M. Subrahmanyam, Hyderabad V. ACIT, Nellore

ITA 335/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66344 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Business income; Speculation loss; Wrong claim; Revised return
• Section: 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 335/HYD/2010 ASSESSMENT YEAR: 2003-04 M. SUBRAMANYAM , ... APPELLANT NELLORE. (PAN ADLPM5832A) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDENT CIRCLE-1, NELLORE. APPELLANT BY : SHRI A.V. RAGHURAM RESPONDENT BY : SHRI K.J. RAO DATE OF HEARING : 04/07/2012 DATE OF PRONOUNCEMENT : 28/09/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), GUNTUR DATED 11/12/2009 FOR THE AS SESSMENT YEAR 2003-04. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL DERIVES INCOME FROM PROPERTY AND OTHER S OURCES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE RETURNED CAPITAL GAINS OF RS. 90,33,830/-, WHICH WAS ENHANCED TO RS. 1,41,03,659/- BY THE AO. THE ASSESSEE CONTESTED THI S ADDITION BEFORE BOTH THE CIT(A) AND ITAT, BUT, FAILED TO GET RELIEF FROM THEM. THE AO LEVIED PENALTY U/S 271(1)(C) OF THE AC T HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF HIS INCOME ITA NO. 335/HYD/10 M. SUBRAMANYAM 2 BY DELIBERATELY FURNISHING INACCURATE PARTICULARS A ND MAKING A BOGUS CLAIM OF EXPENDITURE TO THE EXTENT OF RS. 13, 50,000/-. 3. THE ASSESSEE HAD CLAIMED PAYMENT OF COMPENSATION TO THREE TENANTS AS UNDER:- I) HOTEL AMEDIA RS. 5,00,000/- II) BHARGAVI LODGE RS. 5,00,000/- III) SRINIVASA SILKS & SARIES RS.3,50,000/- 4. THE AO DISALLOWED THE CLAIM OF COMPENSATION PAID TO THE ABOVE MENTIONED PARTIES ON THE GROUND THAT THE ASSE SSEE IN THIS CASE WAS THE SELLER, AND AS PER THE AGREEMENT WITH THE PURCHASER, THE EVICTION OF TENANTS WAS TO BE TAKEN CARE OF BY THE PURCHASER. SECONDLY, ONE OF THE PARTIES M/S BHA RGAVI LODGE WAS A PARTNERSHIP CONCERN IN WHICH SHRI UDAY KUMAR, WHO IS THE KEY PERSON IN-CHARGE IS THE SON OF THE S ELLER AND, HENCE, THE PAYMENT TO HIS OWN SON IS NOT REALISTIC. FURTHER, THE AO OBSERVED THAT IT WAS NOT CLEAR WHETHER M/S BHARG AVI LODGE RECEIVED RS. 5.00 LAKHS FROM THE ASSESSEE OR THE PU RCHASER. THIRDLY, WITH RESPECT TO M/S SRINIVASA SILKS AND SA RIS, THE AO OBSERVED THAT THE TENANCY WAS CONTINUED IN THE SAME PREMISES EVEN AFTER THE SALE WAS MADE. THE AO HELD THAT THE ASSESSEE FAILED TO PRODUCE ANY DETAILS OF PAYMENTS MADE TO T HE PARTIES SUCH AS, CHEQUE NOS., DATE OF PAYMENTS ETD. THE AO NOTED THAT THE SALE DEED INDICATED THAT THE ASSESSEE HAD GIVEN POSSESSION OF THE PROPERTY TO THE PURCHASER WITH THE TENANTS. THE AO, THEREFORE, HELD THAT THE AMOUNTS STATED TO HAVE BEE N PAID TO THE EXISTING TENANTS WERE NOT ALLOWED AS DEDUCTION. ITA NO. 335/HYD/10 M. SUBRAMANYAM 3 5. ON FURTHER APPEAL, THE CIT(A) CONSIDERING THE FA CT OF THE CASE HELD THAT THE AO WAS JUSTIFIED IN DISALLOWING THE COMPENSATION. WHEN THE MATTER CAME TO THE ITAT, THE ITAT IN ITA NO. 642/HYD/2007 VIDE ORDER DATED 23/11/2007 HE LD THAT THE ASSESSEE HAD FAILED TO DISCHARGE HIS ONUS OF PR OVING THAT THE COMPENSATION PAID TO TENANTS FOR EVICTING THE P REMISES SOLD WAS, IN FACT, INCURRED BY THE ASSESSEE AND NOT BY THE PURCHASER. ITAT UPHELD THE DECISION OF CIT(A) AND D ISALLOWED THE CLAIM OF THE ASSESSEE. 6. BEFORE THE CIT(A), THE AR OF THE ASSESSEE SUBMIT TED THAT IT COULD BE SEEN FROM THE ORDER OF THE ITAT (SUPRA) THAT THE DISALLOWANCE WAS ULTIMATELY CONFIRMED ON THE TECHNI CAL GROUND THAT THE PAYMENTS DID NOT RELATE TO ASSESSMENT YEAR 2003-04 BUT TO ASSESSMENT YEAR 2004-05 SINCE THEY WERE MADE IN APRIL, 2003. IT WAS SUBMITTED THAT ONCE THE TENANT HAD VAC ATED THE PREMISES IT WAS NOT POSSIBLE TO FIND OUT WHERE HE W AS. WITH REGARD TO SRINIVASA SILKS AND SAREES, IT WAS SUBMIT TED THAT MERELY BECAUSE HE CONTINUED IN THE SAME PREMISES, I T CANNOT BE HELD THAT HE WAS NOT PAID COMPENSATION. THE LEAR NED AR OF THE ASSESSEE FURTHER STATED THAT ULTIMATELY IT WAS ONLY A CASE OF DISALLOWANCE OF CLAIM BUT NOT OF ESTABLISHMENT O F FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IT WAS CONTENDED THAT IF THE AO AFTER EXAMINING THE CLAIM OF THE ASSESSEE CONCLUDES THAT THE COMPENSATION CLAIME D IS NOT ALLOWABLE IN A PARTICULAR ASSESSMENT YEAR OR THAT T HE ASSESSEE IS NOT REQUIRED TO PAY THE COMPENSATION, THIS DOES NOT AMOUNT TO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. THE LEARNED AR, THEREFORE, SUBMITTED THAT T HERE WAS ITA NO. 335/HYD/10 M. SUBRAMANYAM 4 NO CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE AC T, AND RELIANCE WAS PLACED ON FEW CASE LAWS, WHICH WERE ME NTIONED BY THE CIT(A) IN HIS ORDER AT PAGE 5 OF THE CIT(A) ORDER. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS, 306 ITR 277 HELD THAT IN ORDER TO INVOKE SECTION 271(1)(C) OF THE ACT, THE EXISTENCE OF DISHONEST INTENTION AND D ELIBERATE FAILURE TO GIVE CORRECT PARTICULARS IS NOT NECESSAR Y. THE CIT(A) FINALLY HELD THAT THE ASSESSEE HAD FAILED TO DISCHA RGE HIS ONUS OF SUBSTANTIATING THE CLAIMS FOR EXPENDITURE AND IN VIEW OF EXPLANATION 1(B) OF 271(1)(C), THE AMOUNT ADDED AS INCOME OF THE ASSESSEE IS DEEMED TO BE CONCEALED INCOME. 8. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US R AISING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS BOT H ON FACTS AND IN LAW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER LEVYING PENALTY U/S 271(1)(C) OF RS. 4,36,770/-. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE PENALTY IS LEVIED ONLY ON DISALLOWANCE OF A CLA IM BUT NOT BECAUSE OF ANY CONCEALMENT OF INCOME OR FURNISH ING OF INACCURATE PARTICULARS AND THEREBY ERRED IN CONF IRMING THE PENALTY. 4. THE LEARNED CIT(A) ERRED IN RELYING ON THE DECIS ION OF SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES EV EN AFTER BRINGING TO HER NOTICE THE DECISION OF SUPREM E COURT IN THE RAJASTHAN SPINNING MILLS IN WHICH THE DECISI ON IN THE CASE OF DHARMENDRA TEXTILES IS CLARIFIED AND AL SO ERRED IN NOT FOLLOWING THE DECISION IN THE CASE OF HARYANA WAREHOUSING CORPN AND ERRED IN RELYING ON THE DECIS ION OF ITA NO. 335/HYD/10 M. SUBRAMANYAM 5 MP HIGH COURT WHICH RELIED ON K.P. MADHUSUDHAN WHIC H IS ON DIFFERENT FACTS. 9. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SHRI A.V. RAGHURAM REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 10. ON THE OTHER HAND, THE LEARNED DR SHRI K.J. RAO BESIDES RELYING UPON THE ORDERS OF THE LOWER AUTHORITIES, F ILED WRITTEN SUBMISSIONS OF CASE LAWS, WHICH ARE AS FOLLOWS: 1. CIT VS. JEEVAN LAL SHAH, 205 ITR 244 (SC) 2. CIT VS. GOLD COIN HEALTH FOOD PVT. LTD., 304 ITR 308(SC). 3. M. SHAMSUL HAMEED BATCHA ?VS. ITO, 292 ITR 585 (MAD.) 4. KUTTOOKARAN MACHINE TOOLS VS. ACIT & ANR., 313 I TR 413 (KER.) 5. KALPAKA BAZAAR VS. CIT, 313 ITR 414 (KER.) 6. INDUS ENGG. CO. AND ANR. VS. ACIT (INV.) & OTHER S, 323 ITR 302 (MUM.) 7. JCIT VS. SAHELI LEASING AND INDUSTRIES LTD., 324 ITR 170(SC). 8. MAHAL SINGH VS. ITO, 127 ITD 1 11. WE HAVE HEARD THE ARGUMENTS OF THE PARTIES, PER USED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE FACT THAT THE ITAT HAS NOT ALLOWED THE ASSESSEE S APPEAL ON MERITS WOULD NOT NECESSARILY JUSTIFY THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE AO HAD DISALLOWED THE CLA IM FOR COMPENSATION PAID FOR THE REASONS THAT I) AS PER TH E TERMS OF THE AGREEMENT, THE EVICTION OF TENANTS WAS TO BE TA KEN CARE BY THE PURCHASER, II) EVICTION IN THE CASE OF BHARGAVI LODGE WAS UNREALISTIC AS THE AMOUNT OF COMPENSATION WAS PAID TO THE SON OF THE ASSESSEE AND, III) SRINIVASA SILKS AND SAREE S CONTINUED AS TENANT IN THE SAME PREMISES EVEN AFTER THE SALES . ITA NO. 335/HYD/10 M. SUBRAMANYAM 6 CONSIDERING THE TOTALITY OF THE FACTS, THE AO DISAL LOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE PAYMEN TS MADE TO THE PARTIES WERE NOT SUBSTANTIATED BY THE ASSESS EE BY WAY OF PRODUCING DETAILS AND EVIDENCES TO PROVE THAT TH E PAYMENTS WERE, IN FACT, PAID TO THE PARTIES. ON THE SAME LIN ES, THE CIT(A) CONFIRMED THE ORDER OF THE AO. THE ITAT ULTI MATELY CONFIRMED THE DISALLOWANCE ON THE TECHNICAL GROUND THAT THE PAYMENTS DID NOT REALLY PERTAINING TO THE AY 2003-0 4 BUT THE SAME ARE PERTAINING TO THE AY 2004-05 AS THE SAME W ERE MADE IN APRIL, 2003. 12. FROM THE ORDERS OF THE LOWER AUTHORITIES AS WEL L AS THE ORDER OF THE ITAT DISMISSING THE CASE OF THE ASSESS EE ON MERITS, WE ARE UNABLE TO COME TO A CONCLUSION THAT THE ASSESSEE HAD CONCEALED HIS INCOME OR FURNISHED INAC CURATE PARTICULARS OF INCOME, AS ALL FACTS REGARDING HIS C LAIM WERE FILED BEFORE THE AO AND THE AO TOOK A CONSCIOUS DECISION OF NOT ALLOWING WHAT HAS BEEN CLAIMED. HOWEVER, IN OUR CON SIDERED VIEW, AFTER EXAMINING THE CLAIM OF THE ASSESSEE, TH E ITAT CONCLUDES THAT THE COMPENSATION CLAIMED IS NOT ALLO WABLE IN A PARTICULAR YEAR OR THE ASSESSEE IS NOT REQUIRED TO PAY COMPENSATION, WOULD NOT AMOUNT CONCEALMENT OR FURNI SHING OF INACCURATE PARTICULARS OF INCOME TO LEVY PENALTY U/ S 271(1)(C) OF THE ACT. IN THIS CONNECTION, WE REFER TO THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS LTD. [2010] 322 ITR 158(SC) WHEREIN THE APEX COURT 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, THERE HAS TO BE CONCEALMENT OF THE ITA NO. 335/HYD/10 M. SUBRAMANYAM 7 PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS U SED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SU CH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, 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 FALSE THERE IS NO QUESTIO N 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 INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 13. WE ALSO NOTE THAT IN RELIANCE PETROPRODUCTS (SUPRA) DECISION, THE RATIO OF THE DHARMENDRA TEXTILES (SUPRA) WHICH HAS BEEN RELIED ON BY THE CIT(A) HAS BEEN ANALYZED AND CLARIFIED WITH THE SUPREME COURT OBSERVING THAT THE DHARMENDRA TEXTILES (SUPRA) DECISION IS AN AUTHORITY ONLY FOR THE PROPOSITION T HAT ELEMENT OF MENS REA STANDS EXCLUDED FROM THE SCOPE OF S.271(1)(C) PROV ISIONS AND THAT THE CONDITIONS OF THE SECTION MUST EXIST BEFORE LEV Y OF PENALTY AND IT IS FOR THE REVENUE TO ESTABLISH THAT SUCH CONDITIONS E XIST. ITA NO. 335/HYD/10 M. SUBRAMANYAM 8 14. WE WOULD ALSO LIKE TO REFER A DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJIV GARG & ORS 313 ITR 256 IN WHICH THE HONBLE HIGH COURT HAS HELD AS UNDER:- PURUSANT TO THE NOTICE U/S 148 THE ASSESSEE FILED T HE REVISED RETURN OF INCOME SHOWING HIGHER INCOME. THE SAID RETURN OF INCOME WAS ACCOMPANIED BY A NOTE IN WHICH THE ASSESSEE SUBMITTED THAT HE SURRENDERED THE ENTIRE AMOUNT OF SALE PROCEEDS OF SHARES TO BUY PEACE OF M IND AND TO AVOID HAZARDS OF LITIGATION AND ALSO TO SAVE HIMSELF FROM ANY PENAL ACTION. LATER ON, ON THE BASIS OF RE VISED RETURN, THE ASSESSMENT WAS FRAMED AND THE RETURN SUBMITTED BY THE ASSESSEE WAS REGULARIZED AS IT IS. DURING THE COURSE OF ASSESSMENT, THE AFORESAID EXPLANATION GIVEN BY THE ASSESSEE WAS NEITHER REJECTED NOR WAS IT HEL D TO BE MALA FIDE. THE TRIBUNAL HAS RECORDED A PURE FIND ING OF FACT TO THE EFFECT THAT THE REVENUE HAS NOT PLACED ON RECORD ANY MATERIAL OR EVIDENCE TO DISCHARGE ITS BU RDEN OF PROVING CONCEALMENT. IN THE ASSESSMENT ORDER NO SUC H FINDING WAS RECORDED. THE DEPARTMENT HAS SIMPLY RES TED ITS CONCLUSION ON THE ACT OF THE ASSESSEE OF HAVING OFFERED ADDITIONAL INCOME IN THE RETURN FILED IN RESPONSE T O THE NOTICE ISSUED UNDER SECTION 148. THE TRIBUNAL HAS F URTHER HELD THAT THE ADDITIONAL INCOME SO OFFERED BY THE ASSESSEE WAS DONE IN GOOD FAITH AND TO BUY PEACE. THEREFORE, IN VIEW OF THE AFORESAID FINDING, THE TR IBUNAL WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE CIT(A), WHEREBY THE PENALTY IMPOSED U/S 271(1)(C) BY THE AO WAS ORDER TO BE DELETED. 15. WE WOULD ALSO LIKE TO REFER SOME ITAT DECISION S ON S.271(1)(C) NAMELY NITON VALVE INDUSTRIES (P.) LTD. VS. ACIT, [2009] 30 SOT 236 (MUM.), ITO VS. GACL FINANCE LTD. , [2009] 30 SOT 360 (MUM.) AND TWIN STAR JUPITER COOPERATIVE HSG. SOC.LTD., VS. ITO, [2009] 31 SOT 474 (MUM.) THE ITAT IN THE CASE OF M/S OASIS SECURITIES LTD. IN ITA NO. 846/M/08 FOR A Y 2002-03 VIDE ITS ORDER DATED 29 TH JANUARY, 2010 CONSIDERED ITS DECISION IN GACL LTD . ( SUPRA) AND OTHER DECISIONS OF ITAT ITA NO. 335/HYD/10 M. SUBRAMANYAM 9 (SUPRA) AND UPHELD THE ORDER OF THE CIT (A) WHO DIRECTED T HE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) WHILE HOLDING AS FOLLOWS: 7.3 NOW COMING TO THE MERITS OF THE CASE, WE NO TICED THAT THE AO LEVIED PENALTY U/S 271(1)(C) ON THE GRO UND THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME. WHAT IS INACCURATE PARTICULARS OF INCOME WI THIN THE MEANING OF PROVISIONS OF SECTION 271(1)(C) OF T HE ACT HAS BEEN DISCUSSED IN DETAILS BY THE ITAT MUMBAI BE NCH IN THE CASE OF MIMOSA INVESTMENT CO. PVT. LTD, IN I TA NO. 2983/MUM/07 FOR AY 2004-05 ORDER DATED 15.01.09. TH E SAID ORDER HAS BEEN FOLLOWED BY THE ITAT IN THE CA SE OF ITO VS. GACL LTD. IN ITA NO. 6528/M/05 VIDE ORDER D ATED 19.03.2009, THE DECISION CITED BY THE LEARNED AR. T HE FACTS OF THE CASE OF ITO VS. GACL LTD WERE THAT THE ASSESSEE CLAIMED LOSS AS LOSS FROM TRADING OF SHARE S. THE ASSESSING OFFICER TREATED THE SAID LOSS UNDER EXPLA NATION TO SECTION 73 AND TREATED THE SAME AS DEEMED SPECULATION LOSS. THE ASSESSING OFFICER HAS APPORTI ONED THE INTEREST AND OTHER EXPENSES ATTRIBUTABLE TO SPECULATION BUSINESS INCOME. PENALTY U/S 271(1)(C) LEVIED BY THE AO HAS BEEN CANCELLED BY THE ITAT FOLLOWING THEIR ANOTHER DECISION IN CASE OF MIMOSA INVESTMENT CO PV T LTD, ITA NO 2983/MUM/07 FOR AY 2004-05 ORDER DATED 15.01.09 WHEREIN IT WAS HELD THAT THE PROCEEDINGS U NDER SECTION 271(1) (C) CAN BE INITIATED ONLY IF THE A.O OR THE FIRST APPELLATE AUTHORITY IS SATISFIED IN THE COURS E OF ANY PROCEEDINGS UNDER THE ACT. IF HE IS SATISFIED AS PE R CLAUSE (C) THAT ANY PERSON HAS CONCEALED THE PARTICULARS O F HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF S UCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY THE SUM MENTIONED IN SUB-CLAUSE (III) OF CLAUSE (C). THE EXPRESSION USED IN CLAUSE (C) IS HAS CONC EALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCU RATE PARTICULARS OF SUCH INCOME. THEREFORE, BOTH IN CAS ES OF CONCEALMENT AND INACCURACY THE PHRASE PARTICULARS OF INCOME ARE USED. IT WILL BE NOTED THAT AS REGARDS CONCEALMENT, THE EXPRESSION IN CLAUSE (C) IS HAS CONCEALED THE PARTICULARS OF HIS INCOME AND NOT H AS CONCEALED HIS INCOME. THE EXPRESSIONS 'HAS CONCEAL ED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACC URATE PARTICULARS OF INCOME' HAVE NOT BEEN DEFINED EITHER IN ITA NO. 335/HYD/10 M. SUBRAMANYAM 10 SECTION 271(1)(C) OR ELSEWHERE IN THE ACT. THERE CA NNOT BE A STRAIGHT JACKET FORMULA FOR DETECTION OF THESE DEFAULTS OF CONCEALMENT OF PARTICULARS OR OF FURNIS HING INACCURATE PARTICULARS OF INCOME. IT DEPENDS UPON T HE FACTS OF THE EACH CASE. THERE WAS CONCEALMENT OR NO T IS, ORDINARILY, A QUESTION OF FACT. ONCE BEARING IN MIN D THE CORRECT PRINCIPLES COMES TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE ONUS, IT BECOMES A CONCLUSION OF FACT. SIMILARLY, WHETHER THE EXPLANAT ION OFFERED BY THE ASSESSEE WAS BONA FIDE OR NOT IS ALS O A QUESTION OF FACT. IN THE ASSESSMENT PROCEEDINGS THE ITO WHILE ASCERTAINING THE TOTAL INCOME CHARGEABLE TO T AX WOULD BE IN A POSITION TO DETECT THE SPECIFIC OR DE FINITE PARTICULARS OF INCOME CONCEALED OR INACCURATE PARTI CULARS ARE FURNISHED. WHERE IN THE CONSTITUENTS OF INCOME RETURNED, SUCH SPECIFIC OR DEFINITE PARTICULARS OF INCOME ARE DETECTED AS CONCEALED, THEN EVEN IN THE TOTAL I NCOME FIGURE TO THAT EXTENT THEY REFLECT, IT WOULD AMOUNT TO CONCEALMENT TO THAT EXTENT. IN THE SAME WAY WHERE SPECIFIC AND DEFINITE PARTICULARS OF INCOME ARE DET ECTED AS INACCURATE, THEN SUCH FIGURE WILL ALSO MAKE THE TOT AL INCOME INACCURATE IN PARTICULARS TO THE EXTENT IT D OES NOT INCLUDE SUCH INCOME. IN OTHER WORDS THE AO CANNOT I NVOKE PROVISION OF SECTION271 (1) (C) ON THE BASIS ROUTIN E AND GENERAL PRESUMPTIONS. WHETHER IT BE A CASE OF ONLY CONCEALMENT OR OF ONLY INACCURACY OF PARTICULARS OR BOTH, THE PARTICULARS OF INCOME SO VITIATED WOULD BE SPEC IFIC AND DEFINITE AND BE KNOWN IN THE ASSESSMENT PROCEEDINGS BY THE ITO, WHO ON BEING SATISFIED ABOUT EACH CONCEALM ENT OR INACCURACY OF PARTICULARS OF INCOME WOULD BE IN A POSITION TO INITIATE THE PENALTY PROCEEDINGS ON ONE OR BOTH OF THE GROUNDS OF DEFAULT AS MAY HAVE BEEN SPECIFIC ALLY AND DIRECTLY DETECTED. 7.4 IT WAS ALSO HELD THAT FROM THE SCHEME OF THE AC T, TWO IMPORTANT THINGS COME OUT ARE THAT IT IS THE DUTY O F THE ASSESSEE TO FURNISH PARTICULARS OF INCOME WHICH SHOULD BE AC CURATE PARTICULARS, SIMULTANEOUSLY HE HAS RIGHT TO CLAIM A LL EXEMPTIONS AND DEDUCTIONS PROVIDED IN THE ACT, ACCORDING TO TH E ASSESSEE FOR WHICH HE IS ENTITLED. THE DUTY OF THE ASSESSING OFF ICER IS TO ASSESS REAL AND CORRECT INCOME IN ACCORDANCE WITH L AW. THE CBDT IN ITS CIRCULAR NO. 14(XL35) OF 1955 DATED 11.04.19 55 STATED THAT OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVAN TAGES OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS, IT IS ON E OF THEIR DUTIES ITA NO. 335/HYD/10 M. SUBRAMANYAM 11 TO ASSIST A TAX PAYER IN EVERY REASONABLE WAY. ON T HE BASIS OF DETAILED DISCUSSIONS IN THIS REGARD THE ITAT OBSERV ED THAT AFTER FURNISHING PARTICULARS REGARDING DETERMINATIO N OF INCOME THE ASSESSEE HAS RIGHT TO CLAIM EXEMPTION AN D DEDUCTION, ACCORDING TO HIM WHICH ARE AS PER LAW .T HE ASSESSING OFFICER WHILE DISCHARGING HIS DUTY ALLOW OR DISALLOW ASSESSEES CLAIM AND ARRIVED AT A DIFFEREN T FIGURE OF TOTAL INCOME THEN THE TOTAL INCOME DECLARED BY T HE ASSESSEE, THAT CASE CANNOT BE SAID TO BE A CASE OF FURNISHING INACCURATE PARTICULARS OR CONCEALING OF PARTICULARS OF INCOME. 16. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE S UPREME COURT, HONBLE HIGH COURT AND THE ITAT DECISIONS CI TED ABOVE, AS WELL AS CONSIDERING THE FACTS OF THE CASE UNDER CONSIDERATION, WE ARE OF THE VIEW THAT PENALTY U/S 271(1)(C) CANNOT BE LEVIED ON THE ASSESSEE AND, HENCE, WE DEL ETE THE PENALTY OF RS. 4,36,770/- LEVIED BY THE AO AND SUST AINED BY THE CIT(A). 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 28/09/2012. SD- SD/- (D. KARUNAKARA RAO) (ASHAVIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:28 TH SEPTEMBER, 2012. KV ITA NO. 335/HYD/10 M. SUBRAMANYAM 12 COPY TO:- 1) SHRI M. SUBRAMANYAM, C/O K. VASANTKUMAR, ADVOCATE, 403, MANISHA TOWERS, 10-1-18/31, SHYAMNAGAR, HYDERABAD 500 004. 2) THE ACIT, CIRCLE 1, NELLORE, 3) THE CIT (A), GUNTUR 4) THE CIT, GUNTUR CHARGE, GUNTUR 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.