Appeal details
Counselvise Citation
264520114 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 24 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-08-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2007-2008
Appeal Filed On
31-05-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI I.C. SUDHIR , JM & SHRI A.N. PAHUJA, AM ITA NO.2645/DEL/2012 ASSESSMENT YEAR : 2007-08 D.C.I.T.,CIRCLE 11(1), ROOM NO.312,C.R. BUILDING, IP ESTATE, NEW DELHI V/S. INTEGRATED MASTER SECURITIES PVT. LTD., 303, 304, 3 RD FLOOR, HOUSE-27, BARAKHAMBA ROAD, NEW DELHI [PAN :AAACI 2074 F ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SATISH AGGARWAL,AR REVENUE BY SHRI NEERAJ KUMAR, DR DATE OF HEARING 01-08-2012 DATE OF PRONOUNCEMENT 24-08-2012 O R D E R A.N. PAHUJA:- THIS APPEAL FILED ON 31.05.2012 BY THE REVENUE AGA INST AN ORDER DATED 06-03-2012 OF THE LD. CIT(A)-XV, NEW DE LHI, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY OF ` ` 6,02,514/- IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 09.10.2009,DETERMIN ING INCOME OF ` `4,45,81,010/- , IN PURSUANCE TO RETURN FILED ON 06.11.2007 DECLAR ING INCOME OF ` ` 4,27,91,010/-. ITA NO.2645/DEL./2012 2 INTER ALIA, AN AMOUNT OF ` `17,90,000/- WAS DISALLOWED IN RELATION TO AMORTIZ ATION CLAIM WRITTEN OFF ON ACCOUNT OF MEMBERSHIP FEE PAID TO STOCK EXCHANGES. THE ASSESSING OFFICER[AO IN SHORT] ALSO INITIATED PENAL TY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF IN COME SUBSEQUENTLY, AFTER CONSIDERING THE REPLY DATED 21 ST APRIL, 2010 IN RESPONSE TO A SHOWCAUSE NOTICE BEFORE LEVY OF PENALTY, THE AO IMPOSED A PENALTY OF ` `6,02,514/- U/S 271(1)(C) OF THE ACT @100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF ` ` 17,90,000/-. INTER ALIA, THE AO INVOKED EXPLANATION 1 TO 271(1)( C) OF THE ACT AND RELIED UPON THE DECISIONS IN CIT VS. GATES FOAM & RUBBER CO. (1 973) 91 ITR 467 (KERALA); CIT VS. ANWAR ALI (1970) 76 ITR 696 (SC) AND CIT VS . LAL CHAND TIRATH RAM (1997) 225 ITR 675 (P&H). 3. ON APPEAL, THE LD. CIT(A) CANCELLED THE PENALTY IN THE FOLLOWING TERMS:- 5 I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPEL LANT, THE FACTS ON RECORDS AND HAVE ALSO PERUSED THE PENALTY ORDER AND CONSIDE RED THE DECISION RELIED UPON BOTH BY THE APPELLANT AND THE AO. 5.1 AS PER THE SCHEME OF SECTION 271(L)(C), PENALT Y IS LEVIABLE IN CASE THE ASSESSING OFFICER, IN THE COURSE OF ANY PR OCEEDING UNDER ACT, IS SATISFIED THAT: (I) ANY PERSON HAD CONCEALED PARTICULARS OF HIS IN COME OR (II) HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FURTHER, AFTER INSERTION OF EXPLANATION 1 TO SECTIO N 271(L)(C), THE ONUS IS ON THE ASSESSEE TO SHOW THAT THERE WAS NO I NTENTION OF CONCEALMENT AND NOT ON THE REVENUE. 5.2. HOWEVER, IN A DISPUTE UNDER CENTRAL EXCISE LAW THE APEX COURT IN THE CASE OF UOI VS DHARAMENDRA TEXTILE PRO CESSORS (200S) (306 ITR 277) (SC) HELD THAT DEFAULT MERITED PENALTY WITHOUT HAVING TO CONSIDER ANY INTEND OF THE ASSESSEE TO EV ADE TAX. THE MENS REA IS ESSENTIAL ONLY FOR MATTERS OF PROSECUTION & NOT PENALTY. ITA NO.2645/DEL./2012 3 THUS AFTER THE DECISION IN THE CASE OF DHARAMENDRA TEXTILE PROCESSOR (SUPRA) MENS REA IS NOT NECESSARY TO BE PROVED BY REVENUE FOR CIVIL PENALTIES. 5.3. BUT WITH THE RECENT DECISION OF THE SUPREME CO URT IN THE CASE OF CLT VS RELIANCE PETRO PRODUCTS PVT. LTD (2010) ( 322 ITR 158) (SC), IT IS CLEAR THAT THE SUPREME COURT BY GIVING THE RULING IN DHARMENDRA TEXTILE PROCESSOR'S CASE (SUPRA) HAS NOT OVERRULED THEIR DECISION GIVEN EARLIER IN DILIP N. SHROFF'S V S. CIT (209 ITR 519) EXCEPT FOR ITS MENTION OF MENS REA THEREIN BUT SUPR EME COURT HAVE AGAIN RE-ITERATED THEIR FINDING GIVEN IN THE CASE O F CLT VS ATUL MOHAN BINDAL (2009) (317 ITR1) AND UOI VS RAJASTHAN SPINNING & WEAVING MILLS (2010) (1GSTR66) (SC) THAT' THAT FOR APPLICABILITY OF SECTION 271(L)(C} THE CONDITIONS STATED THEREIN MUS T EXIST.' EVEN IN THE RECENT DECISION IN THE CASE OF CIT(LTU} VS. MTNL, ITA NO.626/2011 DATED 10.10.2011, THE JURISDICTIONAL DE LHI HIGH COURT HAS UPHELD THE SAME VIEW. 5.4 THUS FROM ABOVE, IT IS VERY CLEAR THAT FOR IMP OSING PENALTY UNDER SECTION 271(L}(C}, THE AO HAVE TO BE SATISFIE D THAT: (A) ASSESSEE HAS CONCEALED THE PARTICULARS OF INCO ME OR (B) ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 5.5 IN VIEW OF THE ABOVE DISCUSSION AND IN VIEW OF THE HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS (SUPRA) IT IS CLEAR THAT THE LEGISLATURE DID NOT INTEND TO IMPOSE PENALTY ON EVE RY ASSESSEE WHOSE CLAIM WAS REJECTED BY THE ASSESSING OFFICER. WHAT IS SOUGHT TO BE COVERED UNDER SECTION 271(L}(C} IS CONCEALMEN T OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME AND NOT MAKING OF AN UNTENABLE CLAIM. 5.6 FROM THE VARIOUS JUDICIAL PRECEDENTS IT IS SEEN THAT THE FACTS AND CIRCUMSTANCES IN EACH CASE HAS TO BE SEEN IN THE CO NTEXT AND THEN PENALTY PROVISION SHOULD BE APPLIED TO SEE WHETHER THERE WAS THE CONCEALMENT OF PARTICULARS OF INCOME OR THE APPELLA NT HAS FURNISHED INACCURATE PARTICULARS SO AS TO CALL FOR THE PENAL ACTION UNDER SECTION 271(1}(C). 5.7 IN THE APPELLANT'S CASE IS SEEN THAT THE APPELL ANT HAS BEEN TREATING THE COST OF MEMBERSHIP CARD OF THE STOCK E XCHANGE AS AN AMORTISED ASSETS AND THIS FACT HAS BEEN DISCLOSED I N THEIR RETURN OF INCOME ALSO. IT IS ADMITTED FACT THAT FOR QUITE A L ONG, TREATMENT OF ITA NO.2645/DEL./2012 4 COST OF MEMBERSHIP ASSET, HAVE BEEN A SUBJECT MATTE R OF LITIGATION AND VARIOUS BENCHES OF ITAT HAVE GIVEN RULING IN FA VOUR OF THE ASSESSEE. IT WAS ONLY IN THE MONTH OF SEPTEMBER 201 0, THAT SUPREME COURT GAVE A RULING IN THE CASE OF TECHNO S HARES AND STOCK LTD. VS. ITO (CIVIL APPEAL 7780/7781 OF 2010 DATED 09.09.2010) THAT THIS ISSUE IS SETTLED. FURTHER IT IS ALSO A SETTLED PREPOSITION THAT WHERE DIFFERENT VIEWS ARE POSSIBLE ON AN ISSUE, IN THOSE CASES PENALTY IS NOT LEVIABLE. 5.8. HENCE IN THE FACTS OF THE APPELLANT'S CASE, TH EIR CLAIM OF AMORTIZATION WHICH WAS DISCLOSED IN THE RETURN OF I NCOME BUT WAS NOT ACCEPTED BY THE AO, AT ASSESSMENT STAGE DOESN'T MEAN THAT THERE HAS BEEN FAILURE ON THE PART OF THE APPELLANT TO FURNISH INACCURATE PARTICULARS IN VIEW OF THE SUPREME COURT 'S RULING IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA). ACCORDINGLY, I HOLD THAT IN THE FACTS AND CIRCUMSTA NCES OF THE APPELLANT'S CASE NO PENALTY UNDER SECTION 271(1)(C) IS WARRANTED, HENCE PENALTY LEVIED BY THE AO DESERVES TO BE DELET ED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF LEARNED CIT(A) AND CONTENDED FURTHER THAT DISALLOWANCE OF EXPENSE COUL D NOT MEAN THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME . INTER ALIA, THE LD. AR RELIED UPON THE DECISION IN CIT VS. RELIANCE PETRO PRODUCT S PVT. LTD., (2010) 322 ITR 158 (SC). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS WELL AS THE AFORESAID DECISION RELIED UPON ON BEHALF OF THE ASSESSEE. THE AO LEVIED PENALTY U/S 2 71(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF AMOUNT OF ` ` 17,90,000/- DISALLOWED ON ACCOUNT OF AMORTIZATION CLAIM WRITTEN OFF IN RELATION TO MEMBERSHIP FEE PAID TO STOCK EXC HANGES, IGNORING THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEEE, H OLDING THAT THE MEMBERSHIP CARD IS AN INTANGIBLE ASSET WITHIN THE MEANING OF S ECTION 32(1)( II ) OF THE ACT AND THUS, ENTITLED FOR DEPRECIATION THEREOF. SOME OF TH ESE DECISIONS RELIED UPON BY THE ITA NO.2645/DEL./2012 5 ASSESSEE ARE KAYNET CAPITAL LTD. VS. DCIT IN I.T.A. NOS.3870, 38 71 AND 4871/MUM/2005 (BCAJ);KOTAK SECURITIES LTD. VS. ADDL . CIT (2009) 24 DTR 214 (MUM.)(TRIB.);PENINSULAR CAPITAL MARKET VS. ACIT (2 008) 19 SOT 421;R.M. VALIPPAN VS. ACIT (2006 103 ITD 63 (CH) AND TECHNO SHARES & STOCK LTD. S VS. INCOME-TAX OFFICER IN I.T.A. NOS.778, 779 & 1951/MU M./2004.THE LD. CIT(A) WHILE REFERRING TO DECISION IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) CANCELLED THE PENALTY. WE FIND THAT HONBLE APEX COURT IN THEIR D ECISION DATED 9.9.2010 IN TECHNO SHARES & STOCK LTD. VS. CIT,193 TAXMAN 248(S C) FINALLY SETTLED THE ISSUE HOLDING THAT DEPRECIATION WAS ALLOWABLE ON TH E COST OF THE MEMBERSHIP CARD OF STOCK EXCHANGE UNDER SECTION 32(1)( II ) OF THE ACT. AS IS APPARENT FROM THE AFORESAID FACTS AND CIRCUMSTANCES, IT IS NOT A CASE WHERE THE ASSESSEE HAS NOT DISCLOSED FULL DETAILS AT THE TIME OF FILIN G OF RETURN OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE, IN THE INSTANT CASE, MERELY MADE A BONAFIDE CLAIM FOR THE DEDUCTIO N OF DEPRECIATION ON THE COST OF MEMBERSHIP CARD STOCK EXCHANGE U/S 32(1)( II ) OF THE ACT. NOT EVEN A WHISPER HAS BEEN MADE IN THE PENALTY ORDER AS TO WHICH SPECIFIC PARTICULARS WERE FURNISH ED INACCURATE OR WERE CONCEALED. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS O F INCOME' HAVE NOT BEEN DEFINED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY, KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM TH E RETURN. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS CO N+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVEN T THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF. THE OFFENC E OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN I TEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF T HE INCOME- TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : ITA NO.2645/DEL./2012 6 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRA NSCRIPT.'. 5.1. THE PENALTY U/S 271(1)(C) OF THE ACT IS LE VIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL S ETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN TH E CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT, 123 ITR 4 57, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE RE GARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDI NGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT ARE DIFF ERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. IT IS, THEREFORE, NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION OR DISALLOWANCE MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SA ID PROVISIONS. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT STIPULA TE THAT IF THE ASSESSING OFFICER OR THE CIT(APPEALS) OR THE COMMIS SIONER, IN THE COURSE OF PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS THEREOF , HE MAY DIRECT THAT SUCH PERS ON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY A REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME. EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT MENTIONS THAT WHE RE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR ITA NO.2645/DEL./2012 7 OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR T HE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR SUCH PERSON OFF ERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE A ND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DIS ALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL FOR THE PURPOSE OF CLAUSE (C) OF SECTION 271(1), B E DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. IN OTHER WORDS, THE NECESSARY INGREDIEN TS FOR ATTRACTING EXPLANATION 1 TO SECTION 271(1)(C) ARE THAT (I) THE PERSON FAILS TO OFFER THE EXPLANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY TH E AO OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. 5.2 IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1)(C) COME INTO PLAY, AND THE AMOUNT AD DED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE C ONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1), AND THE P ENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER A N EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATIO N 1 TO SECTION 271(1)(C) OF THE ACT, AND IN THAT CASE, THE PENALTY SHALL NOT BE IMPOSED. IN THE INSTANT CASE, AS IS APPARENT FROM T HE AFORESAID ITA NO.2645/DEL./2012 8 FACTS, THE ASSESSEE DISCHARGED THE ONUS CAST ON IT IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF V. JT. CIT [2007] 210 C TR (SC) 228 : [2007] 291 ITR 519 (SC) WHILE CONSIDERING THE SCOPE OF THESE PROVISIONS U/S 271(1)( C) OF THE ACT OBSERVED IN THE FOLLOWING TERMS: THE LEGAL HISTORY OF SECTION 271(1)(C) OF THE ACT TRACED FROM THE 1922 ACT PRIMA FACIE SHOWS THAT THE EXPLAN ATIONS WERE APPLICABLE TO BOTH THE PARTS. HOWEVER, EACH CA SE MUST BE CONSIDERED ON ITS OWN FACTS. THE ROLE OF THE EXPLAN ATION HAVING REGARD TO THE PRINCIPLE OF STATUTORY INTERPR ETATION MUST BE BORNE IN MIND BEFORE INTERPRETING THE AFOREMENTI ONED PROVISIONS. CLAUSE (C) OF SUB-SECTION (1) OF SECTIO N 271 CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVI ABLE IF THE ASSESSEE CONCEALS THE PARTICULARS OF HIS INCOME OR FURNISHES INACCURATE PARTICULARS THEREOF. BY REASON OF SUCH C ONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENALTY. IMPO SITION OF PENALTY IS NOT AUTOMATIC. LEVY OF PENALTY IS NOT ON LY DISCRETIONARY IN NATURE BUT SUCH DISCRETION IS REQU IRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEP ING THE RELEVANT FACTORS IN MIND. SOME OF THOSE FACTORS APA RT FROM BEING INHERENT IN THE NATURE OF PENALTY PROCEEDINGS AS HAS BEEN NOTICED IN SOME OF THE DECISIONS OF THIS COURT , INHERES ON THE FACE OF THE STATUTORY PROVISIONS. PENALTY PROCE EDINGS ARE NOT TO BE INITIATED, AS HAS BEEN NOTICED BY THE WAN CHOO COMMITTEE, ONLY TO HARASS THE ASSESSEE. THE APPROAC H OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAIR AND O BJECTIVE. THE TERM 'INACCURATE PARTICULARS' IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT BY I TSELF BE FURNISHING OF INACCURATE PARTICULARS. EVEN IF THE E XPLANATIONS ARE TAKEN RECOURSE TO, A FINDING HAS TO BE ARRIVED AT HAVING REGARD TO CLAUSE (A) OF EXPLANATION 1 THAT THE ASSE SSING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE, IN THE EVENT HE OFFERS ONE, WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO PROVE THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATIN G TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HI M. THUS, APART FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD HAVE BEEN FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS MATERIAL TO THE COMPUTATION OF HIS INCOME . ITA NO.2645/DEL./2012 9 5.3 IN THE LIGHT OF AFORESAID OBSERVATIONS O F THE HONBLE APEX COURT , WHAT IS TO BE SEEN IN THE INSTANT CASE, IS WHETHER THE CLAIM FOR DEDUCTION OF DEPRECIATION U/S 32 OF THE ACT, MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTAB LISHED, THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENA LTY U/S 271(L)(C) OF THE ACT. THE ASSESSEE, IN THE LIGHT OF CERTAIN D ECISIONS, CLAIMED THAT IT IS ENTITLED TO DEPRECIATION ON THE MEMBERSH IP FEE OF STOCK EXCHANGE U/S 32 OF THE ACT. THE CLAIM WAS ,SUBSEQU ENTLY, UPHELD BY THE HONBLE APEX COURT IN THEIR DECISION DATED 9.9.2010 IN TECHNO SHARES & STOCK LTD. VS. CIT,193 TAXMAN 248(SC). THE AO HAS NOT BEE N ABLE TO ESTABLISH THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF DEP RECIATION U/S 32 OF THE ACT WAS NOT BONA FIDE OR THAT ANY SPECIFI C PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. WE ARE OF THE OP INION THAT A MERE DISALLOWANCE OF A CLAIM OF DEDUCTION DOES NOT NECES SARILY IMPLY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BECAUSE THE IS SUE REGARDING ALLOWABILITY OF DEDUCTION OF DEPRECIATION ON MEMBERSHIP FEE OF STO CK EXCHANGE U/S 32 OF THE ACT WAS DEBATABLE ISSUE. A MERE REJECTION OF THE CL AIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETATIONS DOES NOT AM OUNT TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS THEREOF BY THE ASSESSEE. HON'BLE APEX C OURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158/ 189 TAX MAN 322, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519/ 161 TAXMAN 218 (SC) AND UNION OF INDIA V. DHARMENDRA TE XTILE PROCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC) CONCLUDED THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OR CONCEALED T HE PARTICULARS. ITA NO.2645/DEL./2012 10 ADMITTEDLY, THE CLAIM FOR DEDUCTION OF DEPRECIATION ON MEMBERSHIP FEE OF STOCK EXCHANGE U/S 32 WAS DEBATABLE ISSUE AND FINAL LY SETTLED BY HONBLE APEX COURT IN THEIR AFORESAID DECISION DATED 9.9.2010 IN TECHNO SHARES & STOCK LTD.(SUPRA). MERE DISALLOWANCE OF A CLAIM WILL NOT AMOUNT TO FILING OF INACCURATE PARTICULARS OF INCOME. IT CAN AT BEST BE A WRONG CLAIM NOT A FALSE CLAIM. IN SUCH CIRCUMSTANCES, HONBLE DELHI HIGH COURT HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX.VS BACARDI MARTINI INDIA LIMITED.,288 ITR 585(DEL) THAT NO PENALTY WAS LEVIABLE. IN CIT VS. HARSHVARDHAN CHEMICALS & MINERALS LTD. ,259 ITR 212 (RAJ),HONBLE RAJASTHAN HIGH COURT UPHELD THE FINDI NG OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AMOUNT THOUGH THAT IS DEBATABLE, IN SUCH CASES, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED A NY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF THE TAX. IN THIS VIEW OF THE MATTER, NO FAULT CAN BE FOUND WITH THE CLAIM OF THE ASSESSEE T HAT IT HAD CLAIMED THE DEDUCTION IN A BONA FIDE MANNER. IN THE CASE UN DER CONSIDERATION, AS POINTED OUT BY THE LD. CIT(A), THE ASSESSEE HAD GIV EN ALL THE PARTICULARS OF INCOME AND HAD DISCLOSED ALL FACTS TO THE AO IN REL ATION TO CLAIM FOR DEDUCTION OF DEPRECIATION ON MEMBERSHIP FEE OF STOCK EXCHANGE U/S 32 OF THE ACT. THE LD. CIT(A) ,ACCORDINGLY, CONCLUDED THAT PENALTY CANNO T BE IMPOSED MERELY ON SUCH DISALLOWANCE. 6. IN VIEW OF THE FOREGOING, WE ARE OF THE OPINI ON THAT MERE ERRONEOUS CLAIM IN THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY, ESPECIALLY WHEN THERE I S NOTHING ON RECORD TO SHOW THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NO T BONA FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE . IN THESE CIRCUMSTANCES, WE HAVE NO HESITATION IN UPHOLDING THE CONCLUSION OF THE LD. CIT(A),CANCELLING THE PENALTY IN RELATION TO CLAIM FOR DEDUCTION OF DEPRECIATION ON MEMBERSHIP FEE OF STOCK EXCHANGE U/S 32 OF THE ACT. CONSEQUENTLY, GROUND NO. 1 IN THE APPEAL IS DISMI SSED. ITA NO.2645/DEL./2012 11 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL,, ACCORDINGLY T HIS GROUND IS DISMISSED. 8. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US . 9. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (I.C. SUDHIR) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. D.C.I.T.,CIRCLE 11(1), ROOM NO.312, C.R. BUILDING, IP ESTATE, NEW DELHI 3. CIT CONCERNED 4. CIT(A)-XV, NEW DELHI 5. DR, ITAT,C BENCH, NEW DELHI 6.. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT
