The DCIT, 1(1), Bhopal V. M/s Bhopal Vikas Pradhikaran, Bhopal

ITA 45/IND/2011

• Counselvise Citation: 4522714 RSA 2011
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: A K CHHAJED
• Keywords: Bonafide belief
• Section: 43B; 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.44 & 45/IND/2011 A.Y. 2003-04 & 2004-05 DY. COMMISSIONER OF INCOME TAX 1(1), BHOPAL ... APPELLANT VS BHOPAL VIKAS PRADHIKARAN, BHOPAL PAN AAALB 0040 K ... RESPONDENT APPELLANT BY : SHRI ARUN DEWAN RESPONDENT BY : SHRI A.K.CHHAJED, ADVOCATE DATE OF HEARING : 02.11.2011 DATE OF PRONOUNCEMENT : 04.11.2011 O R D E R PER JOGINDER SINGH BY WAY OF THESE APPEALS FOR AYS 2003-04 AND 2004-05 THE REVENUE IS BEFORE THIS TRIBUNAL ON THE COMMON GROUN D THAT THE 2 FIRST APPELLATE AUTHORITY, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WAS NOT JUSTIFIED IN DELETING THE PENA LTY OF RS.53 LAKHS AND RS.23 LAKHS RESPECTIVELY, LEVIED BY THE A SSESSING OFFICER, U/S 271(1)(C) OF THE ACT. 2. DURING HEARING OF THESE APPEALS THE LEARN ED SENIOR DR SHRI ARUN DEWAN STRONGLY DEFENDED THE IMPOSITION OF PENALTY WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEFENDED T HE IMPUGNED ORDERS DATED 05.01.2011.IN REPLY THE LD.CO UNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE PENALTY WAS IMPOSED ON ACCOUNT OF TECHNICAL DEFAULT OF DELAY OF DEPOSIT OF EMPLOYEES CONTRIBUTION TO CPF/EPF. THIS ASSERTION OF THE ASSE SSEE WAS NOT CONTROVERTED BY THE REVENUE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A STATUTORY LOCAL AUTHORITY OF THE STATE GOVERNMENT OF M.P.AS PER THE REVENUE THERE IS LATE PAYMENT OF CONTRIBUTI ON TO PF OF RS.2,48,52,954/- AND RS.85,08,000/- FOR THE RESPECT IVE AYS. 3 THE STAND OF THE REVENUE IS THAT THOUGH THE ASSESSE E DEDUCTED THE AMOUNTS FROM THE EMPLOYEES BUT WAS NOT DEPOSITE D IN THE GOVERNMENT ACCOUNT IN TIME AND THUS DID NOT FURNISH THE ACCURATE PARTICULARS OF ITS INCOME THUS THE IMPUGNE D PENALTIES U/S 271(1)(C) WERE IMPOSED. BEFORE THE LD.CIT(A) TH E ASSESSEE PREFERRED THE FOLLOWING REPLIES:- 'REPLY FOR A. Y 2003-04: DEAR SIR, WITH REFERENCE TO ABOVE AND THE APPEALFILED ON 01.0 5.2009 WE BEG TO FURNISH OUR DETAIL SUBMISSIONS AS BELOW:- BHOPAL VIKAS PRADHIKARAN BHOPAL IS A STATUTORY LOCA L AUTHORITY CONSTITUTED VIDE NOTIFICATION NO. 3344/32176 DATED 10.09.1976 D /S 38 OF MP. NAGAR TATHA GRAM NIVESH ADHINIYAM 1973 BY THE GOVT. OF MADHYA PRADESH FOR DEVELOPMENT OF BHOPAL MUNICIPAL AREA FOR PROVIDING RESIDENTIAL/COMMERCIAL ACCOMMODATION. PUBLIC UTILIT Y CENTRES ETC. AS PROVIDED IN SECTION 49 OF THE ADHINIYAM. THE INCOME WAS EXEMPTED TILL THE ASSESSMENT YEAR 2002-03 TENDER SECTION 10(20A) OF T HE INCOME TAX ACT, WHICH WAS SUBSEQUENTLY OMITTED WITH EFFECT FROM 01. 04.2003 VIDE FINANCE ACT 2002. THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2003- 2004 WAS FILED ON 29.11.2003 DECLARING A TOTAL LOSS OFRS1,82,90.0001 -. THE ASSESSMENT WAS COMPLETED DIS 143(3) ON 30.03.2006 AND TOTAL INCOME ASSESSED WAS RS.1, 15,36,954/- AFTER MAKING ADDITIONS BY DISALLOWING THE EXPENSES OF RS. 2,98,26,954/-. IN THIS CONTEXT IT IS SUBMITTED THAT AT THE TIME OF ASSESSMENT WE OURSEF SUBMITTED THE DETAIL OF STATUTORY RECOVERIES AND PAYMENTS AND OFFEREDFOR DISALLOW AND ADDITION U/S 43(B) OF 1 T. ACT THOSE ARE NOT MADE PAYMENT IN PRESCRIBED TIME, THIS FACT CAN EASILY VE RIFY WITH THE ENCLOSED NOTICES AND QUESTIONNAIRES ISSUED VIDE ASSESSING AU THORITY. EVEN THEN THE PENALTY PROCEEDINGS UNDER SECTION 271 (L)(C ) WERE INITIATED IN THE ASSESSMENT ORDER FOR CONCEALMENT OF INCOME AND FURN ISHING INACCURATE PARTICULARS OF INCOME (ENCLOSED COPY OF ASSESSMENT ORDER ON PAGE NO 7 TO 12), WITH IGNORING THE FACT YOUR PETITIONER IS MP. GOVT. STATUTORIES L OCAL AUTHORITY, HAVING NO INTEREST TO EVADE ANY TAX. BEING AGGRIEVED WITH THE ADDITION MADE BY THE ASSES ING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A)-I, BHOPAL. THE LEARNED CIT(A)-I BHOPAL VIDE HIS ORDER DATED 11.12.2007, IN APPEAL NO. CIT(A)- I/BPL/IT-258/2006 07 HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE BY DELETING ADDITIONS TO THE TUNE OF RS.L,32,58,954 /- OUT OF RS.2, 98,26, 954/- AND SUSTAINING THE BALANCE ADDITION OF RS.1,65,68,0 001- ON ACCOUNT OF CPF SHARE AND CPF/GPF PAYMENTS. (ENCLOSE D COPY OF THE CIT(A)-I ORDER PAGE NO 18T 0 21). 4 AFTER RECEIPT OF APPEAL ORDER OF THE CIT(A)-I' BHOP AL PENALTY OF RS.53,00,0001- HAS BEEN IMPOSED TREATING THE AMOUNT OF RS.L,65,68,0001- ON ACCOUNT OF TM PAID CPF/GPF -ETC . SUSTAINED IN APPEAL WHICH WAS ADDED BACK U/S 43B AND OTHER PROVI SIONS AS CONCEALED INCOME VIDE PENALTY ORDER OF DATED 31.3.2009. THE ASSESSING OFFICER HAS GIVEN HIS FINDINGS THAT S UCH AMOUNTS WERE ADDED ON ACCOUNT OF . STATUTORY' PAYMENTS SHOWN IN THE AUDIT REPORT AND CONCLUDED THAT THE ASSESSEE HAD FURNISHED INACCURAT E PARTICULARS OF INCOME. IT IS A WELL SETTLED POSITION OF LAW, AS IS HELD BY VARIOUS JUDGEMENTS OF THE APEX COURT AND THE HIGH COURTS, T HAT THE ASSESSING OFFICER HAS TO GIVE CLEAR FINDING AS TO THE CONCEAL MENT OF INCOME AND I OR FURNISHING OF INACCURATE PARTICULARS ON ACCOUNT OF DISALLOWANCES I ADDITIONS IN THE TOTAL INCOME. WE MAY SUBMIT THAT DURING THE FINANCIAL YEAR 2002-0 3, TOTAL AMOUNT OF STATUTORY RECOVERIES WAS RS.146.09 LACS, UNDER VARI OUS HEADS OF ACCOUNTS. OUT OF THIS AMOUNT THE PAYMENTS AMOUNTING TO RS.83. 71 LAKHS WERE PAID DURING THE YEAR BUT INADVERTENTLY DEBITED TO INCOME AND EXPENDITURE ACCOUNT, INSTEAD OF DEBITING THE SAME T O THE PROPER HEADS OF ACCOUNT. OUT OF THIS 83.71 LACS, AN AMOUNT OF RS. O. 39 LACS PERTAIN TO OTHER RECOVERIES WHICH WERE NOT COVERED UNDER THE P ROVISIONS OF DISALLOWANCE UNDER INCOME TAX ACT. THUS AN AMOUNT O F RS. 83.32 LACS (I.E. RS.83.71 (-) 0.39 LACS) WAS ADDED BACK. FURTHER AN AMOUNT OJRS.82.36 LACS ON ACCOUNT OF OTHER STATUTORY LIABI LITIES I.E CPF AMOUNTS DISALLOWAB1E VIS 43B WAS ALSO ADDED BACK. T HUS THE TOTAL ADDITIONS AMOUNTED TO (RS.83.32 + 82.36) 165.68 LAKHS WERE MADE IN THE TOTAL INCOME. ON THE SAME BASIS THE LEARNED ASS ESSING OFFICER HAS CALCULATED AND LEVIED THE PENALTY ON THE ADDITIONS SUSTAINED BY CIT(A)I OF RS. 1,65,68,000.00. (STATEMENT ENCLOSED) THE ACTUAL AMOUNT WHICH WAS RECOVERED IN THE FINANC IAL YEAR 2002-03 BUT WAS NOT PAID WAS RS.86,5I,154/-, WHICH INCLUDES THE AMOUNT OF RS.82.36 LAKHS ON ACCOUNT OFCPF AMOUNTS AND OTHER S TATUTORY LIABILITIES. THIS AMOUNT WAS PAID SUBSEQUENTLY DURI NG THE FINANCIAL YEAR 2002-03 TO 2008-09 AS SHOWN IN THE ENCLOSED STATEME NT. FROM THE DETAILS YOU WILL KINDLY SEE THAT THE TOTAL AMOUNT HAS BEEN PAID BETWEEN THE FINANCIAL YEARS 2002-03 TO 2008-09, THE RE WAS NO BALANCE AMOUNT OUTSTANDING WHICH HAD REMAINED TO BE PAID. I T WAS ONLY THE FUND SHORTAGE WHICH HAD CREATED IRREGULARITY ION PAYMENT . FROM THE SAID DETAILS THE INTENTION OF THE ASSESSEE WILL CERTAINL Y BECOME CLEAR TO YOUR HONOUR THAT THERE WAS NO MALAFIED INTENTION FOR EVA SION OF ANY TAX AMOUNT. FURTHER THE PETITIONE IS MP. GOVT STATUTORI ES LOCAL AUTHORITY AND NO PERSON IS INTERESTED TO EVADE THE ANY TAX OR FUR NISHED INACCURATE PARTICULAR. OUR FIRST GROUND OF APPEAL IS THE LEARNED ASSESSING OFFICER HAS ERRED IN IMPOSITION OF PENALTY . UNDER THE PROVISIONS OF SECTION 271 (L)(C) OF THE INCOME TAX ACT WHEN THE ASSSSEE HAS FURNISHED FULL AND COMPLETE INFORMATION IN THE RETURN AND AT THE TIME OF ASSESS MENT PROCEEDING. 5 AS PER THE PROVISIONS OF SECTION 271 (L )( C) OF THE INCOME TAX ACT 1961, IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALM ENT OF PARTICULARS OF INCOME. SECONDLY THE ASSESSEE MUST HAVE FURNISHED I NACCURATE PARTICULARS OF INCOME. WE WOULD LIKE TO SUBMIT THE FOLLOWING JUDGEMENTS IN WHICH IT 'IS OBSERVED THAT THE PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. IF THE INCOME TAX OFFICER IS SATISFIED THAT THE DEFAULT IS FOR GOOD AND SUFFICIENT REASONS NO PENALTY SHALL BE LEVIED. THE HONOURABLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V S. STATE OF ORRISA 83 ITR 26, HAS OBSERVED THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A S TATUTORY OBLIGATION IS THE RESULT OF QUASI-CRIMINAL PROCEEDINGS AND PENALTY WI LL NOT ORDINARILY BE IMPOSED, UNLESS THE PARTY OBLIGED EITHER ACTED DELI BERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOS ED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MCINNER PRESCRIBED BY THE STATUTE. IN THE RENT JUDGEMENT OF THE SUPREME COURT OF INDIA IN A CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC), IT IS OBSERVED THAT 'IN ORDER TO EXPOSE THE ASSESSE E TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY P ROVISIONS CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORREC T CLAIM TENTAMOUNT TO FURNISHING INACCURATE PARTICULARS'. A MERE MAKING O F A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. THE SUPREME COURT ON PAGE NO. 166 HAS OBSERVED AS UNDER: 'AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF I TS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, THE DETAILS, IN THEMSELVES WE RE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UPTO THE AUTHORITIES TO ACCEPT ITS CLAIMS IN THE RETURN OR N OT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, THE CLAIM WHI CH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF W OULD NOT ATTRACT THE PENALTY VIS 271 (L)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY VIS 271 (!) . THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. IN THE INSTANT CASE THERE WAS NO CONCEALMENT OF INC OME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ALL THE MATERIAL WAS AVAILABLE BEFORE THE ASSESSING OFFICERS FOR ASSESSMENT OF THE TOTAL INCO ME. THUS IN VIEW OF THE POSITION. DISCUSSED IN THE ABOVE PARAS, THE PENALTY PROVISIONS ARE NOT ATTRACTED AND THE PENALTY IMPOSED IS DESERVED TO BE DELETED I N THIS REGARD WE WOULD LIKE 6 TO SUBMIT AND RELY ON THE FOLLOWING JUDGEMENTS: I. CIT V S. AUTO LAMPS LTD., 278ITR 32 (DELHI HIGH COURT) II. CIT VS. B.R. SHARMA 275 ITR 303 (DELHI HIGH COURT), ALSO 196 CTR 454 (DELHI) III. CIT VS. VIKAS PROMOTERS PVT. LTD 277 ITR 337 (DELHI), ALSO 194 CTR 384 (DELHI) , IV. CIT V S. SUPER METAL RE-ROLLERS - 265 ITR 82 (DELHI) V. CIT V S. RAM COMMERCIAL ENTERPRISES LTD., 246ITR 568 (DELHI) VI. DIWAN ENTERPRISE VS. CIT 246 ITR 571 (DELHI) VII. CIT V S. BHAGWANT FINANCE CO. LTD, 196 CTR 462 (DELHI) VIII. SUBHASH GUPTA VS. DCIT 85 LTD 167 (IT AT JAIPUR) (T.M) IX. ITA V S. DEVI BAI H PARMANI 84 LTD 342 (IT AT MUMBAI) X. CIT V S. SURESH CHAND MITTAL251 ITR 9 (SUPREME COURT) XI. CIT VS. RAJAN & CO. 291 ITR 340 (DELI.) XII. SMT. KAVITA KAPOOR VS ITA 110 ITJ 50 (ASR.) IT IS HELD IN THE CASE OF DAMODAR VAMAN BALIGA V S. JOINT CIT (2006) 6 SOT 271 (BANG- TRIB) THAT PENALTY IS TO BE LEVIED WHERE ELEMENT OF MENS-REA IS PROVED CONCEALMENT WILL NOT AUTOMATICALLY ATTRACT P ENALTY WITHOUT ESTABLISHING MENS-REA UNDER EXPLANATION 1 TO SECTION 271 (L)(C) VIDE CIT VS. SUSAI KALYANAMANDAPAM (P) LTD (2004) 271 ITR 138(MAD) THOUGH THE ELEMENT OF MENS-REA MUST BE THERE FOR IMPOSITION PE NALTY U/S 271 (L)(C) OF I T ACT HAS BEEN WIPED OUT, BUT STILL THIS ISSUED REGARDING REQUIREMENT TO PROVE MENMS-REA HAS BECOME SUBJECT MATTER OF CONSID ERATION IN THE LIGHT OF DECISION IN UNION OF INDIA VS. RAJASTHAN SPINNING & WEIVING MILL (2009) 180 TAXMAN 609(S C.) AS HELD IN CIT VS. ATUL MOHAN BINDAL (2009) 30(1) ITCL - 339 (SC) (2009) 317 ITR 1 (SC) IN ORDER TO IMPOSE PENALTY YOUR GOODSELF MUST SEE T HE CONDUCT AND DELIBERATE INTENTION ON THE PART OF THE ASSESSEE IN CONCEALING HIS TRUE INCOME TO AVOID IMPOSITION OF TAX THEREON. IN THIS RESPECT FOLLOWING JUDGEMENTS ARE RELIED UPON BY US WHICH ARE AS FOLLOWS: I) CIT VS. SKY LINE AUTO PRODUCTS PVT.LTD 271 ITR 335 (MP. HIGH COURT) II) CIT VS. ASHIM KUMAR AGARWAL AND ANOTHER 275 ITR 48 (JHARKHAND HIGH COURT) III)CIT VS. RAJ BANS SINGH 273 ITR 351 (ALLAHABAD HIGH COURT) IV)CIT VS. AJAIB SINGH & CO., 253 ITR 630 (PUNJAB & HARYANA HIGH COURT) V)CIT V S. PRADEEP KUMAR 246 ITR 94 ( J & K) VI)CIT VS. HARSIDDH CONSTRUCTION PVT. LTD 244ITR 417 (GUJRAT) VII)CIT VS. PITAMBARDAS DULICHAND 33 ITC 142 ((MP. HIGH COURT INDORE BENCH) VIII)CIT VS. S V. ELECTRICALS PVT .. LTD, 33 ITC 230 (MP. HIGH COURT INDORE BENCH) IX)CIT V S. NIRMAL DAS JASSUMAL INDORE 31 ITC 87 ( IT A T INDORE) X)CIT VS. PUNJAB TYRES 162ITR 517 (MP. HIGH COURT INDORE BENCH) XI)SHRI SHADILAL SUGAR AND GENERAL MILLS LTD AND AN OTHER VS. CIT DELHI 168 ITR 705 (SC) RECENTLY IT HAS BEEN HELD BY THE SUPREME COURT IN T HE CASE OFT. ASHOK PAI VS CIT 292 IT/? II & DILIP N. SHROFF VS JCIT 291 ITR 519 THAT THE ORDER IMPOSING PENALTY BEING QUASI CRIMINAL IN NATURE, BU RDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THEASSESSEE HAD CONCEA LED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OFINCOME .. IT WAS ALSO HELD THAT IMPOSING OF PENALTY IS NOT AUTOMATIC. THE LEVY OF PENALTY IS NO T ONLY DISCRETIONARY IN NATURE BUT THE DISCRETION IS TO BE EXERCISED KEEPIN G THE RELEVANT FACTORS IN MIND ANLI THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAIR AND 7 OBJECTIVE. DISCRETION TO BE EXERCISED JUDICIOUSLY A ND NOT TOHARRAS THE ASSESSEE. 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INACCURA TE PARTICULARS OF INCOME' ARE DIFFERENT. HOWEVER BOTH CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS REFER TO DELIBERATE ACT ON T HE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE OR DIFFERENCE IN OPINIO N FOR WORKING OUT ADMISSIBILITY OR OTHERWISE FOR ANY DEDUCTION WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUP PRE SIO VERI OR SUGGESTION FALSI. UNDER THE ABOVE CIRCUMSTANCES WE REQUEST YOUR GOODS ELF TO KINDLY DELETE THE PENALTY IMPOSED OF RS. 53,00,000 I - AS THERE WAS NE ITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. FURTHER MORE THE AMOUNT DISALLOWED HAS ALSO BEEN PA ID TO GOVT. EVEN THOUGH LATE, BUT CLEARLY INDICATING THAT THERE IS NO MENS- REA TO AVOID TAX ON THE PART OF THE ASSESSEE BY WHICH PENALTY PROVISIONS ARE ATTRAC TED AND AS LOOKING TO THE ABOVE MENTIONED FACTS THAT YOUR PETITION IS MP. GOV T. STATUTORIES LOCAL AUTHORITY AND NO ONE IS INTERESTED TO EVADE THE TAX ETC. ' REPLV FOR A.Y.2004-05: WITH REFERENCE TO ABOVE, AND THE APPEAL JILED ON 01 .05.2009 WE BEG TO FURNISH OUR DETAILED SUBMISSIONS AS BELOW:- ' BHOPAL VIKAS PRADHIKARAN BHOPAL IS A STATUTORY LOCA L AUTHORITY CONSTITUTED VIDE NOTIFICATION NO. 3344/32/76 DATED 10.09.1976 VIS 38 OF MP. NAGAR TATHA GRAM NIVESH ADHINIYAM 1973 BY THE GOVT. OF MADHYA PRADESH FOR DEVELOPMENT OF BHOPAL MUNICIPAL AREA FOR PROVIDING RESIDENTIAL/COMMERCIAL ACCOMMODATION, PUBLIC UTILIT Y CENTRES ETC. AS PROVIDED IN SECTION 49 OF THE ADHINIYAM. THE INCOME WAS EXEMPTED TILL THE ASSESSMENT YEAR 2002-03 UNDER SECTION 10(20A) OF TH E INCOME TAX ACT, WHICH WAS SUBSEQUENTLY OMITTED WITH EFFECT FROM 01.04.200 3 VI4E FINANCE ACT 2002. THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2004- 2005 WAS FJILED ON 01.11.2004 DECLARING A TOTAL LOSS OF RS.3,57,22, 00 0/-. THE ASSESSMENT WAS COMPLETED VIS 143(3) ON 29.12.2006 AND TOTAL LOSS A SSESSED WAS RS.2,30,88,000/- AFTER MAKING ADDITIONS BY DISALLOW ING THE EXPENSES OF RS. 1,26,34,000/-. IN THIS CONTEXT IT IS SUBMITTED THAT AT THE TIME OF ASSESSMENT WE OURSELF SUBMITTED THE DETAILS OF ALL STATUTORY RECO VERIES AND PAYMENTS AND OFFERED FOR DISALLOWANCES AND ADDITION U/S 43(B) OF I.T ACT, THOSE ARE NOT MADE IN PRESCRIBED TIME, EXCEPT CPF SHARE ETC. THIS FACT CAN EASILY VERIFY WITH THE ENCLOSED PHOTOCOPIES OF NOTICE & QUESTIONN AIRES ISSUED BY THE ASSESSING AUTHORITY. THIS FACT IS SPECIFICALLY BEIN G MENTIONED TO SHOW THAT ALL FACT AND FIGURES WERE.. SUBMITTED TO THE ASSESSING OFFICER IN THE PROCEEDINGS AND NO INFORMATION WAS DELIBERATELY CONCEALED OR WR ONGLY SUBMITTED. EVEN THEN THE PENALTY PROCEEDINGS UNDER SECTION 271 (L)(C) WERE INITIATED IN THE ASSESSMENT ORDER FOR CONCEALMENT OF INCOME A ND FURNISHING INACCURATE PARTICULARSOF INCOME. (ENCLOSED COPY OF ASSESSMENT ORDER ON PAGE NO.7 TO 15), WITH IGNORING THE FACTS THAT YOUR PETITIONER IS MP. 8 GOVT, STATUTORY LOCAL AUTHORITY NO ONE IS INTERESTE D TO EVADE ANY TAX ETC. BEING AGGRIEVED WITH THE ADDITIONS MADE BY THE ASSE SSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-I BH OPAL. THE LEARNED CIT(A)-I BHOPAL VIDE HIS ORDER DATED 11.12.2007, IN APPEAL NO. CIT(A)-IIBPUIT-92012006_0 7 HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE BY DELETING ADDITIONS TO THE TUNE OF RS. 5753,0001- OUT OF RS. 1,26,34,0001 AND SUSTAINING THE BALANCE ADDITION OJ RS.68,81,0001- ON ACCOUNT OFCPF SHARE AND CPFIGPF PAYMENTS. (ENCLOSED COPY OF THE CIT(A)-I ORDER PAGE NO.4 TO 6) AFTER RECEIPT OF APPEAL ORDER OF THE CIT(A)-I BHOPA L PENALTY OF &.23,00,0001- HAS BEEN IMPOSED TREATING THE AMOUNT OF &.68,81,000 1- ON ACCOUNT OF UNPAID CPFIGPF SUSTAINED IN APPEAL WHICH WAS ADDED BACK U/ S 43B, AS CONCEALED INCOME VIDE PENALTY ORDER OF DATED 31.3.2009. THE ASSESSING OFFICER HAS GIVEN HIS FINDINGS THAT S UCH AMOUNTS WERE ADDED ON ACCOUNT OF STATUTORY PAYMENTS SHOWN IN THE AUDIT RE PORT AND CONCLUDED THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME. IT IS A WELL SETTLED POSITION OF LAW, AS IS HELD BY VARIOUS JUDGEMENTS O F THE APEX COURT AND THE HIGH COURTS, THAT THE ASSESSING OFFICER HAS TO GIVE CLEAR FILL DING AS TO THE CONCEALMENT OF INCOME AND 1 OR FURNISHING OF INACCURATE PARTICULARS ON ACCOUNT OF DISALLOWANCES 1 ADDITIONS IN THE TOTAL INCOME. THE ACTUAL AMOUNT WHICH WAS RECOVERED IN THE FINANC IAL YEAR 2003-04 BUT WAS NOT PAID UP TO THE DATE OF FILING THE INCOME TAX RE TURN WAS &.68,81,0001 THIS AMOUNT WAS PAID SUBSEQUENTLY DURING THE FINANCIAL Y EAR 2006-07 TO .2008-09 AS SHOWN IN THE ENCLOSED STATEMENT .. FROM THE DETAILS YOU WILL KINDLY SEE THAT THE TOTAL AMOUNTS OF RS. 85,08' 0001- HAS BEEN PAID BETWEEN THE FINANCIAL YEARS 2003-04 T O 2008-09, WHICH INCLUDES THE CPF AMOUNT OF RS. 68,81,0001- WHICH WAS ADDED TO THE TOTAL INCOME BY THE ASSESSING OFFICER, THERE WAS NO BALAN CE AMOUNT OUTSTANDING WHICH HAD REMAINED TO BE PAID IT WAS ONLY THE FUND SHORTAGE WHICH HAD CREATED IRREGULARITY IN PAYMENT. FROM THE SAID DETA ILS THE INTENTION OF THE ASSESSEE WILL CERTAINLY BECOME CLEAR TO YOUR HONOUR THAT THERE WAS NO MALAFIED INTENTION FOR EVASION OF ANY TAX AMOUNT. T HE PETITIONER IS MP. GOVT. STATUTORY LOCAL AUTHORITY AND NO PERSON IS INTEREST ED TO EVADE TAX OR FURNISH INACCURATE PARTICULAR. OUR FIRST GROUND OF APPEAL IS THE LEARNED ASSESSING OFFICER HAS ERRED IN IMPOSITION OF PENALTY UNDER THE PROVISIONS OF SECTI ON 271 (1) OF THE INCOME TAX ACT WHEN THE ASSESSEE HAS FURNISHED FULL AND COMPLETE INFORMATION IN THE RETURN, AND AT THE TIME OF INCOM E TAX ASSESSMENT PROCEEDINGS. AS PER THE PROVISIONS OF SECTION 271 (1)( C) OF THE INCOME TAX ACT 1961, IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCE ALMENT OF PARTICULARS OF INCOME. SECONDLY THE ASSESSEE MUST HAVE FURNISHED I NACCURATE PARTICULARS OF INCOME. WE WOULD LIKE TO SUBMIT THE FOLLOWING JUDGEMENTS IN WHICH IT IS OBSERVED THAT THE PENALTY SHOULD NOT BE IMPOSED MERELY BECAU SE IT IS LAWFUL TO DO SO. IF THE INCOME TAX OFFICER IS SATISFIED THAT THE DEFAULT IS FOR GOOD AND SUFFICIENT REASONS NO PENALTY SHALL BE LEVIED. THE HONOURABLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORRISA 83 ITR 26, HAS OBSERVED THAT AN ORDER IMPOSING PENALTY FOR FAI LURE TO CARRY OUT A 9 STATUTORY .OBLIGATION IS THE RESULT OF QUASI-CRIMIN AL PROCEEDINGS AND PENALTY WILL NOT ORDINARILY BE IMPOSED, UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR .DISHONEST. OR ACTED IN CONSCIOUS D ISREGARD OF ITS OBLIGATION. PENALTYWILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILUR E TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED I N REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. IN THE RECENT JUDGEMENT OF THE SUPREME COURT OF IN DIA IN A CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETRO PRODU CTS PVT. LTD. (2010) 322 ITR 158 (SC), IT IS OBSERVED THAT 'IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISIONS CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TENTAMOUNT TO FURNISH ING INACCURATE PARTICULARS'. A MERE MAKING :OF A CLAIM, WHICH .IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN.TH E RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THE SUPREME COURT ON PAGE NO. 166 HAS OBSERVED AS UNDER- 'AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF I TS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, THE DETAILS, IN THEMSELVES WE RE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UPTO THE AUTHORITIES TO ACCEPT ITS CLAIMS IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, THE CLAIM WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271 (L)(C). IFWE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RET URN WHERE THE, CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR A NY REASON, THE ASSESSEE WILL. INVITE PENALTY ULS 271 (J)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE'. IN THE INSTANT CASE THERE WAS NO CONCEALMENT OF INC OME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ALL THE MATERIAL WAS AVAILABLE BEFORE THE ASSESSING OFFICER FOR ASSESSMENT OF THE TOTAL INCOM E. THUS IN VIEW OF THE POSITION DISCUSSED IN THE ABOVE PARAS, THE PENA LTY PROVISIONS ARE NOT ATTRACTED AND THE PENALTY IMPOSED IS DESERVED TO BE DELETED IN THIS R EGARD WE WOULD LIKE TO SUBMIT AND RELY ON THE FOL!OWINGJU DGEMENTS: CIT VS. AUTO LAMPS LTD., 278ITR 32 (DELHI HIGH COURT) I) CIT VS. B.R. SHARMA 275 ITR 303 (DELHI HIGH COURT), ALSO 196 CTR 454 (DELHI) II) CIT VS. VIKAS PROMOTERS PVT. LTD. 277 ITR 337 (DELHI), ALSO 194 CTR 384 (DELHI) III) CIT VS. SUPER METAL RE-ROL!ERS - 265ITR 82 (DELHI) IV) CIT V S. RAM COMMERCIAL ENTERPRISES LTD., 246 ITR 568 (DELHI) V) DIWAN ENTERPRIESE V S. CRT 246ITR 571 (DELHI) VI) CIT V S. BHAGWANT FINANCE CO. LTD' 196 CTR 462 (DELHI) VII) SUBHASH GUPTA VS, DCIT 85 LTD 167 (IT AT JAIPUR) 10 (T,M) VIII) 11'0 V S. DEVI BAI H PARMANI 84 LTD 342 (ITA T MUMBAI) IX) CIT V S, SURESH CHAND MITTAL251ITR 9 (SUPREME- COURT) X) CIT VS. RAJAN & CO, 291 ITR 340 (DELI.) XI) SMT. KAVITA KAPOOR VS ITO 110 ITJ 50 (ASR.) IT IS HELD'IN THE CASE OF DAMODAR VAMAN BALIGA VS, JOINT CRT (2006) 6 SOT 271 (BANG-TRIB) THAT PENALTY IS TO BE LEVIED WHERE ELEM ENT OF MENS REA IS PROVED. CONCEALMENT WILL NOT AUTOMATICALLY ATTRACT PENALTY WITHOUT ESTABLISHING MENS REA UNDER EXPLANATION 1 TO SECTION 271(I)(C) VIDE CIT VS. SUSAI KALYANAMAND APAM (P) LTD. (2004) 271 ITR 138(MAD.) THOUGH THE ELEMENT OF MENS-REA MUST B E THERE FOR IMPOSITION PENALTY ULS 271 (L)(C) OF I T. ACT HAS BEEN WIPED OUT, BUT STILL TH IS ISSUED REGARDING REQUIREMENT TO PROVE MENMS-REA HAS BECOME SUBJECT MATTER OF CONSIDERATION IN THE LIGHT OF DECISION IN UNION OF INDIA VS. RAJASTHAN SPINNING & WEIVING MILL (2009) 180 TAXMAN 609(S C.) AS HELD IN CIT VS. ATUL MOHAN BINDAL (2009) 30(1) ITCL - 339 (SC) (2009) 317 ITR I(SC) IN ORDER TO IMPOSE PENALTY YOUR GOODSELFMUST SEE TH E CONDUCT AND DELIBERATE INTENTION ON THE PART OF THE ASSESSEE IN CONCEALING HIS TRUE INCOME TO AVO D IMPOSITION OF TA:R.,THEREON. IN THIS RESPECT FOL!OW INGJUDGEMENTS ARE RELIED UPON BY US WHICH ARE AS FOL!OWS:- I) CIT VS. SKY LINE AUTO PRODUCTS PVT. LTD. 271 ITR 335 (MP. HIGH COURT) II) CIT VS. ASHIM KWNAR AGARWAL AND ANOTHER 275 ITR 48 (JHARKHAND HIGH COURT) III) CIT VS. RAJ BANS SINGH 273ITR 351 (AL!AHABAD HIGH COURT) IV) CIT VS. AJAIB SINGH & CO., 253ITR 630 (PUNJAB & HARYANA HIGH COURT) V) V) CIT V S. PRADEEP KWNAR 246ITR 94 ( J & K) VI) CIT V S. HARSIDDH CONSTRUCTION PVT. LTD. 244ITR 417 (GUJRAT) VII) CIT VS. PITAMBARDAS DULICHAND 33 ITC 142 MP. HIGH COURT INDOREBEENCH VIII)CIT VS. S V. ELECTRICALS PVT .. LTD., 33 ITC 230 (MP. HIGH COURT INDORE BENCH IX) CIT VS, NIRMAL DAS JASSWNA/INDORE 3IITC 87 (IT AT INDORE) X)CIT VS. PUNJAB TYRES 162 ITR 517 ( M.P. HI GH COURT INDORE BENCH) XI) SHRI SHADILAL SUGAR AND GENERAL MILLS L TD. AND ANOTHER VS. CIT DELHI 168 1. 2. RECENTLY IT HAS BEEN HELD BY THE SUPREME COURT IN T HE CASE OFT. ASHOK PAI VS CIT 292 ITR 11 & DILIP N. SHROF'S LCIT 291 ITR 519 THAT THE ORDER IMPOSING PENALTY BEING QUASI CRIMINAL IN NATURE, BU RDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAD CONCE ALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT WAS ALSO HELD, THAT IMPOSING OF PENALTY IS NOT AUTOMATIC. THE LEVY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE BUT THE DISCRETION IS TO BE EXERCISED KEEPIN G THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE ASSESSING OFFICER IN T HIS BEHALF ,MUST BE FAIR AND OBJECTIVE. DISCRETION TO BE EXERCISED JUDICIOUS LY AND NOT TO HARRAS THE ASSESSEE. 3. 'CONCEALMENT OF INCOME' AND 'FURNISHING OF INACCURA TE PARTICULARS OF INCOME' ARE DIFFERENT. HOWEVER BOTH CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS REFER TO DELIBERATE ACT ON T HE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE OR DIFFERENCE IN OPINIO N FOR WORKING OUT ADMISSIBILITY OR OTHERWISE FOR ANY DEDUCTION WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSIO VERI OR SUGGESTIO FALS I. \- 4. UNDER THE ABOVE CIRCUMSTANCES WE REQUEST YOUR GOODS ELF TO KINDLY DELETE THE PENALTY IMPOSED OF RS.23, 00, 000/- AS THERE WA S NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE 11 ASSESSEE. FURTHER MORE THE AMOUNT DISALLOWED HAS AL SO BEEN PAID TO GOVT. EVEN THOUGH LATE, 'BUT CLEARLY INDICATING THAT THER E IS NO MENS REA TO AVOID TAX ON THE PART OF THE ASSESSEE BY WHICH PENALTY PR OVISIONS ARE ATTRACTED AND AS LOOKING TO THE FACT THAT YOUR PETITIONER IS MP. GOVT. STATUTORY LOCAL AUTHORITY AND NO ONE IS INTEREST TO EVADE THE TAX E TC. ' 4. ON THE BASIS OF ABOVE SUBMISSIONS OF THE ASSESSEE T HE LD.CIT(A) CONCLUDED AS UNDER :- 4. I HAVE GONE THROUGH THE OBSERVATIONS AND FINDI NGS OF THE AO MENTIONED IN THE PENALTY ORDERS. I HAVE ALSO CAREFU LLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT. I FIND THAT ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, LEVY OF PENA LTY IS NOT JUSTIFIED. IT IS SEEN THAT THE APPELLANT BHOPAL VIKAS PRADHIKARAN IS A STATUTORY LOCAL AUTHORITY CONSTITUTED BY STATUTE BY M.P. STATE GOVE RNMENT FOR DEVELOPMENT OF BHOPAL MUNICIPAL AREA. I FIND FORCE IN THE LD. A R'S ARGUMENTS THAT SINCE LOSS IS FINALLY ASSESSED IN THE CASE OF THE A PPELLANT IN BOTH THE ASSESSMENT YEARS, THERE WAS NO INTENTION OF THE APP ELLANT BEING A M.P. STATE GOVERNMENT STATUTORY LOCAL AUTHORITY TO EVADE ANY I NCOME TAX LIABILITY. IT IS ALSO SEEN THAT THE APPELLANT ITSELF OFFERED THE DIS ALLOWANCE U/S 43B DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS THE EMPLOYE ES CONTRIBUTION TO CPEI GPF COULD NOT BE DEPOSITED WITHIN THE DUE DATE OF FILIN G INCOME TAX RETURN BY PROVIDING THE DETAILS THEREOF. IT IS ALSO SEEN THAT EMPLOYEES' CONTRIBUTION TO CPFI GPF HAS BEEN DEPOSITED BY THE APPELLANT IN SUBSEQUENT YEARS. THEREFORE, THE DISALLOWANCE THOUG H SUSTAINED IN THE RELEVANT ASSESSMENT YEARS AS NOT DEPOSITED WITH DUE DATE SHOULD NOT LEAD TO LEVY OF FURTHER PENALTY U/S 271(L) OF THE INCOME TAX ACT. FOR THIS PROPOSITION, I RELY ON THE DECISION OF HON'BLE SUPREME COURT IN CIT VS. PODAR CEME NT P. LTD. 92 TAXMAN 541 WHEREIN IT WAS LAID DOWN THAT AT PROVISIONS OF TH E I NCOME TAX ACT COULD NOT CONSTRUED IN A MANNER TO MAKE THEM AS INSTRUMENT OF SUPPRESSION. I ALSO RELY ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THECASE OF MOHD. ATIQ V S. ITO 46 ITR 4 52 WHEREIN IT WAS HELD THAT MERE FACT THAT AN EXPLANATION OFFERED BY THE ASSESSEE MAY HAVE BEEN D ISBELIEVED DOES NOT BY ITSELF WARRANT THE IMPOSITION OF PENALTY. I ALSO RELY ON THE DECISION OF HON'BLE SUPREME COURT ON THE CASE OF HINDUSTAN STEE L LTD. (SUPRA) WHEREIN.IT WAS HELD THAT PENALTY SHOULD NOT ORDINAR ILY BE IMPOSED UNLESS. THE PARTY EITHER ACTED DELIBERATELY. IN DEF IANCE OF LAW OR WAS GUILTY CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED I II CONSCIOUS DISREGARD OF ITS OBLIGATION. THE DECISION OF THE HON 'BLE SUPRE ME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD (SUPRA) WHEREIN IT WAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABL E IN LAW BY ITSELF' WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE IS APPLICABLE TO THE APPELLANT'S CASE. FUR THER, IT IS SETTLED LAW THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND ADDITION MADE IN QUANTUM PROCEEDINGS IS NOT CONCLUSIVE IN PE NALTY PROCEEDINGS AND THEREFORE, THE CONFIRMATION OF ASSESSMENT ORDER ITS ELF CANNOT BE CONSIDERED TO BE A SOLE GOVERNING FACTOR TO LEVY PENALTY. THEREFO RE, THE PENALTY LEVIED U/S 271(1)(C) OF THE LT. ACT OF RS.53,00,000/- AND RS.2 3,00,000/- FOR THE A.YS. 2003-04 AND 2004-05 IS DELETED. 5. IN THE RESULT, THE APPEAL IS ALLOWED. 5. 12 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL AVAILABLE ON RECORDS, WE FIND THAT FIRSTLY , THE ASSESSEE, DURING ASSESSMENT PROCEEDINGS, ITSELF OFFERED THE D ISALLOWANCE U/S 43B AS THE EMPLOYEES CONTRIBUTION AND THE SAME WAS DEPOSITED SUBSEQUENTLY. IN SUCH A SITUATION, IT AUT OMATICALLY DOES NOT LEAD TO LEVY OF PENALTY U/S 271(1) FOR WH ICH WE FIND SUPPORT FROM THE DECISION FROM HONBLE APEX COURT I N CIT VS. PODAR CEMENT P. LTD. (92 TAXMAN 541) WHEREIN IT WAS HELD THAT THE PROVISIONS OF I.T. ACT COULD NOT BE CONSTR UED IN A MANNER TO MAKE THEM AS INSTRUMENT OF OPPRESSION. TH E RATIO LAID DOWN IN MOHD. ATIQ VS. ITO BY HONBLE ALLAHABA D HIGH COURT ALSO GOES IN FAVOUR OF THE ASSESSEE. THE ASSE SSEE IS FURTHER FORTIFIED BY THE DECISION FROM HONBLE APEX COURT IN HINDUSTAN STEEL LTD. (SUPRA) WHEREIN IT WAS CLEARLY HELD THAT PENALTY SHOULD NOT ORDINARILY BE IMPOSED UNLESS THE RE IS DELIBERATE DEFIANCE OF LAW BY THE ASSESSEE OR THERE IS A CONDUCT OF CONTUMACIOUS OR DISHONEST OR CONSCIOUS D ISREGARD OF ITS OBLIGATION. THE DECISION IN THE CASE OF RELI ANCE PRODUCTS P. LTD. (322 ITR 158) ALSO COMES TO RESCUE OF THE A SSESSEE 13 ASSESSEE WHEREIN VIDE ORDER DATED 17.3.2010, THE HO NBLE APEX COURT HELD THAT MERELY BECAUSE THE ASSESSEE HA S CLAIMED EXPENDITURE WHICH WAS NOT ACCEPTED OR WAS N OT ACCEPTABLE TO THE REVENUE BY ITSELF WOULD NOT ATTRA CT PENALTY U/S 271(1) OF THE ACT. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SKYLINE AUTO PRODUCTS P. LTD. (271 ITR 335) (MP) EVEN WENT TO THE EXTENT THAT WHERE THE MISTAKE IS B ONA FIDE, SUCH A GROUND CANNOT BE A GOOD GROUND FOR IMPOSITIO N OF PENALTY U/S 271(1) OF THE ACT. IN THESE APPEALS, W E FURTHER FIND THAT THERE IS UNCONTROVERTED FINDING THAT THE ACTUAL AMOUNT WHICH WAS RECOVERED IN FY 2002-03, BUT WAS NOT PAID WAS RS.86,51,154/- WHICH INCLUDES THE AMOUNT OF RS.82.3 6 LACS ON ACCOUNT OF CPF AMOUNT AND OTHER STATUTORY LIABILITI ES WHICH WERE SUBSEQUENTLY PAID AND THERE WAS NO OUTSTANDING WHICH REMAINS UNPAID AND ONLY THE FUND SHORTAGE CREATED I RREGULARITY IN PAYMENTS. THUS, THERE WAS NO MALA FIDE INTENTION FOR EVASION OF TAX. EVEN OTHERWISE, THE ASSESSEE IS A S TATUTORY AUTHORITY AND NO PERSON IS INTERESTED TO EVADE ANY TAX OR TO FURNISH INACCURATE PARTICULARS ESPECIALLY WHEN THE DETAILS OF 14 EXPENDITURE AS WELL AS OF INCOME WERE DULY FURNISHE D IN THE RETURN AND THESE DETAILS ITSELF WERE NOT FOUND INAC CURATE, THEREFORE, THESE CANNOT BE VIEWED AS CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE REVENUE AUTHORITIES T O ACCEPT THE CLAIM OR NOT WHICH BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1) OF THE ACT. FOR IMPOSING PENALTY U/S 271(1) , EITHER THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, CONSEQUENTLY, WE FIND NO IN FIRMITY IN THE STAND OF LD. CIT(A). THEREFORE, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. FINALLY, BOTH THE APPEALS OF REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF THE HEARING ON 2.11.2011. 6. SD SD (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04.11.2011 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE