ITO (E) 2(2), MUMBAI V. PRABHODHAN PRAKASHAN, MUMBAI

ITA 3833/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8766 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 22-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A COMMON
• Keywords: Depreciation; Charitable institution
• Section: 43B; 12A; 6; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI C. N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NOS. 3831/MUM/2015 ASSESSMENT YEAR 2007-08 & ITA NOS. 3833/MUM/2015 ASSESSMENT YEAR 2008-09 ITO - (E)2(2) ROOM NO.502, 5 TH FLOOR, PIRAMAL CHAMBERS, LAL BAUG, PAREL, MUMBAI-400 012 VS. PRABODHAN PRAKASHAN SADGURU DARSHAN, NAGU SAYAJI WADI, DAINIK SAAMNA MARG, MUMBAI 400025 PANNO. : AAA TP 3410 F APPELLANT .. RESPONDENT DATE OF HEARING: 20.10.2016 DATE OF PRONOUNCEMENT: 18.01. 2017 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS ARE FILED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER (APPEALS) 7, MUMBAI AND ARISE OUT OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). THE ASSESSMENT YEARS ARE 2007-08 AND 2008-09. REGARD BEING HAD TO THE SI MILITUDE OF THE ISSUES IN THESE APPEALS, THEY WERE HEARD TOGETHER A ND DISPOSED OF BY A COMMON ORDER. 2. THE 1 ST GROUND RAISED BY THE REVENUE IN THESE APPEALS IS T HAT THE LEARNED CIT(A) ERRED IN DELETING PENALTY OF RS. 19, 32,354/- FOR THE A.Y. 2007-08 AND RS. 18,62,354/- FOR THE A.Y. 2008-09 IM POSED BY THE AO APPELLANT BY: SHRI RAJESH OJHA , DR RESPONDENT BY: SHRI A NIL SATHE , AR ITA NO. 3831 & 3833/MUM/2015 2 U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THERE I S NO CONCEALMENT OF ANY FACT. IT IS FURTHER STATED THAT THE LEARNED CIT (A) ERRED IN NOT ACCEPTING THAT IT WAS A CONCEALMENT, WHEN IT WAS PR OVED THAT THE ASSESSEE WAS NOT IN CHARITABLE ACTIVITY BUT IN COMM ERCIAL / BUSINESS ACTIVITY AND THE SAME WAS UPHELD IN APPEAL. ALSO IT IS STATED THAT THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THAT THE ASSE SSEE IS DELIBERATELY CLAIMING EXEMPTION U/S 11, EVEN THOUGH THE JUDICIAL AUTHORITIES HAVE DECIDED THAT THE ASSESSEE WAS NOT DOING A CHARITABL E ACTIVITY. 3. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2007-08 ON 31.10.2007 DECLARING TOTAL LOSS OF RS. 1,29,54,737/ -. THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT ON 18.12.2009 DETERMINING THE LOSS AT RS. 39,11,377/-. THE ASSESSEE ALSO FILED IT S RETURN OF INCOME FOR THE A.Y. 2008-09 ON 30.09.2008 DECLARING NIL INCOME. THE AO COMPLETED THE ASSESSMENT ON 02.12.2010 DETERMINING THE INCOME AT RS. 1,19,92,709/-. DURING THE COURSE OF THE IMPUGNED AS SESSMENT YEARS, THE AO TOOK INTO ACCOUNT THE DECISION OF ITAT IN THE CA SE OF THE ASSESSEE FOR THE A.Y. 1989-90 WHEREIN IT HAS BEEN HELD THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT OF CHARITABLE NATURE AND IT WAS R UNNING THE BUSINESS OF PUBLISHING NEWSPAPER. THUS EXEMPTION U/S 11 WAS DENIED TO THE ASSESSEE. THE AO FOUND THAT THE ACTIVITIES OF THE A SSESSEE IN THE IMPUGNED ASSESSMENT YEARS WERE SAME AS THE ONE IN T HE A.Y. 1989-90. IN VIEW OF THE ABOVE, THE A.O. IMPOSED A MINIMUM PE NALTY OF RS. 19,32,534/- FOR THE A.Y. 2007-08 AND RS. 18,62,354/ - FOR THE A.Y. 2008- 09 U/S 271(1)(C) OF THE ACT. 4. THE ASSESSEE PREFERRED APPEAL AGAINST THE ORDER OF THE AO BEFORE THE LEARNED CIT(A). IT IS FOUND BY THE LEARNED CIT( A) THAT THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S 12A OF THE ACT A ND ALSO UNDER THE BOMBAY PUBLIC TRUST ACT BY THE CHARITY COMMISSIONER . HOWEVER, THE ITA NO. 3831 & 3833/MUM/2015 3 TRUST WAS DENIED EXEMPTION U/S 11 OF THE ACT ON THE GROUND THAT INCOME FROM RUNNING OF NEWSPAPER HAD NOT BEEN APPLIED FOR CHARITABLE PURPOSES. INSTEAD, THE INCOME EARNED HAD BEEN SPENT TOWARDS ACQUISITION OF ASSETS. THE LEARNED CIT(A) HAS MENTI ONED THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE TO PROVE THAT IT WAS ENGAGED IN THE ACTIVITY OF GIVING RELIEF TO THE POOR, OR EDUCA TION, OR MEDICAL RELIEF. ALSO THE LEARNED CIT(A) HAS MENTIONED THAT SINCE TH E ONUS CAST ON THE ASSESSEE THAT IT HAD USED ITS INCOME FOR CHARITABLE PURPOSES, I.E. RELIEF TO THE POOR, EDUCATION OR MEDICAL RELIEF ETC. WAS NOT DISCHARGED, THE AO HAS DENIED TO THE ASSESSEE GRANT OF EXEMPTION U/S 11 OF THE ACT EVEN THOUGH THE REGISTRATION OF THE TRUST U/S 12A WAS SUBSISTIN G. THE LEARNED CIT(A) HAS MENTIONED THAT THE QUANTUM APPEAL OF THE ASSESS EE FOR THE A.Y. 2007-08 AND 2008-09 HAVE ALSO BEEN DISMISSED BY BOT H THE CIT(A) AND ITAT. 4.1 THE LEARNED CIT(A) HAS ALSO MENTIONED THAT IN T HE ASSESSMENT YEAR PRIOR TO THE IMPUGNED ASSESSMENT YEARS, THE EX EMPTION U/S 11 WAS SIMILARLY DENIED BY THE AO WHICH WAS LATER ON UPHEL D BY THE CIT(A) AND ITAT. HOWEVER, IN THE A.Y. 1989-90, 1992-93, 1995-9 6, 1996-97, 1998- 99 & 2003-04, THE DECISION OF THE ITAT IN THE CASE OF THE ASSESSEE WAS NOT EXACTLY THE SAME. THE LEARNED CIT(A) OBSERVED T HAT THE ISSUE OF CLAIM OF EXEMPTION IN THE CASE OF THE ASSESSEE HAS BEEN A DEBATABLE ONE, AS FAR AS ITS APPELLATE HISTORY GOES. RELYING ON TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS THANTHI TRUST (2001) 247 ITR 785 (SC), THE CIT(A) HAS STATED THAT THE CLAIM OF THE A SSESSEE IS DEBATABLE. HE ALSO NOTED THAT AS FAR AS THE FACTS AND FIGURES OF INCOME AND EXPENDITURE STATEMENTS ARE CONCERNED, THERE IS NOT DISPUTE THAT THE ASSESSEE HAD NOT CONCEALED ANY SUCH FACTS AND FIGURES. BUT THE ASSES SEE HAD PRESUMED THAT IN ITS OPINION, IT HAD MADE A BONAFIDE CLAIM O F EXEMPTION U/S 11 OF THE ACT, WHICH HAS BEEN DENIED TO IT BY THE AO AND THE APPELLATE ITA NO. 3831 & 3833/MUM/2015 4 AUTHORITIES IN THE YEARS UNDER CONSIDERATION. THERE FORE, IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 4.2 THE LEARNED CIT(A) HAS ALSO MENTIONED THAT THE ITAT IN THE CASE OF THE ASSESSEE FOR THE A.Y. 1989-90, 1992-93, 1995 -96, 1996-97, 1998- 99 AND 2003-04 HAS EXPLICITLY RECORDED A FINDING OF FACT AND HELD THAT THE OBJECTS OF TRUST, AS A WHOLE, ARE FOR CHARITABL E PURPOSE FALLING WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. FOR THE A. Y. 1998-99, 2000-01, 2003-04, 2007-08 AND 2008-09, THE DECISION HAS BEEN REVERSED BY THE ITAT. ONCE, THIS PROPOSITION IS ACCEPTED, THE ISSUE OF GRANT OF EXEMPTION IN THE CASE OF THE ASSESSEE CAN AT BEST BE DESCRIBE D AS A DEBATABLE ISSUE. THE LEARNED CIT(A) RELIED ON THE JUDGEMENT OF THE H ON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD [2010] 189 TAXMAN 322 (SC), WHEREIN IT HAS BEEN HELD THAT PENA LTY CANNOT BE LEVIED MERELY BECAUSE THE AO AND THE ASSESSEE HOLD A DIVER GENT VIEW ON ALLOWABLITY OF A CLAIM FOR DEDUCTION. HE ALSO RELIE D ON THE DECISION IN THE CASE OF DILIP N. SHROFF 210 CTR 228 (SC) AND DELETED THE PENALTY IMPOSED BY THE AO. 5. BEFORE US, THE LEARNED DR REFERRED TO PAGE 17 OF THE ORDER OF THE LEARNED CIT(A) WHEREIN HE HAS MENTIONED THAT THE QU ANTUM APPEALS OF THE ASSESSEE FOR THE A.Y 2007-08 AND 2008-09 HAVE B EEN DISMISSED BY BOTH THE CIT(A) AND THE ITAT. HE ALSO RELIED ON THE ORDER OF THE AO. 6. PER CONTRA, THE LEARNED COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE A.Y. 1989-90, 1992-93, 1995-96, 1996-97, 1998-99 & 2003-04. ALSO HE RELIED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF THANTI TRUST . ITA NO. 3831 & 3833/MUM/2015 5 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN THE DISCUSSION WITH TH E DECISIONS RELIED ON BY THE LEARNED COUNSEL OF THE ASSESSEE. IN THE CASE OF THE ASSESSEE FOR THE A.Y. 1989-90 (1 997) 50 ITD 135, THE TRIBUNAL HAS HELD THAT THE DONATIONS COLLECTED IN BOXES MARKED AS DONATION TOWARDS CORPUS ARE NOT ELIGIBLE FOR EXEM PTION U/S 11(1)(D); ONLY THE DONATIONS RECEIVED WITH CONFIRMATORY LETTE RS STATING THAT THE DONATION WAS TOWARDS CORPUS IS EXEMPT. ALSO IT IS H ELD THEREIN THAT DONATIONS RECEIVED BY CHARITABLE TRUST WITHOUT ANY DIRECTION WHETHER IT WAS TOWARDS CORPUS OF TRUST IS NOT EXEMPT U/S 11(1) (D) AND THE SAME IS ASSESSABLE AS INCOME FROM OTHER SOURCES. REGARDING SET OFF LOSS U/S 71, THE TRIBUNAL HELD THAT THE LOSS INCURRED IN THE SAI D ACTIVITY IS A BUSINESS LOSS AND THE SAME CANNOT BE SET OFF AGAINST INCOME FROM OTHER SOURCES COMPRISING VOLUNTARY CONTRIBUTION. 7.1 IN THE CASE OF THE ASSESSEE FOR THE A.Y. 1992-9 3 (ITA NO. 340/MUM/1998), A.Y. 1995-96 (ITA NO. 1492/MUM/2000) AND A.Y. 1996-97 (ITA NO. 5722/MUM/1999), THE TRIBUNAL HELD AS UNDER: WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE F ACTS AND MATERIALS ON RECORD INCLUDING THE CASE LAWS RELIED UPON BY TH E PARTIES. MAY BE IT IS TRUE THAT THE TRIBUNAL IN ITS EARLIER ORDER CITED S UPRA HAS GIVEN A FINDING THAT THE RUNNING OF NEWSPAPER DAINIK SAMNA WAS FOR CHARITABLE PURPOSE WITHIN THE MEANING OF SECTION 2(15) AS IT STOOD FRO M 01.04.1984. HOWEVER, IN VIEW OF THE INTEREST DECISION OF THE HO N'BLE SUPREME COURT REPORTED IN 247 ITR 785 (SC), WHAT IS TO BE SEEN IS , WHETHER THE INCOME OF THE NEWSPAPER HAS BEEN UTILISED FOR THE PURPOSE OF THE TRUST, EVEN THOUGH, THE OBJECTS MAY BE CHARITABLE AND THIS ASPE CT OF THE MATTER, AS RIGHTLY BEEN CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, WERE NOT PUT TO TEST EITHER BY THE ASSESSING OFFICE OR BY THE COMMISSIONER OF INCOME TAX (APPEAL). IN VIEW OF THIS, WE ARE INC LINED TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WI TH A DIRECTION TO RECORD A FINDING AS TO WHETHER THE INCOME FROM THE NEWSPAPER HAS BEEN UTILISED FOR THE OBJECTS OF THE TRUST DURING THE RELEVANT AS SESSMENT YEARS AND IF SO TO FOLLOW THE DECISION OF HON'BLE SUPREME COURT (CI TED SUPRA) IF THE ITA NO. 3831 & 3833/MUM/2015 6 INCOME IS SO UTILISED AND OTHERWISE TO DECIDE ACCOR DING TO LAW. THUS, THESE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATI STICAL PURPOSE ONLY. 7.2 IN THE CASE OF THE ASSESSEE FOR THE A.Y. 1996-9 7, 1998-99 AND 2003-04 (ITA NO. 291, 292 & 293/MUM/2007), THE ISSU E BEFORE THE TRIBUNAL WAS WHETHER THE SURPLUS FUNDS UTILISED FOR ACQUISITION OF ASSETS FOR BUSINESS PURPOSES WOULD AMOUNT TO APPLICATION O F INCOME OR NOT FOR CHARITABLE PURPOSE. THE TRIBUNAL HELD THAT THE EXPE NDITURE IN RESPECT OF THOSE FIXED ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN CLAIMED AND ALLOWED TO THE ASSESSEE CANNOT BE TREATED AS APPLIC ATION OF INCOME. HOWEVER, THE BALANCE AMOUNT SPENT FOR ACQUISITION O F FIXED ASSETS, ON WHICH NO DEPRECIATION HAS BEEN ALLOWED, IS TO BE TR EATED AS APPLICATION OF INCOME AS PER THE TEST LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1989-90. ACCORDINGLY THE TRIBUNAL RES TORED THE ISSUE TO THE FILE OF THE AO TO DECIDE THE SAME IN THE LIGHT OF T HEIR DECISION FOR THE A.Y. 1989-90 AND TO DETERMINE THE APPLICATION OF INCOME ACCORDINGLY. 7.3 NOW WE COME TO THE JUDGEMENT OF THE HON'BLE SUP REME COURT IN THE CASE OF THANTHI TRUST (SUPRA) . IN THAT CASE, IT HAS BEEN HELD THAT REQUIREMENT OF SECTION 13(1)(BB) IS THAT THE EXEMPT ION U/S 11 WILL NOT BE AVAILABLE TO SUCH A TRUST THAT CARRIES ON ANY BU SINESS UNLESS THE BUSINESS IS CARRIED ON IN THE COURSE OF THE ACTUA L CARRYING OUT OF THE PRIMARY PURPOSE OF THE TRUST, SINCE THE BUSINESS OF RUNNING A NEWSPAPER THOUGH HELD BY THE ASSESSEE- TRUST AS A P ART OF ITS CORPUS WAS NOT CARRIED ON IN THE COURSE OF ACTUAL ACCOMPLISHME NT OF THE CHARITABLE OBJECTS OF THE TRUST, BAR OF SECTION 13(1)(BB) WAS APPLICABLE AND THE ASSESSEE-TRUST WAS NOT ENTITLED TO EXEMPTION U/S 11 FOR ASSESSMENT YEAR 1979-80 TO 1983-84. FURTHER IT HAS BEEN HELD THAT A S THE ASSESSEE-TRUST WAS EXISTING NOT ONLY FOR PUBLIC RELIGIOUS PURPOSES AND IT IS A TRUST AND NOT AN INSTITUTION THE NEWSPAPER BUSINESS CARRIED O N BY ASSESSEE DID NOT FALL WITHIN SUB-SECTION (4A) OF SECTION 11 AND ASSESSEE WAS NOT ITA NO. 3831 & 3833/MUM/2015 7 ENTITLED TO EXEMPTION U/S 11 FOR THE A.Y. 1984-85 T O 1991-92 IN RESPECT OF INCOME OF ITS NEWSPAPER. FINALLY IT HAS BEEN HEL D THEREIN THAT IN VIEW OF SUBSTITUTED SUB-SECTION (4A) OF SECTION 11 W.E.F . 1 ST APRIL, 1992, ASSESSEE-TRUST WAS ENTITLED TO EXEMPTION U/S 11 FOR THE A.Y. 1992-93 AND THEREAFTER IN RESPECT OF ITS INCOME OF NEWSPAPE R BUSINESS WHICH WAS EMPLOYED TO ACHIEVE ITS CHARITABLE OBJECTS. 7.4 NOW WE COME TO THE ORDER OF THE ITAT C BENC H, MUMBAI IN THE CASE OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YE ARS (ITA NO. 8490/M/2010 & 1880/M/2012). THE PRINCIPAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEARS AS MENTIONED AT PARA 3.1 OF THE ORDER OF THE TRIBUNAL ARE AS UND ER: A. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE TREATMENT OF PUBLICATION OF DAINIK S AMANA AS A BUSINESS ACTIVITY NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE I.T. ACT. B. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT RS. XXXX INCURRED TOWARDS PURCHASE OF FIXED ASSETS WAS IN THE NATURE OF APPLICATION OF INCOME FOR OBJE CTS OF THE TRUST AND NOT FOR EXPANSION OF BUSINESS AS TREATED BY THE ASS ESSING OFFICER. C THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT APPRECIATING THAT WHILE CONSIDERING APPLICATION OF INCOME, DEFICITS OF THE EARLIER YEARS HAD TO BE CONSIDERED AND A HOLIST IC VIEW HAD TO BE TAKEN. 7.5 THE TRIBUNAL CONCLUDED THAT THE ASSESSEES CASE WAS WHOLLY UN- MAINTAINABLE AND DISMISSED THE APPEAL. 7.6 LET US NOW GO BACK TO THE BACKGROUND ON WHICH T HE AO HAS IMPOSED PENALTY U/S 271(1)(1) OF THE ACT. IN THE AS SESSMENT ORDER FOR THE A.Y. 2007-08, THE AO HAS MADE THE FOLLOWIN G ADDITIONS: 1. NON-PAYMENT OF EMPLOYEES & EMPLOYERS RS. 22,57,426 /- ITA NO. 3831 & 3833/MUM/2015 8 CONTRIBUTION OF PROVIDENT FUND 2. NON-PAYMENT/LATE PAYMENT OF ESIC CONTRIBUTION RS. 3 ,21,183/- 3. PENALTY FOR CONTRAVENTION OF LAW RS. 5,910/- 4. NON-DEDUCTION OF TDS ON PAYMENTS ATTRACTING PROVISIONS OF SECTION 40(A)(IA) RS. 21,30,302/- 5. PRIOR PERIOD EXPENSES DISALLOWED U/S 43B RS. 23,92,292 /- 6. DISALLOWANCE U/S 40A(2B) RS. 2,97,527/- TOTAL RS. 74,04,640/- 7.7 HOWEVER, THE LEARNED CIT(A), CONSIDERING THE FA CTS OF THE CASE, ALLOWED CERTAIN EXPENSES TO THE ASSESSEE AND CONFIR MED THE FOLLOWING ADDITIONS: 1. NON-PAYMENT OF EMPLOYEES & EMPLOYERS CONTRIBUTION OF PROVIDENT FUND (RS. 22,57,426-10,22,0 21) RS. 12,35,405/- 2. NON-PAYMENT/LATE PAYMENT OF ESIC CONTRIBUTION (RS. 3,21,183-1,78,090) RS. 1,43,093/- 3. PENALTY FOR CONTRAVENTION OF LAW RS. 5,910/- 4. NON-DEDUCTION OF TDS ON PAYMENTS ATTRACTING PROVISIONS OF SECTION 40(A)(IA) RS. 21,30,302/- 5. PRIOR PERIOD EXPENSES DISALLOWED U/S 43B RS. 23,92,292 /- TOTAL RS. 59,08,002/- 7.8 THE AO HAS IMPOSED A MINIMUM PENALTY OF RS. 19, 32,534/- U/S 271(1)(C) ON THE ABOVE ADDITIONS / DISALLOWANCES OF RS. 59,08,002/-. 7.9 IT IS FOUND THAT FOR THE A.Y. 2008-09 THE FOLLO WING ADDITIONS MADE BY THE AO HAVE BEEN SUSTAINED BY THE LEARNED CIT(A) : 1. NON-PAYMENT OF EMPLOYEES & EMPLOYERS CONTRIBUTION OF PROVIDENT FUND RS. 8,55,110/- 2. NON-PAYMENT/LATE PAYMENT OF ESIC CONTRIBUTION RS . 2,99,385/- 3. PENALTY FOR CONTRAVENTION OF LAW RS. 18,403/- 4. NON-DEDUCTION OF TDS ON PAYMENTS ATTRACTING PROVISIONS OF SECTION 40(A)(IA) RS. 21,84,171/- 5. PRIOR PERIOD EXPENSES DISALLOWED U/S 43B RS. 21,05, 756/- ITA NO. 3831 & 3833/MUM/2015 9 6. DISALLOWANCE OF LOSS ON SALE OF FIXED ASSETS RS. 16,297/- TOTAL RS. 54,79,122/- 7.10 THE A.O. HAS IMPOSED A MINIMUM PENALTY OF RS. 18,62,354/- U/S 271(1)(C) OF THE ACT ON THE ABOVE ADDITIONS / DISAL LOWANCES OF RS. 54,79,122/-. 7.11 IN THE SCHEME OF THE ACT, THE PROCEEDINGS FOR IMPOSITION OF PENALTY, THOUGH EMANATING FROM PROCEEDINGS OF ASSES SMENT, ARE ESSENTIALLY INDEPENDENT AND A SEPARATE ASPECT OF TH E PROCEEDINGS. WHETHER A PENALTY CAN BE IMPOSED IN A GIVEN CASE, T HE ENTIRETY OF THE CIRCUMSTANCES MUST BE TAKEN INTO ACCOUNT. 7.12 THE QUESTION ARISES WHETHER PENALTY U/S 271(1) (C) IS LEVIABLE ON THE ADDITIONS / DISALLOWANCES MADE BY THE A.O. AS N ARRATED AT PARA 7.7 AND 7.9 HERE-IN-ABOVE. WE MAY GAINFULLY REFER TO TH E JUDGEMENT OF THE HON'BLE SUPREME COURT IN RELIANCE PETROPRODUCTS (P.) (SUPRA) WHEREIN IT HAS HELD: A GLANCE OF PROVISION OF SECTION 271(1)(C ) WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE P ARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE INSTANT C ASE WAS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE EITHER. IT WAS AN ADMITTED POSITION IN THE INSTANT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INC ORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL S UPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACI E, THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICU LARS. THE REVENUE ARGUED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FO R THE EXPENDITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICUL ARS OF SUCH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CONCERNED WORDS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESS EE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAG INATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISH ING OF INACCURATE PARTICULARS. [PARA 7] ITA NO. 3831 & 3833/MUM/2015 10 THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UND ER SECTION 271(1)(C ) EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECA USE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTIC ULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. [PARA 8] THE WORD 'PARTICULARS' MUST MEAN THE DETAILS SUPPLI ED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT A CCORDING TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE WAS NO FINDIN G THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O 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). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WI LL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOU NT TO THE INACCURATE PARTICULARS. [PARA 9] THE REVENUE CONTENDED THAT SINCE THE ASSESSEE HAD C LAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY WERE INCORRECT, IT AMO UNTED TO CONCEALMENT OF INCOME. IT WAS ARGUED THAT THE FALSE HOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS: (I) AN ITEM OF RE CEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITUR E MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES A TTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUN T TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. SUCH CONTENTION COULD NOT BE ACCEPTED AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CL AIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVEN UE, THAT, BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)( C). IF THE CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE WAS NOT ACCEPTED BY THE ASSESSING OFFICE R FOR ANY REASON, THE ASSESSEE WOULD INVITE PENALTY UNDER SECTION 271 (1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. [PAR A 10] THEREFORE, THE APPEAL FILED BY THE REVENUE HAD NO M ERITS AND WAS TO BE DISMISSED. ITA NO. 3831 & 3833/MUM/2015 11 7.13 THE PRESENT FACTUAL MATRIX IS TO BE TESTED ON THE ANVIL OF THE ABOVE ENUNCIATION OF LAW. IN THE LIGHT OF THE DECISION RE FERRED HERE-IN-ABOVE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 8. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/01/2017 SD/- SD/- (C. N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 18/01/2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY OR DER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI