RDC Concrete (India) Pvt. Ltd., Gurgaon V. ACIT, New Delhi

ITA 2918/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6717 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHERPA
• Keywords: Reasonable cause; Bonafide mistake; Revenue expenditure
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 2918/DEL /2012 ASSESSMENT YEAR: 2006-07 RDC CONCRETE (I) PVT. LTD VS. THE ACIT SIGMA, III FLOOR, PLOT NO. C/8 CIRCLE 15(1) ROAD NO. 22, MIDC, ANDHERI [EAST] NEW DELHI MUMBAI PAN : AAACU 0108 Q [APPELLANT] [RESPONDENT] DATE OF HEARING : 04.05.2016 DATE OF PRONOUNCEMENT : 29.07.2016 APPELLANT BY : SHRI VISHAL KALRA , ADV SHRI S.S. TOMAR, ADV RESPONDENT BY : MS. KESANG Y. SHERP A, SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A)-XVIII, NEW DELHI, DATED 05/03/2 012 FOR A.Y 2006-07 PASSED IN FIRST APPEAL NO. 04/2011-12. 2. ALTHOUGH THE ASSESSEE HAS RAISED AS MANY AS FOUR GROUNDS IN THIS APPEAL, BUT EXCEPT THE MAIN EFFECTIVE GROUND NO. 1, ALL THE REST ARE SUPPORTIVE AND ARGUMENTATIVE TO THE MAIN GROUND WHI CH READS AS 2 ITA NO. 2918/ DEL/2012 2 FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN CONFIRMING THE ERRONEOUS OBSERV ATION OF HT AO THAT THE APPELLANT HAS CLAIMED A DEDUCTION IN RE SPECT OF A SUM OF RS. 17,056,951/- AS MISCELLANEOUS EXPENSES T O THE EXTENT NOT WRITTEN OFF OR ADJUSTED UNDER THE HEAD DEFERRED REVENUE EXPENDITURE AS AGAINST RS 6,605,954/- ACTUALLY CLAI MED AS DEDUCTION. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D HAVE CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON R ECORD ON THE TRIBUNAL INTER ALIA ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' , ORDER OF THE CIT(A) ALONGWITH THE PAPER BOOK OF THE ASSESSEE SPREAD OVE R 74 PAGES. THE LD. AR TOOK OVER THROUGH THE ORIGINAL ASSESSMENT OR DER PASSED ON 23.12.2008 AND SUBMITTED THAT DURING THE RELEVANT A Y 2006-07, THE ASSESSEE DEBITED ONLY RS. 6605955/- WHEREAS THE AO PROCEEDED TO LEVY PENALTY OF AN AMOUNT OF RS. 1,70,56,950/- AS P ER INCORRECT ADDITION MADE IN THE ASSESSMENT ORDER. THE LD. AR FURTHER POINTED OUT THAT AS PER THE ASSESSEES PAPER BOOK PAGES 46 TO 48, IN SCHEDULE XII, THE OPENING BALANCE OF DEFERRED REVENUE EXPEND ITURE WAS RS. 72,49,150/- AND AFTER ADJUSTING EXPENDITURE INCURRE D DURING THE YEAR OF RS. 98,07,801/- TOTAL AMOUNT INCLUDING OPENING B ALANCE REACHED RS. 1,70,56,951/- AND AFTER WRITING OFF THE AMOUNT OF R S. 66,05,955/- 3 ITA NO. 2918/ DEL/2012 3 DURING THE RELEVANT PERIOD, CLOSING BALANCE FOR THE YEAR WAS RS. 1,04,50,996/-. THE LD. AR DREW OUR ATTENTION TO SC HEDULE XII AND XV OF THE STATEMENT OF ACCOUNT AND ALSO DREW OUR ATTEN TION TOWARDS NOTE NO. 3 TO THE NOTES OF ACCOUNTS WHEREIN IT HAS BEEN MENTIONED THAT DEFERRED REVENUE EXPENDITURE INCURRED ON OR AFTER 1 .4.2004 ON THE SITE CONSTRUCTION AND OTHER PRE OPERATIONS HAS BEEN BOOKED ON DEFERRED REVENUE EXPENDITURE BASIS AMORTISED OVER T HREE YEARS PERIOD OR THE ACTUAL DURATION OF THE PROJECT, WHICHEVER IS LESS AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION. THE LD. AR ALSO POINTED OUT THAT UNFORTUNATELY, THE APPEAL OF THE ASSESSEE BEFORE THE CIT(A) AGAINST QUANTUM WAS DISMISSED ON ACCOUNT OF NON-PRO SECUTION, THEREFORE, THE ASSESSEE LOST HIS CASE WITHOUT ADJUD ICATION BUT THIS CANNOT BE A BASIS FOR INITIATION OF PENALTY AGAINST THE ASSESSEE. THE LD. AR ALSO POINTED OUT THAT THE AO PICKED UP WRONG FIGURES FOR MAKING THE ADDITION AND SOME INCORRECT FIGURE WAS U SED FOR IMPOSING PENALTY AND RECTIFICATION APPLICATION U/S 154 OF TH E ACT IS STILL PENDING BEFORE THE AO IN THIS REGARD WHICH SHOWS THAT THE I SSUE IS DEBATABLE AND THE AO IMPOSED PENALTY ON INCORRECT APPLICATION OF FACTS AND BY PICKING WRONG FIGURE OF AMOUNT WHICH WAS NOT ACTUAL LY DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE LD. AR ALSO SUBMITTED THAT FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, THE AO IS DUTY BOUND TO BRING ON RECORD THAT EITHER THE ASSESSEE CONCEALED PARTICULA RS OF INCOME OR FURNISHED OF INACCURATE PARTICULARS OF INCOME WITH A MALAFIDE 4 ITA NO. 2918/ DEL/2012 4 INTENTION TO EVADE TAX. THESE ALLEGATIONS HAVE NOT BEEN SUBSTANTIATED BY THE AO AND THUS THE IMPUGNED PENALTY IS NOT SUST AINABLE. 4. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS ASSES SEES PAPER BOOK PAGE 55 TO DEMONSTRATE THAT RIGHT FROM F.Y. 19 99-2000, THE ASSESSEE IS MAINTAINING DEFERRED REVENUE EXPENDITUR E ACCOUNT AND THE AMOUNT ACTUALLY WRITTEN OFF DURING THE YEAR HAS BEE N CLAIMED IN THE PROFIT AND LOSS ACCOUNT WHICH WAS RS. 66,05,955/- F OR THE PERIOD UNDER CONSIDERATION BUT THE AO INCORRECTLY MADE ADDITION OF RS. 1.70 CRORE AND IMPOSED PENALTY ON THE ASSESSEE BY CONSIDERING THIS INCORRECT AND WRONG FIGURE WHICH SHOWS CLEAR NON-APPLICATION OF M IND ON THE PART OF THE AO. THE LD. AR ALSO DREW OUR ATTENTION TOWARDS ASSESSEES PAPER BOOK PAGES 56 AND 57 AND SUBMITTED THAT SIMILAR CLA IM OF THE ASSESSEE WAS ALLOWED BY THE AO DURING THE EARLIER A.YS AND T HE ASSESSMENT ORDER DATED 25.03.2004 IS AMPLY CLEAR WHERE NO DISA LLOWANCE OR ADDITION HAS BEEN MADE IN THIS REGARD. 5. THE LD. AR DREW OUR ATTENTION TOWARDS PROFIT AND LOSS ACCOUNT FOR A.Y. 2001-02 PAGE 60 OF SCHEDULE X AND SUBMITTE D THAT THE ASSESSEE HAS WRITTEN OFF RS. 27,59,060/- DURING THE F.Y. 2000-01 PERTAINING TO A.Y. 2001-02 AND IN THE SIMILAR SET O F FACTS AND CIRCUMSTANCES OF THE CASE, AO, THE AO ALLOWED THE W RITTEN OFF AMOUNT WITHOUT MAKING ANY DISALLOWANCE AND ADDITION IN THI S REGARD. THEREFORE, THE ISSUE IS QUITE DEBATABLE AND INFRACT ED. DURING THE YEAR 5 ITA NO. 2918/ DEL/2012 5 UNDER CONSIDERATION, THE ASSESSEE COULD NOT PLACE I TS CASE DUE TO INADVERTENT ERROR OF THE TAX DEPARTMENT STAFF AS WE LL AS THE TAX PRACTITIONER WHICH LED TO THE DISMISSAL OF THE APPE AL BEFORE HT CIT(A) FOR PETTY CAUSE OF NON PROSECUTION. THEREFORE, THE PENALTY IMPOSED BY THE AO ON THE BASIS OF INCORRECT FACTS AND CIRCU MSTANCES CANNOT BE HELD AS SUSTAINABLE AND THE CIT(A) WAS QUITE UNJUST IFIED AND INCORRECT IN UPHOLDING THE SAME. TO SUPPORT HIS CONTENTIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING JUDGMENTS OF THE TRIBUNAL : A) DCIT VS. INDIAHIT COM {P} LTD ITA NO. 4374/DEL/2004 DATED 22.9.20 06 B) SANGHAVI SAVIA COMMODITY BROKERS P. LTD VS. AC IT ITA NO. 1746/MUM/2011 DATED 22.12.2 015 C) ELPRO INTERNATIONAL LTD VS. DCIT ITA NO. 28 & 29/MUM/2008 DATED 23.3 .2011 D) AT & T COMMUNICATION VS. DCIT ITA NO. 2788/DEL/2006 DATED 19.2.20 10 6. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE OR DER OF THE AO AS WELL AS THE LD. CIT(A) AND SUBMITTED THAT AS PER PE NALTY ORDER PAGE 4, THE AO HAS DRAWN CORRECT CONCLUSION THAT THE ASSESS EE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AS REFERRED TO IN SECTION 2(15) OF THE ACT. THEREFORE, IT WAS LIABLE TO PENALTY U/S 271(1 )(C) OF THE ACT. THE LD. DR FURTHER DREW OUR ATTENTION TOWARDS LAST OPER ATIVE PARA OF THE IMPUGNED ORDER OF THE CIT(A) AND SUBMITTED THAT HT ASSESSEE HAS BEEN UNABLE TO JUSTIFY ITS CLAIM OF FILING WRONG PARTICU LARS IN ITS RETURN OF 6 ITA NO. 2918/ DEL/2012 6 INCOME. THUS IT IS NOT A CASE OF BONAFIDE AND THE ASSESSEE HAS FILED INCORRECT PARTICULARS OF ITS INCOME WITH THE INTENT ION TO EVADE TAX AND THEREFORE, THE CIT(A) RIGHTLY UPHELD THE PENALTY IM POSED BY THE AO. 7. PLACING REJOINDER TO THE ABOVE SUBMISSIONS OF TH E LD. DR, THE LD. AR VEHEMENTLY CONTENDED THAT NEITHER THE AO NOR THE CIT(A) HAS BROUGHT ON RECORD ANY FACT OR CIRCUMSTANCE AGAINST THE ASSESSEE TO SHOW AND ESTABLISH THAT EITHER THE ASSESSEE HAS FUR NISHED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED PARTICULARS OF ITS INCOME. THEREFORE, HT PENALTY CANNOT BE IMPOSED IN VIEW OF THE ORDER OF THE ITAT, MUMBAI IN THE CASE OF SANGHAVI SAVIA COMMODIT Y BROKERS P. LTD. [SUPRA]. THE LD. DR PLACED RELIANCE ON THE DECISIO N OF THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S MADHUSHREE GUPT A VS. UOI REPORTED AT 317 ITR 107 [DEL] AND CONTENDED THAT BE FORE IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, THE AO SHOULD SAT ISFY HIMSELF THAT THE ASSESSEE HAS EITHER CONCEALED PARTICULARS OF HI S INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME OR INFRA CTED BOTH THESE CONDITIONS, THEN ONLY PENALTY CAN BE LEVIED ON THE ASSESSEE. 8. BEFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CA SE TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAINED BY NUMEROUS JUDICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN T HIS CASE OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POS ITION REGARDING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN 7 ITA NO. 2918/ DEL/2012 7 BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPI NIONS ABOUT THE SETTLED POSITION OF LAW THAT REGULAR ASSESSMENT PROCEEDING S AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHI CH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFE RENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITION AND FOR LEVY ING PENALTY UNDER SECTION 271(1)(C). THERE CAN BE NO DISPUTE WITH REG ARD TO THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) OF THE ACT PENALTY CAN BE LEVIED ONLY IF EITHER THE ACT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME, OR BOTH, IS FOUND TO HAVE BE EN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFA ULTS ALBEIT THEY REFER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUP PRESSION OR FALSITY BY THE ASSESSEE. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF INACC URATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENALTY DISCRETIONARY IN NA TURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPING THE RELEVANT FACTORS IN MIN D AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJEC T HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO THE DECISIONS IN THE CASE OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UN ION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF INDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, T HE HON'BLE SUPREME COURT 8 ITA NO. 2918/ DEL/2012 8 IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. L TD, 322 ITR 158, HAS HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE C ANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRE CT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. 9 ITA NO. 2918/ DEL/2012 9 9. ADVERTING TO THE FACTS OF THIS CASE, AT THE VERY OUTSET, WE MAY POINT OUT THAT THE LD. DR HAS NOT CONTROVERTED THIS FACT THAT THE FIRST APPEAL OF THE ASSESSEE BEFORE THE CIT(A) HAS BEEN D ISMISSED ON ACCOUNT OF NON PROSECUTION AND ON APPLICATION OF T HE ASSESSEE FILED U/S 154 OF THE ACT BEFORE THE AO SEEKING RECTIFICAT ION IN THE ASSESSMENT ORDER REGARDING AMOUNT RECORDED IN THE Q UANTUM ASSESSMENT ORDER IS STILL PENDING FOR ADJUDICATION. WE MAY ALSO POINT OUT THAT AS PER THE TABULAR CHART FURNISHED BY THE ASSESSEE, AVAILABLE AT PAGE 55 OF THE ASSESSEES PAPER BOOK, WHICH WAS ALSO CERTIFIED TO HAVE BEEN PLACED ON THE ASSESSMENT ORDER DURING ASS ESSMENT PROCEEDINGS SHOWING SUMMARY OF CLAIMED EXPENSES WHI CH REVEALS THAT THE ACTUAL AMOUNT WRITTEN OFF BY THE ASSESSEE ON AC COUNT OF DEFERRED REVENUE EXPENDITURE DURING FY 2005-06 PERTAINING TO AY 2006-07 WAS 66,05,955/- WHICH WAS PICKED UP BY THE AO FROM QUAN TUM ASSESSMENT ORDER WHEREIN THE AO PICKED UP THE FIGURE OF 1,70,5 6,950/- WHICH WAS TOTAL OF OPENING BALANCE AND DEFERRED REVENUE EXPEN DITURE ADDED DURING THE YEAR AND ACTUALLY THE ASSESSEE HAS NOT C LAIMED AND WRITTEN OFF AN AMOUNT OF RS. 1,70,56,950/- IN THE PROFIT AN D LOSS ACCOUNT DURING THE YEAR WHICH SHOWS NON APPLICATION OF MIND ON THE PART OF THE AO. 10 ITA NO. 2918/ DEL/2012 10 10. FROM THE QUANTUM ASSESSMENT ORDER PARA 4 PAGE 1 , WE OBSERVE THAT THE AO MADE DISALLOWANCE BY OBSERVING THAT THE ASSESSEE HAD SHOWN A SUM OF RS. 1,70,56,950/- AS MISCELLANEOUS E XPENSES TO THE EXTENT OF NOT WRITTEN OFF OR ADJUSTED UNDER THE HEA D DEFERRED REVENUE EXPENDITURE. THE AO FURTHER NOTED THAT IN THE NOTE S OF THE ACCOUNTS, IT IS STATED THAT SITE CONSTRUCTION AND OTHER PRE O PERATIONS HAVE BEEN BOOKED ON DEFERRED REVENUE EXPENDITURE BASIS AMORTI SED OVER THREE YEARS PERIOD OR THE ACTUAL DURATION OF THE PROJECT, WHICHEVER IS LESS AFTER THE COMMENCEMENT OF COMMERCIAL PRODUCTION. T HE AO HELD THAT AS THE ASSESSEE COMPANY WAS INCORPORATED ON 20.4.19 93 AND ACTUAL PRODUCTION OF THE COMPANY COMMENCED SINCE LONG, THE REFORE, THE ASSESSEE IS NOT ENTITLED TO CLAIM THIS AMOUNT. THE REFORE, THE SAME IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. HOWEVER, IT IS WELL ACCEPTED PROPOSITION THAT THE QUANTUM AND PENA LTY PROCEEDINGS ARE DIFFERENT BUT AT THE SAME TIME CONSIDERING THE ISSUE OF PENALTY IT IS RELEVANT TO NOTE THAT WHICH ALLOWANCES HAVE BEEN NOTED BY AO WHILE MAKING DISALLOWANCE AND ADDITION AND AT THE T IME OF DISMISSING THE APPLICATION OF HT ASSESSEE ABOUT ITS CLAIM FOR WHICH DISALLOWANCE AND ADDITION HAS BEEN MADE. IN THE PRESENT CASE, IN THE QUANTUM ASSESSMENT ORDER, NO ALLOCATION HAS BEEN LEVIED AGA INST THE ASSESSEE THAT THE ASSESSEE HAS MADE A CLAIM WHICH WAS BOGUS OR THE ASSESSEE HAS MADE A CLAIM BY FURNISHING INACCURATE PARTICULA RS OF ITS INCOME OR BY CONCEALING PARTICULARS OF ITS INCOME. FROM THE PENALTY ORDER, THE 11 ITA NO. 2918/ DEL/2012 11 RELEVANT OPERATIVE PARA 1, AT LAST PAGE, WE MAY NOT E THAT THE AO IN THE BEGINNING OF THE ORDER NOTED THE FACTS OF THE C ASE, THEN THE PROPOSITION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAGHUVIR SONI VS. ACIT REPORTED AT 258 ITR 239 [RSJ] THEREA FTER REPRODUCED THE SUBMISSIONS OF THE ASSESSEE DATED 28.3.2011. ON TH E 4 TH PAGE OF PENALTY ORDER, THE AO OBSERVED THAT THE AO HAS NOT BEEN ABLE TO SHOW ANY REASONABLE CAUSE FOR ITS ACTION IN CLAIMING DEF ERRED REVENUE EXPENDITURE AND THE ASSESSEE HAS BEEN UNABLE TO SUS TAIN THE EXPLANATION OFFERED BY HIM IN RESPECT OF ADDITION M ADE. BUT THERE IS NO DISCUSSION REGARDING THE EARLIER ASSESSMENT ORDE R WHEREIN SIMILAR CLAIMS OF THE ASSESSEE HAS BEEN ALLOWED BY THE AO. WE MAY FURTHER POINT OUT THAT IN THE LATTER PART OF THE PENALTY OR DER, THE CIT(A) HAS REPRODUCED THE RELEVANT PART OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATIONS PV T. LTD DATED 24.5.2010 AND THEREAFTER IN THE LAST PARA DECIDED T HE ISSUE AGAINST THE ASSESSEE BY CONCLUDING THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF TOTAL INCOME AS REFERRED TO IN SECTI ON 2(45) OF THE ACT AND IMPOSED PENALTY BY CONSIDERING THE AMOUNT OF CO NCEALED INCOME AS RS. 1,70,56,950/- WHICH IS FACTUALLY INCORRECT W HICH SHOWS CLEAR NON APPLICATION OF MIND ON THE PART OF THE AO WHIL E PASSING THE IMPUGNED ORDER. IN THE SIMILAR FASHION, THE CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WHEREIN IN FIRST PART OF THE ORDER REPRODUCED WRITTEN SUBMISSIONS DATED 29.2.2012 THEREAFTER SHE NOTED THAT THE 12 ITA NO. 2918/ DEL/2012 12 ASSESSEE HAS CLAIMED IN ITS PROFIT AND LOSS ACCOUNT MISCELLANEOUS EXPENSES OF RS. 66,05,955/- ONLY AND NOT RS. 1,70,5 6,915/- BUT THERE IS NO ADJUDICATION BY HER ON THIS FACTUAL DISCREPAN CY. IN THE SUBSEQUENT PART OF THE IMPUGNED ORDER AFTER REFERRI NG TO VARIOUS JUDICIAL PRONOUNCEMENTS, THE CIT(A) IN A BRIEF PARA MENTIONED AT THE END OF THE ORDER HELD THE ASSESSEE HAS BEEN UNABLE TO JUSTIFY ITS CLAIM FOR FILING WRONG PARTICULARS IN ITS RETURN OF INCOM E AND IT IS NOT A CASE OF BONAFIDE MISTAKE AND THE ASSESSEE HAS FILED INAC CURATE PARTICULARS OF INCOME WITH THE INTENTION TO EVADE TAX AND MENS REA ARE CLEARLY ESTABLISHED WHICH ARE NECESSARY COMPONENTS IN THE C ASE OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 11. IN THIS BACKDROP OF THE CONCLUSION OF THE AUTHO RITIES BELOW, WE ARE INCLINED TO HOLD THAT THE AO IMPOSED PENALTY BY PICKING WRONG FACTS AND FIGURES AND BY IGNORING HIS OWN ASSESSMEN T ORDERS IN THE EARLIER YEARS WHEREIN ON SIMILAR SET OF FACTS AND C IRCUMSTANCES THE SAME CLAIM OF THE ASSESSEE HAS BEEN ALLOWED. AS WE HAVE ALREADY NOTED THAT IN THE PENALTY ORDER THERE IS NO ALLEGAT ION OF THE AO THAT IN WHICH MANNER THE ASSESSEE CONCEALED PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. UNFORT UNATELY, DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) OBSERVED TH E DISCREPANCY IN THE FIGURES PICKED UP BY THE AO FOR IMPOSING PENALT Y AND CONTENTION OF THE ASSESSEE IN PARA 4.1 BUT DID NOT GIVE ANY HE ED OF ADDITION TO 13 ITA NO. 2918/ DEL/2012 13 THE FACTS AND CIRCUMSTANCES AND WITHOUT ADJUDICATIN G THE VITAL CONTENTION OF THE ASSESSEE WHICH IS ALSO PENDING BE FORE THE AO AS APPLICATION U/S 154 OF THE ACT FOR SEEKING RECTIFIC ATION IN THE ASSESSMENT ORDER AND PROCEEDED TO IMPOSE PENALTY BY TAKING INTO CONSIDERATION IRRELEVANT ALLEGATION OF BONAFIDE MIS TAKE, MENS REA, ETC. IT IS WELL ACCEPTED PROPOSITION OF LAW THAT P ENALTY U/S 271(1)(C) OF THE ACT CAN ONLY BE IMPOSED ON THE ASSESSEE ON T HE BASIS OF ALLEGATIONS AS NOTED BY THEIR LORDSHIPS IN THE CASE OF MADHUSHRE GUPTA [SUPRA] AND THE AO IS DUTY BOUND TO SATISFY HIMSELF THAT THE ASSESSEE HAS EITHER CONCEALED PARTICULARS OF INCOME OR FURN ISHED INACCURATE PARTICULARS OF INCOME ON BOTH THESE CONDITIONS AND HE HAS NO EXPLANATION TO OFFER OR EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE SUBSTANTIATED OR WAS NOT ACCEPTABLE BY THE AO. ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A FINAL CONCLUSIO N THAT THE ASSESSEES CONDUCT AND EXPLANATION OFFERED BUT IT D ID NOT SHOW ANY CONSCIOUS OR INTENTIONAL ACT OF THE TO CONCEAL PART ICULARS OF INCOME OR FURNISH OF INACCURATE PARTICULARS OF INCOME. AT TH E SAME TIME, WE CANNOT IGNORE THIS FACT THAT THE ASSESSEES APPEAL AGAINST QUANTUM ORDER WAS DISMISSED DUE TO NON PROSECUTION AND THE AO HAS NOT DECIDED THE RECTIFICATION APPLICATION U/S 154 OF TH E ACT TILL DATE AND ON SPECIFIC QUERY FROM THE BENCH, THE LD. DR COULD NOT CONTROVERT THIS FACT THAT E ACTUALLY MADE CLAIM BY WRITING OFF RS. 66,05,955/- IN THE PROFIT AND LOSS ACCOUNT DURING THE YEAR UNDER CONSI DERATION AND THE 14 ITA NO. 2918/ DEL/2012 14 AO HAS MADE DISALLOWANCE AND ADDITION BY PICKING WR ONG FIGURE WHICH WAS ALSO TAKEN INTO CONSIDERATION WHILE IMPOSING PE NALTY ON THE ASSESSEE WHICH SHOWS CLEAR NON APPLICATION OF MIND BY THE AO AS WELL AS BY THE CIT(A) WHEREIN THE CIT(A) RECORDED THE CO NTENTION OF THE ASSESSEE BUT THE SAME REMAINED WITHOUT ADJUDICATION AND THE CIT(A) CONFIRMED PENALTY IN A MECHANICAL MANNER WITHOUT CO NSIDERING THE CONTENTIONS, EXPLANATION OF THE ASSESSEE AND WITHOU T PROVIDING ANY HEED TOWARDS THIS FACT THAT SIMILAR CLAIM OF THE AS SESSEE HAS BEEN CONTINUOUSLY ALLOWED DURING THE EARLIER A.YS ON SIM ILAR FACTS AND CIRCUMSTANCES. IN VIEW OF THE ABOVE, WE HAVE NO HE SITATION TO HOLD THAT THE AO AS WELL AS THE CIT(A) COULD NOT ESTABLI SH THIS ALLEGATION AGAINST THE ASSESSEE THAT THE ASSESSEE HAS CONCEALE D PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCO ME REGARDING CLAIM OF DEFERRED REVENUE EXPENDITURE. THEREFORE, WE ARE UNABLE TO AGREE WITH THE CONCLUSION OF THE AUTHORITIES BELOW AND TH US THE MAIN EFFECTIVE GROUND OF THE ASSESSEE IS ALLOWED AND CON SEQUENTLY, THE AO DIRECTED TO DELETE THE PENALTY IMPOSED U/S 271(1)(C ) OF THE ACT. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 29.07. 2016. SD/- SD/- (S.V. MEHROTRA) (C.M. GAR G) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH JULY, 2016 15 ITA NO. 2918/ DEL/2012 15 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI