DCIT(IT) 3(1)(2), MUMBAI V. LINGTEC CONSTRUCTION L.P, MUMBAI

ITA 4835/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8577 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2000-2001
• Appeal Filed On: 20-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Reasonable cause; Difference of opinion; Corroborative evidences
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4835/MUM/2016 (ASSESSMENT YEAR: 2000-01) DCIT (IT) - 3(2)(2) VS. M/S. LINGTEC CONSTRUCTION L.P. SCINDIA HOUSE, BALLARD PIER N.M. ROA, MUMBAI 400038 C/O J.K. DOSHI AND CO. 98, JAMSHEDJI TATA ROAD CHURCHGATE RECLAMATION MUMBAI 400020 PAN AAAFL8057A APPELLANT RESPONDENT APPELLANT BY: SHRI V. JUSTIN RESPONDENT BY: NONE DATE OF HEARING: 30.10.2017 DATE OF PRONOUNCEMENT: 14.11.2017 O R D E R PER PAWAN SINGH, J.M. THIS APPEAL BY THE REVENUE UNDER SECTION 253 OF THE INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-57, MUM BAI DATED 11.04.2016 FOR A.Y. 2000-01. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: - '1. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY LEVI ED U/S 271)C) ON THE GROUND THAT THE ASSESSEE IS PART OF THE ENRO N GROUP WHICH FILED FOR BANKRUPTCY AND HOLDING THAT THE ASS ESSEE AND ITS AUDITORS WERE ARTHUR ANDERSON WHICH ALSO WAS SH UT DOWN AND THE ASSESSEE HAD REASONABLE CAUSE FOR NOT PRODU CING VOUCHERS/ SUPPORTING EVIDENCES AND HENCE PENALTY WA S NOT LEVIABLE IN THE CASE/. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY LEVI ED U/S 271(1)(C) RELYING ON THE DECISION OF HONBLE APEX C OURT IN THE CASE OF RELIANCE PETRO PRODUCTS IGNORING THE FACTS THAT THE AO IN HIS PENALTY ORDER HAS DISTINGUISHED THE JUDGMENT. ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CANCELLING THE PENA LTY LEVIED U/S 271(1)(C) IGNORING THE VARIOUS JUDICIAL PRONOUNCEME NTS RELIED UPON BY THE AO IN FAVOUR OF THE REVENUE AND WITHOUT DEALING WITH THE SAME IN HIS APPELLATE ORDER. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A LIMITED LIABILITY PARTNERSHIP FIRM HAVING REGISTERED OFFICE IN STATE OF DELAWARE, USA (UNDER LIQUIDATION), FILED RETURN OF INCOME FOR THE RELEVA NT ASSESSMENT YEAR ON 28.03.2012 DECLARING TOTAL INCOME OF ` 9,99,54,090/-. THE ASSESSMENT WAS COMPLETED ON 26.03.2003 UNDER SECTION 143(3) DETERM INING THE TOTAL INCOME AT ` 31,93,99,830/-. THE AO MADE ADDITIONS ON ACCOUNT OF DIFFERENCE IN BILLED AND ACCOUNTED INCOME OF ` 11,01,94,324/-, INDIRECT PAYROLL OVERHEADS OF ` 9,35,90,110/-, LEGAL AND PROFESSIONAL CHARGES OF ` 1,56,61,303/- AND UNDER SECTION 40A(3) R.W. RULE 6D D OF ` 8,95,350/-. ON APPEAL BEFORE THE CIT(A) THE ADDITION/ DISALLOWA NCE WERE SUSTAINED. HOWEVER, ON FURTHER APPEAL BEFORE THE TRIBUNAL THE ADDITION ON ACCOUNT OF DIFFERENCE IN BILLED AND ACCOUNTED INCOME WAS DELET ED IN ITA NO. 3988/MUM/2004 DATED 05.04.2013. THE AO LEVIED PENAL TY ON THE REMAINING ADDITIONS/DISALLOWANCES, I.E., INDIRECT P AYROLL OVERHEADS OF ` 9,35,90,110/-, LEGAL AND PROFESSIONAL CHARGES OF ` 1,56,61,303/- AND UNDER SECTION 40A(3) R.W. RULE 6DD OF ` 8,95,350/-. THE AO LEVIED PENALTY UNDER SECTION 271(1)(C) AT 100% OF TAX SOUGHT TO B E EVADED. HE WORKED OUT THE PENALTY AT ` 3,85,51,367/- VIDE ORDER DATED 30.12.2013. ON APPEA L BEFORE THE CIT(A) THE ENTIRE PENALTY WAS DELETED. T HUS, AGGRIEVED BY THE ORDER OF THE CIT(A) REVENUE IS IN APPEAL BEFORE US. 4. THE APPEAL WAS LISTED FOR OUT OR TURN HEARING BEIN G SMALL/COVERED MATTER. THE LEARNED D.R. FILED AN APPLICATION FOR T RANSFER OF THE CASE OF L BENCH VIDE APPLICATION DATED 30.10.2017. THE APPLIC ATION OF THE LEARNED D.R. WAS REJECTED AS THE ISSUE INVOLVED IN THE PRES ENT APPEAL RELATES TO THE PENALTY LEVIED UNDER SECTION 271(1)(C). THE LEARNED D.R., AFTER RISING OF THE COURT, AGAIN MOVED A DETAILED APPLICATION FOR TRANS FER OF THE CASE TO L ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 3 BENCH (INTERNATIONAL TAXATION BENCH). THE APPLICATI ON FILED BY THE LEARNED D.R. IS MISCONCEIVED. PENALTY LEVIED UNDER SECTION 271(1)(C) IS NOT RELATED TO THE SPECIALISED ISSUE(S) WHICH ARE ASSIGNED TO L BENCH. THIS APPLICATION FILED BY THE LEARNED D.R. IS REJECTED. 5. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELO W CAREFULLY. THE AO LEVIED PENALTY ON THREE ADDITIONS/DISALLOWANCES CONSISTING OF DISALLOWANCES OF INDIRECT PAYROLL OVERHEADS OF ` 9,35,90,110/-, LEGAL AND PROFESSIONAL CHARGES OF ` 1,56,61,303/- AND UNDER SECTION 40A(3) R.W. RULE 6DD OF ` 8,95,350/-. FURTHER, PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW REVEALS THAT ` 9,35,90,110/- REPRESENTS OVERHEAD PAYROLL REIMBURSEMENT TO ENRON POWER SERVICES B.V. RELATES TO EMPLOYEES SALARIES WHICH HAVE BEEN DEBITED BY THE ASSESSEE. T HE ASSESSEE CLAIMED THE EXPENDITURE ON THE GROUND THAT THE AMOUNT IS NO T CHARGEABLE TO TAX IN INDIA AS THE SAME IS IN THE NATURE OF REIMBURSEMENT OF COST, HENCE NO TAX CAN BE DEDUCTED AT SOURCE UNDER SECTION 195. THE AO DISALLOWED THE ENTIRE AMOUNT. THE DISALLOWANCE WAS UPHELD BY THE C IT(A) AND SUBSEQUENTLY BY THE TRIBUNAL. THE SECOND DISALLOWAN CE RELATES TO LEGAL AND PROFESSIONAL CHARGES OF ` 1,56,61,303/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED DETAILS OF LEGAL AND PROFESSIONAL FEES OF `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` 20,000/-. THE ASSESSEE CONTENDED THAT THE PAYMENTS WERE MADE IN CASH TO THE STAFF. T HE STAFF MEMBERS WERE FOREIGNERS AND WERE VISITING THE REMOTE SITE OF GUH AGHAR FOR A SHORT PERIOD. THE AO DISALLOWED 20% OF THE AMOUNT. THE DISALLOWAN CE WAS CONFIRMED BY THE LD CIT(A) AND FURTHER BY THE TRIBUNAL. ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 4 6. BEFORE THE CIT(A) THE ASSESSEE URGED THAT ALL THE THREE ITEMS/EXPENSES WERE SHOWN BY THE ASSESSEE IN ITS FI NANCIAL STATEMENTS AS WELL AS IN THE RETURN OF INCOME, ALL THE DETAILS WE RE FURNISHED AND EXPLAINED BEFORE THE AO. THE FACTS WERE ALSO BROUGH T IN NOTE-3 TO THE STATEMENT OF ACCOUNT AND TO LIABILITY ATTACHED TO T HE RETURN OF INCOME FILED. THERE WAS NO CONSCIOUS ATTEMPT ON THE PART OF THE A SSESSEE TO CONCEAL PARTICULARS TO EVADE PAYMENT OF LAWFUL TAX. IN FACT , THERE WAS COMPLETE DISCLOSURE OF FACTS BY THE ASSESSEE IN THE RETURN F ILED. THE ASSESSEE HAS NEITHER DELIBERATELY NOR OTHERWISE GIVEN ANY INACCU RATE DETAILS OF ANY AMOUNT OF EXPENDITURE CLAIMED. ALL DATA AND INFORMA TION WERE PROVIDED TO THE REVENUE OFFICERS. THE EXPENSES INCURRED WERE RE AL AND NOT BOGUS, THOUGH THERE MIGHT BE A CONTRARY EXPLANATION OR POI NT OF VIEW TAKEN BY THE AO. THE LEARNED CIT(A), AFTER CONSIDERING THE FACTU AL MATRIX AND SUBMISSIONS OF THE ASSESSEE ALLOWED THE APPEAL ON A LL THE THREE DISALLOWANCE AND PASSED THE FOLLOWING ORDER: - I HAVE GONE THROUGH THE FACTS OF THE CASE UP AND T HE FINDINGS OF THE ASSESSING OFFICER AND THE VERY DETAILED SUBMISSIONS OF THE APPELLANT. THE ISSUE THAT IS PRESENT IN THIS APPEAL IS THAT WH ETHER IF THE DISALLOWANCES REPRESENTING OVERHEADS OF ENRON POWER S-BV PERTAINING TO EMPLOYEES WHOSE SALARIES HAS BEEN DEBITED BY THE APPELLANT, THE LEGAL AND PROFESSIONAL CHARGES PAID AND PAYMENTS IN CONTRAVENTION OF SECTION 40A (3) WHICH HAVE BEEN DISALLOWED IN QUANT UM AND UPHELD BY THE APPEAL AUTHORITIES INCLUDING THE HON'BLE TRI BUNAL, THEN THE PENALTY FOR CONCEALMENT SHOULD ALSO BE UPHELD OR NO T. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A N ON-RESIDENT FIRM HAVING ITS REGISTERED OFFICE IN THE STATE OF DELAWA RE, USA AND THE PLACE OF BUSINESS IS ENRON CORPORATION, HOUSTON, TE XAS. THE ASSESSEE HAD ENTERED INTO A CONTRACT WITH DABHOL POWER CORPO RATION IN CONNECTION WITH THE RESPONSIBILITY FOR ONSHORE CONS TRUCTION WORK AND ONSHORE SERVICE IN CONNECTION WITH PHASE II OF DPC. IT HAS A PROJECT OFFICE IN INDIA IN CONNECTION WITH SUCH PROJECT. DU RING THE YEAR THE ASSESSEE DEBITED AN AMOUNT OF RS. 9, 35,901,102 IT' S PROFIT AND LOSS ACCOUNT ON ACCOUNT OF INDIRECT PAYROLL OVERHEADS PA YABLE TO ENRON POWER SERVICES BV. THE SAID AMOUNT WAS DISALLOWED B Y THE AO ON THE GROUNDS THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE EVIDENCE OF ACTUAL PAYMENT. SIMILARLY WITH RESPECT TO THE LE GAL AND PROFESSIONAL CHARGES ALSO IT IS CONTENDED THAT EVIDENCE FOR THE PAYMENT OF THE SAME HAS NOT BEEN FILED. WITH RESPECT TO THE 3 RD DISALLOWANCE, THE SAME HAS BEEN MADE WITH RESPECT TO THE PAYMENTS MAD E IN CASH. TO UNDERSTAND THE CRUX OF THE ISSUE AS TO WHETHER PENA LTY SHOULD BE ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 5 UPHELD OR NOT IN THE PRESENT CASE IT IS IMPORTANT T O UNDERSTAND THE CIRCUMSTANCES OF THE CASE. A ALREADY STATED ABOVE T HE ASSESSEE WAS A PART OF THE ERSTWHILE ENRON CORPORATION WHICH THR OUGH ITS SUBSIDIARY WAS PROVIDING SPECIALISED STAFF TO ITS V ARIOUS GROUP ENTITIES GLOBALLY. THE CHARGE WAS AS REIMBURSEMENT, ON A NO PROFIT BASIS. IN LATE 2001 THE ENTIRE ENRON GROUP FILED FOR BANKRUPT CY AND WAS LIQUIDATED. THE APPELLANT ALSO SUBSEQUENTLY FILED F OR BANKRUPTCY PROTECTION. IT IS A PECULIAR CIRCUMSTANCE OF THIS C ASE THAT THE TAX REPRESENTATIVES OF THE ASSESSEE, M/S ARTHUR ANDERSE N ALSO COLLAPSED AROUND THE SAME TIME AND THE OPERATIONS IN INDIA AS WELL AS GLOBALLY WERE SHUT DOWN. IT IS ALSO A FACT IN THE CASE THAT MESSER'S EPS BV HAD FILED FOR CLAIM AGAINST ENRON CORPORATION AND A GAINST THE APPELLANT WITH THE NETHERLANDS BANKRUPTCY COURT. IT IS A FACT THAT IN THE JUDGEMENT PASSED BY THE SAID COURT A CLAIM OF $ 31,13,683.51 WHICH TRANSLATES TO ABOUT INK 140115757.95 WAS AWAR DED TO MESSER'S EPS BV. IT IS ALSO A MATTER OF RECORD AND WAS AVAILABLE AS PART OF THE ACCOUNTS OF THE ASSESSEE THAT SALARY PA YMENTS TO VARIOUS PERSONS DEPUTED TO THE PROJECT IN INDIA HAVE BEEN M ADE AND THERE IS ALSO TAX DEDUCTION UNDER FORM NUMBER 16 AVAILABLE. THE SAME FACTS ARE NOT IN DISPUTE, ALSO NOT IN DISPUTE ARE THE VAR IOUS OTHER EXPENSES CLAIMED BY THE APPELLANT, THE EMAIL EXCHANGES BETWE EN EPS, THE APPELLANT AS WELL AS THE AUDITORS ARE ALSO VERY MUC H A PART OF RECORD WHICH ALSO .POINT THE EXISTENCE OF A SETUP IN INDIA AND THE FACT THAT THE CONSULTANTS WERE DEPLOYED IN THE PROJECT OFFICE IN INDIA. IT ALSO REMAINS A MATTER OF RECORD THAT WHILE HAVING CLAIME D EXPENSES THE APPELLANT WAS NOT ABLE TO ADDUCE VOUCHERS FOR THE S AME. HOWEVER, GIVEN THE CIRCUMSTANCES OF THE CASE WHERE MESSERS E NRON HAD FILED FOR BANKRUPTCY AND THE AUDITORS ALSO COLLAPSED AND SHUTDOWN, THE ISSUE OF WHETHER THE APPELLANT IS LIABLE FOR PENALT Y OR NOT WOULD NEED TO BE ADJUDICATED IN THE ENTIRETY OF THE FACTS. AS ALREADY STATED ABOVE IT IS A MATTER OF RECORD THAT THE APPELLANT HAD A P ROJECT OFFICE IN INDIA AND THAT IT WAS A PART OF THE GLOBAL OPERATIONS OF ENRON AND THAT TAXES HAVE BEEN DEDUCTED FOR THE EXPATRIATES DEPUTED TO T HIS PROJECT OFFICE AND IN TERMS OF THE LEGAL AND PROFESSIONAL CHARGES PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. WHILE NO DOUBT IT IS THE PREROGATIVE OF THE ASSESSING AUTHORITY AND THE RESP ONSIBILITY OF THE TAXPAYER TO SUBSTANTIATE WITH CREDIBLE EVIDENCE THE VARIOUS EXPENSES CLAIMED BY THE TAXPAYER AND THE APPELLANT IN THE PR ESENT FACTS AND CIRCUMSTANCES HAS RIOT DISCHARGED ITS ENTIRE ONUS O F PRODUCING THE SAME, HOWEVER IN THE PECULIAR FACTS AND CIRCUMSTANC ES OF THE CASE THE OTHER EVIDENCE AVAILABLE CERTAINLY POINTS TO THE FA CT THAT REIMBURSEMENT WERE DUE FROM THE APPELLANT TO EPS BV AND THAT LEGAL AND PROFESSIONAL CHARGES HAVE ALSO BEEN INCURRED. A ND SO THEREFORE WHILE THE DISALLOWANCE IN QUANTUM MAY BE MADE AND H ELD TO BE VALID CONSIDERING THE LACK OF SUFFICIENT EVIDENCE, HOWEVE R, IN MY CONSIDERED OPINION, IN THE BACKGROUND OF THE FACTS AND IN THE BACKGROUND OF THE VARIOUS LEGAL DECISIONS WHICH HAVE BEEN CITED ABOVE , IMPOSITION OF PENALTY WOULD NOT BE MERITED IN THE PRESENT CASE. T HE JUDGEMENT OF THE NETHERLANDS BANKRUPTCY COURT IS A SIGNIFICANT T HIRD-PARTY ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 6 EVIDENCE WHEREIN THE ASSESSEE HAS MADE PAYMENT TO E NRON POWER SERVICES BV IT MAY ALSO BE NOTICED THAT THE APPELLA NT HAS NOT DEBITED EXPENSES IN ANY OTHER YEAR AND THEREFORE THE AWARD TO EPS BV WOULD BE ATTRIBUTABLE TO THE EXPENSES CLAIMED BY THE APPE LLANT. SIMILARLY THE TDS CERTIFICATES ALSO ASSUMES SIGNIFICANCE IN THE A BSENCE OF DIRECT EVIDENCE FOR THE CLAIM. THE REFERENCE MADE BY THE A PPELLANT TO THE DECISION OF THE HONORABLE MUMBAI ITAT IN THE CASE O F ACIT VERSUS VIP INDUSTRIES LTD, REFERRED SUPRA WHEREIN IT WAS HELD THAT MERE FACT THAT AN ADDITION IS CONFIRMED CANNOT PER SE LEAD TO THE CONFIRMATION OF THE PENALTY IS FOUND TO BE VALID IN THE PRESENT CASE. T HE DECISION OF THE HONORABLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS, REFERRED SUPRA, ALSO WOULD BE APPLICABLE IN THE PRESENT FACT S AND CIRCUMSTANCES OF THE CASE CONSIDERING THAT IT IS NO T IN DISPUTE THAT THE ASSESSEE DID HAVE A PROJECT OFFICE IN INDIA, THAT T HE EXPATRIATES STAFF WAS HIRED, THERE ARE EMAILS AVAILABLE FOR THE CALCU LATION OF THE OVERHEAD EXPENSES, THE EXPATRIATES PAYROLL, REIMBUR SEMENT AND CALCULATIONS TALLIED WITH THE ACCOUNTING RECORDS, F ORM 16 HAVE BEEN ISSUED TO THE EXPATRIATES STAFF, PAYMENTS FOR LEGAL AND PROFESSIONAL CHARGES HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE S ALL PROVIDE A SCENARIO WHERE THE APPELLANT HAS DEFINITELY HAD A S ETUP IN INDIA AND THAT THIS SETUP HAS RUN INTO LEGAL ISSUES ALL REMAI NS A PART OF THE FACTS OF THE PRESENT CASE. IN THE SAID JUDGEMENT THE HONO RABLE APEX COURT HAS HELD THAT MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INA CCURATE PARTICULARS. IN THE PRESENT CASE ALSO WHILE THE ASSESSING AUTHOR ITY HAS THE PREROGATIVE OF DISALLOWING A CLAIM WHERE SOME EVIDE NCE COULD BE ADDUCED BY THE APPELLANT, BUT NOT TO THE ENTIRE SAT ISFACTION OF THE ASSESSING AUTHORITY, THE CLAIM ITSELF MAY BE DISALL OWED BUT IT WOULD STILL NOT NECESSARILY IMPLY THE ATTRACTION OF PENAL TY PROCEEDINGS AND IMPOSITION THEREOF UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT 1961. THEREFORE IN MY CONSIDERED VIEW KEEPING IN PERSPECT IVE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WHEREIN THE PAREN T COMPANY AND THE GROUP ITSELF FILED FOR BANKRUPTCY AND WAS LIQUI DATED AND WHEREIN INCIDENTALLY THE AUDITORS TO THE APPELLANT ALSO COL LAPSED AND SHUT THEIR OFFICES IN INDIA AS WELL AS GLOBALLY AT THE SAME TI ME, IT WOULD BE A SIGNIFICANT FACTOR IN UNDERSTANDING THAT THE APPELL ANT HAS NOT BEEN ABLE TO PRESENT ALL THE PRIMARY DATA AND HENCE THE DISALLOWANCE. THEREFORE, IN THIS BACKGROUND THE PENALTY IMPOSED O N ALL THE 3 DISALLOWANCES IS HEREBY DELETED. THE GROUNDS OF APP EAL ARE ALLOWED. 7. WE ARE OF THE VIEW THAT MERE CONFIRMATION OF ADDITI ON IN APPEAL IN THE QUANTUM ASSESSMENT CANNOT PER SE LEAD TO CONFIRMATION OF PENALTY AS THE QUANTUM AND PENALTY PROCEEDINGS AND ASSESSMENT ARE INDEPENDENT OF EACH OTHER. FOR APPLICATION OF PROVISIONS OF EXPLAN ATION (1) TO SECTION 271(1)(C), IT MUST BE SHOWN EITHER; (I) THE ASSESSE E FAILED TO OFFER AN EXPLANATION OR (II) HE OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE OR (III) ITA NO.4835 /MUM/2018 M/S. LINGTEC CONSTRUCTION L.P. 7 HE OFFERS AND EXPLANATION WHICH CANNOT BE SUBSTANTI ATED OR SHOWN TO BE BONA FIDE EXPLANATION. WE NOTED THAT THE ADDITIONS/ DISALLOWANCES ARE MADE ON DIFFERENCE OF OPINION. THERE IS NO SPECIFIC FINDING OF AO THAT THE DISCLOSURE MADE BY THE ASSESSEE WAS WILFUL CONCEALM ENT OF INCOME. THE HON'BLE APEX COURT IN THE CASE OF CIT VS RELIANCE P ETROPRODUCTS 322 ITR 158(SC) HELD THAT A MERE MAKING OF THE CLAIM, WHIC H IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS . IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSION, WE DO NO T FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(A) . THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH NOVEMBER, 2017. SD/ - SD/ - (PAWAN SINGH) (PAWAN SINGH) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 14 TH NOVEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -57, MUMBAI 4. THE CIT (IT)-3, MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.