M/s. Lala Harbhagwan Dass Memorial & Dr. Prem Hospital (P) Ltd., New Delhi V. ITO, New Delhi

ITA 5023/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61610 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS Y KAKKAR
• Assessee Lawyers: ASHWANI TANEJA TARUN KR; KUNA L NAGPAL CAS
• Keywords: Depreciation; Bonafide belief; Earning of tax free income; Wrong claim
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5023/DEL./2011 (ASSESSMENT YEAR : 2005-06) M/S LALA HARBHAGWAN DASS MEMORIAL & VS. ITO, WARD 39(3), DR. PREM HOSPITAL (P) LTD., NEW DELHI. C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART I, NEW DELHI. (PAN/GIR NO.AAACL9072G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI TANEJA, TARUN KR. & KUNA L NAGPAL, CAS REVENUE BY : MRS. Y. KAKKAR, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A), KARNAL, DATED 16.8.11 WHEREBY CONFIRMATION OF PENAL TY OF RS.4,68,865/- IMPOSED U/S 271(1)(C) HAS BEEN CHALLENGED. 2. THE FACTS ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE A. O. NOTED THAT THE ASSESSEE CLAIMED DEPRECIATION @ 4 O% ON THE BLOCK OF ASSETS OF LIFE SAVING EQUIPMENT WHICH INCLUDED ON ADDITION OF RS.55 LAKHS. THE ASSESSEE FURNISHED TWO BILLS IN RESPECT OF ADDITION OF R.55 LAKHS, VIZ., A BILL OF PURCHASE OF CT SCANNER SYSTEM FOR RS.51,07,704/-AN D ANOTHER BILL IN LIEU OF LEAD GLASS/UPS/STABILIZER FOR RS. 3,92, 296/-. B OTH THE BILLS WERE DATED 29.3.2005 AND OF M/S VIPRO GE MEDICAL SYSTEM LTD., HOSUR, KARNATKA TOTALING TO I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 2 RS.55 LAKHS. ON PERUSAL OF THE D EPRECIATION TABLE RELEVANT TO THE ASSESSMENT YEAR 2005-06 PROVIDED IN THE APPENDIX OF INCOME TAX RULES 1962, IT WAS NOTED THAT IN THE BLOCK OF PLANT AND MACHINERY AT S.NO. 3(XIA), AMONG THE LIST OF LI FE SAVINGS MEDICAL EQUI PMENT ELIGIBLE FOR DEPRECIATION @ 40%, THE NAME OF CT .SCAN MACHINE IS NOT MENTIONED. THE AO, THEREFORE, HELD THAT CT SCANNER MACHINE PURCHASED DURING THE YEAR IS NOT ELIGIBLE FOR DEPRE CIATION @ 40% UNDER TH E BLOCK OF LIFE SAVING MEDICAL EQUIPMENT. THE ASSESSE E DID NOT OFFER AN Y EXPLANATION IN THIS REGARD AND SUBMITTED THAT DEPRE CIATION @ 40% WAS CLAIMED UNDER THE BONAFIDE BELIEF THAT IT IS COVERED UNDER 'LIFESAVING MEDICAL EQUIPMENT' JUST LIKE MAGNETIC RESONANCE IMA GINE SYSTEM ON WHICH IT HAS BEEN CLAIMING DEPRECIATION @ 40% SINCE A.Y. 2003-04. THE A. 0., HOWEVER, NOTED THAT THE ASSESSEE REDUCED THE AMOUNT OF RS.5 LAKH ON ACCOUNT OF SALE OF OLD CT SCAN MACHINE FROM THE WDV OF THE BLOCK OF ASSETS UNDER THE HEAD 'PLANT & MACHINERY' ELIGIBLE FOR DEPRECIATION @ 4 .0% AND NOT FROM THE WDV OF BLOCK OF ASSETS UNDER THE HEAD 'LIFE SAVING MEDICAL EQUIPMENT' ELIGIBLE FOR DEPRECIATION @ 40%. THE A.O. FURTHER STATED THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE CT SCAN MACHINE P UR CHASED WAS PUT TO USE FOR THE PURPOSE OF BUSINESS DURING THE YEAR ITSELF AND HENCE HELD THAT THE SAME IS NOT ELIGIBLE FOR DEPRECIATION IN THE YEAR UNDER CONSIDE RATION AND DISALLOWED CT SCAN MACHINE OF RS.55 LAKH BY THE ASSESSEE. 2.1 THE ASSESSEE CLAIMED PAYMENT OF INTEREST OF RS. 5,93,815/-ON BUILDING LOAN TAKEN FOR CONSTRUCTION OF BUILDING WHICH WAS N OT USED FOR THE PURPOSES OF BUSINESS AND PROFESSION DURING THE YEAR UNDER CO NSIDERATION. THE SAME I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 3 WAS, THEREFORE. DISALLOWED AS EXPENDITURE BY THE A.O. THE A.O. ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT W.R.T. DISALLOWANCE OF DEPRECIATION AND OF INTEREST. 3. THE ASSESSEE CHALLENGED THE ORDER OF THE A.O BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ACTION OF THE A.O. THAT DEPRECIATION ON THE CT SCAN MACHINE WOULD BE ALLOWED AT NORMAL RATES I.E. 25% AS AGAINST CLAIMED BY THE APPELLANT AT 40% BUT PARTLY ALLOWED THE CLAIM OF THE APPELLANT AND HELD THAT DEPRECIATION ON THIS MACHINE WOULD BE ALLOWED FOR SIX MONTHS BEING THE SAME WAS USED FOR TWO DAYS DURING THE PREVIOUS YEAR. THE CIT(A) ALSO CONFIRMED THE ACTION OF THE AO REGARDING DISALLOWANCE OF INTEREST ON BUILDING LOAN TAKEN FOR CONSTRUCTION O F BUILDING WHICH WAS NOT USED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS AND PROFESSION. 4. THE A.O., ON RECEIPT OF THE ORDER OF THE CIT(A), TOOK UP THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, INITIATED VID E THE ASSESSMENT ORDER. DURING THE PENALTY PROCEEDINGS, THE APPELLANT SUBMI TTED THAT THE WRONG AND EXCESS CHARGING OF DEPRECIATION WAS UNINTENTIONAL A ND THERE WAS NO MALAFIDE MOTIVE ON THEIR PART, REGARDING THE CLAIM OF INTERE ST ON THE BUILDING LOAN, THE APPELLANT SUBMITTED THAT THE BUILDING WAS CONSTRUCT ED BY A CONTRACTOR AND ADVANCES WERE GIVEN TO 'HIM FROM TIME TO TIME WHICH WERE SHOWN AS 'ADVANCES TO CONTRACTOR' IN THE BALANCE SHEET AS THE CONTRACTOR DID NOT SUBMIT THE BILLS BEFORE F INALIZATION OF THE BALANCE-SHEET. THE ASSESSEE FURTHER CLAIMED THAT THE BUILDING WAS PUT TO USE DURING THE YEAR. IT IS FURTHER SUBMITTED THAT NO DEPRECIATION WAS CLAIMED SINCE THE COST OF CONST RUCTION OF THE BUILDING I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 4 WAS NOT TRANSFERRED TO THE 'BUILDING ACCOUNT' DURIN G THE YEAR UNDER CONSIDERATION. THE APPELLANT ALSO SUBMITTED THAT PE NALTY U/S 271(1)(C) IS NOT LEVIABLE SINCE IT HAS OFFERED AN EXPLANATION AND HAS SUBSTANTIATED IT AND PROVED THAT ITS EXPLANATION WAS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY IT AND REFERRED TO SOME DECISIONS. 5. THE SUBMISSIONS OF THE ASSESSEE WERE CONSIDERED BY THE A.O. BUT WAS NOT FOUND TENABLE FOR THE REASONS DISCUSSED IN PARA .4 AND 4.1OF HIS ORDER, WHICH ARE REPRODUCED BELOW IN WHICH THE ASSESSING O FFICER HELD THE ASSESSEE IS LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AND FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN DULY CONSIDERED BUT NOT FOUND TENABLE AS THE ASSESSEE HAS CLAIMED DEPRECIATION OF NEW SCAN MACHINE@ 4O% ON THE BLOCK OF ASSETS OF LIFE SAVING MEDICAL EQUIPMENT' WHEREAS THE ASSESSEE ITSELF WHEN SOLD T HE OLD CT SCAN MACHINE. THE ASSESSEE HAS REDUCED THIS AMOUNT FROM THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS UNDER THE HEAD 'PLANT & MACHINERY' ELIGIBLE FOR DEPRECIATION @25%. SECONDLY, THE NAME OF CT SCAN MACHINE IS NOT MENTIONED AMONG THE LIST OF LIFE SAVING MEDICAL EQU IPMENT ELIGIBLE FOR DEPRECIATION @40%. THEREFORE, IT IS CLEAR THAT THE ASSESSEE HAS WELL AWARE ABOUT THE CLAIM OF DEPRECIATION ON CT SCAN MA CHINE. THUS THE CONTENTION OF THE ASSESSEE THAT THE WRONG & EXCESS CHARGING OF DEPRECIATION WAS UNINTENTIONAL WAS NOT CORRECT. THE FACTS OF THE CASE LAWS AS STATED BY THE ASSESSEE ARE ALSO DIFFERENT FROM THE FACTS OF THE CASE OF THE ASSESSEE. THE SUBMISSIONS OF THE ASSESSEE REGARDING INTEREST ON BUILDING LOAN HAS ALSO DULY BEEN CONSIDERED AND FOUND NOT TE NABLE AS THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE OF ANY ELECTRICI TY, TELEPHONE OR WATER AVAILABLE FOR USE OR BEING USED IN THE BUILDING DURING THE PREVIOUS YEAR . SINCE THE ASSESSEE FAILED TO PROVE THAT THE BUILDIN G WAS WHOLLY/PARTLY PUT TO USE DURING THE FINANCIAL YEAR 2004-045 FOR BUSINESS PUR POSES, THEREFORE, INTEREST PAID ON BUILDING LOAN OF RS.593 815/- IS DISALLOWED US EXPENDITURE NOT RELATED TO THE BUSINESS. THE FACTS OF THE CASE LAWS AS I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 5 STATED BY THE A SSESSEE ARE ALSO DIFFERENT FROM THE FACTS OF THE CASE OF TH E ASSESSEE. KEEPING IN VIEW THE ABOVE ! FACTS, PENALTY U/S 271(L)(C) OF THE INCOME TAX ACT, 1961 IS IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME. 6. ASSESSEE TOOK UP THE MATTER IN APPEAL AND DURING THE APPEAL PROCEEDINGS, THE COUNSEL OF THE ASSESSEE FILED WRITTEN SUBMISSIONS. THE RELEVANT EXTRACTS THEREOF ARE EXTRACTED BELOW:- IN PURSUANCE TO OUR RECTIFICATION U/ S 154 BY ASSE SSEE, LD. ASSESSING OFFICER HAS PASSED ORDER DT. 08.02.2011 U/S 271 (1)(C)/ 154 AND REDUCED THE PENALTY AMOUNT TO RS. 3,68,236/-, COPY OF DEMAND NOTICE AND AO REC TIFICATION ORDER US 154 DT. 08.02.2011 ARE AT PG. 1-3. YOUR GOODSELF, IS THEREF ORE, REQUESTED TO AMEND THE GROUND NO. 1 OF APPEAL WHEREIN AMOUNT OF RS.4,68,86 5/ - HAS BEEN MENTIONED IT IS NOW RS.3,68,236/- A) THE APPELLANT IS A MULTI SPECIALTY HOSPITAL AND NURSING INSTITUTE WHEREIN THE RETURN OF INCOME WAS FILED ON 27.10.2005 DECLAR ING INCOME OF R. 22,79,121. THE ASSESSEE HAS CLAIMED DEPRECIATION @ 40% ON THE BLOCK OF ASSETS OF LIFE SAVING MEDICAL EQUIPMENTS WHICH INCLUDE PURCHASE OF CT SCANNER SYSTEM (HI SPEED FX/I) AMOUNTING RS.51,01,704 AND PURCHASE OF LEAD GLASS/ UPS/ STABILIZER FOR RS.3,92,296/ -. IN QUANTUM PROCEEDIN GS, AD MADE THE ADDITION FOR CHARGING HIGHER RATE OF DEPRECIATION @ 40% INSTEAD OF 25% BEING THE ABOVE SAID ITEMS ARE NOT 'UNDER THE LIST OF LIFE SAVING MEDICA L EQUIPMENTS COPY OF AO QUANTUM ORDER DT: 31.8.2007 IS. AT :PG.2937 WHERE AS PER ASSESSEE THE DEPRECIATION @ 40%WAS CHARGED FOR THE REASON THAT L IFE SAVING MEDICAL EQUIPMENTS INCLUDE AT POINT (I) MAGNETIC RESONANCE IMAGING SYSTEM (MRI) ON WHICH 40% DEPRECIATION. HAS TO BE CHARGED AS PER IN COME TAX ACT. BOTH MRI AND CT SCANNER ARE DIAGNOSTIC TOOLS TO NON-INVASIVE LY (NON-SURGICALLY) LOOK INSIDE THE BODY. BOTH HAVE SAME FUNCTIONS BUT ARE U SED FOR AND FOR DIFFERENT PURPOSES. THE DEPREDATION CHART AS PER INCOME TAX A CT AND NOTE ON CT SCAN & MRI FUNCTIONS AT PG.49-56.BEING PURELY MEDICO-TECHN ICAL TERMS AND CONSIDERING THE SAME FUNCTIONS, ASSESSEE TREATED THE CT SCANNE R AS LIFE SAVINGS MEDICAL, EQUIPMENT LIKE MRI AND CHARGED DEPRECIATION RATE @ 40% WHEREAS 14. AO HAS GONE BY EXACT PHRASEOLOGY IN DEPRECIATION CHART. B) AS REGARD CHARGING OF DEPRECIATION @ 25% ON OLD CT SCAN MACHINE, THE ASSESSEE WAS UNDER THE IMPRESSION THAT THEY WERE CH ARGING LESS DEPRECIATION EARLIER, ACTUALLY THE DEPRECIATION @ 40% HAS TO BE CHARGED. DUE TO SAID REASON, I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 6 ASSESSEE HAS CHANGED THE DEPRECIATION RATE FROM 25% TO 40% ON THE BASIS AS MENTIONED IN PARA (A). C) THE DEPRECIATION ON CT SCANNER @ 40% WAS CHARGED ON BONAFIDE BELIEF - THAT CT SCANNER AND MRI ARE OF SAME CATEGORY. ASSES SEE HAS PROVIDED ALL THE MATERIAL PARTICULARS BEFORE THE AO. THERE WILL NOT BE ANY REVENUE LOSS TO THE DEPARTMENT AS TOTAL DEPRECIATION AMOUNT CANNOT BE E XCEED BY THE COST OF MACHINERY OVER A PERIOD OF TIME AND THERE IS NOT MU CH DIFFERENCE IN INCOME TAX RATES FROM {A. Y. 2005-06 TILL DATE). (D) MOREOVER, THERE IS NO FINDING IN THE ORDER THA T WHICH PARTICULARS HAVE BEEN FURNISHED INACCURATE BY THE ASSESSEE. MERELY .THE L D. AO HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE THAT DEPRECIATION @ 40% HAS TO, BE CHARGED ON CT SCAN INSTEAD OF 25% AS PROVIDED BY ASSESSING OFFICE R DOES NOT ATTRACT PENALTY U/S 271(1)(C).... (E) FURTHER THE REASON FOR EXCESS CHARGING OF DEPRE CIATION HAS 'BEEN MENTIONED ABOVE WHICH IS BY MISTAKE AND NOT A DELIBERATE DEFA ULT. (F) FURTHER ACCOUNTS OF THE ASSESSEE ARE AUDITED U / S 44AB OF THE INCOME TAX ACT AS WELL AS UNDER THE COMPANIES ACT, 1956. THE A UDITOR HAS NOT OBJECTED IN HIS AUDIT REPORT IN FORM NO. 3CD PARA 4 REGARDING E XCESS CHARGING OF DEPRECIATION ON CT SCAN, COPY OF AUDIT REPORT U/ S 44AB &. AUDITED BALANCE SHEET AS ON 31.3.2005 ARE AT PG.5-28. THAT THE ASSE SSEE HAS ACTED UPON THE AUDIT REPORT AND, ON BONAFIDE BELIEF CHARGED DEPRECIATION @ 40% ON C. T. SCAN, WHERE THE ASSESSEE ACTED UPON ADVISE OF AUDITOR/ EXPERT T HEN NO PENALTY CAN BE LEVIED. 4.(A) AS REGARD INTEREST ON BUILDING LOAN AMOUNTIN G TO RS. 5,93,815/ - WAS CLAIMED. THE BUILDING LOAN WAS USED TO CONSTRUCT BU ILDING OF NURSING INSTITUTE. THE BUILDING WAS CONSTRUCTED BY CONTRACTOR AND ADV ANCE WERE GIVEN TO HIM FROM TIME TO TIME WHICH WAS SHOWN AS ADVANCE TO CONTRACT OR IN THE BALANCE, SHEET AS CONTRACTOR, HAD NOT SUBMITTED -THE :BILLS BEFORE FI NALIZATION OF BALANCE SHEET. THE 'BUILDING WAS PUT TO USE DURING THE YEAR. AS THE CO ST OF CONSTRUCTION OF BUILDING WAS NOT TRANSFERRED TO BUILDING ACCOUNT, NO DEPRECI ATION WAS CLAIMED AND AMOUNT OF RS. 1,17,11,3401- WAS SHOWN; AS ADVANCE TO CONTR ACTOR, COPY OF BALANCE SHEET FOR THE IMPUGNED YEAR IS AT PG.19-.28. IN NEXT ASSE SSMENT YEAR THE SAID ADVANCE TO CONTRACTOR HAS BEEN TRANSFERRED TO BUILDING A/C AND DEPRECIATION HAS BEEN CHARGED. (B) FURTHER AS SUBMITTED IN QUANTUM PROCEEDINGS TH AT THE SAID BUILDING WAS COMPLETE AND USED FOR THE PURPOSE OF BUSINESS DURIN G THE YEAR ONLY. CLASSES WERE HELD IN THE SAID BUILDING AND SURVEY PARTY CONDUCTE D SURVEY OF THE SAID BUILDING ON 29.11.2004 FOR 8 LONG HOURS AND FOUND THE USER O F THE BUILDING THEMSELVES IN PERSON. STATEMENT OF THE REASONS PRESENT AT THE SAI D SCHOOL BUILDING WERE RECORDED. THE FACTS CAN BE VERIFIED FROM THE SURVEY [OLDER OF THE REVENUE DEPARTMENT AND AFFIDAVIT OF DIRECTOR IS AT PG. 58. THE USER OF THE BUILDING IS EVIDENT BY THIS FACT I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 7 THAT THE EARLIER BUILDING BEING USED FOR CLASSES WA S ON RENT FOR RS. 6,500/- PER MONTH TILL SEPT. 2004 WHICH WAS DISCONTINUED WHEN O WN BUILDING WAS READY FOR USE. THE SAID FACT CONFIRMS THAT OLD BUILDING WAS N O LONGER IN USE AND NEW BUILDING WAS USED FOR BUSINESS PURPOSES. EVEN THE B US WAS PURCHASED FOR THE PURPOSE OF TRANSPORTING AND FERRYING THE STUDENTS T O THE NEW BUILDING, COPY OF RECEIPT FOR PURCHASE OF BUS IS AT PG. 57. THE USER OF THE SAID BUILDING IS FURTHER ESTABLISHED BY THE COPY OF THE LEDGER ACCOUNT OF TH E ELECTRICITY TO SHOW THAT CLASSES STARTED FROM NOV. 2004 AND THE ELECTRICITY CHARGES JUMPED SUBSTANTIALLY SINCE THEN, COPY OF LEDGER A/C OF ELECTRICITY IS AT PG. 5 9; HOWEVER THE LD. AO AND LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E DURING QUANTUM PROCEEDINGS AND DISALLOWED INTEREST: PAID DURING THE YEAR' ON. LOAN TAKEN FOR CONSTRUCTION OF BUILDING; COPY OF ORDER IS AT PG. 29-37 RELEVANT PA GE 34-36 PARA.3 AND CIT(A)ORDER IS AT PG. 38-45 RELEVANT PAGE 44-45. WH EREAS ASSESSEE HAS PROVIDED ALL RELEVANT MATERIAL DURING QUANTUM PROCEEDINGS BE FORE AO AND CIT(A) AS WELT AS IN PENALTY PROCEEDINGS. (C) THE ASSESSEE HAS CLAIMED INTEREST ON LOAN TAKE N FOR CONSTRUCTION OF BUILDING AS IT WAS PUT TO USE DURING THE YEAR. HO WEVER, THE AO' DENIED' INTEREST UNDER CONSIDERATION ON THE GROUND THAT THERE WAS NO USE OF BUILDING DURING THE YEAR. SURVEY REPORT WHEREIN IT WAS MENTIONED THAT 75% OF THE WORK WAS COMPLETED AS ON DT. 29.11.2004 AND THERE WERE STILL 4 MONTHS LEFT FOR YEAR ENDING AS ON 31.3.2005 TO COMPLETE THE BUILDING, THE DISCO NTINUANCE OF OLD BUILDING, NEW BUS PURCHASED PURPOSE OF TRANSPORTING AND FERRYING THE STUDENTS TO THE NEW BUILDING FOR CLASSES AND SUBSTANTIAL INCREASE IN EL ECTRICITY PAYMENT CLEARLY ESTABLISHES THAT APPELLANT HAS STARTED USING NEW BU ILDING FOR CLASSES OF STUDENTS WHICH IS THE BUSINESS OF THE APPELLANT AND THERE WA S NO FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE TO MERIT IM POSITION OF A PENALTY. AT BEST IT WAS THE CASE OF REJECTION OF THE ASSESSEE'S EXPLANA TION OFFERED FOR A CLAIM OF INTEREST AND A REJECTION OF APPELLANT'S CLAIM UNDER A BONAFIDE IMPRESSION. IT COULD NOT, BE SAID THAT THE ASSESSEE HAD CONSCIOUSLY CONC EALED PARTICULARS OF ITS INCOME OR FACTS, IT IS ONLY A CASE OF DIFFERENCE OF OPINIO N AND NOT OF CONCEALMENT OR FILING OF INACCURATE PARTICULARS OF INCOME. 7. CIT(A) WHILE CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DISCUSSING VARIOUS CASE LAWS ON BOTH THE ITEMS OF DEPRECIATION AS WELL AS CHARGE OF INTEREST ON CAPITAL FOR INCOMPLETE BUILDING AND CONCLUDED TO CONFIRM THE AC TION OF THE ASSESSING OFFICER AS PER PARA.3.15 OF HIS ORDER AS UNDER: IN VIEW OF THE FACTUAL AND LEGAL POSITION DISCUSSE D ABOVE, IT IS HELD THAT THE APPELLANT FURNISHED INACCURATE PARTICULARS OF ITS I NCOME BY CLAIMING HIGHER DEPRECIATION ON THE CT SCAN MACHINE AND BY CLAIMING INTEREST ON BUILDING LOAN TAKEN FOR THE BUILDING WHICH WAS UNDER CONSTRUCTION AND WAS NOT PUT TO USE DURING I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 8 THE YEAR UNDER CONSIDERATION AND HENCE, IS LIABLE F OR PENALTY U/S 271(1)(C) OF THE ACT. THE PENALTY LEVIED BY THE ASSESSING OFFICER I S, THEREFORE, CONFIRMED. 8. STILL AGGRIEVED, ASSESSEE HAS COME UP IN FURTHER APPEAL AND WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE LOWER AUTHORITIES, IT WA S PLEADED FOR DELETION OF THE IMPUGNED PENALTY AS IMPOSED BY THE ASSESSING OFFICE R AND CONFIRMED BY THE CIT(A). SINCE THE CLAIM OF DEPRECIATION AT HIGHER RATE WAS BONA FIDE ACTION ON THE PART OF THE ASSESSEE BECAUSE CT SCAN IS ALSO IN A WAY LIFE SA VINGS EQUIPMENT AND SO FAR AS INTEREST ON CAPITAL INVESTMENT IN INCOMPLETE BUILDI NG WHICH HAS BEEN USED AS CLASS ROOMS. SO, CLAIM OF THE ASSESSEE WITH RESPECT TO BOTH THE ITEMS IS BONA FIDE ONE, HENCE, PENALTY IS NOT ATTRACTED. RELIANCE WAS HEAVILY PLACED ON D ECISION OF GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, 249 I.T.R. 125, THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 I.T.R. 158 AND HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SIDDHARTHA ENTERPRISES, 322 I.T.R. 80 AND BOMBAY HIGH COURT DECISION IN THE CASE OF CI T VS. UPENDER DATED 5.8.2009. 9. LD.COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON VARIOUS DOCUMENTS FURNISHED IN THE PAPER BOOK AND PARTICULAR REFERENCE HAS BEEN MADE TO PAGE 14, 28-30, 31, 34, 54 AND 55-70 TO LAY STRESS ON THE PLEA THAT ALL RELEVA NT FACTS WERE ALREADY THERE WITH THE ASSESSING OFFICER. IN THIS CASE, ASSESSING OFFICER HAS NOT ESTABLISHED THAT ASSESSEE HAS FURNISHED ONLY INACCURATE PARTICULARS OF INCOME AND , MOREOVER, NEITHER ANY CONCEALMENT HAS BEEN DETECTED NOR ANY NEW FACT WAS FOUND AND IN VIEW OF AUTHORITATIVE PRONOUNCEMENTS AS RELIED UPON, PENALTY IN THIS IS NOT EXIGIBLE WHICH SHOULD BE DELETED. 10. LD.DR. WHILE RELYING UPON THE BASIS AND REASONI NG AS GIVEN BY THE ASSESSING OFFICER AS WELL AS BY CIT(A), HAS PLEADED FOR CONFI RMATION OF THE IMPUGNED ORDER. IT WAS I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 9 FURTHER SUBMITTED THAT ASSESSEE HAS NOT BEEN ABLE T O PROVE THE BONA FIDE, AND MOREOVER ENTRIES IN THE BOOKS OF ACCOUNT DISPEL THE CONTENTI ON OF THE ASSESSEE THOUGH DEPRECIATION WAS CLAIMED AT 40%. FURTHER RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF KUTTOOKARAN MACHINE TOOLS VS. ACIT, 313 I.T.R. 413( KER.), CIT VS. HARPARSHAD & CO. LTD., 328 I.T.R. 53(DEL.), CIT VS. HARSH, 07 I.T.R .(TRIB.) 711 (MAD.), CIT VS. ECS LTD., REPORTED IN 36 I.T.R. 162 (DEL.) AND ACIT VS. VBS I NVESTMENT,(2010-TIOL-422-ITAT- DEL.) AND ANAND & ANAND VS. ACIT (2010-TIOL-592-ITA T-DEL.). REFERENCE WAS ALSO MADE TO ASSESSING OFFICERS ORDER AT PAGE 6 OF PARA .3. BOOKS OF ACCOUNT GIVES DIFFERENT VERSION REFERRING TO CIT(A) ORDER AT PAGE 13, PARA .2.08 ON PAGE 17 AND PAGES , 40, 54, 55 & 56 OF PAPER BOOK TO PLEAD FOR CONFIRMATION OF THE ORDER AS ASSESSEE HAS MADE A TOTALLY WRONG CLAIM WITH RESPECT TO BOTH THE ITEMS. THEREF ORE, PENALTY IS ATTRACTED, WHICH HAS BEEN RIGHTLY IMPOSED BY THE ASSESSING OFFICER AND C IT(A) IS JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. IT WAS PRAYED FOR CONFORMATION OF THE IMPUGNED ORDER. 11. LD.COUNSEL FOR THE ASSESSEE IN ORDER TO COUNTER THE SUBMISSION OF THE LD.DR HAS SUBMITTED THAT THE DECISION IN THE CASE OF RELIANCE PETRO (SUPRA) IS IN SUPPORT OF THE PLEA OF THE ASSESSEE. SO FAR AS USE OF BUILDING IS CONC ERNED, ONE SHOULD SEE DE FACTO UTILIZATION AND NOT SIMPLE BOOK ENTRIES BECAUSE SUCH BUILDING W AS BEING USED FOR CLASS ROOMS AND ASSESSEE HAS DISCONTINUED WITH THE OLD RENTED PREMI SES, HAS ALSO PURCHASED ONE BUS IN ORDER TO FERRY THE STUDENTS TO THEIR CLASS ROOMS AN D THESE ALL FACTORS DO SUPPORT THE CASE OF THE ASSESSEE, UNDER THE BONA FIDE IMPRESSION, THE CLAIM WITH RESPECT TO BOTH THE ITEMS WAS MADE IN THE RETURN OF INCOME. THEREFORE, THERE IS NO OCCASION FOR IMPOSING THE PENALTY. IT WAS ALSO SUBMITTED THAT CIT(A) HAS CONFIRMED THE PENALTY AT OLD AMOUNT WHEREAS ASSESSEE HAS CATEGORICALLY SUBMITTED IN WRITING THA T PENALTY IMPOSED HAS BEEN PARTIALLY I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 10 REDUCED BY THE ASSESSING OFFICER HIMSELF ON THE BAS IS OF RELIEF ALLOWED AND IT CLEARLY SHOWS THAT CIT(A) HAS NOT APPLIED HIS MIND PROPERLY . SINCE PENALTY IS NOT EXIGIBLE IN THIS CASE, THEREFORE, SAME SHOULD BE DELETED WHICH MAY B E DELETED. 12. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE FACTS OF THE CASE, RELEVANT MATERIAL AND THE DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE AS WELL AS BY THE DEPARTMENT, AS REGARDS PENALTY LEVIED IN RESPECT OF AMOUNT OF EXCESS DEPRECIATION AND INTEREST ON AMOUNT BORROWED FOR BU ILDING WHICH WAS INCOMPLETE AND FIND THAT NOT EVEN A WHISPER HAS BEEN MADE I N THE PENALTY ORDER AS TO WHICH SPECIFIC PARTICULARS WERE FURNISHED INACCURATE OR WERE CONCEALED. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME' A ND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEFINED EITHER IN SECT ION 271 OR ELSEWHERE IN THE ACT . HOWEVER, NOT WITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFE CT NAMELY, KEEPING OF F A CERTAIN PORT ION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET . THE WORD 'CONCEAL ' IS CON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITH DRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT ; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT I S, THUS, A DIRECT AT TEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, ' INACCURATE' HAS BEEN DE FINED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT ; NOT AC CORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT , COPY OR TRANSCRIPT .'. 13. THE PENALTY U/S 271(1)(C) OF THE AC T IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 11 THE PARTICULARS OF HIS INCOME OR FURNISHED I NACCURATE PARTICULARS OF SUCH INCOME. IT IS SETTLED POSITION THAT ASSESSMENT PRO CEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT, 123 ITR 457, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENAL TY PROCEEDINGS. I T IS ALSO WELL SETT LED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1) (C ) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE AD DITIONS. IT IS, THEREFORE, NECESSARY TO RE-APPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION OR DISALLOWANCE MADE IN THE QUANTUM PROCEEDINGS ACTUAL LY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1)(C) OF THE ACT, AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. THE PROVISIONS OF SECT ION 271(1)(C) OF THE ACT STIPULATE THAT IF THE ASSESSING OFFICER OR THE CIT(APPEALS) OR THE COMMISSIONER, IN THE COURSE OF PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACC URATE PARTICULARS THEREOF , HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY A REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME. EXPLANATION 1 TO SECTION 271(1)(C) OF THE AC T MENTIONS THAT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF T HE TOTAL INCOME OF ANY PERSON UNDER THE ACT , SUCH PERSON FAILS TO OFFER AN EX PLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR THE CIT (APPEALS) OR TH E COMMISSIONER TO BE FALSE, OR SUCH I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 12 PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT AL L THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HI S TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOWED I N COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSE OF CLAUSE (C) OF SECT ION 271(1), BE DEEMED TO REPRESENT THE INCOME I N RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN OTHER WORDS, THE NECESSA RY INGREDIENTS FOR ATTRACTING EXPLANATION 1 TO SECT ION 271(1) (C) ARE THAT (I ) THE PERSON FAILS TO OFFER THE EXPLANATION, OR (II) HE OFFERS THE EXPLANATIO N WHICH IS FOUND BY THE AO OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANT IATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BON A FIDE AND THAT AL L THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. 14. IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1) (C) COME INTO PLAY, AND THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF W HICH PARTICULARS HAVE BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1) , AND THE PENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER AN EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSE E HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION ION 1 TO SECT ION 271(1) (C) OF THE ACT , AND IN THAT CASE, THE PENALTY SHALL NOT BE I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 13 IMPOSED. IN THE INSTANT CASE, THE ASSESSEE DI SCHARGED THE ONUS CAST ON IT IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF TH E ACT . HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF V. JT . CIT [20 07] 210 CTR (SC) 228 : [2007] 291 ITR 519 (SC) WHILE CONSIDERING THE SCOPE OF THESE PROVISIONS U/S 271(1) ( C) OF THE ACT OBSERVED IN THE FOLLOWING TERMS: THE LEGAL HISTORY OF SECT ION 271(1) (C) O F THE ACT T RACED FROM THE 1922 ACT PRIMA FACIE SHOWS THAT THE EXPLAN ATIONS WERE APPLICABLE TO BOTH THE PARTS. HOWEVER, EACH CASE MUST BE CONS IDERED ON ITS OWN FACTS. THE ROLE OF THE EXPLANATION HAVING REGARD TO THE PRINCIPLE OF STATUTORY INTERPRETATION MUST BE BORNE IN MIN D BEFORE INTERPRETING THE AFOREMENTIONED PROVISIONS. CLAUSE (C) OF SUB- SECT ION (1) OF SECTION 271 CATEGORICALLY STATES THAT THE PENAL TY WO ULD BE LEVIABLE IF THE ASSESSEE CONCEALS THE PARTICULARS OF HIS INC OME OR FURNISHES INACCURATE PARTICULARS THEREOF . BY REASON OF SUCH CONC EALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOE S NOT IPSO FACTO BECOME LIABLE FOR PENALTY. IMPOSITION OF PENALTY IS NOT AUTOMATIC. LEVY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE BUT SUCH DI SCRETION IS REQUIRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEPING THE RELEVANT FACTORS IN MIND. SOME OF THOS E FACTORS APART FROM BEING INHERENT IN THE NATURE OF PENAL TY PROCEEDI NGS AS HAS BEEN NOT ICED IN SOME OF THE DECISIONS OF THIS COURT , INHERES ON THE FACE OF THE STATUTORY PROVISIONS. PENAL TY PROCEEDINGS ARE NOT TO BE INITIATED, AS HAS BEEN NOTICED BY THE WANCHOO COMMITTEE, O NLY TO HARASS THE ASSESSEE. THE APPROACH OF THE ASSESSING OFFIC ER IN THIS BEHALF MUST BE FAIR AND OBJECTIVE. THE TERM ' INACCURATE PARTICULARS' IS NOT DE FINED. FURNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY N OT BY ITSELF BE FURNISHING OF INACCURATE PARTICULARS. EVEN, IF THE EXPLANATIONS ARE TAKEN RECOURSE TO, A FINDING HAS TO BE ARRI VED AT HAVING REGARD TO CLAUSE (A) OF EXPLANATION 1 THAT THE ASSES SING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATIO N OFFERED BY AN ASSESSEE, IN THE EVENT HE OFFERS ONE, WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO PROVE THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT AL L THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. THUS, APART FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD HAVE BEEN FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS MATERIAL TO THE COMPUTATION OF HIS INCOME. I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 14 15. IN THE LIGHT OF AFORESAID OBSERVATIONS OF THE HONBLE APEX COURT, WHAT IS TO BE SEEN IN THE INSTANT CASE, IS WHETHE R THE CLAIM FOR DEDUCTION OF EXCESS DEPRECIATION AND INTEREST ON AMOUNT BORROWED FOR BU ILDING WHICH WAS INCOMPLETE, MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHE R AT ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L )(C) OF THE ACT . THE ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH THAT THE C LAIM OF THE ASSESSEE FOR DEDUCTION OF EXCESS DEPRECIATION AND INTEREST ON AMOUNT BORROWED FOR BUILDING WHICH WAS INCOMPLETE WAS NOT BONA FIDE OR THAT ANY SPECIFIC PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. A MERE REJECT ION OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETATIONS DOES NOT AMOUNT TO CONCEALMEN T OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF BY TH E ASSESSEE. HON'BLE APEX COURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 I TR 158, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF V. JT. C IT [2007] 291 ITR 519/ 161 TAXMAN 218 (SC) AND UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC) CONCLUDED THAT A MERE MAKING O F A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN THE CASE UNDER C ONSIDERATION, THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE FURNISHED ANY IN ACCURATE PARTICULARS OR CONCEALED THE PARTICULARS. ADMITTEDLY, THE CLAIM FOR DEDUCTIO N OF EXCESS DEPRECIATION AND INTEREST ON AMOUNT BORROWED FOR BUILDING WHICH WAS INCOMPLETE W AS THERE IN THE DOCUME NTS I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 15 FORWARDED WITH THE RETURN. IN THIS VIEW OF T HE MATTER, NO FAULT CAN BE FOUND WITH THE CLAIM OF THE ASSESSEE THAT IT HAD CLAIMED THE DEDUCT ION IN A BONA FIDE MANNER. 16. IN THE CASE UNDER CONSIDERATION, AS P OINTED OUT BY THE LD. AR OF THE ASSESSEE HAD GIVEN ALL THE PARTICULARS OF INCOME AND HAD DISCLOSED ALL FACTS TO THE AO IN RELATION TO CLAIM FOR DEDUCTION OF EXCESS DEP RECIATION AND INTEREST ON AMOUNT BORROWED FOR BUILDING WHICH WAS INCOMPLETE. MERE DISALLOWANCE OF A CLAIM WILL NOT AMOUNT TO FILING OF INACCURATE PARTICULARS OF I NCOME. IT CAN AT BEST BE A WRONG CLAIM NOT A FALSE CLAIM. IN SUCH CIRCUMSTANC ES, HONBLE DELHI HIGH COURT HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX VS BAC ARDI MARTINI INDIA LIMITED.,288 ITR 585(DEL) THAT NO PENALTY WAS LEVIABLE. IN CIT VS. HARSHVARDHAN CHEMICALS & MINERALS LTD. (259 ITR 212) (RAJ), HONBLE RAJASTHAN HI GH COURT UPHELD THE FINDING OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AMOUNT THOUGH THAT IS DEBATABLE, IN SUCH CASES, IT CANNOT BE SAID THAT TH E ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION O F THE TAX. RECENTLY, HONBLE APEX COURT IN RELIANCE PETRO PRODUCTS(SUPRA) HELD THAT 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. THUS, MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE IN RELATION TO EXEMPT INCOME, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE ARE OF THE OPINION THAT THE DISALLOWANCE OF CLAIM FOR DEDUCTIONS OF EXCESS DEPRECIATION A ND INTEREST ON AMOUNT BORROWED FOR BUILDING WHICH WAS INCOMPLETE, CANNOT BE CONSIDE RED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF, ESPE CIALLY WHEN ALL THE RELEVANT PARTICULARS I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 16 WERE DISCLOSED BEFORE THE AO. THE FOLLOWING OB SERVATIONS MADE BY THE HONBLE APEX COURT IN THE AFORESAID CASE OF M/S RELI ANCE PETRO PRODUCTS(SUPRA) ARE RELEVANT: 10. IT WAS TRIED TO BE SUGGESTED THAT SE CTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT O F THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POIN TED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSE E HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT; I T AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; ( I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN AGGREGATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WEL L 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 PAR T. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH C LAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY IT SELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271 (1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF VERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLAT URE. 11. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT M ADE IN SREE KRISHNA ELECTRICAL V. STATE OF TAMIL NADU & ANR. [(2009) 2 3VST 249 (SC)] AS REGARDS THE PENALTY ARE APPOSITE. IN THE AFORE MENTIONED DECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS IN T AMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THAT THE AUTHORI TIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATEMENTS MADE I N THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REFLECTED IN THE ACCOUNT S OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED: 'SO FAR AS THE QUESTION OF PENALTY IS CONCE RNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVER ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES IN CLUDE THESE I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 17 ITEMS IN THE DEALER'S TURNOVER DISALLOWING TH E EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STAND S SET ASIDE.' THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN I TS RETURN. 17. IN VIEW OF THE FOREGOING, WE ARE OF THE OPI NION THAT MERE ERRONEOUS CLAIM IN THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY, ESPECIALLY WHEN THERE IS NO THING ON RECORD TO SHOW THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BONA FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE . IN THESE CIRCU MSTANCES, WE HAVE NO HESITATION IN OBSERVING THAT NO PENALTY IS EXIGIBLE IN RELATION TO CLAIM FOR DEDUCTION OF EXCESS DEPRECIATION AND INTEREST ON AMOUNT BORROWED FOR BU ILDING WHICH WAS INCOMPLETE. THEREFORE, WE HOLD THAT PENALTY IS NOT IMPOSABLE IN THIS CASE AND ACTION OF AUTHORITIES BELOW IN IMPOSING/CONFIRMING THE PENALTY U/S 271(1) (C) OF THE ACT IS NEITHER PROPER NOR JUSTIFIED. AS SUCH, WHILE ACCEPTING THE PLEA OF TH E ASSESSEE, WE DIRECT TO DELETE THE IMPUGNED PENALTY IMPOSED/CONFIRMED. 18. IN VIEW OF DISCUSSION AS HELD ABOVE AND IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT AND HOLD ACCORDINGLY. 18. AS A RESULT, THE APPEAL OF THE ASSESSEE GETS AC CEPTED. ORDER PRONOUNCED IN OPEN COURT ON 13/04/2012. SD/- SD/- (B.C. MEENA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : APRIL 13, 2012 I.T.A. NO.5023/DEL./2011 (A.Y. : 2005-06) 18 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A), KARNAL. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT