DCIT 4(1), MUMBAI V. CREDIT SUISSE SECURITIES (I) P.LTD, MUMBAI

ITA 3646/MUM/2010

• Counselvise Citation: 364619914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-09-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 07-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Keywords: Depreciation; Transfer pricing; Earning of tax free income; Difference of opinion; Corroborative evidences; Onus to prove
• Section: 271(1)(c); 14A; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI B. RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO. 3646/MUM/2010 ASSESSMENT YEAR-2002-03 THE DCIT 4(1), AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. CREDIT SUISSE SECURITIES (I) PVT. LTD., 9 TH FLOOR, CEEJAY HOUSE, PLOT F, SHIVSAGAR ESTATE, DR. A.B. ROAD, WORLI, MUMBAI -400 019 PAN-AAACC 4388G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ALEXANDER CHANDY RESPONDENT BY: SHRI FARROKH V. IRANI DATE OF HEARING :20 .09.2011 DATE OF PRONOUNCEMENT:28.9.2011 O R D E R PER B.R. MITTAL, JM : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMEN T YEAR 2003-04 AGAINST THE ORDER OF LD. CIT(A) DT. 03.02.2010 ON T HE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) CLEARLY ERRED IN FACTS AND IN L AW IN CANCELLING PENALTY U/S. 271(1)(C) WITHOUT APPRECIAT ING THE FACT THAT THE PENALTY WAS CLEARLY LEVIABLE FOR FILI NG INACCURATE PARTICULARS AND FOR CONCEALMENT OF INCOM E. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) CLEARLY ERRED IN FACTS AND IN L AW HOLDING THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE HAD NOT ACTED IN GOOD FAITH AND NOT EXERCISED DUE DILIGENCE. ITA NO. 3646/M/2010 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) CLEARLY ERRED IN FACTS AND IN L AW IN CANCELLING PENALTY U/S. 271(1)(C) WITHOUT APPRECIAT ING THE FACT THAT THE AO FOUND SERIOUS DISCREPANCIES, LACK OF AUTHENTICITY AND NON-AVAILABILITY OF DATA ETC. WHIC H AMOUNTED TO FILING OF INACCURATE PARTICULARS OF INC OME. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE AND STOCK BROKING, SECURITIES TRADING AND MANAGEMENT SERVICES. THE ASSESSEE IS A MEMBER OF THE NATIONAL STOCK EXCHANGE AND THE BOMBAY STOCK EXCHANGE. THE ASSESSE E FILED ITS RETURN FOR ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL LOSS OF RS. 31,55,48,110/-. THE ASSESSING OFFICER COMPLETED TH E ASSESSMENT ASSESSING LOSS AT RS. 22,96,06,394/- BY MAKING CERTAIN DISALL OWANCE/OR ADDITIONS INTER ALIA AS UNDER : S. NO. ITEM OF DISALLOWANCE/ADDITION QUANTUM OF DISALLOWANCE (RS.) 1. INTEREST CLAIM 26,36,325 2. INTEREST ACCRUED BUT NOT DUE 2,36,32,961 3. SETTLEMENT COST 1,44,00,000 4. LEGAL & PROFESSIONAL 4,65,388 5. SEBI REGISTRATION FEES 46,01,543 6. BUSINESS PROMOTION EXPENSES 2,11,998 7. PRIOR PERIOD EXPENSES 71,02,572 8. EXPENDITURE U/S 14A OF THE ACT 3,27,172 9. TRANSFER PRICING ADJUSTMENT 4,34,462 3. IT IS RELEVANT TO STATE THAT ASSESSEE FILED APPEA L BEFORE LD. CIT(A) DISPUTING INTER ALIA ABOVE MENTIONED DISALLOWANCES/ ADDITIONS MADE BY AO. HOWEVER, ASSESSEE DID NOT PURSUE THE SAID APPEAL AN D WITHDREW IT ON ALL THE GROUNDS, EXCEPT CLAIM OF DEPRECIATION IN RESPECT OF MEMBERSHIP CARD OF BOMBAY STOCK EXCHANGE IN VIEW OF PROVISIONS OF SEC. 79 OF THE I.T. ACT THAT THE COMPANY COULD NOT HAVE BEEN BENEFITED FROM CAR RY FORWARD OF ANY ITA NO. 3646/M/2010 3 BUSINESS LOSS IN RESPECT OF ASSESSMENT YEAR UNDER C ONSIDERATION. IN VIEW OF AFORESAID DISALLOWANCES/ADDITIONS MADE BY AO, THE A O INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT AND LEVIE D PENALTY AGGREGATING TO RS. 1,92,11,034/- AND THE RESPECTIVE DETAILS FOR LE VY OF PENALTY AGAINST THE ITEMS WHICH WERE DISALLOWED BY AO AT THE TIME OF MA KING ASSESSMENT ARE AS UNDER: S. NO. ITEM OF DISALLOWANCE/ADDITION QUANTUM OF DISALLOWANCE (RS.) 100% OF THE ALLEGED TAX EVADED (PENALTY IMPACT) RS. 1. INTEREST CLAIM 26,36,325 9,41,168 2. INTEREST ACCRUED BUT NOT DUE 2,36,32,961 84 , 36 , 967 3. SETTLEMENT COST 1,44,00,000 51,40,800 4. LEGAL & PROFESSIONAL 4,65,388 1,66,144 5. SEBI REGISTRATION FEES 46,01,543 16,42,751 6. BUSINESS PROMOTION EXPENSES 2,11,998 75,683 7. PRIOR PERIOD EXPENSES 71,02,572 25,35,618 8. EXPENDITURE U/S 14A OF THE ACT 3,27,172 1,16,800 9. TRANSFER PRICING ADJUSTMENT 4,34,462 1,55,103 TOTAL 1,92,11,034 BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE LD. CIT(A). 4. ON BEHALF OF THE ASSESSEE, IT WAS CONTENDED AS UNDER: A) IN RESPECT OF PENALTY ON DISALLOWANCE OF INTEREST CL AIMED, IT WAS MADE ON THE BASIS THAT INTEREST WAS NOT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES OF THE ASSESSEE. THAT DISALLOWANC E OF INTEREST AT THE MOST COULD BE REGARDED AS DEBATABLE BUT THERE W AS NO CONCEALMENT AND/OR FURNISHING OF INACCURATE PARTICU LARS OF INCOME. FURTHER IN ASSESSMENT YEAR 2000-01 AND 2001-02, SIM ILAR ITA NO. 3646/M/2010 4 DISALLOWANCES WERE MADE BUT IN THE APPELLATE PROCEE DINGS, ISSUES WERE DECIDED IN FAVOUR OF ASSESSEE. B) IN RESPECT OF LEVY OF PENALTY ON INTEREST ACCRUED BU T NOT DUE, IT WAS IN RESPECT OF GOVERNMENT SECURITIES THAT ASSESSEE D ISCLOSED RELEVANT FACTS WITH RESPECT TO INTEREST ACCRUED BUT NOT DUE IN ITS RETURN OF INCOME IN NOTE-4 TO ITS COMPUTATION OF TOTAL INCOME . HENCE THERE WAS NO CONCEALMENT OF FACTS AND/OR FURNISHING INACC URATE PARTICULARS OF INCOME. SIMILAR ISSUE WAS DECIDED I N FAVOUR OF ASSESSEE BY THE APPELLATE AUTHORITIES IN ASSESSMENT YEAR 2001-02. C) IN RESPECT OF PENALTY ON SETTLEMENT COST PAID TO IL&F S OF RS. 1,44,00,000/-, AO MADE DISALLOWANCE ON THE GROUND T HAT SAID EXPENSES WERE NOT INCURRED BY ASSESSEE FOR THE PUR POSES OF BUSINESS. HOWEVER, ASSESSEE CONTENDED THAT IT DIS CLOSED BY WAY OF SUITABLE NOTE IN THE FINANCIAL STATEMENT AS WELL AS NOTE-1 TO THE RETURN OF INCOME THAT PURSUANT TO SEBI ORDER IT WA S ABLE TO CARRY ON BROKING TRANSACTIONS AS WELL AS TRANSACTION OF TRADING IN SHARES OF ITS OWN ACCOUNT ONLY FOR A PERIOD OF 18 DAYS IN THE RELEVANT YEAR I.E. UPTO 18.4.2001. THAT ASSESSEE FURNISHED A CER TIFICATE FROM IL&FS SETTING OUT THE NATURE AND SCOPE OF SERVICES W HOLLY RENDERED BY THEM AND ALSO MENTIONING THE FEE PAID BY ASSESSE E TO IL&FS IN THE PREVIOUS YEAR TO THE ASSESSMENT YEAR UNDER CONS IDERATION. IT WAS ALSO CONTENDED THAT IL&FS WAS NOT RELATED TO AS SESSEE IN ANY MANNER. HOWEVER, AO MADE DISALLOWANCE OF EXPENSES CLAIMED. BUT THERE WAS NO CONCEALMENT OF FURNISHING OF INACC URATE PARTICULARS IN RESPECT OF ABOVE AMOUNT. THAT ASSES SEE FILED COPIES OF INVOICES, COPIES OF CONTRACT AND CONFIRMATORY LE TTER FROM IL&FS JUSTIFYING ASSESSEES CLAIM THAT IT PAID FEE TO IL& FS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS. D) IN RESPECT OF LEVY OF PENALTY ON ACCOUNT OF DISALLOW ANCE OF LEGAL AND PROFESSIONAL FEE OF RS. 4,65,388/- PAID TO GENESIS, THE AO STATED THAT IT WAS INCURRED BY ASSESSEE ON BEHALF OF CSFB (HONG KONG) ITA NO. 3646/M/2010 5 LTD. HOWEVER, ASSESSEE CONTENDED THAT THERE WAS AN AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND GENESIS DESCRIBIN G THE NATURE OF SERVICES PROVIDED BY GENESIS TO ASSESSEE COMPANY . IT PAID A TOTAL SUM OF RS. 60,94,574/- OF WHICH RS. 38,29,186 /- WAS RECOVERED FROM INDIA REPRESENTATIVE OFFICE OF CSFB ( HONG KONG) LTD., A SISTER CONCERN OF THE COMPANY, TOWARDS REIM BURSEMENT OF THEIR SHARE OF THE EXPENSES AND THEREFORE ASSESSEE EFFECTIVELY CLAIMED THE NET AMOUNT OF RS. 22,65,388/- AS ITS EX PENSES. HOWEVER, AO DID NOT ACCEPT THE EXPLANATION OF ASSES SEE AND TOOK A VIEW THAT A SUM OF RS. 1,50,000/- PER MONTH COULD B E CONSIDERED AS ALLOWABLE EXPENSES AND THEREFORE DISALLOWED BALA NCE RS. 4,65,388/- OUT OF RS. 22,65,388/-. IT WAS CONTENDED THAT THERE WAS NO CONCEALMENT OF FACTS /OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME BY THE ASSESSEE AND AO MADE DISALLOWANCE BAS ED ON ITS OWN PRESUMPTIONS AND ASSUMPTIONS. E) IN RESPECT OF PENALTY FOR DISALLOWANCE OF REGISTRATI ON FEE PAID TO SEBI OF RS. 46,01,543/-, ASSESSEE STATED THAT A SUM OF RS. 4,09,13,000/- WAS ALREADY PAID FOR, ON ACCOUNT OF S EBI TURNOVER FEES FOR THE YEAR ENDED 31 ST MARCH,2001. HOWEVER, THE ACTUAL SEBI TURNOVER FEE WAS BASED ON INTIMATION FROM SEBI, SUB SEQUENTLY ASCERTAINED TO BE RS. 4,55,14,794/- AND THEREFORE A SUM OF RS. 46,01,543/- WAS FOUND TO BE SHORT PROVIDED IN EARLI ER YEAR, WHICH WAS PROVIDED IN THE FINANCIAL STATEMENTS OF CURRENT YEAR. HOWEVER, AO DISALLOWED THE SAID SUM OF RS. 46,01,543/- BEING PRIOR PERIOD EXPENSES. THE ASSESSEE STATED THAT AFORESAID PRACTI CE IS CONSISTENT WITH THE PRACTICE FOLLOWED BY THE ASSESSEE IN EARLI ER YEARS AND WHEN THERE WAS NO DISALLOWANCE MADE IN THE ASSESSME NT ORDERS IN RESPECT OF POSSIBLE SIMILAR SHORTFALLS IN PROVISION MADE FOR SEBI TURNOVER FEES IN A PARTICULAR YEAR, BOOKED IN SUBSE QUENT YEARS. THE ASSESSEE STATED THAT IT DISCLOSED ALL FACTS IN ITS ACCOUNTS AND THERE ITA NO. 3646/M/2010 6 WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS OF INCOME F) IN RESPECT OF PENALTY OF BUSINESS PROMOTION EXPENSES OF RS. 2,11,998/-, IT WAS CONTENDED THAT THESE WERE DISALL OWED BY AO ON THE GROUND THAT THESE WERE POSSIBLY PERSONAL EXPENS ES. THERE WAS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME AND THE AO MADE ADHOC DISALLOWANCE OF 25% OF TOTAL BUSINESS PROMOTIONAL EXPENSES CLAIMED BY IT. HENCE THERE WA S NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. G) IN RESPECT OF PENALTY FOR DISALLOWANCE OF VARIOUS EX PENSES AGGREGATING RS. 71,02,572/- ON THE BASIS THAT THEY ARE IN THE NATURE OF PRIOR PERIOD EXPENSES, THE ASSESSEE CONTENDED TH AT IT ALSO INCLUDES A SUM OF RS. 46,01,543/- IN RESPECT OF SEB I TURNOVER FEE PAID AND FOR WHICH THERE WAS SEPARATE DISALLOWANCE AND IT SECOND TIME DISALLOWANCE MADE WHILE MAKING DISALLOWANCE OF RS. 71,02,572/-. HENCE THERE WAS DOUBLE DISALLOWANCE O N THIS COUNT IN THE ASSESSMENT ORDER. IT WAS FURTHER CONTENDED THAT ASSESSEE RECEIVED CERTAIN BILLS AFTER CLOSURE OF ITS BOOKS O F ACCOUNTS FOR THE YEAR ENDED 31 ST MARCH, 2001 AND THOSE BILLS WERE PROCESSED, APPROVED AND ACCOUNTED FOR IN THE PREVIOUS YEAR REL EVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. HENCE LIABILI TY FOR SUCH EXPENSES CRYSTALLIZED ONLY IN THE ASSESSMENT YEAR U NDER CONSIDERATION AND ASSESSEE CLAIMED DEDUCTION FOR SU CH EXPENSES ACCORDINGLY. IT WAS CONTENDED THAT IT WAS NOT THE CO NTENTION OF THE AO THAT THOSE EXPENSES ARE FALSE OR EXCESSIVE. HE DISALLOWED SAID SUM ONLY ON THE GROUND THAT THESE RELATED TO PRIOR PERIOD EXPENSES. THE ASSESSEE STATED THAT THERE WAS NO CONCEALMENT O R FURNISHING OF ANY INACCURATE PARTICULARS ON THE PART OF THE ASSES SEE IN RESPECT OF AFORESAID DISALLOWANCE MADE BY AO. ITA NO. 3646/M/2010 7 H) IN RESPECT OF PENALTY ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE AS PER SEC. 14A OF THE I.T. ACT OF RS. 3,27,172/- ON T HE GROUND THAT IT WAS INCURRED BY THE ASSESSEE IN RELATION TO EARNING OF EXEMPT DIVIDEND INCOME, THE ASSESSEE STATED THAT NO EXPENS ES WERE INCURRED BY ASSESSEE IN EARNING OF EXEMPT INCOME AN D THE SAME WAS ALSO STATED IN NOTE 8 TO THE RETURN OF INCOME. THE ASSESSEE MADE ADEQUATE DISCLOSURES IN THE RETURN OF INCOME A ND HENCE THERE WAS NO CASE OF CONCEALMENT OR FURNISHING OF A NY INACCURATE PARTICULARS ON THE PART OF THE COMPANY. THAT MERE NON-ACCEPTANCE OF THE VIEW OF ASSESSEE COULD NOT GIVE RISE TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. I) IN RESPECT OF LEVY OF PENALTY ON ACCOUNT OF ADJUSTME NT MADE U/S. 92CA(3) BY TRANSFER PRICING OF RS. 4,34,462/-, IT WAS CONTENTED THAT ALL RELEVANT FACTS RELATING TO BROKERAGE CHARG ED WITH ASSOCIATED ENTERPRISES WERE FULLY BROUGHT OUT IN THE ACCOUNTS REPORT IN FORM 3CEB WHICH WAS FILED AT THE TIME OF FILING OF RETUR N OF INCOME FOR THE YEAR. HENCE ASSESSEE DISCLOSED ALL RELEVANT FAC TS IN RESPECT OF BROKERAGE TRANSACTION WITH THIS ASSOCIATED ENTERPRI SES. HOWEVER, AO MADE ADJUSTMENTS OF RS. 4,34,462/- TO ASSESSEES INCOME IN VIEW OF TPOS VIEW THAT THERE WAS SHORT RECOVERY I N BROKERAGE CHARGED IN RESPECT OF DVP TRADES TO KALLAR KAHAR IN VESTMENTS LTD., AND ASSOCIATED ENTERPRISES OF THE ASSESSEE. THAT AO MERELY ACCEPTED THE SUGGESTION MADE BY TPO IN REGARD TO AD DITION ON ACCOUNT OF DIFFERENCE OF VIEW, IT COULD NOT BE A G ROUND TO LEVY PENALTY U/S. 271(1)(C). 5. THE LD. CIT(A) CONSIDERED ABOVE SUBMISSION OF AS SESSEE AND HAS STATED THAT THE ISSUES IN REGARD TO ABOVE ADDITIONS AND DELETIONS EXCEPT ADDITION MADE IN RESPECT OF TRANSFER PRICING ADJUST MENT OF RS. 4,34,462/- ARE HIGHLY DEBATABLE IN NATURE AND FOR WHICH THE ASSESS EE HAD DISCLOSED FULL PARTICULARS OF ITS RETURN OF INCOME. THE EXPRESSIO N FURNISHING OF INACCURATE ITA NO. 3646/M/2010 8 PARTICULARS OF INCOME IMPLIES FURNISHING ALL DETAI LS OR INFORMATION ABOUT WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH. IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS TAXABILITY OF INCOME, ADMISSIBILITY O F A DEDUCTION AND INTERPRETATION OF LAW AS IS THE CASE OF THE ASSESSE E HEREIN. HE OBSERVED THAT DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO CANNOT BE TREATED AS ADEQUATE GROUND FOR LEVY OF PENALTY. FURTHER, LD. CIT(A) IN RESPECT OF ADJUSTMENT MADE ON ACCOUNT OF TRANSFER PRICING ADJU STMENT STATED THAT THE BASIS ON WHICH TPO HAD COME TO HIS CONCLUSION IS NOT KNOWN AND IT REMAINS AN ASSUMPTION WHICH IS NOT BACKED BY CORROBORATIVE EVIDENCES AND THEREFORE IT CANNOT BE A BASIS FOR LEVY OF PENALTY. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAD NOT ACTED IN GOOD FAITH AND NOT E XERCISED DUE DILIGENCE. IN VIEW OF ABOVE LD. CIT(A) HAS DELETED THE PENALTY AG GREGATING RS. 1,92,11,034/- LEVIED BY AO U/S. 271(1)(C) OF THE AC T. HENCE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, LD. DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDER OF AO AND WHEREAS THE LD. AR JUSTIFIED THE OR DER OF LD. CIT(A). HE ALSO FILED A CHART SUMMARIZING THE REASONS FOR MAKING DI SALLOWANCES BY AO, SUBMISSIONS MADE BY ASSESSEE BEFORE LD. CIT(A) AND ALSO REFERRED THE CASES TO SUPPORT THE ORDER OF LD. CIT(A). 7. WE HAVE CONSIDERED ORDERS OF AUTHORITIES BELOW A ND THE WRITTEN SUBMISSION FILED BY ASSESSEE BEFORE THE AO AS WELL AS BEFORE LD. CIT(A). WE OBSERVE THAT AO LEVIED PENALTY IN RESPECT OF SOME I TEMS, HEREIN ON SIMILAR KIND OF DISALLOWANCES MADE IN ASSESSMENT YEAR 2003- 04 & 2004-05, BUT LD. CIT(A) DELETED THE SAME. WE OBSERVE THAT THE SAID H EADS FOR WHICH THE PENALTY WAS IMPOSED BY AO AND DELETED BY LD. CIT(A) IN ASSESSMENT YEARS 2003-04 AND 2004-05 ARE (A) PENALTY IN RESPECT OF D ISALLOWANCE OF INTEREST CLAIMED (B) INTEREST ACCRUED BUT NOT DUE (C) DISALL OWANCE IN RESPECT OF LEGAL & PROFESSIONAL FEES (D) DISALLOWANCE IN RESPECT OF SETTLEMENT COST PAID TO IL&FS. WE OBSERVE THAT DEPARTMENT FILED APPEALS BEFO RE THE TRIBUNAL AND THE TRIBUNAL CONFIRMED THE ORDER OF LD. CIT(A) VIDE ITS ORDER DT. 21 ST JANUARY, ITA NO. 3646/M/2010 9 2011 (TO WHICH ONE OF US IS A PARTY- AM) IN ITA NO. 1104 & 1105/MUM/2010. WE ALSO OBSERVE THAT AO HAS LEVIED PENALTIES MAINLY ON ACCOUNT OF ADDITIONS/DISALLOWANCES MADE OUT OF THE EXPENSES CL AIMED BY ASSESSEE, EXCEPT IN RESPECT OF ADJUSTMENT MADE OF RS. 4,34,46 4/- ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT U/S. 92CA(3) OF THE ACT . WE OBSERVE THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT CLAIM OF ASSESSEE I N RESPECT OF EXPENSES CLAIMED/OR ADDITIONS MADE WERE FALSE OR UNTRUE. TH E ASSESSEE FAILED TO DISCLOSE RELEVANT FACTS AND/OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR CONCEALED ITS INCOME. THE HONBLE APEX COURT IN TH E CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 AFTER CONSIDERING ITS EARLIER DECISIONS INCLUDING THE CASE OF UNION OF INDIA VS D HARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) HAS HELD AS UNDE R: 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 PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIV EN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING 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 INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDIN G 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 QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT S USTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO ITA NO. 3646/M/2010 10 FURNISHING INACCURATE PARTICULARS. 8. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF CIT VS SIDDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) HAS ALSO HELD THAT PENALTY U/S. 271(1)(C) OF THE ACT COULD BE IMPOSED ONLY WHE N THERE WAS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A MERE MISTAK E. 9. THE HONBLE MADRAS HIGH COURT IN THE CASE OF INCO ME-TAX VS CAFCO SYNDICATE SHIPPING CO. (MAD) 294 ITR 134 THAT THE PRIMARY BURDEN OF PROOF IS ON THE REVENUE WHERE THE BOOKS OF ACCOUNT REVEAL ES THAT THE EXPENSES WERE INCURRED BY THE ASSESSEE BUT ONLY INCAPACITY ON THE PART OF THE ASSESSEE WAS THAT IT WAS NOT ABLE TO PRODUCE PROPER DOCUMENTS FOR THE EXPENSES INCURRED AND THAT BY ITSELF WOULD NOT AMOU NT TO CONCEALMENT OF INCOME. IT WAS HELD THAT PENALTY CANNOT BE IMPOSED . 10. IN THE CASE BEFORE US, WE OBSERVE THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT THE ASSESSEE HAS NOT GIVEN EXPLANAT IONS FOR THE EXPENSES CLAIMED BY IT IN ITS BOOKS OF ACCOUNTS BUT ON THE O THER HAND WE OBSERVE THAT THE ASSESSEE HAS MADE FULL DISCLOSURE FOR THE EXPEN SES CLAIMED AND ALSO JUSTIFIED THE SAME. HOWEVER, AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND NOWHERE HE HAS COME TO THE FINDING THA T THE CLAIM OF THE ASSESSEE WAS FALLS OR ASSESSEE DISCLOSED WRONG PART ICULARS OF ITS INCOME OR THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE OR WAS UNTR UE. FURTHER, IN RESPECT OF ADJUSTMENT MADE ON THE BASIS OF REPORT OF TPO, WE A LSO OBSERVE THAT MERELY THE SAID ADDITION WAS MADE ON THE BASIS OF THE VIEW OF TPO, AND IN THE ABSENCE OF CORROBORATIVE FACTS BROUGHT ON RECORD FO R MAKING THE SAID ADJUSTMENT IN RESPECT OF THE TRANSACTIONS ENTERED B Y THE ASSESSEE WITH ITS ASSOCIATED CONCERN, CANNOT BE PRESUMED THAT ASSESSE E FURNISHED WRONG OR INACCURATE PARTICULARS OF INCOME. 11. HENCE CONSIDERING THE ABOVE FACTS ON RECORD AND THE DECISIONS CITED HEREIN ABOVE AND ALSO CONSIDERING THE EARLIER DECIS IONS OF CO ORDINATE BENCH ITA NO. 3646/M/2010 11 DT. 21.1.2011 IN ASSESSEES OWN CASE (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THEREFORE, WE UPHOLD THE ORDER OF LD. CIT(A) AND REJECT THE GROUND OF APPEAL TAKEN BY REV ENUE. 12. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF SEPTEMBER, 2011 SD/- SD/- ( B. RAMAKOTAIAH) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 28 TH SEPTEMBER, 2011 RJ OPY TO : 1. CAPPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 3646/M/2010 12 . ITA NO. 3646/M/2010 13 ITA NO. 3646/M/2010 14 DATE INITIALS 1. DRAFT DICTATED ON: 22.9.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 26.09.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE JM/AM ITA NO. 3646/M/2010 15 THE SECOND MEMBER: 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: