The DCIT(OSD) Circle-8, Ahmedabad V. Sarabhai Holdings Pvt. Ltd., Ahmedabad

ITA 2555/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0507 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 07-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: M K PATEL
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER DATE OF HEARING: 10.11.2009 DRAFTED ON: 10.11. 2009 ITA NO.2555/AHD/2009 & 2556/AHD/2009 ASSESSMENT YEAR : 2004-2006, 2005-2006 D.C.I.T. (OSD), CIRCLE-8, AHMEDABAD VS. SARABHAI HOLDINGS PVT. LTD., OPP. JANSATTA PRESS, MIRZAPUR, AHMEDABAD. PAN/GIR NO. : AAECS 6919 B (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.C.PANDIT SR. D.R. RESPONDENT BY: SHRI M.K.PATEL O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-XIV, AHMEDABAD DATED 6.07.2009 PASS ED IN APPEAL NO.CIT(A)XIV/ACIT(OSD) CIR.8/47/2009-10 AND ORDER D ATED 6.07.2009 IN APPEAL NO.CIT(A)XIV /ACIT(OSD) CIR.8/48/2009-10. 2. THE SOLE GROUND OF APPEAL TAKEN IS THAT THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN LAW AND ON FACTS IN DE LETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT OF RS.12,02,555/ - IN ASSESSMENT YEAR 2004-2005 AND RS.8,19,766/- IN ASSESSMENT YEAR 2005 -2006. 3. IN THE ASSESSMENT YEAR 2004-2005, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE LEVY OF PENALTY BY OBSERVING AS UNDER:- 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSION AS ADVANCED BY THE AR OF THE APPELLANT. THE A.R. HAS RELIED UPON THE DECISIONS OF CIT V. B.R.SHARMA 275 ITR 303 (DEL) AND CIT VS. VIKAS PROMOTERS PVT. LTD. 277 ITR 337 (DEL) TO CONTEND THAT THE ITA NO . M/S. ASST.YEAR - - 2 - A.O. HAS NOT RECORDED SPECIFIC SATISFACTION IN THE ASSESSMENT ORDER REGARDING CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. I FIND FROM THE ASSESSMENT O RDER THAT THE A.O. HAS PROPERLY RECORDED SATISFACTION FOR INITIATING P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 IN VIEW OF THE AMENDMENT BY FINANCE ACT 2008 W.E.F. 1-4-1989 BY IN TRODUCING SUBSECTION (1B) TO SECTION 271 OF THE I.T.ACT. HENC E, THE CONTENTION OF THE A.R. THAT THERE IS NO PROPER SATISFACTION IS RE JECTED. COMING TO THE MERITS OF PENALTY, I FIND FROM THE DETAILS OF DIVID END RECEIVED FROM THE USA COMPANY THAT THE APPELLANT HAD OFFERED AN AMOUN T OF RS.49,37,633/- WHICH WAS THE NET OF TAX WITHHELD AN D IN SUPPORT OF OFFERING NET DIVIDEND, THE APPELLANT RELIED UPON DE CISION OF CALCUTTA HIGH COURT, KERALA HIGH COURT, DECISION OF ITAT AHM EDABAD BENCH AND ORDER OF C.I.T.(A) IN ITS OWN CASE FOR A.Y. 199 1-92. FURTHER, THE DECISION IN THE CASE OF ALKAPURI INVESTMENTS PVT. L TD. FOR A.Y. 1995-96 WAS IN FAVOUR OF THE APPELLANT. FURTHER, THE DETAIL S GIVEN BY THE A.R. REVEAL THAT THE CEILING AMOUNT OF TAX WAS RS.10,14, 060/- AND THE AMOUNT OF TAX CREDIT CLAIMED BY AND ALLOWED TO THE APPELLANT WAS OF RS.7,34,825/- WHICH WAS WELL WITHIN THE CEILING LIM IT PRESCRIBED UNDER THE PROVISION OF THE TAX TREATY. IT IS THUS SEEN TH AT THE ISSUE INVOLVED OF TAXATION OF DIVIDEND NET OF TAX WITHHELD OR GROSS D IVIDEND IS A DEBATABLE ISSUE WHERE TWO OPINIONS CAN BE HELD AND ON SUCH DEBATABLE ISSUE, THE PENALTY FOR CONCEALMENT CANNOT BE SUSTAI NED. IT IS ALSO NOT A CASE OF NOT FURNISHING THE PARTICULARS OF FACTS AS THE APPELLANT HAD GIVEN A NOTE BELOW THE STATEMENT OF INCOME, THUS FU LL DETAILS WERE GIVEN BEFORE THE A.O. IT WAS A BONAFIDE CLAIM MADE BY THE APPELLANT WHICH WAS WELL SUPPORTED BY JUDICIAL DECISION AND IN FACT IT WAS A CASE OF NOT ACCEPTING THE DETAILS FURNISHED BY THE APPELLANT. A S REGARDS THE CLAIM OF SUNDRY BALANCE WRITTEN OFF OF RS.15,31,488/-, FR OM THE DETAILS GIVEN BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE, IT IS SEEN THAT THE SAME WERE RELATED TO VERY OLD PERIOD AND T HE ADVANCES WERE GIVEN IN COURSE OF BUSINESS AND THE APPELLANT HAD G IVEN BREAKUP DETAILS FOR THE SAME BEFORE THE A.O. AND AS IT WAS NOT POSSIBLE TO RECOVER THE SAME THE APPELLANT HAD WRITTEN OFF THE SAME, THUS, IT IS A BONAFIDE CLAIM MADE BY THE APPELLANT WHICH HAS BEEN REJECTED BY THE A.O. AS FAR AS THE CLAIM OF LOSS ON INVESTMENT OF R S.17,47,000/-, IT IS SEEN THAT THE INVESTMENTS WERE MADE BY THE APPELLAN T IN THE SUBSIDIARY COMPANIES AND AS THE APPELLANT COMPANY WAS ENGAGED IN THE BUSINESS OF MONEY LENDING AND OF HOLDING OF INVESTMENTS, THE LOSS ON ACCOUNT OF SUCH INVESTMENT WAS CLAIMED AS REVENUE LOSS. IT WAS BONAFIDE CLAIM MADE BY THE APPELLANT. FURTHER THE APPELLANT HAD DI SCLOSED FULL FACTS OF SUCH CLAIM IN THE STATEMENTS ACCOMPANYING THE RETUR N OF INCOME. THE ADDITIONS/DISALLOWANCES HAVE BEEN MADE DUE TO CHANG E OF OPINION AND ON THE BASIS OF SUCH ADDITION, THE PENALTY FOR CONC EALMENT CANNOT BE SUSTAINED. FURTHER, IT IS NOT THE CASE THAT EXPLANA TION OF THE APPELLANT ITA NO . M/S. ASST.YEAR - - 3 - IN RESPECT OF THE VARIOUS CLAIMS WHICH HAVE BEEN DI SALLOWED AND FOR WHICH PENALTY HAS BEEN LEVIED HAS NOT BEEN SUBSTANT IATED OR FOUND TO BE FALSE SO AS TO ATTRACT EXPLANATION 1 TO SECTION 271(1)(C). FURTHER, MERELY BECAUSE THE ADDITIONS STOOD CONFIRMED AT THE FIRST APPELLATE STAGE, THERE IS NO JUSTIFICATION IN HOLDING THAT TH ERE IS CONCEALMENT OF INCOME AND/OR FILING OF INACCURATE PARTICULARS OF I NCOME. FURTHER, THE ISSUE IS DISPUTABLE AND DEBATABLE AND SO DISALLOWAN CE WOULD NOT RESULT INTO LEVY OF PENALTY U/S. 271(1)(C), AS THE PENALTY PROCEEDINGS ARE ENTIRELY DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND NO PENALTY CAN BE LEVIED, UNLESS IT IS ESTABLISHED THAT THERE IS C LEAR CUT FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS SEEN THAT F ULL AND COMPLETE FACTS WERE DISCLOSED BY THE APPELLANT ALONG WITH THE RETU RN OF INCOME AND FURTHER DURING THE ASSESSMENT PROCEEDINGS AND FURTH ER THE EXPLANATION FILED BY THE APPELLANT WAS REASONABLE AND WAS BONAF IDE. MOREOVER, MERE REJECTION OF THE APPELLANTS CLAIM CANNOT BE E QUATED WITH CONCEALMENT. IN THE INSTANT CASE, IT IS FOUND THAT A DIFFERENT VIEW HAS BEEN TAKEN BY THE A.O. OUT OF THE TWO POSSIBLE VIEW S WHILE REJECTING THE CLAIM OF THE APPELLANT AND THIS WILL NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. FURTHER, IT IS NOTICED THAT THE CLAIM OF THE APPELLANT WAS SUPPORT ED BY THE DECISIONS OF HIGH COURT AND TRIBUNALS. HENCE, I AM OF THE CON SIDERED OPINION THAT THERE IS NO CONSCIOUS/DELIBERATE ATTEMPT TO CO NCEAL ANY INCOME ON THE PART OF THE APPELLANT. I ALSO FIND THAT HON'BLE MADRAS HIGH COURT HAS HELD IN THE CASE OF CAPLIN POINT LABORATORIES L TD. 293 ITR 524 THAT BY REJECTION OF ASSESSEES CLAIM BY RELYING ON DIFFERENT INTERPRETATION, IT COULD NOT BE SAID THAT PARTICULA RS OF INCOME HAVE BEEN CONCEALED. THE DECISION OF DELHI HIGH COURT IN CIT VS. EICHER GOODEARTH LTD. REPORTED IN 170 TAXMAN 27 (DEL) WHER EIN IT WAS HELD THAT THERE IS NO JUSTIFICATION TO LEVY PENALTY WHEN THE A.O. HAD NOT FOUND PARTICULARS FURNISHED BY THE ASSESSEE TO BE F ALSE AND HAD NOT UNEARTHED ANY MATERIAL FACTS OR PARTICULARS WHICH A SSESSEE HAD NOT DISCLOSED IS SQUARELY APPLICABLE TO THE FACTS OF TH E APPELLANT, AS THE PARTICULARS FURNISHED BY THE APPELLANT HAD NOT BEEN FOUND FALSE BY THE A.O.. FURTHER, EXPLANATION (1) BELOW SECTION 271(1) (C) IS ALSO NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE AS IT IS NOT A CASE WHERE THE APPELLANT FILED TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE APPELLANT WAS FOUND TO BE FALSE BY THE A.O. OR WHERE THE APPELLANT FILED TO SUBSTANTIATE THE EXPLANATION TO BE BONAFID E. IN THE CASE OF THE APPELLANT, THE APPELLANT HAD OFFERED THE EXPLANATIO N WHICH WAS BONAFIDE BUT THE A.O. REJECTED THE SAME DUE TO DIFF ERENCE IN PERCEPTION. HENCE, THE EXPLANATION (1) BELOW SECTIO N 271(1)(C) HAS NO APPLICABILITY TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. FURTHER, VARIOUS CASE LAWS CITED BY THE A.R. SUPPOR T THE CLAIM OF THE APPELLANT THAT DISALLOWANCE OF CLAIM FOR DEDUCTION WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF ITA NO . M/S. ASST.YEAR - - 4 - INCOME. IN VIEW OF THE ABOVE FACTS AND CASE LAWS, I HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) AND SO I DIRECT THE PENALTY TO BE DELETED. 4. IN THE ASSESSMENT YEAR 2005-2006, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) HAS DELETED THE LEVY OF PENALTY BY OBSERVING AS UNDER:- 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS AS ADVANCED BY THE AR OF THE APPELLANT. THE A.R. HAS RELIED UPON THE DECISIONS OF CIT V. B.R.SHARMA 275 ITR 303 (DEL) AND CIT VS. VIKAS PROMOTERS PVT. LTD. 277 ITR 337 (DEL) TO CONTEND THAT THE A.O. HAS NOT RECORDED SPECIFIC SATISFACTION IN THE ASSESSMENT ORDER REGARDING CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. I FIND FROM THE ASSESSMENT O RDER THAT THE A.O. HAS PROPERLY RECORDED SATISFACTION FOR INITIATING P ENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, IN V IEW OF THE AMENDMENT BY FINANCE ACT 2008 W.E.F. 1-4-1989 BY IN TRODUCING SUBSECTION (1B) TO SECTION 271 OF THE I.T.ACT. HENC E, THE CONTENTION OF THE A.R. THAT THERE IS NO PROPER SATISFACTION IS RE JECTED. COMING TO THE MERITS OF PENALTY, I FIND FROM THE DETAILS OF DIVID END RECEIVED FROM THE USA COMPANY THAT THE APPELLANT HAD OFFERED AN AMOUN T OF RS.47,88,760/- WHICH WAS THE NET OF TAX WITHHELD AN D IN SUPPORT OF OFFERING NET DIVIDEND, THE APPELLANT RELIED UPON DE CISION OF CALCUTTA HIGH COURT, KERALA HIGH COURT, DECISION OF ITAT AHM EDABAD BENCH AND ORDER OF C.I.T.(A) IN ITS OWN CASE FOR A.Y. 199 1-92. FURTHER, THE DECISION IN THE CASE OF ALKAPURI INVESTMENTS PVT. L TD. FOR A.Y. 1995-96 WAS IN FAVOUR OF THE APPELLANT. FURTHER, THE DETAIL S GIVEN BY THE A.R. REVEAL THAT THE CEILING AMOUNT OF TAX WAS RS.10,14, 060/- AND THE AMOUNT OF TAX CREDIT CLAIMED BY AND ALLOWED TO THE APPELLANT WAS OF RS.7,34,825/- WHICH WAS WELL WITHIN THE CEILING LIM IT PRESCRIBED UNDER THE PROVISION OF THE TAX TREATY. IT IS THUS SEEN TH AT THE ISSUE INVOLVED OF TAXATION OF DIVIDEND NET OF TAX WITHHELD OR GROSS D IVIDEND IS A DEBATABLE ISSUE WHERE TWO OPINIONS CAN BE HELD AND ON SUCH DEBATABLE ISSUE, THE PENALTY FOR CONCEALMENT CANNOT BE SUSTAI NED. IT IS ALSO NOT A CASE OF NOT FURNISHING THE PARTICULARS OF FACTS AS THE APPELLANT HAD GIVEN A NOTE BELOW THE STATEMENT OF INCOME, THUS FU LL DETAILS WERE GIVEN BEFORE THE A.O. IT WAS A BONAFIDE CLAIM MADE BY THE APPELLANT WHICH WAS WELL SUPPORTED BY JUDICIAL DECISION AND IN FACT IT WAS A CASE OF NOT ACCEPTING THE DETAILS FURNISHED BY THE APPELLANT. A S REGARDS THE CLAIM OF LOSS OF RS.3,21,705/- MADE BY THE APPELLANT, FRO M THE DETAILED WORKING OF CAPITAL GAIN, IT IS SEEN THAT THE WORKIN G OF SHORT TERM CAPITAL GAIN ALSO SHOWED THE SHORT TERM CAPITAL LOS S, THUS, THERE WAS FULL DISCLOSURE OF FACTS ALONG WITH THE RETURN OF I NCOME. FURTHER THE ITA NO . M/S. ASST.YEAR - - 5 - LOSS FROM HDFC PRUDENTAIL FUND WAS OF RS.3,99,121/- WHICH WAS NEARLY EQUAL TO DIVIDEND RECEIVED FROM UNITS OF THE SAID MUTUAL FUND OF RS.3,21,705/- AND THE AMOUNTS RECEIVED AS DIVIDEND IN FINANCIAL YEAR 2003-04 WAS SHOWN AS SUCH IN THE RETURN FOR THAT Y EAR. FURTHER, THE DIVIDEND WAS INVESTED IN THE SAME UNIT AND THUS, TH E LOSS WAS ARRIVED AT ON THE TOTAL NUMBER OF UNITS AND HENCE THERE WAS NO INTENTION OF CONCEALMENT OF INCOME ON THE PART OF THE APPELLANT. IT IS ALSO SEEN THAT THE PERIOD SPECIFIED IN SEC.94(7) WAS EXTENDED TO 9 MONTHS AS AGAINST 3 MONTHS BY FINANCE NO.2 ACT, 2004 W.E.F. 1.04.2005 AND THIS AMENDMENT TOOK PLACE SUBSEQUENT TO TRANSACTIONS MAD E BY THE APPELLANT. SO IT CANNOT BE SAID THAT THE TRANSACTIO NS WERE ENTERED INTO BY THE APPELLANT ONLY TO CREATE SHORT TERM LOSS. FU RTHER, THE APPELLANT HAD DISCLOSED FULL FACTS OF SUCH CLAIM IN STATEMENT S ACCOMPANYING THE RETURN OF INCOME. FURTHER THE APPELLANT HAD BONAFID E BELIEF THAT GENUINE TRANSACTIONS OF SALE AND PURCHASE OF UNITS WOULD NOT BE BROUGHT WITHIN THE NET OF THE SECTION 94(7). THE ADDITIONS/DISALLOWANCES HAVE BEEN MADE DUE TO CHANG E OF OPINION AND ON THE BASIS OF SUCH ADDITION, THE PENALTY FOR CONC EALMENT CANNOT BE SUSTAINED. FURTHER, IT IS NOT THE CASE THAT EXPLANA TION OF THE APPELLANT IN RESPECT OF THE VARIOUS CLAIMS WHICH HAVE BEEN DI SALLOWED AND FOR WHICH PENALTY HAS BEEN LEVIED HAS NOT BEEN SUBSTANT IATED OR FOUND TO BE FALSE SO AS TO ATTRACT EXPLANATION 1 TO SECTION 271(1)(C). FURTHER, MERELY BECAUSE THE ADDITIONS STOOD CONFIRMED AT THE FIRST APPELLATE STAGE, THERE IS NO JUSTIFICATION IN HOLDING THAT TH ERE IS CONCEALMENT OF INCOME AND/OR FILING OF INACCURATE PARTICULARS OF I NCOME. FURTHER, THE ISSUE IS DISPUTABLE AND DEBATABLE AND SO DISALLOWAN CE WOULD NOT RESULT INTO LEVY OF PENALTY U/S. 271(1)(C), AS THE PENALTY PROCEEDINGS ARE ENTIRELY DIFFERENT FROM THE ASSESSMENT PROCEEDINGS AND NO PENALTY CAN BE LEVIED, UNLESS IT IS ESTABLISHED THAT THERE IS C LEAR CUT FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS SEEN THAT F ULL AND COMPLETE FACTS WERE DISCLOSED BY THE APPELLANT ALONG WITH THE RETU RN OF INCOME AND FURTHER DURING THE ASSESSMENT PROCEEDINGS AND FURTH ER THE EXPLANATION FILED BY THE APPELLANT WAS REASONABLE AND WAS BONAF IDE. MOREOVER, MERE REJECTION OF THE APPELLANTS CLAIM CANNOT BE E QUATED WITH CONCEALMENT. IN THE INSTANT CASE, IT IS FOUND THAT A DIFFERENT VIEW HAS BEEN TAKEN BY THE A.O. OUT OF THE TWO POSSIBLE VIEW S WHILE REJECTING THE CLAIM OF THE APPELLANT AND THIS WILL NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. FURTHER, IT IS NOTICED THAT THE CLAIM OF THE APPELLANT WAS SUPPORT ED BY THE DECISIONS OF HIGH COURT AND TRIBUNALS. HENCE, I AM OF THE CON SIDERED OPINION THAT THERE IS NO CONSCIOUS/DELIBERATE ATTEMPT TO CO NCEAL ANY INCOME ON THE PART OF THE APPELLANT. I ALSO FIND THAT HON'BLE MADRAS HIGH COURT HAS HELD IN THE CASE OF CAPLIN POINT LABORATORIES L TD. 293 ITR 524 THAT BY REJECTION OF ASSESSEES CLAIM BY RELYING ON DIFFERENT INTERPRETATION, IT COULD NOT BE SAID THAT PARTICULA RS OF INCOME HAVE ITA NO . M/S. ASST.YEAR - - 6 - BEEN CONCEALED. THE DECISION OF DELHI HIGH COURT IN CIT VS. EICHER GOODEARTH LTD. REPORTED IN 170 TAXMAN 27 (DEL) WHER EIN IT WAS HELD THAT THERE IS NO JUSTIFICATION TO LEVY PENALTY WHEN THE A.O. HAD NOT FOUND PARTICULARS FURNISHED BY THE ASSESSEE TO BE F ALSE AND HAD NOT UNEARTHED ANY MATERIAL FACTS OR PARTICULARS WHICH A SSESSEE HAD NOT DISCLOSED IS SQUARELY APPLICABLE TO THE FACTS OF TH E APPELLANT, AS THE PARTICULARS FURNISHED BY THE APPELLANT HAD NOT BEEN FOUND FALSE BY THE A.O.. FURTHER, EXPLANATION (1) BELOW SECTION 271(1) (C) IS ALSO NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE AS IT IS NOT A CASE WHERE THE APPELLANT FILED TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE APPELLANT WAS FOUND TO BE FALSE BY THE A.O. OR WHERE THE APPELLANT FILED TO SUBSTANTIATE THE EXPLANATION TO BE BONAFID E. IN THE CASE OF THE APPELLANT, THE APPELLANT HAD OFFERED THE EXPLANATIO N WHICH WAS BONAFIDE BUT THE A.O. REJECTED THE SAME DUE TO DIFF ERENCE IN PERCEPTION. HENCE, THE EXPLANATION (1) BELOW SECTIO N 271(1)(C) HAS NO APPLICABILITY TO THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. FURTHER, VARIOUS CASE LAWS CITED BY THE A.R. SUPPOR T THE CLAIM OF THE APPELLANT THAT DISALLOWANCE OF CLAIM FOR DEDUCTION WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME. IN VIEW OF THE ABOVE FACTS AND CASE LAWS, I HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) AND SO I DIRECT THE PENALTY TO BE DELETED. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDER OF THE LEARNED ASSESSING OFFICER. 6. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) BY SUBMITTING THAT ORDER OF THE LEARNED ASSESSING OFFICER LEVYING PENALTY WAS BAD IN LAW IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT OF G UJARAT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX (2006) 282 ITR 642 (GUJ) AS THE LEARNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. THE ASSESSEE ITA NO . M/S. ASST.YEAR - - 7 - SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BY SUBMITTING THAT ORDER OF THE LEARNED ASSESSING OFFI CER LEVYING PENALTY WAS BAD IN LAW. WE FIND THAT PENALTY UNDER SECTION 271( 1)(C) WAS IMPOSED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2004-05 AND 20 05-06 BY OBSERVING AS UNDER: 8. THEREFORE, I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF ITS INCOME AND/OR FURNISHED INACCURA TE PARTICULARS OF ITS INCOME AND FOR THIS DEFAULT, PENALTY U/S.271(1)(C) READ WITH EXPLANATION (1) IS LEVIED. FROM A READING OF THE ABOVE ORDER SHOWS THAT THE LE ARNED ASSESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR HE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE HON'BLE HIGH COURT OF GU JARAT IN THE CASE OF NEW SORATHIA ENGINEERING CO. VS. COMMISSIONER OF INCOME TAX (2006) 282 ITR 642 (GUJ) HAS HELD AS UNDER: 11. IN THE CASE OF CIT VS. MANU ENGINEERING WORKS ( SUPRA) THIS IS WHAT IS LAID DOWN BY THIS COURT AT PAGE NO. 310 OF THE REPORTS : '.. WE FIND FROM THE ORDER OF THE IAC, IN THE PENALTY P ROCEEDINGS, THAT IS, THE FINAL CONCLUSION AS EXPRESSED IN PARA 4 OF THE ORDER : 'I AM OF THE OPINION THAT IT WILL HAVE TO BE SAID THAT THE ASSES SEE HAD CONCEALED ITS INCOME AND/OR THAT IT HAD FURNISHED INACCURATE PART ICULARS OF SUCH INCOME'. NOW, THE LANGUAGE OF 'AND/OR' MAY BE PROPE R IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR-CUT F INDING WAS REACHED BY THE IAC AND, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE TO BE STRUCK DOWN.' THE PENALTY ORDER AND THE ORDER OF CIT(A) SHOW THAT NO CLEAR-CUT FINDING HAS BEEN REACHED. THE TRIBUNAL HAS FAILED TO APPRECIATE THIS LEGAL ISSUE. APPLYING THE RATIO TO THE FACTS OF THE CASE IT IS APPARENT THAT THE ORDER OF PENALTY CANNOT BE SUSTAINED AND THE TRIBUNAL COULD NOT HAVE SUSTAINED THE SAME. THE TRIBUNAL HAVING FAILED TO TAKE INTO CONSIDERATION A ND DEAL WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT IT WOULD CONSTITUTE AN ERROR IN LAW WHICH GOES TO THE VERY BASIS OF THE CONTROVE RSY INVOLVED AND HENCE, THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE UPHELD. ITA NO . M/S. ASST.YEAR - - 8 - 8. IN VIEW OF THE ABOVE DECISION OF THE JURISDICTIO NAL HIGH COURT, IN OUR CONSIDERED OPINION, LEVY OF PENALTY IN THE INSTANT CASE WAS BAD IN LAW AND THEREFORE, UNSUSTAINABLE AS BECAUSE THE LEARNED ASS ESSING OFFICER HAS NOT RECORDED A CLEAR FINDING TO THE EFFECT THAT WHETHER ASSESSEE HAD CONCEALED THE INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF I NCOME IN THE INSTANT CASE. WE THEREFORE, CONFIRM THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME TAX(APPEALS) IN DELETING THE LEVY OF PENALTY OF RS.12,02,555/- IN ASSESSMENT YEAR 2004-2005 AND RS.8,19,766/- IN ASSESSMENT YEAR 2005-2006 AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 9. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE COURT AT THE CONCLUSION OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 10/11/2009. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 10/11/2009 PREPARED AND COMPARED BY : PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD