KGK CREATIONS (INDIA) P. LTD, MUMBAI V. ACIT RG 5(2), MUMBAI

ITA 2320/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7654 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Keywords: Bogus purchase; Agreed addition; Revised return
• Section: 271(1)(c); 11A; 133A; 251; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI. BEFORE SHRI R.K. GUPTA, J.M. AND SHRI J. SUDHAKAR REDDY, A.M. I.T.A. NO. 2 320/MUM/2009. ASSESSMENT YEAR : 2005-06 M/S KGK CREATIONS (INDIA) P. LTD., ASSTT. COMMISSIONER OF C/O KARNAVAT & CO., VS. INCOME TAX, 2A KITAB MAHAL, 1 ST FLOOR, RANGE-5(2) , MUMBAI. 192 DR. D.N. ROAD, MUMBAI 400 001. PAN AABCK4456A APPELLANT RESPONDENT APPELLANT BY : SHRI VIJAY MEHTA. RESPONDENT BY : SHRI LAL CHAND. O R D E R PER J. SUDHAKAR REDDY, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE CIT(APPEALS)-V, MUMBAI DATED 13-02-200 9 FOR THE ASSESSMENT YEAR 2005-06, WHEREIN A PENALTY LEVIED U /S 271(1)(C) OF THE ACT WAS CONFIRMED. 2. FACTS IN BRIEF: THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF MANUFACTURE OF STUDDED JEWELLERY AND SELLING THE SA ME IN THE DOMESTIC MARKET. THE REQUIRED RAW MATERIAL IN THE FORM OF CU T AND POLISHED DIAMONDS IS ALSO SOURCED FROM LOCAL SUPPLIERS. THE INCOME TAX DEPARTMENT CONDUCTED A SURVEY ACTION U/S 133A OF TH E INCOME TAX ACT, 1961 AT THE OFFICE PREMISES OF THE ASSESSEE COMPANY IN MUMBAI ON 13- 2 12-2006. DURING THE SURVEY ACTION, ENQUIRIES WERE M ADE IN RESPECT OF POLISHED DIAMONDS PURCHASED FROM LOCAL SUPPLIERS IN CLUDING PURCHASED FROM ONE M/S PUJAN IMPEX AND M/S MARVEL IMPEX ON TH E GROUND THAT THEY ARE NOT GENUINE PARTIES. NO STATEMENTS WERE RE CORDED FROM ANY PERSON DURING THE COURSE OF SURVEY. EARLIER THE INC OME TAX DEPARTMENT HAD CONDUCTED SURVEY IN THE CASE OF M/S PUJAN IMPEX AND M/S MARVEL IMPEX AND HAVE COME TO A CONCLUSION THAT THE PURCHA SES FROM THEM WERE NOT GENUINE. THIS FACT WAS CONFRONTED TO THE ASSESS EE. THE ASSESSEE IN RESPONSE, STATED AS FOLLOWS : 5.1 THE ASSESSEE IN THIS RESPECT SUBMITTED AS FOL LOWS: IN THIS RESPECT IT IS SUBMITTED THAT ALL PURCHASE S WERE GENUINE AND ALL PAYMENTS WERE MADE THROUGH CROSS A/C PAYEE CHEQUES. THERE WERE NO ACCOMMODATION BILLS. WHILE THE SAID P URCHASES ARE GENUINE, WE MAY NOT ABLE TO SUBSTANTIATE THE SAME T O THE COMPLETE SATISFACTION OF TAX AUTHORITIES DUE TO INADEQUACY O F DOCUMENTARY EVIDENCE AND POSSIBLE NON-COOPERATION OF THE PARTY AND OTHER DIVERSE REASONS. WITH A VIEW TO BUY PEACE AND AVOID PROTRACTED LITIGATION, WE HAD AGREED TO OFFER ADDITIONAL INCOM E FOR TAXATION AND PAY THE TAX THEREON. 3. THE ASSESSEE FILED A REVISED RETURN AND PAID TA XES THEREON. THIS REVISED RETURN OF INCOME WAS ACCEPTED BY THE A O AND NO FURTHER ADDITIONS HAVE BEEN MADE. THERE WERE NO PURCHASES F ROM M/S MARVEL IMPEX DURING THE YEAR. THE PURCHASES MADE FROM M/S PUJAN IMPEX WERE OFFERED TO TAX AS INCOME. THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). THE ASSESSEE FILED ITS EXPLANATION ON 09 -05-2008. IN THIS EXPLANATION THE ASSESSEE CONTENDED THAT A) ALL PUR CHASES MADE WERE GENUINE AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHE QUES, B) ALL GOODS PURCHASED WERE UTILIZED IN THE PRODUCTION OF STUDDE D JEWELLERY WHICH WERE LATER SOLD IN THE LOCAL MARKET, C) THAT ADDITI ONAL INCOME WAS OFFERED BY THE COMPANY VOLUNTARILY AND SOLELY WITH A VIEW T O BUY PEACE OF MIND 3 AND TO AVOID THE PROTRACTED LITIGATION WHICH INVOLV ES WASTAGE OF LOT OF TIME, MONEY AND THAT THIS VOLUNTARY OFFER WAS COUPL ED WITH THE PRAYER THAT NO PENAL ACTION SHOULD BE INITIATED, D) THERE IS NO DIFFERENCE BETWEEN THE ASSESSED INCOME AND THE RETURNED INCOME AS PER THE REVISED RETURN OF INCOME FILED AND HENCE NO PENALTY SHOULD BE LEVIED AGAINST THE ASSESSEE. 4. THE AO REJECTED THIS EXPLANATION. HE HELD THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE GENUINENESS OF THE PU RCHASES CLAIMED TO HAVE BEEN MADE FROM M/S PUJAN IMPEX AND THAT THE VO LUNTARY OFFER WAS NOT MADE SUO MOTO AND ONLY ON DETECTION DURING THE COURSE OF SURVEY, THE ASSESSEE CAME FORWARD TO MAKE A DECLARATION. THE AO HELD THAT THE ASSESSEE CONCEALED THE PARTICULARS OF ITS INCOME BY FURNISHING INACCURATE PARTICULARS AND CLAIMING BOGUS PURCHASES. HE LEVIED 100% OF THE TAX SOUGHT TO BE EVADED AS PENALTY. ON APPEAL, THE FIRS T APPELLATE AUTHORITY CONFIRMED THE ORDER OF THE AO. FURTHER AGGRIEVED, T HE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, MR. VIJAY MEHTA, FILED A PAPER BOOK RUNNING INTO PAGES 1 TO 49 AND SUBMITT ED THAT THE ASSESSEE VOLUNTARILY AND SOLELY WITH AN INTENTION TO BUY PEA CE OF MIND AND TO AVOID PROTRACTED LITIGATION, HAD COME FORWARD TO FILE A R EVISED RETURN OF INCOME. HE VEHEMENTLY CONTENDED THAT THE PURCHASES WERE GEN UINE AND HAD BEEN UTILIZED IN THE MANUFACTURE OF STUDDED JEWELLERY, W HICH WAS LATER ON SOLD. HE POINTED OUT THAT THE AO HAS NEVER DOUBTED THE F ACT THAT THE ASSESSEE HAD MANUFACTURED CERTAIN STUDDED JEWELLERY FROM OUT OF THESE PURCHASES AND HAS ALSO NOT DISPUTED THE FACT THAT SUCH JEWELL ERY WAS SOLD. HE CONTENDED THAT WHEN A SALE IS ACCEPTED AND FACT OF MANUFACTURE IS ACCEPTED, THEN THE QUESTION OF NOT ACCEPTING THE PU RCHASES DOES NOT ARISE. HE DREW THE ATTENTION OF THE BENCH TO PAGE 4 OF THE PAPER BOOK WHICH IS A 4 BILL DATED 05-03-2005 FROM PUJAN IMPEX WHICH DISCLO SES THAT THE ASSESSEE HAS PURCHASED 492.19 CARATS FOR RS.44,57,381/- AND ANOTHER BILL OF EVEN DATED I.E. 05-03-2005 DISCLOSING PURCHASES OF 188.6 7 CARATS FOR RS.38,69,090/-. ON PAGES 6 AND 7 HE FILED A COPY OF THE STOCK REGISTER AT THE HEAD OFFICE AND ON PAGE 7 HE DREW THE ATTENTION OF THE BENCH TO THE ENTRY ON 6 TH MARCH, 2005 WHICH DISCLOSES 680.86 CARATS AS PURCH ASES FROM PUJAN IMPEX AS RECEIVED IN STOCK AND THEREAFTER ON 7, 8, 10 AND 11 TH MARCH ISSUE OF VARIOUS QUANTITIES TO THE FACTORY AN D TO CERTAIN JOB WORKERS FOR VARIOUS PURPOSES. HE POINTED OUT THAT THE ISSUE S RECORDED IN THE STOCK REGISTER ACCOUNTED TO 447.65 CARATS. THUS HE SUBMIT S THAT THE BALANCE CARATS I.E. 680.86 - 447.65 I.E. 232.21 CARATS A RE IN THE CLOSING STOCK AND THE ASSESSEE HAS NOT EVEN CLAIMED EXPENDITURE OF TH ESE PURCHASES. HE FURTHER FILED A COPY OF THE FACTORY STOCK REGISTER AT PAGE 8 AND 9 AND DREW THE ATTENTION OF THE BENCH TO ENTRIES ON 7 TH MARCH, 11 TH MARCH ETC. WHEREIN RECEIPTS OF STOCKS FROM HEAD OFFICE ARE RECORDED AN D CONSUMPTION OF SUCH STOCKS IS ALSO RECORDED. PAGES 10 TO 14 OF THE PAPE R BOOK CONTAINS COPIES OF PRODUCTION REPORTS AND MR. VIJAY MEHTA DEMONSTRA TED HOW THESE STOCKS WERE UTILISED FOR PRODUCTION. HE DREW THE AT TENTION OF THE BENCH TO PAGES 48 AND 49 OF THE ASSESSEES PAPER BOOK WHICH CONSISTS OF CONFIRMATION OF ACCOUNT ISSUED BY PUJAN IMPEX AND S UBMITTED THAT PAYMENTS WERE MADE BY CROSSED ACCOUNT PAYEE CHEQUES AND THAT M/S PUJAN IMPEX NOT ONLY CONFIRMED THE SETTLEMENT OF AC COUNTS BUT ALSO ISSUES BILLS ETC. HE ALSO FILED COPIES OF THE LABOU R BOOK GIVEN BY SUNANDA ENTERPRISES, SIBNATH SAMUI ETC. HE SUBMITTED THAT T HE ENTIRE ADDITION HAS BEEN MADE, ONLY ON THE BASIS OF AN OFFER MADE BY WA Y OF A LETTER. HE POINTED OUT FROM THE BALANCE SHEET AND THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEE HAD DECLARED A LOSS OF R.56,93,309/- DURIN G THE YEAR AND THAT IT HAD ALSO A LOSS IN THE PREVIOUS YEAR AND THAT BECAU SE OF THESE LOSSES, THE ASSESSEE DID NOT HESITATE TO OFFER CERTAIN ADDITION S. HE SUBMITTED THAT A 5 ROUGH CALCULATION WOULD SHOW THAT 22% OF THE PURCHA SES WERE INTENDED TO BE HELD AS BOGUS. HE RELIED ON THE JUDGMENT OF THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MALU ELECTRODES (P ) LTD. 127 TTJ (NAG) 599 AND SUBMITTED THAT HAD THE ASSESSEE CONTESTED T HE PROPOSED ADDITION, HE WOULD HAVE DEFINITELY SUCCEEDED AND NO ADDITION WOULD HAVE BEEN MADE AND JUST BECAUSE THE ASSESSEE WANTED TO AVOID PROTRACTED LITIGATION, HE DID PLEA BARGAINING AND UNDER SUCH CIRCUMSTANCES , LEVY OF PENALTY IS BAD IN LAW. 6. THE LEARNED DR, MR. LAL CHAND, ON THE OTHER HAN D, VEHEMENTLY CONTROVERTED THE ARGUMENTS OF MR. VIJAY MEHTA AND SUBMITTED THAT INITIALLY THERE WAS A SURVEY ACTION IN THE CASE OF PUJAN IMPEX AND IN THE CASE OF MARVEL IMPEX MUCH BEFORE T HE CONDUCTING OF SURVEY IN THE ASSESSEES PREMISES ON 13-12-2006. HE POINTED OUT THAT THERE WAS ALMOST A GAP OF 8 MONTHS BETWEEN THE DATE OF SURVEY IN THE PREMISES OF PUJAN IMPEX AND MARVEL IMPEX AND THE DA TE OF SURVEY IN THE CASE OF THE ASSESSEE, AND ARGUED THAT THE ASSESSEE, IF HE WANTED TO AVOID PROTRACTED LITIGATION, COULD HAVE FILED THE RETURN OF INCOME, IMMEDIATELY ON SURVEY OF THE PREMISES OF M/S PUJAN IMPEX AND NO T WAITED UNTIL A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSE E. HE VEHEMENTLY CONTENDED THAT NOT MAKING A DECLARATION DURING THE GAP BETWEEN BOTH THE SURVEYS, IS NOT AN ACT IN GOOD FAITH AND THE DISCLO SURE ONLY AFTER SURVEY ACTION CAN BE HELD AS ONE MADE AFTER DETECTION AND NOT A VOLUNTARY ONE. HE SUBMITTED THAT THERE IS NOTHING LIKE PURCHASING OF PEACE AND SUCH CONCEPTS CANNOT BE READ INTO INCOME TAX ACT. HE POI NTED OUT THAT AT PAGE 26 OF THE ASSESSEES PAPER BOOK, A PROFIT AND LOSS ACCOUNT HAS BEEN FILED WHICH SHOWS THAT THE ASSESSEE IS ALREADY IN LOSSES AND ARGUED THAT BOGUS PURCHASES HAVE BEEN MADE TO INFLATE THE LOSSES. HE RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF K.P. MA DHUSUDAN 251 ITR 6 99 AND SUBMITTED THAT BOTH THE AO AND THE CIT(APPEA LS) WERE RIGHT IN LEVYING AND CONFIRMING THE PENALTY RESPECTIVELY. HE POINTED OUT THAT THE ASSESSEE HAS NOT FILED ANY FURTHER EVIDENCE TO SUBS TANTIATE ITS CLAIM THAT THE PURCHASES ARE GENUINE. HE RELIED ON THE ORDER O F THE CIT(APPEALS) AND PRAYED THAT THE SAME MAY BE UPHELD. HE POINTED OUT THAT THE FIRST APPELLATE AUTHORITY HAS REFERRED TO THE DECISION OF THE SUPREME COURT IN THE CASE OF M/S DHARMENDRA TEXTILES AND PROCESSORS 306 ITR 277. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL O F THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED, WE HOLD AS FOLLOWS : 8. THE ASSESSEE IN THIS CASE HAS FILED COPIES OF T HE BILLS, EVIDENCING PURCHASES FROM M/S PUJAN IMPEX. MR. VIJ AY MEHTA, LEARNED COUNSEL FOR THE ASSESSEE, ALSO POINTED OUT THAT THE SE PURCHASE BILLS GAVE THE GENERAL SALES-TAX AND CENTRAL SALES-TAX REGISTR ATION NOS. OF M/S PUJAN IMPEX. PAYMENTS HAVE BEEN MADE BY WAY OF ACCOUNT PA YEE CHEQUES. A PERUSAL OF THE COPIES OF THE STOCK REGISTERS BOTH A T THE HEAD OFFICE AS WELL AS THE FACTORY DISCLOSED THAT THE GOODS PURCHASED F ROM M/S PUJAN IMPEX HAVE BEEN ENTERED IN THE STOCK REGISTER AND THEREAF TER ISSUED TO THE FACTORY AND FROM THE FACTORY THEY HAVE BEEN ISSUED FOR CONS UMPTION. CERTAIN STOCKS HAVE BEEN ISSUED TO THIRD PARTIES FOR JOB WO RKS. THE PRODUCTION REPORT FILED DISCLOSED THAT THESE STOCKS WHICH WERE PURCHASES WERE UTILIZED IN PRODUCTION. THE LABOUR BILLS ISSUED BY THE JOB WORKERS DISCLOSED THE QUANTITY OF STOCKS RECEIVED BY THEM, SPECIFICATIONS, LABOUR CHARGES AS WELL AS THE RETURN OF THE FINISHED GOODS . THE AO HAS NOT ONLY ACCEPTED THE SALE OF THE FINISHED GOODS BUT HAS ALS O NOT DISPUTED THE MANUFACTURING AND COST OF THE LABOUR CHARGES CLAIME D BY THE ASSESSEE. ON 7 THIS FACTUAL MATRIX, WE ARE INCLINED TO AGREE WITH THE CONTENTIONS OF MR. VIJAY MEHTA THAT IT CANNOT BE SAID THAT THERE WERE NO PURCHASES AT ALL IN THIS CASE. IN FACT M/S PUJAN IMPEX HAS GIVEN NOT ON LY CONFIRMATION OF ACCOUNT, BUT ALSO GIVEN A CONFIRMATION OF THE BALAN CE IN THE ACCOUNTS. THE BOOKS HAVE BEEN AUDITED AND THE AUDITORS HAVE GIVEN A REPORT IN FORM NO. 3CD. ON THIS FACTUAL MATRIX, WE CONSIDER THE STATEM ENT OF THE ASSESSEE OFFERING ADDITIONAL INCOME WHICH IS REPRODUCED IN P ARA 2 ABOVE. 9. IN THE STATEMENT OF TOTAL INCOME AT NOTE NO. 2, THE ASSESSEE STATED AS FOLLOWS : DURING THE AFORESAID YEAR, THE ASSESSEE MADE CERT AIN PURCHASE AGGREGATING TO RS.83,26,471/- FROM M/S PUJ AN IMPEX AND M/S MARVEL IMPEX. WHILE THE PURCHASES ARE GENUINE, THE ASSESSEE MAY NOT BE ABLE TO SUBSTANTIATE THE SAME TO THE COM PLETE SATISFACTION OF THE TAX AUTHORITIES DUE TO INADEQUA CY OF DOCUMENTARY EVIDENCE AND POSSIBLE NON COOPERATION O F THE PARTIES AND OTHER DIVERSE REASONS. WITH A VIEW TO BUY PEACE AND AVOID PROTRACTED LITIGATION, THE ASSESSEE HAS VOLUNTARILY OFFERED THE AFORESAID SUM FOR TAXATION AND PAID TAXES THEREON. IN VIEW OF THE SAME, THE ASSESSEE PRAYS THAT NO PENAL ACTION SHOUL D BE INITIATED AGAINST THE ASSESSEE. 10. THE AO IN THIS CASE, ATLEAST IN THE PENALTY PR OCEEDINGS, FAILED TO CONDUCT ANY INVESTIGATION OR COLLECT ANY EVIDENCE TO DISPUTE THE CLAIM OF THE ASSESSEE THAT THE PURCHASES IN QUESTIO N ARE GENUINE. PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND WHEN TH E ASSESSEE CLAIMS AND PRODUCES EVIDENCE THAT THE PURCHASES ARE GENUIN E, THE AO CANNOT SIMPLY BRUSH ASIDE ALL THESE EVIDENCES AND BASE HI S CONCLUSIONS ONLY ON AN ADDITIONAL OFFER MADE BY THE ASSESSEE IN THE QUA NTUM PROCEEDINGS. THERE IS NO MATERIAL BROUGHT ON RECORD BY THE REVEN UE EITHER IN THE QUANTUM PROCEEDINGS OR IN THE PENALTY PROCEEDINGS, IN SUPPORT OF ITS CONTENTION THAT THE PURCHASES ARE NOT GENUINE PURCH ASES. THE ASSESSEE IS A 8 LOSS MAKING COMPANY AND THE ALLEGATION THAT, BOGUS PURCHASES HAVE BEEN BOOKED FOR THE PURPOSE OF INFLATING LOSSES HAS NOT BEEN PROVED WITH EVIDENCE. THERE MIGHT BE VARIOUS REASONS FOR THE PE RSON TO COME FORWARD AND MAKE ONE OFFER, FOR AVOIDING LITIGATION AND ONE OF THE MAJOR REASONS BEING COST, TIME AND EFFORT INVOLVED IN LITIGATION . THE ARGUMENT OF THE LEARNED DR THAT THE ASSESSEE SHOULD HAVE MADE DECLA RATION, ONCE THE SURVEY HAD TAKEN PLACE IN THE PREMISES OF THE SELLE R I.E. M/S PUJAN IMPEX AND M/S MARVEL IMPEX, IS DEVOID OF MERIT. THERE IS NOTHING BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT M/S PUJAN IMPEX AND M/S MARVEL IMPEX, WHICH ARE HAVING REGISTRATION UNDER GENERAL SALES TAX ACT AND UNDER CENTRAL SALES TAX ACT AND WHICH HAVE BANK ACC OUNTS, ARE BOGUS PARTIES. THUS WE ARE OF THE CONSIDERED OPINION THAT THE EXPLANATION GIVEN BY THE ASSESSEE ON 09-05-2008 TO THE AO, IN RESPONS E TO A SHOW CAUSE NOTICE ISSUED U/S 271(1)(C) ON 31-12-2007, IS A BON A FIDE EXPLANATION AND HENCE NO PENALTY CAN BE LEVIED. THE AO HAS NOT HELD THE EXPLANATION TO BE FALSE. THE HONBLE SUPREME COURT IN THE CASE OF T. ASHOK PAI VS. CIT 292 ITR 11 AT PAGE 18 PAGINATION 15, 18 & 19 IT IS HELD AS FOLLOWS : 15. IT IS, THEREFORE, TRITE THAT IF AN EXPLANATION GIVEN BY THE ASSESSEE WITH REGARD TO THE MISTAKE COMMITTED BY HI M HAS BEEN TREATED TO BE BONA FIDE AND IT HAS BEEN FOUND AS OF FACT THAT HE HAS ACTED ON THE BASIS OF WRONG LEGAL ADVIC E, THE QUESTION OF HIS FAILURE TO DISCHARGE IS BURDEN IN T ERMS OF THE EXPLANATION APPENDED TO SECTION 271(1)(C) OF THE IN COME TAX ACT WOULD NOT ARISE. 18. THE TERM INACCURATE PARTICULARS IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT B E ITSELF BE FURNISHING OF INACCURATE PARTICULARS. EVEN IF TH E EXPLANATIONS ARE TAKEN RECOURSE TO, A FINDING HAS T O BE ARRIVED AT HAVING REGARD TO CLAUSE (A) OR EXPLANATI ON 1 THAT THE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A FI NDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE, IN THE EVEN T HE OFFERS ONE WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO P ROVE THAT 9 SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE INCOME WER E NOT DISCLOSED BY HIM. THUS, APART FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD HAVE BEEN FOUND AS OF FACT THA T HE HAS NOT DISCLOSED ALL THE FACTS WHICH WERE MATERIAL TO THE COMPUTATION OF HIS INCOME. 19. THE EXPLANATION HAVING REGARD TO THE DECISIONS OF T HIS COURT, MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER HE FURNISHED THE PARTICULARS OF HIS INCOME. IT IS B EYOND ANY DOUBT OR DISPUTE THAT FOR THE SAID PURPOSE THE INC OME-TAX OFFICER MUST ARRIVE AT HIS SATISFACTION IN THIS BEH ALF. (SEE CIT V. RAM COMMERCIAL ENTERPRISES LTD. [2000] 246 ITR 5 68 (DELHI) AND DIWAN ENTERPRISES V. CIT [2000] 246 ITR 571 (DELHI) 11. THIS PROPOSITION OF LAW HAS NOT BEEN REVERSED BY TH E LARGER BENCH OF THE HONBLE SUPREME COURT IN THE CASE OF D HARMENDRA TEXTILE (SUPRA). IN THIS DECISION, THE HONBLE SUPREME COUR T HAS ALSO UPHELD THE FINDING OF THE TRIBUNAL THAT IF THE REVISED RETURN HAS BEEN ACCEPTED BY THE DEPARTMENT AND THE PENALTY IS NOT BEING IMPOSED WITH REFERENCE TO THE ORIGINAL RETURN FILED BY THE ASSESSEE, IT CANNOT BE CONSIDERED THAT THE ASSESSEE IS GUILTY OF CONCEALMENT OF INCOME. IN T HIS CASE ALSO PENALTY HAS BEEN LEVIED WITH REFERENCE TO THE REVISED RETU RN OF INCOME AND THERE IS NO ADDITION MADE TO THE INCOME RETURNED IN THE R EVISED RETURN OF INCOME. 12. REGARDING THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF DHARMENDRA TEXTILES (SUPRA), ANOTHER B ENCH OF HONBLE SUPREME COURT IN THE CASE OF RAJASTHAN SPINNING AND WEAVING MILLS, CIVIL APPEAL NO. 3527 OF 2009 DATED 12 TH MAY, 2009, EXPLAINED THE SAME IN THE FOLLOWING WORDS : (1) AT THIS STAGE WE NEED TO EXAMINE THE RECENT DECISI ON OF THIS COURT IN DHARMENDRA TEXTILE (SUPRA). IN ALMOST EVER Y CASE RELATING TO PENALTY, THE DECISION IS REFERRED TO ON BEHALF OF THE 10 REVENUE AS IF IT LAID DOWN THAT IN EVERY CASE OF NO N-PAYMENT OR SHORT PAYMENT OF DUTY THE PENALTY CLAUSE WOULD AUTOMATICALLY GET ATTRACTED AND THE AUTHORITY HAD N O DISCRETION IN THE MATTER. ONE OF US (AFTAB ALAM J.) WAS A PART Y TO THE DECISION IN DHARMENDRA TEXTILE AND WE SEE NO REASON TO UNDERSTAND OR READ THE DECISION IN THAT MANNER. (2) AFTER QUOTING FROM DHARMENDRA TEXTILES WE FAIL TO SEE HOW THE DECISION IN DHARMENDRA TEXTILE CAN BE SAID TO H OLD THAT SECTION 11AC WOULD APPLY TO EVERY CASE OF NON-PAYME NT OR SHORT PAYMENT OF DUTY REGARDLESS OF THE CONDITIONS EXPRESSLY MENTIONED IN THE SECTION FOR ITS APPLICATION. (3) THERE IS ANOTHER VERY STRONG REASON FOR HOLDING TH AT DHARMENDRA TEXTILE COULD NOT HAVE INTERPRETED SECTI ON 11AC IN THE MANNER AS SUGGESTED BECAUSE IN THAT CASE THA T WAS NOT EVEN THE STAND OF THE REVENUE. (4) THE DECISION IN DHARMENDRA TEXTILE MUST, THEREFORE , BE UNDERSTOOD TO MEAN THAT THOUGH THE APPLICATION OF S ECTION 11AC WOULD DEPEND UPON THE EXISTENCE OR OTHERWISE O F THE CONDITIONS EXPRESSLY STATED IN THE SECTION, ONCE TH E SECTION IS APPLICABLE IN A CASE THE CONCERNED AUTHORITY WOULD HAVE NO DISCRETION IN QUANTIFYING THE AMOUNT AND PENALTY MU ST BE IMPOSED EQUAL TO THE DUTY DETERMINED UNDER SUB-SECT ION (2) OF SECTION 11A THIS IS WHAT DHARMENDRA TEXTILE DECIDES . THE ABOVE DECISION WAS ALSO EXPLAINED IN THE CASE O F ACIT VS. VIP INDUSTRIES. 13. THE NAGPUR BENCH OF THE TRIBUNAL IN THE CASE O F ACIT VS. MALU ELECTRODES (P) LTD. (NAG.), 27 TTJ 599 WAS CON SIDERING THE SITUATION WHERE, IF THE ASSESSEE WOULD HAVE CONTEST ED THE ADDITION, INSTEAD OF AGREEING FOR THE SAME, THE ADDITION COULD NOT HA VE BEEN MADE AND IN SUCH A SITUATION IT OBSERVED THAT IT IS POSSIBLE TH AT THE ASSESSEE WOULD HAVE MADE THE SURRENDER DUE TO A NUMBER OF POSSIBLE REAS ONS AND IN SUCH A SITUATION, NO PENALTY CAN BE LEVIED. IT HELD THAT M ERE FACT OF AN AGREED ADDITION, DOES NOT RESULT INTO A CONCLUSION THAT TH E AMOUNT AGREED TO BE ADDED AS INCOME WOULD RESULT IN CONCEALED INCOME. T HE BENCH RELIED ON 11 THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF KANBAY SOFTWARE INDIA (P) LTD. VS. DCIT (2009) 22 DTR (PUN E) 481. 14. IN VIEW OF THE ABOVE DISCUSSION AND THE FACTUA L MATRIX AND THE LEGAL POSITION, WE DELETE THE PENALTY IN QUESTI ON LEVIED U/S 271(1)(C) OF THE ACT. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF MARCH, 2010. SD/- SD/- (R.K. GUPTA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 11 TH MARCH, 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, A-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.