Aum Aluminium Pvt.Ltd., Dist.Panchmahal V. The ACIT., Panchmahal Circle, Godhra

ITA 3512/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0352 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-06-2010
• Assessment Year: 1995-1996
• Appeal Filed On: 17-08-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE S HRI N.S. SAINI , A.M.) I.T.A. NO. 3512/AHD./2007 ASSESSMENT YEAR : 1995-1996 AUM ALUMINIUM PVT. LTD., - VS.- ASSISTANT COMMISSIONER OF INCOME TAX, DIST. PANCHMAHALS (PAN : AACCA 3974 G) PANCHM AHAL CIRCLE, GODHRA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BANDISH SOPARKA R RESPONDENT BY : SHRI GAURAV BATHAM, D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 31.05.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA CONF IRMING THE PENALTY UNDER SECTION 271(1)(C) ON RS.1,31,508/- [RS.94,089/- + RS.37,419 /-] FOR THE ASSESSMENT YEAR 1995-96. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.6,86,045/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 25.03.1998, WHEREIN HE MADE SEVERAL ADDITIONS AND DISALLOWANCES, WHICH INTER ALIA, INCL UDE THE ADDITION ON DISALLOWANCE OF AMOUNT WRITTEN OFF ON ACCOUNT OF INSURANCE CLAIM AMOUNTING TO RS.2,45,064/- AND BAD DEBTS WRITTEN OFF AMOUNTING TO RS.75,419/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. IN QUANTUM APPEAL, THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) REDUCED THE AMOUNT ON ACCOUNT OF BAD DEBTS WRITTEN OFF TO RS.37 ,419/- AS AGAINST RS.75,419/-. 3.1. IN REPLY TO SHOW CAUSE NOTICE ISSUED BEFORE LE VYING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE SUBMITTED THAT IT HAS NEITHER CONCEALED PA RTICULARS OF INCOME NOR FURNISHED INACCURATE 2 ITA NO. 3512/AHD/2007 PARTICULARS THEREOF. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND TOOK THE VIEW THAT THE ASSESSEE WILLFULLY CONCEALED PARTICUL ARS OF ITS INCOME IN RESPECT OF WRITTEN OFF OF CLAIM OF INSURANCE AT RS.2,54,063/- AND INCORRECT C LAIM FOR BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS.37,419/-. HE WORKED OUT THE MINIMUM PENALTY LEVI ABLE ON BOTH THESE AMOUNTS AT RS.1,34,082/- BEING 100% OF TAX SOUGHT TO BE EVADED AND LEVIED THE PENALTY UNDER SECTION 271(1)(C). 4. ON APPEAL IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) TOOK THE VIEW THAT PENALTY IS IMPOSABLE ON RS.1,31, 508/- [RS.94,089 + RS.37,419/-]. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS THAT INSURANCE COMPANY HAD PAID RS.73,410/- TOWARDS CLAIM OF RS.2, 33,385/- FOR REPAIRS TO THE DG SET. IN OTHER WORDS, WRITE OFF CLAIM TO THE EXTENT OF RS.1,59,975 /- [RS.2,33,385/- MINUS RS.73,410/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD TH AT IT IS SUBSTANTIATED BY DOCUMENTS. IN RESPECT OF BALANCE WRITE OFF CLAIM OF RS.94,089/- [ RS.2,54,064 MINIS RS.1,59,975/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT N O COGENT EXPLANATION COULD BE FURNISHED BY THE ASSESSEE EXCEPT FOR MAINTAINING THAT IT WAS THE DECISION AND JUDGMENT OF MANAGEMENT. ACCORDINGLY HE TOOK THE VIEW THAT THE CLAIM OF RS.9 4,089/- IS NOT SUBSTANTIATED AND THE SAID AMOUNT IS THEREFORE, AMENABLY FOR LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 4.1. IN RESPECT OF BAD DEBTS, HE REFERRED TO THE FI NDING OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN QUANTUM APPEAL, WHICH IS AS UNDER : - THE APPELLANTS CLAIM THAT THE BILLS RAISED BY ADI TYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORPN. WERE MISPLACED AND BECAU SE OF THAT THIS SITUATION HAS ARISEN CANNOT BE RELIED ON. HENCE, TH E ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE AFTER DEDUCTI NG RS.36,000/- + RS.2,000/- (TOTAL RS.38,000/-) FROM THE TOTAL DISAL LOWANCE MADE. 5. ON THE BASIS OF ABOVE AND REASONING GIVEN IN THE ASSESSMENT ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER TOOK THE VIEW THAT BILLS RAISED BY ADITYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORP ORATION WERE MISPLACED OR LOST. IN SUCH A SITUATION, THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTA NTIATE ITS ASSERTION OF BAD DEBTS AND ALSO COULD PROVE THAT EXPLANATION WAS BONAFIDE. IN THIS MANNER , THE LEARNED COMMISSIONER OF INCOME 3 ITA NO. 3512/AHD/2007 TAX(APPEALS) TOOK THE VIEW THAT PENALTY UNDER SECTI ON 271(1)(C) IS EXIGIBLE IN RESPECT OF RS.37,419/-. AGGRIEVED BY THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI BANDISH SOPARKAR, LD. COUNSEL APPEARED AND CONTENDED THAT THE ASSESSEE HAS NEITHE R CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. ALL THE F ACTS WERE DISCLOSED IN THE RETURN OF INCOME. ON APPRECIATION OF EVIDENCES/ NON-AVAILABILITY OF EVID ENCES, THE ADDITIONS WERE CONFIRMED IN QUANTUM APPEAL. IN THESE FACTS AND CIRCUMSTANCES, T HE PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. IN SUPPORT OF THIS, RELIANCE WAS PLACED O N THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPOR TED IN [2010] 322 ITR 158 (SC). 7. ON THE OTHER HAND, SHRI GAURAV BATHAM, LD. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BOTH THE DEDUCT IONS CLAIMED BY THE ASSESSEE WERE BONAFIDE WHICH IS EVIDENT FROM THE REASONING RECORDED IN QUA NTUM APPEAL. THE COMPLETE FACTS RELATING TO BOTH THE ITEMS OF ADDITIONS/ DISALLOWANCES WERE DIS CLOSED IN THE BOOKS OF ACCOUNTS AND ALSO IN THE RETURN OF INCOME. BOTH THE CLAIMS MADE BY THE ASSES SEE WERE BONAFIDE. IN SUCH CIRCUMSTANCES, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. TH IS VIEW IS ALSO SUPPORTED BY THE RECENT JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THE HON'BLE SU PREME COURT HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULAR S OF INCOME. THE HEAD-NOTES OF THE SAID DECISION READS 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 H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE 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 F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF 4 ITA NO. 3512/AHD/2007 IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T 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 DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS 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 CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D 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 MER E 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. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . 8.1. THE EXPLANATION (1) TO SECTION 271(1)(C) IS NO T APPLICABLE BECAUSE THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE MISCHIEF OF MAIN PROVISI ON OF SECTION 271(1)(C) OF THE I.T. ACT, 1961. MERE REJECTION OF ASSESSEES CLAIM IS NOT SUFFICIEN T TO HOLD THE ASSESSEE TO BE GUILTY OF CONCEALMENT. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SARABHAI CHEMICAL (P) LTD. [2002] 257 ITR 355 (GUJ.) HELD AS UNDER :- THE DEEMING FICTION THAT THE ADDED/ DISALLOWED AMO UNTS REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED CONTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THAT WAS GIVEN BY THE ASSESSEE IN THE Q UANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE AND (II) IF HE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME. IN CASES WHERE EXPLANATION WAS OFFERED, BUT WAS REJECTED AS IT COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE, THERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLOWED AND SUCH ASSESSEE CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL F ACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME DUR ING THE QUANTUM PROCEEDINGS. 9. IN VIEW OF THE FOREGOING, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE IN RESPECT OF INSURANCE CLAIM AND BAD DEBTS WRITTEN OFF. WE, THER EFORE, CANCEL THE PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON RS.1 ,31,508/- [RS.94,089/- + RS.37,419/-]. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 02.08.2 010 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/08/2010 5 ITA NO. 3512/AHD/2007 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S. IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE S HRI N.S. SAINI , A.M.) I.T.A. NO. 3512/AHD./2007 ASSESSMENT YEAR : 1995-1996 AUM ALUMINIUM PVT. LTD., - VS.- ASSISTANT COMMISSIONER OF INCOME TAX, DIST. PANCHMAHALS (PAN : AACCA 3974 G) PANCHM AHAL CIRCLE, GODHRA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BANDISH SOPARKA R RESPONDENT BY : SHRI GAURAV BATHAM, D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 31.05.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA CONF IRMING THE PENALTY UNDER SECTION 271(1)(C) ON RS.1,31,508/- [RS.94,089/- + RS.37,419 /-] FOR THE ASSESSMENT YEAR 1995-96. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.6,86,045/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 25.03.1998, WHEREIN HE MADE SEVERAL ADDITIONS AND DISALLOWANCES, WHICH INTER ALIA, INCL UDE THE ADDITION ON DISALLOWANCE OF AMOUNT WRITTEN OFF ON ACCOUNT OF INSURANCE CLAIM AMOUNTING TO RS.2,45,064/- AND BAD DEBTS WRITTEN OFF AMOUNTING TO RS.75,419/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. IN QUANTUM APPEAL, THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) REDUCED THE AMOUNT ON ACCOUNT OF BAD DEBTS WRITTEN OFF TO RS.37 ,419/- AS AGAINST RS.75,419/-. 3.1. IN REPLY TO SHOW CAUSE NOTICE ISSUED BEFORE LE VYING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE SUBMITTED THAT IT HAS NEITHER CONCEALED PA RTICULARS OF INCOME NOR FURNISHED INACCURATE 2 ITA NO. 3512/AHD/2007 PARTICULARS THEREOF. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND TOOK THE VIEW THAT THE ASSESSEE WILLFULLY CONCEALED PARTICUL ARS OF ITS INCOME IN RESPECT OF WRITTEN OFF OF CLAIM OF INSURANCE AT RS.2,54,063/- AND INCORRECT C LAIM FOR BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS.37,419/-. HE WORKED OUT THE MINIMUM PENALTY LEVI ABLE ON BOTH THESE AMOUNTS AT RS.1,34,082/- BEING 100% OF TAX SOUGHT TO BE EVADED AND LEVIED THE PENALTY UNDER SECTION 271(1)(C). 4. ON APPEAL IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) TOOK THE VIEW THAT PENALTY IS IMPOSABLE ON RS.1,31, 508/- [RS.94,089 + RS.37,419/-]. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS THAT INSURANCE COMPANY HAD PAID RS.73,410/- TOWARDS CLAIM OF RS.2, 33,385/- FOR REPAIRS TO THE DG SET. IN OTHER WORDS, WRITE OFF CLAIM TO THE EXTENT OF RS.1,59,975 /- [RS.2,33,385/- MINUS RS.73,410/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD TH AT IT IS SUBSTANTIATED BY DOCUMENTS. IN RESPECT OF BALANCE WRITE OFF CLAIM OF RS.94,089/- [ RS.2,54,064 MINIS RS.1,59,975/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT N O COGENT EXPLANATION COULD BE FURNISHED BY THE ASSESSEE EXCEPT FOR MAINTAINING THAT IT WAS THE DECISION AND JUDGMENT OF MANAGEMENT. ACCORDINGLY HE TOOK THE VIEW THAT THE CLAIM OF RS.9 4,089/- IS NOT SUBSTANTIATED AND THE SAID AMOUNT IS THEREFORE, AMENABLY FOR LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 4.1. IN RESPECT OF BAD DEBTS, HE REFERRED TO THE FI NDING OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN QUANTUM APPEAL, WHICH IS AS UNDER : - THE APPELLANTS CLAIM THAT THE BILLS RAISED BY ADI TYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORPN. WERE MISPLACED AND BECAU SE OF THAT THIS SITUATION HAS ARISEN CANNOT BE RELIED ON. HENCE, TH E ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE AFTER DEDUCTI NG RS.36,000/- + RS.2,000/- (TOTAL RS.38,000/-) FROM THE TOTAL DISAL LOWANCE MADE. 5. ON THE BASIS OF ABOVE AND REASONING GIVEN IN THE ASSESSMENT ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER TOOK THE VIEW THAT BILLS RAISED BY ADITYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORP ORATION WERE MISPLACED OR LOST. IN SUCH A SITUATION, THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTA NTIATE ITS ASSERTION OF BAD DEBTS AND ALSO COULD PROVE THAT EXPLANATION WAS BONAFIDE. IN THIS MANNER , THE LEARNED COMMISSIONER OF INCOME 3 ITA NO. 3512/AHD/2007 TAX(APPEALS) TOOK THE VIEW THAT PENALTY UNDER SECTI ON 271(1)(C) IS EXIGIBLE IN RESPECT OF RS.37,419/-. AGGRIEVED BY THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI BANDISH SOPARKAR, LD. COUNSEL APPEARED AND CONTENDED THAT THE ASSESSEE HAS NEITHE R CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. ALL THE F ACTS WERE DISCLOSED IN THE RETURN OF INCOME. ON APPRECIATION OF EVIDENCES/ NON-AVAILABILITY OF EVID ENCES, THE ADDITIONS WERE CONFIRMED IN QUANTUM APPEAL. IN THESE FACTS AND CIRCUMSTANCES, T HE PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. IN SUPPORT OF THIS, RELIANCE WAS PLACED O N THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPOR TED IN [2010] 322 ITR 158 (SC). 7. ON THE OTHER HAND, SHRI GAURAV BATHAM, LD. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BOTH THE DEDUCT IONS CLAIMED BY THE ASSESSEE WERE BONAFIDE WHICH IS EVIDENT FROM THE REASONING RECORDED IN QUA NTUM APPEAL. THE COMPLETE FACTS RELATING TO BOTH THE ITEMS OF ADDITIONS/ DISALLOWANCES WERE DIS CLOSED IN THE BOOKS OF ACCOUNTS AND ALSO IN THE RETURN OF INCOME. BOTH THE CLAIMS MADE BY THE ASSES SEE WERE BONAFIDE. IN SUCH CIRCUMSTANCES, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. TH IS VIEW IS ALSO SUPPORTED BY THE RECENT JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THE HON'BLE SU PREME COURT HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULAR S OF INCOME. THE HEAD-NOTES OF THE SAID DECISION READS 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 H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE 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 F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF 4 ITA NO. 3512/AHD/2007 IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T 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 DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS 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 CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D 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 MER E 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. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . 8.1. THE EXPLANATION (1) TO SECTION 271(1)(C) IS NO T APPLICABLE BECAUSE THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE MISCHIEF OF MAIN PROVISI ON OF SECTION 271(1)(C) OF THE I.T. ACT, 1961. MERE REJECTION OF ASSESSEES CLAIM IS NOT SUFFICIEN T TO HOLD THE ASSESSEE TO BE GUILTY OF CONCEALMENT. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SARABHAI CHEMICAL (P) LTD. [2002] 257 ITR 355 (GUJ.) HELD AS UNDER :- THE DEEMING FICTION THAT THE ADDED/ DISALLOWED AMO UNTS REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED CONTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THAT WAS GIVEN BY THE ASSESSEE IN THE Q UANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE AND (II) IF HE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME. IN CASES WHERE EXPLANATION WAS OFFERED, BUT WAS REJECTED AS IT COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE, THERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLOWED AND SUCH ASSESSEE CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL F ACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME DUR ING THE QUANTUM PROCEEDINGS. 9. IN VIEW OF THE FOREGOING, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE IN RESPECT OF INSURANCE CLAIM AND BAD DEBTS WRITTEN OFF. WE, THER EFORE, CANCEL THE PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON RS.1 ,31,508/- [RS.94,089/- + RS.37,419/-]. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 02.08.2 010 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/08/2010 5 ITA NO. 3512/AHD/2007 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S. IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON'BLE S HRI N.S. SAINI , A.M.) I.T.A. NO. 3512/AHD./2007 ASSESSMENT YEAR : 1995-1996 AUM ALUMINIUM PVT. LTD., - VS.- ASSISTANT COMMISSIONER OF INCOME TAX, DIST. PANCHMAHALS (PAN : AACCA 3974 G) PANCHM AHAL CIRCLE, GODHRA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BANDISH SOPARKA R RESPONDENT BY : SHRI GAURAV BATHAM, D. R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 31.05.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI, BARODA CONF IRMING THE PENALTY UNDER SECTION 271(1)(C) ON RS.1,31,508/- [RS.94,089/- + RS.37,419 /-] FOR THE ASSESSMENT YEAR 1995-96. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A COMPANY. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.6,86,045/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 25.03.1998, WHEREIN HE MADE SEVERAL ADDITIONS AND DISALLOWANCES, WHICH INTER ALIA, INCL UDE THE ADDITION ON DISALLOWANCE OF AMOUNT WRITTEN OFF ON ACCOUNT OF INSURANCE CLAIM AMOUNTING TO RS.2,45,064/- AND BAD DEBTS WRITTEN OFF AMOUNTING TO RS.75,419/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALSO INITIATED PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 . 3. IN QUANTUM APPEAL, THE LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) REDUCED THE AMOUNT ON ACCOUNT OF BAD DEBTS WRITTEN OFF TO RS.37 ,419/- AS AGAINST RS.75,419/-. 3.1. IN REPLY TO SHOW CAUSE NOTICE ISSUED BEFORE LE VYING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE SUBMITTED THAT IT HAS NEITHER CONCEALED PA RTICULARS OF INCOME NOR FURNISHED INACCURATE 2 ITA NO. 3512/AHD/2007 PARTICULARS THEREOF. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE AND TOOK THE VIEW THAT THE ASSESSEE WILLFULLY CONCEALED PARTICUL ARS OF ITS INCOME IN RESPECT OF WRITTEN OFF OF CLAIM OF INSURANCE AT RS.2,54,063/- AND INCORRECT C LAIM FOR BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS.37,419/-. HE WORKED OUT THE MINIMUM PENALTY LEVI ABLE ON BOTH THESE AMOUNTS AT RS.1,34,082/- BEING 100% OF TAX SOUGHT TO BE EVADED AND LEVIED THE PENALTY UNDER SECTION 271(1)(C). 4. ON APPEAL IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) TOOK THE VIEW THAT PENALTY IS IMPOSABLE ON RS.1,31, 508/- [RS.94,089 + RS.37,419/-]. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS THAT INSURANCE COMPANY HAD PAID RS.73,410/- TOWARDS CLAIM OF RS.2, 33,385/- FOR REPAIRS TO THE DG SET. IN OTHER WORDS, WRITE OFF CLAIM TO THE EXTENT OF RS.1,59,975 /- [RS.2,33,385/- MINUS RS.73,410/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD TH AT IT IS SUBSTANTIATED BY DOCUMENTS. IN RESPECT OF BALANCE WRITE OFF CLAIM OF RS.94,089/- [ RS.2,54,064 MINIS RS.1,59,975/-], THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT N O COGENT EXPLANATION COULD BE FURNISHED BY THE ASSESSEE EXCEPT FOR MAINTAINING THAT IT WAS THE DECISION AND JUDGMENT OF MANAGEMENT. ACCORDINGLY HE TOOK THE VIEW THAT THE CLAIM OF RS.9 4,089/- IS NOT SUBSTANTIATED AND THE SAID AMOUNT IS THEREFORE, AMENABLY FOR LEVY OF PENALTY U NDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 4.1. IN RESPECT OF BAD DEBTS, HE REFERRED TO THE FI NDING OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN QUANTUM APPEAL, WHICH IS AS UNDER : - THE APPELLANTS CLAIM THAT THE BILLS RAISED BY ADI TYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORPN. WERE MISPLACED AND BECAU SE OF THAT THIS SITUATION HAS ARISEN CANNOT BE RELIED ON. HENCE, TH E ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE AFTER DEDUCTI NG RS.36,000/- + RS.2,000/- (TOTAL RS.38,000/-) FROM THE TOTAL DISAL LOWANCE MADE. 5. ON THE BASIS OF ABOVE AND REASONING GIVEN IN THE ASSESSMENT ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER TOOK THE VIEW THAT BILLS RAISED BY ADITYA ALUMINIUM PVT. LTD. AND GUJARAT CASTING CORP ORATION WERE MISPLACED OR LOST. IN SUCH A SITUATION, THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTA NTIATE ITS ASSERTION OF BAD DEBTS AND ALSO COULD PROVE THAT EXPLANATION WAS BONAFIDE. IN THIS MANNER , THE LEARNED COMMISSIONER OF INCOME 3 ITA NO. 3512/AHD/2007 TAX(APPEALS) TOOK THE VIEW THAT PENALTY UNDER SECTI ON 271(1)(C) IS EXIGIBLE IN RESPECT OF RS.37,419/-. AGGRIEVED BY THE ORDER OF LEARNED COMM ISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF A SSESSEE SHRI BANDISH SOPARKAR, LD. COUNSEL APPEARED AND CONTENDED THAT THE ASSESSEE HAS NEITHE R CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. ALL THE F ACTS WERE DISCLOSED IN THE RETURN OF INCOME. ON APPRECIATION OF EVIDENCES/ NON-AVAILABILITY OF EVID ENCES, THE ADDITIONS WERE CONFIRMED IN QUANTUM APPEAL. IN THESE FACTS AND CIRCUMSTANCES, T HE PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. IN SUPPORT OF THIS, RELIANCE WAS PLACED O N THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. REPOR TED IN [2010] 322 ITR 158 (SC). 7. ON THE OTHER HAND, SHRI GAURAV BATHAM, LD. D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED COMMISSIO NER OF INCOME TAX(APPEALS). 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT BOTH THE DEDUCT IONS CLAIMED BY THE ASSESSEE WERE BONAFIDE WHICH IS EVIDENT FROM THE REASONING RECORDED IN QUA NTUM APPEAL. THE COMPLETE FACTS RELATING TO BOTH THE ITEMS OF ADDITIONS/ DISALLOWANCES WERE DIS CLOSED IN THE BOOKS OF ACCOUNTS AND ALSO IN THE RETURN OF INCOME. BOTH THE CLAIMS MADE BY THE ASSES SEE WERE BONAFIDE. IN SUCH CIRCUMSTANCES, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE. TH IS VIEW IS ALSO SUPPORTED BY THE RECENT JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETRO PRODUCTS PVT. LTD. REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN THE HON'BLE SU PREME COURT HELD THAT MAKING INCORRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULAR S OF INCOME. THE HEAD-NOTES OF THE SAID DECISION READS 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 H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE 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 F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF 4 ITA NO. 3512/AHD/2007 IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T 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 DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS 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 CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D 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 MER E 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. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS . 8.1. THE EXPLANATION (1) TO SECTION 271(1)(C) IS NO T APPLICABLE BECAUSE THE CASE OF THE ASSESSEE DOES NOT FALL WITHIN THE MISCHIEF OF MAIN PROVISI ON OF SECTION 271(1)(C) OF THE I.T. ACT, 1961. MERE REJECTION OF ASSESSEES CLAIM IS NOT SUFFICIEN T TO HOLD THE ASSESSEE TO BE GUILTY OF CONCEALMENT. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SARABHAI CHEMICAL (P) LTD. [2002] 257 ITR 355 (GUJ.) HELD AS UNDER :- THE DEEMING FICTION THAT THE ADDED/ DISALLOWED AMO UNTS REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED CONTAINED IN EXPLANATION 1 WILL NOT APPLY IF THE EXPLANATION THAT WAS GIVEN BY THE ASSESSEE IN THE Q UANTUM PROCEEDINGS WHICH HE COULD NOT SUBSTANTIATE IN THOSE PROCEEDINGS WAS (I) BONA FIDE AND (II) IF HE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME. IN CASES WHERE EXPLANATION WAS OFFERED, BUT WAS REJECTED AS IT COU LD NOT BE SUBSTANTIATED BY THE ASSESSEE, THERE WOULD ARISE NO PRESUMPTION OF CONCEALMENT OF THE PARTICULARS OF INCOME THAT WAS ADDED OR DISALLOWED AND SUCH ASSESSEE CAN SHOW THAT THE SAID EXPLANATION OFFERED BY HIM WAS A BONA FIDE ONE AND THAT HE HAD DISCLOSED ALL F ACTS RELATING TO SUCH EXPLANATION AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME DUR ING THE QUANTUM PROCEEDINGS. 9. IN VIEW OF THE FOREGOING, PENALTY UNDER SECTION 271(1)(C) IS NOT LEVIABLE IN RESPECT OF INSURANCE CLAIM AND BAD DEBTS WRITTEN OFF. WE, THER EFORE, CANCEL THE PENALTY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON RS.1 ,31,508/- [RS.94,089/- + RS.37,419/-]. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 02.08.2 010 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02/08/2010 5 ITA NO. 3512/AHD/2007 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.