M/s. Oil Industry Development Board, New Delhi V. DCIT, New Delhi

ITA 4662/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8483 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 31-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 22-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUSHEEL KUMAR GUPTA; D C GARG CAS
• Keywords: Depreciation; Principle of natural justice; Difference of opinion; Unabsorbed depreciation; Set aside
• Section: 271(1)(c); 133A; 14A; 205; 250; 27; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SHRI BHAVNES H SAINI , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO S .4662 , 4663 & 4664 /DE L/ 2014 ASSESSMENT YEAR S : 2005 - 06 , 2006 - 04 & 2007 - 08 M/S. OIL INDUSTRY DEVELOPMENT BOARD, 301, WORLD TRADE CENTRE, BABAR ROAD, NEW DELHI VS. DCIT, CIRCLE - 31(1), NEW DELHI PAN : AAAJO0032A (APPELLANT) (RESPONDENT) APPELLANT BY S/SHRI SUSHEEL KUMAR GUPTA & D.C. GARG, CAS RESPONDENT BY SMT. RINKU SINGH, SR. DR ORDER PER O.P. KANT, A .M. : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T COMMON ORDER DATED 16/23.06. 2014 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XXVI, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2007 - 08, IN RELATION TO PENALTY LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF THE INCOME UNDER SECTION 27 1 ( 1 )(C) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ). AS COMMON ISSUE OF DISPUTE IS INVOLVED IN ALL THE THREE APPEALS , SAME WERE HEARD TOGETHER AND DATE OF HEARING 20.03.2019 DATE OF PRONOUNCEMENT 04.04.2019 2 ITA NO. 4662 , 4663 & 4664 /DEL/2014 DISPOSED OFF, BY WAY OF THIS CONSOLIDATED ORDER FOR CONVENIENCE AND AVOID REPETITION OF FACTS. 2. THE GRO UNDS OF APPEAL IN IT A NO.4662/ D EL/2014 FOR ASSESSMENT YEAR 2005 - 06 ARE REPRODUCED AS UNDER: 1. THAT THE LD. CIT BOTH ON FACTS AND IN LAW HAD ERRED IN PASSING THE PENALTY ORDER U/S 271(1)(C). 2. IT IS CONTENDED THAT THE APPELLANT BOARD HAD NEITHER CONCEALED NOR FURNISHED ANY INACCURATE PARTICULAR SO AS TO ATTRACT PROVISIONS OF SECTION 271(L)(C) OF THE IT ACT. HENCE THE IMPUGNED PENALTY ORDER IS WRONG AND BAD IN LAW. 3. IT IS CONTENDED THAT THE CLAIM OF BENEFIT OF WEIGHTED DEDUCTION UNDER SECTION 35 BEING AN INCENTIVE AND HAVING MADE TO RECOGNIZED INSTITUTION UNDER SECTION 35 CANNOT COME UNDER THE PURVIEW OF PROVISIONS OF SECTION 271(L)(C), SINCE IT IS NEITHER CONCEALMENT NOR FURNISHING OF ANY IN ACCURATE PARTICULARS. 4. IT IS CONTENTED THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(L)(C) HELD IN THE CASE OF CIT VS. RELIANCE PETR O PRODUCTS (P.) LTD. [CIVIL APPEAL NO. 2463 OF 2010, DATED 17.03.2010 (SC). 5. THE EXPRESSION 'CONCEALMENT OF INCOME' IMPLIES THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THE EXPRESSION 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH, IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS THE TAXABILITY OF INCOME, ADMISSIBILITY OF A DED UCTION AND INTERPRETATION OF LAW. THE CLAIM OF THE BENEFIT OF THE DEDUCTION UNDER SECTION 35 CANNOT BE AMOUNT TO AN INCORRECT CLAIM AND WILL NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 6. THAT LD. CIT( A) HAS COMPLETELY OVERLOOKED THE ORDERS OF LD CIT(A) DT 23.04.2009 AND ITAT 'E' BENCH DT. 16.09.2009 PERTAINING TO A.Y. 03 - 04 IN THE APPELLANTS OWN CASE WHICH ALLOWED FULL RELIEF FROM THIS EXORBITANT PENALTY ON DISALLOWANCE MADE U/S 35 .THUS LD. CIT(A) HAS ERRED IN OVERRIDING THE COVERED MATTER THUS DEVOID OF PRINCIPLES OF NATURAL JUSTICE. IT IS PERTINENT TO MENTION HERE THAT PETITION U/S 154 PLACING RELIANCE ON APEX COURT JUDGMENT IN THE CASE OF M/S HONDA SIEL POWER PRODUCTS LTD. V. CIT (2007) 295 ITR 46 6, HAS ALREADY BEEN MOVED ON 3 ITA NO. 4662 , 4663 & 4664 /DEL/2014 14 - 07 - 2014 AND ITS DISPOSAL BY LD. CIT(A) IS AWAITED HOWEVER TO RESPECT LIMITATIONS IN FILLING APPEAL , FORM 36 ALONGWITH GROUNDS OF APPEAL HAVE BEEN COMPLETED AND FILED BEFORE YOUR HONOURS. 7. THAT WITH COMPLETE DISREGARD TO JUDICIAL PRONOUNCEMENTS HOLDING THAT PENALTY PROCEEDINGS SHOULD BE AN INDEPENDENT FACT FINDING , THE LD. CIT(A) HAS ERRED IN IMPOSING PENALTY BECAUSE APPELLANT HAD NOT PREFERRED ANY APPEAL ON DISALLOWANCE OF RS 5,23,00,000.00 U/S 35 IN THE QUANTUM CASE. 8. THAT THE LD. CIT(A) HAS ERRED IN REALIZING THAT LD. ACIT HAD SUMMARILY DISALLOWED THE CLAIM U/S 35 OF RS. 5,23,00,000.00 CONSIDERING THE SAME AS APPLICATION OF INCOME AS WAS FOR DISALLOWANCE OF RS. 78,14,68,000.00 AND ACCORDINGLY INITIATED PENALTY IN QU ANTUM ORDER. THEN BY AND EXPENSES OF OIDB WERE NO MORE CONSIDERED AS APPLICATION OF INCOME BUT ALLOWABLE U/S 36(L)(XII) OF THE INCOME TAX ACT, 1961 THUS LD. ACIT WAS DUTY BOUND TO REVISE THE REASONING IN SHOW CAUSE BEFORE HOLDING THE APPELLANT GUILTY UNDER EXPLANATION (1) OF 271 (L)(C) AND WHICH HE HAS FAILED TO DO AND LD CIT(A) PERPETUATED THE FAULT BY UPHOLDING THE PENALTY ORDER BECAUSE WHAT IS IMPORTANT IS THE MIND SET OF LD. ACIT AT THE TIME OF COMPLETING QUANTUM ASSESSMENT AND IF IT REQUIRED A REVISIT OF VERY REASONING IN INITIATION U/S 271(L)(C) BY ISSUE OF REVISED SHOW CAUSE, IT SHOULD HAVE BEEN DONE HENCE A TECHNICAL LAPSE. 9. THAT APPELLANT CRAVES TO ALTER, AMEND, MODIFY, ADD OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2.1 THE G ROUNDS OF APPEAL RAISED IN ITA NO. 4663/D EL/2014 FOR ASSESSMENT YEAR 2006 - 07 ARE REPRODUCED AS UNDER: 1. THAT THE LD. CIT BOTH ON FACTS AND IN LAW HAD ERRED IN PASSING THE PENALTY ORDER U/S 271(L)(C). 2. IT IS CONTENDED THAT THE APPELLANT BOARD HAD NEI THER CONCEALED NOR FURNISHED ANY INACCURATE PARTICULAR SO AS TO ATTRACT PROVISIONS OF SECTION 271(1 )(C) OF THE IT ACT. HENCE THE IMPUGNED PENALTY ORDER IS WRONG AND BAD IN LAW. 3. IT IS CONTENDED THAT THE CLAIM OF BENEFIT OF WEIGHTED DEDUCTION UNDER SECTION 35 BEING AN INCENTIVE AND HAVING MADE TO RECOGNIZED INSTITUTION UNDER SECTION 35 CANNOT COME UNDER THE PURVIEW OF PROVISIONS OF SECTION 271(L)(C), SINCE IT IS NEITHER CONCEALMENT NOR FURNISHING OF ANY INACCURATE PARTICULARS. 4. IT IS CONTENTED TH AT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO 4 ITA NO. 4662 , 4663 & 4664 /DEL/2014 REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(L)(C) HELD IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P.) LTD. [CIVIL APPEAL NO. 2463 O F 2010, DATED 17.03.2010 (SC). 5. THE EXPRESSION 'CONCEALMENT OF INCOME' IMPLIES THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THE EXPRESSION 'FURNISHING OF INACCURATE PARTICULARS OF INC OME' IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH, IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS THE TAXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW. THE CLAIM O F THE BENEFIT OF THE DEDUCTION UNDER SECTION 35 CANNOT BE AMOUNT TO AN INCORRECT CLAIM AND WILL NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 6. THAT LD. CIT(A) HAS COMPLETELY OVERLOOKED THE ORDERS OF LD CIT(A) DT 23.04.2009 AND ITAT 'E' BENCH DT. 16.09.2009 PERTAINING TO A.Y. 03 - 04 IN THE APPELLANTS OWN CASE WHICH ALLOWED FULL RELIEF FROM THIS EXORBITANT PENALTY ON DISALLOWANCE MADE U/S 35.THUS LD. CIT(A) HAS ERRED IN OVERRIDING THE COVERED MATTER THUS DEVOID OF PRINCIPLES OF NATURAL JUSTICE. IT IS PERTINENT TO MENTION HERE THAT PETITION U/S 154 PLACING RELIANCE ON APEX COURT JUDGMENT IN THE CASE OF M/S HONDA SIEL POWER PRODUCTS LTD. V. CIT (2007) 295 ITR 466, HAS ALREADY BEEN MOVED ON 14 - 07 - 2014 AND ITS DISPOSAL BY LD. CIT(A) IS AWAITED HOWEV ER TO RESPECT LIMITATIONS IN FILLING APPEAL , FORM 36 ALONGWITH GROUNDS OF APPEAL HAVE BEEN COMPLETED AND FILED BEFORE YOUR HONOURS. 7. THAT WITH COMPLETE DISREGARD TO JUDICIAL PRONOUNCEMENTS HOLDING THAT PENALTY PROCEEDINGS SHOULD BE AN INDEPENDENT FACT FINDING , THE LD. CIT(A) HAS ERRED IN IMPOSING PENALTY BECAUSE APPELLANT HAD NOT PREFERRED ANY APPEAL ON DISALLOWANCE OF RS 5,50,00,000.00 U/S 35 IN THE QUANTUM CASE. 8. THAT THE LD. CIT(A) HAS ERRED IN REALIZING THAT LD. ACIT HAD SUMMARILY DISALLOWED TH E CLAIM U/S 35 OF RS. 5,50,00,000.00 CONSIDERING THE SAME AS APPLICATION OF INCOME AS WAS FOR DISALLOWANCE OF RS. 89,51,00,000.00 AND ACCORDINGLY INITIATED PENALTY IN QUANTUM ORDER. THEN BY AND EXPENSES OF OIDB WERE NO MORE CONSIDERED AS APPLICATION OF INC OME BUT ALLOWABLE U/S 36(L)(XII) OF THE INCOME TAX ACT, 1961 THUS LD. ACIT WAS DUTY BOUND TO REVISE THE REASONING IN SHOW CAUSE BEFORE HOLDING THE APPELLANT GUILTY UNDER EXPLANATION (1) OF 271(L)(C) AND WHICH HE HAS FAILED TO DO AND LD CIT(A) PERPETUATED T HE FAULT BY UPHOLDING THE PENALTY ORDER BECAUSE WHAT IS IMPORTANT IS THE MIND SET OF LD. ACIT AT THE TIME OF COMPLETING QUANTUM ASSESSMENT AND IF IT REQUIRED A REVISIT OF VERY REASONING IN INITIATION U/S 271(L)(C) BY ISSUE OF REVISED SHOW CAUSE, IT SHOULD HAVE BEEN DONE HENCE A TECHNICAL LAPSE. 5 ITA NO. 4662 , 4663 & 4664 /DEL/2014 9. THAT APPELLANT CRAVES TO ALTER, AMEND, MODIFY, ADD OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 2.2 THE G ROUNDS OF APPEAL RAISED IN IT A NO. 4664/12/2014 FOR ASSESSMENT YEAR 2007 - 08 ARE REPRODUC ED AS UNDER. 1. THAT THE LD. CIT HAS ERRED BOTH ON FACTS AND IN LAW IN FRAMING ORDER U/S 271(L)(C). 2. IT IS CONTENDED THAT THE APPELLANT BOARD HAD NEITHER CONCEALED NOR FURNISHED ANY INACCURATE PARTICULAR SO AS TO ATTRACT PROVISIONS OF SECTION 271(L)( C) OF THE IT ACT. HENCE THE IMPUGNED PENALTY ORDER IS WRONG AND BAD IN LAW. 3. IT IS CONTENDED THAT THE CLAIM OF BENEFIT OF WEIGHTED DEDUCTION UNDER SECTION 35 BEING AN INCENTIVE AND HAVING MADE TO RECOGNIZED INSTITUTION UNDER SECTION 35 CANNOT COME UNDE R THE PURVIEW OF PROVISIONS OF SECTION 271 (L)(C), SINCE IT IS NEITHER CONCEALMENT NOR FURNISHING OF ANY INACCURATE PARTICULARS. 4. IT IS CONTENTED THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271 (L)(C) HELD IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P.) LTD. [CIVI L APPEAL NO. 2463 OF 2010, DATED 17.03.2010 (SC). 5. THE EXPRESSION 'CONCEALMENT OF INCOME' IMPLIES THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THE EXPRESSION 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH, IT DOES NOT EXTEND TO SUBJECTIVE AREAS SUCH AS THE TAXABILITY OF INCOME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW. THE MAKING OF AN INCORRECT CLAIM DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 6. THAT LD. CIT(A) HAS COMPLETELY OVERLOOKED THE ORDERS OF LD CIT(A) DT 23.04.2009 AND IT AT 'E' BENCH DT . 16.09.2009 PERTAINING TO A.Y. 03 - 04 IN THE APPELLANTS OWN CASE WHICH ALLOWED FULL RELIEF FROM THIS EXORBITANT PENALTY ON DISALLOWANCE MADE U/S 35. THUS LD. CIT(A) HAS ERRED IN OVERRIDING THE COVERED MATTER THUS DEVOID OF PRINCIPLES OF NATURAL JUSTICE. IT IS PERTINENT TO MENTION HERE THAT PETITION U/S 154 HAS ALREADY BEEN MOVED ON 14 - 07 - 2014 AND ITS DISPOSAL BY LD. CIT(A) IS AWAITED HOWEVER TO RESPECT LIMITATIONS IN FILLING APPEAL , FORM 36 ALONGWITH 6 ITA NO. 4662 , 4663 & 4664 /DEL/2014 GROUNDS OF APPEAL HAVE BEEN COMPLETED AND FDED BEFORE YOUR HONOURS. 7. AS THE PENALTY IMPOSED ON THE APPELLANT HAS BEEN FOR VARIED REASONING AND WHICH ARE ALTOGETHER DIFFERENT FROM THE 'APPLICATION OF INCOME' REASONING GIVEN BY LD ACIT IN QUANTUM ASSESSMENT ORDER FOR AY 07 - 08 DT 19.12.2009 THUS IT CANNOT PA SS TEST OF LAW BECAUSE: A) NEITHER CIT(A) IN HIS ORDER DT 22.12.2011 WHILE UPHOLDING DISALLOWANCE UNDER U/S 35 OF RS 3,74,06,800.00 INITIATED REVISED SHOW CAUSE DUE TO CHANGED REASONING FOR DENIAL OF SUCH CLAIM BEFORE TRIGGER OF PENALTY U/S 271(L)(C). B) NOR LD ACIT WHILE GIVING APPEAL EFFECT REVISED HIS SHOW CAUSE FOR STILL MAINTAINING HIS INTENTION TO INITIATE PENALTY U/S 271(L)(C) AS LD. CIT(A) THROUGH HIS ORDER DT 22.12.2011 HAD REASONING OF DISALLOWANCE. 8. THE LD. CIT(A) HAS ERRED IN UPHOLDING P ENALTY U/S 27(L)(C) FOR DISALLOWANCE U/S 14A OF RS. 40,69,000.00 WHEN IT FALLS IN THE AMBIT OF DIFFERENCE OF OPINION. 9. THE LD. CIT(A) HAS ERRED IN UPHOLDING PENALTY U/S 271(L)(C) FOR DISALLOWANCE U/S 14A AS IT WAS TOO PREMATURE AT THAT STAGE AS EVEN RU LE 8D ETC WERE NOTIFIED ONLY ON 24.03.2008. 10. THAT APPELLANT CRAVES TO ALTER , AMEND ,MODIFY ,ADD OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. B RIEFLY STATED FACTS OF THE CASE ARE THAT IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2005 - 06, THE ASSESSEE CLAIMED DEDUCTION U NDER SECTION 36(1)(XII) OF THE ACT , AMOUNTING TO RS.78,14,68, 000/ - AND ALSO CLAIMED DEDUCT ION UNDER SECTION 35(1) OF THE A CT AMOUNTING RS. 5,23,00,000/ - . THE ASSESSING OFFICER DECLINED BOTH THE DEDUCTION CLAIMED BY THE ASSESSEE. ON FURTHER APPEAL, THE LD. CIT(A) DELETED THE DISALLOWANCE OF RS. 78,14,68,000/ - ON ACCOUNT OF DEDUCTION U NDER SECTION 36(1)(XII) OF THE A CT BUT SUS TAINED THE DISALLOWANCE OF RS. 5,23,00,000/ - UNDER SECTION 35(1) OF THE A CT. IN ASSESSMENT Y EAR 2006 - 07 THE ASSESSING OFFICE R ALSO MADE DISALLOWANCE OF RS. 5,50,00,0 00/ - UNDER SECTION 35(1) OF THE A CT . IN ASSESSMENT 7 ITA NO. 4662 , 4663 & 4664 /DEL/2014 YEAR 2007 - 08, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 3,74,06,800 / - UNDER SECTION 35 (1) AND DISALLOWANCE UNDER SECTION 14A OF THE A CT AMOUNTING TO RS. 40, 69,000 / - . THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THE SAID FINDING OF THE LD. CIT(A) ON THE ISSUE OF DISALLOWS UNDE R SECTION 35(1) OF THE A CT. 3.1 CONSEQUENT TO THE APPEAL GIVING EFFECT UNDER SECTION 250/143(3) OF THE A CT, THE LD. ASSESSING OFFICER ISSUED SHOW - CAUSE FOR P E N A L T Y UNDER SECTION 27 (1)(C) OF THE A CT IN RESPECT OF THE DISALLOWANCE AMOUNTING TO RS. 5, 23,00,000/ - , RS. 5, 50,00,000/ - AND RS.4,14,75,800/ - IN ASSESSMENT YEAR 2005 - 06, 2006 - 07 AND 2007 - 08 RESPECTIVELY. 3.2 BEFORE THE ASSESSING OFFICER, IT WAS CLAIMED ON BEHALF OF THE ASSESSEE THAT AT THE TIME OF FILING RETURN OF INCOME FOR THE YEARS UNDER CONSIDERATION, THE EARLIER YEARS CASES FOR A.Y. 2003 - 04 AND 2004 - 05 WERE PENDING BEFOR E THE TRIBUNAL AND THUS THE ASSESSEE BOARD HAD NO OPTION BUT TO CLAIM BOTH THE DEDUCTION AND IN THE EVENT SECTION 36(1)(XII) NOT BEEN ALLOWED, THE DEDUCTION UNDER SECTION 35 WAS TO BE ALLOWED BY THE DEPARTMENT. BUT THE ASSESSING OFFICER DISALLOWED BOTH THE CLAIM OF DEDUCTION UNDER SECTI ON 36(1)(XII) AND 35(1) OF THE A CT. T HE TRIBUNAL HAS ALLOWED THE BENEFIT OF DEDUCTION U NDER SECTION 36(1)(XII) OF THE A CT. THE ASSESSEE SUBMITTED THAT HAD THE BENEFIT OF THE DECISION OF THE TRIBUNAL AVAILABLE TO THE ASSESSEE, IT WOULD NOT HAVE CLAIMED THE DED UCTION UNDER SECTION 35 (1) OF THE A CT. ACCORDING TO THE ASSESSEE, AT THE TIME OF FILING OF THE RETURN OF INCOME, THE FATE OF ALLOW ABILITY OF DEDUCTION UNDER SECTION 36 (1)(XII) WAS NOT KNOWN/WAS NOT CLEAR AND THE ASSESSEE F ILED ITS RETURN OF INCOME BY WAY OF NORM AL CLAIM AND THUS THE ASSESSEE B OARD NEITHER FURNISHED INACCURATE PARTICULARS NOR CONCEALED ANY OF ITS INCOME 8 ITA NO. 4662 , 4663 & 4664 /DEL/2014 SO AS TO ATTRACT THE PROVISION OF SECTION 271(1)(C) OF THE A CT. THE LD. COUNSEL SUBMITTED THAT THE TRIBUNA L IN THE INSTANT YEAR S HAS ALSO ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 36(1)(XII) TO THE ASSESSE E, REJECTING THE APPEAL OF THE R EVENUE. ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A OF THE A CT ALSO IT WAS SUBMITTED THAT NO INACCURATE PARTICULARS HAVE BEEN FILED BY THE ASSESSEE. 3.3 THE ASSESSING OFFICER, HOWEVER , WAS NOT CONVINCED BY THE SUBMISSION S OF THE ASSESSEE AND FOLLOWING THE JUDICIAL DECISIONS RELIED UPON IN THE PENALTY ORDER, INCLUDI NG THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATIONS PRIVATE L IMITED , 327 IT R 51 , LEVIED THE PENALTY V IDE HIS SEPARATE ORDER ( S ) DA TED 08/03/2013 UNDER SECTION 27 1 (1)(C) OF THE A CT AT THE RATE OF 100% OF THE TAX SOUGHT T O BE E VADED AMOUNTING TO RS.1,76,04, 180/ - , RS.1, 8 5, 13,000/ - AND RS.1,39,60, 754 / - FOR ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2007 - 08 RESPECTIVELY 3.4 ON FURTHER APPEAL, THE LD. CIT(A) UPHELD THE PENALTY IN ALL THE THREE ASSESSMENT YEARS BY WAY OF COMMON ORD ER OBSERVING AS UNDER: 4.7 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED MATERIAL ON THE RECORDS. THE EXPLANATIONS OFFERED BY THE APPELLANT EITHER DURING THE PENALTY OR APPELLATE PROCEEDINGS CANNOT BE CONSIDERED AS A BONAFIDE ONE TO ESCAPE FROM THE RIGOURS OF THE PENALTY PROVISIONS. HERE, DIRECT EVIDENCES TO PROVE THE INTENT OF CONCEALMENT ARE AVAILABLE IN ALL THE THREE YEARS AS THE APPELLANT FAILED TO OFFER ANY PLAUSIBLE EXPLANATION EITHER BEFORE THE AO OR ME REGARDING THE DI SALLOWANCE OF DEDUCTION U/S 35 AND DISALLOWANCE U/S 14A. THE FACTS AND CIRCUMSTANCE OF THESE CASES ESTABLISH THAT THE APPELLANT HAS CONCEALED INCOME AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME IN ALL THE THREE YEARS. IN THE CASE OF SHIV NARAIN KHANN A VS. CIT 107 ITR 542, THE HON'BLE PUNJAB & HARYANA HIGH COURT HAS HELD AS UNDER THAT NO ADDITIONAL MATERIAL IS REQUIRED FOR LEVY OF PENALTY IN ADDITION TO THE MATERIAL FOR WHICH ASSESSMENT IS BASED: 9 ITA NO. 4662 , 4663 & 4664 /DEL/2014 'THE FA CTS OF THE CASE WOULD STARE ANY ONE IN THE FACE. THE LEARNED COUNSEL FOR THE ASSESSEE APPEARS TO BE LABOURING UNDER THE IMPRESSION THAT SOME ADDITIONAL MATERIAL SHOULD ALWAYS BE AVAILABLE FOR THE LEVY OF PENALTY IN ADDITION TO THE MATERIAL ON WHICH THE ASSESSMENT WAS BASED. THERE IS NO BASIS FOR THIS ASS UMPTION. THE VERY SAME MATERIAL CAN FORM THE BASIS FOR THE ASSESSMENT AND PENALTY, DEPENDING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE PRESENT CASE WE ARE SATISFIED THAT THERE WAS ABUNDANT EVIDENCE JUSTIFY THE LEVY OF PENALTY'. 4.8 BY CLAIMING DE DUCTION U/S 35 AND CLAIMING EXPENDITURE IN RESPECT OF INCOME WHICH DOES NOT FORM PART OF INCOME, THE APPELLANT HAS TRIED TO DEFEAT THE REVENUE. IN THE CASE OF KECIAR NATH SANVVAL DASS V/S CIT, 111 ITR 440, HON'BIE PUNJAB & HARYANA HIGH COURT HAS HELD AS UN DER: 'WE DO NOT THINK THAT IT WAS NECESSARY FOR THE TRIBUNAL TO GIVE ANY ADDITIONAL REASONS WHERE THE REASONS GIVEN IN THE ORIGINAL ORDER OF ASSESSMENT THEMSELVES DISCLOSE A SCHEME AIMED AT DEFEATING THE REVENUE. WHERE THE FINDING IS THAT LOSSES WERE FALS ELY CLAIMED BY THE ASSESSES TO SET OFF THE PROFITS MADE BY THE ASSESSEE, THE FINDING THAT THE LOSSES PUT FORWARD WERE FALSE IS SUFFICIENT TO HOLD THAT THERE WAS A SCHEME ON PART OF THE ASSESSEE TO DEFEAT THE REVENUE. THAT WAS SUFFICIENT TO ATTRACT THE PENA LTY PROCEEDINGS UNDER SECTION 271 (L)(C).' 4.9 WHEN A PATENTLY INCORRECT CLAIM IS MADE AND DISALLOWED, PENALTY CAN BE LEVIED ON THE GROUND THAT SUCH INCORRECT CLAIM AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. HERE, IN THE APPELLANT'S CASES; THE CLAIM OF (I) DEDUCTION U/S 35 IN ALL THE THREE YEARS AND (II) EXPENDITURE REIATABLE TO INCOME WHICH DOES NOT FORM PART OF INCOME IN THE AY 2007 - 08 ARE FOUND PATENTLY INCORRECT. THIS AMOUNTS TO CONCEALMENT. RELIANCE IS PLACED ON THE DECISION OF THE HON' BIE DELHI HIGH COURT IN THE CASE OF CIT VS. GURBACHAN LAL 250 ITR 157. IT WAS HELD BY THE HON'BLE MUMBAI ITAT IN THE CASE OF ACIT VS. SUPREME INDUSTRIES LTD. (2009) (28 SOT 19) THAT WRONG OR IMPERMISSIBLE CLAIM CANNOT AVOID PENALTY U/S 271(L)(C). THE HON'B IE SUPREME COURT IN THE CASE OF UNION OF INDIA & OTHERS VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS, 306 ITR 277 OBSERVED THAT MENSREA NEED NOT BE ESTABLISHED BY THE REVENUE IN EVERY CASE OF CIVIL PENALTY INCLUDING INCOME - TAX PENALTY. AFTER AMENDMENT, ES TABLISHING MENS REA IS NOT A PRECONDITION TO LEVY PENALTY U/S 271(L)(C). THE RELEVANT OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THIS REGARD ARE AS UNDER: 'IT IS OF SIGNIFICANCE TO NOTE THAT THE CONCEPTUAL AND CONTEXTUAL DIFFERENCE BETWEEN SECTION 271(L )(C) AND SECTION 276C OF THE INCOME - TAX ACT WAS LOST SIGHT OF IN DILIP N. SHROFF'S CASE [2007] 8 SCALE 304 (SC). 10 ITA NO. 4662 , 4663 & 4664 /DEL/2014 THE EXPLANATIONS APPENDED TO SECTION 272(L)(C) OF THE I.T. ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALME NT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING THE RETURN. THE JUDGMENT IN DILIP N. SHROFF'S CASE [2007] 8 SCALE 304 (SC) HAS NOT CONSIDERED THE EFFECT AND RELEVANCE OF SECTION 276C OF THE INCOME - TAX ACT. THE OBJECT BEHIND THE ENACTMENT OF SECTION 27 1(L)(C) READ WITH THE EXPLANATIONS INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROSECUTION UNDER SECTION 276C OF THE INCOME - TAX ACT.' 4.10 THE HON'BIE DELHI HIGH COURT, IN THE CASE OF CIT V/S MAK DATA LTD., ITA NO.415/2012, ORDER DATED: 22.01.2013 HELD THAT EVEN THE SURRENDER OF INCOME WITHO UT EXPLANATION ATTRACTS PENALTY. IN THE CASE OF MAK DATA LTD. (SUPRA), A SURVEY U/S 133A WAS CONDUCTED ON THE ASSESSEE S PREMISES IN THE COURSE OF WHICH CERTAIN DOCUMENTS BELONGED TO CERTAIN ENTITIES WHO HAD APPLIED FOR SHARES IN THE ASSESSEE COMPANY WERE FOUND. THE AO CALLED UPON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF THE MONIES RECEIVED AS SHARE CAPITAL, THE CREDITWORTHINESS OF THE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE OFFERED RS. 40.74 LAKHS AS INCOME FROM OTHER SOURCES 'TO AVOID LITIGATION AND TO BUY PEACE'. IT WAS MADE CLEAR THAT IN MAKING THE SURRENDER, THERE WAS NO 3DMISSION OF CONCEALMENT. THE AO COMPLETED THE ASSESSMENT BY ADDING THE SAID SUM AND LEVIED PENALTY U/S 271(L)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271(L)(C). THIS WAS UPHELD BY THE CIT(A) THOUGH REVERSED BY THE TRIBUNAL ON THE GROUND THAT THERE WAS NO MATERIAL TO SHOW ANY CONCEALMENT AND EVEN IN THE PENALTY ORDER IT WAS NOT SPECIFIED AS TO THE PARTICULAR CREDIT IN RESPECT OF WHICH THE PEN ALTY WAS BEING IMPOSED. IT WAS ALSO EMPHASIZED BY THE TRIBUNAL THAT THE ASSESSEE HAD MADE IT CLEAR WHILE SURRENDERING THAT THERE WAS NO ADMISSION OF CONCEALMENT AND THAT THE OFFER WAS MADE IN A SPIRIT OF SETTLEMENT. ON APPEAL BY THE DEPARTMENT, THE HON'BLE HIGH COURT UPHELD THE PENALTY REVERSING THE ORDER OF THE ITAT. HERE ALSO, BY ACCEPTING THE ABOVE MENTIONED DISALLOWANCES U/S 35 AND 14A, THE APPELLANT ADMITTED THE FACT THAT IT HAS NOT DISCLOSED ITS CORRECT INCOME IN AIL THE THREE YEARS. HOWEVER, THE REAS ONING FOR SUCH FAILURE, AS MENTIONED ABOVE, IS NOT SUBSTANTIATED - AND IS NOT FOUND BONAFIDE. 4.11 IN THE CASE OF CIT VS. ESCORTS FINANCE LTD. (183 TAXMANN 453) (DEL) 292 ITR 558, THE JURISDICTIONAL HON'BLE HIGH COURT OBSERVED WHERE CLAIM MADE IN THE ROI APPEARS TO BE EX FACIE BOGUS, IT WOULD BE TREATED AS CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS AND PENALTY PROCEEDINGS WOULD BE JUSTIFIED PARTICULARLY WHEN THE DEPARTMENT IS ACCEPTING THE R OIS IN 95% OF THE CASES WITHOUT SUBJECTING THEM TO SCRUTINY/VERIFICATION. THE 11 ITA NO. 4662 , 4663 & 4664 /DEL/2014 APPELLANT'S CASE IS COVERED BY THIS DECISION (ESCORTS FINANCE LTD.). THE HON'BLE SUPREME COURT IN THE CASES OF CIT VS. MOSER BAER INDIA LTD. 184 TAXMAN 8 AND CIT VS. RMP PIASTO ( P) LTD. 184 TAXMAN 372 UPHELD CONCEALMENT PENALTY FOR WRONG ADJUSTMENT OF UNABSORBED DEPRECIATION IN THE AY 1996 - 97. IN THE CASE OF CIT VS. ZOOM COMMUNICATION PVT. LTD. (2010) - TIOL - 361 - HC - DEL - IT, THE ASSESSEE MADE A CLAIM WHICH, IS PURELY CAPITAL IN NATURE , AS REVENUE AND ALSO CLAIMED INCOME TAX PAID AS DEDUCTION. THE HON'BLE HIGH COURT AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE RETRO PRODUCTS PVT. LTD., (2010) 322 ITR 158 (SC), UPHELD THE LEVY OF PENALTY BY OBSE RVING THAT: THE BENCH CANNOT LOSE SIGHT OF THE FACT THAT THE ASSESSEE IS A COMPANY WHICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN COMPUTATION OF ITS INCOME, AND ITS ACCOUNTS ARE COMPULSORY SUBJECTED TO AUDIT. IN ABSENCE OF ANY DETAILS FROM THE ASSESSEE, IT IS DIFFICULT TO APPRECIATE HOW SUCH DEDUCTIONS COULD HAVE BEEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY AND HOW IT COULD ALSO HAVE ESCAPED THE ATTENTION OF THE AUDITORS OF THE COMPANY; THE EXPLANATION OFFERED BY THE ASSESSEE COMPANY WAS NOT ACCEPTED EITHER BY THE AO OR BY THE CIT (APPEALS). THE VIEW OF INCOME TAX APPELLATE TRIBUNAL REGARDING ADMISSIBILITY OF THE DEDUCTION OR ACCOUNT OF WRITTEN OFF OF CERTAIN ASSETS, UNDER SECTION 32(L)(III) OF THE ACT IS WHOLLY ERRONEOUS. THE TRIBUNAL HAS NOT RECORDED A FINDING THAT THE EXPLANATION FURNISHED BY THE ASSESSEE IN RESPECT OF THE DEDUCTION DUE TO CERTAIN ASSETS BEING WRITTEN OFF WAS A BONAFIDE EXPLANATION; AS REGARDS DEDUCTION ON ACCOUNT OF INCOME TAX PAID BY THE ASSESSEE, THE TRIBUNAL FELT THAT SINCE NO PERSON WOULD CLAIM THE SAME AS DEDUCTION, TO EVADE PAYMENT OF TAX, THE CLAIM MADE BY THE ASSESSEE WAS NOT MALAFIDE. IN THE ABSENCE OF THE ASSESSEE COMPANY TELLING THE AO AS TO WHO COMMITTED THE OVERSIGHT RESULTING IN FAILURE TO ADD THIS AMOU NT WHILE COMPUTING THE INCOME OF THE ASSESSEE, UNDER WHAT CIRCUMSTANCES THE OVERSIGHT OCCURRED AND WHY IT WAS NOT DETECTED BY THOSE WHO CHECKED THE INCOME TAX RETURN BEFORE IT WAS FILED AND LATER BY THE AUDITORS OF THE ASSESSEE COMPANY, THE BENCH CANNOT AC CEPT THE GENERAL VIEW TAKEN BY THE TRIBUNAL . NO SUCH VIEW COUID HAVE REASONABLY BEEN TAKEN, ON THE FACTS AND CIRCUMSTANCES PREVAILING IN THIS CASE AND, THEREFORE, THE DECISION OF THE TRIBUNAL IN THIS REGARD SUFFERS FROM THE VICE OF PERVERSITY. THE BENCH CA NNOT ALSO ACCEPT THE GENERAL PROPOSITION THAT NO PERSON WOULD EVER CLAIM THE AMOUNT OF INCOME TAX AS A DEDUCTION WITH A VIEW TO AVOID PAYMENT OF TAX. NO HARD AND FAST RULE IN THIS REGARD CAN BE JAID DOWN AND EVERY CASE WILL HAVE TO BE DECIDED CONSIDERING T HE FACTS AND CIRCUMSTANCES IN WHICH SUCH A DEDUCTION IS CLAIMED, COUPLED WITH AS TO 12 ITA NO. 4662 , 4663 & 4664 /DEL/2014 WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE FOR MAKING THE CLAIM, IS SHOWN TO BE BONAFIDE OR NOT. 4.12. AS REGARDS THE CASE LAWS RELIED UPON BY THE APPELLANT, IT MAY BE MENTIONED THAT THESE CASE LAWS RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS AND DO NOT APPLY TO THE APPELLANT'S CASE. THE SO - CAUSE OF CENTRAL EXCISE DEPARTMENT IS EQUIVALENT TO THE ASSESSMENT ORDER OF THE AO. THUS, ONCE THE ASSESSMENT ORDER IS NOT IN EXISTENCE; DEFINITELY, THE CONSEQUENTIAL PENALTY WILL NOT SURVIVE. HOWEVER, HERE, IN THE APPELLANT'S CASE IT IS NOT SO. THE DISALLOWANCES U/S 35 AND 14A DO EXIST AFTER THE FIRST APPELLATE AUTHORITY. THESE DISALLOWANCES U/S 35 AND 14A HAVE NOT BE EN AGITATED BEFORE THE HON'BLE ITAT. THUS, IT CAN BE INFERRED THAT THE APPELLANT, IN PRINCIPLE, HAS ACCEPTED THE DISALLOWANCE U/S 35 AND 14A IN ALL THE RELEVANT YEARS AND THE DISALLOWANCE U/S 14A IN THE AY 2007 - 08. THE QUESTION IS ONE OF APPLICABILITY OF T HE PRINCIPLES TO THE FACTS IN A GIVEN CASE. IT HAS BEEN A WELL - SETTLED VIEW THAT THE RATIO OF ANY DECISION MUST BE UNDERSTOOD IN THE BACKGROUND OF THAT CASE. WHAT IS OF ESSENCE IN A DECISION IS ITS RATIO AND NOT EVERY OBSERVATION FOUND THEREIN NOR WHAT LEG ALLY FOLLOWS FROM THE VARIOUS OBSERVATIONS MADE IN IT. IT IS NOT A PROFITABLE TASK TO EXTRACT A SUITABLE SENTENCE HERE AND THERE FROM A JUDGEMENT AND TO BUILD UPON IT (VIDE AMBICA QUARRY WORKS V. STATE OF GUJARAT, AIR 1987 SUPREME COURT 1073). 4.13 HAD TH E AO NOT INVESTIGATED THESE CASES; THEN THE GOVT, EXCHEQUER WOULD HAVE BEEN DEVOID OF THE QUANTUM OF TAX LEVIED ON THE INCOME OF RS.5,23,00,000/ - , RS.5,50,00,000/ - AND RS.4,14,75,800/ - IN THE AY 2005 - 06, 2006 - 07 AND 2007 - 08 RESPECTIVELY. HERE IN THESE CASE S, THE APPELLANT'S EXPLANATIONS HAVE BEEN REBUTTED OR FOUND UNSUBSTANTIATED BY THE AO AS EVIDENT FROM THE DETAILS MENTIONED ABOVE IN PARA 4.1 TO 4.3 IN RESPECT OF AIL THE AYS AND IN THE IMPUGNED PENALTY ORDERS OF THE AY 2005 - 06 TO 2007 - 08 AND THUS AIL THE FACTS AND MATERIALS RELATING TO THE COMPUTATION OF THE TOTAL INCOME FOR THE AY 2005 - 06 TO 2007 - 08 ARE HELD TO HAVE NOT BEEN DISCLOSED BY THE APPELLANT. THEREFORE, THE EXPLANATION - 1 OF SECTION 271(L)(C) IS CLEARLY ATTRACTED IN THESE CASES FOR THE AY 2005 - 06 TO 2007 - 08. ACCORDINGLY, THE INCOME OF THE AY 2005 - 06, 2006 - 07 AND 2007 - 08 HAVE BEEN RIGHTLY TREATED DEEMED TO HAVE BEEN CONCEALED WITHIN THE MEANING OF SECTION 271(L)(C) BY THE AO. HAVING CONSIDERED THE FACTS OF THE CASES AND SUBMISSION OF THE APPELLANTS IN THIS REGARD, I AM OF THE CONSIDERED VIEW THAT THE PRESUMPTION OF CONCEALMENT AS CONTAINED IN EXPLANATION - 1 TO SECTION 271(L)(C) IS CIEARIY ATTRACTED IN THESE CASES IN ALL THE THREE YEARS. I AM FORTIFIED IN THIS VIEW BY THE RATIOS CITED ABOVE BY THE AO & ME AND RATIO DECIDENDI LAID DOWN IN THE CASES REPORTED AS WESTERN AUTOMOBILES (INDIA) VS. CIT (1978) 112 ITR 1048 (BOM); DURGA TIMBER WORKS VS. CIT (1971) 79 ITR 63 (DEL); ADDL, CIT VS. SMT. CHANDRAKANTA & ANR (1992) 205 ITR 607 (MR); S S RATANCHAND BHOL ANATH VS. CIT (1994) 201 ITR 682 (MR); CIT VS. SREE KRISHNA TRADING CO. (2002) 253 ITR 13 ITA NO. 4662 , 4663 & 4664 /DEL/2014 645 (KER); ELECTRICAL AGENCIES CORPORATION VS. CIT (2002) 253 ITR 619 (DEL); K.P. MADHUSUDANAN VS. CIT (2001) 251 ITR 99(SC) AND ESCORT FINANCE V/S CL I 28 DTR 293. 4.1 4 IN THE NUTSHELL, THE FACTS MENTIONED ABOVE CONCLUSIVELY ESTABLISH FURNISHING OF INACCURATE PARTICULARS OF INCOME IN A DIE TO CONCEAL THE ACTUAL QUANTUM OF INCOME/TAX BY THE APPELLANT IN ALL THE THREE YEARS, AS THE APPELLANT DID NOT AT ALL CONTROVERT THE FINDINGS OF THE AO. IN FACTUAL CIRCUMSTANCES OF THESE CASES IN ALL THE THREE YEARS, I HAVE NO HESITATION IN HOLDING THAT THE FACTUM OF CONCEALMENT OF AY 2005 - 06, 2006 - 07 AND 2007 - 08 HAD BEEN FULLY ESTABLISHED AND THEREFORE, THE LEVY OF PENALTIES U/S 27I(I) (T) ON SUCH INCOME IN ALL THE THREE YEARS ARE HELD JUSTIFIED. ACCORDINGLY, THE PENALTIES IMPOSED IN ALL THE THREE YEARS ARE SUSTAINED. 4. THE ASSESSEE IS AGITATED WITH THE ABOVE FINDING OF THE LD. CIT(A). 5. BEFORE US , THE LD. COUNSEL OF THE ASSESSEE FILED COPY OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 2005 - 06 TO 2007 - 08 AND SUBMITTED THAT THE ISSUE OF EXPENSES INCURRED ON GRANTS RELEASED BY THE ASSESSEE TO THE INSTITUTION AND ROYALTY PAID WERE ALLOWABLE TO THE ASSESSEE AS DEDUCTION UNDER SECTI ON 36(1)(XII) OF THE A CT , HAVE BEEN ALLOWED AS APPLICATION OF INCOME BY THE TRIBUNAL . THE LD. COUNSEL SUBMITTED THAT THE CLAIM M ADE UNDER SECTION 35(1) OF THE A CT WAS WEIGHTED DEDUCTION AT THE RATE OF 125% IN RESPECT OF THE SAME GRANTS AND SINCE HUNDRED PE RCENT DEDUCTION WAS C LAIMED UNDER SECTION 36(1)(XII) , BALANCED 25% WAS CLAIMED UNDER SECTION 35(1) OF THE A CT, WHICH HAS BEEN DISALLOWED BY THE ASSESSING OFFICER AND THE LD. CIT(A). ACCORDING TO THE LD. COUNSEL, SAID CLAIM OF WEIGHTED DEDUCT ION UNDER SECTI ON 35(1) OF THE A CT WAS MADE UNDER THE BONA FIDE BELIEF THAT THE INSTITUTION TO WHICH GRANTS WERE MADE I.E. M/S THE PETROLEUM CONSERVATION RESEARCH ASSOCIATION, NEW DELHI, WAS ENTITLED AS APPROVED SCIENTIFIC RESEARCH ASSOC IATION UNDER SECTION 35(1)(II) 14 ITA NO. 4662 , 4663 & 4664 /DEL/2014 VIDE N OTIFICATION NO. SO 904 (37/2006) DATED 28/02/2006. THE LD. COUNSEL SUBMITTED THAT FURTHER APPEAL ON THIS ISSUE WAS NOT FILED BEFORE THE TRIBUNAL A S THE ASSESSEE WAS NOT GRANTED ANY APPROVAL BY THE COMMITTEE OF DISPUTE (COD) ON THIS ISSUE. ACCORDING TO T HE LD. COUNSEL IN MAKING THE CLAIM NO INACCURATE PARTICULARS BEEN FILED AND MERELY MAKING INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 6. THE LD. COUNSEL ALSO SUBMITTED THAT THERE IS NO FINDING IN THE ASSESSMENT ORDER T HAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME WHICH ARE PREREQUISITE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. IN SUPPORT OF THE SUBMISSION, HE RELIED ON THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS MANJUNATHA COTTON GINNING GACTORY ( 359 ITL 565). 7. THE LD. DR, ON THE OTHER HAND , RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND FILED A WRITTEN SUBMISSION RELYING ON FOLLOWING CASES: 1. UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [(2007) 295 ITR 244] WHERE HON BLE SUPREME COURT HELD T HAT PENALTY UNDER SECTION 271(1 )(C) IS A CIVIL LIABILITY FOR WHICH WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING THE CIVIL LIABILITY AS IS THE CASE IN THE MATTER OF PROCEEDINGS UNDER SECTION 276C 2. CIT VS ZOOM COMMUNICATION (P.) LTD. T191 TAXMAN 179 (DELHI)/[2010] 327 ITR 510 (DELHI)/[2010] 233 CTR 465] WHERE HON BLE DELHI HIGH COURT HELD THAT IF ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE, EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO PLAY AND ASSESSEE WILL BE LIABLE TO PENALTY 15 ITA NO. 4662 , 4663 & 4664 /DEL/2014 3. CIT VS MOSER BAER INDIA LTD. (184 TAXMAN 8 (SC)/[2009] 315 ITR 460 (SC)/[2009] 222 CTR 213) WHERE HON BLE SUPREME COURT CONFIRMED PENALTY UNDER SECTION 271(1 )(C) FOR WRONG ADJUSTMENT OF UNABSORBED DEPRECIATION. 4. MAK DATA P. LTD VS. CIT [38 TAXMANN.COM 448 (SC)/[ 2013] 358 ITR 593 (SC)/ [2013] 263 CTR 1 ] WHERE HON BLE SUPREME COURT HELD THAT UNDER EXPLANATION 1 TO S. 271(1 )(C), VOLUNTARY DISCLOSURE OF CONCEALED INCOME DOES NOT ABSOLVE ASSESSEE OF S. 271(1 )(C) PENALTY IF THE ASSESSEE FAILS TO OFFER AN EXPLANATION WHICH IS BONA FIDE AND PROVES THAT ALL THE MATERIAL FACTS HAVE BEEN DISCLOSED '9. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SURRENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEARCH CONDUCTED IN THE S ISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORA NDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARIN G AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEGUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAIN THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCOME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961.' 5. CIT VS ESCORTS FINANCE LTD [183 TAXMAN 453 (DELHI)/[2010] 328 ITR 44 (DELHI)/[2009] 226 C TR 105] WHERE HON BLE DELHI HIGH COURT HELD THAT IF CLAIM MADE IN RETURN OF INCOME APPEARS TO BE EX FACIE BOGUS, IT WOULD BE TREATED AS A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS AND PENALTY PROCEEDING WOULD BE JUSTIFIED. 8. W E HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE GRANTS AND CONTRIBUTION MADE BY 16 ITA NO. 4662 , 4663 & 4664 /DEL/2014 THE ASSESSEE TO VARIOUS INSTITUTION AND DEDUCTION CLAIMED THEREON UNDER SECTION 36(1)(XII) WAS DISALLOWED BY THE ASSESSING OFFICER , HOWEVER , SAME WAS ALLOWED BY THE LD. CIT(A) AN D APPEAL FILED BY THE R EVENUE AGAINST THE SAID ORDER HAS BEEN DISM ISSED BY THE TRIBUNAL . THE YEAR WISE CLAIM UNDER SECTION 36(1)(XII) MADE BY THE ASSESSING OFFICER IS REPRODUCED AS UNDER: AMOUNT ( IN RS. ) PARTICULARS AY: 2005 - 06 AY: 2006 - 07 AY: 2007 - 08 CONTRIBUTIONS TO NOTIFIED INSTITUTIONS 2095 00000 220000000 149627200 CONTRIBUTION/GRANTS TO OTHER INSTITUTIONS 572000000 675100000 2256000000 TOTAL 781500000 895100000 2405627200 9. THE GRANTS AND CONTRIBUTION ALSO INCLUDED THE NOTIFIED INSTITUTIONS ENGAGE D IN SCIENTIFIC RESEARCH, ON WHICH , THE ASSESSEE CLAIMED WEIGHTED DEDUCTION UNDER SEC TION 35(1) OF THE A CT , I.E. , 125% . OUT OF THIS WEIGHTED DEDUCTION, THE 25% PORTION WAS DISALLOWED BY THE ASSESSI NG OFFICER, THE YEAR WISE DETAIL OF WHICH IS REPRODUCED AS UNDER: AMOUNT ( IN RS. ) PARTICULARS AY: 2005 - 06 AY: 2006 - 07 AY: 2007 - 08 CONTRIBUTIONS TO NOTIFIED INSTITUTIONS 209500000 220000000 149627200 CLAIM OF THE ASSESSEE @ 125% 261875000 275000000 187034000 DISALLOWANCE UNDER SECTION 35(1) 52300000 55000000 37406800 10. THUS , IT IS EVIDENT THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 36(1)(XII) OF THE A CT INCLUDE HUNDRED PERCENT PORTION OF THE WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE AGAINST THE CONTRIBUTIONS MADE TO THE NOTIFIED INSTITUTION, WHICH GOT DELETED IN THE FIRST APPEAL. THE BALANCE 25% PORTION OF THE WEIGHTED DEDUCTION WAS DISALLOWED BY THE 17 ITA NO. 4662 , 4663 & 4664 /DEL/2014 ASSESSING OFFI CER UNDER SECTION 35(1) OF THE A CT, WHICH WAS N OT CONTESTED BY THE ASSESSEE IN APPEAL IN ASSESSMENT YEAR 2005 - 06 TO 2006 - 07. IN ASSESSMENT YEAR 2007 - 08 DISALLOWANCE UNDER SECTION 35(1) AND SECTION 14A WERE CONTESTED BY THE ASSESSEE BEFORE THE LD. CIT(A), BUT NOT ALLOWED IN THE APPEAL. THE ASSESSEE, DID NOT CONTEST THESE ISSUES IN THE TRIBUNAL . 11. THUS , WE FIND THAT THE HUNDRED PERCENT CLAIM OF THE GRANT TO NOTIFIED INSTITUTION WAS ALLOWED UNDER SECTION 36(1)(XII) BUT THE BALANCE 25% CLAI MED UNDER SECTION 35(1) OF THE A CT HAS NOT BEEN ALLOWED TO TH E ASSESSEE. 12. IN OUR OPINION, IT IS SETTLED POSITION OF THE LAW THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN THE LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS OF INCOME. THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. R ELIANCE PETRO PRODUCTS LTD 322 ITR 158 IT IS HELD THAT: READING THE WORDS INACCURATE AND PARTICULARS IN CONJUNCTION, THE APEX COURT OPINED THAT THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORD ING TO TRUTH OR ERRONEOUS. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271( L)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. THE ASSESSE E HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271(L)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTE D THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE CIT(A) 18 ITA NO. 4662 , 4663 & 4664 /DEL/2014 AND THE HIGH COURT HA VE CORRECTLY REACHED THIS CONCLUSION. THE DECISION RELIANCE PETROPRODUCTS (P) LTD. (JUDGMENT DT. 23RD OCT., 2007 OF THE GUJARAT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) WAS AFFIRMED.' 13. IN THE FACTS OF THE CASE , THE DETAILS OF THE NOTIFIED INSTITUTIONS WAS ALREADY MADE AVAILABLE WHILE CLAIMING DEDUCTION UN DER SECTION 36 (1)(XII) OF THE A CT AND SAID CLAIM HAS ALREADY BEEN ALLOWED BY THE TRIBUNAL . THE ONLY QUESTION IS REGARDING THE WEIGHTED CLAIM OF 2 5% UNDER SECTION 35 (1) OF THE A CT ON THE SA ME GRANTS MADE TO NOTIFIED INSTITUTION, WHICH HAS BEEN ALLOWED UN DER SECTION 36 (1)(XII) OF THE ACT . THUS , WE CANNOT SAY THAT THE CLAIM UNDER SECTION 35 (1) IS BASED ON ANY INACCURATE PARTICULARS OF INCOME. 14. THE LD. CIT(A) HAS UPHELD THE PENALTY ONLY ON THE GROUND THAT ASSES SEE HAS FAILED TO GIVE ANY BONA FIDE EXPLANATION IN RESPECT OF THE CLAIM. WE DO NOT AGREE WITH THE SAID FINDING OF THE LD. CIT(A). THE ASSESSEE HAS DULY EXPLAINED BEFORE THE ASSESSING OFFICER THE REASONS AS WHY THE DEDUCT ION UNDER SECT ION 35(1) OF THE A CT HAS BEEN CLAIMED, WHICH HAVE BEEN ALSO REITERATED BY US IN THE BRIEF FACTS OF THE CASE. ACCORDINGLY , WE SET ASIDE THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IN ALL THE T HREE ASSESSMENT YEAR S UNDER CONSIDERATION. ACCORDINGLY, WE ALLOW THE GROUNDS RAISED IN ALL THE THREE APPEALS OF THE ASSESSEE . 15. IN THE ARGUMENTS, THE LD. COUNSEL ALSO CHALLENGED THE PENALTY ON THE GROUND OF SATISFACTION RECORDED IN RELATION TO PENALTY IN THE ASSESSMENT ORDER . ACCORDING TO THE ASSESSEE, IT WAS NOT CLEAR AS ON WHAT GROUND, WHETHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE PENALTY WAS 19 ITA NO. 4662 , 4663 & 4664 /DEL/2014 INITIATED. BUT , SINCE WE HAVE ALREADY DELETED THE PENALTY IN PARA 14 OF THE ORDER , WE ARE NOT ADJUDIC ATING THIS ARGUMENT OF THE LD. C OUNSEL. 16. IN THE RESULT, ALL THE TH R EE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 4 T H APRIL , 201 9 . S D / - S D / - [ BHAVNESH SAINI ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 T H APRIL , 2019 . RK / - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI