DCIT, New Delhi V. M/s. Green Carriers & Contractors (Delhi) Pvt. Ltd., Delhi

ITA 4120/DEL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7486 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: BHAGYADHAR BEURAAR
• Keywords: Business expenditure; Search and seizure; Bad and doubtful debts; Onus to prove
• Section: 37(1); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENC H 'C' BEFORE SHRI U.B.S. BEDI,JM & SHRI A N PAHUJA,AM ITA NO.4120/DEL/2010 ASSESSMENT YEAR:-2005-06 DCIT,CIRCLE-12(1), NEW DELHI V/S M/S GREEN CARRIERS & CONTRACTORS (DELHI) PVT. LTD., 4141, 1 ST FLOOR, NAYA BAZAR, DELHI (PAN: AADFG 0296 P) [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI BHAGYADHAR BEURA,AR REVENUE BY:- MS. Y.S. KAKKAR, DR DATE OF HEARING 27-12-2011 DATE OF PRONOUNCEMENT 20-01-2012 O R D E R A N PAHUJA: THIS APPEAL FILED ON 06.09.2010 BY THE REVENUE AGAINST AN ORDER DATED 08-06-2010 OF THE LD. CIT(AP PEALS)-X, NEW DELHI FOR THE ASSESSMENT YEAR 2005-06, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS WRONG, PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALTY IM POSED U/S 271(1)(C) BY THE ASSESSING OFFICER WITHOUT APPRECIA TING THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT DISCHARGED IT S ONUS OF PROVING THAT THERE WAS NO INTENTION OF CONCEALMENT ON ITS PART AND THE MISTAKE WAS BONAFIDE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME HEARING. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING LOSS OF ` `62,86,966/- FILED ON 30 TH MARCH, 2006 BY THE ASSESSEE, ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS, AFTER BEING PR OCESSED ON 28.07.2006 U/S ITA NO.4120 /DEL/2010 2 2 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ISSUED ON 25 TH OCTOBER, 2006. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION FOR EXPENSES AMOUNTING TO ` `15,86,681/- ON ACCOUNT OF FINES AND PENALTIES . T O A QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT THE SA ID AMOUNT REPRESENTED CHALLANS ISSUED BY TRAFFIC AND OTHER AUTHORITIES FO R SMALL VIOLATION OF TRAFFIC RULES ETC. SUCH AS WRONG PARKING, JUMPING RED LIGHTS, EXC ESS HEIGHT, OVERWEIGHT, AND NON-AVAILABILITY OF DOCUMENTS ETC. SINCE THE DRIVE R COMMITTED SMALL VIOLATIONS, THE ASSESSEE WAS HELPLESS IN PREVENTING SUCH EXPENS ES. HOWEVER, THE A.O. DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND ADDE D THE AFORESAID AMOUNT ON THE GROUND THAT IN TERMS OF EXPLANATION BELOW SECTI ON 37(1) OF THE ACT, NO DEDUCTION OR ALLOWANCE OF SUCH EXPENDITURE IS ADMIS SIBLE IN RESPECT OF EXPENDITURE INCURRED FOR ANY PURPOSE, WHICH IS AN O FFENCE OR IS PROHIBITED BY LAW. INTER ALIA, THE AO INITIATED PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. 2.1 THE A.O. FURTHER NOTICED THAT THE ASSESSEE DEB ITED AN AMOUNT OF ` ` 1,90,338/- UNDER THE HEAD BAD DEBTS WRITTEN OFF. T O A QUERY BY THE AO, THE ASSESSEE REPLIED VIDE LETTER DATED 19 TH DECEMBER, 2007 THAT THESE WERE PETTY AMOUNTS LYING UNRECOVERED FROM VARIOUS PARTIES AND WERE, INADVERTENTLY, TAKEN AS BAD DEBTS WRITTEN OFF. IT WAS ALSO SUBMITTED THAT OUT OF THESE, A SUM OF ` `90,505/- PERTAINED TO A BANK GUARANTEE GIVEN TO THE RAILWAYS , WHICH WAS FORFEITED BY THEM. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIO NS OF THE ASSESSEE ON THE GROUND THAT ASSESSEE ITSELF ADMITTED THAT PART OF T HE AFORESAID AMOUNT IS BEING INADVERTENTLY WRITTEN OFF AS BAD DEBTS AND THE OTHE R PART PERTAINING TO THE FORFEITURE OF THE BANK GUARANTEE COULD NOT BE ALLOWED AS BAD D EBTS. SINCE THE ASSESSEE DID NOT SATISFY THE CONDITIONS LAID DOWN IN SECTION 36(1)(VII) READ WITH SECTION 36(2) OF THE ACT, ACCORDINGLY, THE AO DISALLOWED TH E AMOUNT AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. ITA NO.4120 /DEL/2010 3 3 2.2 THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THE AFORESAID DISALLOWANCES. SUBSEQUENTLY, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY, THE ASSESSEE SUBMITTED THAT IT DID NOT FIL E ANY INACCURATE PARTICULARS OF INCOME AND, THEREFORE, PENALTY PROCEEDINGS MAY BE D ROPPED. THE ASSESSEE ALSO RELIED UPON SOME JUDICIAL PRONOUNCEMENTS, WHICH HA VE NOT BEEN MENTIONED IN THE PENALTY ORDER. IN ANY CASE, THE AO DID NOT AC CEPT THE EXPLANATION OF THE ASSESSEE AND IMPOSED A PENALTY OF ` `6,50,254/- @100% OF THE TAX SOUGHT TO BE EVADED ON THE AFORESAID INCOME, INVOKING EXPLANAT ION (1) TO SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT AFTER THE INSERTION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, THE ONUS WAS ON THE ASSESSEE TO SHOW THAT THERE WAS NO INTENTION OF CONCEALMENT AND NOT ON THE REVENUE AND IN THE INSTANT CASE, THE ASSESSEE DID NOT DISCHARGE THE SAID ONUS IN TERMS O F THE SAID EXPLANATION. INTER ALIA, THE AO RELIED UPON DECISION IN CIT VS. GURBAC HAN LAL,250 ITR 157 (DEL.). 3. ON APPEAL, THE LEARNED CIT(A) CANCELLED THE PEN ALTY IN THE FOLLOWING TERMS:- 4. THESE SUBMISSIONS HAVE BEEN CAREFULLY CONSIDERE D. WITH REGARD TO THE FIRST ISSUE IT IS SEEN THAT IN THE CA SE OF APPELLANTS STATED SISTER CONCERNS I.E. CHETAK CARRIERS (A.Y. 1 991-92) THE HONBLE ITAT DELHI BENCH IN THEIR I.T.A. NO.2934/D/ 1996 HELD AS BELOW:- AFTER HEARING BOTH THE SIDES AND CONSIDERING THE M ATERIALS ON THE FILE, WE ARE OF THE VIEW THAT THE DISALLOWANCE WAS UNJUSTIFIED AND WRONG. THE PAYMENT FINE AND PENALTY AMOUNTING TO ` 11,230/- VIDE PAGE 12 OF THE PAPER BOOK WAS ON ACCOUNT OF MI NOR ALLEGED VIOLATION OF TRAFFIC RULES IN THE COURSE OF CONDUCT OF THE TRANSPORT BUSINESS, WE ARE OF THE VIEW THAT THIS AMOUNT WAS A LLOWABLE AS A BUSINESS EXPENDITURE. SIMILARLY, IN THE CASE OF NEW AMAR GOODS CARRIER FO R ASSESSMENT YEAR 1988-89 AND 1990 ANOTHER STATED SISTER CONCERN OF THE APPELLANT, THE HONBLE ITAT HELD IN I.T.A. NO. 50 & 51/D/92 THAT PAYMENT OF FINE FOR PETTY OFFENCES ARE TO BE TREATE D AS PAID IN THE COURSE OF CONDUCT OF THE BUSINESS AND THAT THERE WA S NO DELIBERATE VIOLATION OF RULES AND INFRACTION OF LAW. THE RELE VANT PORTION IS REPRODUCED AS BELOW: 3. IN GROUND NO.2 ADDITION OF ` `2,260/- ON ACCOUNT OF DISALLOWANCE OF PETTY FINES ON ROAD HAS BEEN CONTESTED. ITA NO.4120 /DEL/2010 4 4 3.1 AFTER HEARING BOTH THE SIDES AND CONSIDERING THE MA TERIALS ON THE FILE, WE HOLD THAT THE PAYMENT OF FINE ON THE SAME HAD BEEN PAID IN THE COURSE OF CONDUCT OF THE BUSINESS AND THERE WAS NO DELIBERATE VIOLATION OF RULES AND INFRACTION OF LAW . 5. KEEPING IN VIEW THE ABOVE OBSERVATIONS OF THE HO NBLE ITAT IT IS HELD THAT THE PAYMENT OF FINES FOR PETTY OFFENCES A RE TO BE TREATED AS PAYMENTS MADE IN THE REGULAR COURSE OF B USINESS. HENCE, IT IS HELD THAT THE ASSESSING OFFICER WAS NO T CORRECT IN IMPOSING PENALTY ON ACCOUNT OF ` `15,86,681/-. 6. THE SECOND ISSUE RELATES TO THE CLAIM OF BAD DEB TS MADE BY THE ASSESSEE. IT IS SEEN THAT OUT OF ` `1,90,338/-, AN AMOUNT OF ` ` 90,505/- PERTAINED TO A BANK GUARANTEE GIVEN TO THE RAILWAYS WHICH WAS SUBSEQUENTLY FORFEITED. BUT THE APPELLAN T HAS RIGHTLY STATED THAT NO FACTS WERE CONCEALED OR WERE WRONGLY PRESENTED, NEITHER ANY PARTICULARS OF INCOME WERE CONCEALED. DISALLOWANCE OF A CLAIM DOES NOT LEAD TO PENALTY AUTOMATICALLY. THE APPELLANT HAS RELIED ON A NUMBER OF CASE LAWS WHICH HAVE BEEN CONSIDERED AND IT IS SEEN THAT THEY SUPPORT THE APP ELLANTS CONTENTION. HENCE, IT IS HELD THAT THE ASSESSING O FFICER MAY BE RIGHT IN MAKING THE DISALLOWANCES, BUT IT IS SEEN T HAT THERE WAS NO CONCEALMENT ON THE PART OF THE APPELLANT. THERE FORE, IT IS HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN IMP OSING PENALTY U/S 271(1)(C) OF THE ACT ON THIS ACCOUNT. HENCE, T HE SAME IS DELETED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LEARNED CIT(A). THE LD. DR WHILE CARRY ING US THROUGH THE FINDINGS OF THE LD. CIT(A) IN THE IMPUGNED ORDER CONTENDED TH AT THE DECISIONS RELIED UPON BY LD. CIT(A) IN THE CASE OF NEW AMAR GOODS CARRIER IN I.T.A. NOS. 50 & 51/D/1992 FOR THE AYS. 1988-89 AND 1989-90 AND IN CHETAK CARRIERS IN I.T.A. NO.2934/D/96 FOR THE AY 1991-92 WERE NOT RELEVANT. SINCE THE LEARNED CIT(A) DID NOT ANALYZE THE FACTS OF THESE CASES NOR CONSIDERED EXPLANATION APPENDED BELOW SECTION 37(1) OF THE ACT INTRODUCED BY FINANCE ACT, 1998 W.E.F. 01.04.1962, THE LD. DR VEHEMENTLY ARGUED THAT THERE WAS NO DIFFEREN CE OF OPINION, THE ASSESSEE HAVING NOT FILED ANY APPEAL AGAINST THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER. WHILE RELYING UPON DECISIONS IN THE CASE OF CIT VS. A.J. SHETTY & CO. (P) LTD., 255 ITR 180 (KARNATAKA); CIT VS. ECS LTD. (20 11), 336 ITR 162 (DELHI); SETHI INDUSTRIES CORPORATION VS. DCIT (2011) (P&H), 338 ITR 243 (DELHI);CIT VS. N.S. ICHOPONANI; 330 ITR 125 (P&H);ASSISTANT COMMIS SIONER OF INCOME-TAX V. KANCHENJUNGA ADVERTISING P. LTD.10 ITR (TRIBUNAL) 6 49 (DELHI); LMP PRECISION ITA NO.4120 /DEL/2010 5 5 ENGG. CO. LTD. V. DEPUTY COMMISSIONER OF INCOME-TAX (ASSESSMENT),330 ITR 93(DELHI); COMMISSIONER OF INCOME-TAX V. HARPARSHAD AND COMPAN Y LTD. 328 ITR 53(DELHI); KAMAL BASHA VS. DCIT (MADRAS),316 IT R 58 (MADRAS); CIT VS. ZOOM COMMUNICATION (P) LTD. (DELHI); 327 ITR 510 (D ELHI);AND ASSISTANT COMMISSIONER OF INCOME-TAX V. NUCHEM LTD., 6 ITR (T RIBUNAL) 429 (DELHI) , THE LD. DR CONTENDED THAT THE EXPLANATION OF THE ASSESSEE W AS NOT BONAFIDE SINCE THE ASSESSEE ITSELF ADMITTED THAT CLAIM FOR DEDUCTION F OR BAD DEBTS WAS INADVERTENTLY MADE. IN NUTSHELL, THE LEARNED DR SUPPORTED THE FI NDINGS OF THE AO. ON THE OTHER HAND, THE LD. AR ON BEHALF OF THE ASSESSEE WH ILE REFERRING TO DECISION OF HONBLE APEX COURT IN CIT VS. RELIANCE PETRO PRODUC TS, 322 ITR 158 (S.C.) SUPPORTED THE FINDINGS IN THE IMPUGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS RELIED UPON BY BOTH THE SIDES. AS IS APPARENT FROM THE AFORESAID FACTS, THE AO IMPOSED THE PENALT Y ON THE GROUND THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS IN TERMS OF THE EXPLANATION 1 TO S. 271(1)(C) OF THE ACT WHILE THE LD. CIT(A) ,WITHOUT RECORDING ANY FINDINGS ON THE APPLICABILITY OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT OR A S TO WHETHER OR NOT THE ASSESSEE DISCHARGED THE ONUS LAID DOWN IN TERMS OF THE SAID EXPLANATION 1 TO THE SEC. 271(1)(C) OF THE ACT AND NOR EVEN ANALYZING THE EX PLANATION TENDERED BY THE ASSESSEE IN RESPONSE TO SHOWCAUSE NOTICE ISSUED BY THE AO, CANCELLED THE PENALTY. INDISPUTABLY, PENALTY HAS BEEN IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RELATION TO DISALLOWANCE OF CLAIM FOR DEDUCTION OF FINE & PENALTIES AND BAD DEBTS. THE EXPRESSION 'HAS CONC EALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS O F INCOME' HAVE NOT BEEN DEFINED EITHER IN SECTION 271 OR ELSEWHERE IN THE A CT. HOWEVER, NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY, KEEPING OFF A CERTAIN PO RTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL ' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT ITA NO.4120 /DEL/2010 6 6 IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' 5.1 THE PENALTY U/S 271(1)(C) OF THE ACT I S LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL S ETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AN D DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VE ERASINGHAIAH & CO. VS. CIT, 123 ITR 457; THE FINDING IN THE ASSESSMENT PRO CEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCE EDINGS. IT IS, THEREFORE, NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROCEEDING S ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGE D IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENA LTY BY INVOKING THE SAID PROVISIONS. IT IS WELL SETTLED THAT THE CRITERION A ND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(L)(C) ARE DIFFERENT THAN T HOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. WHEN THE ASSESSEE HAS MAD E A PARTICULAR CLAIM IN THE RETURN OF INCOME AND HAS ALSO FURNISHED ALL THE MAT ERIAL FACTS RELEVANT THERETO, THE REJECTION OF SUCH CLAIM CANNOT AUTOMATICALLY LEAD T O THE CONCLUSION THAT THERE WAS CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASS ESSEE OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. WHAT IS TO B E SEEN IS WHETHER THE SAID CLAIM MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHE R ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 2 71(L)(C) OF THE ACT.. IN ORDER TO EXAMINE THE CASE OF PENALTY, ONE HAS PRIMARILY TO S EE THE NATURE OF CONCEALMENT, THE EXPLANATION OFFERED BY THE ASSESSEE, HIS CONDUC T, ETC. THESE ARE ESSENTIALLY THE MATTERS WHICH ARE REQUIRED TO BE GONE INTO WITH A VIEW TO FIND OUT WHETHER OR NOT ANY CASE AS CONTEMPLATED IN SECTION 271(1)(C) IS MADE OUT SO AS TO EXERCISE ITA NO.4120 /DEL/2010 7 7 THE DISCRETION OF IMPOSING THE PENALTY ON THE ASSES SEE . IN THE INSTANT CASE, AS ALREADY STATED ,THE AO CONCLUDED THAT THE ASSESSEE FAILED TO DISCHARGE ONUS IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT AND NOR EVEN ESTABLISHED BONAFIDE OF HIS EXPLANATION. IN FACT, NEITHER THE L D. AR NOR THE LD. DR PLACED BEFORE US AS TO WHAT WAS THE EXPLANATION OF THE ASS ESSEE BEFORE THE AO IN RESPONSE TO A SHOWCAUSE NOTICE ISSUED BEFORE LEVY O F PENALTY. A COPY SUCH REPLY IS NOT EVEN PLACED IN THE PAPER BOOK. ON APPEAL, TH E LD. CIT(A) WHILE REFERRING TO CERTAIN DECISIONS OF THE ITAT IN THE CASE OF SISTER CONCERNS ,CONCLUDED THAT PAYMENTS FOR FINES FOR PETTY EXPENSES ARE TREATED A S PAYMENTS IN THE REGULAR COURSE OF BUSINESS. THE LD. CIT(A) DID NOT EVEN ADV ERT TO THE EXPLANATION OF THE ASSESSEE NOR RECORDED ANY FINDINGS AS TO WHETHER O R NOT THE ASSESSEE DISCHARGED ONUS IN TERMS OF EXPLANATION 1 TO SEC. 2 71(1)(C) OF THE ACT, DESPITE BEING FULLY AWARE THAT THE AO INVOKED EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. THE DECISION OF THE LD. CIT(A) MERELY PROCEEDS ON THE BASIS OF VIEW TAKEN BY THE ITAT IN THE CASE OF SISTER CONCERNS OF THE ASSESSE E. A FINDING OF FACT RECORDED IN SOME OTHER CASE CANNOT BE RELIED ON AS A PRECEDENT FOR THE PURPOSE OF RECORDING A FINDING IN THE INSTANT CASE , AS CONCLUDED BY THE HONBLE KARNATAKA HIGH COURT IN A.J. SHETTY & CO. (P) LTD.(SUPRA),RELIED UPON BY THE LD. DR. IN THAT CASE, THE ASSESSEE CLAIMED TWO ITEMS OF EXPENDITURE, NAMELY, (1) AND EXPENDITURE INCURRED TOWARDS HELPING THE EXCISE AUTHORITIES IN CONDUCTIN G RAIDS ON ILLEGAL MANUFACTURERS OF LIQUOR AND AN EXPENDITURE INCURRED TOWARDS PAYMENT/DONATION TO INFORMANTS PROVIDING INFORMATION REGARDING ILLICIT BREWING OF LIQUOR AND ALSO TO CHARITABLE ORGANIZATIONS. THE TRIBUNAL, IN APPEAL ALLOWED AND DIRECTED DEDUCTION OF AN AMOUNT OF 50 PER CENT. IN RESPECT OF THE RAID EXPENSES AND 75 PER CENT., AN EXPENSE TOWARDS DONATION/AWARDS PAID BY THE ASSESSE E TO INFORMANTS. THE TRIBUNAL HELD THIS TO BE AN ITEM OF EXPENDITURE AL LOWABLE UNDER SECTION 37(1) OF THE ACT. ON APPEAL, HONBLE HIGH COURT REVERSED THE ORDER OF THE ITAT ON THE GROUND THAT THE INCOME-TAX APPELLATE TRIBUNAL HAD NOT RECORDED ANY FINDING OF FACT INCLUDING THAT THE ASSESSEE HAS IN FACT INCURR ED AND PROVED SUCH EXPENDITURE AS 'RAID EXPENSES' AND 'DONATIONS/REWARDS TO INFORM ERS'. IT WAS FURTHER OBSERVED THAT THE INCOME-TAX APPELLATE TRIBUNAL HAD NOT RECO RDED ANY POSITIVE FINDING BY REVERSING THE FINDING OF FACT RECORDED BY THE FIRST TWO AUTHORITIES AND ITS DECISION MERELY PROCEEDS ON THE BASIS OF ITS EARLIER VIEW IN RESPECT OF A SISTER CONCERN OF ITA NO.4120 /DEL/2010 8 8 THE ASSESSEE. A FINDING OF FACT RECORDED IN SOME OT HER CASE CANNOT BE RELIED ON AS A PRECEDENT FOR THE PURPOSE OF RECORDING A FINDI NG IN THE INSTANT CASE, HONBLE HIGH COURT CONCLUDED. 5.2 IT IS TRUE THAT IN THE DECISIONS REPORTED IN B.A. BALASUBRAMANIAM & BROS. CO. V. CIT [1999] 157 CTR 556(SC), CIT V. B.A. BALA SUBRAMANIAM & BROS. [1984] 40 CTR (MAD.)/[1985] 152 ITR 529 (MAD.) , CI T V. MUSSADILAL RAM BHAROSE [1987] 60 CTR (SC) 34/[ 1987] 165 ITR 14 (S C); TC 50 R. 474; CIT V. K.R. SADAYAPPAN [1990] 86 CTR (SC) 120; [1990] 185 ITR 49 (SC); TC 50 R. 795, ADDL. CIT V. JEEVAN LAL SAH [1994] 117 CTR (SC ) 130; [1994] 205 ITR 244 (SC); TC 50 R. 973 AND K.P.MADHUSUDANAN VS. CIT,2 51 ITR 99(SC), IT HAS BEEN HELD THAT THE BURDEN WAS ON THE ASSESSEE TO PR OVE THAT THERE HAS BEEN NO CONCEALMENT. IT IS ALSO WELL ESTABLISHED THAT WHEN EVER THERE IS DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME, THERE IS INFERENCE OF CONCEALMENT. THE EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT RAIS ES A PRESUMPTION THAT CAN BE REBUTTED BY THE ASSESSEE WITH REFERENCE TO FACTS OF THE CASE. BUT AS STATED IN VARIOUS DECISIONS, IT DEPENDS UPON THE FACTS OF EAC H CASE. THE BURDEN WILL BE DISCHARGED UNLESS THE EXPLANATION IS FANTASTIC OR W ITHOUT ANY BASIS. PARIPOORNAN J., SPEAKING FOR THE DIVISION BENCH IN THE DECISION REPORTED IN CIT V. SHRI PAWAN KUMAR DALMIA [1987] 168 ITR 1 (KER) HELD THAT PENA LTY PROCEEDINGS ARE DISTINCT AND DIFFERENT FROM ASSESSMENT PROCEEDINGS. FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE BUT ARE RELEVANT. TH E ENTIRE MATERIAL AVAILABLE SHOULD BE CONSIDERED AFRESH BY THE AUTHORITIES BEFO RE IMPOSING PENALTY. THE EXPLANATION TO SEC. 271(1)(C) OF THE ACT PROVIDES O NLY A RULE OF EVIDENCE RAISING A REBUTTABLE PRESUMPTION IN CERTAIN CIRCUMSTANCES. NO SUBSTANTIVE RIGHT IS CREATED OR ANNULLED THEREBY. IT WAS CONCLUDED THAT THE INIT IAL BURDEN OF PROOF IS CAST ON THE ASSESSEE TO DISPLACE THE PRESUMPTION ARISING IN CER TAIN CASES AND THE ASSESSEE CAN DISCHARGE THE ONUS EITHER BY DIRECT EVIDENCE OR CIRCUMSTANTIAL EVIDENCE, OR BOTH. 5.3 IN SETHI INDUSTRIES CORPORATION(SUPRA),LEVY OF PENALTY WAS UPHELD SINCE THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND T O BE BONAFIDE, THE ASSESSEE HAVING CLAIMED LOSS ONCE IN AY 1998-99 & AGAIN IN A Y 1999-2000. IN N.S. ICHOPONANI(SUPRA) THE TRIBUNAL HELD THAT SINCE THE ADDITION WAS A RESULT OF ITA NO.4120 /DEL/2010 9 9 DISALLOWANCE, THE ASSESSEE COULD NOT BE HELD TO HAV E CONCEALED THE PARTICULARS OF INCOME. HOWEVER, ON APPEAL, HONBLE HIGH COURT FOUND THAT THE TRIBUNAL HAD NOT INDICATED ANY MATERIAL IN SUPPORT OF ITS FINDIN G. ON THE OTHER HAND, THE FINDING RECORDED BY THE AO WAS THAT THIS WAS A FIT CASE FOR LEVY OF PENALTY AND PENALTY AT 100 PER CENT. OF THE TAX SOUGHT TO BE EVADED. THIS OBSERVATION HAD NOT BEEN DEALT WITH BY THE TRIBUNAL. ACCORDINGLY, THE MATTER WAS REMANDED TO THE TRIBUNAL FOR A FRESH DECISION IN ACCORDANCE WITH LAW. 5.4 IN KANCHENJUNGA ADVERTISING P. LTD.(SUPRA); IT WAS HELD THAT WHERE A CLAIM IS EX FACIE BOGUS, AND EXPLANATION IS NOT BONA FIDE , THE ASSESSEE MAKES HIMSELF LIABLE TO THE PENALTY,THE ASSESSEE HAVING NOT MADE FULL DISCLOSURE IN THE RETURN OF INCOME BY GIVING THE BREAK-UP OF THE DEBTS AND THE NATURE THEREOF. SIMILARLY, IN HARPARSHAD AND COMPANY LTD.(SUPRA),LEVY OF PENALTY WAS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT, SINCE THE ASSESSEE FAIL ED TO OFFER ANY EXPLANATION IN RESPECT OF THE ADDITION OF ` `1,83,078 AND IT WAS DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS THEREOF, BY VIRTUE OF THIS EXPLANATION. 5.5 WE ARE OF THE OPINION THAT THE FINDINGS GI VEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE AS SESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUM STANCE IN PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE I S NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT ON THE BA SIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALT Y PROVISION. THE EXPLANATIONS APPENDED TO SECTION 271(1)(C) OF THE ACT ENTIRELY I NDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GI VING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJECT BEHIND ENACTMENT OF SECTI ON 271(1)(C) READ WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENA CTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. SIMILAR VIEW WAS TAKEN BY THE HONBLE MADRAS HIGH COURT IN KAMAL BASHA(SUPRA). IN ZOOM COMMUNICATION (P) LTD. (SUPRA),HONBLE JURISDICTIONAL HIGH COURT HELD THAT IF THE ASSESSE E MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO WHOLLY WITHOUT A NY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOU ND TO BE BONA FIDE, EXPLANATION ITA NO.4120 /DEL/2010 10 10 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND ASS ESSEE WILL BE LIABLE TO PENALTY. IN NUCHEM LTD.(SUPRA), A CO-ORDINATE BENCH ,UPHELD THE LEVY OF PENALTY, THE ASSESSEE'S CONDUCT OR EXPLANATION BEING NOT BONA FI DE. 6. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID JUDICIAL PRONOUNCEMENTS, ESPECIALLY WHEN IN THE INSTANT CASE, NEITHER THE LD. AR NOR TH E LD. DR PLACED BEFORE US THE EXPLANATION OF THE ASSESSEE IN RESPONSE TO A SHOWCA USE NOTICE ISSUED BY THE AO BEFORE LEVY OF PENALTY NOR THE LD. CIT(A) RECORDED ANY FINDINGS AS TO THE APPLICABILITY OF EXPLANATION 1 TO SEC. 271(1)(C) O F THE ACT NOR AS TO WHETHER OR NOT THE ASSESSEE DISCHARGED ONUS IN TERMS OF EXPLANATIO N 1 TO SEC. 271(1)(C) OF THE ACT, DESPITE BEING FULLY AWARE THAT THE AO INVOKED EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT, WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH THE DIRECTIONS TO READJUDICATE THE LEVY OF PENALTY IN THE LIGHT OF OUR AFORESAID OBSERVATIO NS, KEEPING IN MIND THE VARIOUS JUDICIAL PRONOUNCEMENTS, INCLUDING THOSE REFERRED TO ABOVE AND OF COURSE ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES . INTER ALIA, THE LD. CIT(A) SHALL PASS A SPEAKING ORDER, BRINGING OUT CLEARLY AS TO W HETHER OR NOT THE ASSESSEE DISCHARGED ONUS IN TERMS OF EXPLANATION 1 TO SEC. 2 71(1)(C) OF THE ACT. WITH THESE OBSERVATIONS, GROUND NOS. 1 & 2 IN THE APPEAL ARE D ISPOSED OF. 7. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL, ACCORDINGLY, THIS GROUN D IS DISMISSED. 8. IN THE RESULT, APPEAL IS ALLOWED BUT FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (U.B.S. BEDI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO: 1. M/S. GREEN CARRIERS & CONTRACTORS (DELHI) PVT. L TD., 4141, 1 ST FLOOR, NAYA BAZAR, DELHI. ITA NO.4120 /DEL/2010 11 11 2. DCIT, CIRCLE-12(1), NEW DELHI. 3. CIT CONCERNED. 4. CIT(A)-X, NEW DELHI. 5. DR, ITAT, DELHI BENCH-C, NEW DELHI 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, NEW DELHI