SHRI PRAVEEN KUMAR JAIN, Khargone V. THE ACIT 5(1), Indore

ITA 256/IND/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0375 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S MUNDRA; ARPIT MUNDRA CAS
• Keywords: Opportunity of being heard; Initiation of penalty proceedings
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.256/IND/2015 A.Y. : 2009-10 SHRI PRAVEEN KUMAR JAIN ACIT, 5(1), HOUSE NO. 414, BAGOD VS. INDORE. APPELLANT RESPONDENT PAN NO. ABGPJ2966H APPELLANT BY : SHRI S.S.MUNDRA, AND SHRI ARPIT MUNDRA, CAS RESPONDENT BY : SHRI R.A.VERMA, SR. DR DATE OF HEARING : 10 . 0 6 .201 5 DATE OF PRONOUNCEMENT : 30 . 0 7 .201 5 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 31.12.2014 FOR THE ASS ESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS FILED THE RETURN OF INCOME DECLARI NG TOTAL INCOME AT RS. 44,99,290/- ON 29.09.2009. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME-T AX ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS DECLARED JOB RECEIPTS O F RS. 1,19,82,683/- FROM COTTON CORPORATION OF INDIA. AS PER FORM NO. 26AS, COTTON CORPORATION OF INDIA HAS MADE PAYM ENT OF RS. 1,28,62,419/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUESTED TO CLARIFY T HE DISCREPANCY. THE LD. AUTHORIZED REPRESENTATIVE HAD SUBMITTED THAT A BILL WAS RAISED TO CCI ON 16.5.2009. HOWEVER , THE WORK WAS DONE BEFORE MARCH, 2009. THE CCI HAS CONSIDERED THIS BULK BILL IN THE MONTH OF MARCH, 2009 AND CREDITED THE -: 3: - 3 AMOUNT TO THE ASSESSEE ACCORDINGLY. WHILE THE ASSES SEE HAS MADE ENTRY ACCORDING TO THE DATE OF ISSUE OF THE BI LL AND ENTERED INTO BOOKS FOR FINANCIAL YEAR 2009-10 NEXT YEAR. IT WAS CLAIMED THAT RECEIPTS HAVE BEEN DECLARED BY THE ASS ESSEE, AS SUCH NO ADDITION WAS REQUIRED TO BE MADE. THE AO WA S OF THE VIEW THAT THE INCOME ACCRUED TO THE ASSESSEE IN THE MONTH OF MARCH, WHEN THE WORK HAS BEEN DONE, DURING THE PERI OD RELEVANT TO ASSESSMENT YEAR 2009-10, RESULTING IN T O ADDITION OF RS. 8,79,736/- UNDER THE HEAD JOB RECEIPTS TO THE INCOME OF THE ASSESSEE. THE SHOW CAUSE NOTICE WAS GIVEN AN D ASSESSEE HAS REPLIED TO SHOW CAUSE NOTICE, WHICH READS AS UN DER :- I AM DOING JOB WORK OF GINNING & PRESSING FOR COTT ON CORPORATION OF INDIA. THEY ARE SENDING COTTON TO US PURCHASED FROM MANDI. BILLS FOR JOB WORK ARE ISSUED TO THEM FROM TIME TO TIME HOWEVER FINAL BILL FOR BALAN CE QUANTITY OF PRODUCTION UPTO 31 MARCH IS ISSUED ON 3 1 MARCH. ON ENQUIRY FROM CCI WE CAME TO KNOW THAT THE Y MAKE PROVISION OF JOB WORK CHARGES IN RESPECT OF BALANCE COTTON LYING WITH US IRRESPECTIVE OF PRODUC TION. I AM ENCLOSING HERE WITH THE CHART INDICATING AMOUNT OF -: 4: - 4 JOB WORK AND TDS THERE ON FOR THE FINANCIAL YEAR 20 08- 09 AND 2009-10 RESPECTIVELY. FROM THE ENCLOSED CHART YOU WILL KINDLY OBSERVE THA T AS PER TDS CERTIFICATE TOTAL JOB WORK IS RS. 149.47 LA CS DURING THE YEAR 2008-09 AND 2009-10, WHILE AS PER O UR BOOKS TOTAL JOB WORK IS RS. 149.90 LACS DURING THE SAME PERIOD. THUS THERE IS NOMINAL DIFFERENCE OF RS.0.43 LACS ONLY. TDS OF 2008-09 INCLUDES DEDUCTION OF TAX ON R S.2 78 LACS IN FACT THIS AMOUNT IS REIMBURSEMENT OF TRANSPORTATION CHARGES PAID BY US ON THEIR BEHALF HOWEVER THEY HAVE WRONGLY DEDUCTED TDS ON THIS AMOUNT ALSO, IN OUR BOOKS OF ACCOUNTS SEPARATE ACCO UNT IS MAINTAINED UNDER NAME AND STYLE TRANSPORTATION (INCOME & EXPENDITURE). WE ADD LITTLE CHARGE FOR TH IS ON TRANSPORTATION BILL, DURING THE YEAR 2008-09 WE EAR NED RS. O.L3 LACS OUT OF IT WHICH WAS DULY CREDITED IN PROFIT & LOSS ACCOUNT. FROM THE ENCLOSED CHART YOU WILL KINDLY OBSERVED TH AT THERE IS NO CONCEALMENT OF INCOME IF WE ADD INCOME BOTH -: 5: - 5 THE YEARS TOGETHER. ALL INCOME AND TDS IS DULY RECO RDED IN THE BOOKS OF ACCOUNTS. ALTHOUGH AN APPEAL HAS NOT BEEN FILED AGAINST THE ASSESSMENT ORDER AS I HAVE NO INTENTION OF CONTINUI NG A LITIGATION, IT IS FURTHER SUBMITTED THAT PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND A FAVOURABLE RECONSIDERATION AND REAPPRAISAL OF MY SUBMISSIONS SHALL BE ESSENTIAL ON THE FACTS AND CIRCUMSTANCES OF THE CASE. I, THEREFORE, SUBMIT THAT ON A TRUE AND REALISTIC R E- APPRECIATION OF THE FACTS, CIRCUMSTANCES AND SUBMISSIONS, YOUR HONOUR SHALL BE PLEASED TO HOLD T HAT I HAVE NEITHER CONCEALED MY INCOME NOR I HAVE FURNISH ED INACCURATE PARTICULARS OF SUCH INCOME AND, THEREFOR E, YOUR HONOUR SHALL BE PLEASED TO HOLD THAT NO ORDER IMPOSING A PENALTY BE MADE AGAINST ME, FOR WHICH AC T OF KINDNESS, I SHALL ALWAYS REMAIN MOST GRATEFUL. -: 6: - 6 3. AFTER CONSIDERING THE REPLY, THE AO WAS OF THE VIEW THAT THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEED INGS, THE ASSESSEE HAS TAKEN DIFFERENT CONTENTION AND THE DIF FERENCE WAS DUE TO THE FACT THAT CCI HAS ALLOWED THE CREDIT TO THE BILL RECEIPT BY THE ASSESSEE LATER ON. HOWEVER, DURING T HE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THIS IS A REIMBURSEMENT OF TRANSPORT PAYMENT. HOWEVER, THE AS SESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE. THEREFORE , THE PENALTY HAS BEEN IMPOSED. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HA S DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE ASSESSEE IS DOING THE JOB WORK OF GINNING AND PRESSING COTTON RECEIVED FROM CCI. THE ASSESSEE HAS DECLARED THE RECEIPT OF RS. 1,19,82,683/- WHEREAS IN FORM NO . 26AS, THE ASSESSEE HAS RECEIVED RS. 1,28,62,419/-. THE AS SESSEE HAS SUBMITTED THAT THE HE HAS RECEIVED THE AMOUNT OF RS . 31,03,883/- AND THE CCI HAS GIVEN HIM MONEY AMOUNT OF RS. 20,84,600/-. THUS, IN ASSESSMENT YEAR 2009-10, THE CCI HAS SHOWN THE LESS RECEIPT AND FROM THIS ABOVE SUMMARY, THE ASSESSEE HAS SUBMITTED THAT THERE WAS NO CONCEALMEN T ON THE -: 7: - 7 PART OF THE ASSESSEE AND ASSESSEE HAS SUBMITTED ALL THE EVIDENCES. THEREFORE, NO PENALTY CAN BE LEVIED. 6. THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE ORDER OF HINDUSTAN STEEL LIMITED VS. STATE OF ORISS A, (1972) 83 ITR 26 (S.C.). MOREOVER, HE HAS SUBMITTED THE WRITT EN SUBMISSIONS, WHICH READS AS UNDER :- IN THE ASSESSMENT ORDER PASSED U/S.143(3) DATED 19/12/2011, ADDITION OF RS. 8,79,736/- WAS MADE ON ACCOUNT OF JOB WORK CHARGES OF GINNING AND PRESSING OF COTTON RECEIVED FROM CCI, WHICH HAS BEEN DECLARED B Y THE ASSESSEE AT RS. 1,19,82,683/- AS AGAINST THE RECEIP T APPEARING IN FORM NO. 26AS ON ACCOUNT OF GINNING AN D PRESSING CHARGES FROM COTTON CORPORATION AT RS. 1,28,62,419/-. FOR THIS ADDITION PENALTY PROCEEDING S U/S. 271(L)(C) WERE INITIATED WITHOUT MENTIONING THE CHA RGE AGAINST THE ASSESSEE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. EVEN IN SHOW CAUSE NOTICE DATED 19/12/2011 ISSUED T O THE ASSESSEE, SPECIFIC CHARGE OF PENALTY WERE NOT -: 8: - 8 MENTIONED AS IT IS VERY MUCH EVIDENT FROM THE COPY OF ORDER AS WELL AS NOTICE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS AT THE TIME OF REPLYING THE SHOW CAUSE NOTICE OF PENAL TY U/S. 271(L)(C), IT WAS MENTIONED THAT IN THE YEAR UNDER CONSIDERATION ASSESSEE HAD RAISED BILL OF JOB WORK OF GINNING & PRESSING CHARGES TO THE COTTON CORPORATIO N FOR WORTH OF RS. 1,19,82,683/- WHICH WERE DULY ACCOUNTE D FOR BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AS AGAINST THIS COTTON CORPORATION HAS DEDUCTED TAX ON RS. 1,28,62, 419/- AS SUCH THE COTTON CORPORATION HAS DEDUCTED TAX ON EXCESS AMOUNT OF RS. 8,79,525/- FOR WHICH NO BILLS WERE RAISED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERAT ION. IN SUBSEQUENT ASSESSMENT YEAR I.E. IN 2009-2010 ASSESS EE HAS RAISED BILL OF GINNING & PRESSING AT RS. 31,03, 883/- AS AGAINST THIS COTTON CORPORATION HAS DEDUCTED TAX ON RS. 20,84,600/- WHICH IS LESSER AMOUNT THAN THE BILLED AMOUNT. -: 9: - 9 THUS IN THE AY 2009-2010 COTTON CORPORATION HAS SHO WN LESS RECEIPTS IN FORM NO. 26AS BY RS. 10,19,283/-. IN FACT THE REASON OF DIFFERENCE MAY BE THAT ASSESSEE HAS R AISED BILL OF RS. 9,62,871/- ON 16/05/2009 VIDE BILL NO. JW01 WERE ACCOUNTED FOR BY THE COTTON CORPORATION IN AY 2008- 2009. FROM THE ABOVE DETAILED SUMMARY OF INCOME SHOWN BY THE ASSESSEE AS WELL AS RECEIPT OFFERED BY THE COTTON CORPORATION OF INDIA ARE SUMMARIZED BELOW WHICH SHO WS THAT ASSESSEE HAS SHOWN HIGHER INCOME OF RS. 1,39,7 58/- AS SUCH THERE IS NO UNDERSTATEMENT OF INCOME BY RS. 8,79, 736/- AND THERE IS NO CONCEALMENT OF INCOME IN THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. -: 10: - 10 ASSESSMENT YEAR AMOUNT CREDITED BY COTTON CORPORATION OF INDIA AND APPEARING IN 26 AS AMOUNT OF JOB WORK ACCOUNTED BY ASSESSEE FIRM IN HIS BOOKS OF ACCOUNTS DIFFERENCE 2008-2009 1,28,62,419 1,19,82,894 8,79,525/ - 2009-2010 20,84,600 31,03,883 -10,19,283/ - TOTAL 1,49,47,019 1,50,86,777 -1,39,758/ - IN PARA 02 OF PENALTY ORDER THE LD. AO HAS MENTIONED, ASSESSEE HAS SUBMITTED THAT BILL WAS ISSUED TO CCI ON 16/05/2009, HOWEVER WORK WAS DONE BEFORE MARCH, 2009 IS MATERIALLY INCORRECT. TH E ASSESSEE HAS NOT ADMITTED THIS FACT NEITHER IN REPL Y DATED 22/11/2011 FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOR IN REPLY DATED 03/05/2012 FILED IN THE COURSE OF PENALTY PROCEEDINGS. COPIES OF BOTH THE LETTERS ARE ATTACHE D HEREWITH FOR YOUR KIND PERUSAL AND VERIFICATION TO ASCERTAIN CORRECT FACTS. IN FACT THE INCOME OF RS. 8,79,736/- DID NOT ACCRUE TO THE ASSESSEE IN MONTH OF -: 11: - 11 MARCH 2009 AS MENTIONED BY THE AO IN HIS PENALTY ORDER. COTTON CORPORATION OF INDIA (CCI) IS A GOVERNMENT OF INDIA UNDERTAKING, IT PURCHASES THE COTTON FROM MANDI AND SEND IT TO THE ASSESSEE FOR J OB WORK FROM TIME TO TIME AND ASSESSEE HAD ADMITTED IN HIS REPLY DATED 31/05/2012, THAT HE HAD ISSUED BILL UPTO MARCH 2009 FOR THE JOB WORK OF THE COTTON COMPLETED TILL 31/03/2009. HOWEVER, THE CCI HAD ACCOUNTED FOR TOTAL AMOUNT OF JOB WORK FOR WHICH COTTON WERE SENT FOR GINNING UPTO MARCH 2009. IN FA CT AS ON 31.03.2009 FEW QUALITY OF COTTON SENT BY CCI ARE LYING UNGINNED IN THE FACTORY PREMISES OF THE ASSESSEE FOR WHICH NO BILL HAVE BEEN RAISED AS SUCH INCOME OF RS. 8,79,736/- DO NOT ACCRUE TO THE ASSESSEE. THE COTTON CORPORATION OF INDIA HAS SENT COTTON FOR JOB WORK IN THE TWO FINANCIAL YEAR ENDIN G ON 31/03/2008 AND 31/03/2009 AND TOTAL BILL RAISED BY THE ASSESSEE INCLUDING REIMBURSEMENT OF THE TRANSPORTATION CHARGES WORKED OUT AT RS. 1,50,86,777/- AS AGAINST THE AMOUNT OF JOB WORK -: 12: - 12 APPEARING IN 26AS ON ACCOUNT OF CCI IS RS. 1,49,47,019/- AS SUCH ASSESSEE HAS SHOWN HIGHER INCOME OF RS. 1,39,758/-. THE CONTENTION OF THE AO THAT ASSESSEE HAS NOT SUBMITTED CORRECT FACT ABOUT HIS INCOME BY SHOWING LESS RECEIPT FROM CCI AT RS. 8,79,736/- IS MATERIALLY INCORRECT. FROM THE FACTS NARRATED ABOVE IT TRANSPIRES THAT THE ASSESSEE HAD NOT CONCEALED HIS PARTICULARS OF INCOME IN THE INST ANT ASSESSMENT YEAR AND HAVE NO DELIBERATE INTENTION, NOR COULD THEIR CONDUCT BE REGARDED AS CONTUMACIOUS OR WITH A VIEW TO EVADE THE PAYMENT OF TAX. IF AT A LL THERE IS ANY BREACH IT WAS TECHNICAL OR VENIAL IN NATURE ON PART OF CCI. THE NATURE OF PENALTY AND PRINCIPALS GOVERNING IMPOSITION OF THE SAME ARE WEL L SETTLED BY CATENA OF DECISION OF HON'BLE SUPREME COURT IN CASE OF HINDUSTAN STEEL LIMITED V/S. STATE OF ORISSA (1972) 83 ITR 26 SC AND HON'BLE COURT HELD THAT 'AN ORDER IMPOSING PENALTY FOR FAIL URE TO CARRY OUT STATUTORY OBLIGATION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDING, AND PENALTY WILL NOT -: 13: - 13 ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EIT HER ACTED DELIBERATELY IN DEFIANCE OF LAW OF WAS GUILTY OF CONDUCT, CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATIONS. PENALTY WIL L NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE T O PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCE S. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF T HE ACT OR WHERE THE BREACH FLOWS FROM THE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUE'. WITHOUT PREJUDICE TO THE ABOVE CONTENTION IT IS FUR THER CONTENDED THAT, IN THIS CASE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) WITHOUT POINTING OUT WHETHER THE ASSESSEE HAS CONCEALED THE -: 14: - 14 PARTICULARS OF HIS INCOME OR FILED INACCURATE PARTICULARS OF INCOME. THIS FACT IS VERY MUCH APPARENT FROM THE ASSESSMENT ORDER (COPY OF WHICH I S ENCLOSED HEREWITH). THE ASSESSING OFFICER HAS FAILE D TO DISCHARGE HIS ONUS AS HE WAS NOT SURE AT THE TIM E OF INITIATION OF PENALTY PROCEEDINGS U/S. 271(L)(C) FOR WHICH SPECIFIC CHARGE PENALTY HAS BEEN IMPOSED. ULTIMATELY THE PENALTY WAS IMPOSED BY THE AO FOR CONCEALMENT OF INCOME; THEREFORE THE INITIATION OF PENALTY ITSELF IS NOT CORRECT. RELIANCE IS PLACED O N FOLLOWING CASE LAWS: - HON'BLE HIGH COURT IN CASE OF CIT V/S. NEW SORATHIA ENGINEERING CO. (2006) 282 ITR 642 (GUJ.) IN WHICH IT WAS HELD THAT 'IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO STATE WHETHER PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF INCOME HAD BEEN FURNISHED BY THE ASSESSEE'. -: 15: - 15 ITAT INDORE BENCH, DCIT V/S. NEPA LIMITED (2014) 24 ITJ 695 ( TRIB . INDORE) (COPY OF ORDER IS ATTACHED HEREWITH). U/S. 274 THE ORDER OF IMPOSING THE PENALTY CAN ONLY BE PASSED AFTER ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. AS A PART OF THAT REASONABLE OPPORTUNITY OF BEING HEARD, THE ASSESSEE MUST BE TOLD AS TO WHAT IS THE PARTICULAR SATISFACTION OF THE ASSESSING OFFICER, AS THE CASE MAY BE, HAS ARRIVED AT, WHETHER THE SATISFACTION IS THA T THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR WHETHER THE SATISFACTION IS THAT HE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE INSTANT CASE NOTICE U/S. 271(L)(C) DATED 19/12/2012 SET OUT THE 2 GROUNDS FOR LEVYING THE PENALTY I.E. ',HAVE CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME'. FROM THE ASSESSMENT ORDER IT IS NOT CLEAR WHETHER THE PENALT Y WAS INITIATED FOR CONCEALMENT OF INCOME OR FOR FILI NG -: 16: - 16 INACCURATE PARTICULARS OF INCOME. THE CHARGE OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHI NG OF INACCURATE PARTICULARS OF INCOME' MUST BE SPECIF IC BECAUSE IF THE PROCEEDINGS HAVE BEEN INITIATED ON T HE CHARGE OF 'CONCEALMENT OF INCOME' THEN PENALTY CANNOT BE LEVIED ON THE CHARGE OF 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' AND VICE VERSA, I N THIS CASE THERE IS NO SPECIFIC CHARGE ON WHICH GROU ND PENALTY WAS INITIATED NEITHER IN ASSESSMENT ORDER N OR IN PENALTY NOTICE, IN SUPPORT OF THIS CONTENTION RELIANCE IS PLACED ON CIT VS. LAKHDHIR LALJI REPORTED AT 85 ITR 7 (GUJ) ] AND ITAT AMRITSAR BENCH IN CASE OF JAYESH R. KUMANI IN IT A NO. 453(ASR)/2007. IN THIS CASE ASSESSEE HAS NOT FILED APPEAL AGAINST THE QUANTUM ADDITION, THEREFORE. MERELY ADDITION MADE BY THE ASSESSING OFFICER WHICH WAS ACCEPTED BY THE ASSESSEE AND HAD NOT FILED APPEAL AGAINST SUCH ADDITION WOULD NOT LEAD TO THE CONCLUSION THAT ASSESSEE HAD CONCEALED THE INCOME OR FURNISH -: 17: - 17 INACCURATE PARTICULARS OF INCOME. RELIANCE IS PLACE D ON THE DECISION OF CIT V. SHARP SPRINGS & STAPLES CO. (P.) LTD. [1991 105 TAXMAN 241 (RAJKOT) IN VIEW OF THE ABOVE SUBMISSION AND FACTS NARRATED ABOVE PENALTY LEVIED BY THE LD. ASSESSING OFFICER U/S. 271(L)(C) OF THE INCOME TAX ACT AT RS. 2,70,00 0/- MAY KINDLY BE DELETED. 7. THE LD. SENIOR D.R. RELIED UPON THE ORDER OF LD. CI T(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THE YEAR RELEVANT TO ASSESSMENT YEA R UNDER CONSIDERATION, IT WAS OBSERVED BY THE ASSESSING OFF ICER THAT THE ASSESSEE HAS RECEIVED JOB WORK RECEIPT AMOUNT O F RS. 1,19,82,683/-, WHEREAS IN FORM NO. 26AS, AMOUNT OF RS. 1,28,62,419/- WAS FOUND TO BE RECEIVED BY THE ASSES SEE FROM CCI. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE EXPLAINED THAT BILL WAS ISSUED TO THE JCCI ON 16.05.2009, BUT THE WORK WAS DONE BEFORE MARCH, 200 9. THE -: 18: - 18 CCI HAS CONSIDERED THE BILL IN MARCH, 2009, AND CRE DITED THE AMOUNT OF BILL AGAINST THE ASSESSEE, WHEREAS THE AS SESSEE HAS ACCOUNTED THE BILL ON THE BASIS OF ISSUE DATED BILL . THE AO HAS OBSERVED THAT SINCE THE ASSESSEE IS MAINTAINING BOO KS OF ACCOUNT ON MERCANTILE BASIS, THE INCOME WAS ACCRUED TILL MARCH, 2009. THE SAME SHOULD HAVE BEEN ACCOUNTED FO R THE YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATIO N. THEREFORE, THE DIFFERENCE OF RS. 8,79,736/- WAS ADD ED TO THE INCOME OF THE ASSESSEE AND PENALTY HAS BEEN IMPOSED . 9. IN THE INSTANT CASE, THE ASSESSEE HAS FILED THE RE TURN OF INCOME AND CLAIMED THAT HAS RECEIVED THE LESSER AMOUNT IN THE SUBSEQUENT YEAR. THE ASSESSEE HAS TAKEN THE CON TENTION THAT HE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCO UNTING, THEREFORE, HE SHOULD HAVE TAKEN THIS AMOUNT IN THE YEAR UNDER CONSIDERATION. WE FIND THAT THE POSITION OF LAW REG ARDING LEVY OF PENALTY U/S 271(1)(C) HAS UNDERGONE A SUBSTANTIA L CHANGE AFTER INSERTION OF EXPLANATION I TO SECTION 271(1)( C) WITH EFFECT FROM 01.04.1976. EXPLANATION 1 TO SECTION 271(1)(C) RAISES A PRESUMPTION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME, THE SAME SHALL BE -: 19: - 19 DEEMED OR REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. FURTHER WITH EFFEC T FROM 10.9.1986 AMENDMENT HAS BEEN MADE TO EXPLANATION 1( B) TO SECTION 271(1)(C), AFTER THIS AMENDMENT FURTHER ONU S HAS BEEN PLACED ON THE ASSESSEE TO PROVE THAT EXPLANATION FU RNISHED BY HIM WAS BONA FIDE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXPLANATION AND PROV ES THAT THE EXPLANATION WAS BONA FIDE, THE ADDITION MADE TO HIS INCOME SHALL BE DEEMED TO REPRESENT THE CONCEALED I NCOME. ON ANALYSIS OF PROVISIONS OF SECTION 271(1)(C), IT IS OBSERVED THAT EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THE SIT UATION, WHERE NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSESSEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS F OUND TO BE FALSE OR WHERE THE ASSESSEE IS NOT ABOUT TO SUBSTAN TIATE THE EXPLANATION OFFERED BY HIM. IN ALL THE CASES, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSONA SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. AS PER PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED WAS BONA FIDE AND FACTS RELATING TO SAME AND MATERIAL T O THE -: 20: - 20 COMPUTATION OF HIS INCOME EVEN DISCLOSED BY HIM WIL L BE ON THE PERSONS CHARGED FOR CONCEALMENT. AS PER THE PRO VISIONS 2 TO EXPLANATION 1(B) NOW THE ENTIRE ONUS IS ON THE A SSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT ALSO TO SUBSTANTI ATE IT AND TO PROVE THE PRESUMPTION WAS BONA FIDE. AT THE SAME TI ME THE PRESUMPTION SO RAISED BY THE EXPLANATION 1 IS REBUT TABLE. THE EFFECT IS THAT UNLESS AND UNTIL REBUTS THE PRESUMPT ION, HE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE INC OME-TAX ACT, 1961. IT IS NOW ESTABLISHED LAW THAT PRESUMPTION WO ULD NOT STAND REBUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FANCIFUL OR UNREASONABLE EXPLANATION BY THE ASSE SSEE, THE EXPLANATION SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTED TO THE AUTHORITIES. THE EXPR ESSION FURNISHING THE INACCURATE PARTICULARS OF INCOME H AS BEEN NOT DEFINED IN THE ACT. THE EXPRESSION INACCURATE RE FERS TO NOT ONLY IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS AMENDMENT, WHICH IS RELEVANT IN THE CONTEXT OF FURN ISHING INACCURATE PARTICULARS. THE MEANING BY FURNISHING I NACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT THE INCOME WHICH ARE NOT IN CONFO RMITY WITH -: 21: - 21 THE FACT OR TRUTH. THE DETAILS OR INFORMATION ABOUT INCOME DEALS WHICH ARE FACTUAL DETAIL OF INCOME AND THIS C ANNOT BE EXTENDED TO THE AREA, WHICH ARE SUBJECTIVE SUCH AS STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF DEDUCTION AN D INTERPRETATION OF LAW. FURNISHING OF INACCURATE INF ORMATION, THUS, RELATES TO FURNISHING THE FACTUAL INCORRECT D ETAILS AND INFORMATION ABOUT THE INCOME. THE ADMISSION OR REJE CTION OF A CLAIM SUBJECT TO EXERCISE AND WHETHER THE CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACC URATE PARTICULARS OF INCOME. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT, IN THIS CASE, THE ASSESSEE HAS MADE A BONA FIDE LEGAL CLAIM, WHICH WAS NOT ACCEPTED BY THE TAX AUTHORITY OR JUDI CIAL AUTHORITY. WE FIND THAT THE ASSESSEES CLAIM WAS NO T ACCEPTED BY THE AUTHORITY, IT DOES NOT MEAN THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON 'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN (2009) 13 SCC 448, CONSIDERED THE EARLIER DECISION OF THE -: 22: - 22 HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND ORS VS. DHARMENDRA TEXTILES PROCESSORS & ORS., REPORTED IN (2008) 306 ITR 277 (SC) AND HELD THAT IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 27 1(L)(C) OF THE ACT, CONDITION STATED THEREIN MUST EXIST. THE A BOVE SAID DECISION CAME UP FOR CONSIDERATION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUC TS PVT., LTD., REPORTED IN (2010) 322 ITR 158 (SC). ON READING OF SECTION 271(1)(C) , THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE UNDER S ECTION 271(1)(C), THERE HAS TO BE CONCEALMENT OF THE PARTI CULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION COU LD NOT BE INVOKED. THUS, THE HON'BLE SUPREME COURT POINTED OU T THAT A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WOULD NOT AMOUNT TO FURNISHING OF INACCURAT E PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. T HE READING OF THE DECISION OF THE HON'BLE SUPREME COUR T -: 23: - 23 REFERRED TO ABOVE, THUS POINTS OUT THAT FOR SUSTAIN ING PENALTY, THE BONA FIDE EXPLANATION OF THE ASSESSEE MUST BE LOOKED AT, SO THAT THE CONTUMACIOUS CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINING THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAIN REQUIREMENT UND ER SECTION 271(L)(C) OF THE ACT. REFERRING TO THE DECI SION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS, (SUPRA), THE HON'BLE SUPREME COURT POINTED OUT THAT IN THE BACKG ROUND OF SECTION 271(L)(C) OF THE ACT, THERE IS NO NECESS ITY OF MENS REA BEING SHOWN BY THE REVENUE, HOWEVER REFERRING TO TH E EXPLANATION TO SECTION 271(L)(C) PENALTY BEING A MULTIPLE LIABILITY, THE BONA FIDE OF THE CONDUCT OF THE ASSE SSEE NECESSARILY ASSUMES SIGNIFICANT EVEN THOUGH WILLFUL NESS OF THE ASSESSEE MAY NOT BE A CRITERIA, THE CONDUCT IS TO BE CONSIDERED. THUS, A MERE FACT THAT THE ADDITION IN THIS CASE HAS BEEN SUSTAINED BY THIS COURT BY ITSELF WOULD NO T LEAD TO THE AUTOMATIC APPLICATION TO SECTION 271(L). 10. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE HAS MADE THE CLAIM IN HIS BOOKS OF ACCOUNT, WHICH AS PE R THE AO, THIS AMOUNT SHOULD HAVE BEEN ADDED IN THE ASSESSMEN T YEAR -: 24: - 24 UNDER CONSIDERATION. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS CARRIE D OUT THE WORK BEFORE MARCH,2009, AND WHILE THE CCI HAS CONSI DERED THE BILL IN THE MONTH OF MARCH, 2009, AND CREDITED THE ACCOUNT OF THE ASSESSEE ACCORDINGLY. WHILE THE ASSESSEE HAS MADE THE ENTRY TO THE ISSUE DATED BILL AND ENTERED IN THE BO OKS OF ACCOUNT FOR THE FINANCIAL YEAR 2009-10 I.E. IN NEXT YEAR AND AO HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE MAI NLY ON THE GROUND THAT THE INCOME WAS ACCRUED TO THE ASSESSEE AND WHEN THE ASSESSEE IS MAINTAINING THE BOOKS OF ACCOUNT ON MERCANTILE SYSTEM OF ACCOUNT, THIS IS ACCRUED TO TH E ASSESSEE AND ON THAT GROUND, THE ADDITION WAS MADE. WE FIND THAT THE ASSESSEE HAS NOT CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE HAS ACCOUNTED THIS INCOME IN THE NEXT YEAR AND WHEN THE ASSESSEE HAS ACCOUNTED THIS INCOME, THE PENALTY CANNOT BE LEVIED . WE FIND THAT IT IS THE ONLY DISPUTE, WHICH IS THE YEAR OF T AXATION OF INCOME AND WHETHER THIS INCOME ACCRUED IN ASSESSMEN T YEAR 2009-10 OR 2010-11, THAT IS, ONLY A DEBATABLE ISSUE , FOR WHICH -: 25: - 25 THE PENALTY CANNOT BE LEVIED. MOREOVER, WE ALSO FIN D THAT THE ASSESSEE HAS DECLARED ALL HIS FACTS BEFORE THE AO. WE HAVE ALSO GONE THROUGH THE SUMMARY OF THE INCOME SHOWN BY THE ASSESSEE AS WELL AS RECEIPTS OFFERED BY THE CCI, WH ICH SHOWS THAT THE ASSESSEE HAS SHOWN HIGHER INCOME OF RS. 1, 39,758/- AND THERE WAS UNDER-STATEMENT OF INCOME BY THE ASSE SSEE AND THERE IS NO CONCEALMENT OF INCOME. THE ASSESSEE HAS GIVEN THE TABLE, WHICH READS AS UNDER :- ASSESSMENT YEAR AMOUNT CREDITED BY COTTON CORPORATION OF INDIA AND APPEARING IN 26 AS AMOUNT OF JOB WORK ACCOUNTED BY ASSESSEE FIRM IN HIS BOOKS OF ACCOUNTS DIFFERENCE 2008-2009 1,28,62,419 1,19,82,894 8,79,525/ - 2009-2010 20,84,600 31,03,883 -10,19,283/ - TOTAL 1,49,47,019 1,50,86,777 -1,39,758/ - 11. FROM THE ABOVE TABLE, WE ARE OF THE VIEW THAT IT IS THE ONLY DISPUTE WHETHER THE INCOME ACCRUED IN THE ASSE SSMENT YEAR UNDER CONSIDERATION OR THE INCOME ACCRUED IN T HE NEXT -: 26: - 26 YEAR FOR WHICH NO PENALTY CAN BE LEVIED. THEREFORE , IN OUR OPINION, THE PENALTY CANNOT BE LEVIED AND WE CANCEL THE PENALTY. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 30 TH JULY, 2015. CPU* 7.21