ITO 8(3)(4), MUMBAI V. VADILAL MILK PRODUCTS LTD, MUMBAI

ITA 5000/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2944 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Department
• Bench Allotted: F
• Next Hearing Date: 03-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2013
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 194C; 10; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5000/MUM/2013 ASSESSMENT YEAR: 2006-07 ITO 8(3)(4) R.NO.202, 2 ND FLOOR, AAYAKAR BHAVAN,, MUMBAI-400020. / VS. VADILAL MILK PRODUCTS. LTD.(VMPL DAIRY LTD.) GUL MANZIL, 1 ST FLOOR, 14, DASHRATLAL JOSHI RDM VILE PARLE(W) MUMBAI-400056 ( REVENUE ) ( RESPONDENT ) P.A. NO. AAACV5103G REVENUE BY SHRI ARVIND KUMAR (DR) RESPONDENT BY SHRI PIYUSH CHATURVEDI (AR) !' / DATE OF HEARING : 03/09/2015 !' / DATE OF ORDER: 14/10/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-18, MUMBAI {(IN SHORT CIT(A)}, DATED 19.04.2013 FOR THE VADILAL MILK PRODUCTS. 2 ASSESSMENT YEAR 2006-07, DECIDED AGAINST THE PENALT Y ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO) U/S 271(1)(C) OF THE ACT. THE REVENUE HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALT Y OF RS.3,03,340/- LEVIED U/S271(1)(C) BY OBSERVING THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME WITHOUT APPRECIATING THE FACT THAT IN ITS RE TURN FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAI MED DEDUCTION OF THE IMPUGNED AMOUNT OF RS.9,01,184/- I N RESPECT OF EXPENDITURE DISALLOWED U/S 40(A)(IA) IN A.Y.2005-06, EVEN THOUGH THE ASSESSEE HAD ACTUALLY NOT PAID THE SAME IN THE PRESENT YEAR AND HENCE WAS NOT ENTITLED TO THE SAID DEDUCTION.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE PENALTY OF RS.3,03,340/- LEVIED U/S271(1)(C) WITHOUT APPRECIAT ING THE FACT THAT BY CLAIMING THE IMPUGNED DEDUCTION OF RS.9,01,184/- WHICH WAS UNDISPUTEDLY INADMISSIBLE I N VIEW OF THE PROVISIONS OF SECTION 40(A)(IA), THE AS SESSEE HAS FAILED TO REBUT THE PRESUMPTION OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT, 1961 AND HENCE LIABLE FO R PENALTY THEREUNDER.' 3. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RES TORED.' VADILAL MILK PRODUCTS. 3 4. THE APPELLANT CRAVES TO LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ' 2. DURING THE COURSE OF HEARING, LEARNED DEPARTMENTAL REPRESENTATIVE (IN SHORT LD. DR) HAS RELIED UPON THE ORDER OF THE AO AND REQUESTED FOR CONFIRMING THE LEVY OF PEN ALTY. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT LD. AO HAD WRONGLY COMPUTED THE PENALTY, AND IN ANY CAS E IT WAS NOT A FIT CASE FOR LEVY OF PENALTY. IT HAS BEEN ARG UED BY HIM THAT THE ASSESSEE WAS A SICK COMPANY AND WAS PASSI NG THROUGH TOUGH TIME AND WAS INCURRING CONTINUOUS LOS SES. THUS, THE STAFF OF THE ASSESSEE HAD LEFT THE JOB AN D DUE TO FEW OTHER REASONS THE ASSESSEE WAS NOT ABLE TO PROPERLY CARRY OUT, THE EXERCISE OF RECONCILIATION OF AMOUNT OF TDS DED UCTED AND DEPOSITED BY IT INTO THE GOVERNMENT TREASURY DURING THE IMPUGNED F.Y. 2005-06, AS A RESULT WHICH DISALLOWAN CE WAS MADE U/S 40(A)(IA) OF THE ACT. HOWEVER, THE ASSESSE E DID NOT MAKE ANY FALSE CLAIM IN ITS RETURN OF INCOME. THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSEE. TH ERE WAS NO CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. THERE WAS NO MOTIVE TO EVADE ANY TAXES. THE PENALTY HAS BEEN WRONGLY LEVIED BY THE AO AND THE SAME HAS BEEN RIGHTLY DELE TED BY THE LD. CIT(A), AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND BONA FIDE OF THE CLAI M MADE BY THE ASSESSEE. IT WAS REQUESTED THAT THE ORDER OF LD . CIT(A) IN DELETING THE PENALTY SHOULD BE UPHELD. VADILAL MILK PRODUCTS. 4 2.1. WE HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHO RITIES. IT IS SEEN THAT THE ASSESSEE WAS ENGAGED IN THE BUS INESS OF MARKETING OF THE ICE CREAM. IT WAS NOTICED BY THE A O DURING THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE MADE A CLAIM OF AN AMOUNT AGGREGATING TO RS.29,11,909/, AS A DEDUCT ION IN THE IMPUGNED YEAR, ON PAYMENT BASIS, WHICH WAS DISA LLOWED IN PRECEDING ASSESSMENT YEAR I.E., A.Y. 2005-06 U/S 40(A)(IA) OF THE ACT. THE AO ASKED THE ASSESSEE TO RECONCILE THE PAYMENTS MADE DURING THE IMPUGNED YEAR PERTAINING TO THE TDS OF EARLIER YEARS ALONG WITH TDS CHALLANS AND TDS CERTI FICATES. IT HAS BEEN STATED BY THE AO IN THE ASSESSMENT ORDER T HAT IN RESPONSE, THE ASSESSEE COULD GIVE RECONCILIATION ON LY FOR THE AMOUNTS AGGREGATING TO RS.8,01,661/-. AS A RESULT T HEREOF, THE AO MADE DISALLOWANCE OF BALANCE AMOUNT OF RS.21,10, 248/- ( I.E., RS.29,11,909/- - RS.8,01,661/-). THE AO ALSO INITIATED THE PENALTY PROCEEDINGS IN RESPECT OF THE EXCESS CLAIM AMOUNTING TO RS.21,10,248/-. 2.2 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE L D. CIT(A). BEFORE LD. CIT(A), THE ASSESSEE CONTENDED T HAT ORIGINAL CHALLAN COULD NOT BE PRODUCED AT THE TIME OF ASSESS MENT PROCEEDINGS DUE TO SAME DIFFICULTIES FACED BY THE A SSESSEE. THE LD. CIT(A) ACCEPTED THE CLAIM OF THE ASSESSEE IN PR INCIPLE, AND DIRECTED THE AO TO MAKE VERIFICATION OF THE TDS CHA LLANS AND DELETE THE DISALLOWANCE. THEREAFTER, THE AO ISSUED PENALTY NOTICE U/S 271(1)(C). THE ASSESSEE FILED ITS REPLY DATED 17.03.2012 AND MADE THE FOLLOWING SUBMISSIONS, IN R ESPONSE TO PENALTY NOTICE ISSUED BY THE AO: VADILAL MILK PRODUCTS. 5 OUR COMPANY HAD CLAIMED AN AMOUNT OF RS.29,11,909/- AS DEDUCTION ON PAYMENT BASIS OF THE AMOUNT DISALLOWED U/S.40(A)(IA) IN EARLIER ASSESSME NT YEAR 2005-06. THE DETAILS OF THE PAYMENTS WERE: (I) RENT --- R S.27,450/- (II) SALARY --- RS.90,000/- (III) PROFESSION & CONTRACT RS. 51,375/- (IV) CONTRACTOR PAYMENTS (TRANSPORTATION) RS.27,43, 084/- TOTAL RS.29,11,909/- DURING THE COURSE OF ASSESSMENT PROCEDDINGS, THE AO ASKED THE COMPANY TO RECONCILE THE PAYMENTS OF TDS TO SHOW THE TDS RETURN OF A.Y.2005-06 AND TO SUBMIT FO RM NO.16A. THEREAFTER, THE AO HELD THAT, NO TDS RETURN WAS FIE LD FOR A.Y.2005-06, TDS CHALLANS AND TDS CERTIFICATES ISSU ED WERE SHOWN ONLY TO THE EXTENT OF RS.8,01,661/-. THE LEARNED AO ALLOWED ONLY RS.8,01,661/- AGAINST THE DISALLOWANCE BY THE AO, THE COMPANY FIL ED AN APPEAL WITH THE COMMISSIONER OF INCOME TAX(APPEALS- 18, MUMBAI. DURING THE COURSE OF APPELLANT PROCEEDINGS, IT WAS SUBMITTED BY THE COMPANY THAT THE TDS RETURN CO ULD NOT BE FILED AS THE COMPANY BECAME SICK AND THE ACCOUNTING STAFF HAD LEFT THE JOB AND THE ACCOUNTS WERE IN A MESS. HOWEVER, THE TDS RETURN WAS FILED ON 28.4.2 009, A COPY OF WHICH IS SUBMITTED. FURTHER, THE COMPANY ALSO SUBMITTED THE TEDS PAYMENTS MADE IN ADDITION OF RS.8,01,661/- WHICH WAS ALREADY ALLOWED BY THE AO. THE COMPANY ALSO SUBMITTED PROOF OF PAYMENT OF TDS OF VADILAL MILK PRODUCTS. 6 RS.24,410/- PERTAINING TO PAYMENTS OF RS.12,50,360/ -. THEN THIS APPEAL WAS PARTLY ALLOWED BY THE HONOURAB LE COMMISSIONER. 2. ALL THE DETAILS WERE PRODUCES AND ALSO ALL THE M ATTERS HAVE BEEN PROPERLY DISCLOSED IN THE ANNUAL ACCOUNTS AS WELL AS THE I.T. RETURNS AND THERE WERE NO CONCEALM ENT OF INFORMATION OF MIS-STATEMENT ON THE PART OF THE ASS ESSEE. 3. MERE DISALLOWANCE OF EXPENDITURE DOES NOT MEAN T HE CONCEALMENT OF INFORMATION OR MISSTATEMENT. 4. THE DISALLOWANCE WAS ALSO NOT FOR CLAIMING THE W RONG EXPENDITURE IN THE ACCOUNTS. 5. THE COMPANY WAS IN FINANCIAL SHORTAGES, DUE TO T HIS THE TDS PAYMENT COULD NOT BE MADE. IN VIEW OF THE ABOVE, WE REQUEST YOUR GOODSELT TO K INDLY NOT TO INITIATE PROCEEDINGS U/S.271(1)(C) 2.3. HOWEVER, THE AO WAS NOT SATISFIED WITH THE RESPONS E TO THE ASSESSEE AND PENALTY WAS LEVIED AND THAT TOO ON THE TOTAL AMOUNT OF DISALLOWANCE OF RS.29,11,909/-, BUT PENAL TY WAS LEVIED BY THE AO SUBJECT TO THE CONDITION THAT THE SAME WOULD BE SCALED DOWN AFTER VERIFICATION OF ORIGINAL TDS C HALLANS. 2.4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER I N FIRST APPEAL) FOR CONTESTING THE PENALTY ORDER BEFORE THE LD. CIT(A). IT WAS CONTENDED BY THE ASSESSEE THAT SUBSEQUENT TO PASSING OF THE PENALTY ORDER, THE AO HAD MADE REQUISITE VER IFICATION AND RECONCILIATION OF ORIGINAL CHALLANS VIS-A-VIS T DS PAYMENTS AND HAS ALLOWED RELIEF IN THE ORDER PASSED U/S 154 DATED VADILAL MILK PRODUCTS. 7 06.07.2012 FOR RS.12,39,064/-, AND ACCORDINGLY THE AMOUNT OF DISALLOWANCE HAS BEEN SCALED DOWN BY THE AO TO RS.9,01,184/- FROM RS.21,10,248/-. IT WAS SUBMITTED THAT PENALTY SHOULD BE DELETED STRAIGHT AWAY PROPORTIONA TE TO THE AMOUNT OF DISALLOWANCE REDUCED BY AO HIMSELF. IT WA S FURTHER SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) THA T EVEN FOR THE REMAINING AMOUNT OF DISALLOWANCE, PENALTY IS NO T ATTRACTED SINCE DISALLOWANCE MADE UNDER THE PROVISIONS OF SEC TION 40(A)(IA) DO NOT ATTRACT PENALTY PROVISIONS, AS THE RE WAS NO CONCEALMENT, AND ASSSESSEE HAS MADE FULL DISCLOSUR E OF ALL THE PARTICULARS IN THE RETURN OF INCOME OF PRECEDI NG ASSESSMENT YEAR AS WELL AS IN THE IMPUGNED ASSESSME NT YEAR. KEEPING IN VIEW, ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT ORDER OF THE AO. AND FACTS OF THE CASE CAREFULLY, IT IS N OTICED THAT THE A.O. OBSERVED THAT THE ASSESSEE MADE PAYMENTS O F RS. 29,11,909/- WITHOUT TDS. THE AO OBSERVED THAT IN VI EW OF CIRCULAR NO. 715 DATED 08.08.1995, THE ASSESSEE WAS UNDER OBLIGATION TO MAKE TDS U/S 194C OF THE I.T. A CT ON SUCH PAYMENTS. SINCE THE PAYMENTS WERE IN VIOLATION OF THE PREVISIONS OF SEC. 194C, THE AO DISALLOWED THE SAME BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE I.T. ACT. PENALTY PROCEEDINGS U/S 271 (1 )(C) WERE INITIATED AGAINST THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF VADILAL MILK PRODUCTS. 8 INCOME BY CLAIMING EXPENSES WHICH ARE NOT ALLOWABLE AS DEDUCTION U/S 40(A)(IA) UNDER THE I.T ACT. IN COURSE APPELLATE PROCEEDINGS, IN ADDITION TO THE EXPENDITURE OF RS. 8,01,661/- ALLOWED BY THE AO., T HE ASSESSEE FURNISHED CHALLANS OF PAYMENT OF TDS, THER EFORE THE LD CIT(A) HAS ALLOWED PARTIAL RELIEF TO THE ASS ESSEE SUBJECT TO VERIFICATION OF ORIGINAL CHALLANS BY THE AO. AS PER THE DIRECTIONS CONTAINED IN THE APPELLATE ORDER THE ASSESSEE WAS GIVEN OPPORTUNITY TO FURNISH FOR VERIF ICATION ORIGINAL CHALLANS FOR PAYMENT OF TDS FOR CONSIDERIN G ALLOWING OF EXPENSES AS PER PROVISIONS OF SEC 40(A) (IA). ON VERIFICATION OF ORIGINAL CHALLANS OF TDS PAYMENT, A O HAS ALLOWED FURTHER DEDUCTION OF EXPENDITURE TO THE EXT ENT OF RS.12,09,064/- U/S 40(A)(IA). AS THE AMOUNT OF DISALLOWANCE HAS BEEN SCALED DOWN TO RS.9,01,184/- FROM RS.21,10,248/- THE QUANTUM OF PENALTY IMPOSED U/S.271(1)(C) BY ORDER DATED 30.03.2012 STANDS REVI SED TO RS.3,03,340/-. ON THE OTHER HAND, THE AR OF THE APPELLANT HAS SUBM ITTED THAT DISALLOWANCE MADE UNDER THE PROVISIONS OF SEC 40(A)(IA) OF I.T. ACT DO NOT ATTRACT PENALTY PROVIS IONS FOR CONCEALMENT IN AS MUCH AS THE ASSESSEE HAD DISCLOSE D FULL PARTICULARS OF SUCH AMOUNTS IN THE COMPUTATION OF I NCOME FOR AY. 2005-06 DISALLOWANCES WERE MADE AND ALSO IN THE AY 2006-07( IN WHICH THE AMOUNT WAS CLAIMED AS DEDUCTION FROM THE TOTAL INCOME ON THE BASIS OF PAY MENT OF TDS AND RELIANCE WAS ALSO PLACED ON THE DECISIONS O F VADILAL MILK PRODUCTS. 9 HONBLE COURTS ON THIS ISSUE. THEREFORE, IT WAS ARG UED THAT IT WAS NOT A CASE OF CONCEALMENT AND SUBMISSION OF INACCURATE PARTICULARS OF INCOME. THE AR HAS ALSO R ELIED ON THE DECISIONS IN CASE OF ACIT VS. SEAWAYS SHIPPING LTD. (SUPRA) THE HON'BLE HYDERABAD TRIBUNAL HAS GIVEN A DIRECT DECISION ON THIS ISSUE BY HOLDING AS UNDER: 'WE HEARD THE DEPARTMENTAL REPRESENTATIVE IN THIS C ASE, PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U /S 40(A)(IA) OF THE I.T. ACT NON DEDUCTION OF TDS BY T HE ASSESSEE WAS RESULTED IN DISALLOWANCE OF EXPENDITUR E U/S 40(A)(IA), THAT ITSELF CANNOT BE CONSTRUED AS FURNI SHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTE D IN DISALLOWANCE OF EXPENDITURE IN OUR OPINION. THE MIS TAKE COMMITTED BY THE ASSESSEE WAS COMPENSATED BY DISALLOWING THE EXPENDITURE FORTNER THE REVENUE CAN NOT PENALIZE THE ASSESSEE BY LEVYING PENALTY U/S 271 (1 )(C) OF THE ACT. IN ORDER TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. THERE HAS TO BE CONCEALMENT OF PARTICULAR S OF INCO ME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME. PRESENT IS NO T THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF R EVENUE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICUL ARS OF INCOME. THE DEPARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHED ANY FACTUAL INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR OPINION THE CONDITION S LAID DOWN IN SECTION 271(1)(C) OF THE ACT IS NOT COMPLI ED WITH. VADILAL MILK PRODUCTS. 10 BEING SO LEVY OF PENALTY IS NOT JUSTIFIED MERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE THAT EXPENDITURE IS NOT ELIGIBLE IN VIEW OF THE PROVISIO NS OF SEC. 40(A)(IA) OF THE ACT AND FOR THAT REASON EXPENDITUR E IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKIN G OF A CLAIM OF THE EXPENDITURE WHICH IS NOT SUSTAINABLE A ND DELETION OF PENALTY BY THE CIT(A) IS JUSTIFIED. WE PLACE RELIANCE ON THE JUDGMENT OF THE HON'BLE SUPREME COU RT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR, 158. ACCORDINGLY THE GROUND RAISED BY THE REVENUE H OLDS NO MERIT. SINCE THE FACTS OF THE PRESENT CASE ARE SQUARELY CO VERED BY THE DECISION, WHICH IS FURTHER RELIED ON THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETRO PRODUCTS (P) LTD, THEREFORE, THE GROUND PENAL TY LEVIED BY THE AO IS NOT SUSTAINABLE HENCE DELETED. 2.5. WE HAVE GONE THROUGH THE FINDINGS OF THE LD. CIT(A ). LD. DR WAS NOT ABLE TO CONTROVERT THESE FINDINGS , ON FACTS OR IN LAW. THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE JUDGME NT OF HYDERABAD BENCH IN THE CASE OF ACIT VS. SEAWAYS SHIPPING LTD. , FOR HOLDING THAT THIS IS NOT A CASE OF CONCEALMEN T OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. 2.6. IT IS FURTHER SEEN BY US THAT PENALTY ORDER IS QUIT E VAGUE. THE AO WAS NOT SURE AT THE TIME OF LEVY OF PENALTY, AS TO WHETHER THERE WAS ANY CONCEALMENT OF INCOME AND IF YES, THEN, OF WHAT AMOUNT. THE AO HAS MENTIONED IN THE PENALTY ORDER IN PARA 4.3 THAT: THE TAX ON THE AMOUNT OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.29,11,909/- AS PER ASSES SMENT ORDER ( TO BE SCALED DOWN AFTER VERIFICATION ORIGIN AL TDS VADILAL MILK PRODUCTS. 11 CHALLANS) COMES TO RS.9,80,150/- AND THREE TIMES TH EREOF WORKS OUT TO RS.29,40,450/- . THUS, AO WAS NOT SURE OR CLEAR AT ALL ABOUT AMOUNT OR QUANTUM OF INCOME CONCEALED. PENALTY CANNOT BE LEV IED IN SUCH A VAGUE AND CASUAL MANNER. IN OUR VIEW, NO PEN ALTY CAN BE IMPOSED IF THE FACTS AND CIRCUMSTANCES ARE EQUAL LY CONSISTENT WITH THE HYPOTHESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME AS WITH THE HYPOTHESIS T HAT IT DOES. IN THIS CASE, EXPLANATION GIVEN BY THE ASSESS EE, CAN BE SAID TO HAVE REMAINED, AT THE MOST, UNPROVED , IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, AND NOTHING WA S BROUGHT ON RECORD BY THE LD AO, IN THE ASSESSMENT PROCEEDIN GS OR PENALTY PROCEEDINGS, TO DISPROVE THE SAME. IN OTHER WORDS, ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THIS CAS E, IT CANNOT BE SAID THAT ASSESSEES CASE IS FALSE. OUR VIEW FIN DS SUPPORT FROM THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS UPENDER V. MITHANI , (ORDER DT 5 TH AUGUST, 2009 IN ITA NO 1860 OF 2009). 2.7. IT HAS BEEN FURTHER MENTIONED BY THE AO IN THE PEN ALTY ORDER AT PARA 4.2 THAT: ..FOLLOWING THE DIRECTIONS CONTAINED IN THE APP ELLANT ORDER, THE ASSESSEE WAS GIVEN OPPORTUNITY TO FURNIS H FOR VERIFICATION ORIGINAL CHALLNS FOR PAYMENT OF TDS. O N 28.03.2012, THE ASSESSEE FILED PHOTOCOPIED OF THE CHALLANS ALONG WITH STATEMENT OF TDS AND EXPENSES F OR VADILAL MILK PRODUCTS. 12 CLAIMING DEDUCTION U/S 40(A)(IA). APPEAL EFFECT TO THE APPELLATE ORDER HAS NOT BEEN GIVEN FOR WANT OF VERIFICATION OF ORIGINAL CHALLANS. AS THE LIMITATIO N DATE FOR PASSING OF HIS PENALTY ORDER IS 31.03.2012, THE AMOUNT OF PENALTY IS BEING QUANTIFIED ON THE AMOUNT DISALLOWED IN THE ASSESSMENT ORDER, SUBJECT TO RECTIFICATION U/S.154 ON FURNISHING OF ORIGINAL CHA LLANS EVIDENCING PAYMENT OF TDS FOR VERIFICATION. THE PERUSAL OF THE ABOVE OBSERVATIONS WOULD SHOW TH AT AO HAS PROCEEDED TO LEVY OF THE PENALTY WITHOUT FIRST DISC HARGING HIS LEGAL OBLIGATION OF PRECISELY QUANTIFYING AND ASCER TAINING THE AMOUNT OF TAXABLE INCOME OF THE ASSESSEE. UNTIL AND UNLESS, THE ASSESSED INCOME IS DETERMINED BY THE AO, CORREC TLY AS PER LAW, THE AO IS NOT CONFERRED WITH THE JURISDICTION TO LEVY THE PENALTY. THE PENALTY CAN BE LEVIED VIZ-A-VIZ ASSES SED INCOME ONLY. UNLESS THE AO HIMSELF IS SURE THAT HOW MUCH I NCOME IS GOING TO BE ASSESSED BY HIM, HE CANNOT PROCEED TO L EVY THE PENALTY AND THAT TOO, IN A HIGHLY VAGUE AND CASUAL MANNER. 2.8. FURTHER, WE FIND THAT AS PER FRAMEWORK OF PENAL PROVISIONS AS CONTAINED IN THE INCOME TAX ACT, THE PARAMETERS FOR LEVY OF PENALTY AND FOR ASSESSMENT OF INCOME, A RE QUITE DIFFERENT FROM EACH OTHER, BOTH CAN NEITHER BE MIXE D NOR INTERCHANGED. OUR VIEW IS SUPPORTED WITH THE JUDGME NT FROM COORDINATE BENCH OF ITAT-MUMBAI IN THE CASE OF MANGLAM DRUGS AND ORGANICS LTD (ITA NO 5454/MUM/ 2011 DT 24 TH VADILAL MILK PRODUCTS. 13 SEPTEMBER, 2015), RELEVANT OBSERVATIONS ARE REPRODU CED HEREUNDER: ..IT IS FURTHER NOTED BY US THAT THE AO HAS HELD THAT SINCE THE DISALLOWANCES HAVE BEEN CONFIRMED, IT IS ESTABLISHED THAT THE ASSESSEE HAS CONCEALED ITS INC OME AND PENALTY IS AUTOMATICALLY LEVIABLE. IN OUR VIEW, THIS APPROACH IS ALSO NOT ACCEPTABLE AS PER LAW. IT IS N OW A WELL SETTLED LAW, THAT THE ASSESSMENT PROCEEDINGS A RE INDEPENDENT PROCEEDINGS. IN A GIVEN SITUATION, T HE ASSESSEE MAY BE LIABLE FOR ASSESSMENT OF HIS TAXABL E INCOME, BUT THAT WOULD NOT, NECESSARILY AND AUTOMAT ICALLY, MAKE THE ASSESSEE LIABLE FOR LEVY OF PENALTY AS WEL L, ON THE INCOME ASSESSED. THE PARAMETERS FOR IMPOSITION TO TAX AND FOR LEVY OF PENALTY ARE DIFFERENT UNDER THE LAW . GRAVE ERRORS ARE DONE BY THE AOS, UNDER THE LAW, WHEN BOT H ARE MIXED UP. THE ASSESSEE MAY BE LIABLE TO BE TAXED FO R WANT OF SUBSTANTIATION OF THE CLAIM MADE BY THE ASSESSEE , BUT FOR LEVY OF PENALTY, THE AO MAY BE REQUIRED TO DISP ROVE THE CLAIM OR TO SHOW THAT THE CLAIM MADE BY THE ASSESSE E WAS BOGUS. IN THE PRESENT CASE, NO SUCH EXERCISE HAS BE EN DONE AT ALL BY THE AO WHILE LEVYING THE PENALTY AND THE PENALTY HAS BEEN LEVIED IN A HIGHLY AUTOMATIC, MECH ANISED AND CASUAL MANNER. THIS KIND OF APPROACH GIVES RISE TO AVOIDABLE HARDSHIPS TO THE TAXPAYERS AND SHOULD BE AVOIDED.. VADILAL MILK PRODUCTS. 14 2.9 IN OUR CONSIDERED VIEW, THE AO HAS NOT BEEN ABLE T O MAKE OUT ANY CASE FOR CONCEALMENT OF INCOME OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE, A S HAS BEEN RIGHTLY HELD BY THE LD. CIT(A) ALSO, AND THEREFORE, WE DO NOT FIND ANYTHING WRONG IN THE ORDER OF LD. CIT(A), AND HOLD THAT PENALTY HAS BEEN RIGHTLY DELETED BY THE LD. CIT(A), AND THEREFORE, HIS ORDER IS CONFIRMED. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER 2015. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; $ DATED : /10/2015 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. &'( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. +! + , ( & ) / THE CIT, MUMBAI. 4. +! + , / CIT(A)- , MUMBAI 5. /0 )12 , +! &' 12!3 , / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI