M/s. DHL OPERATIONS BV NETHERLANDS, MUMBAI V. JT. DIT - 3, MUMBAI

ITA 3593/MUM/2003

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1249 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Assessment Year: misc
• Appeal Filed On: 08-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P J PARDIWALA
• Keywords: Double taxation relief; Deemed to accrue or arise in india; Permanent establishment; Wrong claim; Difference of opinion; TDS
• Section: 271(1)(c); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI. BEFORE SHRI SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMB ER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NOS. 3593 & 3594/MUM/2003 ASSESSMENT YEARS : 1989-90 & 1990-91. M/S DHL OPERATIONS BV, NETHERLANDS, JO INT DIRECTOR OF C/O M/S BIJAL VORA, PRICEWATERHOUE VS. INCOME-TAX, COOPERS PVT. LTD., PWC HOUSE, (INTERNATIONAL TAXATION)-3 PLOT 18-A, GURU NANAK ROAD MUMBAI. (STATION ROAD), BANDRA (WEST) MUMBAI -400050. APPELLANT RESPONDENT APPELLANT BY : SHRI P.J. PARDIWALA. RESPONDENT BY : SHR I AARSI PRASAD. O R D E R PER J. SUDHAKAR REDDY, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE DIREC TED AGAINST THE ORDER OF THE CIT(APPEALS)-XXXI, MUMBAI DATED 14 TH FEBRUARY, 2003 FOR ASSESSMENT YEARS 1989-90 AND 1990-91, WHEREIN T HE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE PENALTY LEVIED BY THE A O U/S 271(1)(C) OF THE ACT. 2. FACTS OF THE CASE ARE AS FOLLOWS : THE APPELLANT IS A FOREIGN COMPANY INCORPORATED U NDER THE LAWS OF THE NEHERLANDS ON AUGUST 13, 1979 AND IS A TAX RESIDENT OF NETHERLANDS. THE APPELLANT HAD ENTERED INTO AN AGRE EMENT DATED MAY 19, 1989 (EFFECTIVE FROM JANUARY 1, 1989) WITH AN INDIA N COMPANY I.E. AIR 2 FREIGHT LIMITED (AFL) IN TERMS OF WHICH AFL WAS TO PICK UP PARCELS SENT BY THE APPELLANT AT THE INDIAN GATEWAYS AND DELIVER THEM TO THE ULTIMATE CONSIGNEE IN INDIA. LIKEWISE IN RESPECT OF CONTRACT S ENTERED INTO BETWEEN AFL AND INDIAN CONSIGNORS FOR DELIVERY OF PARCELS O UTSIDE INDIA, THE APPELLANT WAS TO PICK UP THE PARCELS FROM THE INTER NATIONAL GATEWAYS AND DELIVER THE PARCELS TO THE ULTIMATE CONSIGNEES OUTS IDE INDIA THROUGH ITS NETWORK. FOR CARRYING OUT THEIR RESPECTIVE OBLIGATI ONS OF DELIVERY, APPELLANT AND AFL WERE TO CHARGE EACH OTHER AT A RATE WHICH WAS FIXED IN TERMS OF THE AGREEMENT DATED MAY 19, 1989 AND RE VISED FROM TIME TO TIME. 2.1 THE APPELLANT HAD FILED ITS RETURN OF INCOME I N INDIA DECLARING NIL INCOME FOR ASSESSMENT YEAR 1989-90 CO NTENDING THAT NO INCOME ACCRUED OR AROSE TO IT IN INDIA OR IS DEEMED TO ACCRUE OR ARISE TO IT IN INDIA AND HENCE, IT WAS NOT CHARGEABLE TO TAX IN INDIA. FOR THE ASSESSMENT 1990-91, IT WAS FURTHER CONTENDED THAT I T DID NOT HAVE A PERMANENT ESTABLISHMENT (PE) IN INDIA AND HENCE, EV EN UNDER DOUBLE TAXATION AVOIDANCE AGREEMENT ENTERED INTO BETWEEN T HE GOVERNMENT OF INDIA AND THE NETHERLANDS (DTAA), THE INCOME WOULD NOT BE TAXABLE IN INDIA IN VIEW OF ARTICLE 7 OF DTAA. 2.2 THE APPELLANT HAD MADE COMPLETE DISCLOSURE IN THE NOTES TO THE RETURN OF INCOME. IN THE NOTES TO THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 1989-90,THE APPELLANT HAS STATED IN PARA 4 AND5 AS UNDER : 4 SINCE NO SERVICES ARE RENDERED BY THE NON-RESIDE NT DHL OR BY ITS AGENT IN INDIA, PROVISION OF SECTION 9 OF TH E INCOME- TAX ACT, 1961 ARE NOT APPLICABLE AND NO INDIAN INCO ME TAX IS PAYABLE BY THE NON-RESIDENT DHL. 3 5. THAT AT THE TIME OF GRANTING NO OBJECTION CERTIFI CATE FOR REMITTANCE TO BE MADE BY AFL TO DHL AGAINST THE BIL LS OF DHL, THE INCOME-TAX DEPARTMENT INSISTED FOR DEDUCTI ON OF TAX AT SOURCE AND ACCORDINGLY A SUM OF RS.9,42,153/- WA S DEDUCTED FROM REMITTANCES FOR THE MONTH OF JANUARY 1989 TO MARCH 1989 AS DETAILED ABOVE AND PAID TO THE GOVERN MENT TREASURY AS TDS. IN THE NOTES TO THE RETURN OF INCOME FOR THE ASSESS MENT YEAR 1990-91, THE APPELLANT HAS STATED IN PARA 4 AND 5 AS UNDER : 4. SINCE NO SERVICES ARE RENDERED BY THE NON-RESID ENT DHL OR BY ITS AGENT IN INDIA, PROVISION OF SECTION 9 OF TH E INCOME- TAX ACT, 1961 ARE NOT APPLICABLE AND NO INDIAN INCO ME-TAX IS PAYABLE BY THE NON-RESIDENTIAL DHL 5. THAT AT THE TIME OF GRANTING NO OBJECTION CERTIF ICATE FOR REMITTANCE TO BE MADE BY AIRFREIGHT LTD. TO DHL AGA INST THE BILLS OF DHL, THE INCOME-TAX DEPARTMENT INSISTED FO R DEDUCTION OF TAX AT SOURCE AND ACCORDINGLY A SUM OF RS.12,69,589 WAS DEDUCTED FROM REMITTANCES FOR THE MONTH OF APRIL 1989 TO JULY 1989 AS DETAILED ABOVE AND PAID TO THE GOVERNMENT TREASURY AS TDS. 2.3 THE AO IN THE ASSESSMENT YEAR 1989-90 SOUGHT T O TAX INCOME OF THE APPELLANT ON THE PREMISE THAT THE APP ELLANT HAD A BUSINESS CONNECTION IN INDIA AND, HENCE, ITS INCOME WAS ASS ESSABLE TO TAX U/S 9(1)(I) OF THE ACT. IN THE SUBSEQUENT YEAR I.E. ASS ESSMENT YEAR 1990-91, THE AO FURTHER HELD AFL TO BE A PE OF THE APPELLANT UNDER THE PROVISIONS OF THE DTAA. ACCORDINGLY, THE AO COMPUTED INCOME F OR OUTBOUND CONSIGNMENTS BY ATTRIBUTING PROFIT AT THE RATE OF 8 .36% ON THE BASIS OF THE OVERALL PROFIT PERCENTAGE OF THE APPELLANT. OUT OF THE PROFIT SO ESTIMATED, THE AO ESTIMATED 55% THEREOF BEING ATTRIBUTABLE TO ACTIVITIES CARRIED ON IN INDIA AND HENCE, TAXABLE IN INDIA. THE AO ESTIMATED THE TOTAL REVENUE FROM THE INBOUND TRANSACTIONS TO BE 1.1 TIMES OF TH E REVENUE ON THE OUTBOUND TRANSACTIONS. THE PROFIT WAS AGAIN TAKEN A S 8.36% AND THE PROFIT 4 ATTRIBUTABLE TO THE ACTIVITIES CARRIED ON IN INDIA AND HENCE, TAXABLE IN INDIA WAS TAKEN AT 22.5% OF THE ESTIMATED PROFIT ON INBOU ND REVENUE. 2.4 THE CIT(APPEALS) HELD THAT THE PROVISIONS OF S ECTION 9(1)(I) OF THE ACT ARE NOT APPLICABLE AND ACCORDINGLY, THER E IS NO BUSINESS CONNECTION IN INDIA UNDER THE ACT. FOR THE ASSESSME NT YEAR 1990-91, THE CIT(APPEALS) FURTHER HELD THAT THERE WAS NO PE UND ER ARTICLE 5(1) ARTICLE 5(5)(5)/5(6) OF DTAA. ACCORDINGLY, THE CIT( APPEALS) HELD THAT THE APPELLANT IS NOT LIABLE TO TAX IN INDIA AND HE DID NOT ADJUDICATE THE ISSUE AS TO WHETHER THE QUANTUM OF INCOME ESTIMATED WAS JUSTIFIED. 2.5 THE TRIBUNAL IN ITA NOS. 7897 AND 7988/BOM/92 IN THE APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEARS 1 989-90 AND 1990-91 HELD THAT THE APPELLANT HAS A BUSINESS CONNECTION IN INDIA IN THE FORM OF A PRINCIPAL AGENT RELATIONSHIP BETWEEN THE APPELLANT AND AFL. THE TRIBUNAL, WITH RESPECT TO INBOUND TRANSACTIONS, HEL D THAT IT WAS THE OBLIGATION OF THE APPELLANT TO DELIVER THE CONSIGNM ENTS TO CONSIGNEES IN INDIA. ACCORDINGLY, IT HELD THAT THE ACTIVITY OF SU CH DELIVERY THROUGH AFL AMOUNTED TO OPERATIONS CARRIED OUT BY THE APPELLANT IN INDIA AND A REASONABLE ESTIMATE OF INCOME ATTRIBUTABLE TO SUCH OPERATIONS WOULD BE TAXABLE IN INDIA. HOWEVER, IN RESPECT OF OUTBOUND CONSIGNM ENTS, THE TRIBUNAL OBSERVED THAT AFL ACCEPTED THE SAME FROM THE INDIAN CONSIGNORS ON ITS OWN ACCOUNT AND THE ACTIVITIES CARRIED ON BY THE AP PELLANT WERE CONFINED TO PLACES OUTSIDE INDIA. ACCORDINGLY, IT HELD THAT NO INCOME IS ATTRIBUTABLE TO OPERATIONS CARRIED OUT BY THE APPELLANT IN INDIA AND ACCORDINGLY, NO PART OF THE INCOME IS DEEMED TO ACCRUE OR ARISE IN INDIA BY VIRTUE OF THE EXPLANATION TO SECTION 9(1)(I) OF THE ACT. 5 FOR THE ASSESSMENT YEAR 1990-91, UNDER THE DTAA,T HE TRIBUNAL HAS HELD AFL TO BE A PE OF THE APPELLANT IN INDIA UNDER ARTICLE 5(1) FOR THE REASON THAT PLACE OF BUSINESS OF AFL HAS BEEN CONSIDERED AS THE OFFICE OF THE APPELLANT IN INDIA IN TERMS OF TH E VARIOUS CLAUSES OF THE AGREEMENT FOR THE PURPOSE OF CARRYING ON THEIR ACTI VITIES IN INDIA. FURTHER, THE TRIBUNAL HELD AFL TO BE A PE UNDER ARTICLE 5(5) READ WITH ARTICLE 5(6) OF DTAA ON THE GROUND THAT AFL CARRIED ON ALL THE ACTIVITIES OF THE APPELLANT IN INDIA EVEN THOUGH IT ACCEPTED THAT AFL WAS INDEPENDENT BOTH FINANCIALLY AND LEGALLY FROM THE APPELLANT. ACCORD INGLY INCOME FROM INBOUND CONSIGNMENTS WAS HELD AS TAXABLE; WHEREAS I NCOME FROM OUTBOUND CONSIGNMENTS WAS HELD NOT TAXABLE. 2.6 THE APPELLANT AS WELL AS THE REVENUE HAVE PRE FERRED APPEALS AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE HONBL E BOMBAY HIGH COURT. BOTH THE APPELLANTS AND DEPARTMENTS APPEALS HAVE BEEN ADMITTED BY THE HIGH COURT. 2.7 WHEN THE MATTER FOR THE SUBSEQUENT YEARS CAME UP FOR HEARING BEFORE THE MUMBAI TRIBUNAL, THE BENCH REFE RRED THE MATTER TO THE SPECIAL BENCH HOLDING THAT THE DECISION OF THE TRIB UNAL IN THE EARLIER YEARS REQUIRES RECONSIDERATION. 2.8 IN THE PENALTY PROCEEDINGS, THE AO HAS SOUGHT TO LEVY PENALTY ON THE GROUND THAT THE APPELLANT HAS A BUSI NESS CONNECTION IN INDIA AND HENCE THE APPELLANT IS LIABLE TO BE TAXED IN INDIA. ON THE BASIS OF THIS CONCLUSION, THE AO HAS HELD THAT THE APPELLANT HAS FILED INACCURATE PARTICULARS OF INCOME RESULTING THEREBY IN CONCEALM ENT WHICH ATTRACTS THE PENAL PROVISIONS OF SECTION 271(1)(C) OF THE ACT. T HE AO HAS NOT GIVEN ANY FINDING AS TO WHAT INACCURATE PARTICULARS WERE FILED BY THE APPELLANT BUT MERELY BECAUSE THE DEPARTMENT HAS NOT AGREED WI TH THE VIEW OF THE 6 APPELLANT, THE AO CONCLUDED THAT INACCURATE PARTICU LARS WERE FILED. HENCE THE AO LEVIED PENALTY @ 100% OF THE INCOME FROM INB OUND TRANSACTIONS. FOR THE ASSESSMENT YEAR 1990-91, THE AO ALSO HELD THAT THE INCOME WAS ASSESSABLE UNDER THE DTAA AS WELL AND H ENCE THE PENALTY IS LEVIABLE. THE CIT(APPEALS) CONFIRMED THE ORDER OF THE AO PR IMARILY RELYING ON THE DECISION OF THE TRIBUNAL ON THE MERI TS AND HOLDING THAT THERE IS NO QUESTION OF CALLING THE FACTUAL POSITIO N AS MERELY DIFFERENCE OF OPINION WHEN IT IS BASED ON THE APPRECIATION AND AN ALYSIS OF THE FACTS BY THE HIGHEST FACT FINDING AUTHORITY. 3. THE ASSESSEE PREFERRED APPEALS ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE PENALTIES LEVIED BY THE ASS ESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 FOR ASSESSMENT YEARS 1989-99 AND 1990-91 MERELY REL YING ON THE ORDER OF THE INCOME TAX APPELLATE TRIBUNAL WHIC H CONFIRMED PART OF THE ADDITIONS TO THE TOTAL INCOME . 4. THE LEARNED COUNSEL FOR THE ASSESSEE, MR. P.J. PARDIWALA, SUBMITTED THAT THE PENALTY CANNOT BE LEVIED WHEN T HERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. HIS CASE IS THAT THE ASSESSEE HAS DISCLOSED ALL PARTICULARS AND NEITHER THE AO NOR THE CIT(APPEALS) HAS POINTED OUT ANY MATERIAL PARTICULA RS WHICH WERE NOT DISCLOSED BY THE ASSESSEE. HE RELIED ON THE DECISI ON OF SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD . 230 CTR 320. HE FURTHER SUBMITTED THAT PENALTY CANNOT BE LEVIED MER ELY BECAUSE THE REVENUE AUTHORITIES HAVE TAKEN A DIFFERENT VIEW THA N THAT OF THE ASSESSEE. 7 HE ARGUED THAT THE ASSESSEE MADE A BONAFIDE SUBMISS ION WHICH IS BASED ON THE FACTS WHICH ARE DISCLOSED IN THE RETURN OF I NCOME AND THE AO HAD GIVEN A DIFFERENT LEGAL INTERPRETATION WHICH IS NOT ONLY NOW PENDING BEFORE THE HIGH COURT BUT ALSO IS A SUBJECT MATTER BEFORE THE SPECIAL BENCH OF THE TRIBUNAL. HE POINTED OUT THAT FOR THE SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 1991-92 TO 1993-94 THE SPECIAL BEN CH IS CONSTITUTED TO DEAL WITH THE CORRECTNESS OF THE FINDINGS OF THE DI VISION BENCH OF THE EARLIER YEARS AS TO WHETHER THE ASSESSEE HAS A PE I N INDIA. HE SUBMITTED THAT WHEN THE SPECIAL BENCH IS CONSTITUTED, IT WOUL D JUSTIFY DELETION OF A PENALTY AND FOR THIS PROPOSITION HE RELIED ON THE F OLLOWING CASE LAWS: I) ITO VS. M/S DARBHANGA MANSION CO-OPERATIVE HOU SING SOCIETY IN ITA NO. 2808/MUM/2009. II) MANERSK INDIA PVT. LTD. VS. DCIT IN ITA NO. 18 83/MUM/2006. 5. THE LEARNED DR, SHRI AARSI PRASAD, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE HAS MADE A WRONG CLAIM AND THAT THE ITAT HAS HELD THAT THE ASSESSEE HAS A BUSINESS CONNECTIO N IN INDIA WITHIN THE MEANING OF SECTION 9(1)(I) AND THAT THE ASSESSEE IS TAXABLE IN INDIA. HE TOOK THIS BENCH THROUGH PAGE 6 OF THE ORDER OF THE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE DECISIONS OF THE TRIBUNAL FO R THE ASSESSMENT YEARS 1989-90 AND 1990-91 WERE DISCUSSED THEREIN AND ON T HIS FACTUAL POSITION IT IS CLEAR THAT THE ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS OF INCOME RESULTING THEREBY IN CONCEALMENT WHICH ATTRACTS PEN ALTY U/S 271(1)(C). HE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND A RGUED THAT THE SAME MAY BE UPHELD. 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSA L OF THE PAPERS ON 8 RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS W ELL AS THE CASE LAW CITED, WE HOLD AS FOLLOWS. 7. THE ASSESSEE HAS FURNISHED FULL PARTICULARS IN HIS RETURN OF INCOME. IN FACT, IN THE NOTES TO THE RETURN OF INCO ME, THE CLAIM HAS BEEN MADE AMPLY CLEAR. THE VERY FACT THAT THE ISSUE HAS BEEN REFERRED TO A SPECIAL BENCH FOR ADJUDICATION, DEMONSTRATES THAT I T IS A DEBATABLE LEGAL ISSUE. THE CLAIM OF THE ASSESSEE, IN OUR HUMBLE OPI NION, IS A BONAFIDE CLAIM. THE HONBLE BOMBAY HIGH COURT HAS ALSO ADMIT TED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT A SUBSTANTIAL QUEST ION OF LAW ARISES. ON THIS FACTUAL MATRIX, WE ARE OF THE CONSIDERED OPINI ON THAT NO PENALTY CAN BE LEVIED ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. THE FACTS HAVE ALREADY BEEN BROUGHT OUT ON PAGE 1 TO 6 OF THIS OR DER. 8. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS . RELIANCE PETROPRODUCTS LTD. HELD AS FOLLOWS : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALME NT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXION, THE MEANING OF THE WORD PARTICULAR IS A D ETAILS (IN PLURAL SENSE); THE DETAILS OF THE CLAIM, OR THE SEPARATE I TEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN THE S. 27 1(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MAD E. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFOR MATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESS EE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE WO RDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENA LTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENA LTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, M AKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING INACCURATE 9 PARTICULARS. THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER S. 271(1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WO ULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCU MENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. CIT VS. ATUL MOHAN BINDAL (2009) 225 CTR (SC) 248 : 28 DTR (SC) 1 : (2009) 9 SSC 589 FOLLOWED. (PARAS 7 & 8) READING THE WORDS INACCURATE AND PARTICULARS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. IN THIS CASE, THERE I NO FINDING THAT ANY DETAILS S UPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO Q UESTION OF INVITING THE PENALTY UNDER S. 271(1)(C). A MERE MAK ING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WH ICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NO T. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLA IM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271(1)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WH ERE THE CLAIM MADE IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE C IT(A) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION.- SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU & ANR. (2009) 2 3 VST 249 (SC), APPLIED, RELIANCE PETROPRODUCTS (P) LTD. (JUD GMENT DT, 23 RD OCT., 2007 OF THE GUJARAT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 9. APPLYING THE PROPOSITIONS LAID DOWN TO THE FACT S OF THIS CASE, WE HAVE TO NECESSARILY HOLD THAT MERELY BECAUSE THE ASSESSEE HAS MADE A BONAFIDE CLAIM, AND THE REVENUE HAS REJECTED THE CL AIM ON A DIFFERENT LEGAL INTERPRETATION, A PENALTY U/S 271(1)(C) CANNO T BE LEVIED. THUS WE 10 UPHOLD THE CONTENTION OF THE ASSESSEE THAT THERE IS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THIS CASE. THER E IS NO FINDING IN THE RETURN OF INCOME THAT ANY DETAILS SUPPLIED BY THE A SSESSEE IN THE RETURN OF INCOME WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. HENCE WE DELETE THE PENALTIES FOR BOTH THE ASSESSMENT YEARS. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF JUNE, 2010. SD/- SD/- (R.S.PADVEKAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 25 TH JUNE, 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, B-BENCH (TRUE COPY) BY ORDER AS STT. REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI.