ITO, JODHPUR V. Shri Krishan Kumar Vishnoi, JODHPUR

ITA 525/JODH/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4918 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation; Rule of consistency
• Section: 143(3); 234B; 10B; 27

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 565/JODH/2009 (A.Y. 2004-05) SHRI KRISHAN KUMAR VISHNOI, VS ACIT, CIRCLE-1, PROP. M/S. VISHNU ART & CRAFTS JODHPUR. C/O. M/S. R.P. MUNDRA & CO., OUT SIDE SIWANCHI GATE, JODHPUR. PAN NO. AFUPK8776N ITA NO. 525/JODH/2009 (A.Y. 2004-05) & ITA NO. 526/JODH/2009 (A.Y. 2006-07) ITO, WARD-1(2), VS. SHRI KRISHAN KUMAR VISHNOI JODHPUR. PROP. M/S. VISHNU ART & CRAFT, JODHPUR. PAN NO. AFUPK8776N (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJENDRA JAIN. DEPARTMENT BY : SH. G.R. KOKANI- DR. DATE OF HEARING : 07/08/2013. DATE OF PRONOUNCEMENT : 29/08/2013. 2 O R D E R PER HARI OM MARATHA, J.M. : ALL THE ABOVE CAPTIONED APPEALS WERE HEARD TOGETHE R AND ARE BEING DECIDED BY A COMMON ORDER FOR THE SAKE OF CON GRUENCE, BREVITY AND CONVENIENCE. A ITA NO. 565/JODH/2009 (A.Y. 2004-05) BY THE ASSESSEE ARISING FROM ORDER PASSED U/S 143(3) OF THE ACT. 2.1 THIS APPEAL IS FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A), JODHPUR, DATED 27/11/2007. THIS APPEAL IS FOUND TO BE TIME BARRED BY 634 DAYS. A CONDONATION PETITION HAS BEEN FILED FOR GETTING THIS DELAY IN FILING OF THIS SECOND APPEAL, WHICH IS SUPPORTED BY AN AFFIDAVIT OF AJAY MUNDRA, TAX PRACTITIONER AUTHORIZED TO FILE TH IS APPEAL. THE DEPONENT AND THE AFFIANT HAS STATED ON OATH IN THIS AFFIDAVIT AS UNDER :- 1. THAT I AM A TAX PRACTITIONER. THE CERTIFICAT E TO THIS EFFECT WAS ISSUED BY CIT-II, JODHPUR. 2. THAT I AM WORKING AS A TAX PRACTITIONER IN THE FIRM OF CHARTERED ACCOUNTANT M/S R.P. MUNDRA & CO., OUTSIDE SIWANCHI GATE, JODHPUR. 3 3. THAT IN THE FIRM M/S R.P. MUNDRA & CO., CHARTERE D ACCOUNTANT I WAS LOOKING AFTER THE APPEAL WORK OF S HRI KRISHNA KUMAR VISHNOI PROP. M/S VISHNU ART & CRAFTS , 32 VIDHYA PARK, AIR FORCE ROAD, JODHPUR. 4. THAT I HAVE PREPARED WRITTEN SUBMISSION IN RESPE CT OF APPEAL FOR THE ASSESSMENT YEAR 2004-05 OF THE ABOVE REFERRED ASSESSEE IN RESPECT OF APPEAL NO. 514/2006 -07. I WAS ALSO ATTENDING THE HEARING OF APPEAL BEFORE CIT (A) FROM TIME TO TIME. THE LAST HEARING IN THIS CASE WA S ATTENDED BY SHRI MADAN PRAJAPAT ADVOCATE WHO WAS AL SO ASSOCIATED WITH M/S R.P. MUNDRA & CO., CHARTERED ACCOUNTANT AT THE RELEVANT POINT OF TIME. 5. THAT I HAVE RECEIVED THE SERVICE OF THE ORDER PA SSED BY CIT(A), JODHPUR IN APPEAL NO. 514/2006-07 ON 05-12- 2007 FROM THE OFFICE OF CIT (A) BUT DID NOT PUT THE DATE OF SERVICE ON THE APPELLATE ORDER AND AS SUCH WHILE PR EPARING THE FORM NO. 36 THE DATE OF SERVICE WAS WRITTEN IN COLUMN NO. 9 AS 11-12-2007 AND ON THE BASIS OF THIS INFORM ATION I HAVE STATED THE DATE OF SERVICE IN MY EARLIER AFFID AVIT DATED 09-05-2010 AS 11-12-2007 WHICH MAY BE TAKEN A S 05- 12-2007 WHEREAS IN THE COLUMN OF VERIFICATION THE D ATE OF 06-12-2007 WAS CORRECTLY WRITTEN. 6. THAT I HAVE PREPARED FORM NO. 36 FOR FILING THE APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR O N 06- 12-2007 (WRONGLY TYPED AS 26-12-2007 IN MY EARLIER 4 AFFIDAVIT). I HAVE HANDED OVER THE FORM NO. 36 DULL Y TYPED AND FILED TO SHRI KRISHNA KUMAR VISHNOI. A CHALLAN OF RS. 10,000/- WAS ALSO GIVEN TO HIM FOR DEPOSITING APPEA L FEES IN THE GOVERNMENT A/C ALONG WITH A POWER OF ATTORNE Y. THE COVERING LETTER WAS ALSO TYPED IN THE NAME OF ASSIS TANT REGISTRAR IN MY OFFICE ON 06-12-2007 ITSELF TO BE A TTACHED WITH THE APPEAL PAPERS AT THE TIME OF FILING THE AP PEAL. THAT SHRI KRISHNA KUMAR VISHNOI HANDED OVER FORM NO . 36 AFTER PUTTING HIS SIGNATURE ON FORM NO. 36 AND POWE R OF ATTORNEY. HE ALSO DELIVERED ME THE COUNTERFOIL OF C HALLAN OF RS. 10,000/- DEPOSITED BY HIM TOWARDS APPEAL FEE S. 8. THAT AFTER THE RECEIPT OF FORM NO. 36 AND COUNTE RFOIL OF CHALLAN I HAVE PREPARED 3 SETS TO DELIVER THE SAME IN THE OFFICE OF INCOME TAX APPELLATE TRIBUNAL, JODHPUR BU T BY MISTAKE OF MY STAFF THE PAPERS WERE PLACED IN THE F ILE OF THE ASSESSEE MAINTAINED IN MY OFFICE RATHER FILING THE SAME IN THE OFFICE OF INCOME TAX APPELLATE TRIBUNAL. I W AS UNDER THE BONAFIDE IMPRESSION THAT THE APPEAL PAPERS OF T HE ABOVE NAMED ASSESSEE STOOD FILED IN THE OFFICE OF H ON'BLE TRIBUNAL IN RELATION TO APPEAL FOR THE ASSESSMENT Y EAR 2004-05. 9. THAT SHRI KRISHNA KUMAR TOOK HIS FILES MAINTAI NED IN MY OFFICE FOR THE ASSESSMENT YEAR 2004-05 IN THE MONTH OF OCT 2009 FOR REFERENCE IN RESPECT OF OTHER MATTER PENDI NG FOR THE SUBSEQUENT YEARS. 5 10. THAT AFTER THE RECEIPT OF FILE COVER FROM MY OF FICE FOR THE ASSESSMENT YEAR 2004-05 SHRI KRISHNA KUMAR VISH NOI CAME TO KNOW THAT ALL THE RELEVANT PAPERS WHICH WER E TO BE FILED IN THE OFFICE OF HON'BLE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05 ARE LYING IN MY OFFICE FILE AND WERE NOT DELIVERED IN THE OFFICE OF INCOME TAX APPE LLATE TRIBUNAL, JODHPUR. 11. THAT SHRI KRISHNA KUMAR WHEN HE CAME TO KNOW TH AT THE APPEAL FORMS WHICH WERE SIGNED BY HIM AS BACK A S IN DEC. 2007 AND THE COUNTERFOIL OF CHALLAN AND THE CO VERING LETTER ARE LYING IN THE FILE MAINTAINED IN MY OFFIC E HE FILED THE SAME IN THE OFFICE OF HON'BLE TRIBUNAL. 12. THAT THE DELAY CAUSED IN FILING OF APPEAL BY SH RI KRISHNA KUMAR IS ENTIRELY ATTRIBUTABLE TO THE MISTA KE OF MY OFFICE CLERK WHO RATHER FILING THE APPEAL PAPERS IN THE OFFICE OF HON'BLE TRIBUNAL FILED THE SAME IN THE FI LE OF THE ASSESSEE MAINTAINED IN MY OFFICE. I WAS ALL ALONG U NDER THE IMPRESSION THAT THE APPEAL STOOD FILED IN THE OFFIC E OF HON'BLE TRIBUNAL TILL THE MATTER BROUGHT TO MY NOTI CE BY SHRI KRISHNA KUMAR THE APPELLANT ABOUT THE MISTAKE OF MY OFFICE. 6 2.2 TO CONTROVERT THE VERSION OF THE ABOVE STATEMEN T, SHRI ASHOK BHANDARI S/O SHRI M.M. BHANDARI, THE I.T.O. WARD -1 (2), JODHPUR, HAS ALSO FILED HIS AFFIDAVIT, DATED 03/06/2010. THIS AF FIDAVIT READS AS UNDER:- THAT MR. AJAY MUNDRA ADVOCATE, JODHPUR MOVED AN AP PLICATION FOR CONDONING THE DELAY IN FILLING OF APPEAL BEFORE HON'BLE IT AT AS WELL AS AN AFFIDAVIT WAS ALSO FILED FOR THIS PUR POSE, REGARDING THIS I WOULD LIKE TO PLACE SOME FACTS BEF ORE GOING THROUGH THE APPLICATION FOR CONDONING THE DELAY. TH REE FIRS WERE LODGED AGAINST SHRI AJAY MUNDRA BY THE ITO, BH ILWARA AT POLICE-STATION, BHILWARA U/S. 420 / 466 / 467 / 468 / 471 / 120B UNDER IPC ON 22.09.2008 FOR FILING FORGED APPELLATE ORDERS AS WELL AS USING FORGED SEALS IN THE CASES OF I. JANKI CORPORATION LTD. BHILWARA 2.SHAMSHUDIN RANGANI, BHILWARA, SOHA N LAL CHORDIA, BHILWARA IN VIEW OF THE FACTS NARRATED ABOVE MY OPINION THAT THE CONDUCT AND PAST RECORDS OF THE AJAY MUNDRA IS DUBIOUS AND NOT ABOVE THE BOARD. SO IT IS PRAYED THAT THE AFFIDAVIT FILED BY MR. AJAY MUNDRA SHOULD BE CONSIDERED IN THE LIGHT OF ABOVE F ACTS. 2.3 WE HAVE CONSIDERED RIVAL STANDS ON THE ISSUE OF CONDONATION OF THIS DELAY. THE AVERMENT MENTIONED IN THE AFFIDAVIT OF SHRI AJAY MOONDRA IS SELF-SPEAKING AND DETAIL THE REASONS FOR THE DELAY AND THE AFFIDAVIT IS DULY ATTESTED AS PER LAW. THE AFFIDAVI T OF SHRI ASHOK BHANDARI ITO IS NOT ATTESTED AND INSTEAD OF CONTROV ERTING THE REASONS 7 GIVEN FOR THE DELAY IN THE AFFIDAVIT OF SHRI AJAY M OONDRA DATED 13/05/2010, HIS ANTECEDENTS HAVE BEEN REFERRED TO. IT HAS BEEN ALLEGED THAT A CASE MAINLY OF FORGERY AND CHEATING HAS BEEN REGISTERED AGAINST SHRI AJAY MOONDRA, AND THEREFORE, HIS PAST CONDUCT IS DUBIOUS. BE THAT AS IT MAY, WE ARE NOT CONCERNED ABOUT THE C ONDUCT OF THE ITP IN DECIDING THIS APPEAL. 3. WE HAVE COGITATED THE RIVAL CONTENTIONS THE HON' BLE SUPREME COURT HAS LONG BACK LAID DOWN A PERFECT GUIDELINE W HILE DECIDING THE CASE OF COLLECTOR, LAND ACQUISITION VS MST. KATIJI & OTHERS (167 ITR 471), IN THEIR PITH AND SUBSTANCE, THAT WHEN SUBSTA NTIAL JUSTICE IS PITTED AGAINST PEDANTIC REASONS, THE CAUSE OF SUBST ANTIAL JUSTICE SHOULD PREVAIL. RECENTLY, THE HON'BLE SUPREME COURT HAS R EITERATED THE SAME PRINCIPLE WHILE DECIDING THE CASE OF IMPROVEMENT TR UST VS UJAGAR SINGH (2010) 6SCC 786 (S.C) [SOURCE WWW.ITATONLINE.ORG ] BY OBSERVING THAT JUSTICE CAN BE DONE ONLY WHEN THE MATTER IS FOUGHT ON MERITS AND IN ACCORDANCE WITH LAW RATHER THAN TO DISPOSE IT OF ON SUCH TECHNICALITIES AND THAT TOO AT THE VERY THRESHOLD. IT WAS STRONG LY LAID THAT UNLESS MALAFIDES ARE WRIT LARGE ON THE FACE OF IT DELAY SH OULD BE CONDONED. IN THIS CASE, NO SUCH MALAFIDE IS EXHIBITED. THE D ELAY STANDS REASONABLY EXPLAINED. HENCE, BY FOLLOWING THE DICT UM OF THE ABOVE 8 DECISIONS, WE CONDONE THIS DELAY AND ADMIT THE APPE AL. THEREFORE, SINCE THE REASONS GIVEN FOR THE DELAY SEEMS TO BE R EASONABLE, IN VIEW OF THE DICTUM OF THE HONBLE APEX COURT AS ABOVE, W E CONDONE THIS DELAY OF 634 DAYS AND ADMIT THE APPEAL. WE MAY MENT ION THAT THE FATE OF AN APPELLANT CANNOT BE SEALED ON EXTRANEOUS REAS ONS, WHICH ARE NOT DIRECTLY CONNECTED WITH THE FACTS OF THIS APPEAL. 4. THE APPELLANT HAS RAISED THE FOLLOWING GROUNDS I N THIS APPEAL :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LEARNED CIT (A) HAS ERRED IN SUSTAINING THE DIS ALLOWANCE OF DEDUCTION OF RS.72,85,833.00 U/S 10B CLAIMED AND NOT ALLOWED THE DEDUCTION U/S 10B ON DISALLOWANCE OF RS.2,30,784.00 MADE OUT OF THE VARIOUS EXPENSES CLA IMED IN PROFIT & LOSS ACCOUNT WITHOUT ANY BASIS AND WITH OUT APPRECIATING THE RECORDS AND EXPLANATION FURNISHED BY THE APPELLANT. 2 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LEARNED CIT (A) HAS ERRED IN SUSTAINING THE DISALLO WANCE OF RS.2,30,784.00 OUT OF THE VARIOUS EXPENSES CLAIMED IN PROFIT AND LOSS ACCOUNT. THE DISALLOWANCE MADE WITH OUT POINTING OUT A SINGLE INSTANCE OF PERSONAL USE. 9 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS GROSSLY ERRED IN SUSTAINING THE DISALLOWANCE OF RS.17540.00 OUT OF THE TOTAL DISALL OWANCES MADE BY THE AO OF RS.42754.00 ON ACCOUNT OF VEHICLE S EXPENSES AND DEPRECIATION. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) HAS GROSSLY ERRED IN SUSTAINING THE CHARGING OF INTEREST U/S 234 B AMOUNTING TO RS.10,46,922.00 AND INTEREST U/S 234C OF RS. 19,572 .00 AS THERE IS NO SPECIFIC ORDER FOR CHARGING OF INTEREST U/S 234B AND 234C IN THE ASSESSMENT ORDER. 4.1 WE HAVE HEARD RIVAL SUBMISSIONS. IT WAS ARGUED THAT GROUND NO. (1) STANDS COVERED IN THE FAVOUR OF THE ASSESSEE AS THE A.O. HIMSELF, UNDER IDENTICAL FACTS, HAS ALLOWED THE CLAIM OF DED UCTION U/S 10B MADE BY THIS ASSESSEE IN A.YS. 2003-04 AND 2007-08. WE H AVE GONE THROUGH THE ORDERS OF THE A.O. FOR THESE YEARS, THE COPIES OF WHICH ARE PLACED ON RECORD FOR OUR PERUSAL. THE LD. D.R. COULD NOT D ENY THE ABOVE FACTS. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SECTION 10B IN THIS YEAR AS WELL. THE FACT SIN A.Y. 2006-07 HAVE NOT CHARGED AND ARE IDENTICAL TO THE FACTS OBTAINING IN A.YS. 2003-04 AND 2007-08. OTHERWISE ALSO THIS ISSUE STANDS COVERED B Y THE DECISION OF THIS VERY BENCH IN THE CASE OF THIS VERY ASSESSEE R ENDERED FOR A.Y. 2005-06 IN ITA NO. 385/JU/2010 DATED 04/10/2010, CO PY ENCLOSED. THE 10 FOLLOWING DECISIONS SUPPORT THE CLAIM OF ASSESSEES DEDUCTION U/S 10B OF THE ACT :- A. ITO V/S ARIHANT TILES - 320 ITR 79 (SC). B. CIT V/S FATEH GRANITE P LTD. 314 ITR 32 (BOM) C. GRACE EXPORTS V/S ITO (RAJ) - ORDER DATED 29.8. 2012 OF HON'BLE RAJASTHAN HIGH COURT. D. KWAL PRO EXPORT V/S AGIT (ITAT, JODHPUR) [2009] 123 TTJ [JD] 543 E. ARTS & CRAFTS VS ITO [2012] 66 DTR 69 (MUMBAI ) F. DGIT VS MANGLAM ARTS (ITAT, JAIPUR)-[2009] 120 TTJ [JP] 198 G. DIVIJ EXPORTS V/S ITO (ITAT, JODHPUR) [2012] 148 TTJ [JD] [UO] 49. 4.2 OTHERWISE ALSO, THE RULE OF CONSISTENCY SUPPORT S THE CLAIM OF THE ASSESSEE. THE FOLLOWING DECISIONS ARE RELEVANT :- (I) MALBOROUGH POLYCHEM PVT. LTD. 309 ITR 43 (RAJ.). (II) HANWANT KHATRI VS. ITO (JODHPUR) IN ITA NO. 114/JOD H/2013 (A.Y. 2009-10) ORDER DATED 04/04/2013. ACCORDINGLY, WE ALLOW GROUND NO. (1) OF ASSESSEES APPEAL. 5. THE GROUND NO. (2) AND (3) WILL BE CONSIDERED IN THE LIGHT OF OUR FINDING GIVEN IN RESPECT OF GROUND NO. (1). 11 6. GROUND NO. (4) CANNOT BE ALLOWED AS CHARGING OF INTEREST U/S 234B AND 234C ARE MANDATORY. HOWEVER, THE ASSESSEE IS ENTITLED TO A CONSEQUENTIAL RELIEF. 6.1 IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. B. ITA NO. 525/JODH/2009 (A.Y. 2004-05) U/S 271(1)( C) 7. THIS APPEAL OF THE REVENUE ARISE FROM THE ORDER OF LD. CIT(A) DATED 01/07/2009 WHO HAS DELETED THE PENALTY OF RS. 21,85,748/- IMPOSED VIDE ORDER DATED 30/04/2009 PASSED U/S 271 (1)(C) OF THE ACT. 7.1 SINCE THE PENALTY WAS IMPOSED ONLY ON THE REASO N THAT THE ASSESSEE HAD MADE A CLAIM OF EXEMPTION U/S 10B WHIC H WAS NOT ALLOWED. SINCE, WE HAVE NOW ALLOWED THIS CLAIM, THI S APPEAL OF THE REVENUE CANNOT SUCCEED EVEN ON FACTS OTHERWISE ALSO NOW THE LAW ON THE SUBJECT IS WELL SETTLED. TO ASCERTAIN WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT, AS EXPLAINED BY CATENA OF JU DICIAL PRONOUNCEMENTS, PENALTY CAN BE LEVIED IN THESE CASE S OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POS ITION REGARDING SCHEME OF IMPOSITION OF A PENALTY U/S 271(1)(C) OF THE ACT . WE MAY DISCUSS UNDER WHAT CIRCUMSTANCES AND IN WHAT CONDITIONS PEN ALTY CAN BE LEVIED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOU T THE SETTLED 12 POSITION OF LAW THAT REGULAR ASSESSMENT PROCEEDING S AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHI CH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIR ELY DIFFERENT PARAMETERS ARE APPLICABLE FOR MAKING QUANTUM ADDITI ON AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE I S NO DISPUTE REGARDING THE POSITION OF LAW THAT UNDER SECTION 27 1(1)(C) PENALTY CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT O F PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS O F INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS, ALBEIT, THEY REFER TO A DELI BERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOUL D NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGEST IO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACT O, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOM ATIC. MEANING THEREBY, ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISH ING OF INACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPI NG THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. 13 FINALLY, AFTER REFERRING TO DECISIONS IN THE CASES OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UNION OF INDIA VS. DHA RMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF I NDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448, THE HON'BLE SU PREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASS ESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS . THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE 14 RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. 7.2 ACCORDINGLY, WE CANNOT ALLOW THIS APPEAL OF THE REVENUE AND DISMISS THE SAME. C. ITA NO. 526/JODH/2009 (A.Y. 2006-07) U/S 143(3). 8. THIS APPEAL OF THE REVENUE FOR A.Y. 2006-07 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A) DATED 03/07/2009. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: 1. ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 10B OF THE ACT WITHOUT APPRECIATING THE FACTS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. 15 2. ALLOWING ASSESSEES CLAIM FOR DEDUCTION U/S 10B OF THE ACT IGNORING THE FACT THAT THE ASSESSEE IN FACT SOLD THE SAME ITEM WHICH HE HAD PURCHASED AS BORNE OUT FROM HIS BOOKS OF ACCOUNT ITSELF ON EXAMINATION BY THE A.O. 3. DELETING THE DISALLOWANCE OF RS. 2,10,070/- MADE BY THE A.O. WITHOUT APPRECIATING THE FACTS MENTIONED B Y THE A.O. IN THE ASSESSMENT ORDER. 9. THE FOLLOWING HELD PORTION AT PAGE 48 TO PAGE 51 (A1 TO A2) OF LD. CIT(A)S ORDER WOULD SPELL OUT THE FACTS AND HI S FINDING :- THE ASSESSING OFFICER HAS FINALLY CONCLUDED THAT T HE ASSESSEE HAD SIMPLY CARRIED OUT TRADING OF MANUFACT URED ITEMS PURCHASED FROM THE LOCAL PERSONS ON WHICH SOM E POLISHING AND GRINDING HAD BEEN DONE. THE REASON AD VANCED BY THE ASSESSING OFFICER WAS THAT THE TABLES CHAIRS ETC. PURCHASED BY THE ASSESSEE WERE NOT TRANSFORMED INTO NEW ARTICLES EVEN AFTER POLISHING AND GRINDING AND THER E WAS NO CHANGE IN BASIC IDENTITY OF THE PRODUCTS AND THAT T HE ASSESSEE HAD SOLD THE SAME ITEMS AS PURCHASED, AS I S EVIDENT FROM THE PURCHASE AND SALE BILLS. HOWEVER, FROM THE ASSESSMENT ORDER, I FIND THAT WHILE THE ASSESSI NG OFFICER HAS CONSIDERED AND DISCUSSED THE SUBMISSION S MADE BY THE ASSESSEE BUT HAS NOT DISCUSSED THE ASSESSEE' S SUBMISSION THAT THE ASSESSEE USED TO PLACE ORDE RS TO THE SUPPLIERS FOR SUPPLY OF RAW STRUCTURES STRICTLY AS PER HIS SPECIFICATIONS AND DESIGNS AND DRAWINGS FINALIZED B Y HIS 16 BUYERS AND ASSESSEE'S SUPERVISOR CHECK THE SAME FRO M TIME TO TIME AT THE SUPPLIERS PLACE. AS HAS BEEN POINTED OUT ABOVE, IN CASES WHERE ARTICLES ARE MANUFACTURED BY PARTIES OTHER THAN THE ASSESSEE, THE TEST WHETHER THE ASSES SEE IS CARRYING ON THE ACTIVITY OF THE MANUFACTURING IS WH ETHER SUCH ACTIVITIES CARRIED ON BY THE PARTIES OTHER THA N THE ASSESSEE WERE UNDER CLOSE SUPERVISION AND DIRECTION OF THE ASSESSEE AND AT THE RISK OF THE ASSESSEE. IN THE IN STANT CASE, THE FACT BORNE OUT FROM THE ASSESSMENT ORDER IS THAT THE ASSESSEE WAS GETTING THE GOODS MANUFACTURED BY OUTSIDE PARTIES AS PER HIS OWN SPECIFICATIONS AND D ESIGNS AND DIRECTIONS. UNDER THESE CIRCUMSTANCES, IT HAS T O BE CONCLUDED THAT THE ASSESSEE IS A MANUFACTURER AND N OT A TRADER AS HAS BEEN WRONGLY CONCLUDED BY THE ASSESSI NG OFFICER. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE AS SESSEE WAS ENGAGED IN MANUFACTURING ACTIVITIES AND THEREFO RE, WAS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. THE ASSESSING OFFICER IS THEREFORE, DIRECTED TO ALLOW D EDUCTION U/S 10B TO THE ASSESSEE. THE APPEAL OF THE ASSESSEE IN THIS REGARD IS ALLOWED. THE NEXT GROUND OF APPEAL IS REGARDING DISALLOWANCE OF RS. 2,10,070/-OUT OF VARIOUS EXPENSES CLAIMED IN P&L AC COUNT. THE APPELLANT'S CONTENTION WAS THAT THE DISALLOWANC E WITHOUT POINTING OUT A SINGLE INSTANCE OF A PERSONA L USE. 17 FROM THE ASSESSMENT ORDER, I FIND THAT THE ASSESSIN G OFFICER HAD MADE A LUMP SUM DISALLOWANCE OF 1/5TH O UT OF CLAIM OF EXPENSES ON ACCOUNT OF TELEPHONE, VEHICLE AND TRAVELING FOR THE REASON THAT PERSONAL USE OF TELEP HONE AND VEHICLES CANNOT BE RULED OUT AND SOME OF THE TRAVEL ING EXPENSES WERE NOT SUPPORTED BY PROPER BILLS / INVOI CES / VOUCHER AND HENCE NOT SUBJECT TO FURTHER VERIFICATI ON. THE APPELLANT IN HIS WRITTEN SUBMISSION HAS POINTED OUT THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON A DHOC BASIS AND NO SPECIFIC DISCREPANCY HAS BEEN OBSERVED AND THEREFORE, NO DISALLOWANCE OUGHT TO HAVE BEEN MADE. UPON CONSIDERATIONS OF THE REASON MENTIONED BY THE ASSESSING OFFICER AS THE BASIS FOR, RESORTING TO DI SALLOWANCE ON LUMP SUM BASIS, I FIND THAT THERE IS NO JUSTIFIC ATION FOR SUCH DISALLOWANCE. DESPITE EXPRESSING AN APPREHENSI ON REGARDING CERTAIN EXPENSES HAVING BEEN USED FOR PER SONAL PURPOSES, THE ASSESSING OFFICER HAS FAILED TO BRING ANY MATERIAL ON RECORD WHICH COULD ESTABLISH THAT CERTA IN EXPENSES WERE INDEED INCURRED FOR PERSONAL PURPOSES . SIMILARLY, ALTHOUGH ASSESSING OFFICER HAS STATED TH AT CERTAIN TRAVELING EXPENSES WERE NOT PROPERLY MAINTA INED AND VOUCHERS / BILLS ETC. IN RESPECT OF TRAVELING E XPENSES WERE NOT AVAILABLE, BUT NEITHER ANY INSTANCE OF SUC H EXPENSES HAS BEEN MENTIONED NOR ANY ADDITION HAS BE EN MADE IN RESPECT OF SUCH EXPENSES WHOSE DETAILS WERE NOT AVAILABLE OR BILLS / VOUCHERS WERE NOT MAINTAINED B Y THE ASSESSEE. THUS, I FIND THAT THERE IS NO JUSTIFICATI ON FOR MAKING SUCH DISALLOWANCE. THE ADDITION OF RS. 2,10, 070/- IS 18 THEREFORE, DELETED. THE APPEAL ON THIS GROUND IS AL LOWED. THE NEXT GROUND OF APPEAL IS AGAINST CHARGING OF IN TEREST U/S 234B & 234C AMOUNTING TO RS. 5,58,885/- AND RS. 5,344/- RESPECTIVELY. THIS VIEW HAS BEEN CONFIRMED BY THE HON'BLE APEX COURT IN THE CASE OF ANJUM M. H. GHANS WALA AND OTHERS (252 ITR 1 SC) AND ALSO BY THE HON'BLE I TAT IN THE CASE OF R. M. CHENNIAH (303 ITR (AT) 154 CHENNA I). THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO CHARGE INTEREST AS PER LAW. WITH THESE DIRECTIONS THE APPEAL ON TH IS GROUND IS DISPOSED OFF. FOR STATISTICAL PURPOSES T HE APPEAL ON THIS GROUND IS TREATED AS ALLOWED. 10. AFTER HEARING BOTH SIDES, IN VIEW OF OUR FINDIN G GIVEN IN THE A.Y. 2004-05, WE HAVE TO CONFIRM THE ABOVE FINDINGS OF L D. CIT(A). ACCORDINGLY, WE DISMISS THIS APPEAL. 11. TO SUM UP THE APPEAL IN ITA NO. 565/JODH/2009 I S PARTLY ALLOWED, IN ITA NO. 526/JODH/2009 IS DISMISSED AND IN ITA NO 525/JODH/2009 IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH AUGUST, 2013. 19 VL/ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR