THE ACIT RG 8(3), MUMBAI V. M/S. SANGHVI SWISS REFILLS P. LTD,

ITA 3893/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2235 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 09-04-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 18-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M KHARE
• Assessee Lawyers: VISHW
• Keywords: Business income; Wrong claim; Difference of opinion; Corroborative evidences
• Section: 271(1)(c); 251; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI PRAMOD KU MAR ,(AM) ITA NO.3893/MUM/2007 ASSESSMENT YEAR : 2001-02 ASSTT. COMMISSIONER OF INCOME TAX RANGE-8(3), ROOM NO.204 2 ND FLOOR, AAYAKAR BHAVAN NEW MARINE LINES M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. SANGHVI SWISS REFILLS P. LTD. PLOT NO.A-3, MIRA, MIDC P.O. MIRA, THANE. ..( RESPONDENT ) P.A. NO. (AACCS 8696 R) APPELLANT BY : MS. M. K HARE RESPONDENT BY : SHRI ARUN SATHE ALONGWITH MS. AARTI SATHE AND SHRI VISHWAS MEHENDALE O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 07.03.2007 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 2001-02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE MANUFACTURING AND TRADING IN WRITING INSTRUMENTS AND RECEIVING OF SERVICE CHARGES. THE RETURN WAS FILED DECLAR ING A LOSS OF ITA NO.3893/M/07 A.Y:01-02 2 RS.16,33,280/- . IT HAS BEEN INTERALIA OBSERVED BY THE LD. CIT(A) IN PARA-7 APPEARING AT PAGE 8-9 OF THE IMPUGNED ORDER THAT ..FINALLY ASSESSED INCOME AFTER GIVING EFFECT TO THE CIT(A)S ORDER IS RS.6,30,420/-. THIS FIGURE HAS BEEN ARRIVED BECAUSE IN THE ORIGINAL ASSESSMENT ORDER THE COMPUTATION HAS BEEN STARTED WITH TH E RETURNED LOSS OF RS.16,33,280/-.. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN INCOM E FROM SALES & SERVICE(NET) AT NEGATIVE FIGURE OF RS.3 3,62,022/-. THE ASSESSEE HAS ALSO SHOWN OTHER INCOME OF RS.53,49,255/- WHICH INCLUDES RENTAL INCOME OF RS.50,40,000/-. HE FURTHER O BSERVED THAT VIDE POINT NO.7(1) TO THE NOTES TO ACCOUNT IT IS APPAR ENT THAT DURING THE YEAR UNDER CONSIDERATION ACTUAL PRODUCTION IS NIL. THEN HOW EMPLOYEES EMOLUMENTS EXPENSES ARE SHOWN ON HIGHER SIDE. I F THESE EXPENSES ARE NOT ALLOWED THEN THERE MUST BE POSITIVE IN COME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE AO AFTER CO NSIDERING THE ASSESSEE'S REPLY THAT THE COMPANY HAS TAKEN THE PROPERTY O N LEASE FROM MR. JAYANT D. SANGHVI AS PER AGREEMENT AND TO G ENERATE EXTRA INCOME, THE MANAGEMENT HAS THOUGHT IT FIT TO SUBLET TH E EXTRA SPACE AVAILABLE IN THE FACTORY TO M/S. BOSTON EDUCATION AND SOFTWARE TECHNOLOGIES PRIVATE LIMITED (BEST) AS PER THE AGREEME NT DATED 28.01.1999 AND HENCE, THE INCOME EARNED ON ACCOUNT OF T HE SAME IS RIGHTLY TAKEN AS BUSINESS INCOME AND NOT AS INCOME FROM HOUSE ITA NO.3893/M/07 A.Y:01-02 3 PROPERTY AND EXAMINING THE RENT AGREEMENTS WAS OF T HE VIEW THAT IT IS A CASE OF SUB-LETTING OUT OF A PROPERTY AND ACCORDINGL Y HE ASSESSED THE RENTAL INCOME OF THE PROPERTY RS.50,40,000/- PR OTECTIVELY UNDER THE HEAD INCOME FROM OTHER SOURCES. BESIDES THIS, IT W AS ALSO OBSERVED BY THE AO THAT THE ASSESSEE HAD UNACCOUNTED SALES R ETURNS OF RS.45,27,400/-. HE FURTHER OBSERVED THAT FROM THE P&L ACCOUNT THE ASSESSEE HAS FINISHED GOODS WORTH RS.45,27,400/- AS ON 31.3. 2000 I.E. AT THE END OF PREVIOUS FINANCIAL YEAR OR AT THE BEGI NNING OF THE CURRENT FINANCIAL YEAR. HE FURTHER OBSERVED THAT THE ASSESSEE HA D FURTHER SHOWN A NEGATIVE PURCHASE OF RS.60,62,592/- WHICH IS DUE TO THE PURCHASE RETURNS. HE FURTHER OBSERVED THAT DURING THE I MPUGNED ASSESSMENT YEAR THERE ARE ONLY TRANSACTIONS OF RETURN OF G OODS EITHER FROM SALE PARTIES OR FROM THE PURCHASE PARTIES. HE FURT HER OBSERVED THAT BY ADOPTING THIS PROCESS THE ASSESSEE HAS DECLARED A LO SS OF RS.45,38,962/-(RS.45,27,400 RS.11,562 BEING NET CONSUM PTION). ON BEING QUESTIONED, IT WAS EXPLAINED BY THE ASSESSEE TH AT THE OPENING STOCK WORTH RS.45,27,400/- HAD BECOME DRY AND N OT USABLE AND IN SUPPORT THE ASSESSEE FILED COPY OF NECESSARY ENTRIES ALONG WITH CREDIT NOTE. THE AO AFTER CONSIDERING THE ASSESSEE'S EXPLAN ATION AND THE EVIDENCE PRODUCED BY THE ASSESSEE, DISBELIEVED THE A SSESSEE'S CLAIM AND ACCORDINGLY DISALLOWED RS.45,27,400/- FROM THE LOSS CLAIMED BY THE ASSESSEE AND ADDED BACK TO THE TOTAL INCOME OF TH E ASSESSEE ITA NO.3893/M/07 A.Y:01-02 4 AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.28,94,120/- VIDE ORDER DATED 30.01.2004 PASSED U/S.1 43(3) OF THE INCOME TAX ACT, 1961(THE ACT). ON APPEAL, THE LD. CIT (A) HELD THAT THE INCOME IN THE FORM OF RENT RECEIVED FROM BEST IS ONLY INCOME FROM OTHER SOURCES AND NOT INCOME FROM BUSINESS. WITH R EGARD TO DISALLOWANCE OF LOSS OF RS.45,27,400/- THE LD. CIT(A) HE LD THAT EVEN AFTER CONSIDERING THE PREPONDERANCE OF PROBABILITY IT CANNOT BE SAID THAT THE ENTIRE INK HAD BECOME UNUSABLE WHEN THE ASSESSEE IS NOT IN A POSITION TO LEAD ANY CONCLUSIVE EVIDENCE IN THIS REGARD. AT THE SAME TIME IT ALSO CANNOT BE SAID THAT THE INK WHICH WAS AVAIL ABLE WITH THE ASSESSEE SINCE AT LEAST FROM 1.4.1996 WAS IN GOOD CONDITION AND USABLE EVEN FOR THE RELEVANT ASSESSMENT YEAR 2001-02. HE , THEREFORE, WAS OF THE OPINION THAT IT WOULD BE REASONABLE TO ESTI MATE THE VALUE OF SUCH INK AT 50% OF RS.45,27,400/- AND ACCORDINGLY HE RE STRICTED THE DISALLOWANCE TO RS.22,63,200/-. 3. WHILE MAKING THE ASSESSMENT THE AO ALSO INITIATED PEN ALTY PROCEEDING U/S.271(1)(C) OF THE ACT. ACCORDINGLY THE AO I SSUED NOTICE TO SHOW CAUSE AS TO WHY PENALTY U/S.271(1)(C) MAY NOT BE IMPOSED. IN RESPONSE, IT WAS INTERALIA SUBMITTED BY THE ASSESSEE THAT THERE WAS NO FRESH LETTING OUT OF THE PROPERTY BY SHRI JAYANT SANGHVI, WITH A MALAFIDE INTENTION. IN FACT, THE SAID PROPERTY WAS AL READY UNDER ASSESSEE'S OCCUPATION AS THE TENANT, SINCE THE YEAR 1981, WHI CH IS ITA NO.3893/M/07 A.Y:01-02 5 MUCH BEFORE THE YEAR IN WHICH SHRI JAYANT SANGHVI BECA ME THE OWNER THEREOF. THE ASSESSEE FURTHER SUBMITTED THAT THE RELIA NCE TO THE CASE OF MCDOWELL AND COMPANY IS TOTALLY WITHOUT ANY BASIS AN D MISPLACED AND FURTHER THE AO HAS NOT MADE SUBSTANTIVE ASSESSMENT, HENCE, THERE IS NOT CONCEALMENT IN RESPECT OF RENTAL INCOME OF T HE PROPERTY ON THE PART OF THE ASSESSEE. WITH REGARD TO THE DISALLOWAN CE OF CLAIM OF LOSS OF OPENING STOCK OF INK OF RS.45,27,400/- THAT TH E LD. CIT(A) HAS REJECTED THE ENTIRE SUSPICION THEORY OF THE AO . IT I S ONLY IN HIS VIEW THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE THE DETAI LS/PROOF FOR THE ZERO VALUE OF THE STOCK OF INK, THE LD. CIT(A) RESTRICT ED THE DISALLOWANCE AT 50% WHICH CANNOT BE HELD TO BE LIABLE T O PENALTY FOR CONCEALMENT. THEREFORE, THE PENALTY MAY BE DROPPED. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEE'S EXPLANATION. HE WAS OF TH E VIEW THAT IN VIEW OF THE FINDING RECORDED IN THE ASSESSMENT THE ASSE SSEE HAS FILED INACCURATE PARTICULARS OF ITS INCOME LIABLE FOR P ENALTY AND ACCORDINGLY HE IMPOSED PENALTY OF RS.11,44,430/- VIDE ORDER DATED 29.3.2006 PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL, TH E LD. CIT(A) WITH REGARD TO THE RENTAL INCOME ASSESSED UNDER THE HEA D INCOME FROM OTHER SOURCES PROTECTIVELY OBSERVED THAT WHEN THE AO HIM SELF DOES NOT BELIEVE THAT THE INCOME BELONGS TO THE APPELLANT, TH ERE IS NO QUESTION OF LEVYING PENALTY ON SUCH ADDITION. WITH REGARD TO THE DISALLOWANCE OF WRITE-OFF OF OPENING STOCK HE HELD THAT IT WAS POINTED OUT BY THE ITA NO.3893/M/07 A.Y:01-02 6 APPELLANT THAT THIS STOCK OF INK WAS FOUR YEARS OLD AND PREPONDERANCE OF PROBABILITY IS THAT THIS INK MIGHT HAVE BECOME BAD AND FURTHER IT WAS CERTIFIED BY THE EXPERT THAT THE INK BEING UNUSABLE, SUCH DISALLOWANCE DO NOT MERIT LEVY OF PENALTY AND ACCORDINGLY HE DELE TED THE PENALTY IMPOSED BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING SOLE GROUND OF APPE AL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE ACSE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE A SSESSING OFFICER TO CANCEL THE PENALTY OF RS.11,44,426/- LEV IED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE I.T. ACT , 1961. 5. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE PENALTY ORDER, THE LD. CIT(A) WAS N OT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO. THE RELIANCE WAS ALSO PLACED ON THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL SUSTAI NING THE DISALLOWANCE OF 50% OF LOSS OF OPENING STOCK OF INK AND T HE FOLLOWING DECISIONS: (I) CIT VS. T.J. MATHAI (2004) 269 ITR 492 (KER.) (II) CIT VS. DR. A.K. SHARMA (1993) 204 ITR 62 (RAJ .) (III) CIT VS. K.P. MADHUSUDANAN (2000) 246 ITR 2 18(KER.) (IV) K.P. MADHUSUDHANAN VS. CIT (2001) 251 ITR 99 (SC ) 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THERE IS N O CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCO ME ON THE PART OF THE ASSESSEE. THE RELIANCE WAS ALSO PLACED ON THE FINDING ITA NO.3893/M/07 A.Y:01-02 7 RECORDED BY THE TRIBUNAL, IN QUANTUM APPEAL IN M/S. SANGHVI SWISS REFILLS PVT. LTD. VS. DCIT AND VICE-VERSA IN ITA NO.179 6 & 1617/MUM/2005 FOR THE ASSESSMENT YEAR 2001-02(ALONG WIT H OTHER APPEALS) IN PARAS-14, 23 AND 34 OF THE ORDER DATED 26.2.2009. THE RELIANCE WAS ALSO PLACED ON THE DECISION IN CIT VS. RELIAN CE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC). HE T HEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) IN DELE TING THE PENALTY BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS SHOWN RENTAL INCOME OF RS.50, 40,000/- RECEIVED FROM BEST AS PART OF THE INCOME FROM BUSINESS. THE AO ASSESSED THE SAME ON PROTECTIVE BASIS UNDER THE HEAD INCOME FROM OTHER SOURCES AND IN THE CASE OF JAYANT D. SANGHVI HE ASSESSED THE SAME ON SUBSTANTIVE BASIS. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. HOWEVER, THE TRIBUNAL VIDE ITS FINDING RECORDED IN PARA-23 OF ITS CONSOLIDATED ORDER DATED 26.2.2009 (SUP RA), HAS HELD THAT ... THE ASSESSMENT OF RENTS RECEIVED BY SSRPL (SAN GHVI SWISS REFILLS (P) LTD.) FROM BEST HAS TO BE MADE ON SUBSTANTI VE BASIS IN THE HANDS OF THE SSRPL AND THIS ISSUE IS DECIDED ACCORDINGLY. ITA NO.3893/M/07 A.Y:01-02 8 8. IN ITO VS. ROBORANT INVESTMENT (I) LTD.(2006) 7 SO T 181 (MUM) THE TRIBUNAL AFTER CONSIDERING VARIOUS DECISIONS INCLUDING THE JUDGMENT IN K.P. MADHUSUDHANAN VS. CIT (2001) 251 ITR 99(SC) W HILE OBSERVING THAT THE AFORESAID JUDGMENT, IN OUR VIEW, SU PPORTS THE CASE OF THE ASSESSEE MORE THAN THE CASE OF THE DEPARTMENT HAS H ELD VIDE PARA -10 OF THE ORDER DATED 14.12.05 AS UNDER :- 10. IN VIEW OF THE FOREGOING, WE ARE OF THE OPINIO N THAT MERE REJECTION OF A LEGAL CLAIM OF THE ASSESSEE FOR TAXABILITY OF INCOME UNDER A PARTICULAR HEAD OF INC OME IS NOT BY ITSELF SUFFICIENT TO WARRANT IMPOSITION OF P ENALTY. TAX MATTERS ARE HIGHLY COMPLEX AND HENCE THERE IS B OUND TO BE A GENUINE DIFFERENCE OF OPINION IN MATTERS OF LAW BETWEEN THE TAX COLLECTORS AND THE TAX PAYERS. IT IS INDEED VERY DIFFICULT FOR THE ASSESSEE TO PREDICT, IN ADVANCE, AS TO WHAT VIEW THE ASSESSING OFFICER OR APPELLATE AUTHORITIES WOULD TAKE ON THE LEGAL CLAIM MADE BY THE ASSESSEE. CASES INVOLVING GENUINE DIFFERENC E OF OPINION ON MATTERS OF LAW BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ARE CLEARLY OUTSIDE THE SCOPE OF EXPLANATION 1 TO SECTION 271(1) PROVIDED THE ASSES SEE HAS MADE FULL DISCLOSURE OF ALL THE RELEVANT FACTS AND ALSO ACTED BONA FIDE. TESTED ON THE AFORESAID PARAMETE RS, WE FEEL THAT THE LEARNED COMMISSIONER (APPEALS) HAS CORRECTLY CANCELLED THE IMPUGNED PENALTY. HIS ORDE R IS, THEREFORE, CONFIRMED. 9. THE ABOVE VIEW HAS BEEN REITERATED BY THE TRIBUN AL IN DEVANSHI WAREHOUSING GANGA HOUSE, MUMBAI AND OTHERS VS. ITO IN IT A NOS. 2638,2639& 2640/M/08 FOR THE ASSESSMENT YEAR 2004-05 OR DER DATED 1.10.2009 AND IN RECLAMATION PROPERTIES (I) PVT. LTD. AND OTHERS VS. ACIT IN ITA NO.2239 & 2240/MUM/2006 FOR ASSESSMENT YEAR 2002-03 ORDER DATED 17.12.2009 IN WHICH ONE OF US (J.M.) WAS THE PARTY. ITA NO.3893/M/07 A.Y:01-02 9 10. WITH REGARD TO THE LEVY OF PENALTY ON THE SUSTENA NCE OF DISALLOWANCE OF WRITE-OFF OF OPENING STOCK WE FIND THAT IT HAS BEEN INTERALIA OBSERVED BY THE TRIBUNAL IN QUANTUM APPEAL SUPRA IN PARA 35 OF ITS ORDER DATED 26.2.2009 AS UNDER :- . THEREFORE, THE QUESTION NOW ARISES IS AS TO HO W THE WRITING OFF OF THE STOCK BY THE ASSESSEE HAS TO BE CONSIDERED. ACCORDING TO THE ASSESSEE SINCE THE ST OCK IS NOT IN A CONDITION TO USE, THEREFORE, IT HAS WRITTE N OFF THE SAME. HOWEVER, DUE TO NON PRODUCTION ANY SATISFACTO RY EVIDENCE, THE ASSESSING OFFICER DISALLOWED THE ENTI RE AMOUNT AND THE CIT(A) RESTRICTED SUCH DISALLOWANCE TO 50% OF THE AMOUNT HOLDING THAT THE ENTIRE INK CANNO T BE SAID TO HAVE BECOME UNUSABLE ESPECIALLY WHEN THE ASSESSEE IS NOT IN A POSITION TO LEAD ANY CONCLUSIV E EVIDENCE IN THIS REGARD. BUT AT THE SAME TIME IT ALSO CANNOT BE SAID THAT THE INK WHICH WAS AVAILABLE WIT H THE ASSESSEE SINCE 1.4.1996 WAS IN A GOOD CONDITION AND WAS USABLE EVEN IN THE A.Y. 2001-02. WE DO NOT FIND AN Y INFIRMITY IN THE AFORESAID OBSERVATION OF THE CIT(A ). NORMALLY OVER A LAPSE OF TIME THE QUALITY OF INK DETERIORATES AND SLOWLY BECOMES UNUSABLE. THEREFOR E, IN THE ABSENCE OF ANY FURTHER EVIDENCE BEFORE HIM AND CONSIDERING THE TIME FACTOR THE STOCK WAS LYING WIT H THE ASSESSEE, THE CIT(A), IN OUR OPINION, WAS JUSTIFIED IN GIVING PART RELIEF TO THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) RESTR ICTING SUCH DISALLOWANCE TO 50% OF THE STOCK WRITTEN OFF. THE ASSESSEE COULD HAVE GOT THE FULL BENEFIT OF WRITING OFF OF THE STOCK IN NORMAL COURSE PROVIDED HE WOULD HAVE L ED ADEQUATE SUPPORTING EVIDENCE AS TO HOW THE STOCK WA S FOUND TO BE UNUSABLE AND THE MANNER OF DISPOSAL OF THE UNUSABLE STOCK. SINCE THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE EITHER BEFORE THE ASSESSING OFFICER OR BEF ORE THE CIT(A) OR EVEN BEFORE US, THEREFORE, NO FURTHER BEN EFIT COULD BE ALLOWED TO THE ASSESSEE. IN THIS VIEW OF THE MATTER THE GROUND RAISED BY THE REVENUE AS WELL AS THE GROUND RAISED BY THE ASSESSEE ARE DISMISSED. 11. WE FURTHER FIND THAT THE LD. CIT(A) IN PARA-9 O F THE IMPUGNED ORDER HAS ALSO OBSERVED THAT ....THE APPELLANT HAS F URTHER POINTED OUT THAT M/S. HI SHINE INK, BEING EXPERT, HAD CERTIFI ED THAT THIS INK ITA NO.3893/M/07 A.Y:01-02 10 BEING UNUSABLE ..... IN THE LIGHT OF THE EXPERT RE PORT WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE EVEN AT THIS STAGE W E ARE OF THE VIEW, THAT THE ASSESSEE HAS FILED ADEQUATE SUPPORTING EVI DENCE TO SHOW THAT THE STOCK OF THE INK WAS UNUSABLE AND, IN ANY CASE, IT IS A CASE OF DIFFERENCE OF OPINION. 12. IN T.J. MATHAI (SUPRA), THE ASSESSEE HAD FILED A RE TURN SHOWING NIL INCOME WHEREAS THE INCOME WAS ASSESSED AT RS.3,85,725/- . IT HAS BEEN HELD THAT THE TRIBUNAL WAS NOT CORRECT IN HOLDING THAT THE EXPLANATION DOES NOT COME INTO PLAY. AS PER THE EXPLA NATION, THE BURDEN IS ON THE ASSESSEE. THE TRIBUNAL SHOULD HAVE DECI DED THE APPEAL IN THE LIGHT OF THE EXPLANATION TO SEC.271(1)( C) AND HENCE, THE MATTER WAS REMANDED TO THE TRIBUNAL TO CONSIDER THE MA TTER IN THE LIGHT OF THE DIRECTION GIVEN BY THEIR LORDSHIPS. 13. IN DR. A.K. SHARMA (SUPRA), THE AO AFTER COMPLETI ON OF ASSESSMENT FOUND THAT THE ASSESSEE HAD RECEIVED RS.60,571/- A S CONSULTATION AND INJECTION CHARGES FROM THE EMPLOYEES OF THE POST AND TELEGRAPH DEPARTMENT BUT THE SAME HAD NOT BEEN DISCLO SED IN THE RETURN SUBMITTED. IN THE ASSESSMENT THE AO ESTIMATED THE INCOME AT A FIGURE OF RS.65,571/-. IT HAS BEEN HELD THAT IT WAS FOR THE ASSESSEE TO DISCHARGE HIS BURDEN INITIALLY. NO POSITIVE EVIDENCE HA D BEEN BROUGHT ITA NO.3893/M/07 A.Y:01-02 11 BY THE ASSESSEE TO DISCHARGE THE BURDEN OF PROVING THAT T HERE HAD BEEN NO CONCEALMENT OF INCOME. 14. WHEREAS IN THE CASE BEFORE US IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT DISCLOSED ITS RENTAL INCOME OR THE WRITE-OFF OF OPENING STOCK IS NOT SUPPORTED BY DOCUMENTARY EVIDENCE, O R IT IS NOT A CASE OF DIFFERENCE OF OPINION, THEREFORE, BOTH THE DECI SIONS RELIED ON BY THE LD. DR ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 15. IN K.P. MADHUSUDHANAN (SUPRA), THE ASSESSEE INTERALIA STATED THAT SINCE IT WAS UNABLE TO FURNISH EVIDENCE FOR SUCH LOA NS IT OFFERED THE AMOUNT OF RS.93,000/- AS ADDITIONAL INCOME. IN PEN ALTY PROCEEDING THE AO NOTED THAT IT HAS OFFERED THE AMOUNT OF RS.93, 000/- AS ADDITIONAL INCOME AND APPLYING EXPLANATION 1(B) TO SE C 271 IMPOSED A PENALTY ON THE ASSESSEE. THE APPELLATE TRIBUNAL CANCELLE D THE PENALTY, INTERALIA , FOR THE REASON THAT IN THE NOTICE INITIATING PENALT Y PROCEEDINGS THE ASSESSEE WAS NOT INTIMATED ABOUT THE PROPO SED ACTION UNDER EXPLANATION 1(B) TO SECTION 271(1)(C); BUT THE HO NBLE HIGH COURT ON REFERENCE HELD THAT THE IMPOSITION OF PENAL TY WAS VALID. ON APPEAL, THE HONBLE SUPREME COURT HELD, AFFIRMING T HE DECISION OF THE HONBLE HIGH COURT THAT THE PENALTY WAS VALIDLY LEVIED FURTHER HELD THAT NO EXPRESS INVOCATION OF THE EXPLANATION TO SEC. 271 IN THE NOTICE ITA NO.3893/M/07 A.Y:01-02 12 U/S.271 IS NECESSARY BEFORE THE PROVISIONS OF THE EXPLANAT ION ARE APPLIED. HOWEVER, IT IS NOT THE CASE OF THE ASSESSEE THAT THE PENALTY IS NOT LEVIABLE AS NOTICE INITIATING PENALTY PROCEEDING THE ASSESSEE WAS NOT INTIMATED ABOUT THE PROPOSED ACTION UNDER EXPLANA TION 1(B) TO SEC.271(1)(C). THEREFORE, THE DECISION RELIED ON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 16. RECENTLY THEIR LORDSHIPS IN CIT VS. RELIANCE PETROP RODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) AFTER CONSIDERING VARI OUS DECISIONS INCLUDING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519 (SC) AND UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 2 77(SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER T O BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE 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 FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. ITA NO.3893/M/07 A.Y:01-02 13 WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT 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 SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 17. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND KEEP ING IN VIEW THAT THERE IS NO FINDING OF THE AO THAT THE DETAILS FURNISHED BY THE ASSESSEE ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE WE ARE OF THE VIEW THAT, UNDER SUCH CIRCUMSTANCES, THE PENALTY IS NOT LEV IABLE. FURTHER MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEA LMENT OR GIVING OF INACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS VIEW ALSO FINDS SUPPORT FROM THE RECENT DECISIONS IN CIT VS. SIDHARTHA ENTERPRISES (2010) 322 I TR 80 (P&H) AND CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (2010) 3 22 ITR 73(P&H). ACCORDINGLY WE ARE INCLINED TO UPHOLD THE ORD ER OF THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE AO. T HE GROUND TAKEN BY THE REVENUE IS THEREFORE, REJECTED. 18. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.5.2010. SD/- SD/- (PRAMOD KUMAR) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 7.5.2010. JV. ITA NO.3893/M/07 A.Y:01-02 14 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7.5.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 11.5.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER