M/s AKM Finance Ltd, Indore V. The ITO, Indore

ITA 296/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2736 (ITAT-INDORE)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: C P RAWKA
• Keywords: Unexplained cash credit; Salary income; Wrong claim; Capital receipt
• Section: 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH-I, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.296/IND/2010 AY: 2004-05 M/S AKM FINANCE LIMITED INDORE PAN AABCA4264A ..APPELLANT V/S. ITO, WARD 1(1), INDORE ..RESPONDENT APPELLANT BY : SHRI C.P. RAWKA DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE ON T HE GROUND THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS.40,000/- IMPOSED U/ S 271(1)(C) OF THE ACT. 2. DURING HEARING OF THIS APPEAL, I HAVE HEARD TH E LEARNED REPRESENTATIVES OF BOTH THE SIDES AND CONSIDERED TH E ARGUMENTS ADVANCED BY THEM. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE NAMES AND ADDRESSES OF THE CREDITORS ALONG WITH CONFIRMATIONS AND PANS WERE DULY PRODUCED BEFORE THE ASSESSING OF FICER, THEREFORE, 2 NEITHER THERE IS ANY CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE. IT WAS SUBMITTED THAT QUANTUM AND PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT. RELIANCE WAS PLACED ON THE DECISION IN CIT V. RELIANCE PETRO PRODUCTS (2010) 1 4 ITJ 381 (SC). ON THE OTHER HAND, THE LEARNED SENIOR DR PLEADED THAT THE CREDITORS WERE NOT PRODUCED BY THE ASSESSEE AND INACCURATE PARTICU LARS WERE FURNISHED THEREFORE THE PENALTY WAS RIGHTLY LEVIED. RELIANC E WAS PLACED ON THE DECISIONS IN 172 ITR 250 (SC) AND 160 CTR 128 (KER. ). 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN PROVIDING CONSULTANCY FOR INVESTMENT. AN ADDITI ON OF RS.1,10,000/- WAS MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUN T OF UNEXPLAINED CASH CREDIT ON THE PLEA THAT THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME. THE STAND OF THE REVENUE IS THAT THE ASSES SEE COMPANY FAILED TO PROVE THE IDENTITY AND GENUINENESS OF TRANSACTIO N OF THE CREDITORS. HOWEVER, THE FACT REMAINS THAT THE NAMES AND ADDRES SES OF THE CREDITORS ALONG WITH CONFIRMATIONS OF LOAN WITH PAN S WERE DULY FILED BUT CREDITORS WERE NOT BE PRODUCED. IF THE LANGUAGE USE D IN SECTION 271(1)(C) OF THE ACT IS KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL, I FIND THAT NEITHER THERE IS ANY CONCEALMEN T OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REFORE, THE DECISION OF 3 THE HONBLE APEX COURT IN CIT V. RELIANCE PETRO PRO DUCTS PRIVATE LIMITED WHEREIN VARIOUS DECISIONS LIKE CIT V. ATUL MOHAN BINDAL; 1ITKJ 373 (SC); UNION OF INDIA V. DHARMENDRA TEXTILES PRO CESSORS; 12 ITJ 40 ; 306 ITR 266 (SC), DILIP N. SHROFF V. JCIT; 2981 ITR 913 ETC. HAVE ALREADY BEEN CONSIDERED, SUPPORTS THE CASE OF THE A SSESSEE . SO FAR AS THE DECISION IN THE CASE OF CHUHARMAL V. CIT; 172 ITR 250 AND CIT V. ABOO MOHAMMED; 160 CTR 128, RELIED UPON BY THE REVENUE, IS CONCERNED, I AM OF THE VIEW THAT THE SAME DOES NOT HELP THE REVENUE AS THE SAME HAS BEEN DECIDED ON DIFFERENT FACTS. THE RATIO LAID DOWN BY THE INDORE BENCH IN S. NIZA MUDDIN (ITA NO. 15/IND/2010) ORDER DATED 2.6.2010 ALSO SUP PORTS THE CASE OF THE ASSESSEE. THE ORDER IN THAT CASE IS REPRODUCED AS UNDER :- THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A), UJJAIN, DATED 18.9.200 9 CHALLENGING THE SUSTENANCE OF PENALTY OF RS.2,20,81 0/- IMPOSED U/S 271(1)(C) OF THE ACT. DURING HEARING O F THIS APPEAL, I HAVE HEARD SHRI S.C. BHANDARI, LEARNED REPRESENTATIVE FOR THE ASSESSEE AND SMT. APARNA KAR AN, LEARNED SENIOR DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE IS A DEVELOPMENT OFFICER RECEIVED INCENTIVE BONUS FROM LIFE INSURANC E CORPORATION AND INTER ALIA CLAIMED 40% DEDUCTION FR OM THIS BONUS. IT WAS SUBMITTED THAT SINCE TRUE FACTS WERE DISCLOSED IN THE RETURN, THEREFORE, NO PENALTY CAN BE IMPOSED. ON THE OTHER HAND, THE LEARNED SR. DR STRO NGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT SINC E THERE IS EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN LIC AND THE ASSESSEE, THEREFORE, THE CLAIMED INCENTIVE BONU S IS PART OF SALARY, THEREFORE, NO SEPARATE DEDUCTION IS ALLOWABLE. IT WAS STRONGLY PLEADED THAT SINCE WRONG CLAIM WAS MADE BY THE ASSESSEE BY FURNISHING INACCURATE PARTICULARS OF HIS INCOME, THE PENALTY WAS RIGHTLY LEVIED, 2. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES FROM BOTH THE SIDES AND CONSIDERED THE 4 ARGUMENTS ADVANCED BY THEM. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE WAS WORKING AS A DEVELOPMENT OFFICER WITH LIC OF INDIA, CLAIMED DEDUCTION OF RS.3,81,744/- AT THE RATE OF 40% OF THE AMOUNT OF R S. 16,27,344/- RECEIVED AS INCENTIVE BONUS FROM HIS EMPLOYER. THE LEARNED ASSESSING OFFICER IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I ON THE CASE OF CIT V. A.K. GHOSH AND OTHERS (263 ITR 536) (M.P.), WHEREIN IT WAS HELD THAT DEVELOPMENT OFFICE RS OF LIC ARE NOT ENTITLED TO 40% DEDUCTION OF CLAIMED INCENTIVE BONUS, BEING THE PART OF SALARY INCOME, DISALLOWED THE CLAIM OF THE ASSESSEE AND IMPOSED PE NALTY OF RS.2,20,810/- U/S 271(1) OF THE ACT. ON APPEAL , THE PENALTY ORDER WAS AFFIRMED, WHICH IS UNDER CHALLENG E BEFORE THE TRIBUNAL. NOW THE QUESTION ARISES WHETHE R THE DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE I N ITS RETURN TANTAMOUNT TO FURNISHING OF INACCURATE PARTI CULARS OR CONCEALMENT OF INCOME? THE OBVIOUS REPLY IS NO BECAUSE SINCE THE TRUE FACTS WERE DECLARED BY THE ASSESSEE IN ITS RETURN, THERE IS NEITHER CONCEALMEN T OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. MY VIEW GETS SUPPORT FROM THE DECISION IN THE CASE OF SOM POWER LIMITED (ITA NOS. 107 AND 108/IND/2000) AND ALSO THE DECISION IN THE CASE OF IQBAL HUSSAIN (ITA NO. 337/IND/2009). THE RELEVANT PORTI ON OF THE SAME IS REPRODUCED HEREUNDER FOR READY REFERENC E:- THIS APPEAL IS BY THE ASSESSEE CHALLENGING THE ORD ER OF THE LD. CIT(A) DATED 4.3.2009 CONFIRMING THE PENALT Y OF RS. 11,533/- IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. DURING HEARING OF THIS APPEAL, I HAVE HEARD TH E LD. RESPECTIVE COUNSEL AND CONSIDERED THE ARGUMENTS ADVANCED BY THEM. THE CRUX OF ARGUMENTS ON BEHALF O F THE ASSESSEE IS THAT THE ASSESSEE IS A RETIRED EMPL OYEE FROM BANK OF BARODA, DEPOSITED HIS SAVINGS AMOUNTIN G TO RS.17 LACS IN FIXED DEPOSIT WITH STATE BANK OF I NDIA AND RECEIVED INTEREST OF RS.1,21,922/- ON SUCH DEPO SITS. THE ASSESSEE BORROWED OVERDRAFT FOR PURCHASING REAL ESTATE FROM ONE MR. HAMOOD AHMED SIDDIQUI FROM THE BANK AND CONSEQUENTLY PAID INTEREST OF RS.56,218/- ON SUCH OVERDRAFT AND RETURNED THE INCOME OF RS.65,705 /- (RS.1,21,923 RS.56,218). THE ASSESSEE CLAIMED REB ATE OF RS.12,000/- U/S 80L OF THE ACT AND ALSO TDS WAS DEDUCTED BY THE BANK FOR THE INTEREST PAID ON FIXED DEPOSITS. THE ASSESSEE CLAIMED REFUND. THE ASSESSME NT WAS COMPLETED U/S 143(1) ON 1.3.2005. THE DEPARTMEN T DENIED THE REFUND AFTER A LAPSE OF TWENTY MONTHS FR OM THE DATE OF FILING OF THE RETURN. THE ASSESSING OFF ICER ISSUED NOTICE U/S 148 AND STARTED INQUIRY ABOUT 5 DEDUCTION OF RS.56,218/- BEING THE AMOUNT OF INTERE ST PAID ON LOAN. THE STAND OF THE ASSESSEE IS THAT SIN CE THE AMOUNT WAS DEDUCTIBLE FROM INTEREST PAID BY THE BAN K, THEREFORE, THERE IS NO FURNISHING INACCURATE PARTIC ULAR OR CONCEALMENT OF INCOME. ON THE OTHER HAND, LD. SR . DR CONTENDED THAT THE ASSESSEE MADE A WRONG CLAIM B Y FURNISHING INACCURATE PARTICULAR, CONSEQUENTLY, IT IS CLEAR CASE OF CONCEALMENT OF INCOME. MY ATTENTION W AS INVITED TO PAGE 7 PARA 4.5 OF THE ORDER OF THE LD. CIT(A). IN REPLY, THE LD. COUNSEL FOR ASSESSEE PLAC ED RELIANCE UPON THE DECISION FROM THE HONBLE APEX CO URT IN CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (2010) 2 30 CTR (SC) 320. 2. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON THE FILE. UNDER T HE AFOREMENTIONED FACTS, QUESTION ARISES WHETHER PENAL TY CAN BE IMPOSED ON THE DISALLOWANCE OF CLAIM MADE BY ASSESSEE. IN MY HUMBLE OPINION, THE OBVIOUS REPLY I S NO BECAUSE FOR IMPOSING PENALTY U/S 271(1)(C), EITHER THERE MUST BE CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS. AS NARRATED ABOVE, THE ASSE SSEE MADE THE CLAIM ON THE BASIS THAT THE AMOUNT WAS DEDUCTIBLE FROM THE INTEREST PAID BY THE BANK. IF T HE ITO WAS NOT AGREEABLE WITH THE CLAIM OF THE ASSESSE E, IT AUTOMATICALLY DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. IT IS NOT A CASE OF SUPPRESSION OF INCOME. THE ASSESSEE IS FURT HER FORTIFIED BY THE DECISION OF THE INDORE BENCH OF TH E TRIBUNAL IN THE CASE OF M/S. SOM POWER LTD. (ITA NOS.107 & 108/IND/2009, ORDER DATED 5.5.2010). THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDE R: THESE APPEALS ARE BY THE SAME ASSESSEE FOR DIFFERENT ASSESSMENT YEARS WHEREIN THOUGH THE ASSESSEE HAS TAKEN VARIOUS GROUNDS WHICH CAN BE CONCISED TO ONE I.E. CHALLENGING THE PENALTY OF RS. 1,16,000/- EACH U/S 271(1) OF THE ACT. 2. DURING HEARING OF THESE APPEALS, WE HAVE HEARD SHRI R.N. GUPTA, LD. COUNSEL FOR THE ASSESSEE AND S MT. APARNA KARAN, SR. DR. THE CRUX OF ARGUMENTS ON BEHA LF OF THE ASSESSEE IS THAT THERE WAS NO POSITIVE EVIDE NCE TO THE EFFECT THAT EITHER THE ASSESSEE CONCEALED ITS I NCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. ON A QUERY FROM THE BENCH ABOUT THE QUANTUM ADDITION, IT WAS CONTENDED THAT THE QUANTUM APPEAL WAS DECIDED ON TH E BASIS OF DIFFERENT JUDICIAL PRONOUNCEMENTS IN THE C ASES OF TUTICORIN ALKALIES & BOKARO STEEL LIMITED. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING JU DICIAL PRONOUNCEMENTS :- 6 1. CHANDRAPAL BAGGA V. ITAT; 261 ITR 67 (RAJ.) 2. YOGESH R. DESAI V. ACIT; (2010) 2 TTR 267 (MUM) 3. CIT V. RELIANCE PETRO PRODUCTS PVT. 322 ITR 158 (SC) 4. 218 CTR 21 5. 14 ITJ 269 (IND) ON THE OTHER HAND, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE STRONGLY DEFENDED THE IMPUGNED ORDER/PENALTY ORDER BY ASSERTING THAT THE ASSESSEE DELIBERATELY MADE A FALSE CLAIM AS INTEREST INCOME IS TAXABLE. IT WAS FURTHER PLEADED THAT WHETHER THE AS SESSEE CAN MAKE A CLAIM WHICH IS PATENTLY NOT ALLOWABLE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. BRIEF FACTS ARE TH AT DURING THE IMPUGNED ASSESSMENT YEARS, THE ASSESSEE RECEIVED INTEREST OF RS.12,41,742/- AND RS.14,71,37 5/- RESPECTIVELY. THE BREAK UP OF THE SAME HAS BEEN GI VEN IN THE RESPECTIVE ASSESSMENT ORDER. AS PER THE REVE NUE, NO BUSINESS ACTIVITY WAS CARRIED OUT BY THE ASSESSE E DURING THE YEAR. THE ASSESSEE INCURRED EXPENDITURE DURING THE CONSTRUCTION PERIOD (PRE-OPERATIVE EXPEN SES WORKED OUT TO RS.77,25,258/-) (A.Y. 1998-98). THE ASSESSEE DEDUCTED INTEREST OF RS.12,41,742/- FROM T HE PRE-OPERATIVE EXPENSES AND THE BALANCE AMOUNT WAS TAKEN TO THE BALANCE SHEET AS EXPENDITURE DURING TH E CONSTRUCTION PERIOD PENDING ALLOCATION. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED AS TO WHY THE INTEREST INCOME SHOULD NOT BE TAXED. THE ASSESSEE CLAIMED THAT IN VIEW OF THE DECISION FROM THE HONBLE APEX COURT IN CIT V. BOKARO STEEL LIMITED; 236 ITR 315 THE AMOUNT SHOULD NOT BE TAXED. IT WAS FUR THER CLAIMED THAT THE INTEREST EARNED ON THE CAPITAL WAS DIRECTLY LINKED WITH THE BUSINESS ACTIVITIES OF THE COMPANY. HOWEVER, THE ASSESSING OFFICER TREATED THE INTEREST AMOUNT AS TAXABLE AND ADDED TO THE TOTAL I NCOME OF THE ASSESSEE. ON APPEAL, THE QUANTUM ADDITION WA S AFFIRMED. 4. THE LEARNED ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AS TO WHY PENALTY U/S 271(1) MAY NOT BE IMP OSED ON THE PLEA THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF ITS INCOME. ULTIMATELY PENALTY OF RS.1,16,000/- EACH WAS IMPOSED. ON APPEAL, THE PEN ALTY WAS AFFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS UNDER CHALLENGE BEFORE THE 7 TRIBUNAL. IF THE TOTALITY OF FACTS IS ANALYSED, THE RE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE MADE TRUE DISCLOSURE OF FACTS/INCOME IN ITS RETURN. WE HAVE PERUSED THE PAPER BOOK, SUBMISSIONS OF THE ASSESSEE. ADMITTEDLY, IN ITS STATEMENT OF COMPUTATION OF TOTA L INCOME, THE ASSESSEE SPECIFICALLY GAVE A NOTE BELOW THE AUDITED FINAL ACCOUNTS/TDS CERTIFICATES (PAGES 3 AN D 4 OF PAPER BOOK). THE NOTES ARE AS UNDER :- 1. THE COMPANY HAS NOT COMMENCED ANY OPERATIONS AS YET AND ITS PROJECT IS UNDER IMPLEMEN TATION. NO COMMERCIAL PRODUCTION HAS BEEN STARTED. 2. INTEREST RECEIVED DURING THE YEAR HAS BEEN REDUCED FROM PREOPERATION EXPENSES AND NOT CHARGED TO TAX IN VIEW OF JUDGMENT OF HONBLE SUPREME COURT (C IT V. BOKARO STEEL LTD. 236 ITR 315 (SC). THE AUDITORS REPORT TO SHAREHOLDERS WAS ALSO FILED BEFORE THE ASSESSING OFFICER. THE BALANCE SHEET AS ON 31.3.1999 SHOWING THE COMPLETE DETAILS OF INCOME AN D EXPENDITURE WAS ALSO FILED ALONG WITH NOTES ON ACCO UNTS AND SIGNIFICANT ACCOUNTING POLICIES (PAGES 9 TO 11 OF THE PAPER BOOK), BALANCE-SHEET ABSTRACT AND GENERAL BUSINESS PROFILE OF THE ASSESSEE (PAGE 12 OF THE PA PER BOOK) WERE ALSO FILED. IT IS ALSO A FACT THAT THE A SSESSEE MADE THE TRUE DISCLOSURE OF ALL THE DETAILS. DURIN G HEARING OF THIS APPEAL, A QUESTION WAS POSED BY THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE WHETHER THE ASSESSEE CAN MAKE A CLAIM WHICH IS PATENTLY NOT ALLOWABLE. THE QUESTION SEEMS TO BE VERY TEMPTING AND REASONABLE BUT THE FACT REMAINS THAT EVEN IF A WRON G CLAIM IS MADE BY THE ASSESSEE BY DISCLOSING TRUE FA CTS AUTOMATICALLY DOES NOT ENTITLE THE ASSESSEE FOR SUC H CLAIM AND IT CAN BE DISALLOWED. IT IS THE DUTY OF T HE ASSESSING OFFICER TO ASSESS THE CORRECT INCOME/TAX AS PER THE PROVISIONS OF THE ACT. EVEN OTHERWISE, IF A CL AIM HAS BEEN MADE, THAT TOO ON THE BASIS OF A DECISION FROM THE HONBLE APEX COURT BY GIVING A NOTE IN ITS RETURN, DOES NOT MEAN THAT THE ASSESSEE EITHER CONCEALED THE INC OME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IF THE CLAIM IS NOT ALLOWABLE, CERTAINLY IT CAN BE DENIED BUT BEFORE US THE QUESTION IS TO BE DECIDED REGARDING IMPOSITION OF PENALTY. THE LANGUAGE USED IN SECTIO N 271(1) IS AS UNDER :- 4 271. (1) IF THE 5 [ASSESSING] OFFICER OR THE 6 [***] 7 [COMMISSIONER (APPEALS)] 8 [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, ISSATISFI ED THAT ANY PERSON 8 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR 13 [* * *] FURNISHED INACCURATE PARTICULARS OF 14 [SUCH INCOME, OR] IF THE LANGUAGE USED IN THE AFORESAID SECTION IS AN ALYSED, IT CAN BE SAID THAT FOR IMPOSITION OF PENALTY U/S 2 71(1) EITHER THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION, GIVEN IN THE RETURN, IS FOUND TO BE IN CORRECT OR INACCURATE, THE ASSESSEE MAY NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, PENALTY PROVISION CANNOT BE INVOK ED. BY NO STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAI M CAN BE SAID TO BE TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT IT DEPEND S UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS TH E ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. IN THE IMPUGNED ORDER THERE IS NO FI NDING THAT THE DETAILS FILED BY THE ASSESSEE WERE EITHER ERRONEOUS OR FALSE. 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, NOR IT CAN BE SAID THAT INACCURATE PARTICULARS WERE FILED. THE CLAIM OF THE ASSESSEE IS MUCH STRONGER BECAUSE THE RETURN IS SUPPORTED BY A NOTE MENTIONED BELOW THE RETURN/PAN AND LOSS ACCOUNT THA T THE CLAIM IS MADE ON THE BASIS OF NOTE AS MENTIONED IN PARA 4 ABOVE. THE RETURN WAS SUPPORTED BY COPY OF AUDIT ED BALANCE SHEET/AUDIT REPORT AND IN THE AUDITED ACCOU NTS, IN SCHEDULE-C THE ASSESSEE HAS CLEARLY MENTIONED THAT IN THE RELEVANT YEAR IT HAS RECEIVED INTEREST OF RS.12,41,742/- WHICH HAS BEEN REDUCED FROM THE EXPENDITURE INCURRED DURING CONSTRUCTION YEAR. IN THE NOTES OF ACCOUNTS ATTACHED WITH THE BALANCE SHEET, THE ABOVE FACT WAS ALSO CLEARLY MENTIONED IN NOTE NO. 2 OF SCHEDULE-H ATTACHED WITH THE BALANCE-SHEET. FURTHE R IN THE SAID SCHEDULE-H NOTE NO. 12 THE ASSESSEE CLEARL Y MENTIONED THAT NO PROVISION FOR INCOME TAX HAS BEEN CONSIDERED NECESSARY IN VIEW OF THE FACT THAT THE ASSESSEE COMPANY HAS NOT YET STARTED ITS COMMERCIAL ACTIVITY AND INTEREST INCOME DURING THE PERIOD IS N OT TAXABLE THAT TOO IN VIEW OF THE DECISION FROM THE H ONBLE APEX COURT IN THE CASE OF CIT V. BOKARO STEELS LIMI TED. IN ITS COMPUTATION OF INCOME IT HAS BEEN MENTIONED THAT THE INTEREST RECEIVED DURING THE YEAR HAS BEEN REDU CED FROM PRE-OPERATIVE EXPENSES AND NOT CHARGED TO TAX. IF THIS CLAIM OF THE ASSESSEE IS NOT ACCEPTED BY THE 9 ASSESSING OFFICER, DOES NOT MEAN THAT THE ASSESSEE EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WHICH IS THE PRIME CONDITION FOR IMPOSING PENALTY U/S 271(1). EVEN THE MATTER TRAV ELLED TO THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHO REDUCED THE ADDITION OF RS. 12,41,742/- TO RS. 3,31,368/-. ON FURTHER APPEAL, THE TRIBUNAL ALSO HE LD THAT OUT OF RS. 12,41,742/- ONLY RS. 3,31,338/- IS TAXAB LE. THE SUSTAINED DISALLOWANCE IS DUE TO THE BONAFIDE INTERPRETATION OF LAW ON THE ISSUE. HOWEVER, WE AR E OF THE VIEW THAT IT MAY BE A CASE FOR QUANTUM ADDITION BUT NOT A GOOD CASE FOR IMPOSING PENALTY. OUR VIEW FIN DS SUPPORT FROM THE DECISIONS QUOTED ABOVE AND ESPECIA LLY THE LATEST DECISION DATED MARCH 17, 2010 FROM THE HONBLE APEX COURT IN CIT V. RELIANCE PETRO PRODUC TS PRIVATE LIMITED (2010) 322 ITR 158 (SC). WHILE COM ING TO A PARTICULAR CONCLUSION, THE HONBLE COURT ALSO CONSIDERED THE OFF-QUOTED DECISION OF DILIP & SHROF F V. JCIT (291 ITR 519 (SC), SHRIKRISHNA ELECTRICALS V. STATE; (2009) 23 VST 249 (SC); UNION OF INDIA V. DHARMENDR A TEXTILES PROCESSORS; 306 ITR 277 (SC), UNION OF IND IA V. RAJASTHAN WEAVING MILLS (2010) 1 GSTR 66 (SC), ETC. THE HONBLE APEX COURT IN THE AFORESAID CASE OF REL IANCE PETRO PRODUCTS LIMITED HAS IDENTICALLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE DECISIONS IN CHANDR APAL BAGGA V. ITAT AND ANOTHER (261 ITR 67) (RAJ ) AND YOGESH R. DESAI V. ACIT (SUPRA) SUPPORT OUR VIEW. 5. EVEN IF THE CLAIM OF THE ASSESSEE IS BASED UPON A DECISION FROM THE HONBLE APEX COURT (BOKARO STEEL LIMITED) THOUGH ON DIFFERENT LINE OF REASONING WHI CH HAS BEEN MADE A BASE FOR SUCH CLAIM, IT CANNOT BE SAID THAT THE ASSESSEE AT THAT POINT OF TIME WAS WRONG BECAUS E IT IS THE ASSESSING OFFICER WHO IS SUPPOSED TO ANALYSE THE CASE ON ITS OWN MERIT AND IF HE FINDS THAT SUCH CLA IM CANNOT BE ALLOWED, IT MAY BE A GOOD CASE FOR ADDITI ON OR DISALLOWANCE OR ALLOWANCE, AS THE CASE MAY BE, BUT CERTAINLY IT MAY NOT BE A GOOD CASE FOR IMPOSING PE NALTY U/S 271(1) OF THE ACT. FOR ADOPTION OF A PARTICUL AR VIEW WE MAY FIND SUPPORT FROM THE DECISION OF THE HON'BL E HIGH COURT OF RAJASTHAN IN CIT V. KANSARA MODLER LIMITED (2008) 218 CTR (RAJ. ) 21 WHEREIN IT WAS CONCLUDED AS UNDER :- CONCLUSION TRIBUNAL EXAMINED THE DIVERSE JUDGMENTS OF THE SUPREME COURT AND FOLLOWED THE DECISION IN KARNAL COOPERATIVES CASE TO HOLD THAT INTEREST EARNED BY THE ASSESSEE ON THE MARGIN MONEY DEPOSITED WITH BANK FOR OPENING 10 LETTER OF CREDIT WAS A CAPITAL RECEIPT, IT CANNOT BE SAID THAT THE TRIBUNAL WAS WHOLLY WRONG IN ADOPTING SUCH COURSE. IN THE LIGHT OF THESE FACTS AND JUDICIAL PRONOUNCEM ENTS, EVEN IF A WRONG CLAIM HAS BEEN MADE BY THE ASSESSEE BY DISCLOSING TRUE FACTS, WE ARE OF THE CONSIDERED OPI NION THAT NO PENALTY IS LEVIABLE U/S 271(1) OF THE ACT, THEREFORE, BOTH THESE APPEALS OF THEN ASSESSEE ARE ALLOWED. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2010 IN THE AFORESAID CASE, A DETAILED ORDER HAS BEEN FR AMED BY THE TRIBUNAL ON IDENTICAL FACTS BY CONSIDERING V ARIOUS CASES INCLUDING THE LATEST DECISION FROM THE HONBL E APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (SUPRA), CITED BY THE LD. COUNSEL FOR ASSESSEE. IN THE PRESENT APPEAL, THE INFORMATION GI VEN IN THE RETURN WAS NOT FOUND TO BE INCORRECT OR INACCURATE, CONSEQUENTLY, KEEPING IN VIEW THE LANGU AGE OF SEC. 271(1)(C) OF THE ACT, THE ASSESSEE CANNOT B E HELD THE GUILTY OF EITHER FURNISHING THE INACCURATE PARTICULARS OR CONCEALMENT OF INCOME BECAUSE EVEN MAKING AN INCORRECT CLAIM/DEDUCTION, IT CANNOT BE S AID THAT THE ASSESSEE CONCEALED ITS INCOME, THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION, THIS APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. DURI NG HEARING BEFORE ME, THE LD. SR. DR INVITED MY ATTENT ION TO THE CASE-LAWS RELIED UPON BY THE LD. CIT(A). ADMITTEDLY, A DETAILED IMPUGNED ORDER HAS BEEN PASS ED BY LD. CIT(A) EVEN BY QUOTING THE DECISION IN THE C ASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES P. LTD. (306 ITR 277)(SC) AND VARIOUS OTHER DECISIONS. BUT, THE FACT UAL POSITION IS THAT THE ASSESSEE NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ANY INCOME. EV EN IF A WRONG CLAIM IS MADE BY THE ASSESSEE BY DISCLOS ING TRUE FACTS IN THE RETURN DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME. IN THE CASE OF RELIANCE PETR O PRODUCTS LTD. (SUPRA), THE HONBLE APEX COURT CONCLUDED THAT: MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY UNDER S. 271(1)(C) IS NOT ATTRACTED; MERE MAKING OF THE CLAIM, WHICH IS NOT 11 SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. WHILE COMING TO THE AFORESAID DECISION, THE HONBLE APEX COURT CONSIDERED VARIOUS DECISIONS INCLUDING D ILIP N. SHROFF VS. JCIT (2007) 210 CIT (SC) 228; UNION O F INDIA VS. DHARMENDRA TEXTILES PROCESSORS (2007) 212 CTR (SC) 432; UNION OF INDIA VS. RAJASTHAN SPINNING & WEAVING MILLS (2009) 224 CTR (SC) 1; CIT VS. ATUL M OHAN BINDAL (2009) 225 CTR (SC) 248) AND VARIOUS OTHER DECISIONS. THEREFORE, THE CASES RELIED UPON IN THE IMPUGNED ORDER AND ALSO CITED BY LD. SR. DR MAY NOT BE OF MUCH HELP TO THE REVENUE AS THE ASSESSEE WAS EXPECTING THAT THE AMOUNT WAS DEDUCTIBLE FROM THE INTEREST PAID BY THE BANK. EVEN IF THE LD. ITO WAS NOT AGREEING WITH THE CLAIM OF THE ASSESSEE, AUTOMATICA LLY DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. THE ASSESSEE IS FURTHER FORTIFIED BY THE RATIO LAID DOWN BY THE HON BLE P & H HIGH COURT IN THE CASE OF CIT VS. AJAYB SINGH & CO. (253 ITR 630) WHEREIN IT WAS HELD THAT DISALLOW ANCE OF EXPENSES WILL NOT PER SE AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME, THEREFORE, IT IS NOT A FIT CASE WHERE PENALTY CAN BE LEVIED. RESULTANTLY, THIS APPEAL OF THE ASSESSEE IS ALLOWED. IN THE AFORESAID CASE, AN ELABORATE DISCUSSION HAS BEEN MADE BY THE BENCH BY CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING FROM THE HONBLE APEX LIKE CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (2010) 230 CTR (SC) 320 (SUPRA) WHEREIN THE HONBLE APEX COURT CLE ARLY HELD THAT MERE DISALLOWANCE OF CLAIM DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OR CONCEALING OF INCOME. WHILE COMING TO THIS CONCLUSI ON, THE HONBLE COURT CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS WHICH HAVE ALREADY BEEN DELIBERATED UPON IN THE AFORESAID ORDER. IN THE PRESENT APPEAL SINCE TRUE FACTS WERE DULY DISCLOSED BY THE ASSESSE E IN ITS RETURN REGARDING INCENTIVE BONUS RECEIVED BY TH E ASSESSEE FROM HIS EMPLOYER, THEREFORE, THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER AUTOMATICALLY CANNOT LEAD TO THE CONCLUSION THAT EI THER THE ASSESSEE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULAR OF SUCH INCOME, THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION, THIS APPEAL OF THE ASSESSEE IS ALLOWED, FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 12 ORDER PRONOUNCED IN THE OPEN COURT ON 2.6.2010. I, THEREFORE, FOR THE REASONS DISCUSSED ABOVE AND F OLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WHEREIN VARIOUS JUDICIAL PRONOUNCEMEN TS HAVE BEEN CONSIDERED, ALLOW THE APPEAL OF THE ASSESSEE. FINALLY THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 .7.2 010. (JOGINDER SINGH) JUDICIAL MEMBER DATED: 12 .7.2010 COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE D/-