DCIT CIR 3(1), MUMBAI V. ENSO P.LTD, MUMBAI

ITA 4396/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0334 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 23-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Depreciation; Business expenditure; Revised return
• Section: 43B; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI P K BANSAL, VP & SHRI PAWAN SINGH, JM ITA NO. 4396/MUM/2014 ASSESSMENT YEAR : 2009-10 DCIT CIRCLE 3(1) MUMBAI VS. ENSO PVT LTD., (FORMERLY KNOWN AS M/S. ENSO LTD.) JOLLY MAKER NO.II, 7 TH FLOOR, R.NO.74 NARIMAN POINT, MUMBAI- 400 021 PAN AABCE8655K (APPELLANT) (RESPONDENT) APPELLANT BY : DR A K NAYAK RESPONDENT BY : NONE DATE OF HEARING : 14 .0 6 .2017 DATE OF PRONOUNCEMENT : 15 .0 6 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), DATED 21.03.2014, FOR ASSESSMENT YEAR 2009- 10. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING OF THE PE NALTY LEVIED ON THE ASSESSEE U/S. 271(1)(C) OF THE IT ACT WITHOUT A PPRECIATING THE FACT THAT THE CLAIM OF VARIOUS INADMISSIBLE EXPENSE S MADE BY THE ASSESSEE WERE NOT ALLOWABLE U/S. 40(A)(IA) AND SECT . 43B OF THE I.T.ACT AND SUCH CLAIMS MADE BY THE ASSESSEE AMOUNT S TO FURNISHING OF INACCURATE PARTICULARS OF INCOME WHIC H FAILS WITHIN THE AMBIT OF EXPLANATION OF SECTION 271(1)(C) OF THE I. T.ACT. ITA NO. 4396/MUM/2014 ENSO PVT. LTD 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE NO TICE FIXING THE HEARING FOR TODAY I.E. 14.06.2017 HAS BEEN RETURNED UN-SERVED BY THE POSTAL AUTHORITIES WITH THE REMARKS NOT KNOWN. ON THE EARLIER DATES EVEN THOUGH THE NOTICE WAS DULY SERVED NONE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, PROCEED TO DISPOSE OF THE APPEAL ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LEARNED D R. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SUBMITTED ITS RETURN OF INCOME ON 30.09.2009, DECLARING TOTAL LOSS OF ` 5,50,93,030/-, WHICH WAS REVISED TO ` 5,94,45,183/- BY FILING REVISED RETURN ON 22.01.20 11. THE ASSESSMENT U/S. 143(3) WAS COMPLETED AT AN INCOME O F ` 6,39,078/- BY DISALLOWING BUSINESS EXPENSES OF ` 6,18,47,124/-. 4. THE ASSESSING OFFICER INITIATED THE PROCEEDINGS U/S. 271(1)(C) AND ULTIMATELY LEVIED PENALTY ON THE ASSESSEE IN RESPEC T OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF ` 6,18,47,124/- @ 100% AT ` 2,10,21,837/- FOR CONCEALING THE PARTICULARS OF INCOME BY THE ASSESSE E. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A AND THE CIT(A) DELETED THE PENALTY LEVIED U/S. 271(1)(C). 5. WE HAVE HEARD THE LEARNED DR AND HAVE DULY CONSI DERED THE SUBMISSIONS MADE BY HIM. WE HAVE ALSO GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THE ASSESSING OFF ICER WHILE MAKING THE ASSESSMENT DISALLOWED THE FOLLOWING EXPENSES: ITA NO. 4396/MUM/2014 ENSO PVT. LTD 3 EXPENDITURE AMOUNT RENT, RATES & TAXES 72,30,262 INTEREST ON LOAN 11,08,677 DEPRECIATION 2,81,661 PERSONNEL COST 2,26,33,944 ADMINISTRATIVE & OTHER EXPENSES 3,05,92,580 6,18,47,124 THE ASSESSEE INSPITE OF FILING THE APPEAL BEFORE TH E CIT(A) FILED A PETITION U/S. 264 BEFORE THE LEARNED CIT-3 AND, IN THE MEANWHILE THE ASSESSING OFFICER LEVIED PENALTY ON THE ASSESSEE AMOUNTING TO ` 2,10,21,837/- THE ASSESSING OFFICER WHILE LEVYING PENALTY TOOK A VIEW THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE NEXUS BETWEEN THE EXPENSES CLAIMED AN D THE INCOME OFFERED AND THE ASSESSEE COULD NOT PROVED THAT ITS BUSINESS HAD COMMENCED AND THE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF BUSINESS. 6. BEFORE THE CIT(A), THE ASSESSEE HAD VEHEMENTLY R ELIED ON THE DECISION OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 IT R 158 (SC) AND ON THAT BASIS IT WAS CONTENDED THAT MERELY MAKING A CLAIM W HICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER DOES NOT MEAN THAT THE ASS ESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCU RATE PARTICULARS OF INCOME. THE CIT(A), WE NOTED, ULTIMATELY DELETED THE PENALT Y LEVIED U/S. 271(1)(C) BY OBSERVING AS UNDER: 4. I HAVE CONCEDED THE ABOVE SUBMISSIONS OF THE APP ELLANT AS WELL AS THE FACTS OF THE CASE. IT IS SEEN THAT IN ITS RE TURN OF INCOME THE APPELLANT HAD DECLARED A LOSS OF RS.6,12,08,048/-, WHICH WAS AS PER ITA NO. 4396/MUM/2014 ENSO PVT. LTD 4 ITS P&L ACCOUNT. IN THE P&L ACCOUNT, THE RECEIPTS F ROM 'TRADEMARK AND LOGO USAGE CHARGES' AND INTEREST ON LOANS WERE SHOWN AT RS.6,39,0767-, WHEREAS THE APPELLANT HAD CLAIMED EX PENSES TO THE TUNE OF AN AGGREGATE AMOUNT OF RS.6,18,47,124/- ON ACCOUNT OF I) RENT, RATES AND TAXES, II) INTEREST ON LOAN, III) D EPRECIATION, IV) PERSONNEL COST AND V) ADMINISTRATIVE AND OTHER EXPE NSES. THESE EXPENSES OF RS.6,18,47,124/- HAVE BEEN DISALLOWED B Y THE AO ON ACCOUNT OF THE REASON THAT A) THE APPELLANT HAD NOT BEEN ABLE TO ESTABLISH THE NEXUS BETWEEN THE EXPENSES CLAIMED AN D THE INCOME OFFERED, B) THE APPELLANT HAD NOT BEEN ABLE TO PROV E THAT ITS BUSINESS HAD COMMENCED AND THE EXPENSES WERE INCURR ED WHOLLY AND EXCLUSIVELY FOR | THE BUSINESS AND C) THE APPEL LANT HAD NOT BEEN ABLE TO PROVE THAT CERTAIN EXPENSES CLAIMED ARE ALL OWABLE UNDER THE PROVISIONS OF SECTION 40(A)(IA) AND 43B. ON THIS BA SIS, THE AO HAS LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. THE FIRST AND FOREMOST THING TO BE NOTED HERE TH EREFORE, IS THAT THE AO HAS NOWHERE HELD THAT THE EXPENSES CLAIMED W ERE BOGUS EXPENSES. NEITHER DID HE CONDUCT AN ENQUIRY DURING THE ASSESSMENT PROCEEDINGS TO ESTABLISH THAT SUCH EXPENSES CLAIMED WERE BOGUS. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT ARE AS UNDER: (1) IF THE [ASSESSING OFFICER] OR THE [* * * * *] [ COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] IN THE COURSE OF A NY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON [(A) ****] (B) HAS I* * * * *] FAILED TO COMPLY WITH A NOTICE [UNDER SUB-SECTION (2) OF SECTION 115WD OR UNDER SUB-SECTION (2) OF SE CTION 115WE OR UNDER SUB-SECTION (1) OF SECTION 142] OR SUB-SECTIO N (2) OF SECTION 143 [OR FAILS TO COMPLY WITH A DIRECTION ISSUED UND ER SUB-SECTION (2A) OF SECTION 142]; OR (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [ * * * ] FURNISHED INACCURATE PARTICULARS OF [SUCH INCOME, O R] HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, [(D) HAS CONCEALED THE PARTICULARS OF THE FRINGE BE NEFITS OR FURNISHED INACCURATE PARTICULARS OF SUCH FRINGE BENEFITS,] [(I) * * *1 ITA NO. 4396/MUM/2014 ENSO PVT. LTD 5 [(II) IN THE CASES REFERRED TO IN CLAUSE (B), [IN A DDITION TO TAX, IF ANY, PAYABLE] BY HIM [A SUM OFTEN THOUSAND RUPEES], FOR EACH SUCH FAILURE;] [(III) IN THE CASES REFERRED TO IN [CLAUSE (C) OR C LAUSE (D)], [IN ADDITION TO TAX, IF ANY, PAYABLE] BY HIM, A SUM WHI CH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED [THREE TIMES] THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMEN T OF PARTICULARS OF HIS [INCOME OR FRINGE BENEFITS] OR T HE FURNISHING OF INACCURATE PARTICULARS OF SUCH [INCOME OR FRINGE BE NEFITS] : [ ***** ] EXPLANATION 1 : WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION 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 OFFICE R] OR THE [*****] [COMMISSIONER (APPEALS)] [OR THE COMMISSION ER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS [ NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM,] THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FO R THE PURPOSES OF CLAUSE (C) OF THIS SUBSECTION BE DEEMED TO REPRESEN T THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. R*****; EXPLANATION 2 :... EXPLANATION 3 : ... EXPLANATION 4 :... EXPLANATION 5:... EXPLANATION 5A : ... ITA NO. 4396/MUM/2014 ENSO PVT. LTD 6 EXPLANATION 6:... EXPLANATION 7:... 6. FROM THE ABOVE, IT MAY BE NOTED THAT PENALTY UND ER SECTION 271(1)(C) CAN BE LEVIED ONLY IN A CASE WHERE A PERS ON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. FURTHER, EXPLANATION-1 TO ABOVE SECTION PROVIDES THAT 'WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT (A) SUCH- PERSON FAILS TO OFFER AN EXPLANATION OR OFFER S AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (B) S UCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBST ANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THA T ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N 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'. 7. IT IS SEEN THAT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE APPELLANT HAD FURNISHED THE DETAILS AND EXPLANA TIONS AS WERE CALLED FOR BY THE AO. BUT, THE AO WAS I NOT SATI SFIED WITH THE SAME; HENCE HE DISALLOWED THE WHOLE OF THE EXPENSES . HOWEVER, THE EXPLANATIONS AND DETAILS GIVEN BY THE APPELLANT WERE NOT PROVED OR ESTABLISHED TO BE FALSE BY THE AO. FURTHER, THE AO HAS NOWHERE DEMONSTRATED THAT 'THE APPELLANT WAS NOT ABLE TO SU BSTANTIATE ITS EXPLANATIONS AND/OR HAD FAILED TO PROVE THAT SUCH E XPLANATION WAS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE NOT BEEN D ISCLOSED BY HIM' (IT IS ONLY THE AO'S DISSATISFACTION IN THIS REGARD , WHICH IS ON RECORD IN THE ASSESSMENT ORDER). THUS, IN MY OPINION THE D EEMING PROVISIONS OF EXPLANATION-1 ARE NOT SATISFIED IN TH E CASE OF THE APPELLANT. 8. SO FAR AS THE AO'S QUESTIONING OF TRADEMARK AND LOGO CHARGES ARE CONCERNED, IT IS SEEN THAT THE APPELLANT'S TRADEMAR K/LOGO HAD BEEN REGISTERED WITH THE 'REGISTRAR OF TRADE MARKS', GOV ERNMENT OF INDIA BEARING NO. O655683 DATED 20.02.2008 AND THE APPELL ANT RECEIVED THE CHARGES FOR THE USE OF TRADEMARKS/LOGO FROM ITS SISTER CONCERN ENSO TECHNOLOGIES PVT. LTD IN THE CURRENT YEAR AS W ELL AS IN THE ITA NO. 4396/MUM/2014 ENSO PVT. LTD 7 PRECEDING YEAR I.E. ASSESSMENT YEAR 2008-09. IN ASS ESSMENT YEAR 2008-09, THE APPELLANT DECLARED A BUSINESS LOSS OF RS.4,75,805/- AFTER CONSIDERING THE RECEIPTS OF RS.2,00,0007- FRO M ENSO TECHNOLOGIES PVT. LTD FOR USE OF ITS TRADEMARK/LOGO AND THE SAME WAS ACCEPTED BY THE DEPARTMENT U/S 143(1) OF THE AC T. THIS JUSTIFIES THE APPELLANT'S CLAIM THAT ITS BUSINESS H AD ALREADY COMMENCED IN ASSESSMENT YEAR 2008-09. 9. COMING TO THE EXPENSES CLAIMED BY THE APPELLANT, IT IS SEEN THAT THE APPELLANT HAD FURNISHED THE DETAILS AND EXPLANA TIONS AS WERE CALLED FOR BY THE AO. BUT, THE AO WAS NOT SATISFIED WITH THE SAME. HOWEVER, IT IS NOT A CASE WHERE THE EXPLANATION GIV EN BY THE APPELLANT HAS BEEN FOUND OR HAS BEEN ESTABLISHED TO BE FALSE. IT IS ONLY ON ACCOUNT OF THE NON-SATISFACTION OF THE AO W ITH THE EXPLANATION OFFERED BY THE APPELLANT, WHERE EITHER THE PARTICULARS OF INCOME HAVE BEEN CONCEALED OR INACCURATE PARTICULAR S OF INCOME HAVE BEEN FURNISHED BY THE APPELLANT. 10. THE APPELLANT, AS CLAIMED, HAS INCURRED VARIOUS EXPENSES FOR THE PURPOSES OF FURTHERANCE OF VARIOUS OBJECTS FOR WHICH THE APPELLANT COMPANY HAS BEEN ESTABLISHED. THE DETAILS OF SUCH EXPENSES WERE FURNISHED DURING THE ASSESSMENT PROCE EDINGS BY THE APPELLANT. THERE ARE VARIOUS EXPENSES, SOME OF WHIC H ARE STATUTORY IN NATURE; OTHER ONES CLAIMED ARE FOR DAY TO DAY MA INTENANCE OF OFFICE AND ALSO IN CONNECTION WITH EXPLORING THE BU SINESS ACTIVITIES IN PURSUANCE TO THE OBJECTS OF THE COMPANY. THE EXPENS ES CLAIMED ALSO INCLUDE SALARY, RENT, ELECTRICITY CHARGES, AUD IT FEES, LEGAL CHARGES ETC. SUCH EXPENSES HAVE TO BE INCURRED EVEN IF NO INCOME COULD HAVE ARISEN DURING THE YEAR. THE DISALLOWANCE OF WHOLE OR PART OF SUCH EXPENSES BY THE AO IS ANOTHER MATTER; HOWEVER, THE SAME DOES NOT ESTABLISH THAT PARTICULARS OF INCOME WERE CONCEALED OR INACCURATE PARTICULARS OF INCOME WERE FURNISHED BY THE APPELLANT. EVEN IF THE AO HELD THAT THE RECEIPTS OF THE APPELL ANT ARE CHARGEABLE TO TAX UNDER THE HEAD 'INCOME FROM OTHER SOURCES' THE CLAIM OF DEDUCTION OF EXPENSES UNDER THE HEAD 'BUSI NESS INCOME 1 CANNOT BE SAID TO BE NON-BONA FIDE. THE QUESTION WO ULD BE ONLY ABOUT THE EXTENT OF ALLOWABILITY OF SUCH EXPENSES. 11. IN THE BACKGROUND OF ABOVE FACTS, WE CAN DISCUS S THE CASE LAWS CITED BY BOTH THE SIDES. THE AO HAS CITED THE DECIS ION IN THE CASE OF DHARAMENDRA TEXTILE PROCESSORS (SUPRA), WHICH IN MY OPINION IS NOT AT ALL APPLICABLE TO THE PRESENT CASE, AS THE ISSUE IN THAT CASE WAS AS TO WHETHER FOR A CIVIL PENAL LIABILITY, THE MENS -REA IS AN ESSENTIAL ITA NO. 4396/MUM/2014 ENSO PVT. LTD 8 INGREDIENT OR NOT. HON'BLE SUPREME COURT ANSWERED T HE QUESTION IN THE NEGATIVE AND IN FAVOUR OF THE REVENUE; MEANING THEREBY THAT MENS-REA IS NOT AN ESSENTIAL INGREDIENT FOR A CIVIL PENAL LIABILITY. THIS IS NOT AT ALL THE QUESTION IN THE CASE OF THE APPEL LANT. BEFORE A CIVIL PENAL LIABILITY CAN BE IMPOSED, THE REQUIREMENTS OF THE CONCERNED STATUTE MUST BE FULFILLED AND IN THIS CASE, IT IS T HE REQUIREMENTS OF SECTION 271(1)(C) OF THE ACT WHICH NEED TO BE FUFIL LED. FROM THE FACTS OF THE CASE OF THE APPELLANT AS DISCUSSED ABO VE, I HAVE ALREADY INDICATED THAT THE REQUIREMENTS OF SECTION 271(1)(C) OF THE ACT FOR IMPOSITION OF PENALTY IN THE CASE OF THE AP PELLANT ARE NOT FULFILLED. 12. THE AO HAS ALSO CITED THE DECISION IN THE CASE OF K. P. MADHUSUDHAN (SUPRA). THE FACTS OF THE SAID CASE ARE ALSO COMPLETELY DIFFERENT FROM THE FACTS OF THE APPELLAN T'S CASE. IN THAT CASE, AFTER NECESSARY INVESTIGATION, IT WAS ESTABLI SHED THAT CERTAIN UNSECURED CASH LOANS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE BOGUS AND HENCE THE ASSESSEE HAD SURR ENDERED THE SAME ALSO, DURING ASSESSMENT PROCEEDINGS. IN THE CA SE OF THE APPELLANT, NO SUCH FACTS ARE PREVAILING. 13. THE APPELLANT HAS ALSO CITED A NUMBER OF DECISI ONS. IT WOULD ONLY BE SUFFICIENT TO DISCUSS ONE OF THEM I.E. THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF RAJASTHAN SPIN NING & WEAVING MILLS (SUPRA), WHERE THE DECISION IN THE CA SE OF DHARAMENDRA TEXTILE PROCESSORS (SUPRA) HAS ALSO BEE N CONSIDERED AND IT HAS SIMPLY BEEN HELD THAT CIVIL PENAL LIABIL ITY CANNOT BE IMPOSED WITHOUT REGARD TO CONDITIONS EXPRESSLY MENT IONED IN THE CONCERNED PENAL PROVISION. IT HAS BEEN HELD THAT IF THE CONDITIONS OF CONCERNED PENAL PROVISION ARE SATISFIED, THEN ONLY THE DECISION IN THE CASE OF DHARAMENDRA TEXTILE PROCESSORS (SUPRA) SHALL APPLY AND IF SUCH CONDITIONS ARE SATISFIED THEN THE CONCERNED AUTHORITY SHALL HAVE NO DISCRETION IN THE MATTER OF QUANTIFICATION OF THE AMOUNT OF PENALTY AND THE SAME HAS TO BE LEVIED AS PER THE PR OVISIONS OF THE CONCERNED STATUTE. RATHER THE HON'BLE SUPREME COURT , IN THE SAID DECISION HAS EXCLAIMED AND POINTED OUT THAT 'IN ALM OST EVERY CASE RELATING TO PENALTY, THE DECISION (IN THE CASE OF D HARMENDRA TEXTILE) IS REFERRED TO ON BEHALF OF THE REVENUE AS IF IT LA ID DOWN THAT IN EVERY CASE OF NONPAYMENT OR SHORT PAYMENT OF DUTY, THE PENALTY CLAUSE WOULD AUTOMATICALLY GET ATTRACTED AND THE AU THORITY HAD NO DISCRETION IN THE MATTER. ONE OF US (AFTAB ALARRI J ) WAS A PARTY TO THE DECISION IN DHARMENDRA TEXTILE AND WE SEE NO RE ASON TO UNDERSTAND OR READ THAT DECISION IN THAT MANNER'. ITA NO. 4396/MUM/2014 ENSO PVT. LTD 9 14. SINCE, AS INDICATED ABOVE, THE CONDITIONS OF SE CTION 271(1)(C) READ WITH EXPLANATION-1 ARE NOT AT ALL FULFILLED IN THE CASE OF THE APPELLANT, IT AUTOMATICALLY FOLLOWS THAT THE APPELL ANTS CASE IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. HENCE, THE PENALTY LEVIED BY THE AO CANNOT BE SUSTA INED. THE SAME IS DIRECTED TO BE DELETED. 7. THE LEARNED DR EVEN THOUGH VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER COULD NOT CONVINCE US THAT IT IS A CASE WHERE THE CLAIM MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS DI SALLOWED BY THE ASSESSING OFFICER. IN OUR VIEW THE CASE OF THE ASSESSEE IS D ULY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROCHEM PVT. LTD. 322 ITR 158 [TRIBUNAL ORDER TO WHICH THE UNDER SIGNED WAS THE AUTHOR], WHEREIN IT WAS HELD MERELY BECAUSE THE ASSESSEE HA D CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 271(1)I.E. CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINA BLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURT HER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS THEREFORE REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT S INCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED ITA NO. 4396/MUM/2014 ENSO PVT. LTD 10 THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF T HE TWO FORMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AM OUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PART ICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN WHICH D ETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NO T. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLA IM WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT , IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT T HE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RET URN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271( L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE NO CONTRARY DECISION WAS BROUGHT TO OUR KNOWLEDGE B Y THE LEARNED DR RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON BLE SUPREME COURT, WE CONFIRM THE ORDER OF THE CIT(A) AND DELETE THE P ENALTY LEVIED U/S. 271(1)(C). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH DAY OF JUNE, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 15 TH JUNE, 2017 SA ITA NO. 4396/MUM/2014 ENSO PVT. LTD 11 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI