OASIS INFRASTRUCTURE P.LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 5501/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3264 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Business expenditure; Additional depreciation; Bonafide belief; Difference of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 10B; 10; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE S/SHRI SANJAY GARG, JUDICIAL MEMBER AND RAJ ESH KUMAR , ACCOUNTANT MEMBER ./ I.T.A. NO. 5501 /MUM/2 0 14 ( / ASSESSMENT YEAR S : 20 09 - 10 ) OASIS INFRASTRUCTURE PVT LTD, 119 - 121/B,SHRIKANT CHAMBERS SION TROMBAY ROAD, NEAR R K STUDIO, CHEMBUR, MUMBAI - 400071 / VS. ASST T. COMMISSIONER OF INCOME TAX , CIRCLE 10 (2) 4 TH FLOOR, AYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 . ./ PAN : AAACO5715H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DEVENDRA JAIN / RESPONDENT BY : DR.S PANDIAN / DATE OF HEARING : 21 .3 . 2016 / DATE OF PRONOUNCEMENT : 8.6. 2016 / O R D E R PER RAJESH KUMAR , A CCOUNTANT MEMBER : THIS IS AN AP PEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13.6.2014 PASSED BY THE LD.CIT(A) - 2 2 MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 20 09 - 10. 2. THE ONLY GROUND RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY BY THE CIT(A) TO THE EXTENT OF 1 00% OF THE TAX SOUGHT TO BE ITA NO. 5501 / MUM/ 2014 2 EVADED AS AGAINST THE 200% LEVIED BY THE AO IN RESPECT OF DISALLOWANCE OF AIR DISCREPANCY AND FOREIGN TRAVELLING EXPENSES. 3. THE FACTS IN BRIEF ARE THAT THE AO FRAMED THE ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDER DATED 30. 11.2011 ASSESSING THE INCOME OF THE ASSESSEE AT RS.3,35,57030/ - AS AGAINST THE RETURNED INCOME OF RS.3,27,12,510/ - BY THE ASSESSEE BY ADDING RS.79,680/ - ON THE BASIS OF AIR INFORMATION WHICH IS RELATED TO SHORT OFFERING OF HIRE INCOME TO THIS EXTENT, DISAL LOWANCE OF FOREIGN TRAVELLING EXPENSES OF RS. 6,45,182/ - ALSO INITIATING THE PENALTY PROCEEDINGS U/S 274 R.W.S.271(1) (C ) READ WITH EXPLANATION 1 THERETO. THE LD AO ULTIMATELY IMPOSED A PENALTY ON THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS. 6,45,18 2/ - AT RS. 4,97,806/ - BEING EQUAL TO 200% OF THE TAX SOUGHT TO BE EVADED AFTER REJECTING THE SUBMISSIONS OF THE ASSESSEE WHICH HAS BEEN INCORPORATED IN PARA 3 OF THE PENALTY ORDER. THE ORDER WAS THEREAFTER RECTIFIED U/S 154 OF THE ACT REVISING THE PENALTY IMPOSED TO RS. 4,38,568/ - .THE ASSESSEE DID NOT CHALLENGE THE QUANTUM ADDITIONS BEFORE THE F IRST APPELLATE AUTHORITY (FAA) AND THE ASSESSMENT ATTAINED FINALITY. 4. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA WHICH WAS ALSO DISMISSED BY THE LD . CIT(A) BY REJECTING THE CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE AS INCORPORATED IN PARA 2.3 OF THE APPEAL ORDER BY OBSERVING AND HOLDING AS UNDER: - ITA NO. 5501 / MUM/ 2014 3 2.4 I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE APPELLANT AND THE IMPUGNED PENALTY ORDER. THE TOTAL EXPENDITURE INCURRED UNDER THE HEAD FOREIGN TRAVEL WAS R S .7,64,842/ - OUT OF WHICH, THE AO HAD ALLOWED THE EXPENDITURE INCURRED TOWARDS FOREIGN TRAVEL EXPENSES IN RESPECT OF KUALA LUMPUR TRIP AMOUNTING TO RS.1,19,7001 - , CONNECTED TO IMPORT OF CR ANES. AS IT WAS RELATED TO IMPORT OF CAPITAL ASSET, THE AO TREATED THE FOREIGN TRAVEL EXPENSES AS PART OF CAPITAL EXPENDITURE AND HENCE DID NOT ENTERTAIN THE CLAIM OF THE APPELLANT THAT IT WAS REVENUE EXPENDITURE. 2.5 THE SECOND COMPONENT OF FOREIGN TRAVE L EXPENSES AMOUNTING TO RS.6,45,142/ - WAS IN RESPECT OF FOREIGN TRAVEL EXPENSES UNDERTAKEN BY TWO OF ITS DIRECTORS TOWARDS VISIT TO EUROPE. THE PURPOSE OF FOREIGN VISIT WAS ALLEGED TO HAVE BEEN TOWARDS SURVEY OF NEW CRANES AVAILABLE IN THE MARKET. FROM THE DETAILS FILED IT COULD BE ASCERTAINED THAT BOTH THE DIRECTORS HAVE BOOKED THEIR FOREIGN TOUR THROUGH THOMAS COOK IN THE NAME OF THE COMPANY. THE APPELLANT COULD FILE ONLY THE RECEIPT ISSUED BY THOMAS COOK AND NO OTHER DETAILS CONNECTED TO THE TRAVEL WERE FILED TO SUBSTANTIATE THAT IT WAS UNDERTAKEN ONLY WITH AN INTENTION TO CARRY OUT SURVEY OF THE CRANES. M/S.THOMAS COOK ARRANGES FOREIGN TRAVEL EITHER FOR A GROUP OR A CUSTOMIZED TOUR ITINERARY FOR SELECTED INDIVIDUALS. THE APPELLANT DID NOT FILE ANY EVIDEN CE EITHER BEFORE THE AO OR BEFORE ME TO PROVE THAT - A CUSTOMIZED PACKAGE WAS MADE EXCLUSIVELY FOR SHRI PREMAL NARESH THAKKAR AND HIS WIFE MRS.DARSHANA PREMAL THAKKAR, THE DIRECTORS OF THE COMPANY. IN THE ABSENCE OF SUCH EVIDENCE, A CONCLUSION CAN BE DRAWN THAT THEY HAVE TRAVELLED IN A GROUP TOUR. GENERALLY, THE TRAVEL ITINERARY BY M/S:THOMAS COOK OR ANY OTHER TRAVEL AGENTS ARE SUCH THAT THERE WILL BE NO TIME LEFT FOR ANY INDIVIDUAL TO EXPLORE ANY OTHER' ACTIVITY. IT IS FOR THE APPELLANT TO PROVE THAT REALLY THE DIRECTORS HAD SPARE TIME TO CARRY OUT THE SURVEY OF NEW CRANES AVAILABLE IN THE MARKET. IN MY OPINION, IT WAS ONLY A PLEASURE TRIP UNDERTAKEN BY THE DIRECTORS AND IT WAS NOT FOR CARRYING OUT ANY SURVEY OPERATIONS FOR THE PURPOSE OF PURCHASING A NEW CR ANE. THE VERY FACT THAT THE APPELLANT HAD BOOKED IT THROUGH A TRAVEL AGENT LIKE M/S.THOMAS COOK ITSELF IS A PROOF THAT IT IS NOT FOR THE PURPOSE OF BUSINESS BUT PURELY TOWARDS A PERSONAL PLEASURE TRIP. THE TRAVEL ITINERARY FOR THE ENTIRE TOUR SHOULD HAVE B EEN FURNISHED BY THE APPELLANT TO PROVE THAT THERE WAS A SPARE TIME AVAILABLE FOR SURVEY WITH VARIOUS' CRANES MANUFACTURING CONCERNS. SINCE THE APPELLANT FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE, THE AO HAD RIGHTLY COME TO THE CONCLUSION THAT FOREIGN TRA VEL EXPENSES IS NOT FOR THE PURPOSE OF THE BUSINESS. ITA NO. 5501 / MUM/ 2014 4 2.6 THE APPELLANT HAD FILED A RESOLUTION PASSED BY THE BOARD OF DIRECTORS IN THIS REGARD. HOWEVER, IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE TO PROVE THAT REALLY THE DIRECTORS HAVE CARRIED OUT' INQUIRY WITH SEVERAL CRANE MANUFACTURERS, THE CLAIM OF THE APPELLANT CANNOT BE ENTERTAINED. 2.7 THE APPELLANT HAD ALSO FILED COPY OF THE LETTER DATED 22.11.2011 FILED BEFORE THE ACIT - 10(2) CONTAINING NOTE TOWARDS FOREIGN TRAVEL. THE NOTE CLEARLY INDICATES THAT THE TOUR OPERATOR HAS HANDLED THE ENTIRE PACKAGE WHICH INCLUDES TRAVEL, FOOD, STAY AND CONVEYANCE IN THE FOREIGN COUNTRY. WHEN THE DIRECTORS ARE PART OF THE TOUR PACKAGE, I WONDER HOW THEY CAN TRAVEL TO VARIOUS PLACES ONLY TO MAKE INQUIRY ABOUT THE CRANE S. FURTHER DOCUMENTARY EVIDENCE LIKE AIR TICKET, HOTEL BILLS WERE NOT AVAILABLE WITH THE COMPANY AND IT WAS NOT FURNISHED BEFORE THE A.O. 2.8 AS RIGHTLY POINTED OUT BY THE AO, EXPLANATION 1 TO SECTION 271(1) SQUARELY APPLIES TO THE FACTS OF THE APPELLANT 'S CASE AND APPELLANT HAD MISERABLY FAILED TO REBUT THE PRESUMPTION RAISED UNDER THE EXPLANATION. HENCE, IN MY VIEW, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271 (1)( C ) OF I.T ACT AND THEREFORE THE PENALTY LEVIED IS HEREBY SUSTAINED. HOWEVER IN THE INTERE ST OF JUSTICE, I DIRECT THE AO TO RESTRICT THE PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED. 5 . THE LD AR REITERATED HIS SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW AND ARGUED THAT THE EXPENSES AS DISALLOWED BY THE AO WERE INCURRED OUT OF G ENUINE BUSINESS NEEDS AS THE DIRECTORS OF THE ASSESSEE UNDERTOOK FOREIGN TOUR TO EXPLORE THE NEW CRANES AVAILABLE IN THE INTERNATIONAL MARKET WHICH WERE DISALLOWED AND PENALTY PROCEEDINGS WERE INITIATED BY THE AO BY INVOKING THE EXPLANATION 1 TO SE CTION 271(1) ( C ) OF THE ACT DESPITE THE FACT THAT THE ALL EVIDENCES QUA THE FOREIGN TRAVEL SUCH AS BILL AND RECEIPT OF THE TRAVEL AGENCY, BOARD RESOLUTION SANCTIONING THE FOREIGN TRIP OF THE DIRECTORS WERE PRODUCED BEFORE THE AO. THE LD AR ARGUED THAT THE EXPLANATION 1 TO SEC ITA NO. 5501 / MUM/ 2014 5 271(1) ( C ) WRONGLY INVOKED AS THE ASSESSEE HAS OFFERED AND GIVEN FULL EXPLANATION QUA CLAIMING THOSE FOREIGN TRAVEL EXPENSES WHICH WAS NOT FOUND BY THE AO TO BE FALSE AND THE ASSESSEE B ELIEVED THE SAME TO BE BONAFIDE. ALTERNATIVELY THE LD COUNSEL SUBMITTED THAT EVEN IF FOR A MOMENT IF THE EXPENSES ARE INCURRED TO BE NOT IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE EVEN THEN THESE WOULD INCURRED OUT OF BUSINESS EXIGENCIES WERE FULLY ALLOWABLE IF SUPPORTED BY THE BOARD RESOLUTION AS IT WILL IMPACT THE BUSINESS MANIC FOR A MOMENT IF THE EXPENSES ARE INCURRED TO BE NOT IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE BUT INCURRED OUT OF BUSINESS EXIGENCIES WERE FULLY ALLOWABLE IF SUPPORTE D BY THE BOARD RESOLUTION AS IT WILL IMPACT THE BUSINESS MAN EUVERING IN MUCH EFFICIENT MANNER AND EVEN ON THAT GROUND THE PENALTY WAS NOT LEVIABLE. THE LD COUNSEL SUBMITTED THAT THE PROVISIONS OF SECTION 271(1) ( C) OF THE ACT COULD BE INVOKED IF THE ASSES SEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME WHICH WAS NOT SO IN THE PRESENT CASE AS THE ASSESSEE DID NOT CONCEAL ITS INCOME AND NOR FURNISHED INACCURATE PARTICULARS AS ALL THE PARTICULARS QUA THE FOREIGN EXPE NSES WERE DISCLOSED IN THE RETURN OF INCOME. THE COUNSEL OF THE ASSESSEE ARGUED THAT MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS OF INCOME AND THUS THE CLAIM OF THE ASSESSEE QUA FORE IGN EXPENSES WHICH WAS NOT ACCEPTABLE TO REVENUE WOULD NOT BE LIABLE FOR ANY PENALTY U/S 271(1) ( C ) OF THE ACT. IN DEFENCE OF HIS ARGUMENTS THE ITA NO. 5501 / MUM/ 2014 6 LD COUNSEL RELIED ON A SERIES OF DECISIONS NAMELY CIT VS RELIANCE PETRO PRODUCTS (P) LTD (2010) 322 ITR 158( SC), HOGKONG & SHANGHAI BANKING CORPORATION LTD VS DDIT INT. TAX (2012) 16 ITR 275(BOM) AND ITO VS CHEMEFORM (2012) 51 SOT 27 (KOL). THE LD AR OF THE ASSESSEE FURTHER RELIED ON THE DECISIONS OF TRIBUNAL IN THE CASE OF M/S VISTAR CONSTRUCTION PVT LTD VS D CIT (ITA NO . 5149/DEL/2011) DATED 19.10.2012 AND DCIT VS CONTROL & SWITCHGEARS LTD (ITA NO1981/DEL/2013) DATED 4.3.2015 IN WHICH THE COORDINATE BENCHES OF THE TRIBUNAL DELETED THE PENALTY LEVIED U/S 271(1) ( C ) OF THE ACT FOR DISALLOWANCE OF FOREIGN TRAVEL EXPENSES. FINALLY THE LD AR PRAYED FOR DELETION OF THE PENALTY AS THE ASSESSEE IS FULLY COVERED BY THE VARIOUS DECISIONS REFERRED AND RELIED. THE LD DR,ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 6 . WE HAVE CONSIDERED THE RIVALS SUBMISSI ONS AND PERUSED THE RELEVANT MATERIALS ON RECORDS CAREFULLY INCLUDING THE ORDERS OF AUTHORITIES BELOW. THE AO HAS IMPOSED PENALTY OF RS. 4,97,806/ - ON THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES OF RS. 6,45,142/ - OF TWO DIRECTORS WHICH WAS SUBSEQUENTLY RE DUCED TO RS.4,38,568/ - BY PASSING ORDER U/S 154 OF THE ACT. IN APPEAL BEFORE CITT(A), THE PENALTY WAS REDUCED TO RS. 2,19,284/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED. THE FACTS ARE THAT THE ASSESSEE INCURRED EXPENSES FOR THE TRAVELING OF TWO DIRECTORS WHO HAPPEN TO BE SPOUSE OF EACH OTHER BY REJECTING THE ARGUMENTS OF THE AR THAT THE SAID EXPENSES WERE INCURRED FOR BUSINESS PURPOSES AND EXIGENCIES IN ITA NO. 5501 / MUM/ 2014 7 ORDER TO CARRY OUT SURVEY THE NEW CRANES IN THE FOREIGN MARKET. NOW THE ISSUE BEFORE US IS WHETHER THE DISALLOWANCE OF EXPENSES INCURRED FOR FOREIGN TRAVELLING OF DIRECTORS ARE LIABLE FOR PENALTY U/S 271(1)(C) OF THE ACT . THE AO TREATED THE SAME AS NON - BUSINESS EXPENSES WHEREAS THE ASSESSEE CLA I MS THE SAID TO BE BUSINESS EXPENSES . IT IS A CASE WHERE THE A O WAS NOT SATISFIED WITH THE EVIDENCES PRODUCED BY THE ASSESSEE BUT CLAIM OF THE ASSESSEE WAS NOT PROVED WRONG OR FALSE. THE MERE DISALLOWANCE OF EXPENSES UNDER SUCH CIRCUMSTANCES IS NOT SUFFICIENT TO LEVY PENALTY. IT IS ALSO CLEAR FROM THE FACTS BEFORE US THAT THE ASSESSEE HAS ALSO FULLY DISCUSSED THE PARTICULARS OF THE CLAIM IN ITS RETURN OF INCOME. IN OUR OPINION THIS IS NOT A CASE OF FILING INACCURATE PARTICULAR OF INCOME AS THE ASSESSEE CLAIMED THE SAME TO BE BUSINESS EXPENSES UNDER BONAFIDE BELIEF A ND THE ISSUE OF ADMISSIBILITY IS DEBATABLE ONE. EVEN THE CLAIM BY THE ASSESSEE WHICH IS NOT SUSTAINABLE IN LAW DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS HAS BEEN HELD IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (P) LTD (SUPRA). THE HON'BLE SUPREME COURT HAS HELD THAT MERE MAKING A CLAIM OF EXPENSES WHICH IS NOT SUSTAINABLE IN LAW DOES NOT MEAN THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. MERE FACT THAT THE ASSESSEE CLAIMED AN EXPENSES IN THE RETURN OF INCOME W HICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) AND IF THE CLAIM OF REVENUE IS ACCEPTED THEN IN EVERY CASE WHERE A CLAIM IS NOT ACCEPTED BY THE REVENUE ITA NO. 5501 / MUM/ 2014 8 FOR ANY REASONS, THE ASSESSEE WILL BE SUBJ ECTED TO PENALTY U/S 271(1) (C) OF THE ACT. IN THE FOLLOWING CASES , THE TRIBUNAL CONSIDERED AND FOLLOWED THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS LTD (SUPRA) AND HELD THAT PENALTY IS NOT LEVIABLE WHERE FOREIGN TRA VELLING OF DIRECTORS WERE DISALLOWED. IN THE CASE OF M/S VISTAR CONSTRUCTION PVT LTD VS DCIT , THE TRIBUNAL HELD AS UNDER: - 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT DISALLOWANCE IN THIS CASE HAS BEEN MADE TO THE EXTENT OF 50% OF EXPENDITURE INCURRED ON FOREIGN TRAVEL EXPENSES. THE BASIS OF MAKING DISALLOWANCE IN THIS REGARD IS THAT TWO DIRECTORS AND THEIR WIVES WHO WERE ALSO DIRECTORS VISITED FOREIGN COUNTRIES WHICH WAS NOT FULLY FOR BUSINESS PURPOSES. ASSESSE ES SUBMISSIONS IN THIS REGARD IS NOTE WORTHY THAT BOTH THE WIVES, WHO WERE ALSO DIRECTORS OF THE COMPANY WERE RECEIVING CONSIDERABLE SALARY WHICH WAS ACCEPTED YEAR AFTER YEAR. HENCE, THE VISITS CANNOT BE SAID TO BE FOR NON - BUSINESS PURPOSES. IT HAS FURTHE R BEEN NOTED THAT DISALLOWANCE IN THIS REGARD IN THE PRECEDING YEAR WAS ONLY 20% AND ON THAT ADDITION PENALTY WAS NOT IMPOSED, EVEN THE PENALTY NOTICE HAS BEEN ISSUED BY THE ASSESSING OFFICER. IN THIS BACKGROUND, WE HAVE TO SEE WHETHER THE PENALTY PROCEEDI NGS U/S. 271(1)(C) IS SUSTAINABLE OR NOT. WE FIND THAT SECTION 271(1)(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. IN THIS CASE DISALLOWANCE HAS BEEN MADE ONLY ON ESTIMATE BASIS. IN THE PRECEDING YEAR THIS DISALLOWANCE WAS ONLY 20% AND NO PENALTY WAS IMPOSED. IN OUR OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CONDUCT OF THE ASSESSEE CANNOT BE SAID TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY U/S. 271(1)(C). 8. IN THIS R EGARD, WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, ITA NO. 5501 / MUM/ 2014 9 OR ACTED IN CONS CIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS O F THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 9. WE WOULD ALSO LIKE TO REFER TO THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LT D. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE VIDE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPT ED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 10. IN THE BACKGROUND OF THE AFORESAID DISCUSSIO NS AND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALTY. IN THE CASE OF DCIT VS CONTROL & SWITCHGEARS LTD , THE TRIBUNAL HELD AS UNDER: - 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE ORDER OF THE AO. WITH REGARD TO THE DISALLOWANCE OF ADDITIONAL DEPRECIATION AND OF EXEMPTION U/S 10B OF THE ACT, THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO TO DETERMINE THE SAME AFRESH IN ACCORDANCE WITH LAW AS PER THE DIRECTIONS OF THE TRIBUNAL AND THE M ATTER IS STILL PENDING BEFORE THE AO. IN THESE FACTS, WE CANCEL THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON THESE TWO ITEMS OF DISALLOWANCE. HOWEVER, THE AO WHILE FRAMING THE ASSESSMENT AS PER THE DIRECTIONS OF THE TRIBUNAL, MAY IF SO WARRANTED INITIATE THE PENALTY U/S 271(1)(C) OF THE ACT AFRESH IN ACCORDANCE WITH LAW. WITH REGARD TO THE DISALLOWANCE OF GUARANTEE COMMISSION OF DIRECTORS, ITA NO. 5501 / MUM/ 2014 10 THE TRIBUNAL HAS ALREADY ALLOWED THE MISCELLANEOUS APPLICATION PREFERRED BY THE ASSESSEE AND FOLLOWING THE DECISION O F THE HON'BLE DELHI HIGH COURT HAS ALLOWED DEDUCTION OF GUARANTEE COMMISSION PAID TO THE DIRECTORS AND THEIR REMAIN NO BASIS FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THIS ISSUE AND THE SAME IS ACCORDINGLY CANCELLED. WITH REGARD TO THE OTHER TWO ITEM S OF DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES AND DISALLOWANCE OUT OF FOREIGN TRAVELLING EXPENSES, WE FIND THAT PART OF DISALLOWANCE HAS BEEN CONFIRMED IN APPEAL BY THE APPELLATE AUTHORITY. HOWEVER, THE DISALLOWANCE WAS MADE ON THE BASIS OF INFORMAT ION AND FACTS MADE AVAILABLE TO THE AO BY THE ASSESSEE ITSELF. THE FACT THAT ASSESSEE HAS IN FACT SPENT THE AMOUNTS IN QUESTION, IS NOT IN DOUBT. MOREOVER, IT IS A CLEAR CASE OF DIFFERENCE OF OPINION WITH REGARD TO THE ALLOWABILITY OF CERTAIN CLAIM OF EXPE NDITURE MADE BY THE ASSESSEE. THE ISSUE THAT WHETHER REPAIRS AND MAINTENANCE IN RESPECT OF LEASED BUILDINGS WAS REVENUE OR CAPITAL IN NATURE OR WHETHER THE PART OF THE FOREIGN TRAVELLING EXPENSES WERE FOR THE BUSINESS PURPOSES OF THE ASSESSEE IS CLEARLY DE BATABLE IN NATURE. THIS IS A CASE WHERE THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ASSESSMENT AT THE TIME OF FILING OF THE RETURN ITSELF. THE CONDUCT OF THE ASSESSEE IN THIS CASE WAS BONAFIDE. IN THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON THESE TWO ITEMS OF DISALLOWANCES MADE BY THE AO AND ACCORDINGLY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES AND OUT OF FOREIGN TRAVELLING EXPENSES IS CANCELLED. 7 . IN BOTH THE FOREGOING DECISIONS THE CO - ORDINATE BENCHES OF THE TRIBUNAL HELD THAT IF THE ASSESSEE HAS CLAIMED THE EXPENSES OF FOREIGN TRAVELLING OF BOTH THE DIRECTORS WHO ARE HUSBAND AND WIFE IS A DEBATABLE ISSUE AND PENALTY U/S 271(1)(C) OF THE ACT CAN NOT BE IMPOSED . THUS WE FIND THAT THE FACTS OF THE ASSESSEE ARE SIMILAR TO THE FACTS OF THE CASE DISCUSSED ABOVE WHEREIN THE TRIBUNAL HELD DISALLOWANCE OF FOREIGN TRAVEL EXPENSES AS DEBATABLE ISSUE. IN THE PRESENT CASE BEFORE US WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS FULLY DISCLOSED THE PARTICULARS OF ITA NO. 5501 / MUM/ 2014 11 CLAIM WHICH IN NO WAY CAN BE TERMED AS FURNISHING OF INACCURATE PARTICULARS AND IS A DEBATABLE POINT . WE THEREFORE FOLLOWING RATIO LAID DOWN IN THE ABOVE DECISIONS SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY OF RS. 2,19,284/ - U/S 271(1)(C) OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE , 2016. 8 TH JUNE , 2016 SD SD ( / SANJAY GARG) ( / RAJESH KUMAR ) / JUDICIAL MEM BER / ACCOUNTANT MEMBER MUMBAI ; DATED 8/6 / 2016 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLAN T 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI