEAD CAPIT AL GAINHAS BEEN FOUND TO BE NOT SUSTAINABLE IN LAW. AS PER THE AUTHORITA TIVE PRONOUNCEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RELIAN CE PETRO PRODUCTS LTD. (SUPRA), SUCH A FACT-SITUATION DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING INCOME WITHIN THE MEANING OF SECTION UNDER 271(1)(C) OF THE ACT. THUS, ON THIS ASPECT IT SELF THE PENALTY IS UNSUSTAINABLE. 6.6 TO REPEAT, THE ENTIRE FACT-SITUATION OF THE DI SPUTE REVEALS THAT DIFFERENCE BETWEEN THE ASSESSEE AND THE REVENUE REV OLVES AROUND THE HEAD OF INCOME UNDER WHICH THE IMPUGNED RECEIPT FRO M M/S. TERMO ELECTRON LLS INDIA PVT. LTD. IS LIABLE TO BE TAXED. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. BENNETT COLEMAN & C O. LTD.(SUPRA) HELD THAT WHERE THERE IS ONLY A CHANGE OF HEAD OF INCOME AND IN THE ABSENCE OF FACTS TO SHOW THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE, 11 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT M AINTAINABLE. ON THIS COUNT ALSO, WE FIND THAT THE PENALTY IMPOSED UNDER SECTION 271(1)(C) IN THE PRESENT CASE IS UNSUSTAINABLE. 6.7 BEFORE PARTING, WE MAY REFER TO THE RELIANCE PL ACED BY THE CIT(A) AS WELL AS BY THE LD. DEPARTMENTAL REPRESENTATIVE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LT D.(SUPRA) TO JUSTIFY THE LEVY OF PENALTY IN THE PRESENT CASE. WE HAVE C AREFULLY PERUSED THE JUDGMENT OF HONBLE SUPREME COURT AND FIND THAT THE SAID DECISION HAS BEEN RENDERED UNDER DIFFERENT FACTS AND CIRCUMSTANC ES AND THE SAME IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE HONBLE SUPREME COURT WAS CONSIDERING A SITUATION WHERE THE PENALTY WAS DELETED BY THE TRIBUNAL ON THE GROUND THAT THE AMOUNT WAS SURRENDE RED BY THE ASSESSEE TO SETTLE THE DISPUTE WITH THE DEPARTMENT. NOTABLY, HONBLE SUPREME COURT AFFIRMED THE DECISION OF THE HIGH COU RT TO THE EFFECT THAT THE IMPOSITION OF PENALTY COULD NOT BE DELETED SOLELY ON THE BASIS THAT ASSESSEE SURRENDERED AN INCOME TO SETTLE THE DISPUTE. IN FACT, THE FACT-SITUATION BEFORE US STANDS ON A DIFFERENT FOO TING. THE HONBLE SUPREME COURT EXPLAINED THAT IN THE COURSE OF EXAMI NING THE EFFICACY OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT , THE QUESTION TO BE EXAMINED IS WHETHER THE ASSESSEE HAS OFFERED ANY E XPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AS PER HONBLE SUPREME COUR T, THE EXPLANATION TO SECTION 271(1) OF THE ACT RAISES A PRESUMPTION O F CONCEALMENT WHEN A DIFFERENCE IS NOTED BY THE ASSESSING OFFICER BETW EEN THE REPORTED AND ASSESSED INCOME; THAT IN SUCH A SITUATION THE BURD EN IS ON THE ASSESSEE TO SHOW OTHERWISE, ON THE BASIS OF ANY COGENT AND R ELIABLE EVIDENCE. THE HONBLE SUPREME COURT FURTHER EXPLAINED THAT WH EN ASSESSEE 12 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) DISCHARGES SUCH INITIAL ONUS, THEN THE BURDEN SHIFT S ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED AN INC OME AND NOT OTHERWISE. HONBLE SUPREME COURT APPLIED THE AFORE SAID PROPOSITION TO THE FACTS OF THE CASE BEFORE IT AND FOUND THAT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS EXIGIBLE. SO HOWEVER, IN THE CONTEXT OF THE FACTUAL MATRIX WHICH IS BEFORE US, THE PENALTY UNDE R SECTION 271(1)(C) OF THE ACT CANNOT BE JUSTIFIED EVEN ON APPLICATION OF THE AFORESAID LEGAL PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA P. LTD.(SUPRA). WE SAY SO FOR THE REASON THA T IN THE PRESENT CASE ASSESSEE HAS BEEN ABLE TO DEMONSTRATE THAT THE CLAI M MADE IN THE RETURN OF INCOME WAS A BONAFIDE CLAIM AND THAT THE SAME WAS ALSO SUPPORTED BY THE DECISION OF THE TRIBUNAL PREVAILIN G AT THE RELEVANT POINT OF TIME. THEREFORE, THE INITIAL ONUS ON THE ASSESSEE IS DISCHARGED IN THE PRESENT CASE AND IN OUR VIEW, THE BURDEN WAS ON THE REVENUE TO DEMONSTRATE THAT THE EXPLANATION RENDERED BY THE A SSESSEE IS BEREFT OF ANY SUBSTANCE. IN OUR CONSIDERED OPINION, THE REVE NUE HAS FAILED TO DEMONSTRATE THAT THERE IS ANY CONSCIOUS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE RETURN OF I NCOME QUA THE AMOUNT OF RS.5.00 CRORES RECEIVED BY THE ASSESSEE A S NON-COMPETE AND NON-SOLICITATION FEE FROM M/S. TERMO ELECTRON LLS I NDIA PVT. LTD. THEREFORE, THE RATIO OF THE JUDGMENT OF HONBLE SUP REME COURT IN THE CASE OF MAK DATA P. LTD.(SUPRA) DOES NOT HELP THE CASE OF THE REVENUE IN THE INSTANT APPEAL. 6.8 IN CONCLUSION, WE THEREFORE, HOLD THAT HAVING R EGARD TO THE AFORESAID DISCUSSION, THE LOWER AUTHORITIES HAVE ER RED IN IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTIN G TO RS.1,50,00,000/-. ACCORDINGLY, THE ORDER OF THE C IT(A) IS SET ASIDE AND 13 ITA NO.210&211/MUM/2015 (ASSESSMENT YEAR : 2009-10) THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PEN ALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 6.9 IN SO FAR AS THE OTHER CAPTIONED APPEAL IN THE CASE OF ANURAG TOSHNIWAL IS CONCERNED, THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THOSE CONSIDERED IN THE CASE ARUN TOSHNIWAL IN THE EARLIER PARAS. THEREFORE, OUR DECISION IN THE APPEAL OF ARUN TOSHN IWAL(SUPRA) WOULD APPLY MUTATIS MUTANDIS IN THE OTHER CAPTIONED APPEAL ALSO. 7. RESULTANTLY, THE CAPTIONED APPEALS ARE ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2015 SD/- SD/- (SANJAY GARG) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 30/09/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS