Dy. CIT, Pune V. Avi Electronics and Netwoks P Ltd, Pune

ITA 2261/PUN/2012

• Counselvise Citation: 226124514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Rule of consistency; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2261/PN/2012 (ASSESSMENT YEAR 2005-06) DY.CIT, CIRCLE-1(1), PUNE .. APPELLANT VS. AVI ELECTRONICS AND NETWORKS PVT. LTD., 302-303, POONAM PLAZA, 694/2B, MARKET YARD ROAD, PUNE-411037. .. RESPONDENT PAN NO.AADCA2707Q ASSESSEE BY : NONE REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 21-03-2014 DATE OF PRONOUNCEMENT : 25-03-2014 ORDER PER R.S. PADVEKAR, JM : THIS APPEAL FILED IS BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD.CIT(A)-I, PUNE DATED 26-06-2012 FOR THE A.Y. 2005- 06 AS THE LD.CIT(A) AS DELETED THE PENALTY LEVIED B Y THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT. 2. THE REVENUE HAS TAKEN MULTIPLE GROUNDS ON THE IS SUE BUT THE ISSUE FOR ADJUDICATION BEFORE US IS WHETHER LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICE R U/S.271(1)(C) OF THE ACT AS THE ASSESSEES CLAIM OF DEDUCTION U/S .80IA(4)(II) OF THE ACT WAS REJECTED AND ADDITION WAS MADE. 3. FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDE R. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 20 05-06 DECLARING TOTAL INCOME OF RS.2,38,430/-. ASSESSMENT OF THE A SSESSEE WAS COMPLETED U/S.143(3) DETERMINING TOTAL INCOME AT RS .24,06,020/. 2 ASSESSEE HAS CLAIMED THE DEDUCTION U/S.80IA(4)(II) OF THE I.T. ACT AT RS.18,01,674/-. THE SAID CLAIM OF THE DEDUCTION WAS REJECTED BY THE ASSESSING OFFICER. 3.1 THE ASSESSING OFFICER HAS OBSERVED THAT THE ASS ESSEE COMPANY BASICALLY CARRIES ON BUSINESS AS TRADER FOR ALL PRODUCTS OF TELECOMMUNICATION AND RADIO TRANSMISSION EQUIPMENTS , TELECOM CABLES, OPTICAL FIBER CABLES, UG CABLES, VSAT EQUIP MENTS, ETC. AND ALSO UNDERTAKES JOB WORK FOR DEFENSE PROJECTS AND A LSO OFFERS CONSULTING SERVICES AND THAT THE ASSESSEE COMPANY I S A MERE TRADER AND CONTRACTOR. SHE HAS FURTHER OBSERVED THA T THE FIXED ASSET SCHEDULE OF THE ASSESSEE COMPANY DOES NOT SHO W ANY ASSET BY VIRTUE OF WHICH THE ASSESSEE COMPANY CAN CLAIM T O BE A SERVICE PROVIDER. IT IS FURTHER STATED THAT THE ASSESSEE HA S ONLY BEEN AWARDED A CONTRACT OF PROVIDING CERTAIN EQUIPMENTS, LAYING OF CABLES, ETC. AND IN THE PROCESS HAS ONLY EXECUTED T HE CONTRACT AS PER THE TERMS, TO PROVIDE NECESSARY SUPPORT FOR THE ARMY ESTABLISHMENTS IN SETTING UP THE TELECOMMUNICATION NETWORK AND IS NOT IN ITSELF A SERVICE PROVIDER WHICH BECOMES CLEA R WHEN THE ACTIVITY OF THE ASSESSEE COMPANY IS COMPARED WITH T HE SERVICE PROVIDERS, VIZ., AIRTEL, IDEA, VSNL, BSNL, ETC. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE COMPANY IS PROVI DING SERVICES TO THE ARMY ONLY BY VIRTUE OF DEPLOYING THE NECESSA RY MANPOWER IN THE SPECIFIC CENTERS FOR RENDERING SERVICES LIKE ALLOCATION OF BANDWIDTH FOR THE REQUISITE VOICE/DATA APPLICATION, MAINTAINING OF DATA TERMINAL UNIT AND ATTENDING TO TROUBLESHOOT FA ULTS/COMPLAINTS AT ANY OF THE LOCATIONS. IT IS FURTHER STATED THAT THE ASSESSEE IS NOT IN RECEIPT OF ANY TARIFF FOR THE SERVICES RENDERED, THE ASSESSEE IS NOT CONTROLLED OR REGULATED BY THE TELECOM REGULATO RY AUTHORITY OF 3 INDIA (TRAI) AND THAT THE ASSESSEE HAS NOT MADE ANY INVESTMENT TOWARDS THE INFRASTRUCTURE. THE ASSESSING OFFICER H AS HELD THAT THE CONDITIONS STIPULATED IN SECTION 80IA(4)(II) OF THE ACT ARE NOT FULFILLED BY THE ASSESSEE AND ACCORDINGLY DISALLOWE D THE CLAIM OF DEDUCTION OF RS. 18,01,674/-U/S. 80IA(4)(II) OF THE ACT 3.2 THE ASSESSING OFFICER LEVIED THE PENALTY OF RS. 6,30,586/- ON THE SAID DISALLOWANCE U/S.271(1)(C) OF THE ACT FOR CONCEALING AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE A SSESSEE CHALLENGED THE SAID ORDER BEFORE THE LD.CIT(A) AND LD.CIT(A) DELETED THE PENALTY FOLLOWING HIS OWN ORDER IN ASSE SSEES CASE FOR A.Y. 2003-04. THE OPERATIVE PART OF THE ORDER OF T HE LD.CIT(A) FOR A.Y. 2003-04 IS REPRODUCED AS UNDER : '8. AS CAN BE SEEN FROM THE PERUSAL OF THE PENALTY ORDER QUOTED SUPRA, THAT THE APPELLANT DURING THE COURSE OF PENA LTY PROCEEDINGS, HAD CONTENDED BEFORE THE ASSESSING OFFICER THAT THE CLAIM OF DEDUCTION UNDER SEC. 80IA(4) WAS MADE UNDER THE BON AFIDE IMPRESSION THAT IT IS ELIGIBLE FOR IT. THE APPELLAN T FURTHER CONTENDED THAT THE CLAIM OF THE ASSESSEE COMPANY WAS FIRST DI SALLOWED IN THE ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR UNDE R CONSIDERATION, WHICH WAS UPHELD IN APPELLATE PROCEE DINGS AND THAT THE RETURN FOR THE ASSESSMENT YEAR IN QUESTION WAS FILED MUCH BEFORE THE ASSESSEE CAME TO KNOW THAT HE IS NOT ELI GIBLE TO CLAIM DEDUCTION. THESE CONTENTIONS OF THE APPELLANT DID N OT FIND FAVOUR WITH THE ASSESSING OFFICER WHO DENIED DEDUCTION UND ER SEC. 80IA(4)(II) CLAIMED BY THE APPELLANT AND SUBSEQUENT LY HELD THE PENALTY UNDER SEC. 271(1)(C) AS LEVIABLE ON THE GRO UNDS THAT THE APPELLANT DID NOT PRODUCE ANY COGENT EVIDENCE IN SU PPORT OF ITS CLAIM THAT IT WAS PROVIDING TELECOMMUNICATION SERVI CES. THE ASSESSING OFFICER ON THE OTHER HAND HAS STATED IN T HE PENALTY ORDER THAT THE LANGUAGE OF SECTION 80IA(4)(II) IS VERY CL EAR AND THERE IS NO AMBIGUITY ABOUT ITS ELIGIBILITY OR INELIGIBILITY AND THUS, THE APPELLANT HAS CLAIMED FALSE DEDUCTION U/S 80IA(4)(I I) OF THE I. T. ACT. 8.1 ON CAREFUL CONSIDERATION OF THE FACTS OF THE C ASE AND THE LAW, IT IS SEEN THAT THE PENALTY U/S.271(1)(C) WAS IMPOS ED IN THE PRESENT CASE IN RESPECT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE GROUNDS THAT THE APPELLANT HAS FURNI SHED INACCURATE PARTICULARS OF INCOME THEREBY LEADING TO UNDERASSES SMENT OF INCOME AND SECONDLY, THE EXPLANATION OF THE APPELLA NT REMAINED TO BE SUBSTANTIATED AND PROVED AS BONAFIDE. THEREFORE, BY INVOKING 4 EXPLANATION 1 TO SEC.271(1)(C), THE ASSESSING OFFIC ER LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. SE C. 271(1)(C) OF THE IT. ACT MAKES A PROVISION FOR IMPOSITION OF PEN ALTY WHEN THE ASSESSEE HAS CONCEALED INCOME OR WHEN THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN ADDI TION TO THESE TWO SITUATIONS, PENALTY CAN ALSO BE IMPOSED, INTER ALIA , WHEN ASSESSEE IS- DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME UNDER EXPLANATION TO SEC. 271(1)(C). A DEEMING FICTION UN DER EXPLANATION 1 TO SEC. 271(1)(C) ENVISAGES TWO SITUATIONS (A) F IRST, WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSES SEE IS FOUND TO BE FALSE BY THE AO OR THE CIT(A); AND, (B) SECOND, WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THIS ACT, THE ASSESSEE IS N OT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACT S RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL I NCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. IN THE FIRST SITUAT ION, THE DEEMING FICTION IS TRIGGERED BY THE INACTION OF THE ASSESSE E BY HIS NOT GIVING THE EXPLANATION WITH RESPECT TO ANY FACT MATERIAL T O THE COMPUTATION OF TOTAL INCOME, OR BY ACTION OF THE AO OR THE CIT(A) BY GIVING CATEGORICAL FINDING TO THE EFFECT THAT TH E EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUA TION, THE DEEMING FICTION IS TRIGGERED BY THE FAILURE OF THE ASSESSEE LEADING TO SATISFACTION OF CONDITIONS LAID DOWN IN CL. (B) OF EXPLANATION 1 NAMELY THAT THE ASSESSEE IS NOT ABLE TO SUBSTANTIAT E ART EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME, AND THE ASSESSEE IS ALSO NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS BONA FIDE AND ALL THE FACTS RELATIN G TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. WHEN THIS DEEMING FICTIO N COMES INTO PLAY, WHICH CAN ONLY HAPPEN IN ONE OF THE ABOVE SIT UATIONS, THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE T OTAL INCOME OF THE ASSESSEE, FOR THE PURPOSES OF S. 271(1)(C), IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. THUS, IT IS BY VIRTUE OF EXPLA NATION 1 TO SEC. 271(1)(C) ONLY THAT THE ASSESSING OFFICER HAS BEEN GIVEN A RIGHT TO RAISE A PRESUMPTION TO DEEM CERTAIN SUM ADDED TO IN COME OR DISALLOWED IN COMPUTING THE INCOME OF A PERSON, TO REPRESENT/THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED, IF (THE ASSESSEE DID NOT FURNISH AN EXPLANATION OR WHEN EXP LANATION FURNISHED WAS FOUND TO BE FALSE; AND ALSO WHEN SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT A LL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PENALTY UNDE R SEC. 271(1)(C) IS A PENALTY FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS, OR, UNDER THE EXTENDED D EFINITION BY THE VIRTUE OF EXPLN. 1 TO SEC. 271(1)(C), FOR A DEEMED CONCEALMENT OF INCOME. AS A COROLLARY TO THIS LEGAL POSITION, UNLE SS IT IS ESTABLISHED THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OR IT IS ESTABLISHED THAT, ON THE FACTS OF THE CASE, CONCEALMENT OF INCOME CAN BE DEEMED IN ACCORDANCE W ITH THE 5 PROVISIONS OF THE EXPLANATION, PENALTY CANNOT BE IM POSED UNDER SECTION 271(1)(C). 8.2 THE FACTS OF THE PRESENT CASE ARE NOW TESTED VI S-A-VIS THE ABOVE LEGAL POSITION TO EXAMINE WHETHER THE; PRESEN T CASE IS COVERED UNDER THE MAIN PART OF THE PROVISIONS OR UN DER THE DEEMING PROVISIONS OF EXPLANATION 1 OF SECTION 271( 1)(C) OR NOT. 8.3 THE NECESSARY PRECONDITION FOR IMPOSITION OF PE NALTY UNDER THE MAIN PROVISIONS OF SEC. 271(1)(C) IS THAT THE A .O. SHOULD SATISFY HIMSELF THAT THE APPELLANT CONCEALED ITS IN COME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE EXPRESSION 'C ONCEALMENT OF INCOME HAS NOT BEEN DEFINED IN THE ACT, BUT THE NA TURAL MEANING OF THE EXPRESSION 'CONCEALMENT' IS 'TO KEEP FROM BE ING SEEN, FOUND, OBSERVED, OR DISCOVERED'. IT WOULD, THEREFORE, FOLL OW THAT THE EXPRESSION CONCEALMENT OF INCOME, IN ITS NATURAL SE NSE AND GRAMMATICAL MEANING, IMPLIES AN INCOME IS BEING HID DEN, CAMOUFLAGED OR COVERED UP SO THAT IT CANNOT BE SEEN , FOUND, OBSERVED OR DISCOVERED. BUT, IN THE PRESENT CASE, T HE APPELLANT HAS CLAIMED DEDUCTION UNDER SECTION 80IA(4)(II) WHICH W AS VERY-MUCH AVAILABLE ON THE RETURN OF INCOME FILED AND THERE I S NO INDICATION FROM THE ASSESSMENT RECORD THAT ANY NEW FACTS HIDDE N FROM THE A.O. HAD BEEN UNEARTHED DURING THE ASSESSMENT PROCE EDINGS LEADING TO THE ADDITION/DISALLOWANCE IN QUESTION. A S CAN BE SEEN, IN THE PRESENT CASE, THE APPELLANT HAS ACTED IN A VERY TRANSPARENT MANNER BY DISCLOSING ALL THE FACTS RELATING TO THE LEGAL CLAIMS IN THE DOCUMENTS ACCOMPANYING THE RETURN OF INCOME AND THE RE CANNOT BE ANY CONCEALMENT OF INCOME IN SUCH A SITUATION. F URTHER, THE DIVERGENT VIEWS EXISTING ON THE ISSUE AT THE RELEVA NT POINT OF TIME SHOWED THAT THERE WAS A GENUINE DIFFERENCE OF OPINI ON BETWEEN THE APPELLANT AND THE ASSESSING OFFICER ON THIS ASPECT OF THE MATTER. UNDER SUCH CIRCUMSTANCES, IT COULD NOT BE SAID THAT THE APPELLANT HAD CONCEALED ITS INCOME. THE OTHER EXPRESSION 'FUR NISHING OF INACCURATE PARTICULARS OF INCOME' HAS ALSO NOT BEEN DEFINED IN THE ACT. THE PENALTY WAS LEVIED ON THE PREMISE THAT THE APPELLANT FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE CONTEXT OF 'FURNISHING OF INACCURATE PARTICULARS', THE EXPRESS ION 'INACCURATE REFERS TO 'NOT IN CONFORMITY WITH THE FACT OR TRUTH '. THE EXPRESSION 'PARTICULARS' REFERS TO 'FACTS, DETAILS, SPECIFICS, OR INFORMATION ABOUT SOMEONE OR SOMETHING'. THEREFORE, THE PLAIN MEANING OF THE EXPRESSION 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME W HICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH. IN THE PRESENT CASE, THE ASSESSING OFFICER HAS APPARENTLY PROCEEDED TO TREAT APPELLANT'S MAKING A LEGAL CLAIM OF INCOME AS FURNISHING OF INA CCURATE PARTICULARS. RAISING A LEGAL CLAIM, EVEN IF IT IS U LTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT TO FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. 'INACCURATE' DENOTES SOMETHI NG FACTUALLY INCORRECT AND INTERPRETATION OF LAW CAN GENERALLY N OT LEAD TO SUCH INFERENCE. JUST BECAUSE AN AO DOES NOT ACCEPT AN IN TERPRETATION, SUCH AN INTERPRETATION IS NOT RENDERED INCORRECT. E VEN THE JUDGMENTS OF HON'BLE SUPREME COURT ARE REVERSED BY THE LARGER BENCHES OF HON'BLE SUPREME COURT. IN SUCH CIRCUMSTA NCES, A BONA FIDE LEGAL CLAIM MADE BY THE APPELLANT CANNOT BE VI SITED WITH PENAL CONSEQUENCES MERELY BECAUSE IT HAS NOT BEEN ACCEPTE D THUS FAR BY 6 THE TAX AUTHORITIES. IN THE PRESENT CASE, NO INFORM ATION OR STATEMENT GIVEN IN THE RETURN OR DURING THE ASSESSM ENT PROCEEDINGS IS FOUND TO BE FACTUALLY INCORRECT OR I NACCURATE. IN ANY EVENT, EXPRESSION 'INACCURATE PARTICULARS OF INCOME ' DO NOT EXTEND TO THE ISSUES, WHICH ARE CAPABLE OF DIFFERENT INTER PRETATIONS UNDER LAW AND THEREFORE THE CASE OF THE APPELLANT CANNOT BE SAID TO BE A CASE OF 'FURNISHING OF INACCURATE PARTICULARS OF IN COME' EITHER. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NO T BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. 8.4 NOW THE CASE OF THE APPELLANT IS EXAMINED UNDER THE DEEMING PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C). T HIS DEEMING FICTION, AS MENTIONED EARLIER IN THIS ORDER, COMES INTO PLAY WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (I) WHEN THE A SSESSEE FAILS TO PROVIDE AN EXPLANATION, (II) WHEN THE ASSESSEE PROV IDES AN EXPLANATION WHICH IS FOUND TO BE FALSE, AND (III) W HEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTI ATE AND HE FAILS TO PROVE THAT THE EXPLANATION WAS BONA FIDE AND THA T ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. 8.5 IN THE INSTANT CASE, CONDITION (I) IS NOT SATIS FIED AS THE APPELLANT COMPANY HAD FILED AN EXPLANATION BEFORE T HE ASSESSING OFFICER DURING THE COURSE OF PENALTY PROCEEDINGS TH AT IT WAS OF THE BONA FIDE VIEW THAT IT IS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IA(4)(II) AS IT WAS PROVIDING THE BANDWIDTH SERVI CES TO ARMY. IN THE INSTANT CASE, NO FACTUAL INFORMATION GIVEN IN T HE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUAL LY INCORRECT. THUS, THE CONDITION (II) IS ALSO NOT SATISFIED AS T HERE IS NO FINDING IN THE PENALTY ORDER THAT THE EXPLANATION FURNISHED BY THE APPELLANT IS FALSE. AS FAR AS CONDITIONS IN (III) THERE IS NO FI NDING OF THE ASSESSING OFFICER THAT THE EXPLANATION FURNISHED BY THE APPELLANT WAS NOT BONA-FIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND NECESSARY FOR COMPUTATION OF INCOME WERE NOT DI SCLOSED IN THE RETURN OF INCOME FILED. THE ASSESSING OFFICER HAS N OT ALLEGED ANY FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. HENCE ON THE FACE OF IT LOOKS BONA FIDE. THEREFORE, THERE IS NO GOOD REASON TO REJECT THE SAME AS UNACCEPTABLE FOR THE PURPOSE OF MAKING OF T HE CLAIM OF DEDUCTION BEING COVERED BY THE DEEMING FICTION UNDE R EXPLANATION 1 TO S. 271(1)(C). THUS, THE ASSESSING OFFICER FAIL ED TO PROVE THAT THE PRESUMPTION OF CONCEALMENT AS CONTAINED IN EXPL ANATION 1 TO SEC.271(1)(C) OF THE IT. ACT WAS ATTRACTED IN THIS CASE AND THE APPELLANT FAILED TO REBUT THAT PRESUMPTION 8.6 IN VIEW OF THE REASONS SET OUT ABOVE, THE CASE OF THE ASSESSEE IS NOT EVEN HIT BY THE MISCHIEF OF ANY OF THE THREE SITUATIONS ENVISAGED BY THE DEEMING FICTION UNDER E XPLANATION 1 TO S. 271(1)(C). AS ALREADY OBSERVED EARLIER, ON THE F ACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLANT COULD NOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. IT IS THE SETTLED LAW THAT P ENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEE DINGS AND, 7 THEREFORE, IF ANY ADDITION IS MADE IN THE ASSESSMEN T ORDER, IT DOES NOT MEAN THAT THE PENALTY WILL AUTOMATICALLY BE LEV IED. IN THE PENALTY PROCEEDINGS THE ASSESSEE IS GIVEN AN OPPORT UNITY TO EXPLAIN HIS CASE. IF HE SUCCESSFULLY EXPLAINS HIS P OSITION AND IS NOT TRAPPED WITHIN THE PARAMETERS OF S. 271(1)(C) AND T HE EXPLANATIONS THERETO, PENALTY CANNOT BE IMPOSED. 8.7 TO SUM UP, RAISING A BONA FIDE LEGAL CLAIM IN THE RETURN OF INCOME, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALL Y NOT ACCEPTABLE, CANNOT AMOUNT TO CONCEALING PARTICULARS OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE APPELLANT CAN NOT BE SADDLED WITH PENAL CONSEQUENCES MERELY BECAUSE A BONA FIDE LEGAL CLAIM WAS MADE IN THE RETURN OF INCOME AND THE SAME HAS N OT BEEN ACCEPTED BY THE TAX AUTHORITIES OR APPELLATE AUTHOR ITIES SO FAR. THUS, THE CASE OF APPELLANT CANNOT BE SAID TO BE A CASE OF 'CONCEALING PARTICULARS OF INCOME' OR 'FURNISHING O F INACCURATE PARTICULARS OF INCOME' AS CONTEMPLATED UNDER SECTIO N 271 (1)(C). 8.8 IN THE PRESENT CASE, EVEN THE DEEMING FICTION U NDER THE EXPLANATION 1 COULD NOT BE INVOKED AS THE ONLY CONT ROVERSY WAS REGARDING ADMISSIBILITY OF A LEGAL CLAIM MADE BY TH E APPELLANT. IT IS NOT IN DISPUTE IN THE PRESENT CASE THAT ALL THE REL EVANT FACTS MATERIAL TO THE CLAIM AND COMPUTATION OF TOTAL INCO ME WERE DULY FURNISHED BY THE APPELLANT IN THE RETURN OF INCOME AND NO DEFICIENCIES IN FURNISHING OF SUCH FACTS WERE POINT ED OUT BY THE ASSESSING OFFICER. IF ONE LOOKS AT THE CONDUCT OF T HE APPELLANT WHILE FILING THE; RETURN OF INCOME AND DURING THE ASSESSM ENT PROCEEDINGS, THERE WAS NO CAUSE OF ACTION FOR INVOK ING THE DEEMING FICTION UNDER THE EXPLANATION. 8.8.1 IN THIS CONTEXT, REFERENCE CAN BE MADE TO THE LATEST DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. REPORTED IN 322 ITR 158, WHEREIN THE APEX COURT HELD AS UNDER : A GLANCE OF PROVISION OF SECTION 271(1)(C) WOULD SU GGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESS EE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT CASE WAS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE [EITHER. IT WAS AN ADMITTED POS ITION IN THE INSTANT CASE THAT NO INFORMATION GIVEN IN THE RETUR N WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY ST ATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCOR RECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE REVENUE ARGU ED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEND ITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SU CH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE 8 PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. [PARA 7] THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UND ER SECTION 271(1)(C) EXIST BEFORE THE PENALTY IS IMPOS ED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. [PARA 8] THE WORD 'PARTICULARS' MUST MEAN THE DETAILS SUPPLI ED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORREC T, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE W AS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEI NG THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INAC CURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MA DE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. [PARA 9] THE REVENUE CONTENDED THAT SINCE THE ASSESSEE HAD C LAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY WERE INCORRE CT, IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS: (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AM OUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXAB LE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PA RTICULARS OF INCOME. SUCH CONTENTION COULD NOT BE ACCEPTED AS TH E ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT IT S CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT, BY ITSELF, WOULD N OT ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF THE CONTENT ION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RET URN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESS ING OFFICER FOR ANY REASON, THE ASSESSEE WOULD' INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE IN TENDMENT OF THE LEGISLATURE. [PARA 10] (EMPHASIS SUPPLIED). 8.9 AFTER CONSIDERING THE ENTIRE CONSPECTUS OF THE CASE, THE LEGAL POSITION AND THE JUDICIAL PRONOUNCEMENTS AS DISCUSS ED HEREINABOVE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFF ICER FAILED TO PROVE THAT THIS IS A FIT CASE FOR THE IMPOSITION OF PENAL TY EITHER UNDER THE MAIN PART OF SECTION 271(1)(C) OR UNDER THE DEEMING PROV ISIONS OF EXPLANATION TO SECTION 271(1)(C) AND THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFIED IN LEVYING PENALTY INVOKING EXPLANATI ON 1 OF SEC.271(1)(C). 9 ACCORDINGLY, PENALTY OF RS.21,85,506/- LEVIED BY TH E ASSESSING OFFICER IS DELETED.' 4. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. LD. DEPARTMENTAL REPRESENTATIVE WAS PRESENT. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E. THE BENCH HAS PUT THE QUERY TO THE LD. DEPARTMENTAL REP RESENTATIVE WHETHER THE ORDER OF THE LD.CIT(A) FOR A.Y. 2003-04 DELETING THE PENALTY HAS BEEN CHALLENGED BY THE DEPARTMENT BEFOR E THE TRIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE SUBM ITTED THAT AS PER INFORMATION GIVEN BY THE ASSESSING OFFICER THE SAID ORDER WAS NOT CHALLENGED BY THE DEPARTMENT AND HAS BEEN ACCEP TED. THE FACTS ARE IDENTICAL IN THIS YEAR. SO FAR AS A.Y. 2 003-04 IS CONCERNED THE ORDER OF THE LD.CIT(A) ON THE IDENTIC AL SET OF FACTS HAS REACHED FINALITY WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. WE, THEREFORE, FOLLOWING THE RULE OF CONSISTENCY CO NFIRM THE ORDER OF THE LD.CIT(A) FOR DELETING THE PENALTY. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25-03-2014. SD/- SD/- (R.K. PANDA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 25 TH MARCH, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4 CIT-I PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUN E BENCHES, PUNE