The DCIT, Central Circle-1(1), Ahmedabad V. Nirma Ltd., Ahmedabad

ITA 2950/AHD/2008

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73029 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 14-08-2008
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Question of law; Wrong claim; Difference of opinion; Revised return
• Section: 143(3); 27; 148

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD . .. . . . . . , , , , ! '# ! '# ! '# ! '#, , , , $ $ $ $ BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ ././ ./ ITA NO. 2950/AHD/2008 & '& & '& & '& & '& / // / ASSESSMENT YEAR 2000-01 DCIT, CENTRAL CIRCLE-1(1), AHMEDABAD VS NIRMA LIMITED. PAN: AAACN5350K ()/ APPELLANT *+() / RESPONDENT REVENUE BY : SH. SUBHASH BAINS, SR. DR ASSESSEE(S) BY : SH. S.N. SOPARKAR, AR !, - #./ // / DATE OF HEARING : 30/01/2014 /0' - #. / DATE OF PRONOUNCEMENT : 27/02/2014 1 1 1 1/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-I DATED 20.03.2008. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS 5,25,33,000/- LEVIED U/S 271(C) OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY IS A MANUFACTURER OF DETERGENT POWDER AND ALLIED PRODUCTS. INITIALLY THE ASSESSMENT ORDER IN THIS CASE WAS PASSED ON 31/3/03 U/S 143(3) AT A TOT AL INCOME OF RS 1,57,65,29,678-. SUBSEQUENTLY, A NOTICE U/S. 148 D ATED 31/3/04 WAS ISSUED AND ON THIS BASIS, ASSESSMENT U/S. 143(3) R.W.S. 14 7 OF THE I.T. ACT WAS PASSED ON 23/3/05 AT A TOTAL INCOME OF RS 1,70,41,3 0,474/-. IN THE ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 2 - ASSESSMENT ORDER, DISALLOWANCE OF RS. 13,64,43,850 /- WAS MADE ON ACCOUNT OF CLAIM OF DEDUCTION U/S. 80-IA/80-IB IN RESPECT O F TRIKAMPURA DIVISION. THE LD. CIT(A) DISMISSED THE APPEAL OF THE APPELLAN T AGAINST THIS ORDER VIDE HIS ORDER DATED 8/2/06 AGAINST WHICH THE APPELLANT WENT IN APPEAL TO ITAT, WHICH IS PENDING FOR DECISION. MEANWHILE, IT IS ON THE BASIS OF THIS ASSESSMENT THAT PENALTY U/S 271(1)(C) HAS BEEN LEVI ED BY THE ASSESSING OFFICER ON 23/3/07. WHILE LEVYING THE PENALTY, THE ASSESSING OFFICER HAS ALSO INVOKED EXPLANATION-1 OF SECTION 271(1)(C) IN PARA 5 OF HIS PENALTY ORDER. IT IS THIS PENALTY ORDER, WHICH IS THE SUBJECT MATTER OF APPEAL UNDER THE PRESENT PROCEEDINGS. 4. THE LD. CIT(A) HELD AS UNDER: IN GROUND OF APPEAL NO.2, THE APPELLANT HAS DISPUTE D THE LEVY OF PENALTY OF RS 5,25,33,0007- U/S R 271(L)(C ) IN THIS CASE. THE MAIN POINTS OF ARGUME NT GIVEN BY THE APPELLANT IN ITS DEFENCE ARE- (A) THE APPELLANT WAS ENGAGED IN THE MANUFACTURE R OF DETERGENT POWER AND ALLIED PRODUCTS WHEREIN HE UNDERTOOK ALL ACTIVITIES EXCEPT MANUFACTURING, WHICH WAS GOT DONE FROM JOB-WORKERS. THE APPELLANT WAS UNDER BONA FIDE BELIEF THAT THE DEDUCTION U/S.80-1 A WAS AVAILABLE TO HIM EVEN IF THE GOODS W ERE NOT MANUFACTURED BY THE APPELLANT COMPANY ITSELF. (B) THERE WAS NO CONCEALMENT OR FURNISHING OF INAC CURATE PARTICULARS - REAL OR DEEMED. ALL THE BASIC AND PRIMARY FACTS WERE DISCLO SED BY WAY OF NOTE NO.2 FORMING PART OF RETURN OF INCOME ABOUT CALCULATION OF DEDUCTION WHICH READS AS UNDER: 'DEDUCTION U/S. 80-1 & 80-1A IS LEVIABLE AS PER CAL CULATION GIVEN IN THE INCOME OF THE RESPECTIVE UNITS. DEPRECIATION IS CLA IMED AFTER EXCLUDING OTHER INCOMES AS MENTIONED IN THE CALCULATION.' THEREFORE, THE APPELLANT WAS NOT CAUGHT BY THE MISC HIEF OF EXPLANATION-I BELOW SECTION 271 (L.)(C). (C) ACCORDING TO THE APPELLANT, THERE IS ONLY A DIF FERENCE OF OPINION REGARDING THE ALLOWABILITY OF DEDUCTION U/S. 80-IA / 80-IB, SO MU CH SO THAT THE A.O. AS ALSO THE CIT(A) HAVE ANALYZED AND EITHER APPLIED OF DISTINGU ISHED A NUMBER OF REPORTED - DECISIONS. THUS, ACCORDING TO THE APPELLANT, THERE IS A LEGAL CONTROVERSY FOR WHICH THERE ARE TWO VIEWS POSSIBLE. IN SUCH A SITUATION, WHEN THE APPELLANT COMPANY HAS NOT CONCEALED PARTICULARS OF INCOME AND THE ADDITIO N HAS BEEN MADE BECAUSE OF DIFFERENCE OF OPINION, THE PENALTY U/S. 271(L)(C) I S NOT LEVIABLE IN THE CASE OF THE ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 3 - ASSESSEE. IN SUPPORT .OF THIS CONTENTION, IT RELIED ON THREE COURT DECISIONS, WHICH ARE REPRODUCED AS UNDER. (I) NATIONAL TEXTILES V/S. CIT (2001) 249 ITR125 (GUJ. ) IT HAS BEEN HELD THAT WHEN THERE ARE MORE THAN ONE VIEWS POSSIBLE ON THE SAME SET OF FACTS, NO PENALTY UNDER SEC.271 (L) (C) OF THE ACT CAN BE LEVIED. (II) SARABHAI CHEMICALS P.LTD. V/S. CIT TAX.(2002) 257 ITR 355(GUJ.) 'WHEN THE FULL FACTS ARE NARRATED AND CATEGORICALLY STATED IN THE RETURN OF INCOME ITSELF, THERE CANNOT BE ANY CONCEALMENT O R FURNISHING OF INACCURATE PARTICULARS OF INCOME MORE SO WHEN RATIO OF DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IS FOLLOWED.' (III) K.C. BUILDERS AND AM. VS. ACIT(2004) 265ITR 5 62 (S.C.) 'THE APPELLANT FURTHER SUBMITS THAT EVEN AFTER THE AMENDMENT W.E.F. 1.4.1976 THE OMISSION OF THE WORD 'DELIBERATELY' FR OM THE LANGUAGE OF SEC.271(1)(C) OF THE ACT, IT HAS STILL TO BE PROVID ED THAT THE CONCEALING OF PARTICULARS OF INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME WAS A DELIBERATE ACT ON THE PART OF THE ASSESSEE AN D THE SAME HAS RESULTED INTO TAX AVOIDANCE ON THE PART OF THE ASSE SSEE. THIS VIEW IS SUPPORTED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF K.C. BUILDERS. RELEVANT EXTRACT OF THE SAME IS REP RODUCED HEREINBELOW'. (D) HE HAS FARTHER QUOTED JUDGEMENT OF HON'BLE BOMB AY HIGH COURT IN THE CASE OF PENWALT INDIA LTD. 196 ITR 813 WHICH, HELD THAT DEDUCTION U/S.80-1A IS AVAILABLE EVEN WHEN GOODS GOT MANUFACTURED BY THE OUTSIDERS. (E) THE APPELLANT ALSO SUBMITTED THAT MERE DISA LLOWANCE OF DEDUCTION U/S, 80-1A CANNOT MAKE A GROUND FOR LEVY OF PENALTY U/S 271(1) (C). IN SUPPORT OF THIS CONTENTION, THE APPELLANT RELIED ON THE FOLLOWING 1 2 CASES: I. NAVJIVAN OIL MILLS V/S. CIT 252 LTR 417(GUJ.) II. CIT V/S. B.S.BADVE AND OTHERS 138 ITR 682(BOM) III. SOHANLALSANGIV/S.ACIT 125 ITR 184(M.P.) IV. ADDL. CIT V/S. AGARWAL MISTAN BHANDAR 131 ITR 6 19(RQJ) V. CIT V/S. J.K.A. RAJAPPA CHETTIAR 153 ITR 215 (M AD.) VI. ALYANBI ENTERPRISES VS. ACIT 83 ITD 764 VII. CIT V/S. BARODA TIN WORKS 221 ITR 661 (GUJ.) VIII. MOTILAL PADAMPAT SUGAR MILLS CO. V/S. STATE OF U.P. 118 ITR 326 (SC) IX. CIT V/S. HARYANA EDUCATION SOCIETY 251 ITR 846( P & H) X. CIT V/S. RAM SINGHANI DALL MILLS 254 ITR 264 (M .P.) XI. CIT V/S. SIVANAND STEELS LTD 256 ITR 683 (MAD .) XII. CHANDRAPALBAGGA V/S. LTAT 261 ITR 67 (RAJ. ) IT ALSO FILE4 A COMPILATION OF 14 REPORTED CASES FR OM PAGES 1 TO 140, WHICH INCLUDED ALL THESE 12 CASES AND TWO OF THE THREE CASES DISCU SSED IN (C) ABOVE. (F) THE APPELLANT ALSO DREW ATTENTION TO THE DEC ISION OF HON'BLE AHMEDABAD TRIBUNAL IN THE CASE OF NIRMA CHEMICAL WORKS LTD., ONE OF THE SISTER CONCERNS OF THE ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 4 - APPELLANT COMPANY, VIDE APPEAL NO. ITA/220/AHD/2007 DATED 20/8/07 FOR ASSESSMENT YEAR 2001-02 WHEREIN HON'BLE ITAT DELETE D THE PENALTY, THOUGH ADDITION WAS CONFIRMED ON FACTS. (G) THE APPELLANT FURTHER PLEADED THAT THERE WERE I DENTICAL ISSUES IN THE PENALTY ORDER LEVIED U/S. 271(1)( C) IN THE CASE OF THE APP ELLANT COMPANY FOR THE A.Y. 2001- 02 AND THE SAME HAS BEEN DELETED BY CIT(A)-II/CC.1( 1)/273/06-07 DATED 6/2/07. SINCE THE CASE UNDER CONSIDERATION HAS IDENTICAL FA CTS, THE PENALTY LEVIED U/S. 271(L)(C) FOR THE YEAR UNDER CONSIDERATION SHOULD A LSO BE DELETED. (H) THE APPELLANT HAS ALSO PLEADED THAT THE DECISIO NS REFERRED TO IN THE PENALTY ORDER ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTA NCES OF THE APPELLANT'S CASE. 7.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE APPELLANT AND HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS FILED BY THE A PPELLANT. I HAVE ALSO CONSIDERED THE CASE RECORDS AS ALSO THE JUDGMENTS RELIED UPON BY THE APPELLANT. 7.2 THE APPELLANT HAS REFERRED TO MANY CASES. FOR A BETTER PERSPECTIVE, IT WILL BE IN THE FITNESS OF THINGS TO DISCUS THEM IN BRIEF A S UNDER: (A) K.C. BUILDERS V. ACLT (265ITR 562) (SC): HEAD NOTE- WORD AND PHRASES- 'CONCEALMENT, MEANING OF: 'CONCEALMENT' INHERENTLY CARRIES WITH IT THE ELEMEN T OF MENS REA. THE FACT THAT SOME FIGURE OR SOME PARTICULARS HAVE BEEN DISC LOSED, EVEN IF IT TAKES OUT THE CASE FROM NON-DISCLOSURE, WOULD NOT BY ITSELF T AKE THE CASE OUT OF THE PURVIEW OF FURNISHING INACCURATE PARTICULARS. MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT AMOUNTS NEITHER TO CONCEALMENT N OR TO DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME, UNL ESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR CIRCUMSTANCES ARE FOUND FROM WH ICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVO ID IMPOSITION OF TAX THEREON.' (B) KALYANBI ENTERPRISES V. ACIT (83 ITD 764): IN THIS CASE THE DEPARTMENT'S ALLEGATION WAS THAT T HE VEHICLE ON WHICH DEPRECIATION WAS CLAIMED COULD NOT HAVE BEEN PUT TO USE ON OR BEFORE 30TH MARCH 1989 AND, THEREFORE CLAIM OF DEPRECIATION ON THAT VEHICLE FOR A.Y. 1989-90 WAS DISALLOWED AND THE ASSESSEE DID NOT FIL E APPEAL AGAINST THE SAME. THE DEPARTMENT LEVIED PENALTY AND THE TRIBUNA L DELETED IT OBSERVING THAT THOUGH THE ASSESSEE HAD NOT FILED APPEAL AGAIN ST THE QUANTUM ASSESSMENT, IT WOULD NOT BE CORRECT TO HOLD THAT TH E ASSESSEE HAD ACCEPTED THE FINDING OF THE APPELLATE AUTHORITY THAT THE VEH ICLE HAD NOT BEEN USED FOR THE PURPOSE OF THE BUSINESS DURING THE YEAR. IN THE CIRCUMSTANCES OF THE PRESENT CASE, IT COULD NOT BE HELD THAT THE FAILURE ON THE PART OF THE ASSESSEE TO RETURN THE CORRECT INCOME FOR THE ASSESSMENT YEA R 1989'90 HAD ARISEN FROM ANY FRAUD, OR GROSS, OR -WILFUL NEGLECT. IT WA S A LEGAL STAND TAKEN BY THE ASSESSEE THAT EVEN WHEN THE VEHICLE WAS RUNNING FRO M INDORE TO COIMBATORE AFTER THE PURCHASE, IT WAS RUNNING FOR THE PURPOSE OF THE ASSESSEE'S BUSINESS, ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 5 - AND SO IT WAS ENTITLED TO THE ALLOWANCE OF DEPRECIA TION. THE REJECTION OF THE CONTENTIONS RAISED BY THE ASSESSEE CANNOT LEAD TO T HE CONCLUSION THAT THERE HAS BEEN ANY CONCEALMENT OF THE PARTICULAR OF INCOM E OR THAT, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. HAVING REGARD TO THE FACTS OF THE PRESENT CASE AND THE JUDICIAL DECISIONS ON T HE. SUBJECT OF CONCEALMENT OF INCOME, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING THE PENALTY ON THE GROUND THAT BY MAKING THE CLAIM FOR THE ALLOWAN CE OF DEPRECIATION ON THE VEHICLE PURCHASED ON 30/3/1989 AND RUNNING FAR THE ASSESSEE'S PURPOSE, IT WAS MAKING A FALSE CLAIM OF DEPRECIATION. THE COMMI SSIONER (APPEALS) WAS NOT CORRECT IN UPHOLDING THE LEVY OF PENALTY IN THE INSTANT CASE (C) CIT VS. BARODA TIN WORKS (221ITR 661) (GUJ.) : ASSESSMENT YEAR WAS 1971-72 AND IT WAS HELD THAT TH E EXPLANATION TO SECTION 271(1)(C) WHICH WAS INSERTED W.E.F. 1.4.1-9 76 WAS NOT APPLICABLE AND HENCE EVEN WHEN INCOME RETURNED WAS LESS THAN 8 0% OF THE ASSESSED INCOME PENALTY WAS NOT LEVIABLE BECAUSE TRIBUNAL HA D GIVEN A FINDING THAT THE INITIAL PRESUMPTION OF CONCEALMENT WAS SUCCESSF ULLY REBUTTED BY THE ASSESSEE. (D) CIT VS. NATIONAL TEXTILES (249 ITR 125 (GUJ.) : THE ASSESSMENT YEAR INVOLVED WAS 1974-75 AND SQUARED UP CASH CREDITS IN THE RANGE OF RS 5000 TO RS.5500 APPEARED IN THE BOOKS TOTALLING RS.90,000. ASSESSEE HAD CLAIMED THAT THEY REPRESEN TED INTEREST FREE LOANS. IT WAS HELD THAT THERE WERE NO CIRCUMSTANCES TO LEA D A REASONABLE AND POSITIVE INFERENCE THAT THE EXPLANATION THAT CASH C REDITS WERE ARRANGED AS TEMPORARY LOAN WAS FALSE. IT WAS HELD THAT THE FACT S AND CIRCUMSTANCES WERE EQUALLY CONSISTENT WITH THE HYPOTHESIS THAT THEY CO ULD HAVE BEEN SUNDRY LOANS OBTAINED FROM DIFFERENT PARTIES. THEREFORE, T HE IMPOSITION OF PENALTY WAS NOT JUSTIFIED. THE COURT ADJUDICATED AS UNDER; 'IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTO RS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO T HE REASONABLE CONCLUSION THAT THE AMOUNT REPRESENTS THE ASSESSEE'S INCOME. I T IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSE D AS INCOME AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS CONSCIOUS CO NCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. IT FURTHER CLARIFIES THAT EXPLANATION-1 TO SECTION 271(1)(C) H AS NO BEARING ON FACTOR NO.1, BUT HAS A BEARING ON FACTOR NO.2. THE EXPLANA TION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUN T ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. NO PENALTY CAN BE IMPOS ED IF THE FACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOT HESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME WITH THE HYPOTH ESIS THAT IT DOES. IF THE ASSESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE R EASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE, THE EX PLANATION CANNOT HELP THE DEPARTMENT BECAUSE THERE WILL BE NO MATERIAL TO SHO W THAT THE AMOUNT IN QUESTION WAS THE INCOME OF THE ASSESSEE. ALTERNATIV ELY, TREATING THE EXPLANATION AS DEALING WITH, BOTH THE INGREDIENTS ( I) AND(II) ABOVE, WHERE THE CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE A ND POSITIVE INFERENCE THAT THE ASSESSEE'S EXPLANATION IS FALSE, THE A SSESSEE MUST BE HELD TO ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 6 - HAVE PROVED THAT THERE WAS NO MENS REA OR GUILTY MI ND OH HIS PART. EVEN IN THIN VIEW OF THE MATTER THE EXPLANATION ALONE CANNO T JUSTIFY LEVY OF PENALTY. ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTMENT CANNO T BE EQUATED WITH FRAUD OR WILFUL DEFAULT. (E) MOTILAL PADAMPAT SUGAR MILLS CO, V. STATE O F U.P. (118 ITR 326) (SC): THIS, DECISION IS ON THE ASPECT OF PROMISSORY ESTOP PEL AND HENCE, NOT RELATABLE TO THE APPELLANT'S CASE.' (F) CIT V. HARYANA EDUCATION SOCIETY (251 ITR846) (P&H) : HEAD NOTES ON PAGE 847 GIVE THE GIST OF THE CASE AS UNDER: 'THE COMMISSIONER OF INCOME-TAX (APPEALS) HAD FOUND IN RELATION TO THE ASSESSMENT YEARS 1986-87 AND 1987-88 THAT ACTUAL PA YMENT OF HOUSE TAX WAS MADE AND THE CLAIM WAS MADE BONA FIDE FOR DEDUC TION AND SUCH-CLAIM WOULD NOT AMOUNT TO CONCEALMENT FOR THE PURPOSE OF PENALTY UNDER SECTION 271(1) (C) OF THE INCOME-TAX ACT, 1961. THE PENALTY WAS CANCELLED: PENALTY FOR THE ASSESSMENT YEARS 1988-89 AND 1989-90 WAS CA NCELLED BY THE TRIBUNAL FOR THE SAME REASON. ON APPEAL: HELD, THAT ONCE THE COMMISSIONER OF INCOME-TAX (APP EALS) HAD ACCEPTED THE EXPLANATION GIVEN BY THE ASSESSEE IN RESPECT OF THE ALLEGATION OF CONCEALMENT OF INCOME, THERE WAS NO SCOPE FOR INTERFERENCE BY T HE COURT. (G) CIT V. RAM SIRIGHANI DALL MILLS (254 ITR 264) (MP): IN THIS CASE FOR A.Y. 1979-80, THE DISPUTE WAS ABO UT THE CLAIM FOR SALES-TAX IN RESPECT OF WHICH PENALTY U/S.27L(L)(C) WAS LEVIE D ON THE GROUND THAT THE ASSESSEE HAD WRONGLY CLAIMED THE DEDUCTION OF SALES TAX WHICH, AMOUNTED TO CONCEALMENT THE HIGH COURT DECIDED AS UNDER: 'BEFORE INITIATING PENALTY PROCEEDINGS UNDER SECTIO N 271(1)(C) OF THE INCOME- TAX ACT, 1961, THE AUTHORITY CONCERNED HAS PRIMARIL Y TO SEE THE NATURE OF THE CONCEALMENT, THE EXPLANATION OFFERED BY THE ASSESSE E, HIS CONDUCT, ETC. THESE ARE ESSENTIALITY THE MATTERS TO BE GONE INTO. ONCE THESE ARE EXAMINED -WITHIN A VIEW TO FINDING OUT WHETHER PENALTY SHOUL D BE IMPOSED, THE ISSUE COMES TO AN END. HELD, THAT IN THE CASE OF CONCEALMENT OF INCOME WHE THER TO ACCEPT THE EXPLANATION OFFERED BY THE ASSESSEE OR NOT WAS ESSE NTIALLY ON FACTS. THE TRIBUNAL HAD EXAMINED THE ENTIRE FACTS AND THEN CAM E TO A CONCLUSION THAT NO CASE OF CONCEALMENT WAS MADE OUT. THUS, NO QUESTION OF LAW AROSE OUT OF ITS ORDER: (H) CIT V. SIVANAND STEELS LTD. (256 ITR 264) (MP ): IN THIS CASE BASED ON SOME HIGH COURT DECISION ASSE SSEE HAD CLAIMED DEPRECIATION AND INVESTMENT ALLOWANCE ON NEWLY INST ALLED MACHINERY AND THAT CLAIM WAS WITHDRAWN SUBSEQUENTLY. IT WAS HELD THAT IT WAS NOT A FIT CASE FOR PENALTY U/S.27L(L)(C). THE CATCH-WORDS READ AS UNDE R: 'PENALTY LEVIED ON GROUND OF DELI BERATE FURNISHING OF INACCURATE PARTICULARS IN ORIGINAL RETURN- NO FINDI NG THAT CLAIM WAS MALA FIDE- TWO OPINIONS ON QUESTION COULD EXIST - SUBSEQUENT WLTHDRAWAL DID NOT AMOUNT TO DELIBERATE ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 7 - FURNISHING OF INACCURATE PARTICULARS IN ORIGINAL RE TURN- TRIBUNAL CANCELLING PENALTY- JUSTIFIED-INCOME-T AX ACT, 1961, S. 271(1)(C).' (I) CHANDRAPAL BAGGA V. ITAT 261 ITR 67 (RAJ.): RELEVANT PARTS OF THE HEADNOTES ON PAGE 67 READ AS FOLLOWS: 'THE ASSESSEE, AN INDIVIDUAL, HAD SOLD IMMOVABLE PR OPERLY IN THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR 1992-93. HE FI LED-A REVISED RETURN BUT CLAIMED THAT CAPITAL GAINS TAX WAS NOT PAYABLE BECA USE IT WAS LONG-TERM CAPITAL GAIN AND THE ASSESSEE HAD PURCHASED A NEW P ROPERTY WITHIN SIX MONTHS AGAINST THE CONSIDERATION RECEIVED ON THE SA LE OF HIS HOUSE PROPERTY ON < APRIL 26, 1991. THE ASSESSING OFFICER DID NOT ACCEPT THIS EXPLANATION AND TAXED THE DIFFERENCE OF RS. 1,40,000 AS SHORT T ERM CAPITAL GAIN. NO APPEAL WAS PREFERRED AND THE ADDITION HAD BECOME FI NAL. THEREAFTER, THE ASSESSING OFFICER .INITIATED THE PENALTY PROCEEDING S UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, AND LEVIED PENALTY. TH E TRIBUNAL REDUCED THE PENALTY. ON FURTHER APPEAL TO THE HIGH COURT: HELD THAT THE ASSESSEE HAD SHOWN 'LONG-TERM CAPITAL GAIN' AND CLAIMED EXEMPTION, BUT THE TRANSACTION HAD BEEN DISCLOSED I N THE RETURN. THERE WAS NO CONCEALMENT OF INCOME AND PENALTY COULD NOT BE I MPOSED.' (J) NAVJIVAN OIL MILLS V. CIT 252ITR 417 (GUJ.): IN THAT CASE FOR A.Y. 1972-73 ON THE BASIS OF SOME MATERIALS SEIZED BY THE SALES-TAX DEPARTMENT, .THE ASSESSING OFFICER ESTI MATED UNACCOUNTED SALES AND PROFIT THEREOF BUT IN THE PROCEEDINGS U/S.271( L)(C) IT WAS HELD THAT ADDITION MADE ON THE BASIS OF SUCH ESTIMATE COULD N OT BE SAID TO RESULT IN A SITUATION WHERE IT WOULD BE POSSIBLE TO ASCRIBE THE FAILURE TO RETURN THE CORRECT INCOME TO THE ASSESSEE ON ACCOUNT OF ANY FR AUD OR ANY GROSS OR WILLFUL NEGLECT. (K) CIT V.B.S. BADVE AND OTHERS (138 ITR 682) (BOM.): IN THE CASE, RETURN WAS FILED ON THE BASIS OF ESTIM ATES ON WHICH, MODEST ADDITIONS WERE MADE BY THE A.O. CONCEALMENT PENALTY WAS NOT FOUND VALID BY THE COURT. THE CATCH-WORD NOTES OF THE CASE ARE AS FOLLOWS: 'PENALTY-CONCEALMENT OF INCOME-ACCOUNT BOOKS DESTRO YED BY FIRE-BOOKS NOT MAINTAINED THEREAFTER-RETURNS FILED ON BASIS OF ESTIMATES-MODEST ADDITIONS MADE BY ITO TO ESTIMATES OF INCOME- NO FINDING THAT ESTIMATES WERE FRAUDULENT OR THERE WAS DELIBERATE UNDERESTIMATION OF INCOME-LEVY OF PENALT Y NOT VALID- INCOME-TAX ACT, 1961, S. 271 (L)(C),EXPLN. (L) SOHANLAL SANGIV.ACIT (125 ITR 184)(MP) : CATCHWORD NOTES ARE AS FOLLOWS: 'PENALTY-CONCEALMENT OF INCOME-TRANSPORT BUSINESS-A SSESSMENT YEAR 1959-60-OVERWRITING IN DAILY COLLECTION SHEE TS-ADDITION TO INCOME MADE ON ESTIMATE BASIS-NO MATERIAL TO SHOW THAT OVERWRITING WAS DONE BY ASSESSEE OR UNDER HI S AUTHORITY- ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 8 - NO DELIBERATE OR CONSCIOUS CONCEALMENT OF INCOME-IM POSITION OF PENALTY NOT VALID-INCOME-TAX ACT, 1961, S,271(1) (C).' (M) ADDL. CIT V. AGARWAL MISTAN BHANDAR (131 ITR 619)(RAJ.): CATCHWORD NOTES OF THE CASE ARE AS UNDER: 'PENALTY-CONCEALMENT.OF INCOME-ASSESSEE, A-SMALL TR ADER, DOING HALWAI BUSINESS-NET PROFIT DECLARED VERY LOW -ESTIMATED HIGHER ASSESSMENT MADE BY ITO ACCEPTED BY ASSESSEE TO AVOI D DISPUTES.BY WAY QF APPEALS, PENALTIES, ETC.-TRIBUNA L FINDING THAT SUCH BOOKS OF ACCOUNT AS WERE POSSIBLE OR PRACTICAB LE IN SUCH BUSINESS WAS MAINTAJNED-NO MANIPULATION OR OTHER IN DICATION OF CONCEALMENT OF INCOME POINTED OUT BY DEPARTMENT-CO- OPERATION EXTENDED IN COMPLETING ASSESSMENT DOES NOT AMOUNT T O CONFESSION OF CONCEALMENT OF INCOME-LEVY OF PENALTY NOT VALID- INCOME-TAX ACT 1961, S. 2710)(C). ' (N) CIT V. J.K.A. RAJAPPA CHETTIAR (153 ITR 215)(MAD.): ASSESSMENT YEARS INVOLVED WERE 1963-64 AND 1964-6.5 . CATCHWORD NOTES ARE AS FOLLOWS: 'PENALTY-SALE OF ACTUAL USER'S LICENCE FOR IMPORT O F ART-SILK YARN AT PROFIT-ACCOUNTS.MAINTAINED ON BASIS OF IMPO RT OF YARN, MANUFACTURE OF TEXTILES AND SALE OF TEXTILES-RETURN OF INCOME FILED ON THAT BASIS-ASSESSEE MAKING VOLUNTARY DISCLOSURE- FILING OF REVISED RETURNS SHOWING HIGHER INCOME ON BASIS OF SALE, OF LICENCES-ASSESSMENT ON BASIS OF REVISED RE TURN ON ESTIMATE-NO CONCEALMENT IN COURSE OF ASSESSMENT PROCEEDINGS-LEVY OF PENALTY FOR CONCEA LMENT NOT JUSTIFIED-INCOME-TAX ACT, 1961, SS. 271(1)(C), 277-FINANCEACT, 1965, S.68.' (O) SARABHAI CHEMICALS P.LTD. V/S. CIT (2002) 257ITR 3 55 (GUJ.) 'WHEN THE FULL FACTS ARE NARRATED AND CATEGORICALLY STATED IN. THE RETURN OF INCOME ITSELF, THERE CANNOT BE ANY CONCEALMENT OR F URNISHING OF INACCURATE PARTICULARS OF INCOME MORE SO WHEN RATIO OF DECISIO N OF HON'BLE JURISDICTIONAL HIGH COURT IS FOLLOWED.' 7.3 FROM THE CASE LAWS, DISCUSSED ABOVE AND OTHERS RELIED UPON BY THE APPELLANT, THE FOLLOWING POINTS EMERGE: A) MERE ON THE BASIS OF ADDITION, ESTIMATED OR OTHE RWISE, THE CONCEALMENT PENALTY CANNOT BE LEVIED. B) THE CONCEALMENT PENALTY IS NOT JUSTIFIED EVEN IN A CASE WHERE THE QUANTUM ADDITION HAS BEEN CONFIRMED BY THE APPELLAT E AUTHORITY. C) THE CONCEALMENT PENALTY ALSO CANNOT BE JUSTIFIED MERELY BECAUSE THE ASSESSEE DID NOT GO IN APPEAL AGAINST AN ASSESSMENT ORDER OR AGAINST AN APPELLATE ORDER IN THE QUANTUM APPEAL. D) THE CONCEALMENT PENALTY CANNOT BE LEVIED WHEN A DEDUCTION CLAIMED BY THE ASSESSEE IS NOT ALLOWED BY THE A.O. E) THE CONCEALMENT PENALTY IS NOT LEVIABLE WHEN THE RE IS DIFFERENCE OF OPINION WITH REGARD TO A DEDUCTION, WHICH THE ASSES SEE MAY CLAIM, ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 9 - CONSIDERING IT ALLOWABLE WHILE THE A.O. MAY REJECT IT, NOT ACCEPTING THE VIEW OF THE ASSESSEE. 7.4.1 THE ADJUDICATION OF THE COURTS, PARTICULARLY OF JURISDICTIONAL GUJARAT HIGH COURT, IN THE CASE OF NATIONAL TEXTILES REFERRED TO (SUPRA) HAS LAID DOWN SPECIFICALLY THE TWO PRIMA FACIE IMPORTANT CONDITIONS TO BE FULF ILLED FOR LEVYING CONCEALMENT PENALTY U/S 27 L(L)(C) VIZ. I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEA DING TO THE REASONABLE CONCLUSION THAT THE AMOUNT REPRESENTS THE ASSESSEE' S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT H AS BEEN ASSESSED AS INCOME. II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS CONS CIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. IT FURTHER CLARIFIES THAT EXPLANATION-1 TO SECTION 271(1)(C) H AS NO BEARING ON FACTOR NO. 1, BUT HAS A BEARING ON FACTOR NO.2.' 7.4.2 IN THE CASE UNDER CONSIDERATION, THE APPELLAN T, HAS CLAIMED, DEDUCTION U/S. 80-I/A/80-1/B FOR TRIKUMPURA DIVISION. THE A.O. DIS ALLOWED THE CLAIM BY NOT ACCEPTING THE APPELLANT'S CLAIM AND THE CTT(A) CONF IRMED THE SAME, TAKING RECOURSE TO DIFFERENT REPORTED CASE LAWS. THE APPELLANT HAS NOT CONCEALED THE FACT OF THE CLAIM, THE SAME HAS BEEN DISALLOWED BECAUSE OF DIFF ERENCE OF OPINION ABOUT ITS ALLOWABILITY. HENCE, THERE IS NOTHING TO SHOW THAT THERE IS ANY CONSCIOUS CONCEALMENT OR ACT OF FURNISHING INACCURATE PARTICU LARS ON THE PART OF THE APPELLANT. CONSEQUENTLY, SINCE THE APPELLANT HAS NOT CONCEALED THE PRIMARY FACTS AND THE ADDITION HAS RESULTED ONLY BECAUSE OF LEGAL CONTROV ERSY, THE APPELLANT DOES NOT BECOME LIABLE FOR THE LEVY OF CONCEALMENT PENALTY. THE CASE OF THE APPELLANT DOES NOT GET COVERED BY EXPLANATION-1 TO SECTION 271(L)( C) BECAUSE IT CANNOT BE REGARDED AS CONSCIOUSLY CONCEALING, THE FACTS OR FU RNISHING INACCURATE PARTICULARS - REAL OR DEEMED. 7.5 THE FACT THAT CIT(A) HAS CONFIRMED THE QUAN TUM ADDITION ALSO DOES NOT MAKE IT A CASE OF LEVYING CONCEALMENT PENALTY. IN THE CA SE OF NIRMA CHEMICALS FOR THE A.Y. 2001-02, ONE OF THE SISTER CONCERNS OF THE ASS ESSEE COMPANY, ITAT HAS DELETED THE PENALTY THOUGH IT CONFIRMED THE QUANTUM ADDITION. 7.6 FURTHER, AS POINTED OUT BY THE APPELLANT, P ENALTY U/S. 271(L)(C) WAS ALSO LEVIED IN THE CASE OF THE APPELLANT ON IDENTICAL IS SUE FOR THE A.Y. 2001-02. VIDE APPEAL ORDER NO. CIT(A)-II/CC. 1(1)7273/06-07 IN TH AT YEAR, THE CIT(A) DELETED THE PENALTY HOLDING THAT THERE WAS NO CONCEALMENT OR FU RNISHING OF INACCURATE PARTICULARS, EITHER REAL OR DEEMED, AS ALL' PRIMARY FACTS WERE DISCLOSED AND THE ADDITION WAS MADE ONLY BECAUSE OF DIFFERENCE OF OPI NION IN THE SENSE THAT THE ASSESSEE THOUGHT IT WAS ENTITLED TO SUCH DEDUCTION AND. THE A.O. AND THE CIT(A) THOUGHT OTHERWISE. SINCE THE FACTS OF THE CASE ARE IDENTICAL, THERE IS NOTHING FOR ME TO DIFFER FROM THE CONCLUSION DRAWN BY THE CIT(A) I N THIS .REGARD. 7.7 IN VIEW OF THE DISCUSSION ABOVE, I HOLD THAT TH ERE IS NO CONCEALMENT OF PRIMARY FACTS ON THE PART OF THE APPELLANT. THERE I S DENIAL OF THE DEDUCTION CLAIMED MERELY ON THE BASIS OF DIFFERENCE OF OPINION WHICH CANNOT SUPPORT LEVYING OF THE PENALTY U/S. 271(1)(C). THE PENALTY ORDER I, THERE FORE, CANCELLED. ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 10 - 5. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS THE LD. AR RELIED ON THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF MAK DATA (P.) LTD. VS. CIT (2013) 38 TAXMANN.COM 44 8 (SC). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION U/S 80IA FOR RS 13,64,48 ,850/- IN RESPECT OF TRIKAMPURA DIVISION. THE SAME WAS DISALLOWED BY TH E ASSESSING OFFICER AND THE APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A) AG AINST SUCH DISALLOWANCE WAS DISMISSED BY THE LD. CIT(A) VIDE ORDER DATED 08 .02.2006. 7. THEREAFTER, THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT ON THE GROUND OF CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE FOR RS 5,25,32,807/- BEING 100% OF THE AMOUNT OF TA X SOUGHT TO BE EVADED. 8. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF ITS I NCOME. THE CLAIM FOR DEDUCTION U/S 80IA WAS MADE IN THE RETURN OF INCOME FILED BY THE ASSESSEE WHICH WAS DISALLOWED BECAUSE OF DIFFERENCE OF OPINI ON ABOUT ITS ALLOWABILITY BY THE ASSESSING OFFICER. THUS, THERE IS NO CONSCI OUS CONCEALMENT OR ACT OF FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. 9. THE LD. CIT(A) HELD THAT IN HIS VIEW, THERE WAS NO CONCEALMENT OF PRIMARY FACTS ON PART OF THE ASSESSEE. THERE IS DE NIAL OF THE DEDUCTION CLAIMED MERELY ON THE BASIS OF DIFFERENCE OF OPINIO N WHICH CANNOT SUPPORT THE LEVYING OF PENALTY U/S 271(1)(C) AND CANCELLED THE PENALTY ORDER. 10. BEING AGGRIEVED AGAINST THE SAID ORDER OF THE L D. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 2950/AHD/2008 NIRMA LTD. VS DCIT, CENTRAL CIR.-1(1), AHD. FOR A.Y. 2000-01 - 11 - 11. THE LD. DR HAS SUPPORTED THE ORDER OF THE ASSES SING OFFICER. 12. THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT(A ). 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE FINDI NGS OF THE LD. CIT(A). THE ORDER OF THE LD. CIT(A) IS IN CONFORMITY WITH THE V IEW OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 158 (SC) WHEREIN IT WAS HELD THAT A MERE MA KING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 14. WE, THEREFORE, DO NOT FIND ANY GOOD REASON TO I NTERFERE WITH THE ORDER OF THE LD. CIT(A) WHICH IS CONFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 27 TH OF FEBRUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 27/02/2014 GHANSHYAM MAURYA, SR. P.S.