ITO, New Delhi V. M/s. Lexus India Ltd., Noida

ITA 4392/DEL/2010

• Counselvise Citation: 439220114 RSA 2010
• Duration Of Justice: 4 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-01-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 30-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DA MKAUNAJMA
• Keywords: Depreciation; Wrong claim; Difference of opinion; Onus to prove
• Section: 27

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, DELHI D BENCH, NEW DELHI BEFORE : SHRI I. C. SUDHIR, JUDICIAL MEMBER A ND SHRI PRAMOD KUMAR, ACCOUNTA NT MEMBER ITA NO.4392/DEL./2010 ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, VS. M/S. LEXUS INDIA LTD., WARD 4(3), NEW DELHI. C-28, SECTOR-4, NODIA (U. P.) (PAN : AAACL 6145 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P. DAM KAUNAJMA, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 29.01.2015 DATE OF PRONOUNCEMENT : 27.03.2015 ORDER PER PRAMOD KUMAR, A.M.: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 17 TH AUGUST 2010 IN THE MATTER OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR T HE ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS :- 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS ERRONE OUS & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE PENA LTY RS.08,30,865/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE I.T. ACT. 2.1. THE LD. CIT(A) IGNORED THE FACT THAT THE ASSES SEE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND CONCEALED TAXABLE INCOME BY CLAIMING NON-ALLOWABLE EXPENSES REVENUE EXPENSES I. E., LOSS ON SALE OF PLOT, CAR HIRE CHARGES AND EXCESSIVE CLAIM OF DEPRE CIATION ON SOFTWARE. 2 ITA NO. 4392/DEL./2010 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS SOLD PLOT NO. 14, BLOCK-D, SURAJPUR INDUSTRIAL AREA, NOD IA FOR RS.14,00,000/- AS AGAINST PURCHASE PRICE OF RS.28.38 LACS. IN RESPONSE TO THE REQUISITION FOR DETAILS BY THE ASSESSING OFFICER, THE ASSESSEE SUBMITTED THAT THIS PLOT WAS PURCHASED FOR SETTING UP PHARMACEUTICAL PROJECT, BUT AS THE ASSESSEE SUBSEQU ENTLY ALSO ACQUIRED LAND IN DEHRADUN INDUSTRIAL AREA IN EXCISE FREE ZONE, IT WA S DECIDED TO SET UP THE PROJECT IN DEHRADUN AND DISPOSE OF THE PLOT IN QUESTION. AS FA R AS THE REASONING FOR SALE OF PLOT BELOW THE PURCHASE PRICE IS CONCERNED, THE ASSESSEE EXPLAINED THAT IN ACCORDANCE WITH THE GUIDELINES OF UPSIDC, I.E., AUTHORITY ALLO TTING THE AFORESAID PLOT, THE PROJECT WAS TO BE COMPLETED WITHIN THE SPECIFIC TIM E, FAILING WHICH THE LAND WAS TO BE ACQUIRED BACK BY UPSIDC AND IT WAS IN THIS BACKD ROP THAT THE ASSESSEE HAD TO SELL THE PLOT, ACCORDING TO THE ASSESSEE, AND BELOW THE MARKET PRICE. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THIS EXPLANATION. HE DEPUTED HIS INSPECTOR FOR ASCERTAINING FURTHER DETAILS AND BASED ON INSPECTOR S REPORTS WHO SUGGESTED THAT THE MARKET PRICE OF THE PLOT WAS IN THE RANGE OF RS.600 TO RS.620 PER SQ. YARD AS AGAINST PURCHASE PRICE OF SAID PLOT, WHICH WAS RS.470 PER S Q. YARD, THE ASSESSING OFFICER PROCEEDED TO REJECT THE CAPITAL LOSS OF RS.19,80,00 0/-. IT WAS TAKEN AT NIL. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HA S PAID CAR HIRE CHARGES OF RS.1,80,000/- AND RS.36,000/- BUT THE RELEVANT AGR EEMENT WITH CAR OWNER, THE DETAILS OF TAX DEDUCTION AT SOURCE AND OTHER VOUCHE RS FOR PAYMENT ETC. WERE NOT 3 ITA NO. 4392/DEL./2010 AVAILABLE. ACCORDINGLY HE DISALLOWED THE SAME. THE ASSESSING OFFICER ALSO DISALLOWED RS.1,20,000/- BEING DEPRECIATION ON PURC HASE OF SOFTWARE FROM AMSOFT GLOVAL PVT. LTD. ON THE GROUND THAT THE SOFTWARE W ERE USED FOR LESS THAN 180 DAYS. THE MATTER DID NOT REST THERE. THE ASSESSING OFFICE R ALSO IMPOSED CONCEALMENT PENALTY U/S. 271(1)(C) IN RESPECT OF THE AFORESAID DISALLOWANCES AS THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS CONCE ALED ITS INCOME BY FILING INACCURATE PARTICULARS IN THE FORM OF INADMISSIBLE CLAIMS. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A). IT WAS CONTENDED THAT THERE WAS NO BASIS EVEN FOR DISALLOWANCE IN QUESTION AND AT N O STAGE, ASSESSEE WAS CONFRONTED WITH INSPECTORS REPORT WHICH IN ANY EVENT CANNOT B E A GOOD BASIS FOR DISALLOWING LONG TERM CAPITAL LOSS. IT WAS ALSO POINTED OUT THA T THE PAYMENT OF HIRE CHARGES WAS DULY SUPPORTED AS PER THE MEMORANDUM OF UNDERSTANDI NG WHICH HAS BEEN TAKEN NOTE OF BY THE ASSESSING OFFICER HIMSELF AND THAT I N ANY EVENT THE FACT OF HIRE CHARGES HAS NOT BEEN IN DISPUTE. IT WAS ALSO POINTE D OUT THAT PAYMENT OF CAR HIRE CHARGES WAS DULY REFLECTED IN THE AUDITED ACCOUNT O F THE RECIPIENT AND THE DISALLOWANCE IS ON THE BASIS OF CERTAIN CONJECTURES . AS FAR AS DISALLOWANCE OF DEPRECIATION, THE ASSESSEE POINTED OUT THAT ALL THE RELEVANT FACTS WERE BEFORE THE ASSESSING OFFICER AND DID NOT AMOUNT TO ANY CONCEAL MENT OR FURNISHING OF INACCURATE PARTICULARS. ON THE BASIS OF THESE ARGUM ENTS, THE CONTENTION OF THE ASSESSEE WAS THAT IMPUGNED ADDITIONS/DISALLOWANCES WERE IN ANY EVENT NOT VALID REASONS FOR IMPOSITION OF PENALTY UNDER SECTION 271 (1)(C). THE LEARNED CIT(A) UPHELD THE CONTENTIONS SO ADVANCED BY THE ASSESSEE AND DELETED THE IMPUGNED 4 ITA NO. 4392/DEL./2010 PENALTY BY OBSERVING, INTER ALIA, AS FOLLOWS : 4.1 I HAVE CAREFULLY CONSIDERED THE WRITTEN SUBMIS SION MADE ON BEHALF OF THE APPELLANT, THE FINDINGS OF THE ASSESSING OFFICE R IN THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDER AND THE FACTS ON RECOR D. THERE IS NO DISPUTE TO THE WELL-SETTLED LEGAL PROPOSITION THAT THE PENALTY PRO CEEDINGS ARE DISTINCT AND DIFFERENT FROM ASSESSMENT PROCEEDINGS. FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE. THE ENTIRE MATERIAL AVAILABLE S HOULD BE CONSIDERED AFRESH BY THE ASSESSING OFFICER BEFORE IMPOSING PENALTY U/ S. 271(1 )(C ). THE EXPLANATION TO SECTION 271(1)(C) PROVIDES A RULE OF EVIDENCE RAISING A REBUTTABLE PRESUMPTION IN CERTAIN CIRCUMSTANCES. NO SUBSTANTIVE RIGHT IS CREATED OR ANNULLED THEREBY. THE SUBSTANTIVE LAW RE LATING TO LEVY OF THE PENALTY IS PRESERVED. THE INITIAL BURDEN OF PROOF IS CAST O N THE ASSESSEE TO ESTABLISH THE PRESUMPTION ARISING IN CERTAIN CASES. THE ASSESSEE CAN DISCHARGE THE ONUS EITHER BY DIRECT EVIDENCE OR CIRCUMSTANTIAL EVIDENC E OR BY BOTH. THE CUMULATIVE EFFECT OF ALL FACTS SHOULD BE TAKEN INTO CONSIDERATION. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESSEE IS ENTI TLED TO SHOW AND ESTABLISH BY THE MATERIAL AND RELEVANT FACTS, WHICH MAY GO TO AF FECT AND HAVING DIRECT BEARING ON THE LIABILITY FOR PENALTY. WHETHER THERE IS A CONCEALMENT TO MAKE THE PENALTY EXERCISABLE IS NORMALLY A QUESTION OF F ACT. WHERE THE BURDEN OF PROOF IN A GIVEN CASE HAS BEEN DISCHARGED ON A SET OF FACTS, IS ALSO A QUESTION OF FACT. THE BURDEN IS CAST ON THE ASSESSEE TO OFFE R A BONA FIDE EXPLANATION. THERE ARE ALSO PLETHORA OF JUDGMENTS TO THE EFFECT THAT FINDING RECORDED OR CONCLUSION DRAWN IN DECIDING THE QUANTUM APPEAL, AR E NEITHER CONCLUSIVE NOR BINDING. FOR THIS PROPOSITION RELIANCE MAY BE PLACE D ON THE JUDGMENT OF HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. PA WAN KUMAR DALMIA [1987] 168 ITR 1 AND THE JUDGMENT OF THE HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF BANARAS TEXTURIUM VS. CIT [1988] 169 IT R 782 AND ALSO THE JUDGMENTS OF THE HON'BLE DELHI HIGH COURT IN THE CA SE OF CIT VS. CHETANDAN LACHHMANDAS [1995] 214 IIR 726 AND CIT V. J.K. SYNT HETICS LTD. [1996] 219 ITR 267 (DELHI). 4.2 THE CONSIDERATIONS IN PENALTY PROCEEDINGS ARE D IFFERENT FROM THOSE IN QUANTUM PROCEEDINGS. IT IS TRITE LAW THAT MERELY BE CAUSE AN ADDITION HAS BEEN MADE AND CONFIRMED IN THE APPEAL, LEVY OF PENALTY I S NOT AUTOMATIC. IN NATIONAL TEXTILES VS. CIT [2001] 249 ITR 125 THE GU JARAT HIGH COURT HELD THAT IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY TH AT THE AMOUNT HAS BEEN ASSESSED AS INCOME, THE CIRCUMSTANCES MUST SHOW THA T THERE WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING INACCURA TE PARTICULARS ON THE PART OF THE ASSESSEE. IN THE PRESENT CASE, THE APPELLANT 'S CONDUCT AND THE EXPLANATION OFFERED BY IT SHOWS THAT THERE WAS NO C ONSCIOUS OR INTENTIONAL ACT OF APPELLANT TO CONCEAL OR FURNISH INACCURATE PARTI CULARS OF INCOME. 4.3. IF SECTION 271(1)( C ) IS READ IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS 5 ITA NO. 4392/DEL./2010 WITHOUT THE EXPLANATIONS INSERTED W.E.F. 01.04.1976 , IT WOULD BE EASY TO HOLD THAT THE BURDEN WHICH LIES UPON THE ASSESSEE TO SUP PORT THE CLAIM IN THE ASSESSMENT PROCEEDINGS IS NOT EXTENDED IN RELATION TO THE PENALTY PROCEEDINGS. IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTOR S MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADING TO THE RE ASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESENT THE ASSESSEE'S INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSE D AS INCOME AND (II) THE CIRCUMSTANCES MUST SHOW THAT THERE WAS ANIMUS I.E. CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. HOWEVER, EXPLANATION 1 TO SECTION 271 (1)( C) HAS B EEN INSERTED W.E.F. 1.4.1976 BY THE FINANCE (NO.2) ACT, 1975. BY THIS E XPLANATION A FICTION HAS BEEN CREATED FOR DEEMING THE CONCEALMENT OF PARTICU LARS OF INCOME, IF IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION TO THE TOTAL INCOME ANY PERSON HAS FAILED TO OFFER AN EXPLANATION OR THE EXPLANATI ON HAS FOUND TO BE FALSE OR WHERE SUCH PERSON HAS OFFERED AN EXPLANATION WHICH HE IS UNABLE TO SUBSTANTIATE. WHEREIN AN EXPLANATION IS FURNISHED W HICH THE ASSESSEE IS UNABLE TO SUBSTANTIATE BUT THE ASSESSEE ESTABLISHES THAT T HE EXPLANATION FURNISHED WAS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAS BEEN DISCLOSED BY HIM, EXPL ANATION 1(B) WILL NOT BE APPLICABLE. 4.4 NOW WHETHER A PARTICULAR CASE FALLS WITHIN THE AMBIT OF THE EXPLANATION OR NOT WOULD DEPEND UPON THE FACTS OF EACH CASE. THERE FORE, IT WOULD BE APPROPRIATE TO REFER TO EXPLANATION 1 TO SECTION 27 1(1)(C) AND EXAMINE THE FACTS OF THE ASSESSEE'S CASE IN THE LIGHT OF THE EX PLANATION. EXPLANATION 1 TO SECTION 271 (1)( C) READS AS UNDER: 'WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PE RSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF TH IS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. ' FROM THE ABOVE EXPLANATION IT IS EVIDENT THAT THE E XPLANATION IS A DEEMING 6 ITA NO. 4392/DEL./2010 PROVISION AND IF THE ASSESSEE'S CASE FALLS WITHIN T HE AMBIT OF CIRCUMSTANCES PROVIDED IN PART A OR PART B OF THE EXPLANATION, IT WILL BE DEEMED THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL I NCOME OF THE ASSESSEE REPRESENTS THE INCOME IN RESPECT OF WHICH PARTICULA RS HAVE BEEN CONCEALED. PART A OF THE EXPLANATION WOULD BE APPLICABLE IN CI RCUMSTANCES - (I) WHERE A PERSON FAILS TO OFFER AN EXPLANATION; ( II) WHERE A PERSON OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR BY THE COMMISSIONER OF INCOME-TAX (APPEALS) TO BE FALSE. PART B OF THE EXPLANATION WOULD BE APPLICABLE - (I) WHERE A PERSON OFFERS AN EXPLANATION BUT HE IS UNABLE TO SUBSTANTIATE HIS EX PLANATION AND ALSO UNABLE TO PROVE THAT THE EXPLANATION IS BONA FIDE. IF THE ASS ESSEE IS ABLE TO PROVE THAT THE EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME HAS BEEN DISCLOSED, THE ASSESSEE'S CASE WOULD NOT FALL WITHI N PART B OF THE EXPLANATION EVEN IF HE IS UNABLE TO SUBSTANTIATE THE EXPLANATIO N. 4.5. IN THE INSTANT CASE, THE ASSESSEE HAD NOT FURN ISHED THE INACCURATE PARTICULARS OF HIS INCOME WHEN IT FURNISHED THE RET URN. THERE IS ONLY DIFFERENCE OF OPINION ON THE RELEVANT ISSUES. IF AN ASSESSEE G IVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE'S CASE IS FALSE, THE EXPLANATION CANNOT HELP THE AO BECAUSE THERE WI LL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS CONCEALED BY THE AS SESSEE OR INACCURATE PARTICULARS OF THE SAID AMOUNT WERE FURNISHED BY TH E ASSESSEE. THEREFORE, THE ASSESSEE'S CASE DOES NOT FALL WITHIN THE AMBIT OF P ART A OF THE EXPLANATION. SO FAR AS PART B IS CONCERNED, I FIND THAT THE ASSESSE E OFFERED AN EXPLANATION AND WAS ABLE TO PROVE THAT THE EXPLANATION WAS BONA FID E AND ALL THE FACTS RELATING TO THE SAME HAD BEEN DISCLOSED. THEREFORE, PART B I S ALSO NOT APPLICABLE. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AJAIB SINGH & CO. [2002] 253 ITR 630 HAVE OBSERVED THAT MERELY BE CAUSE OF CERTAIN EXPENSES CLAIMED BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY, IT CANNOT MEAN THAT PARTICULARS FURNISHED BY THE ASSESSEE WER E WRONG. IT WAS HELD THAT MERE DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN TH AT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IT IS REPEATE DLY HELD BY THE COURTS THAT THE PENALTY ON THE GROUND OF CONCEALMENT OF PARTICULARS OR NON-DISCLOSURE OF FULL PARTICULARS CAN BE LEVIED ONLY WHEN IN THE ACCOUNTS /RETURN AN ITEM HAS BEEN SUPPRESSED DISHONESTLY OR THE ITEM HAS BEEN CLAIMED FRAUDULENTLY OR A BOGUS CLAIM HAS BEEN MADE. WHEN THE FACTS ARE CLEARLY DIS CLOSED IN THE RETURN OF INCOME, PENALTY CANNOT BE LEVIED AND MERELY BECAUSE AN AMOUNT IS NOT ALLOWED OR TAXED TO INCOME, IT CANNOT BE SAID THAT THE ASSE SSEE HAD FILED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO T AX. EVEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRO NGLY BUT BONA FIDE AND NO MALAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NOT B E LEVIED. RELIANCE IS ALSO 7 ITA NO. 4392/DEL./2010 PLACED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD.(2010) 322 ITR 158. 4.6 FROM THE DECISIONS CITED ABOVE AND THE CASE LAW S RELIED UPON BY THE APPELLANT, IT CAN BE CONCLUDED THAT MERE DISALLOWAN CE OR ADDITION WILL NOT BE SUFFICIENT FOR LEVY OF PENALTY U/S 271 (1)(C). IN V IEW OF THE ABOVE AND AFTER TAKING INTO CONSIDERATION THE FACT THAT THE APPELLA NT HAD DISCLOSED ALL MATERIAL FACTS CANNOT AMOUNT TO FURNISHING OF INACCURATE PAR TICULARS OF INCOME, I HOLD THAT THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE ADDITION OF RS.23,16,0 00/- ON ACCOUNT OF LONG TERM CAPITAL LOSS, CAR HIRE CHARGES AND EXCESS CLAIM OF DEPRECIATION ON SOFTWARE. THEREFORE, IT IS HELD THAT A.O. WAS NOT JUSTIFIED I N IMPOSING PENALTY U/S 271(L)(C) AMOUNTING TO RS.8,30,865/-. ACCORDINGLY, THE SAME IS CANCELLED. 3. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE CIT(A) AND IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE BUT NONE APPEARED FOR THE ASSESSEE. WE HAVE PERUSED THE MATERIAL ON R ECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL PO SITION. 5. WE HAVE NOTED THAT SO FAR AS DISALLOWANCE OF LON G-TERM CAPITAL LOSS IS CONCERNED, THE ONLY BASIS FOR THE SAID DISALLOWANCE IS AN INSPECTORS REPORT, BUT THEN THE INSPECTORS REPORT, PRIMA FACIE, BY ITSELF CANN OT BE A REASON ENOUGH TO DISREGARD THE SALE CONSIDERATION ON THE BASIS OF DOCUMENTS ON RECORD. WHILE WE REFRAIN FROM MAKING ANY OBSERVATION ON MERITS, IT IS SUFFICIENT TO SAY THAT BY NO STRETCH OF LOGIC THIS INSPECTORS REPORT CAN BE REASONABLY AND LEGAL LY SUSTAINABLE FOUNDATION FOR HOLDING THAT THE ASSESSEE CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. WHATEVER SALE CON SIDERATION HAS BEEN STATED BY THE 8 ITA NO. 4392/DEL./2010 ASSESSEE IS ADMITTEDLY SUPPORTED BY THE SALE DEED E TC. AND THE ASSESSING OFFICER HAS NOT EVEN CALLED THE SAME INTO QUESTION. IN THESE CI RCUMSTANCES THE LEARNED CIT(A) WAS QUITE JUSTIFIED IN DELETING THE IMPUGNED PENALT Y SO FAR AS LONG TERM CAPITAL LOSS IS CONCERNED. AS REGARDS THE DISALLOWANCE OF EXPEND ITURE IN RESPECT OF CAR HIRE CHARGES, IT IS AN UNDISPUTED POSITION THAT THE ASSE SSEE DID PRODUCE MEMORANDUM OF UNDERSTANDING IN SUPPORT OF THE CLAIM OF EXPENDITUR E BUT THEN THE ASSESSING OFFICER WAS SWAYED BY OTHER CONSIDERATIONS SUCH AS NON DEDU CTION OF TAX AT SOURCE WHICH WAS WHOLLY IRRELEVANT SO FAR AS ASSESSMENT YEAR 200 4-05 WAS CONCERNED SINCE THE PROVISIONS OF SECTION 40(A)(IA) HAS BEEN BROUGHT TO STATUTE W.E.F. 1 ST APRIL, 2005. THEREFORE, WHETHER THE TAX WAS DEDUCTED AT SOURCE W HILE MAKING PAYMENTS OF CAR HIRE CHARGES OR NOT, PRIMA FACIE, COULD NOT HAVE AN Y LEGALLY SUSTAINABLE IMPLICATIONS IN THE DISALLOWANCE WITH RESPECT TO THE EXPENDITURE IN QUESTION. EVEN ON THIS ISSUE AS WE REFRAIN FROM MAKING ANY OBSERVATION ON MERITS , WE ARE CLEARLY OF THE VIEW THAT THE FACTS ON RECORD DID NOT JUSTIFY OR WARRANT IMPOSITION OF PENALTY IN RESPECT OF THIS QUANTUM DISALLOWANCE. FINALLY AS REGARDS THE P ARTIAL DISALLOWANCE OF DEPRECIATION ON SOFTWARE, IT IS AN UNDISPUTED POSIT ION THAT ALL THE RELEVANT FACTS WERE BEFORE THE ASSESSING OFFICER AND INCORRECTNESS OF T HE CLAIM, EVEN IF THAT BE SO, CANNOT BY ITSELF LEAD TO OR RESULT IN IMPOSITION OF PENALTY U/S. 271(1)(C). IN VIEW OF THESE OBSERVATIONS AND ALSO BEARING IN MIND ENTIRET Y OF THE CASE, WE ARE NOT INCLINED TO DISTURB THE WELL REASONED FINDINGS OF THE CIT(A) . WE CONFIRM THE SAME AND 9 ITA NO. 4392/DEL./2010 DECLINE TO INTERFERE IN THE MATTER. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2015. SD/- SD/- (I.C. SUDHIR) (PRAMOD K UMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27 TH MARCH, 2015 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED 4. CIT, CONCERNED 5. DR ITAT, DELHI BENCHES 6. GUARD FILE //TRUE COPY// BY O RDER, DY./ASSTT. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI