TECHNO IMAGING SOLUTIONS, MUMBAI V. ITO WD 4(3), THANE

ITA 3567/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55463 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 07-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Wrong claim; Bonafide mistake
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH (AM) ITA NO. 3567/M/2010 ASSESSMENT YEAR:2006-2007 M/S TECHNO IMAGING SOLUTIONS, GALA NO.2 & 7, TIRUPATI INDUSTRIAL NO. 4, NAVGHAR, VASAI ROAD, VASAI (EAST) 401 210. PAN: AADFT2497H THE INCOME TAX OFFICER, WARD 4(3), 2 ND FLR, QURESHI MANSION, GOKHALE ROAD, NAUPADA, THANE. (APPELLANT) (RESPONDENT) ASSESSEE BY: REVENUE BY: SHRI RAKESH JOSHI, AR SHRI D.S. SURENDRA SINGH,DR DATE OF HEARING: DATE OF PRONOUNCEMENT: 06-09-2011 23-09-2011 O R D E R PER RAJENDRA SINGH (AM): 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.1.2010 OF CIT (A) FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED IN THE APPEAL IS REGARDING PENALTY U/S 271(1)(C) FOR CONCEALMENT OF INCOME. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IN THE RELEVANT YEAR HAD SHOWN CASH LOAN OF RS. 15,91,000/- FROM FO UR DIFFERENT PARTIES. WITH A VIEW TO VERIFY THE GENUINENESS OF LOANS AND CREDITW ORTHINESS OF THE PARTIES, THE AO ISSUED SUMMONS U/S 131 TO THE CREDITORS WHICH WERE RETURNED BY POSTAL DEPARTMENT AS UNDELIVERED. ON BEING CONFRONTED AND REQUESTED TO FURNISH THE DETAILS OF WHEREABOUTS OF THE PARTIES, THE ASSESSEE COULD NOT GIVE DETAILS NOR ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 2 PRODUCE THE PARTIES CONCERNED AND FINALLY VIDE LETT ER DATED 19.12.2008 AGREED FOR TREATING THE LOANS AS INCOME OF THE ASSESSEE. AO T HEREFORE, ADDED THE SUM OF RS. 15,91,000/- TO THE TOTAL INCOME AND ALSO INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) ON THIS ACCOUNT. THE AO ALSO NOTED THAT IN THE P & L ACCOUNT, THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 19,48,282/- ON ACCOUNT OF SALARY BUT ACTUAL EXPENSES FOUND WERE ONLY RS. 17,46,242/-. ON BEING POINTED OUT, THE ASSESSEE WITHDREW EXCESS CLAIM OF RS. 2,00,000/- W HICH WAS ADDED BY THE AO TO THE TOTAL INCOME AND PENALTY PROCEEDINGS U/S 271(1) (C) WERE ALSO INITIATED. THE AO FURTHER NOTED THAT THE ASSESSEE HAD CLAIMED ELEC TRICITY EXPENSES OF RS. 1,05,160/-. THE ASSESSEE HOWEVER, PRODUCED BILLS F OR ONLY RS. 2,810/- FOR FIVE MONTHS AND AO, THEREFORE, POINTED OUT THAT ANNUAL E XPENSES COULD NOT BE MORE THAN RS. 15,000/-. THEREAFTER, THE ASSESSEE SUBMIT TED THAT THERE WERE MISTAKES MADE BY THE INEXPERIENCED ACCOUNTANT WHO WAS NEW AN D WHO HAD ALSO INCLUDED THE ELECTRICITY EXPENSES OF THE RESIDENCES OF THE P ARTNERS. THE ASSESSEE, THEREFORE, WITHDREW THE CLAIM OF RS. 90,000/- WHICH WAS ADDED BY THE AO TO THE TOTAL INCOME. SIMILARLY, IN THE MAINTENANCE ACCOUN T, THE ASSESSEE HAD DEBITED THE EXPENDITURE OF RS. 1,09,885/-. HOWEVER, THE BILLS C OULD BE PRODUCED ONLY TO THE EXTENT OF RS. 15,536/-. THE ASSESSEE SUBMITTED THA T EXPENSES WERE CLAIMED DUE TO THE MISTAKES MADE BY THE INEXPERIENCED ACCOUNTAN T WHO HAD DEBITED THE MAINTENANCE EXPENSES OF RESIDENCES OF THE PARTNERS. THE ASSESSEE WITHDREW THE EXPENSES CLAIMED OF RS. 94,449/- WHICH WAS ADDED BY THE AO TO THE TOTAL INCOME. THE ASSESSEE HAD ALSO CLAIMED EXPENSES OF RS. 2,87, 450/- ON THE MAINTENANCE OF GALA, FLOORING , WATER PROOFING AND REPAIRS. THE AS SESSEE COULD NOT PRODUCE COMPLETE BILLS AND VOUCHERS IN SUPPORT OF THE SAME AND THEREFORE, THE AO DISALLOWED 20% OF SUCH EXPENSES AMOUNTING TO RS. 57 ,490/- AND ADDED TO THE TOTAL INCOME. THUS, THE AO MADE TOTAL ADDITION OF RS. 19, 75,449/-. ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 3 2.1 THE AO HAD ALSO INITIATED PENALTY PROCEEDINGS U /S 271(1)(C) IN RESPONSE TO WHICH THE ASSESSEE EXPLAINED THAT THE EXCESS EXPENS ES HAD BEEN CLAIMED DUE TO ACCOUNTING ERROR ON THE PART OF THE PART TIME ACCOU NTANT WHICH WAS DUE OVERSIGHT. THE AO HOWEVER, DID NOT ACCEPTED THE EXPLANATION AN D OBSERVED THAT IT WAS UNLIKELY THAT THE MISTAKES OF THE INEXPERIENCED ACC OUNTANT WERE UNNOTICED BY THE AUDITORS ALSO. AO THEREFORE, LEVIED THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED AMOUNTING TO RS. 5,82,634/-. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE THE CIT (A) THAT UNSECURED LOANS OF RS. 15,91,000/- HAD BEEN ACTUALLY TAKEN BY THE ASSESSEE THROUGH A BROKE R. THE ASSESSEE WAS NOT IN DIRECT CONTACT WITH THE PARTIES WHICH WAS THE REASO N FOR NOT PRODUCING THE PARTIES. THERE WAS NO CONCEALMENT INVOLVED IN RELATION TO TH E OTHER ADDITIONS. IT WAS SUBMITTED THAT THE EXCESS CLAIM OF EXPENDITURE WAS BECAUSE OF THE MISTAKE MADE BY THE PART TIME ACCOUNTANT. THE EXPENSES WERE ACT UALLY INCURRED AND NOT BOGUS BUT HAD BEEN WRONGLY DEBITED BY THE ACCOUNTANT IN T HE BOOKS OF ACCOUNT. THERE WAS THUS NO CONCEALMENT INVOLVED. IT WAS ACCORDING LY REQUESTED THAT THE PENALTY SHOULD BE DELETED. CIT (A), HOWEVER, DID NOT ACCEP T THE EXPLANATION GIVEN AND IT WAS OBSERVED BY HIM THAT THE ASSESSEE HAD SURRENDER ED THE AMOUNT ONLY AFTER BEING DETECTED BY THE AO. IT WAS FOR THE ASSESSEE TO ENSURE THAT WRONG CLAIMS WERE NOT MADE IN THE RETURN OF INCOME. CIT (A) FUR THER OBSERVED THAT IT WAS UNLIKELY THAT THE MISTAKES MADE BY THE ACCOUNTANT W ERE UNNOTICED BY THE AUDITORS. HE ALSO REFERRED TO THE JUDGMENT OF HONBLE HIGH CO URT OF KERALA IN CASE OF KUTTU KARAN MACHINE TOOLS LTD VS. ACIT (313 ITR 413) IN W HICH ADDITION HAD BEEN MADE ON ACCOUNT OF DISALLOWANCE OF BOGUS CLAIM OF INVEST MENT ALLOWANCE IN RESPECT OF MACHINERY WHICH WAS NEITHER PURCHASED NOR INSTALLED . THE PENALTY LEVIED IN RESPECT OF THE ADDITION WAS UPHELD BY THE HONBLE H IGH COURT. CIT (A), ACCORDINGLY, CONFIRMED THE LEVY OF PENALTY AGGRIEVE D BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 4 3. BEFORE US, THE LEARNED AR FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAD VOLUNTARILY DISCLOSED THE INCOME ACCOUNT OF LOANS A ND THEREFORE IN SUCH CASES NO PENALTY CAN BE LEVIED. RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN CASE OF KUMAR AGENCIES VS. ACIT (87 ITD 69) (MUM) (THIRD MEMBER) WHICH WAS BASED ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF SURESH CHANDRA MITTAL (251 ITR 9). AS REGARDS THE ADDITIONS ON ACCOUNT OF DIS ALLOWANCE OF EXPENSES, IT WAS SUBMITTED THAT THESE WERE DUE TO BONAFIEDE MISTAKES BY THE ACCOUNTANT AND THEREFORE, NO PENALTY SHOULD BE LEVIED IN SUCH CASE S. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF THE CASE: 38 SOT 537 (MUM) IN CASE OF RAKESH GANDHI VS. ITO ; 84 ITD 342 (MUM) IN CASE OF ITO V S. DEVIBAI H. PARMANI; 40 ITD 70 (MUM) IN CASE OF ASSOCIATED CEMENT COMPANIED LTD . VS. CIT; 7 SOT 540 (MUM) IN CASE OF LOTUS LEARNING PVT. LTD., VS. DCIT ; 189 TAXMAN 322 (SC) N CASE OF RELIANCE PETRO PRODUCTS (P) LTD. THE LEARNED AR ALSO POINTED THAT IN RELATION TO ADDITIONS ON ACCOUNT OF ELECTRICITY EXPENSES, MAINT ENANCE CHARGES, AMOUNTING TO RS. 90,000/- 94,449/- AND 57,490/-, THE AO HAD NOT INITIATED PENALTY IN THE ASSESSMENT ORDER THOUGH IN RESPECT OF OTHER TWO ITE MS, HE HAD SPECIFICALLY MENTIONED THAT PENALTY WAS INITIATED. THIS SHOWS T HAT AO WAS SATISFIED THAT NO PENALTY WAS TO BE INITIATED IN RESPECT OF SUCH ADDI TIONS AND THEREFORE LEVY OF PENALTY ON SUCH ADDITIONS IN THE ORDER WAS NOT JUST IFIED. THE LEARNED DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE INCOM E ONLY AFTER THE SAME WAS DETECTED. IT WAS ALSO SUBMITTED THAT THE JUDGMENTS CITED BY THE ASSESSEE WERE DISTINGUISHABLE AND NOT APPLICABLE. 4. WE HAVE PERUSED THE RECORD AND CONSIDERED THE RI VAL CONTENTIONS CAREFULLY. THE DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PENALTY 271(1)(C). THE ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 5 PENALTY HAD BEEN LEVIED BY THE AO IN RESPECT OF THE FOLLOWING 5 ADDITIONS AGGREGATING TO RS. 19,75,449/-. I. ADDITION ON ACCOUNT OF CASH LOAN: RS. 15,91,000 /- II. ADDITION ON ACCOUNT OF EXCESS SALARY CLAIMED : RS. 2,00,000/- III. ADDITION ON ACCOUNT OF ELECTRICITY EXPENSES : RS. 90,000/- IV. ADDITION ON ACCOUNT OF MAINTE- NANCE EXPENSES : RS. 94.249/- V. ADDITION ON ACCOUNT OF MAINTE- NANCE AND REPAIR OF GALA ETC. : RS. 57,490/- 4.1. THE ADDITIONS MADE HAD BEEN ACCEPTED BY THE AS SESSEE. THE ISSUE IS WHETHER ON THE FACTS OF THE CASE LEVY OF PENALTY IN RELATION TO THE ADDITIONS MENTIONED ABOVE CAN BE JUSTIFIED. IT IS A SETTLED LEGAL DECISION AS HELD BY THE HONBLE SUPREME COURT IN CASE OF DHARMENDRA TEXTILE PROCESSORS AND OTHERS (306 ITR 277) THAT PENALTY U/S 271(1)(C) IN ONLY A CIVIL LIABILITY ENACTED TO PROVIDE FOR REMEDY FOR LOSS OF REVENUE. THE WILLFUL CONCEALMEN T OR THE MENSREA IS NOT REQUIRED TO BE PROVED BY THE REVENUE. HOWEVER, EAC H AND EVERY ADDITION IN THE ASSESSMENT CANNOT BE AUTOMATICALLY LEAD TO PENALTY. A CASE OF PENALTY HAS TO EVALUATED IN TERMS OF THE PROVISIONS OF EXPLANATION 1 TO SEC. 271(1)(C) AS PER WHICH IF IN RELATION TO ANY ADDITION MADE BY AO, TH E ASSESSEE DOES NOT OFFER ANY EXPLANATION OR EXPLANATION OFFERED IS FOUND TO BE F ALSE OR THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND ALSO FAILS TO P ROVE THAT THE EXPLANATION IS BONAFIDE, THERE WILL BE A CASE FOR CONCEALMENT OF P ARTICULARS OF INCOME. 4.2. IN THIS CASE THE MAIN ADDITION OF RS. 15,91,00 0/- WAS ON ACCOUNT OF CASH LOANS TAKEN BY THE ASSESSEE FROM FOUR DIFFERENT PAR TIES. IT IS A SETTLED LEGAL DECISION THAT IN CASE OF CASH CREDITS, BURDEN IS ON THE ASSESSEE TO PROVE IDENTITY ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 6 AND CREDITWORTHINESS OF THE CREDITOR AS WELL AS GEN UINENESS OF THE TRANSACTIONS. IN THIS CASE, CREDITORS WERE NOT FOUND AT ADDRESSES GI VEN BY THE ASSESSEE WHO COULD ALSO NOT PROVIDE THE CURRENT ADDRESSES OF THE CREDI TORS NOR PRODUCE THE CREDITORS. ON BEING CONFRONTED, THE ASSESSEE SURRENDERED THE A MOUNT AS INCOME. IT IS A SETTLED LEGAL DECISION THAT ONCE THE CONCEALMENT HA S BEEN DETECTED, THE SURRENDER MADE BY THE ASSESSEE CANNOT BE CONSIDERED AS VOLUNT ARY. EVEN IF THE ASSESSEE DID NOT SURRENDER, THE AMOUNT WAS REQUIRED TO BE ASSESS ED AS INCOME OF THE ASSESSEE AS THERE WAS NO EVIDENCE TO SUPPORT THE LOANS. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED A LETTER DATED 19 .12.2005 ADDRESSED TO THE AO IN WHICH THE SURRENDER OF THE AMOUNT WAS MADE TO BUY P EACE AND TO AVOID LITIGATION AND THIS ASPECT HAD NOT BEEN CONSIDERED BY THE AO. IN OUR VIEW, THE AO HAD RIGHTLY IGNORED THE LETTER AS THE CASH LOANS WERE R EQUIRED TO BE ADDED WHETHER OR NOT, THE ASSESSEE HAD MADE SURRENDER. TO A SPECIFI C INQUIRY OF THE BENCH, THE LEARNED AR FOR THE ASSESSEE COULD NOT GIVE THE DETA ILS AS TO WHEN THE LOANS WERE PAID. IT IS UNBELIEVABLE THAT THE PARTY WHO IS GIV EN SUBSTANTIAL CASH LOANS TO THE ASSESSEE WILL NOT BE IN TOUCH WITH THE ASSESSEE AND THE LATTER WILL NOT KNOW THEIR WHEREABOUTS. IN CASE, AS CLAIMED, THE LOANS WERE TH ROUGH BROKER, THE ASSESSEE SHOULD BE ABLE TO GET DETAILS OF CREDITORS THROUGH BROKERS. THEREFORE, THE ASSESSEE HAD NEITHER BEEN ABLE TO SUBSTANTIATE THE CASH CRED ITS NOR THE EXPLANATION OF THE ASSESSEE IS STATING THAT THESE WERE GENUINE LOANS, CAN BE CONSIDERED AS BONAFIDE. THEREFORE, IN OUR VIEW PENALTY HAS BEEN RIGHTLY LEV IED IN RESPECT OF ADDITION ON ACCOUNT OF CASH CREDIT. 4.3 THE LD. AR HAS RELIED ON THE THIRD MEMBER DECISION IN CASE KUMAR AGENCIES VS. ACIT (SUPRA), BUT THE SAID DECISION IS DISTINGUISHABLE. IN THAT CASE, LOANS HAD BEEN TAKEN BY CHEQUE AND HAD ALSO B EEN PAID BY CHEQUE AND CREDITORS HAD FILED CONFIRMATION GIVING PERMANE NT ACCOUNT NUMBERS. ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 7 THE ASSESSEE HAD SURRENDERED THE INCOME TO BUY PEAC E AND TO AVOID LITIGATION WHICH HAD BEEN ACCEPTED AS BONAFIDE. TH E PRESENT CASE IS DIFFERENT AS IN THIS CASE THERE IS NO CONFIRMATION WITH PERMANENT ACCOUNT NUMBERS AND LOANS HAD BEEN TAKEN IN CASH AND THERE IS NO EVIDENCE PRODUCED TO SUPPORT THE LOANS. RELIANCE HAS ALSO B EEN PLACED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF SU RESH CHANDRA MITTAL (SUPRA), BUT THE SAID CASE IS ALSO DISTINGUISHABLE. IN THAT CASE, THE ADDITION HAD BEEN MADE BASED ONLY ON THE ACT OF SURRENDER MA DE BY THE ASSESSEE AND THERE WAS NO OTHER MATERIAL TO SUPPORT THE ADDI TION AND, THEREFORE, THE EXPLANATION OF THE ASSESSEE THAT SURRENDER HAD BEEN MADE TO BUY PEACE AND TO AVOID LITIGATION WAS FOUND TO BE BONAFIDE. IN THE PRESENT CASE, THE ADDITION IS NOT ONLY ON THE BASIS OF SURRENDER BUT ON THE BASIS OF MATERIAL THAT THERE WAS NO EVIDENCE IN SUPPORT OF CASH CREDI T SHOWN BY THE ASSESSEE WHICH HAD TO BE TREATED AS INCOME UNDER THE PROVISI ONS OF LAW. THE LD. AR HAS ALSO REFERRED TO THE DECISION OF THE TRIBUNAL I N CASE OF ITO VS. DEVIBAI H. PARMANI(SUPRA). THE SAID CASE IS ALSO DISTINGUI SHABLE. IN THAT CASE, THE ASSESSEE BEING AN OLD LADY HAD RECEIVED GIFTS FROM RELATIVES AND FIVE OF THE SIX RELATIVES HAD GIVEN GIFTS BY CHEQUE AND HAD ALS O CONFIRMED THE GIFT. THE SIXTH RELATIVE HAD GIVEN GIFT IN CASH BUT ON EXAMIN ATION HE HAD ALSO ACCEPTED THE GIFT. THE ASSESSEE HAD SURRENDERED TH E GIFT TO AVOID LITIGATION AND TO BUY PEACE OF MIND AND THE EXPLANATION ON THE FACTS OF THE CASE HAD BEEN FOUND BONAFIDE. THE FACTS ARE OBVIOUSLY DIFFE RENT FROM THOSE IN CASE OF THE ASSESSEE. THUS ALL THE CASES ARE DISTINGUISH ABLE. WE, THEREFORE, UPHOLD LEVY OF PENALTY IN RELATION TO ADDITION OF R S.15,91,000/- ON ACCOUNT OF CASH LOANS ADDED AS INCOME BY THE AO. ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 8 4.4 PENALTY HAS ALSO BEEN RECEIVED IN RESPECT OF AD DITION OF RS.2.00 LACS ON ACCOUNT OF EXCESS SALARY CLAIMED. THERE IS NO D ISPUTE THAT THE SALARY CLAIMED WAS EXCESS TO THAT EXTENT. THE EXPLANATION THAT IT WAS DUE TO ACCOUNTING MISTAKE CANNOT BE ACCEPTED AS IN THAT CA SE NO PENALTY CAN BE LEVIED IN CASE OF ANY FALSE CLAIM WHICH CAN ALWAYS BE EXPLAINED DUE TO BONAFIDE MISTAKE. THE AO HAD SPECIFICALLY INITIATE D PENALTY IN RESPECT OF THE SAID ADDITION AND, THEREFORE, IN OUR VIEW LEVY OF P ENALTY IN RELATION TO ADDITION OF RS.2.00 LACS IS UPHELD. THE LD. AR HAS RELIED ON THE JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPROD UCTS LTD. (SUPRA), BUT IN OUR VIEW THE SAID CASE IS OF NO HELD TO THE ASSE SSEE. IN THAT CASE, IT WAS HELD THAT MAKING A WRONG CLAIM DID NOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS OF INCOME. HOWEVER, ADDITION ON ACCOUN T OF DISALLOWANCE IS DEEMED TO BE CONCEALMENT OF PARTICULARS OF INCOME A S PER EXPLANATION-I TO SECTION 271(1)(C) WHICH IN OUR VIEW IS SATISFIED IN THIS CASE. THE PENALTY IS THUS UPHELD UNDER THE PROVISIONS OF EXPLANATION-I T O SECTION 271(1)(C). 4.5 IN RESPECT OF OTHER ADDITIONS I.E. RS.90,000/- ON ACCOUNT OF EXCESS ELECTRICITY EXPENSES; RS.94,249/- ON ACCOUNT OF EXC ESS MAINTENANCE CHARGES IN RESPECT OF THE PROPERTIES AND RS.57,490/ - BEING ESTIMATED DISALLOWANCE OUT OF REPAIR AND MAINTENANCE EXPENSES OF GALA ETC., THE ASSESSEE HAS EXPLAINED THAT EXCESS EXPENSES ON ACCO UNT OF ELECTRICITY AND MAINTENANCE OF HOUSE HAD BEEN CLAIMED DUE TO BONAFI DE MISTAKE OF INEXPERIENCED ACCOUNTANT WHO HAD INCLUDED EXPENSES RELATING TO THE RESIDENCE OF THE PARTNERS. IT IS POSSIBLE THAT THE ACCOUNTANT MAY HAVE BEEN ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 9 OF THE BELIEF THAT EXPENSES RELATING TO PARTNERS R ESIDENCE WERE ALSO ALLOWABLE AS DEDUCTION. MOREOVER WE NOTE THAT THE AO IN THE ASSESSMENT ORDER DID NOT SPECIFICALLY INITIATE PENALTY IN RESP ECT OF THESE ADDITIONS THOUGH IN RELATION TO EARLIER ADDITIONS HE, SPECIFI CALLY STATED THAT PENALTY IS BEING INITIATED. THIS SHOWS THAT THE AO HIMSELF WA S SATISFIED AT THE TIME OF ASSESSMENT THAT NO INITIATION OF PENALTY WAS REQUIR ED. SIMILARLY IN RESPECT OF ESTIMATED DISALLOWANCE ON ACCOUNT OF MAINTENANCE AND REPAIR, THE AO DID NOT INITIATE PENALTY IN THE ASSESSMENT ORDER. IN C ASE THE AO HAD NOT INITIATED PENALTY IN RESPECT OF ANY SPECIFIC ITEM I N THE ASSESSMENT AND ONLY AT THE END OF THE ORDER MENTIONED THAT PENALTY WAS BEING INITIATED, IT CAN BE PRESUMED THAT HE HAD INITIATED PENALTY IN RESPECT O F ALL THE ADDITIONS BUT IN THIS CASE THE AO SPECIFICALLY INITIATED PENALTY IN RESPECT OF TWO ITEMS AND DID NOT DO SO IN RESPECT OF OTHER ITEMS, THEREFORE IT W ILL BE REASONABLE TO CONCLUDE THAT THE AO WAS SATISFIED THAT NO PENALTY WAS REQUIRED TO BE INITIATED IN RESPECT OF OTHER ITEMS. CONSIDERING T HE ENTIRETY OF FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT PENALTY IN RE LATION TO OTHER THREE ITEMS OF ADDITIONS HAS TO BE DELETED. WE ORDER ACC ORDINGLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN OPEN COURT ON 23 RD SEPTEMBER, 2011 SD/- SD/- (D.K. AGARWARL) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 23-09-2011 AT :MUMBAI OKK/JV. ITA 3567/M/2010 M/S TECHNO IMAGING SOLUTIONS 10 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR J BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI