Appeal details
Counselvise Citation
[2010] 136 COUNSELVISE.COM (IT) 5568 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 7 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-07-2010
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
20-07-2010
Assessment Year
1997-1998
Appeal Filed On
17-12-2007
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.4447, 4448 AND 4449/AHD/2007 A. Y.: 1997-98, 1998-99 AND 1999-2000 KRISHNA DEVELOPERS, C/O. DEEPAK N. CHAUHAN, ROW HOUSE NO.1, AAGAN CO-OP SOCIETY, OPP. PRABHAT TARA SCHOOL, TADWADI, RANDER ROAD, SURAT 395 009 VS THE INCOME TAX OFFICER, WARD 2, SURYA PRAKASH CHAMBERS, DHARAMPUR ROAD, VALSAD PA NO. AACFK 9211D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. P. SHAH, AR RESPONDENT BY SHRI R. K. DHANESTA, DR O R D E R PER BHAVNESH SAINI: ALL THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A), VA LSAD DATED 13-09-2007 FOR ASSESSMENT YEARS 1997-98, 1998-99 AND 1999-200 0, CHALLENGING LEVY OF PENALTY LEVIED U/S 271 (1) ( C ) OF THE IT ACT. 2. WE HAVE HEARD LEARNED REPRESENTATIVES OF BOTH THE P ARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERE D THE MATERIAL ON RECORD POINTED OUT BY THE PARTIES. 3. BRIEFLY, THE FACTS LEADING TO IMPOSITION OF PENA LTY U/S 271(1) ( C ) OF THE IT ACT ARE THAT IN ASSESSMENT YEAR 1997-98 RETU RN OF INCOME WAS FILED AT RS.1,06,844/- WHICH WAS FINALIZED ON 30-03 -2000 ASSESSING THE INCOME AT RS.91,833/- SUBJECT TO REVERSIONARY ACTIO N ON ACCOUNT OF DVOS REPORT. ASSESSMENT WAS REOPENED AND THE SAME WAS FINALIZED U/S 143(3) READ WITH SECTION 147 OF THE IT ACT ON 31-07 -2002 ASSESSING THE INCOME AT RS.71,07,958/-. ADDITION OF RS.70,16,075/ - WAS MADE ON ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 2 ACCOUNT OF DIFFERENCE IN COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND THAT DETERMINED BY THE DVO. THE BOOKS OF ACCOUNT WE RE HELD TO BE DEFECTIVE AND REJECTED BY APPLYING PROVISIONS OF SE CTION 145(2) OF THE IT ACT. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S 2 71 (1) ( C ) OF THE IT ACT. IN ASSESSMENT YEAR 1998-99 RETURN OF INCOME WAS FIL ED AT RS.79,516/-. ASSESSMENT U/S 143(3)/147 WAS FINALIZED ON 31-07-20 02 ASSESSING INCOME AT RS.60,68,261/-. ADDITION OF RS.59,81,940/ - WAS MADE ON ACCOUNT OF SAME DIFFERENCE IN COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND THAT DETERMINED BY THE DVO. SIMILARLY, IN ASSES SMENT YEAR 1999- 2000 RETURN OF INCOME WAS FILED AT RS.45,742/-. ASS ESSMENT U/S 143(3) READ WITH SECTION 147 OF THE IT ACT WAS FINALIZED O N 31-07-2002 ASSESSING INCOME AT RS.13,17,862/-. ADDITION OF RS. 12,66,640/- WAS SIMILARLY MADE ON ACCOUNT OF DIFFERENCE IN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND DETERMINED BY THE DVO. IN THESE YEARS ALSO BOOKS OF ACCOUNT WERE REJECTED AND PENALTIES WERE INITIATED. 3.1 APPEALS AGAINST THE ABOVE ASSESSMENT ORDERS WER E PREFERRED BEFORE THE LEARNED CIT(A) WHO REDUCED THE ADDITION BY 20%. THE ASSESSEE AND THE DEPARTMENT PREFERRED APPEALS BEFORE THE TRIBUNA L AGAINST RETENTION OF ADDITIONS AND FOR REDUCING THE ADDITION. ITAT AHMED ABAD BENCH BY ITS APPELLATE ORDER IN ITA NO.2851 TO 2853/AHD/2003 DAT ED 06-10-2006 HAS FOUND THAT THE ASSESSEE HAS NOT FURNISHED CORRECT C OST ACTUALLY DEBITED IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS ADOPTED THE VALUE ON LUMP SUM BASIS. MOREOVER, THE ASSESSEE HAS NOT FILED ACCOUNT OF THE PROJECT ALONG WITH REQUIRED BILLS AND VOUCHERS FOR PAYMENT. NO EV IDENCE WAS FURNISHED FOR LABOUR PAYMENT AND THE ASSESSEE HAS MADE A COMM ON CORRIDORS OF THE BUILDING PAVED WITH MOSAIC TILE FLOORING STAIRC ASE AND GP PARKING IS PAVED WITH CHEQUERED TILE FLOORING, TWO LIFTS ARE P ROVIDED. ALL THESE INFORMATION WERE NOT GIVEN TO THE AO. THE ITAT SUST AINED THE ADDITION OF 15% OF THE EXPENDITURE WHICH COMES TO RS.7,80,524/- , RS.6,64,073/- AND RS.1,40,931/-. THE ITAT FURTHER DIRECTED TO FOL LOW THE DECISION IN THE ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 3 CASE OF ACIT VS NALANDA HOUSNG DEVELOPMENT LTD. WHE REIN DEDUCTION IN RESPECT OF UNEXPLAINED EXPENDITURE WAS HELD TO BE A LLOWABLE. IN VIEW OF THE ABOVE, SHOW CAUSE NOTICE WAS ISSUED AS TO WHY P ENALTY WOULD NOT BE IMPOSED AGAINST THE ASSESSEE. THE ASSESSEE BRIEFLY STATED AT THE APPELLATE STAGE THAT IT IS NOT A FIT CASE OF CONCEALMENT OF I NCOME. BOOKS ARE MAINTAINED IN WHICH NO DEFECT OR MISTAKE HAS BEEN P OINTED OUT BY THE DEPARTMENT. THE TAX SOUGHT TO BE EVADED WORKS OUT T O NIL IN TERMS OF EXPLANATION 4 TO SECTION 271 (1) ( C ) OF THE IT AC T AND THAT PART ADDITION MADE IN ONE YEAR IS MERELY ON ESTIMATE BASIS. THERE FORE, THERE IS NO MATERIAL AVAILABLE ON RECORD TO PROVE FILING OF INA CCURATE PARTICULARS OR CONCEALMENT OF PARTICULARS OF INCOME. THE AO DID NO T ACCEPT THE CONTENTION OF THE ASSESSEE AND NOTED THAT BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE BECAUSE CORRECT COST WAS NOT DEBITED IN THE BOOKS OF ACCOUNT; NO EVIDENCE WAS FILED FOR LABOUR PAYMENT. THE AO, THEREFORE, HELD THAT IT IS A FIT CASE FOR LEVY OF P ENALTY U/S 271 (1) (C) READ WITH EXPLANATION 1 TO SECTION 271 (1) (C) OF THE IT ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF PARTICULARS OF INCOME TO THE EXTENT UPHELD BY THE TRIBUNAL. PENALT Y U/S 271 (1) (C) OF THE IT ACT WAS IMPOSED ON THE ASSESSEE BY SEPARATE ORDERS WHICH ARE ALSO CONFIRMED BY THE LEARNED CIT(A). 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO A PPEAL EFFECT ORDERS PASSED BY THE AO GIVING APPEAL EFFECT TO THE ORDER OF THE ITAT ON QUANTUM AND SUBMITTED THAT THE TOTAL INCOME ASSESSE D IN ASSESSMENT YEAR 1997-98 IS NOT THE SAME AMOUNT WHICH IS SHOWN IN THE RETURN OF INCOME AND THAT IN SUBSEQUENT TWO YEARS, THE INCOME ASSESSED BY THE AO AND RETURNED INCOME IS BELOW TAXABLE LIMIT. THER EFORE, ON ESTIMATE BASIS PENALTY IS NOT JUSTIFIED. HE HAS SUBMITTED TH AT THERE IS NO RECORD TO PROVE THAT THE ASSESSEE HAS FILED INACCURATE PARTIC ULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. HE HAS SUBMITTED T HAT ENTIRE FACTS ARE ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 4 AVAILABLE ON RECORD; THEREFORE, PENALTY IS NOT JUST IFIED. HE FURTHER SUBMITTED THAT THE AO WHILE INITIATING PENALTY PROC EEDING IN THE ASSESSMENT YEARS NOTED THAT PENALTY PROCEEDINGS HA VE BEEN INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME OR CONC EALMENT OF PARTICULARS OF INCOME, BUT WHILE PASSING PENALTY ORDERS, THE AO HAS NOTED IN THE IMPUGNED ORDERS THAT THESE ARE FIT CASES FOR LEVY O F PENALTY U/S 271 (1) ( C ) OF THE IT ACT READ WITH EXPLANATION 1 FOR FUR NISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING PARTICULARS OF INCOME TO THE EXTENT THE ADDITION UPHELD BY THE TRIBUNAL. HE HAS, THEREF ORE, SUBMITTED THAT THESE ARE NOT FIT CASES FOR IMPOSITION OF PENALTY. HE HAS RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF NEW SORATHIA ENGINEERING CO. VS CIT REPORTED IN 282 ITR 642 AND ORDER OF AGRA BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS CHHAIL BEHARI REPORTED IN 36 DTR 453. 5. ON THE OTHER HAND, THE LEARNED DR DID NOT DISPUT E THE CORRECTNESS OF THE ORDERS PASSED BY THE AO GIVING EFFECT TO THE ITAT ORDER WHICH IS FILED IN ASSESSEES PAPER BOOK. THE LEARNED DR HOWE VER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT PROPERLY AND PROPER C OST OF CONSTRUCTION HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT, THER EFORE, BOOKS WERE RIGHTLY REJECTED BY THE AUTHORITIES BELOW AND CONFI RMED BY THE TRIBUNAL. THE LEARNED DR, THEREFORE, SUBMITTED THAT THE ASSES SEE HAS CONCEALED PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. THE LEARNED DR SUBMITTED THAT IN SUCH CIRCUMSTANCES LEV Y OF PENALTY IS JUSTIFIED IN THE MATTER BECAUSE THE TRIBUNAL CONFIR MED PART OF THE ADDITION IN THE MATTER. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND THE MATERIALS AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT PENA LTY PROCEEDINGS WERE INITIATED ON ACCOUNT OF DIFFERENCE IN COST OF CONST RUCTION SHOWN BY THE ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 5 ASSESSEE AND THAT DETERMINED BY THE DVO. THE MATTER WENT IN APPEAL UP TO THE STAGE OF TRIBUNAL AND THE ASSESSEE CHALLENGE D THE ADDITION ON MERIT, HOWEVER, THE REVENUE CHALLENGED THE DELETION OF PART ADDITION BY THE LEARNED CIT(A). THE TRIBUNAL CONSIDERING THE SU BMISSIONS OF BOTH THE PARTIES DIRECTED FURTHER RELIEF IN THE MATTER. THE AO HAS PASSED THE ORDERS GIVING EFFECT TO THE ITATS ORDERS. THE SAME ARE DISCUSSED AS UNDER. A) ASSESSMENT YEAR 1997-98 THE AO HAS PASSED THE FOLLOWING ORDER GIVING EFFECT TO ITATS ORDER ORDER GIVING EFFECT TO ITATS ORDER IN VIEW OF THE ORDER OF THE HONBLE ITAT AHMEDABAD BENCH-B, AHMEDABAD VIDE ITA NO-2851 TO 2853/AHD/2003 WITH IT A NO-2916 TO 2918/AHD/2003 DATED 6.10.2006, TOTAL INCOME OF A SSESSEE IS RECOMPUTED AS UNDER: TOTAL INCOME AS PER ORDER GIVING EFFECT TO CIT(A)S ORDER DATED 25.4.2003 RS.60,67,260 LESS: RELIEF GRANTED BY ITAT ADDITION SUSTAINED BY THE CIT(A) (7016075 1040698) = RS.59,75,377 ADDITION SUSTAINED BY THE ITAT (15% OF 5203494) = RS. 7,80,524 REDUCTION GRANTED BY ITAT RS.51,94,853 RS. 8,72,407 LESS: EXPENDITURE DEDUCTIBLE AS PER ORDER OF ITAT RS. 7,80,524 REVISED TOTAL INCOME RS. 91,993 IN ASSESSMENT YEAR 1997-98, THE ASSESSEE FILED RET URN OF INCOME AT RS.1,06,844/- AND THE AO WHILE COMPLETING ASSESSME NT TAKEN THE FIGURE AS PER ORDER DATED 30-03-2000 AT RS.91,883/- APART FROM ADDITION MADE ON ACCOUNT OF DIFFERENCE OF COST OF CONSTRUCTION. A FTER GIVING APPEAL EFFECT BY THE AO AS NOTED ABOVE, THE REVISED TOTAL INCOME IS NOW COMPUTED AT RS.91,993/-. THEREFORE, THERE IS NO EFFECT OF TAX L IABILITY UPON THE ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 6 ASSESSEE. THERE IS NO CONCEALMENT OF INCOME OR FILI NG OF INACCURATE PARTICULARS OF INCOME BECAUSE THE AO HAS VIRTUALLY ACCEPTED RETURNED INCOME. THE TAX SOUGHT TO BE EVADED WOULD, THEREFOR E, BE WORKED OUT TO NIL. B) ASSESSMENT YEAR 1998-99 THE AO PASSED THE FOLLOWING ORDER GIVING APPEAL EFF ECT TO THE ITAT ORDER: ORDER GIVING EFFECT TO ITATS ORDER IN VIEW OF THE ORDER OF THE HONBLE ITAT AHMEDABAD BENCH-B, AHMEDABAD VIDE ITA NO-2851 TO 2853/AHD/2003 WITH IT A NO-2916 TO 2918/AHD/2003 DATED 6.10.2006, TOTAL INCOME OF A SSESSEE IS RECOMPUTED AS UNDER: TOTAL INCOME AS PER ORDER GIVING EFFECT TO CIT(A)S ORDER DATED 25.4.2003 RS.51,92,831 LESS: RELIEF GRANTED BY ITAT ADDITION SUSTAINED BY THE CIT(A) (5981940 875430) = RS.51,06,510 ADDITION SUSTAINED BY THE ITAT (15% OF 4427155) = RS. 6,64,073 REDUCTION GRANTED BY ITAT (51,06,510 664073) RS.44,42,437 RS. 7,50,394 LESS: EXPENDITURE DEDUCTIBLE AS PER ORDER OF ITAT RS. 6,64,073 REVISED TOTAL INCOME RS. 86,321 THE ASSESSEE FILED RETURN OF INCOME AT RS.79,516/- WHICH IS ADOPTED BY THE AO IN THE ASSESSMENT ORDER APART FROM THE ADDIT ION MADE ON ACCOUNT OF DIFFERENCE OF COST OF CONSTRUCTION. AFTER APPEAL EFFECT, THE INCOME OF THE ASSESSEE IS COMPUTED NOW AT RS.86,321/-. THE PART A DDITION SUSTAINED IS ONLY ON ESTIMATION OF COST OF CONSTRUCTION. ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 7 C) ASSESSMENT YEAR 1999-2000 THE AO PASSED THE FOLLOWING ORDER GIVING APPEAL EFF ECT TO THE ORDER OF THE ITAT: ORDER GIVING EFFECT TO ITATS ORDER IN VIEW OF THE ORDER OF THE HONBLE ITAT AHMEDABAD BENCH-B, AHMEDABAD VIDE ITA NO-2851 TO 2853/AHD/2003 WITH IT A NO-2916 TO 2918/AHD/2003 DATED 6.10.2006, TOTAL INCOME OF A SSESSEE IS RECOMPUTED AS UNDER: TOTAL INCOME AS PER ORDER GIVING EFFECT TO CIT(A)S ORDER DATED 25.4.2003 RS.11,78,672 LESS: RELIEF GRANTED BY ITAT ADDITION SUSTAINED BY THE CIT(A) (1266640 - 139190) = RS.11,27,450 ADDITION SUSTAINED BY THE ITAT (15% OF 939542) = RS. 1,40,931 REDUCTION GRANTED BY ITAT (1127450 140931) RS. 9,86,519 RS. 7,50,394 REVISED TOTAL INCOME RS. 1,92,153 THE ASSESSEE IN THIS YEAR FILED RETURN OF INCOME AT RS.45,742/- WHICH IS ADOPTED IN THE ASSESSMENT ORDER BY THE AO APART FRO M THE ADDITION MADE ON ACCOUNT OF CONST OF CONSTRUCTION. AFTER GIVING A PPEAL EFFECT, THE REVISED TOTAL INCOME IS COMPUTED AT RS.1,92,000/- AS AGAINS T RETURNED INCOME OF RS.45,740/-. THE PART ADDITION SUSTAINED IS ONLY ON ESTIMATION OF COST OF CONSTRUCTION. 7. CONSIDERING THE FACTS OF THE CASE AND THE APPEAL EFFECT ORDERS PASSED BY THE AO AS NOTED ABOVE, IT IS CLEAR THAT IN ASSESSMENT YEAR 1997-98 THERE IS NO DIFFERENCE OF INCOME BECAUSE VI RTUALLY RETURNED INCOME IS ACCEPTED BY THE AO. IN THE REMAINING YEARS PART ADD ITIONS ARE ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 8 MAINTAINED AS PER ORDER OF THE TRIBUNAL ON ESTIMATI ON OF COST OF CONSTRUCTION. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS K. R. CHINNI KRISHNA CHETTY REPORTED IN 246 ITR 121 HELD AS UNDER: UNDER SECTION 271(1)(C) OF THE ACT THE AUTHORITY IS GIVEN THE DISCRETION TO LEVY A PENALTY IF THERE IS CONCEALMENT OF PARTICULARS OF INCOME AND EVEN AS REGARDS THE QUANTUM OF THE PENALTY THERE IS A DISCRETION. THAT DISCRETION WAS AVAILABLE TO THE TRIBUNAL AS WELL WHEN IT CONSIDERED THE MATTER IN APPEAL. OF GREATER IMPORTANCE IS THE NECESSITY FOR A DEFINITE FINDING THAT THERE IS CONCEALMENT, AS WITH OUT SUCH A FINDING OF CONCEALMENT, THERE CAN BE NO QUES TION OF IMPOSING ANY PENALTY. THE MERE REVISION OF THE INCOME TO A HIGHER FIGURE BY THE ASSESSING AUTHORIT Y DOES NOT AUTOMATICALLY WAR- RANT AN INFERENCE OF CONCEALMENT OF THE EXPENDITURE ON THE CONSTRUCTION. THE ADDITION TO THE INCOME OF THE ASSESSEE BASED ON THE REPORT OF THE VALUER WAS RIGHTLY REGARDED BY THE TRIBUNAL AS BEING INSUFFICIENT FOR RECORDING A FIND ING OF CONCEALMENT OF INCOME. CONCEALMENT IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. TH E FACT THAT THE VALUER ASSESSED THE BUILDING AT A FIG URE HIGHER THAN THE ONE REPORTED BY THE ASSESSEE DOES N OT BY ITSELF AS OBSERVED EARLIER LEAD TO THE INFERENCE THAT THERE HAD BEEN CONCEALMENT. THERE WAS NO EVIDENCE T O SHOW THAT THE ASSESSEE HAD DELIBERATELY CONCEALED T HE COST OF CONSTRUCTION. THE ASSESSEE WAS NOT REQUIRED TO REPORT THE PROGRESS OF CONSTRUCTION AS THE RETURN D ID NOT REQUIRE HIM TO DO SO. THEREFORE, THE LEVY OF PENALT Y UNDER SECTION 271(1) ( C ) OF THE ACT WAS NOT VALID . THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RE LIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) HELD THAT A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C ) OF THE INCOME-TAX ACT, 1961, SU GGEST THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, 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 ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 9 DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIV EN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS . IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE I NVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. W HERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE I N ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE I S 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, W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFFIRMED. 8. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR T HAT MERE REVISION OF INCOME TO A HIGHER FIGURE BY THE AO WOULD NOT AUTOM ATICALLY WARRANT INFERENCE OF CONCEALMENT OF INCOME. THE REPORT OF T HE DVO BASED UPON HIS OPINION IS AGAINST THE OPINION OF THE ASSESSEE. THEREFORE, ON DIFFERENCE OF OPINION, NO CASE OF CONCEALMENT OF IN COME OR FILING OF INACCURATE PARTICULARS OF INCOME COULD BE MADE OUT. THE FACT THAT THE DVO ASSESSED THE COST OF CONSTRUCTION AT A HIGHER F IGURE THAN THAT RECORDED BY THE ASSESSEE WOULD NOT LEAD TO INFERENC E OF CONCEALMENT. THE ASSESSEE DISCLOSED ALL PARTICULARS AT THE ASSESSMEN T STAGE. THERE IS NO ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 10 MATERIAL AVAILABLE ON RECORD TO SHOW THAT THE ASSES SEE HAS CONCEALED TRUE FACTS FROM THE AUTHORITIES BELOW. IN THIS VIEW OF T HE MATTER, WE DO NOT FIND THIS TO BE FIT CASE FOR IMPOSITION OF PENALTY. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTE D OUT THAT THE AO WHILE INITIATING PENALTY PROCEEDINGS IN THE ASSESSM ENT ORDER NOTED THAT PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME . HOWEVER, IN THE IMPUGNED PENALTY ORDERS THE AO NOTED THAT HE IS SATISFIED IT TO BE FIT CASE FOR LEVY OF PENALTY U/S 271 (1) ( C ) OF T HE IT ACT READ WITH EXPLANATION 1 FOR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME AND CONCEALMENT OF PARTICULARS OF INCOME TO THE EXTENT ADDITION UPHELD BY THE TRIBUNAL. THE HONBLE GUJARAT HIGH COURT IN THE CAS E OF NEW SORATHIA ENGINEERING CO. VS CIT REPORTED IN 282 ITR 642 CONS IDERING ITS EARLIER DECISION IN THE CASE OF MANU ENGINEERING WORKS ( 12 2 ITR 306 ) IN WHICH IT WAS NOTED THAT IT IS INCUMBENT UPON THE I A C TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCO ME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOM E HAD BEEN FURNISHED BY THE ASSESSEE. IN THE ABSENCE OF CLEAR CUT FINDING BY THE ACIT, PENALTY ORDER PASSED BY THE I A C WAS LIABLE TO BE STRUCK DOWN. THE HONBLE GUJARAT HIGH COURT FOLLOWING THE ABOVE DECISION DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ITAT AGRA BENCH IN THE CASE OF ITO VS CHHAIL BEHARI 36 DTR 453 HELD AS UNDER: CONCLUSION: TRIBUNAL HAVING SET ASIDE LEVY OF PENALTY UNDER S. 271 (1) (C) FOR THE REASON THAT THE PENALTY WAS INITIATED FOR FILING INACCURATE PARTICULARS OF INCOME BUT IT WAS LEVIED FOR CONCEALMENT OF INCOME, AND NOT ON THE GROUND THAT N O SATISFACTION WAS RECORDED IN THE ASSESSMENT ORDER, IT CANNOT BE SAID THAT THERE IS A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL, EVEN ON THE BASIS OF RETROSPECTIVE INSERTION OF SUB-S. (1B) IN S. 271, AS THE DIFFERENCE BETWEEN TH E TWO LIMBS OF S. 271 (1) (C) IS NOT ERASED BY THE RETROSPECTIV E AMENDMENT. ITA NOS.4447, 4448 AND 4449/AHD/2007 M/S. KRISHNA DEVELOPERS VS ITO W-2, VALSAD 11 10. CONSIDERING THE ABOVE DISCUSSIONS, IT IS CLEAR THAT IN THIS CASE THE AO WHILE INITIATING PENALTY PROCEEDINGS HAD NOT GIV EN ANY CLEAR CUT FINDING WHETHER THE ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. IN THE P ENALTY ORDERS THE AO HAS TAKEN BOTH THE ITEMS FOR THE PURPOSE OF IMPOSIN G THE PENALTY. IT WOULD, THEREFORE, SHOW THAT NO SPECIFIC FINDING IS GIVEN EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER WHETHER TH E ASSESSEE CONCEALED PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. THEREFORE, THE ABOVE DECISION CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD APPLY TO THE CASE OF THE ASSESSEE. IN VIEW OF THE A BOVE DISCUSSIONS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCE L THE PENALTY. 11. AS A RESULT, THE APPEALS OF THE ASSESSEE ARE AL LOWED. ORDER PRONOUNCED ON 23-07-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 23-07-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD
