, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. !./ I.T.A. NO.456/AHD/2013 A.Y. 1995-96 2. !./ I.T.A. NO.457/AHD/2013 A.Y. 1996-97 NARAN LALA PRIVATE LTD. NEAR RAILWAY STATION NAVSARI 396 445 / VS. ASSISTANT CIT NAVSARI CIRCLE NAVSARI & !./'( !./ PAN/GIR NO. : AAACN 7719 C ( &) / // / APPELLANT ) .. ( *+&) / RESPONDENT ) &) , / APPELLANT BY : SHRI NIMISH SHAH, AR *+&) - , / RESPONDENT BY : SHRI J.P. JHANGID, SR.D.R. ' . - $/ / / / / DATE OF HEARING : 02/04/2014 012 - $/ / DATE OF PRONOUNCEMENT : 11/04/2014 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE SEPARATE ORDERS OF THE OF THE LD.COMMISSIONER OF I NCOME TAX(APPEALS)- VALSAD (CIT(A) FOR SHORT) IDENTICALLY DATED 14/11/2012 P ERTAINING TO ASSESSMENT YEARS (AYS) 1995-96 & 1996-97. THE ASSE SSEE HAS RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL:- AY 1995-96 1. THE ORDER PASSED BY CIT (APPEALS) IS BAD IN LAW AND ON FACTS AND HENCE, IT IS SUBMITTED THAT THE SAME BE CANCELLED A ND BE SUITABLY MODIFIED. ITA NOS.456 & 457/A HD/2013 NARAN LAL PVT.LTD. VS. ASST.CIT ASST.YEARS 1995-96 & 1996-97 - 2 - 2. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING THE ACTION OF THE AO IN IMPOSING PENALTY U/S.271(1)(C) FOR A SUM OF RS.6,87,420/- (RS.7,81,357/- FOR AY 1996-97) FOR THE ALLEGED DEFAULT OF FURNISHING INACCURATE PARTICULARS OF INC OME WITH RESPECT TO ITS CLAIM FOR DEDUCTION U/S.35AB OF THE I.T. ACT. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACT S OF THE CASE IN UPHOLDING THE ACTION OF THE AO IN IMPOSING PENALTY U/S.271(1)(C) DISREGARDING THE RATIO OF THE FOLLOWING JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA WHICH WERE SPECIFICALLY BROU GHT TO THE NOTICE OF THE CIT(A). A) RELIANCE PETROPRODUCTS PRIVATE LIMITED 322 ITR 158 (SC) B) KRISHNA ELECTRICALS VS. STATE OF TAMILNADU & A NR. (2009) 23 VST 249 C) CIT VS. ATUL MOHAN BINDAL (2009) 225 CTR 248 (S C) THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACT S OF THE CASE IN UPHOLDING THE ACTION OF THE AO IN IMPOSING PENALTY U/S.271(1)(C) DISREGARDING THE FACT THAT THE DISALLOWANCE U/S.35A B WITH RESPECT TO WHICH THE PENALTY IN QUESTION HAD BEEN LEVIED WAS M ADE BY WAY OF PRIMA FACIE ADJUSTMENT U/S.143(1) OF THE INCOME TAX ACT WHILE PASSING INTIMATION U/S.143(1)(A) ON 25.3.1996 AND THEREFORE , IN VIEW OF EXPLANATION-6 TO SECTION 271(1)(C), THE IMPUGNED PE NALTY IS NOT SUSTAINABLE IN THE EYES OF LAW. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE SETTLED POSITION OF LAW, THE LEARNED CIT(A) OUGHT TO HAVE C ANCELLED THE PENALTY U/S.271(1)(C) IMPOSED BY THE ASSESSING OFFICER. IT IS THEREFORE, PRAYED THAT THE ORDER U/S.271(1)(C ) IMPOSING PENALTY OF RS.6,87,420/- FOR A.Y. 1995-1996 (RS.7,81,357/- FOR AY 1996-97) PASSED BY THE AO MAY PLEASE BE CANCELLED. 3. YOUR APPELLANT PRAYS FOR LEAVE TO ADD, AMEND AN D/OR ALTER ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING OF THE APPE AL. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL FOR AY 1 995-96 IN ITA NO.456/AHD/2013. ITA NOS.456 & 457/A HD/2013 NARAN LAL PVT.LTD. VS. ASST.CIT ASST.YEARS 1995-96 & 1996-97 - 3 - 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 26.12.2008, THEREBY THE ASSESSING OFFICER(AO) MADE ADDITION/DISALLOWANCE U/S.35AB OF THE ACT AMOUNTING TO RS.14,94,390/- AND ALSO INITIATED THE PENALTY PROCEEDINGS. IN QUA NTUM APPEAL, THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE UPTO THE STAG E OF THE TRIBUNAL. THEREAFTER, THE AO LEVIED PENALTY OF RS.6,87,420/-. 3. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ORIGINAL RETURN WAS FILED ON 30/11/1995 DECLARING TOTAL INCOME OF R S.28,5,623/-. THE STATEMENT OF TOTAL INCOME WAS ANNEXED ALONG WITH TH E RETURN AS PER ANNEXURE-1 AS AGAINST THE INTIMATION U/S.143(1)(A) OF THE ACT WAS PASSED ON 25/03/1996, WHEREBY CLAIM U/S.35AB RS.15,08,958/ - WAS DISALLOWED AND THE AO VIDE HIS ORDER DATED 26/12/2008 ADDED A SUM OF RS.14,96,390/- U/S.35AB OF THE ACT. SUBSEQUENTLY, T HE AO LEVIED A PENALTY OF RS.6,87,420/- U/S.271(1)(C) OF THE ACT. HE SUBMITTED THAT THE ADDITION HAS BEEN MADE U/S.143(1)(A) OF THE ACT IN TERMS OF EXPLANATION- 6 TO SECTION 271(1)(C) OF THE ACT, NO PENALTY IS LE VIABLE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE PARTICULARS HAVE BEEN DULY DISCLOSED IN THE STATEMENT OF TOTAL INCOME AND, HEN CE, NO PENALTY CAN BE LEVIED AND ONLY CLAIM U/S.35AB WAS DISALLOWED BEING NOT ADMISSIBLE. IN SUPPORT OF THIS CONTENTION, HE RELIED UPON THE JUDG EMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETR OPRODUCTS PVT.LTD. (2010) REPORTED AT 322 ITR 158 (SC). ITA NOS.456 & 457/A HD/2013 NARAN LAL PVT.LTD. VS. ASST.CIT ASST.YEARS 1995-96 & 1996-97 - 4 - 4. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT MAKING A WRONG CLAIM, AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT THE ASSESSEE HAS DELIBERATELY MADE WRONG CLAIM , HENCE THE LEVY OF PENALTY IS JUSTIFIED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE INTIMATION U/S.143(1)(A) OF THE ACT, THE ADJUSTMENTS HAVE BEEN MADE TO THE EXTENT OF RS.15,08,458/- DISALLOWING TH E CLAIM OF THE ASSESSEE. IN HIS STATEMENT OF TOTAL INCOME, THE AS SESSEE HAS CLAIMED DEDUCTION AMOUNTING TO RS.18,10,750/- OUT OF WHICH RS.15,08,958/- HAS BEEN DISALLOWED VIDE ADJUSTMENT MADE U/S.143(1)(A) OF THE ACT. THIS FACT IS NOT DISPUTED BY THE REVENUE. AS PER EXPLANATION -6 TO SECTION 271(1)(C) OF THE ACT, WHERE ANY ADJUSTMENT IS MADE IN THE INCOME OR LOSS DECLARED IN THE RETURN UNDER THE PROVISO TO CLAUSE (A) OF SUB-SECTION (1) OF THIS SECTION 143 AND ADDITIONAL TAX CHARGED UNDER T HAT SECTION, THE PROVISIONS OF THIS SUB-SECTION SHALL NOT APPLY IN R ELATION TO THE ADJUSTMENT SO MADE. MOREOVER, THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. (2010) REPORTED AT 322 ITR 158 (SC) HAS HELD AS UNDER:- 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS . IN WEBSTER'S DICTIONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT.' ITA NOS.456 & 457/A HD/2013 NARAN LAL PVT.LTD. VS. ASST.CIT ASST.YEARS 1995-96 & 1996-97 - 5 - WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTI CULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND T O BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271(1)(C) OF THE A CT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 5.1. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE APEX COURT READ WITH EXPLANATION-6 TO SECTION 271(1)(C) , THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER LEVYING THE PENALTY. HENCE, T HE AO IS DIRECTED TO DELETE THE PENALTY. THUS, THIS GROUND OF ASSESSEE S APPEAL IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR AY 1995-96 IS ALLOWED. 7. NOW, WE TAKE UP THE ASSESSEES APPEAL FOR AY 199 6-97 IN ITA NO.457/AHD/2013. 7.1. WE HAVE HEARD BOTH THE PARTIES. IN THIS APPEAL , THE FACTS ARE IDENTICAL TO THE FACTS OF ASSESSEES APPEAL IN ITA NO.456/AHD/2013 FOR AY 1995-96(SUPRA). IN THIS YEAR, THE ASSESSEE IN THE NOTE ENCLOSED WITH STATEMENT OF DEPRECIATION HAS STATED THAT DEDU CTION U/S.35AB OF THE ACT ON THE BASIS OF PRINCIPLE LAID DOWN IN THE CASE -LAWS AS MENTIONED IN NOTE. HOWEVER, THE CLAIM WAS REJECTED UNDER SECTIO N 143(1)(A) BY HOLDING THAT THE CASE-LAWS ARE NOT APPLICABLE. U NDER THESE FACTS AND IN ITA NOS.456 & 457/A HD/2013 NARAN LAL PVT.LTD. VS. ASST.CIT ASST.YEARS 1995-96 & 1996-97 - 6 - VIEW OF THE EXPLANATION-6 TO SECTION 271(1)(C) OF T HE ACT AS WELL AS FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX C OURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA), WE HEREBY D IRECT THE AO TO DELETE THE PENALTY. 8. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/ 04 /2014 6/.., .../ T.C. NAIR, SR. PS 3 - *$7 872$ 3 - *$7 872$ 3 - *$7 872$ 3 - *$7 872$/ COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. !! $ '9 / CONCERNED CIT 4. '9() / THE CIT(A)-VALSAD 5. 7 #: *$ , , / DR, ITAT, AHMEDABAD 6. :;< =. / GUARD FILE. 3' 3' 3' 3' / BY ORDER, +7$ *$ //TRUE COPY// > >> >/ // / !' !' !' !' ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD