DCIT 9(3)(1), MUMBAI V. DURON TECHNOLOGIES (INDIA ) P.LTD, MUMBAI

ITA 4198/MUM/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0327 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SATISH CHANDRA RAJORE SR
• Keywords: Depreciation; Principle of natural justice; Bonafide belief; Wrong claim; Difference of opinion; Bonafide mistake; Revenue expenditure; Set aside
• Section: 271(1)(c); 143(3)

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 4198/MUM/2016 (ASSESSMENT YEAR 2007-08 ) DCIT-9(3)(1) ROOM NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S DURON TECHNOLOGIES (INDIA) PVT. LTD., ROOM NO. A-11, TRISHUL, MAHAKALI CAVES ROAD, ANDHERI (EAST), MUMBAI-400093 . PAN: AACCD1243R APPELLANT RESPONDE NT APPELLANT BY : SHRI PANKAJ R. TOPRANI WITH SHRI KRUPA P. TOPRANI (DR) RESPONDENT BY : S HRI SATISH CHANDRA RAJORE (SR. AR) DATE OF HEARING : 13.03.2019 DATE OF PRONOUNCEMEN T : 29.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE IN COME-TAX ACT (FOR SHORT THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COM MISSIONER OF INCOME-TAX (APPEALS)-16, [HEREINAFTER REFERRED AS LD CIT (A)], MUMBAI DATED 18.03.2016, WHICH IN TURN ARISES FROM THE PENALTY L EVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT FOR ASS ESSMENT YEAR 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 22.10.2007 DE CLARING TOTAL INCOME OF RS. 2,94,00,307/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 2 3.12.2009 ASSESSING ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 2 THE TOTAL INCOME OF THE ASSESSEE AT RS. 6,04,72,480 /- BY MAKING ADDITIONS ON ACCOUNT OF PROVISION FOR RETENTION AND POWER COS T AMOUNTING TO RS. 2,80,72,176/- AND PROVISION FOR LIQUIDATED DAMAGE A MOUNTING TO RS. 30,00,000/-. ON APPEAL BEFORE THE LD. CIT(A) IN QUA NTUM ASSESSMENT THE ADDITIONS WERE CONFIRMED ORDER DATED 18.03.2011. T HE ASSESSING OFFICER INITIATED PENALTY PROCEEDING FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME ON BOTH THE DISALL OWANCES. THE ASSESSING OFFICER PASSED THE PENALTY ORDER UNDER SE CTION 271(1)(C) OF THE ACT ON 28.03.2013 LEVYING THE PENALTY OF RS. 1,04,5 8,890/-. THE ASSESSING OFFICER WHILE PASSING THE PENALTY ORDER R ECORDED THAT THE ASSESSEE WAS GIVEN OPPORTUNITY VIDE NOTICE DATED 07 .12.2012. THE ASSESSEE NEITHER FILED ANY SUBMISSIONS NOR ATTENDED THE PROCEEDINGS THE ASSESSING OFFICER LEVIED PENALTY @ 100% OF TAX SOUG HT TO BE EVADED ON SUCH DISALLOWANCE. ON FURTHER APPEAL BEFORE, LD CIT(A) THE ENTIRE PENALTY WAS DELETED. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A) THE ASSESSING OFFICER/ REVENUE HAS FILED THE PRESENT AP PEAL BEFORE US. 3. THE REVENUE HAS RAISED SOLE GROUND OF APPEAL THAT T HE LD CIT(A) ERRED IN DELETING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL R EPRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD DR FURTHER SUBMITS THAT ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 3 THE DISALLOWANCE MADE IN THE ASSESSMENT WAS UPHELD BY LD CIT(A). AND NO FURTHER APPEAL WAS FILED BY THE ASSESSEE. THE LD CIT(A) DELETED THE ENTIRE PENALTY HOLDING THAT ASSESSEE WAS UNDER BONA FIDE BELIEF ABOUT THE ALLOWABILITY OF THE PROVISIONS MADE IN ITS ACCOUNT. HAD THE RETURN OF INCOME FURNISHED BY THE ASSESSEE NOT SELECTED FOR S CRUTINY THE INCOME WOULD HAVE ESCAPED FROM THE ASSESSMENT. 5. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE SUPPO RTED THE ORDER OF THE LD. CIT (A). THE LD AR FOR THE ASSESSEE FURTHER SUB MITS THAT THE PENAL PROVISIONS UNDER SECTION 271(1)(C) WOULD APPLY WHEN THERE IS CONCEALMENT OF PARTICULARS OF INCOME OR A FAILURE T O DISCLOSE FULLY AND TRULY PARTICULARS OF INCOME AND IT IS ONLY WHEN THE APPELLANT FAILS BY NOT DISCLOSING PARTICULARS OF INCOME. HOWEVER, ALL THE NECESSARY FACTS AND FIGURES WERE DISCLOSED BY THE ASSESSEE IN ITS RETUR N OF INCOME, WHICH ACCOMPANIED THE PROFIT AND LOSS ACCOUNT FOR THE YEA R, ENDED 31.03.2007, BALANCE SHEET AS ON 31.03.2007 AND RELEVANT SCHEDUL ES. NO INFORMATION GIVEN IN THE INCOME TAX RETURN WAS FOUND TO BE INCO RRECT OR INACCURATE, THEREFORE, IT COULD NOT BE SAID THAT THE PROVISION MADE BY ASSESSEE DISALLOWED DURING THE COURSE OF ASSESSMENT PROCEEDI NGS WAS A RESULT OF ANY SUPPRESSION OF FACTS OR DELIBERATE CONCEALMENT OF INCOME. THE ASSESSEE HAD DISCHARGED ITS ONUS CAST ON IT AS PER EXPLANATION (1) OF SECTION 271(1)(C) OF THE INCOME TAX ACT. IT WAS SU BMITTED THAT THERE WAS NO JUSTIFICATION FOR IMPOSING PENALTY WHEN ASSESSEE HAD DISCLOSED ALL THE ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 4 FACTS IN THE AUDITED STATEMENT OF ACCOUNTS FOR THE YEAR UNDER REFERENCE. THERE WAS NO CONCEALMENT OF INCOME AT ALL AND IT WA S JUST A CLEAR CUT CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND T HE ASSESSING OFFICER. THE ASSESSING OFFICER WHILE IMPOSING PENALTY HAS NO T RECORDED A CONCLUSIVE FINDING THAT THERE WAS AN ACTIVE CONCEAL MENT OR DELIBERATE FURNISHING OF INACCURATE PARTICULARS. THESE PARAMET ERS HAD TO BE FULFILLED BEFORE IMPOSING PENALTY ON THE ASSESSEE. THE PROVI SION OF SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961 WOULD REQUIRE P ROPER APPLICATION OF MIND AND RECORDING OF AT LEAST A BARE MINIMUM OPINI ON ON THE PART OF THE ASSESSING OFFICER THAT A CASE FOR INITIATION OF PEN ALTY PROCEEDING WAS MADE AS THERE WAS CONCEALMENT OF INCOME OR THAT INCORREC T PARTICULARS HAD BEEN FURNISHED BY THE APPELLANT WITH THE INTENTION TO AV OID PAYMENT OF TAXES. 6. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSI NG OFFICER RELIED ON THE DECISION OF DELHI HIGH COURT IN ZOOM COMMUNICAT ION (P) LTD. (2010) 327 ITR 510(DELHI). THE DECISION OF DELHI H IGH COURT IN ZOOM COMMUNICATION (P) LTD (SUPRA) IS DISTINGUISHABLE ON THE FACTS OF THE PRESENT CASE. IN ZOOM COMMUNICATION (P) LTD (SUPRA) THE ASSESSEE IN THAT CASE DEBITED THE ADMINISTRATIVE AND OTHER EXPENSES UNDER THE HEAD EQUIPMENT WRITTEN OFF AND OTHER SUM OF RS. 1.00 L ACKS WAS ALSO DEBITED UNDER THE HEAD INCOME TAX PAID, THUS, CLEARLY INA CCURATE PARTICULAR OF INCOME WAS FURNISHED. THE LD AR FOR THE ASSESSEE RE LIED ON THE DECISION ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 5 OF DELHI HIGH COURT IN TRISTAR INTECH P LTD VS ACIT [2015] 43 ITR( TRIB) 279 ( DELHI). 7. IN ALTERNATIVE SUBMISSIONS THE LD AR SUBMITS THAT H E HAS FILED ADDITIONAL PAPER BOOK AND PLACED ON RECORD THE COPY OF NOTICE ISSUED BY ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)( C), WHEREIN THE ASSESSING OFFICER HAS NOT SPECIFIED THE LIMB OF SEC TION 271(1)(C) ON WHICH THE PENALTY IS PROPOSED. THE ASSESSING OFFICER HAS NOT STRIKE OUT INAPPROPRIATE PORTION OF THE NOTICE, THUS, THE NOTI CE ISSUED BY THE ASSESSING OFFICER WAS INVALID. IN SUPPORT OF HIS SU BMISSIONS THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION OF BOMBAY HIGH COURT IN CIT VS SAMSON PERINCHERY [2017] 392 ITR 4 (BOMBAY). THE LD . AR FOR THE ASSESSEE PRAYED FOR DISMISSAL OF THE APPEAL. 8. IN THE REJOINDER SUBMISSIONS THE LD. DR SUBMITS THA T THE ASSESSEE HAS NEITHER FILED ANY CROSS OBJECTION, THEREFORE, THE A SSESSEE IS NOT ENTITLED TO ARGUE THAT THE NOTICE ISSUED BY ASSESSING OFFICER I S INVALID. EVEN OTHERWISE THE ASSESSEE DULY PARTICIPATED IN THE PEN ALTY PROCEEDINGS AND NEVER RAISED SUCH OBJECTION THAT THE ASSESSEE IS UN AWARE OF THE CHARGES OR LIMB OF SECTION 271(1)(C). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER WHILE PASSING THE ASSESSMENT ORDER MADE THE ADDITION ACCO UNT OF PROVISION FOR RETENTION AND POWER COST AMOUNTING TO RS. 2,80,72,1 76/- AND PROVISION FOR ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 6 LIQUIDATED DAMAGE AMOUNTING TO RS. 30,00,000/-. THE APPEAL FILED BY THE ASSESSEE CHALLENGING THE ADDITION BEFORE LD CIT(A) WAS DISMISSED VIDE ORDER DATED 18.03.2011. NO FURTHER APPEAL WAS FILED BEFORE TRIBUNAL. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 274 R EAD WITH SECTION 271(1)(C) DATED 07.12.2012. THE ASSESSING OFFICER R ECORDED THAT NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY SUBMISSI ONS WAS MADE. THE ASSESSING OFFICER LEVIED THE PENALTY ON BOTH THE DI SALLOWANCE @ 100% OF THE TAX SOUGHT TO BE EVADED VIDE HIS ORDER DATED 28 .03.2013. THERE IS NO DISPUTE THAT ALL THE NECESSARY FACTS AND FIGURES WE RE DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME. THE RETURN OF INC OME WAS ACCOMPANIED THE PROFIT AND LOSS ACCOUNT FOR THE YEAR, ENDED 31.03.2 007, BALANCE SHEET AS ON 31.03.2007 AND RELEVANT SCHEDULES. SIMILARLY, NO IN FORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE, THE REFORE, IT COULD NOT BE SAID THAT THE PROVISION MADE BY ASSESSEE DISALLOWED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS A RESULT OF ANY SUPPRESS ION OF FACTS OR DELIBERATE CONCEALMENT OF INCOME. IN OUR VIEW THERE WAS NO JUSTIFICATION FOR IMPOSING PENALTY WHEN ASSESSEE HAD DISCLOSED AL L THE FACTS IN THE AUDITED STATEMENT OF ACCOUNTS FOR THE YEAR UNDER RE FERENCE. THERE WAS NO CONCEALMENT OF INCOME AT ALL. WE ARE OF THE FURTHER VIEW THAT IT WAS JUST A CLEAR CUT CASE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER. ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 7 10. BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE SIMILA R SUBMISSION AS MADE BEFORE US. THE LD. CIT(A) AFTER CONSIDERING THE ASS ESSMENT ORDER, PENALTY ORDER PASSED BY ASSESSING OFFICER AND ITS SUBMISSIO N DELETED THE PENALTY WHILE MAKING THE FOLLOWING ORDER: 6. I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER O F THE AO AND THE SUBMISSIONS MADE BY THE AR IN SUPPORT OF HIS ARGUME NTS. AFTER TAKING INTO CONSIDERATION, THE AO'S FINDINGS AND THE APPELLANT' S ORAL AND WRITTEN SUBMISSIONS MADE DURING THE COURSE OF HEARING AS WE LL AS FACTS OF THE CASE, DECISION ON VARIOUS GROUNDS ARE ADJUDICATED AS UNDE R: 6.1 ALTHOUGH APPELLANT HAS RAISED 5 GROUNDS OF APPE AL THE ONLY EFFECTIVE GROUND IS AGAINST LEVY OF PENALTY OF RS.1,04,58,890 / - U/ S.271(L)(C) OF THE ACT. THE APPELLANT COMPANY FILED ITS RETURN OF INCOME ON 27.10.2007 DECLARING TOTAL INCOME OF RS.2,94,00,307/ -. THE CASE WAS SEL ECTED FOR SCRUTINY AND AN ORDER U/ S.143(3) OF THE I.T. ACT, 1961 WAS PASSED BY THE LD. A.O. ON 23.12.2009 BY MAKING AN ADDITION/DISALLOWANCE OF RS .3,10,72,176/ -. IN PARA 3 OF THE ASSESSMENT ORDER THE LD.AO HAD MENTIONED T HAT THE APPELLANT COMPANY MADE A PROVISION FOR RETENTION OF 1,30,72,1 76/- AND PROVISION FOR POWER COST FOR AN AMOUNT OF RS.1.50 CRORES. IN PARA 4.2 OF THE ASSESSMENT ORDER, THE LD. A.O. CONCLUDED THAT THE PROVISION MA DE BY THE APPE1LANT WERE IN THE NATURE OF DOUBTFUL DEBT AND NOT ON ACCOUNT OF A NY LIQUIDATED DAMAGES. THE A.O. FURTHER CONCLUDED THAT THE APPELLANT COMPANY H AD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE APPELLANT AS LIABLE TO PA Y ANY LIQUIDATED DAMAGE ON THE CONTRACT ENTERED WITH BHEL. THEREFORE, THE PROV ISION MADE TOWARDS LIQUIDATED DAMAGE OF RS.30,00,000/- TOWARDS APPELLA NT COMPANY WAS ALSO DISALLOWED. SIMILARLY, IN RESPECT OF PROVISION OF R S.1.50 CRORES THE LD. A.O. CONCLUDED THAT IF THE APPELLANT WAS LIABLE TO PAY A NY LIQUIDATED DAMAGE IT COULD BE COLLECTED FROM THE SUB CONTRACT UTILITY EN ERGY TECH ENGINEERING LTD. THEREFORE IN VIEW OF THE A.O., THE APPELLANT COMPAN Y WAS NOT REQUIRED TO BEAR THE LIQUIDATED DAMAGES AND ACCORDINGLY THE PROVISIO N OF RS.1,50,00,000/ - CLAIMED BY THE APPELLANT COMPANY WAS NOT ALLOWED BY THE A.O. SIMILARLY, PROVISION FOR RETENTION WAS ALSO DISALLOWED AND PEN ALTY U/S.271(1)(C) OF THE ACT WERE SEPARATELY INITIATED. ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 8 6.2 IN PARA 5 OF THE PENALTY ORDER DATED 28.03.2013 THE LD. A.O. MENTIONED THAT NOBODY HAD ATTENDED AND NO WRITTEN SUBMISSION WAS M ADE B THE APPELLANT COMPANY. THEREFORE HE IMPOSED PENALTY U/S.271(1)(C) OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ACCORDING TO THE A .O. THE APPELLANT COMPANY COULD NOT REBUT THE ADDITIONS ON ACCOUNT OF PROVISI ON FOR RETENTION AND POWER COST AMOUNTING TO RS.2,80,72,176/- AND PROVISION FO R LIQUIDATED DAMAGE AMOUNTING TO RS.30,00,000/- MADE IN THE ASSESSMENT ORDER WHICH WERE ALSO CONFIRMED BY CIT(A). 6.3 DURING APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT PENALTY ORDER U/S.271(1)(C) WAS PASSED EX-PARTE WITHOUT HEARING T HE APPELLANT BY THE A.O. WHICH WAS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. DURING APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT THE PENAL PROVIS IONS U/S.271(1)(C) WOULD APPLY WHEN THERE IS CONCEALMENT OF PARTICULARS OF I NCOME OR FAILURE TO DISCLOSE FULLY AND TRULY PARTICULARS OF INCOME. IT WAS CLAIM ED THAT IN THE CASE UNDER CONSIDERATION ALL NECESSARY FACTS AND FIGURES WERE DISCLOSED CATEGORICALLY BY THE APPELLANT IN ITS RETURN OF INCOME ACCOMPANIED B Y P & L A/C. FOR THE YEAR ENDING ON 31.03.2007 AND BALANCE SHEET AS ON 31.03. 2007. ACCORDING TO THE APPELLANT, A.O. DID NOT FIND ANY FAULT IN THE FIGUR ES PROVIDED BY THE APPELLANT IN ITS P & L A/C. AND BALANCE SHEET. IT WAS FURTHER CONTENDED THAT ALL THE ACCOUNTS OF THE APPELLANT COMPANY WERE AUDITED BY A REPUTED FIRM AND PROFESSIONALLY QUALIFIED C.A. WHO DID NOT POINTED O UT ANY DEFECTS IN THE ACCOUNTS MAINTAINED BY THE APPELLANT COMPANY. IN TH E AUDIT REPORT DULY CERTIFIED AND SIGNED BY A PROFESSIONAL FIRM, NO REM ARKS REGARDING DISALLOWABILITY OF PROVISIONS WERE GIVEN BY THE AUD ITORS OF THE COMPANY. IT WAS CLAIMED THAT AFTER THE ADVICE OF EXPERTS, THE A PPELLANT COMPANY WAS UNDER A BONAFIDE BELIEF THAT CLAIM OF PROVISIONS MADE IN THE BALANCE SHEET WERE ALLOWABLE CLAIMS. IT WAS ARGUED THAT THERE WAS NO J USTIFICATION FOR IMPOSING PENALTY WHEN APPELLANT HAD DISCLOSED ALL THE FACTS M THE AUDITED STATEMENT OF ACCOUNTS FOR THE YEAR UNDER REFERENCE AND NO QUALIF ICATION TO THAT EFFECT HAS BEEN MENTIONED IN THE AUDIT REPORT OF THE APPELLANT BY THE STATUTORY AUDITORS. IN SUPPORT OF ITS CLAIM A COPY OF THE TAX AUDIT REPORT WAS PRODUCED FOR VERIFICATION. IN SUPPORT OF ITS CLAIM APPELLANT REL IED UPON JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 IN WHICH THE HON'BLE COURT HAD HELD AS UNDER: ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 9 'MERE MAKING OF A CLAIM NOT MAINTAINABLE IN LAW, WI LL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. MERELY BECAUS E THE ASSESSEE CLAIMED OF DEDUCTION OF INTEREST EXPENDITURE HAS NOT BEEN A CCEPTED BY THE REVENUE, PENALTY UNDER SECTION 271(1)(C) IS NOT ATTRACTED. I F THE CONTENTION OF THE REVENUE IS ACCEPTED, THE ASSESSEE WOULD BE LIABLE T O PENALTY UNDER SECTION 271(1) (C) IN EVERY CASE WHERE THE CLAIM MADE BY TH E ASSESSEE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON. T HE COURT HELD THAT THIS CANNOT BE THE INTENTION OF THE LEGISLATURE.' RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF MUMBAI TRIBUNAL IN THE CASE OF WALTER SALDHANA 44 SOT 26 WHEREIN IT WAS DECIDED AS UNDER: '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 RETURN CANNOT AM OUNT TO FURNISHING INACCURATE PARTICULARS. THE ASSESSEE IN THE PRESENT CASE HAD MADE A BONA FIDE CLAIM AND HENCE FOLLOWING THE APEX COURT'S DEC ISION IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD., IT WAS HELD THAT PE NALTY UNDER SECTION 271(1) (C) OF THE ACT WAS NOT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F SMC CAPITAL LTD. VS. ITO 13(2) IN ITA NO.1342/DEL./2010 HAS HELD THAT: '7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE CASE LAWS CITED BY BOTH THE PA RTIES. ASSESSEE'S PLEA THAT THE MISTAKE WAS INADVERTENT HAS NOT BEEN CONTR OVERTED, THIS IS AN OBJECTIVE ISSUE AND INADVERTENCE HAS TO BE GATHERED FROM THE FACTS AND CIRCUMSTANCES. HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. (SUPRA) HAS HELD THAT THE PENALTY SHOULD NOT BE LEV IED MERELY BECAUSE IT IS LAWFUL TO DO SO. THE AMOUNT OF TAX INVOLVED IS ONLY RS.85,607/-. IT HAS NOT BEEN CLAIMED THAT THE BOOKS OF ACCOUNT AND STATEMEN TS THEREFROM FILED BY THE ASSESSEE WERE ERRONEOUS, INCOMPLETE OR PARTICUL ARS WERE INACCURATE OR CONCEALED. ASSESSEE MADE A CLAIM OF SET OFF OF LOSS AND HAS RIGHT FROM BEGINNING EXPLAINING THAT THE SAME WAS DUE TO THE I NADVERTENT MISTAKE OF TAX CONSULTANT. HON'BLE DELHI HIGH COURT IN ESCORTS FINANCE LTD. (SUPRA) ALSO HAS HELD THAT WHERE THERE IS AN INADVERTENT MI STAKE PENALTY U/S.271(1)(C) SHOULD NOT BE IMPOSED. IN THAT CASE, ASSESSEE'S EXPLANATION ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 10 THAT MISTAKE WAS DUE TO ADVICE OF CHARTERED ACCOUNT ANT PUBLISHED IN PROSPECTUS ABOUT THE ALLOWABILITY OF CLAIM WAS FOUN D TO BE NOT INADVERTENT. 8. IN BOTH THE ASSESSMENT AND PENALTY PROCEEDINGS, ASSESSEE'S TAX CONSULTANT APPEARED AND FURNISHED THE ABOVE EXPLANA TION WHICH INDICATES THAT THE MISTAKE ORIGINATED FROM, THE SIDE OF TAX CONSULTANT. IN THE GIVEN FACTS AND CIRCUMSTANCES, THE ASSESSEES CLAIM OF IN ADVERTENT ERROR CANNOT BE RULED OUT. RELYING ON HON'BLE SUPREME COURT JUDG EMENT IN THE CASE OF HINDUSTAN STEEL LTD. AND HON'BLE DELHI HIGH COURT J UDGEMENT IN THE CASE OF ESCORTS FINANCE LTD. WE HOLD THAT THE ASSESSEE'S CLAIM OF INADVERTENT ERROR ON THE PART OF THE INCOME TAX RETURN CONSULTA NT CANNOT BE FOUND TO BE IMPLAUSIBLE LOOKING AT THE LOW AMOUNT OF TAX INVOLV ED AND FACTS AND CIRCUMSTANCES OF THE CASE. IN VIEW OF THE ABOVE, WE DELETE THE PENALTY.' THE HON'BLE MUMBAI TRIBUNAL IN ITA NO.1332 OF 2011 IN THE CASE OF CIT-L VS. SOMANY EVERGREEN KNITS LTD. HELD AS UNDER: IN APPEAL, THE CIT(A) UPHELD THE ORDER OF THE ASSES SING OFFICER. ON FURTHER APPEAL, THE TRIBUNAL BY THE IMPUGNED ORDER RECORDS A FINDING THAT IN THE PROFIT AND LOSS ACCOUNT FILED ALONGWITH THE RETURN OF INCOME. THE RESPONDENT-ASSESSEE HAS CLEARLY DESCRIBED THE LOSS AS THE LOSS ON SALE OF ITS GARMENTS UNIT ASSETS. THIS LOSS WAS ADDED TO THE NE T LOSS IN THE COMPUTATION OF THE TOTAL INCOME. THUS, THERE WAS CO MPLETE DISCLOSURE. THE TRIBUNAL FURTHER RECORDS THAT THE ABOVE LOSS WAS CL AIMED BY THE RESPONDENT-ASSESSEE AS A REVENUE EXPENDITURE AS THE CHARTERED ACCOUNTANT DID NOT ADVICE THEM CORRECTLY AS TO THE LEGAL POSITION. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS THE MIST AKE WAS NOTICED AND CORRECTED BY THE RESPONDENT-ASSESSEE. ON THE ABOVE FACTS, THE TRIBUNAL CONCLUDED THE CLAIM FOR DEDUCTION MADE BY THE RESPO NDENT-ASSESSEE WAS ON ACCOUNT OF A BONAFIDE MISTAKE AND IN SUCH CIRCUM STANCES, THE LEVYING OF PENALTY WAS NOT JUSTIFIED. THE GRIEVANCE OF THE REVENUE IS THAT PENALTY IS JUS TIFIED IN VIEW OF THE FACT THAT THE RESPONDENT-ASSESSEE HAD NOT FILED A REVISE D RETURN OF INCOME. HOWEVER, THE TRIBUNAL NOTED THAT THE TIME TO FILE R EVISED RETURN HAD EXPIRED. IN ANY EVENT EVEN THE REVENUE DOES NOT DIS PUTE THAT IT WAS A BONAFIDE MISTAKE ON THE PART OF THE RESPONDENT-ASSE SSEE. IN THE ABOVE ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 11 VIEW, IMPOSITION OF PENALTY UPON THE RESPONDENT-ASS ESSEE IS NOT WARRANTED.' THE HON'BLE TRIBUNAL PUNE BENCH' A' IN ITA NO.1121/ PN/2011 IN THE CASE OF AMRUTA ORGANICS P. LTD. VS. DCIT CIR-L CONCLUDED TH AT: 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE FIN D THAT THE MERE MISTAKE IN MAKING OF A CLAIM IN THE RETURN OF INCOM E WOULD NOT IPSO FACTOR REFLECT CONCEALMENT OR FURNISHING OF INACCURATE PAR TICULARS OF INCOME IN TERMS OF SECTION 271 (1) (C) OF THE ACT. THE WRONG CLAIM OF DEPRECIATION IN THE PRESENT CASE CANNOT BE SAID TO BE MADE WITH AN INTENTION TO EVADE TAXES IN AS MUCH AS EVEN AFTER THE DISALLOWANCE OF DEPRECIATION, THE RESULTANT INCOME OF THE ASSESSEE REMAINS LOSS. IN F ACT, THE ASSESSEE HAD POINTED OUT BEFORE THE ASSESSING OFFICER THAT IT HA S BEEN INCURRING LOSSES SINCE THE YEAR 2003 DUE TO THE MARKET FORCES. CONSI DERING THE ENTIRETY OF THE CIRCUMSTANCES, IN OUR VIEW, THE IMPUGNED DISALL OWANCE ON ACCOUNT OF DEPRECIATION IS A MISTAKE AND DOES NOT INVITE THE P ROVISIONS OF SECTION 271 (L)(C) OF THE ACT. 7. IN THE RESULT, WE SET ASIDE THE ORDER OF THE CIT (A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED U/S .271 (L)(C) AMOUNTING TO RS.6,432/-. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED.' 6.4 KEEPING IN VIEW THE FACTS OF THE CASE IT IS FO UND THAT MERE MISTAKE IN MAKING OF A CLAIM IN THE RETURN OF INCOME WOULD NOT IPSO FACTO REFLECT CONCEALMENT FOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME IN TERMS OF INCOME U/S.271(1)(C) OF THE ACT. THE PRESENT CLAIM OF PROVISIONS IN THE PRESENT CASE CANNOT BE SAID TO BE MADE WITH AN INTENTION TO EVADE TAX. AFTER RECEIVING AUDIT REPORT FROM TAX CONSULTANT WITHOUT ANY REMARK S, APPELLANT WAS UNDER A BONAFIDE BELIEF ABOUT THE ALLOWABILITY OF PROVISION S MADE IN ITS ACCOUNT. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF THE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS AND VARIOUS CASE LAWS OF HON'BLE COURTS AS DISCUSSED IN FOREGOING PARAGRAPHS PENALTY U/ S. 271 (L)(C) CANNOT BE SUSTAINED. HENCE, PENALTY OF RS.1,04,58,890/ - IS DELETED AND APPEAL OF THE APPELLANT ON THIS GROUND IS ALLOWED. ITA NO. 4198 MUM 2016-M/S DURON TECHN OLOGIES (INDIA) PVT. LTD. 12 11. CONSIDERING THE DETAILS FACTUAL AND LEGAL DISCUSSIO N MADE BY LD CIT(A), WHICH IS SUPPORTED WITH DECISIONS OF VARIOUS SUPERI OR COURTS, WE DO NOT FIND ANY LEGALITY AND INFIRMITY IN HIS ORDER, WHIC H WE AFFIRM. NO CONTRARY FACTS ARE BROUGHT TO OUR NOTICE TO TAKE OT HER VIEW. IN THE RESULT THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMI SSED. 12. AS WE HAVE AFFIRMED THE FINDING OF THE LD CIT(A),TH EREFORE, DISCUSSIONS ON THE ALTERNATIVE SUBMISSIONS OF LD AR FOR THE ASS ESSEE ON THE VALIDITY OF NOTICE UNDER SECTION 274 READ WITH SECTION 271(1 )(C) HAS BECOME ACADEMIC. 13. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2019. SD/- SD /- N.K. PRADHAN, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 29.03.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI