BALAJI MARBLE, MUMBAI V. ITO 14(1)(2), MUMBAI

ITA 5097/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2964 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHNA SARKAR
• Assessee Lawyers: B V JHAVERI
• Section: 27; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER . ITA. NO. 5097 / M UM /20 1 4 (ASSESSMENT YEAR: 2 0 0 8 - 0 9 ) M/S. BALAJI MARBLE, APPELLANT 99/103, 1 ST FLOOR, BHAGWAN BHAVAN, TAMBA KANTA, MUMBAI - 400003 . VS. ITO 14(1)(2), RESPONDENT MUMBAI PAN: AA AF B 44 35C / BY APPELLANT : SHRI B.V. JHAVERI , C.A. / BY RESPONDENT : MS. MAHNA SARKAR , SR. D.R. DATE OF HEARING : 22 . 0 8 .201 6 DATE OF PRONOUNCEMENT : 14.9 .201 6 ORDER PER RAJESH KUMAR , A . M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 25, MUMBAI FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE ONLY ISSUE RAISED IN VARIOUS GROUNDS OF APPEAL BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY OF I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 2 RS.5,19,811/ - A S IMPOSED BY THE AO U/S.271(1)(C) OF THE IT ACT ON ACCOUNT OF PROVISION FOR DETENTION CHARGES AMOUNTING TO RS.16,82,238/ - AND DEMURRAGE CHARGES AMOUNTING TO RS.4,73,100/ - . 3 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BU SINESS OF MANUFACTURING AND TRADING OF MARBLE PRODUCTS . THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. DURING THE YEAR, ASSESSEE HAS INCURRED DETENTION AND DEMURRAGE CHARGES TO THE TUNE OF RS.18,52,624/ - BY MAKING FULL DISCLOSURE OF FACTS REGARDING CLAIM OF PROVISION OF DEMURRAGE AND DETENTION CHARGES IN THE RETURN OF INCOME . THE ASSESSING OFFICER DISALLOWED THE SAID DETENTION AND DEMURRAGE CHARGES TO THE EXTENT OF RS.16,82,238/ - BEING THE PROVISION FOR EXPENSES FOR DEMURRAGE AND DETENTION CHARGES WHICH WAS PAYABLE TO JAWAHARLAL NEHRU PORT TRUST (JNPT) AND WAS OUTSTANDING AT THE YEAR END. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE DETAILS FROM THE ASSESSEE QUA THE SAID CLAIM AND AFTER ISSUING SHOW CAUSE NO TICE ADDED RS.16,82,238/ - TO THE INCOME OF THE ASSESSEE FOR THE REASONS THAT THE LIABILITY HAS NOT CRYSTALLIZED DURING THE YEAR AND WAS MERELY IN THE NATURE OF PROVISION S WHICH ARE NOT ALLOWABLE UNDER THE ACT. PENALTY PROCEEDINGS WERE ALSO INITIATED U/S.27 1(1)(C) READ WITH EXPLANATION 1 OF THE INCOME TAX ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER AFTER CONSIDERING REPLY OF THE ASSESSEE DATED 26.12.2012 CAME TO CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 3 AND ALSO CON CEALED THE PARTICULARS OF INCOME AND THEREFORE , WAS LIABLE FOR A PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT READ WITH EXPLANATION - I AND ACCORDINGLY IMPOSED A PENALTY OF RS.5,19,811/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED. IT IS PERTINENT TO MENTION THAT CIT(A) UPH E LD THE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WHICH WAS NOT CHALLENGED BEFORE THE TRIBUNAL AND T H US ATTAINED FINALITY. HOWEVER, THE ASSESSEE IN THE SUBSEQUENT YEAR REVERSED THE SAID PROVISION S FOR DEMURRAGE AN D DETENTION CHARGES AND OFFERED THE SAME FOR TAXATION. 4 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE SUBMISSION MADE DURING THE COURSE OF APPELLATE PROCEEDINGS AS REPRODUCED IN PARAGRAPH 4 OF THE APPELLATE ORDER AND FINALLY DISMISS ED THE APPEAL BY OBSERVING AND HOLDING AS UNDER: 4.3 I HAVE PERUSED THE FACTS OF CASE AND APPELLANTS SUBMISSIONS CAREFULLY. I FIND ON GOING THROUGH THE APPELLATE ORDER OF MY PREDECESSOR CIT(A) - 25 DATED 22.09.2011 [CIT(A) - 25/IT - 435/14(1)2/10 - 11] THAT THE APPELLANT HAD MADE PROVISION OF THE IMPUGNED AMOUNT OF RS.16,82,238/ - ON ACCOUNT OF DEMURRAGE/DETENTION CHARGES, AND NO CREDIBLE DOCUMENTARY EVIDENCE IN THE FORM O F COMMUNICATION FROM PORT TRUST AUTHORITY WAS FURNISHED, AND ALSO NO RELIABLE EVIDENCE WAS FURNISHED TO ESTABLISH THAT THERE WAS A CRYSTALLIZED AND GENUINE LIABILITY. IT WAS ESTABLISHED THAT THE AMOUNT COMPUTED BY THE ASSESSEE AND CLAIMED AS SUCH WAS BASED ON HYPOTHETICAL CALCULATION MADE BY THE APPELLANT. IT WAS ALSO OBSERVED THAT EVEN TILL THE DATE OF APPELLATE ORDER I.E. TILL 22.09.2011, THERE WAS NO PAYMENT OF SAID LIABILITY. IN THESE CIRCUMSTANCES, THE IMPUGNED LIABILITY CLAIMED BY THE ASSESSEE WAS NOT CONSIDERED ALLOWABLE EITHER AS A CRYSTALLIZED LIABILITY OR GENUINE LIABILITY. I FIND THAT THE APPELLANT ALONG WITH ITS WRITTEN SUBMISSION DURING PRESENT APPEAL HAS SUBMITTED COPIES OF VARIOUS DOCUMENTS SUCH AS ORDER OF APPEAL OF COMMISSIONER OF CUSTOMS (A PPEAL) DATED I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 4 18.01.2007, BOMBAY HIGH COURT ORDER DATED 18.04.2007 (WRIT PETITION NO. 1347/07), ORDER OF DY. COMMISSION OF CUSTOM DATED 17.09.2007, LETTER TO COMMISSION OF CUSTOMS (IMPORTS) FOR CLEARING OF CONSIGNMENT ETC. ON GOING THROUGH THE SAME, I CONCU R WITH THE FINDINGS OF MY PREDECESSOR CIT(A) IN QUANTUM APPEAL, AND NOTE THAT THERE IS NOTHING APPARENT IN SAID CORRESPONDENCE/ORDERS TO SHOW THAT THE APPELLANT WAS LIABLE TO PAY THE EXPENDITURE CLAIMED OF RS.16,82,238/ - . THE CONFIRMATION OF THE DISALLOWAN CE BY CIT(A), A ND FURTHER THE FACT THAT THE APPELLANT DID NOT APPEAL FURTHER AGAINST THE ORDER OF CIT(A), PROVES THAT THE IMPUGNED CLAIM OF EXPENDITURE BY THE APPELLANT WAS NOT BONAFIDE. I FURTHER FIND THAT THE APPELLANT HAS RELIED UPON VARIOUS CASE LAWS, INCLUDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. (SUPRA). ON GOING THROUGH THE RATIO OF SAID DECISIONS, I AM OF THE OPINION THAT THE PENALTY U/S . 271(1)(C) IS NOT LEVIABLE ONLY IN SUCH CASES WHERE AN ASSESSEE MAK ES A CLAIM IN THE RETURN OF INCOME, KNOWING IT TO BE A BONAFIDE CLAIM; HOWEVER, THE ASSESSEE CANNOT TAKE SHELTER OF SUCH CASE LAWS TO MAKE NON - GENUINE CLAIMS OF EXPENDITURE SOLELY FOR THE PURPOSE OF DEFLATING HIS TAXABLE PROFITS. IN THE CASE OF SANGHVI SWI SS REFILLS (P.) LTD. VS. ACIT [2012] 28 TAXMANN.COM 208 (BO M .) RELIED UPON BY THE AO, THE HON'BLE HIGH COURT OF BOMBAY, AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. (SUPRA) HELD THAT 'MAKING OF A CLAIM ON ADMITTED DISCLOSED FACTS IS DIFFERENT FROM FILING FALSE/INACCURATE PARTICULARS'. I FIND THAT THE APPELLANT HAD NOWHERE STATED IN THE RETURN OF INCOME THAT THE IMPUGNED EXPENDITURE CLAIMED OF RS.16,82,238/ - IS NEI THER PAID, NOR CRYSTALLIZED. THE PROVISION MADE WAS PURELY HYPOTHETICAL NOT SUPPORTED BY FACTS OF THE CASE ON RECORDS. THE PROVISION COULD HAVE BEEN MADE ONLY IN RESPECT OF ANY ASCERTAINED LIABILITY, AND NOT FOR ANY CONTINGENT LIABILITY. EVEN IF ANY PROVISION WAS MADE IN ACCOUNTS FOR ANY CONTINGENT LIABILITY, THE SAME SHOULD HAVE BEEN ADDED BACK IN COMPUTATION O F INCO ME. THE APPELLANT HAS NEITHER DISCLOSED THE TRUE FACTS IN RETURN OF INCOME, NOR ADDED BACK THE AMOUNT IN ITS COMPUTATION OF INCOME. THEREFORE, THE APPELLANT HAS FURNISHED INAC CURATE PARTICULARS OF ITS INCOME LIABLE FOR PENALTY U/S 271(1)(C) . IT IS A FACT THAT THE UNJUSTIFIABLE CLAIM MADE BY THE APPELLANT COULD BE UNEARTHED ONLY CONSEQUENT TO THE CASE OF APPELLANT BEEN SELECTED FOR SCRUTINY. IT IS TRUE THAT A VERY SMALL PERCENTAGE (2 - 3%) OF TAX RETURNS ARE TAKEN UP FOR SCRUTINY, AND IF PENALTY IS NOT LEVIED IN SUCH CASES OF ESCAPEMENT OF INCOME, THE DETERRENT EFFECT ON ASSESSEE OF THE PENALTY PROVISIONS U / S . 271(1)(C) WOULD BE LOST. IN SUCH A CASE, EVEN IF HIS TAX RETURNS ARE SELECTED FOR SCRUTINY AND SUCH INCOME IS BROUGHT TO TAX, THE ASSESSEE WILL HAVE TO PAY ONLY THE TAX WHICH HE WAS SUPPOSED TO PAY EVEN OTHERWISE. ON THE OTHER HAND, IN CASE THE RETURN IS NOT SELECTED FOR SCRUTINY, HE WOULD SAVE T HE TAX WHICH WOULD HAVE OTHERWISE PAYABLE BY HIM. IN SUCH A SITUATION, IT WOULD BE UNFAIR TO THE HONEST TAXPAYERS WHO LEGITIMATELY OFFER THEIR TAXABLE I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 5 INCOME IN THE RETURN OF INCOME. IN MY OPINION, THE LEVY OF PENALTY U/S . 271(1)(C) IN SUCH SITUATIONS IS TH E ONLY REMEDY TO DETER THE ASSESSEE TO MAKE TRUE DISCLOSURE OF HIS INCOME IN THE RETURN, AND THEREBY TO KEEP A CHECK ON THE LEAKAGE OF REVENUE. RELIANCE IS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 (SC), WHEREIN IT HAS BEEN HELD THAT 'THE EXPLANATIONS APPENDED TO SECTION 27 1 (1)(C) OF THE INCOME - TAX ACT ENTIRELY INDICATE THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILIN G THE RETURN.' HENCE, THE LEVY OF PENALTY U/S . 271 (1)(C) IN THE PRESENT CASE IS JUSTIFIED. IN VIEW OF THE ABOVE, I CONFIRM THE PENALTY LEVIED OF RS.5,19,811/ - . THEREFORE, THE G ROUNDS OF APPEAL ARE DISMISSED. 5 . LEARNED AR VEHEMENTLY SUBMITTED BEFORE US T HAT ASSESSEE HAS PROVIDED THE DETENTION AND DEMURRAGE CHARGES PAYABLE TO JAWAHARLAL NEHRU PORT TRUST IN RESPECT OF SLABS OF MARBLE IMPORTED BY THE ASSESSEE AND ACCORDINGLY CALCULATED THE SAID CHARGES BY APPLYING THE RATE CHARGED BY THE SAID PORT AUTHORITY AND PROVID ED THE SAME IN THE BOOKS OF ACCOUNT S OF THE ASSESSEE PURSUANT TO MERCANTILE SYSTEM OF ACCOUNTING. LEARNED COUNSEL FURTHER SUBMITTED THAT ASSESSEE - FIRM HAD IMPORTED M ARBLE SLAB S FROM SRI L ANKA VIDE BILL OF ENTRY DATED 20 TH JULY, 2006 , THE CLEARA NCE OF WHICH WAS CLAIMED UNDER PUBLIC NOTICE NO.25(RE - 98) DATED 1 ST AUGUST, 1998 ISSUE D BY THE CENTRAL GOVERNMENT U/S 5 OF FOREIGN TRADE [ DEVELOPMENT OF RE GULATION) ACT , 1992 . I N TERMS OF THE SAID NOTICE , THE IMPORT OF MARBLE SLABS FROM SAARC COUNTRIES WA S FREELY IMPORTABLE . H OWEVER , ACIT VIDE ORDER NO.22 ND NOVEMBER, 2006 REJECTED THE CONTENTION OF THE ASSESSEE AND CONFISCATED THE GOODS U/S. 1 11 (D) OF THE CUSTOM S ACT ON THE GROUND THAT PUBLIC N OTICE NO. 25(RE - 98) DATED 1 ST AUGUST, 1998 WAS NOT APPLICABLE BU T D G FT NOTIFICATION BEARING N O. 23/2005 DATED 31 ST AUGUST, I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 6 2005 READ WITH NOTIFICATION NO.26/2005 DATED 2 ND SEPTEMBER, 2005 WERE APPLICABLE. THE ASSESSEE FIRM PREFERRED AN APPEAL BEFORE COMMISSION ER OF CUSTOM (APPEALS) WHO VIDE ORDER DATED 18 TH JANUARY, 20 07 SET ASIDE THE ORDER OF CONFISCATION AND DIRECTED TO CLEAR THE GOODS FOR HOME CONSUMPTION ON PAYMENT OF CUSTOM DUTY. HOWEVER , DEPUTY COMMISSIONER OF CUSTOM S PREFERRED AN APPEAL TO C USTOM , E XCISE & SERVICE TAX APPELLATE T RIBUNAL WHICH IS PENDING FOR DISP OSAL TILL DATE . I N THE SAID APPEAL , THE DCIT REQUESTED FOR STAY OF THE OPERATION OF ORDER OF THE COMMISSIONER OF CUSTOM S (APPEALS) BUT THE SAME WAS RE JECTED BY CESTAT VIDE ITS ORDER DATED 5 TH APRIL, 2007 . T HEREAFTER , ASSESSEE - FIRM MOVED BEFORE THE HONBLE HIGH C OURT BOMBAY TO GRANT INTERIM RELIEF VIDE W RIT P ETITION NO.1347 OF 2007 TO DIRECT THE C OMMISSIONER OF CUSTOM S (I MPORT ) TO CLEAR GOODS COVERED BY B ILL OF ENTRY DATED 20 TH JULY, 2005 WHICH WAS GRANTED BY THE HIGH COURT VIDE ITS ORDER DATED 18 TH APRIL, 2 007 BUT THE DCIT INSTEAD OF RELEASING THE GOOD S, RAISED THE ISSUE OF V ALUATION OF GOODS DESPITE THE HIGH COURT ORDER AND ENHANCED THE VALUE OF GOODS BY PASSING ORDER DATED 17 TH SEPTEMBER, 2007 RAISING DEMAND OF CUSTOM S DUTY OF RS.2,05,142/ - . A GAIN ASESSE E CARRIED THE MATTER TO COMMISSIONER OF CUSTOM S (APPEAL) WHO ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 10 TH JANUARY, 2008 ON THE GROUND THAT DEPUTY COMMISSIONER OF CUSTOM S CANNOT NOW RAISE THE ISSUE OF VALUATION OF GOODS IMPORTED AS THE SAME WAS NOT RAISED IN THE ORIGINAL ORDER DATED 22 ND NOVEMBER, 2006 . A CCORDINGLY , QUASHED THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF CUSTOM S DATED 17 TH SEPTEMBER, 2007 . THE I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 7 APPEAL AGAINST THE SAID ORDER OF COMMISSIONER OF CUSTOM S (APPEAL) WAS FILED BY THE REVEN UE IN CESTAT WHICH IS PENDING TILL DATE. 5 . 1 LEARNED AR IN VIEW OF THE ABOVE FACTS SUBMITTED THAT SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND CALCULATED THE DETENTION AND DEMURRAGE CHARGES AS PER THE RATE LIST OF PORT TRUST AUTHOR ITY AND RIGHTLY PROVIDED RS.16,82,236/ - IN ITS BOOKS OF ACCOUNT WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND OF BEING CONTINGENT LIABILITY AND ALSO THAT THE ASSESSEE FAILED TO FURNISH THE BILL OF SAID AMOUNT. LEARNED CIT(A) ALSO DISMISSED THE APPEAL VIDE ORDER DATED 22 ND SEPTEMBER, 2011 ON THE GROUND THAT NO CREDIBLE EVIDENCE WAS FILED IN THE FORM OF ANY COMMUNICATION/LETTER FROM PORT B OARD T RUST A UTHORIT Y . T HEREAFTER , THE ASSESSEE INSTEAD OF GOING INTO FURTHER LITIGATION DECIDED TO WRIT E B ACK THE PROVISION ALREADY CREATED AT RS.16,82,236/ - AND OFFERED THE SAME FOR TAXATION WHICH WAS ACCEPTED BY THE INCOME TAX AUTHORITIES IN A.Y. 2011 - 12. 5 .2 LEARNED AR VEHEMENTLY SUBMITTED AND ARGUED THAT SINCE THE ASSESSEE HAS FULLY DISCLOSED THE PARTICU LARS OF CLAIM OF EXPENSES FOR DETENTION AND DEMURRAGE CHARGES IN THE RETURN FILED BEFORE THE AO WHICH HAD A REASONED AND SCIENTIFIC BASIS AND THEREFORE THE PENALTY HAS BEEN WRONGLY LEVIED U/S.271(1)(C) AND ALSO CONFIRMED BY THE CIT(A) WHICH WAS AGAINST THE PROVISION OF LAW . I N DEFENCE OF HIS ARGUMENT LEARNED AR RELIED UPON THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF CIT I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 8 VS. RELIANCE PETRO PRODUCT, 328 ITR 158 (SC) AND ALSO RELIED UPON THE ORDER OF HONBLE TRIBUNAL, DELHI BENCH IN THE CASE OF ITO VS. SRF INTERCONTINENTAL FINANCE PVT. LTD., 152 TAXMAN 55 (DELHI) . F INALLY , THE LEARNED AR SUBMIT ED THAT THE ASSESSEE HAD MADE BONA FIDE CLAIM WHICH WAS DULY DISCLOSED IN THE RETURN OF INCOME FILED AND THEREFORE THE PENALTY A S IMPOSED U/S.271(1)(C) BE DELETED . 6 . PER CONTRA, THE LEARNED DR RELIED HEAVILY UP ON THE ORDERS OF THE AUTHORITIES AND SUPPORTED THE SAME WITH THE PRAYERS THAT THE APPEAL OF THE ASSESSEE BE DISMISSED. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS PROVIDED A SUM OF RS.16,82,388/ - ON THE GROUND OF DETENTION AND DEMURRAGE EXPENSES PAYABLE TO JAWAHARLAL NEHR U PORT TRUST IN RESPECT OF GOODS WHICH WERE IMPORTED FROM SRI LANKA AND WERE IN THE CUSTODY OF THE PORT AS THE SAME W AS SEIZED BY THE DEPUTY COMMISSIONER OF CUSTOMS VIDE ORDER DATED 22 ND NOVEMBER, 2006 AND THEREAFTER , A SERIES OF LITIGATION S FOLLOWED AND REACHED UPTO HONBLE HIGH COURT AND EVEN THE HONBLE HIGH COURT DIRECTION ON THE ISSUE WERE NOT COMPLIED WITH BY THE DEPUTY COMMISSIONER OF CUSTOMS . W E ALSO FIND THAT THE PROVISION SO CREATED WERE REVERSED AND WRITTEN BACK BY THE ASS ESSEE IN A.Y.2011 - 12 AFTER T HE QUANTUM APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY WAS LOST BY THE ASSESSEE AND OFFERED THE SAME TO TAX . T HUS , THE QUANTUM PROCEEDINGS HAVE ATTAINED FINALITY . N OW THE LIMITED QUESTION BEFORE US IS WHETHER THE I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 9 PENALTY CAN BE IMPOSED WHERE THE ASSESSEE HAD MADE THE BONA FIDE CLAIM IN RESPECT OF EXPENSES WHICH WERE PROVIDED ON REASONED AND SCIENTIFIC BASIS AS T HESE CHARGES WERE PAYABLE TO JAWARHARLAL NEHRU PORT TRUST FOR THE GOODS STORAGE BY THE SAID AUTHORITIES IN ITS GODOWN FOLLOWING SEIZURE OF THE MATERIAL BY THE CUSTOM S AUTHORITIES. FROM THE FACTS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS GENUINELY DISCLOSED ALL THE FACTS QUA THE CLAIM OF THE EXPENSES WHICH WERE BASED ON A SCIENTIFIC METHOD AND ALSO IN RESPECT OF GOODS ACTUALLY IMPORTED FROM SRI L ANKA , AND THEREFORE , WE DO NOT DOUBT AND DISPUTE THE GENUINENESS OF THE CLAIM MADE BY THE ASSES SEE. WE ALSO FIND THAT THE PROVISION S WERE WRITTEN BACK WHEN THE ASSESSEE LOST THE QUANTUM APPEAL BEFORE CIT(A) AND DUE TAXES WERE PAID IN A.Y.2011 - 12. IN OUR OPINION, THE PENALTY CONFIRMED BY THE CIT(A) IS WRONG AND CANNOT BE SUSTAINED ON THE GROUND THAT THE ASSESSEE MADE GENUINE CLAIM FOR THE EXPENSES PAYABLE TO JAWAHAR LAL NEHRU PORT TRUST IN RESPECT OF THE GOODS ACTUALLY IMPORTED AND LYING AT THE PORT WHICH IN NO WAY CAN BE DESCRIBED AS FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOM E . THE CASE OF THE ASSESSEE ALSO FIND SUPPORT FROM THE DECISION OF APEX COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) WHEREIN IT HAS BEEN HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE BY ITSELF 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 EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY R EASON, THE I T A NO . 5097 / M UM / 1 4 A.Y. 200 8 - 0 9 [ M/S. BALAJI MAR BLE VS. ITO ] PAGE 10 ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN THE PRESENT CASE BEFORE US THE ASSESSEE PROVIDED FOR THE EXPENSES PAYABLE TO PORT TRUST WHICH WAS REJECTED BY THE AO ON THE GROUND O F BEING CONTINGENT AND CIT(A) UPHELD THE ACTION OF THE AO ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH ANY CREDIBLE EVIDENCE WHEREAS THE ASSESSEE PROVIDED FOR THE EXPENSES AS PER MERCANTILE SYSTEM OF ACCOUNTING. WE , THEREFORE , RESPECTFULLY FOLLOWING T HE RATIO LAID DOWN IN THE ABOVE DECISION AND ALSO IN VIEW OF THE FACT THAT CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE SAID DECISION , SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY . 8 . IN THE RESULT, THE APPEAL OF THE ASSESS EE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPT, 201 6 . SD SD (SHAILENDRA KUMAR YADAV) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED 14 / 9 /201 6 PRABHAT KESARWANI / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4. - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , TRUE COPY / , ,