M/s. Shree Balaji Agro Industries, Delhi V. ACIT, New Delhi

ITA 3422/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7355 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 14-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Assessee Lawyers: KUNAL BHATIA
• Keywords: Business income; Principle of natural justice; Difference of opinion
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 3422 /DEL/ 2013 ASSESSMENT YEAR: 2005 - 06 M/S. BALAJI AGRO INDUSTRIES, 5586, 1 ST FLOOR, LAHORI GATE, NAYA BAZAR, DELHI VS. ACIT, CIRCLE - 20(1), NEW DELHI PAN : AADFS0803N (APPELLANT) (RESPONDENT) APPELLANT BY SH. KUNAL BHATIA, ADV. RESPONDENT BY SMT. ANIMA BARNWAL, SR.DR DATE OF HEARING 14.07.2016 DATE OF PRONOUNCEMENT 19.08.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) - XXII, NEW DELHI , FOR ASSESSMENT YEAR 2005 - 06, WHICH , ACCORDING TO SERIAL NO. 9 OF THE FORM NO. 36 , WAS COMMUNICATED TO AS SESSEE ON 03/04/13. IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED THE PENALTY U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 LEVIED BY THE ASSESSING OFFICER. THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ARE AS UNDER: 2 ITA NO. 3422/DEL/2013 AY: 2005 - 06 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXII, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE PENALTY PROCEEDINGS INITIATED U/S 271(L)(C) WITHOUT APPRECIATING THAT THE REMUNERATION PAID TO PARTNERS OF RS. 2,40,000/ - IS AS PER THE PARTNERSHIP DEED AND SINCE IN THIS YEAR THERE WAS LOSS FROM BUSINESS THE REMUNERATION TO PARTNERS WAS ALLOWABLE AT RS. 50,000/ - THEREFORE, BALANCE 1,90,000/ - WAS DISALLOWED WHICH IS A MATTER OF DIFFERENCE OF OPINION AND THERE IS NO CONCEALMENT OF I NCOME. THEREFORE, THE PENALTY IMPOSED U/S 271(L)(C) IS WRONG, ARBITRARY MID AGAINST THE NATURAL JUSTICE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT AS PER THE REMUNERATION CLAUSE OF THE PARTNERSHIP DEED ASSESSEE FIRM WAS REGULARLY CLAIMING THE REMUNERATION TO PARTNERS OF RS. 2,40,000/ - FROM LAST MANY YEARS AND IN ROUTINE THE SAME HAS BEEN CLAIMED THIS YEAR ALSO OUT OF WHICH THE LD. ASSISTANT COMMISSIONER HAS DISALLOWED THE EXCESS REMUNERATION OF RS. 1,90,000/ - WH ICH IS A MATTER OF DIFFERENCE OF OPINION AND HENCE THERE IS NO CONCEALMENT OF INCOME. THEREFORE, THE PENALTY IMPOSED IS ALTOGETHER INVALID, ILLEGAL, UNSUSTAINABLE AND UNSUSTAINABLE AND UNJUSTIFIED. 3. THAT THE PENALTY PROCEEDING U/S 271(1)(C) CAN BE INITIATED ONLY IN CASE OF CONCEALMENT OF INCOME OR INACCURATE PARTICULARS FURNISHED FOR INCOME WHEREAS IN THIS CASE THERE IS NO CONCEALMENT OF INCOME AND DISALLOWANCES MADE CANNOT BE TAKEN AS CONCEALMENT OF INCOME. THEREFORE, THE CONTENTION OF LEARNED ASSI STANT COMMISSIONER IS NOT SUSTAINABLE AND HENCE, THE PENALTY IMPOSED IS WRONG IN THE EYES OF LAW AND DOES NOT HOLD GOOD. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THERE IS NO MENSREA OR CONSCIOUS CONCEALMENT O N PART OF THE ASSESSEE FIRM IN CLAIMING THE EXCESS REMUNERATION PAID TO PARTNERS OF RS. 1,90,000/ - . HENCE, THE PENALTY IMPOSED IS NOT VALID IN THE EYES OF LAW, ARBITRARY, WRONG AND ILLEGAL. 3 ITA NO. 3422/DEL/2013 AY: 2005 - 06 5. THAT NEITHER THERE IS ANY FRAUDULENT INTENTION NOR ANY WILLFUL ACT ON PART OF THE ASSESSEE AND THE ASSESSEE HAS FURNISHED TRUE AND ACCURATE PARTICULARS OF INCOME. HENCE THERE IS NO CONCEALMENT OF INCOME END THEREFORE THE PENALTY IMPOSED IS WHOLLY UNTENABLE AND UNSUSTAINABLE. 6. THAT THE QUANTUM OF PENALTY IMPOSED AT THE RATE, IF 150% OF THE TAX SOUGHT TO BE EVADED IS HIGHLY EXCESSIVE, HARSH AND ARBITRARY. PRAYER: - THE ASSESSEE MOST RESPECTFULLY PRAYS YOUR HONOUR ON THE AFORESAID GROUNDS WHICH ARE DESCRIBED IN BRIEF AMONG OTHER DETAILED GROUNDS WHICH THE ASSESSEE MAY TAKE UP DURING THE COURSE OF THE HEARING TO KINDLY DELETE THE ADDITIONS MADE ALONG WITH INTEREST AND ALSO ALLOW THE APPROPRIATE RELIEF ON THE BASIS OF AFORESAID GROUNDS. 2. T HE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME D EC LARING TOTAL INCOME OF RS. 8,07, 546/ - ON 18/10/2005. IN THE SCRUTINY ASSESSMENT COMPLETED, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD SUFFERED A LOSS OF RS. 10, 2 0, 466/ - FROM BUSINESS, AND IT CLAIMED REM UNERATION TO PARTNERS AT RS. 2,40, 000/ - , WHE REAS LOOKING TO THE LOSS FROM THE BUSINESS ACTIVITY, THE ASSESSEE WAS ALLOWABLE REMUNERATION TO PARTNERS TO THE EXTENT OF RS. 50,000 ONLY. THEREFORE , HE DISALLOW ED THE BALANCE AMOUNT OF RS. 1,90, 000/ - AND INITIATED PENALTY P ROCEEDINGS UNDER SECTION 271(1)(C ) OF THE INCOME - TAX ACT , 1961 (FOR SHORT THE ACT ) . THE SAID DISALLOWANCE WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS). THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1) (C) OF THE ACT ON 18/03/2010 AMOUNTING TO RS. 1,06, 035/ - AT THE RATE OF 150% OF THE TAX SOUGHT TO BE 4 ITA NO. 3422/DEL/2013 AY: 2005 - 06 EVADED ON THE GROUND THAT THE ASSESSEE HAD KNOWINGLY, INTENTIONALLY AND FRAUDULENTLY CLAIMED EXCESSIVE REMUNERATION FROM RENTAL INCOME AND THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCE ALED THE INCOME. AGGRIEVED , THE ASSESSEE FILED APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) AND SUBMITTED THAT THERE WAS NO T ANY FRAUDULENT INTENTION , NOR ANY WI L LFUL ACT ON THE PART OF THE ASSESSEE AND THE ASSESSEE HAS FURNISHED TRUE AN D ACCURATE PARTICULARS OF INCOME AND THE REMUNERATION DEBITED TO PROFIT AND LOSS ACCOUNT WAS AS PER THE CLAUSES OF THE PARTNERSHIP DEED AND THE ASSESSEE FIRM WAS REGULARLY CLAIMING THE REMUNERATION TO PARTNERS IN PROFIT AND LOSS ACCOUNT FROM LAST MANY YEAR S . THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME T AX VS. REGENCY EXPRESS B UILDERS (P) LTD , (2008) 166 TAX MANN 269 , WHERE IT IS HELD THAT ON QUESTION WHETHER RENTAL INCOME RECEIVED BY THE AS SESSEE WAS TO BE ASSESSED UNDER HEAD INCOME FROM HOUSE PROPERTY OR UNDER BUSINESS INCOME , THE COMMISSIONER OF INCOME TAX(A PPEALS ) HELD THAT TWO VIEWS WERE POSSIBLE AND SINCE THERE WAS NO CLEAR AND DEFINITE INFERENCE COULD BE DRAWN , ONE WAY OR ANOTHER, THE ASSESSEE COULD NOT BE SAID TO HAVE CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME . HOWEVER , THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) UPHELD THE PENALTY LEVIED BY THE ASSESSING OFFICER WITH FOLLOWING OBSERVATIONS: 5 ITA NO. 3422/DEL/2013 AY: 2005 - 06 8.2 THE AS SESSEE HAS CLAIMED THAT THE HON BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 189 TAXMAN 322 (SC) HELD THAT WHETHER MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVEN UE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(L)(C) . IT IS SEEN THAT THE INCOME TAX ACT VIDE SECTION 40(B)(V)(A), VERY CLEARLY PROVIDED FOR THE YEAR UNDER CONSIDERATION THAT ONLY AN AMOUNT OF RS.50,000/ - CAN BE ALLOWED ON PAYMENT OF REMUN ERATION IN CASE OF A LOSS. HOWEVER, DESPITE THE UNAMBIGUOUS PROVISIONS OF THE STATUTE, THE APPELLANT SOUGHT TO EVADE THE TAXES BY CLAIMING EXCESS REMUNERATION. IT WAS NOT A CASE WHERE THE CLAIM WAS NOT ACCEPTED OR NOT ACCEPTABLE TO REVENUE, BUT RATHER IT W AS A CASE FOR WHICH IT COULD NOT HAVE EVEN BEEN THOUGHT THAT A CLAIM IN EXCESS OF RS.50,000/ - IN CASE OF LOSS COULD BE ALLOWED. 8.3 THE APPELLANT HAS ALSO RELIED UPON THE CASE OF COMMISSIONER OF INCOME TAX VS. REGENCY EXPRESS BUILDERS P. LTD. (2008) 166 TAXMAN 269, WHERE IT WAS HELD BY HON BLE DELHI HIGH COURT THAT THE COMMISSIONER (APPEALS) HELD THAT TWO VIEWS WERE POSSIBLE. HOW EVER, IN THE CASE UNDER CONSIDERATION THERE WAS NO WAY IN WHICH ANY OTHER VIEW WAS POSSIBLE AND THUS THE FACTS OF THE CASE ARE ENTIRELY DIFFERENT AND THUS THE FINDING OF THE HON BLE DELHI HIGH COURT AGAIN CANNOT GIVE ANY RELIEF TO THE APPELLANT. 3. A GGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS OF APPEAL , A S REPRODUCED ABOVE. 4. THE EFFECTIVE GROUND OF THE ASSESSEE IS AGAINST THE PENALTY UNDER 271(1) (C) OF THE ACT LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS). 4.1 THE LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT : 6 ITA NO. 3422/DEL/2013 AY: 2005 - 06 (I) THERE WAS NO CONCEALMENT OF INCOME AND NO LOSS OF REVENUE AS THE PARTNERS HAVE CONSID ERED THE REMUNERATION OF RS. 2,40, 000/ - IN THEIR RESPECTIVE INCOME TAX RETURNS AND PAID TAX @ OF 30%, THEREFORE , INTENTION TO EVADE TAX WAS ABSENT AND THERE HAD BEEN DOUBLE TAXATION OF THE SAID REMUNERATION IN THE HANDS OF THE ASSESSEE AS WELL AS IN THE HANDS OF PARTNERS, HENCE , LEVYING A PENALT Y WAS NOT JUSTIFIED. (II) A S PER THE REMUNERATION CLAUSE OF THE PARTNERSHIP DEED , ASSESSEE WAS REGULARLY CLAIMING THE REM UNERATION TO PARTNERS OF RS. 2,40,000/ - FOR LAST MANY YEARS AND HAS BEEN ASSESSED AND ALLOWED AND SAME HAS BEEN CLAIMED IN THE YEAR UNDER CO NSIDERATION ALSO. (III) THE ACCOUNTS OF THE ASSESSE E WERE AUDITED UNDER SECTION 44 A B OF THE INCOME - TAX ACT , 1961 AND THE A UDITOR DID NOT DISALLOW THE REMUNERATION IN HIS TAX AUDIT REPORT AND SO THE ASSESSEE FAILED TO ADD BACK THE EXCESS CLAIM OF THE REMUNERATION. (IV) NO PENALT Y CAN BE LEVIED IN CASE OF THE B ONAFIDE MISTAKE AS HELD BY THE HON BLE SUPREME COURT IN THE CASE OF PWC (PRIVATE) L IMITED VS. CIT KOLKATA , (2012) 25 TAXMANN 400. (V) BY NO STRETCH OF IMAGINATION, MAKING OF AN INCORRECT CLAIM IN LAW TANTA MOUNT S TO FURNISHING OF INACCURATE PARTICULARS. MERELY , BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT 7 ITA NO. 3422/DEL/2013 AY: 2005 - 06 ACCEPTED OR WAS NOT ACCEPTABLE TO THE R EVENUE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER S ECTION 271(1)(C) OF THE ACT A S HELD BY THE HON BLE APEX C OURT IN THE CASE OF CIT VS. R ELIANCE PETROPRODUCTS , (2010) 189 TAXMANN 322 (SC) 4.2 O N THE OTHER H AND, THE LEARNED SENIOR D EPARTMENTAL R EPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 4.3 WE HAVE HEARD THE RIVAL S UBMISSION AND PERUSED THE MATERIAL ON RECORD, INCLUDING THE ORDERS OF THE LOWER AUTHORITIES. WE FIND FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FIRM, WHICH IS AVAILABLE AT PAGE 4 OF THE ASSESSEE S PAPER BOOK, THAT THE ASSESSEE CLAIMED REM UNERATION TO PARTNERS OF RS. 2,40, 000/ - . THIS INFORMATION WAS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER. ACCORDING TO PROFIT AND LOSS ACCOUNT, THERE WAS A N ET PROFIT OF RS. 11,91, 033/ - DURING THE YEAR UNDER CONSIDERATION. IN THE RETURN OF INCOME FILED, THE ASSE SSEE REDUC ED THE RENTAL INCOME OF RS. 26,16, 000/ - OUT OF THE NET PROFIT AND OFFERED THE SAME UNDER THE HEAD INCOME FROM HOUSE PROPERTY , WHICH RESULT ED INTO A LOSS OF RS. 10,20, 466/ - UNDER THE HEAD PROFIT AND GAINS OF BUSINESS AND PROFESSION . IN VIEW OF LOSS UNDER THE HEAD PROFIT AND GAINS OF BUSINESS/PROFESSION , THE REMUNERATION TO PARTNER WAS ALLOWABLE ONLY TO THE EXTENT OF RS. 50,000/ - IN TERMS OF SECTION 40(B)(V) OF THE ACT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. BEFORE US , THE LEARNED AUTH ORISED R EPRESENTATIVE OF THE ASSESSEE HAS CONTENDED THAT THE CASE OF THE ASSESS EE WAS AUDITED UNDER SECTION 44 AB OF THE ACT , HOWEVER , THE 8 ITA NO. 3422/DEL/2013 AY: 2005 - 06 LEARNED A UDITOR DID NOT DISALLOW THE EXCESS CLAIM OF THE REMUNERATION. DUE TO THE REASON , THE ASSESSEE CLAIMED THE REM UNERATION AS PER THE AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT AND ALSO PAID TAXES IN THE HANDS OF THE PARTNER ON THE REMUNERATION RECEIVED BY THEM . THIS FACT HAS NOT BEEN DISPUTED BY THE LEARNED SENIOR DEPARTMENTAL R EPRESENTATIVE . WE FIND THAT THE ASS ESSEE HAS OFFERED EXPLANATION IN RESPECT OF THE FACTS MATERIAL TO THE COMPUTATION OF INCOME AND WHICH HAS NOT BEEN FOUND TO BE FALSE BY THE ASSESSING OFFICER. THE ASSESSEE HAS SUBSTANTIATED THE EXPLANATION AND PROVED THAT THE EXPLANATION FILED IS BONAFIDE AND ALL THE FACTS AND MATERIAL RELATED TO COMPUTATION OF TOTAL INCOME HAS BEEN DISCLOSED BY THE ASSESSEE. IN VIEW OF ABOVE, IN OUR CONSIDERED OPINION, IN THE CASE OF THE ASSESSEE, THE E XPL ANATION - I TO THE SECTION 271(1)(C) OF THE ACT IS NOT ATTRACTED. THOU GH THE ASSESSING OFFICER HAS NOT ALLOWED THE CLAIM OF THE ASSESSEE OF THE EXCESS REMUNERATION, BUT ALL THE DOCUMENTS IN RESPECT OF THE CLAIM WERE PROVIDED BY THE ASSESSEE IN ASSESSMENT PROCEEDINGS AND IN THE PENALTY PROCEEDI NGS THE ASSESSEE EXPLAINED HIS B ONAFIDE IN CLAIMING THE REMUNERATION. BEFORE US ALSO , LEARNED AUTHORISED R EPRESENTATIVE OF THE ASSESSEE HAS EXPLAINED THAT THE LEARNED A UDITOR DID NOT POINT OUT IN A UDIT REPORTS UNDER SECTION 44 AB OF THE ACT ALLOWABILITY OF THE REMUNERATION TO PARTNERS TO THE EXTENT OF RS. 50,000/ - ONLY AND , BECAUSE OF WHICH, THE ASSESSEE HAS PAID TAX ON THE REMUNERATION PAID TO THE PARTNERS AND THE DISALLOWANCE HAS ALSO BEEN SUSTAINED RESULTING INTO DOUBLE TAXATION ON THE REMUNERATION P AID TO THE PARTNERS. THIS 9 ITA NO. 3422/DEL/2013 AY: 2005 - 06 EXPLAINS THE BONA FIDE OF THE ASSESSEE IN CLAIMING THE REMUNERATION TO THE PARTNERS, WHICH IS FOUND TO BE EX CESS BY THE ASSESSING OFFICER. WE FIND THAT IN THE CASE OF COMMISSIONER OF INCOME T AX, AHMEDABAD VS. R ELIANCE PETROPRODUCTS (P) LTD (SUPRA), THE HON BLE APEX C OURT HAS HELD THAT WHEN THE DETAIL S SUPPLIED BY THE ASSESSEE ARE NOT FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE , THERE WAS NO QUESTION OF INVITING PENAL TY UNDER SECTION 271(1)(C) OF THE ACT. THE RELEVANT FINDING S OF THE HON BLE SUPREME COURT ARE REPRODUCED AS UNDER: 9. WE ARE NOT CONCERNED IN THE PRESENT CASE W ITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTION ARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS: - 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT'. WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DE TAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 10. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME 10 ITA NO. 3422/DEL/2013 AY: 2005 - 06 WHICH DOES NOT FORM PART OF THE T OTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSES SEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (I I) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY U NDER SECTION 271(1)(C) . IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UN DER SECTION 271(1)(C) . THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 4.4 T HUS THE HON BLE SUPREME COURT HAS HELD THAT WHERE THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME , IN ITS RETURN , WHICH THEMSELVES WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS CONCEALMENT OF INCOME ON ITS PART AND MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH HAS NOT BEEN ACC EPTED BY THE R EVENUE , CANNOT LEAD TO THE LEVY PENALTY UNDER SECTION 271(1) (C) OF THE ACT. 11 ITA NO. 3422/DEL/2013 AY: 2005 - 06 4.5 IN VIEW OF ABOVE DISCUSSION, R ESPECTFULLY FOLLOWI NG THE DECISION IN THE CASE OF RELIANCE PETROPRO DUCTS PRIVATE L IMITED (SUPRA) , WE HOLD THAT NO PENALTY UNDER SECTION 271( 1)(C ) OF THE ACT IS LEVIABLE IN RESPECT OF EXCESS RE MUNERATION TO PARTNERS OF RS. 1 ,90,000/ - CLAIMED BY THE ASSESSEE. THE GROUNDS OF THE APPEAL ARE ACCORDINGLY ALLOWED. 5. IN THE RES ULT , APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST , 2016 . SD/ - SD/ - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH AUGUST , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI