Shri Ram Chandra Sahu, Rajgarh V. The ITO, Shajapur

ITA 58/IND/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98978 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MEENA
• Assessee Lawyers: P D NAGAR
• Keywords: Onus to prove; Revised return
• Section: 133A; 131; 68; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO. 58/IND/2014 A.Y. : 2009-10 RAM CHANDRA SAHU, ITO, PROP. M/S. SAHU TRADING CO., BIORA VS SHAJAPUR RAJGARH DISTRICT APPELLANT RESPONDENT P.A.N. NO BCAPS2071Q APPELLANT BY SHRI P.D. NAGAR, C. A. RESPONDENT BY SHRI R. R. MEENA, DR DATE OF HEARING : 10 .08.2015 DATE OF PRONOUNCEMENT : 11 .09.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), UJJAIN, DATED 31.10.2013 FOR THE ASSESSM ENT YEAR 2009-10. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE COU LD NOT SUBMIT THE CONFIRMATION IN RESPECT OF TWO PARTI ES AND HE WAS NOT IN A POSITION TO ESTABLISH LIABILITY AND GE NUINENESS TO THE TUNE OF RS. 36,92,529/- AND OFFERED THE SAME AS CURRENT YEARS INCOME AND IT WAS INCLUDED IN THE TOTAL INCOM E. THE ASSESSEE HAS SURRENDERED THIS INCOME. THEREFORE, TH E PENALTY U/S 271(1)(C) WAS IMPOSED. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. THE LD. AUTHORIZED REPRESENTATIVE FILED THE WRITTEN SUBMISSION, WHICH READS AS UNDER :- -: 3: - 3 THE APPELLANT IS AN INDIVIDUAL DERIVING INCOME FROM WHOLESALE TRADING IN FERTILIZERS, PESTICIDES A ND CEMENT. THE RETURN OF INCOME HAS BEEN FILED DECLARI NG THE TOTAL INCOME OF RS. 6,54,015/-. THE ACCOUNTS AR E AUDITED AND THE TAR IS FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO ASKED THE ASSESSEE TO PROVE THE ADVANCE DEPOSITS FROM THE CUSTOMERS TO THE TUNE OF RS. 1,02,62,333/- AND ALSO PROVE THE CREDITS IN THE SAVINGS BANK ACCOUNT AND THE FIXED DEPOSITS. THE LD . AO WANTED TO PRODUCE AL THE DEPOSITORS FOR VERIFICATION. THE ASSESSEE FILED THE CONFIRMATIONS OF ALL THE CREDITORS EXCEPT THE FOUR CREDITORS. THE LD . AO ISSUED NOTICES U/S 131 TO THE SAID CUSTOMERS WHICH WERE FOURTEEN IN NUMBER. FOUR PARTIES WERE PRODUCED BY THE ASSESSEE IN COMPLIANCE TO SUCH SUMMONS WHO ACCEPTED THE DEPOSITS MADE BY THEM WITH THE ASSESSEE. IT WAS VERY DIFFICULT FOR THE ASSESSEE TO PRODUCE ALL THE FARMERS IN A SHORT TIME. TO BUY PEA CE AND AVOID THE LITIGATION, THE ASSESSEE SURRENDERED -: 4: - 4 THE CREDIT BALANCES OF FOUR CREDITORS FROM WHOM THE CONFIRMATION LETTERS COULD NOT BE OBTAINED. THESE F OUR CREDITORS HAD THE BALANCE OF RS 36,92,529/- AND THIS AMOUNT WAS OFFERED AS INCOME OF THE ASSESSEE. THE LD AO INITIATED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME. THE LD AO HAS LEVIED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND LEVIED THE PENALTY OF RS 12,61,000/-. THE LD CIT(A) RELIED ON THE JUDGMENT OF MAC DATA AND MAINTAINED THE PENALTY LEVIED BY THE LD AO. IT IS HUMBLY SUBMITTED THAT THE PENALTY PROCEEDINGS WERE INITIATED FOR FURNISHING INACCURATE PARTICULAR S WHILE THE PENALTY HAS BEEN LEVIED FOR CONCEALMENT O F INCOME. SINCE THE PENALTY HAS BEEN LEVIED ON A WRON G FOOTING THE SAME DESERVES TO BE QUASHED. IN THIS CONNECTION ATTENTION IS DRAWN TO THE FOLLOWING DECISIONS: -: 5: - 5 1. T. ASHOK PAI VS. CIT ,292 ITR P 11 2. CIT VS. MANU ENGINEERING, 122 ITR P 306 3. CIT VS. VIRGO MARKETING ,171 TAXMAN 156 (DEL) ON MERITS THE DISTINGUISHABLE FEATURES OF APPELLANT 'S CASE VIS-A- VIS M/S. MAK DATA PVT. LTD. VS. CIT (2014) 358 ITR 593 (SC) :- OBSERVATION OF COURT IN M/S. MAK DATA PVT. LTD. FACTS OF THIS CASE IT CANNOT BE SAID THAT THE SURRENDER CONCEALED OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, THERE WAS NO DETECTION OF CONCEALED INCOME BY THE DEPARTMENT. THE APPELLANT SURRENDERED AFORESAID INCOME WHICH WAS WORKED OUT BY APPELLANT HIMSELF AND DEPARTMENT ACCEPTED THE SAME. NO ENQUIRIES WERE MADE FROM ANY OF THE DEPOSITORS (UNSECURED -: 6: - 6 MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN CASE OF A SISTER CONCERN OF THE ASSESSEE. LOANS) OR AGRICULTURISTS. THE CLOSING BALANCE OF THE BANK WAS RS.47,65,792/- AND THE OPENING BALANCE WAS RS.45,23,910. THE FDRS IN THE NAME OF THE SON BELONG TO HIM AND COULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE. THE FDR OF RS.18 LACS WERE OUT OF THE WITHDRAWALS FROM THE BANK. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME YET NEITHER THERE WAS ANY SURVEY NOR SEARCH PROCEEDINGS IN THE CASE OF THE APPELLANT OR ANY OF ITS -: 7: - 7 INCOME SURRENDERED DURING SURVEY WAS NOT OFFERED FOR TAX. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE AGAIN AGREED TO SURRENDER THE INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO ASSOCIATE CONCERN. RETURN OF INCOME WAS FILED IN NORMAL COURSE JUST BECAUSE CONFIRMATION CERTIFICATES FROM FEW CREDITORS COULD NOT BE OBTAINED DUE TO REASONS BEYOND CONTROL, THE APPELLANT SURRENDERED THE INCOME. -: 8: - 8 INTENTION TO DECLARE ITS TRUE INCOME. IT CANNOT BE SAID THAT THE SURRENDER CONCEALED OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SHARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN CASE OF A SISTER CONCERN OF THE ASSESSEE. THERE WAS NO DETECTION OF CONCEALED INCOME BY THE DEPARTMENT. THE APPELLANT SURRENDERED AFORESAID INCOME WHICH WAS WORKED OUT BY APPELLANT HIMSELF AND DEPARTMENT ACCEPTED THE SAME. NO ENQUIRIES WERE MADE FROM ANY OF THE DEPOSITORS (UNSECURED LOANS) OR AGRICULTURISTS. THE CLOSING BALANCE OF THE BANK WAS RS.47,65,792/- AND THE OPENING BALANCE WAS RS.45,23,910. THE FDRS IN THE NAME OF THE SON BELONG TO HIM AND COULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE. THE FDR OF RS.18 LACS WERE OUT OF THE WITHDRAWALS FROM THE BANK. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME YET INCOME NEITHER THERE WAS ANY SURVEY NOR SEARCH PROCEEDINGS IN THE CASE OF THE APPELLANT OR ANY OF ITS ASSOCIATE -: 9: - 9 SURRENDERED DURING SURVEY WAS NOT OFFERED FOR TAX. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE AGAIN AGREED TO SURRENDER THE INCOME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. CONCERN. RETURN OF INCOME WAS FILED IN NORMAL COURSE JUST BECAUSE CONFIRMATION CERTIFICATES FROM FEW CREDITORS COULD NOT BE OBTAINED DUE TO REASONS BEYOND CONTROL, THE APPELLANT SURRENDERED THE INCOME. THE OBSERVATIONS MADE BY THE HON'BLE APEX COURT IN THE CASE OF M/S. MAK DATA PVT LTD (SUPRA) ARE WHOLLY DISTINGUISHABLE WHEREAS FOLLOWING JUDGMENTS ARE FUL LY APPLICABLE TO THE CASE OF THE APPELLANT :- CIT VS. SURESH CHANDRA MITTAL (2000) 251 ITR 9 THE HON'BLE SUPREME COURT UPHELD THE DECISION OF TH E -: 10: - 10 HON 'BLE HIGH COURT WITH THE FOLLOWING OBSERVATION WE HAVE READ THE ORDER OF THE HIGH COURT AND THE STATE MENT OF CASE. GIVEN THE FACTS AND CIRCUMSTANCES, WE DO N OT THINK THAT ANY INTERFERENCE WITH THE ORDER OF THE H IGH COURT IS CALLED FOR. WHILE DELIVERING THIS JUDGEMENT THE HON'BLE MP HIG H COURT HELD THAT 'THE ASSESSMENT WAS MADE BY THE REVENUE AND ONCE THE ASSESSING AUTHORITY HAD FAILED TO TAKE ANY OBJECTION IN THE MATTER, THE DECLARATION OF INCOME MADE BY THE ASSESSEE IN HIS REVISED RETURNS AND THE EXPLANATION THAT HE HAD DONE SO TO BUY PEACE WITH THE DEPARTMENT AND TO COME OUT OF VEXED LITIGATION COULD BE TREATED AS BONA FIDE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, NO PENALTY COULD BE LEVIED FOR CONCEALMENT'. IN THE CASE OF MAK DATA, THE DECISION OF APEX COURT IN THE CASE OF CIT VS. SURESH CHAND MITTAL (2001) 251 ITR 0009 (SC) , WAS NEITHER CITED NOR CONSIDERED. THE RATIO LAID DOWN IN SURESH CHAND MITTAL STILL HOLDS GOOD AND BE ING A -: 11: - 11 PRONOUNCEMENT BY THE JURISDICTIONAL HIGH COURT, IT HAS BINDING PRECEDENCE. THIS JUDGEMENT OF THE HON 'BLE SUPREME COURT WAS DELIVERED BY LD THREE JUDGES BENC H WHILE THE JUDGEMENT OF MAC DATA WAS DELIVERED BY A DIVISIONAL BENCH. RECENTLY, THE HON'BLE SUPREME COURT IN THE CASE OF CIT V/S AGRAWAL ROUND ROLLING MILLS 88 CCH PAGE 36 HAS DISMISSED THE SPECIAL LEAVE BY OBSERVING WHERE ADDI TIONS WAS MADE ON ACCOUNT OF AMOUNT SURRENDERED BY THE ASSESSEE NO PENALTY CAN BE IMPOSED. THE JUDGEMENT O F THE MAC DATA WAS FURTHER DISCUSSED IN THE FOLLOWING CASES:- CIT VS. GEM GRANITES (2013) 86 CCH 160 (CHEN.HC) AFTER REFERRING THE DECISION OF APEX COURT IN THE C ASES OF UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC); UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS (2009) 13 SCC 448, CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) ' AND MAK DATA PVT LTD. VS. CIT (2013) 358 ITR 593 (SC) HELD THAT WHEN THERE IS -: 12: - 12 A DIFFERENCE IN THE REPORTED AND ASSESSED INCOME, T HE BURDEN IS ON THE ASSESSEE TO SHOW THE DIFFERENCE. AND WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION HAD BEEN DISCHARGED BY THE ASSESSEE, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME OF THE ASSESSEE AND NOT OTHERWISE. THE COURT FURTHER HELD THAT ONCE THE ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED BY GIVING A COGENT AND RELIABLE EXPLANATION, THE ONUS SHIFTS ON THE REVENUE AND IF THE DEPARTMENT DOES NO T DISCHARGE ITS ONUS, NO PENALTY CAN BE LEVIED. CIT V/S CHENNUPATTI TYRE & PRODUCTS 90 CCH 181 (AP) THE REVENUE HAS TO DISCHARGE ITS BURDEN TO PROVE TH AT THERE WAS SOME INTENTION TO CONCEAL THE INCOME ON THE PART OF THE ASSESSEE WHERE THERE IS NO INTENTIO N ON PART OF THE ASSESSEE TO CONCEAL INCOME AND THE ASSESSEE AGREED TO OFFER SUNDRY CREDITS WHICH ARE CARRY FORWARD THE PENALTY WAS UNJUSTIFIED. -: 13: - 13 CIT V/S MATHURA COMMERCIAL COMPANY THE CREDITORS COULD NOT BE PROVED AND THE ASSESSEE OFFERED THE SAME AS INCOME HELD THAT IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. THE ASSESSEE FURTHER RELIES ON THE FOLLOWING JUDGME NTS: CIT VS. M.M. GUJAMGADI (2007) 290 ITR 168 (KER) :- HELD THAT WHERE THE ASSESSEE CONCEDES AN ADDITION, IT DOES NOT AUTOMATICALLY FOLLOW THAT THE AMOUNT REPRESENTS CONCEALED INCOME. IF THE ASSESSING OFFIC ER PROVES THEM TO BE GENUINE, PENALTY COULD NOT BE ESCAPED BUT WHERE THE ASSESSEE CONCEDES BECAUSE ITS INABILITY TO PRODUCE THE CREDITORS, SUCH CONCESSION AND CONSEQUENT ADDITION CAN BE TAKEN AS ADDITION FOR LA CK OF PROOF AND NOT FOR POSITIVE CONCEALMENT. COMMISSIONER OF INCOME TAX VS. HARSH TALWAR (2011) 335 ITR 200 (DEL.) DISCREPANCY IN STOCK FOUND DURING SEARCH - VOLUNTAR Y SURRENDER OF INCOME BY ASSESSEE DURING ASSESSMENT -: 14: - 14 PROCEEDINGS TO BUY PEACE - NOT BY ITSELF GROUND TO IMPOSE PENALTY - ASSESSEE PLACING EVIDENCE WITH CORROBORATION PROOF EXPLAINING DISCREPANCY IN STOCK - DELETION OF PENALTY IN IDENTICAL CIRCUMSTANCES IN C ASE OF FIRM OF WHICH ASSESSEE PARTNER BECOMING FINAL - PENALTY NOT IMPOSABLE ON ASSESSEE. IN ABOVE CASES SEARCH/SURVEY PROCEEDINGS WERE CONDUCTED AND INCOME OFFERED WAS ASSESSED TO TAX YET PENALTY LEVIED U/S 271(1(C) OF THE ACT WAS QUASHED BY THE COURTS. ON AFORESAID FACTS AND CIRCUMSTANCES, NEITHER THE RETURN OF INCOME CAN BE CONSIDERED AS FALSE NOR THE RE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME HENCE PENALTY LEVIED U/S 271(1)(C) OF THE ACT AT RS . 3,58,750/- DESERVES TO BE QUASHED. 6. THE LD. D.R. RELIED UPON THE ORDER OF HON'BLE SUPRE ME COURT IN THE CASE OF MAK DATA PRIVATE LIMITED VS. C IT, 358 ITR 593, WHEREIN THE HON'BLE SUPREME COURT HAS HELD THA T VOLUNTARY DISCLOSURE DOES NOT RELEASE ASSESSEE FROM MISCHIEF -: 15: - 15 OF PENAL PROCEEDINGS. THE SURRENDER OF INCOME WAS N OT VOLUNTARY AS IT WAS MADE AFTER DETECTION BY THE ASS ESSING OFFICER IN SEARCH CONDUCTED IN THE SISTER CONCERN. THE SURVEY WAS CONDUCTED FOR MORE THAN 10 MONTHS BEFORE THE AS SESSEE FILED ITS RETURN. HAD IT BEEN THE INTENTION OF ASSE SSEE TO MAKE FULL AND TRUE DISCLOSURE, IT WOULD HAVE FILED THE R ETURN DECLARING INCOME INCLUSIVE OF THE AMOUNT, WHICH WAS SURRENDERED LATER. THEREFORE, THE PENALTY IS LEVIAB LE. HON'BLE SUPREME COURT HAS ALSO HELD THAT THE AO SHALL NOT B E CARRIED OUT BY THE PLEA OF ASSESSEE LIKE VOLUNTARY DISCLOSU RE TO BUY PEACE, TO AVOID LITIGATION, TO EXPLAIN HIS CONDUCT. THE LD. D.R. SUBMITTED THAT BY THIS JUDGMENT, WHICH CLARIFIES TH E POSITION OF LAW REGARDING PLEA LIKE VOLUNTARY DISCLOSURE, BU Y PEACE, AVOID LITIGATION SHOULD NOT BE TAKEN INTO CONSIDERA TION WHILE IMPOSING THE PENALTY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. 8. ON THE ABOVE FACTS WHETHER THE PENALTY U/S 271(1)(C) CAN BE IMPOSED OR NOT, THE SIMILAR ISSUE HAD COME BEFORE HONBLE A.P. HIGH COURT IN THE CASE OF CIT VS. -: 16: - 16 CHENNUPATI TYRES & RUBBER PRODUCTS, 90 CCH 181 (APHC) WHEREIN THE HON'BLE HIGH COURT HAS HELD AS U NDER: PENALTY U/S 271(1)(C) - CONCEALMENT OF INCOME ASSESSEE FILED A RETURN, SHOWING LOSS FOR AY 1994-95 INTIMATION WAS GIVEN U/S 143(1)(A) BY ASSESSING OFFICER REDUCING LOSS ASSESSEE FILED AN APPLICATION FOR RECTIFICATION THEREOF AND SAID REQUEST WAS ACCEPTED BY ASSESSING OFFICER THEREAFTER AN EXERCISE U/S 143(2) WAS UNDERTAKEN AND SCRUTINY OF EACH AND EVERY ITEM WAS MADE IN RESPECT OF TWO ITEMS OF SUNDRY CREDITS, EXPLANATION OFFERED BY ASSESSEE WAS NOT FOUND SATISFACTORY ASSESSEE AGREED FOR TREATING THOSE TWO ITEMS AS INCOME AND IT PAID TAX ASSESSING OFFICER IMPOSED PENALTY U/S 271(1)(C) IN RESPECT OF TWO SUNDRY CREDITORS, REJECTING ASSESSEES EXPLANATION THAT HE DID NOT HAVE ANY INTENTION TO CONCEAL AMOUNTS, AND TWO AMOUNTS -: 17: - 17 WERE CARRIED FORWARD FROM PREVIOUS AY CIT(A) DELETED PENALTY IMPOSED BY ASSESSING OFFICER HOLDING THAT THERE WAS NO INTENTION ON PART OF ASSESSEE TO HIDE INCOME TRIBUNAL AFFIRMED ORDER PASSED BY CIT(A) HELD, BEFORE LEVYING PENALTY U/S 271(1)(C) REVENUE HAS TO DISCHARGE ITS BURDEN TO PROVE THAT THERE WAS SOME INTENTION TO CONCEAL OR FURNISH INACCURATE PARTICULARS ON PART OF ASSESSEE CONCEALMENT CAN OCCUR, ONLY WHEN PERSON IS IN FULL KNOWLEDGE OF STATE OF AFFAIRS AND EVEN WHILE BEING UNDER OBLIGATION TO MAKE IT KNOWN TO OTHERS, AND IN PARTICULAR AUTHORITIES UNDER THE ACT FAILS OR REFUSES TO DO SO IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE FACTUM OF CONCEALMENT IS PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT DOES NOT SAVE HIM HOWEVER, AN INADVERTENT MISTAKE, OR A BONA FIDE -: 18: - 18 BELIEF, AS TO CLASSIFICATION, OR CHARACTER OF AN AMOUNT, CANNOT PER SE PROVIDE A GROUND FOR LEVY OF PENALTY IN INSTANT CASE ASSESSEE AGREED TO TREAT TWO SUNDRY CREDITORS AS INCOME AS A MEASURE OF PURCHASING PEACE LACK OF ANY MALA FIDE INTENTION ON PART OF ASSESSEE CLEAR FROM THE FACT THAT THOSE TWO ITEMS WERE CARRIED FORWARD FROM PREVIOUS YEAR AND WERE NOT NEW ADDITIONS AT ALL THERE WAS NO INGREDIENTS TO CONCEALMENT. 7. WE FIND THAT IN THE SAME JUDGMENT, THE HON'BLE H IGH COURT ALSO DISTINGUISHED THE MAK DATA (SUPRA) BY OBSERVING AS UNDER: LEARNED COUNSEL FOR THE APPELLANT PLACED RELIANCE UPON THE JUDGMENT OF THE SUPREME COURT IN MAK DATA P. LTD. VS. CIT, 358 ITR 593. THEIR LORDSHIPS HELD THAT ONCE AN ITEM OF INCOME WAS FOUND TO HAVE BEEN CONCEALED, THE -: 19: - 19 MERE FACT THAT THE ASSESSEE HAS VOLUNTARILY DISCLOSED IT THEREAFTER, DOES NOT ABSOLVE HIM FROM BEING PROCEEDED UNDER SECTION 271(1)(C) OF THE ACT. WE RESPECTFULLY FOLLOW THAT. HOWEVER, IT IS IMPORTANT TO UNDERSTAND THE PURPORT OF VERY WORD CONCEALMENT. THAT CAN OCCUR, ONLY WHEN THE PERSON IS IN FULL KNOWLEDGE OF THE STATE OF AFFAIRS AND EVEN WHILE BEING UNDER OBLIGATION TO MAKE IT KNOW TO OTHERS, AND IN PARTICULARS THE AUTHORITIES UNDER THE ACT FAILS OR REFUSES TO DO SO. IT IS THEN, AND ONLY THEN, THAT HE CAN BE SAID TO HAVE CONCEALED AND ONCE THE FACTUM OF CONCEALMENT IS PROVED, HIS ATTEMPT TO VOLUNTARILY DISCLOSE IT DOES NOT SAVE HIM. IN THE INSTANT CASE, WE DO NOT FIND ANY INGREDIENTS OF CONCEALMENT. 8. WE ALSO FIND SUPPORT FROM THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. AGRAWAL ROLLIN G -: 20: - 20 MILLS, 88 CCH (0036) (ISCC) WHEREIN IT IS HELD THAT WHEN ASSESSEE HAS FILED THE RETURN AND DURING THE SCRUTI NY OF THE ACCOUNT OF SHARE APPLICATION MONEY RECEIVED, TH E ASSESSEE COULD NOT FURNISH THE DOCUMENTS RELATING T O SOME OF APPLICANTS AND SURRENDERED THE AMOUNT PERTAINING TO THEM. ASSESSING OFFICER MADE ADDITION U/S 68 IN RES PECT OF SURRENDERED AMOUNT, NO PENALTY CAN BE LEVIED U/S 27 1(1) OF THE ACT. 9. WE ALSO GET SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEMICAL S 322 ITR 158 (SC) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT MERE RAISING A CLAIM, EVEN IF NOT SUSTAINABLE IN LAW, IS NOT BY ITSELF, SUFFICIENT TO HELD THAT IT DENOTES F URNISHING OF INACCURATE PARTICULARS WITH AN INTENT AS WOULD INVI TE A PENALTY. 10. THE POSITION OF LAW REGARDING LEVY OF PENALTY U /S 271(1)(C) HAS UNDERGONE A SUBSTANTIAL CHANGE AFTER INSERTION OF EXPLANATION I TO SECTION 271(1)(C) WITH EFFECT FROM 01.04.1976. -: 21: - 21 EXPLANATION 1 TO SECTION 271(1)(C) RAISES A PRESUMP TION THAT AS AND WHEN ANY AMOUNT IS ADDED OR DISALLOWED IN CO MPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEMED OR REPRE SENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEE N CONCEALED. FURTHER WITH EFFECT FROM 10.9.1986 AMEND MENT HAS BEEN MADE TO EXPLANATION 1(B) TO SECTION 271(1)(C), AFTER THIS AMENDMENT FURTHER ONUS HAS BEEN PLACED ON THE ASSES SEE TO PROVE THAT EXPLANATION FURNISHED BY HIM WAS BONA FI DE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXPLANATION AND PROVES THAT THE E XPLANATION WAS BONA FIDE, THE ADDITION MADE TO HIS INCOME SHAL L BE DEEMED TO REPRESENT THE CONCEALED INCOME. ON ANALYS IS OF PROVISIONS OF SECTION 271(1)(C), IT IS OBSERVED THA T EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THE SITUATION, WHER E NO EXPLANATION FOR THE FAILURE IS OFFERED BY THE ASSES SEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO B E FALSE OR WHERE THE ASSESSEE IS NOT ABOUT TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THE CASES, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON SHALL BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH -: 22: - 22 THE PARTICULARS HAVE BEEN CONCEALED. AS PER PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED WAS BONA FIDE AND FACTS RELATING TO SAME AND MATERIAL T O THE COMPUTATION OF HIS INCOME EVEN DISCLOSED BY HIM WIL L BE ON THE PERSONS CHARGED FOR CONCEALMENT. 11. AS PER THE PROVISIONS 2 TO EXPLANATION 1(B) NOW THE ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFER AN EXPLANATION BUT ALSO TO SUBSTANTIATE IT AND TO PROVE THAT THE P RESUMPTION WAS BONA FIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION 1 IS REBUTTABLE. THE EFFECT IS THAT UNLESS AND UNTIL REBUTS THE PRESUMPTION, HE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. IT IS NO W ESTABLISHED LAW THAT PRESUMPTION WOULD NOT STAND RE BUTTED MERELY BY FURNISHING ANY GENERAL OR FANTASTIC OR FA NCIFUL OR UNREASONABLE EXPLANATION BY THE ASSESSEE, THE EXPLA NATION SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTED TO THE AUTHORITIES. 12. THE EXPRESSION FURNISHING THE INACCURATE PA RTICULARS OF INCOME HAS BEEN NOT DEFINED IN THE ACT. THE EXP RESSION -: 23: - 23 INACCURATE REFERS TO NOT ONLY IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS AMENDMENT, WHICH IS RELEVANT IN T HE CONTEXT OF FURNISHING INACCURATE PARTICULARS. THE MEANING B Y FURNISHING INACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT THE INCOME WHICH AR E NOT IN CONFORMITY WITH THE FACT OR TRUTH. THE DETAILS OR I NFORMATION ABOUT INCOME DEALS WHICH ARE FACTUAL DETAIL OF INCO ME AND THIS CANNOT BE EXTENDED TO THE AREA, WHICH ARE SUBJECTIV E SUCH AS STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF DE DUCTION AND INTERPRETATION OF LAW. FURNISHING OF INACCURATE INF ORMATION, THUS, RELATES TO FURNISHING THE FACTUAL INCORRECT D ETAILS AND INFORMATION ABOUT THE INCOME. THE ADMISSION OR REJE CTION OF A CLAIM SUBJECT TO EXERCISE AND WHETHER THE CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACC URATE PARTICULARS OF INCOME. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT, IN THIS CASE, THE ASSESSEE HAS MADE A BONA FIDE LEGAL CLAIM, WHICH WAS NOT ACCEPTED BY THE TAX AUTHORITY OR JUDI CIAL AUTHORITY. WE FIND THAT THE ASSESSEES CLAIM WAS NO T ACCEPTED -: 24: - 24 BY THE AUTHORITY, IT DOES NOT MEAN THAT THE ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE HON 'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN (2009) 13 SCC 448, CONSIDERED THE EARLIER DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND ORS VS. DHARMENDRA TEXTILES PROCESSORS &ORS., REPORTED IN (2008) 306 ITR 277 (SC) AND HELD THAT IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(L)(C) OF THE ACT, CONDITION STATED THEREIN MUST EXIST. THE ABOVE SAID DECISION CAME UP FOR CONSIDERATION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT., LTD., REPORTED IN (2010) 322 ITR 158 (SC). ON READING OF SECTION 271(1)(C) , THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE UNDER SECTION 271(1)(C), TH ERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. IN ORDER TO E XPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION COULD NOT BE INVOK ED. THUS, -: 25: - 25 THE HON'BLE SUPREME COURT POINTED OUT THAT A MERE M AKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSEL F, WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE INCOME OF THE ASSESSEE. THE READING OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE, THUS POINT S OUT THAT FOR SUSTAINING PENALTY, THE BONA FIDE EXPLANAT ION OF THE ASSESSEE MUST BE LOOKED AT, SO THAT THE CONTUMACIOU S CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINI NG THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAI N REQUIREMENT UNDER SECTION 271(L)(C) OF THE ACT. REFERRING TO THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS, (SUPRA), THE HON'BLE SUPREME COURT POINTED OUT THAT IN THE BACKGROUND OF SECTION 271(L )(C) OF THE ACT, THERE IS NO NECESSITY OF MENS REA BEING SHOWN BY THE REVENUE, HOWEVER REFERRING TO THE EXPLANATION T O SECTION 271(L)(C) PENALTY BEING A MULTIPLE LIABILIT Y, THE BONA FIDE OF THE CONDUCT OF THE ASSESSEE NECESSARILY ASS UMES SIGNIFICANT EVEN THOUGH WILLFULNESS OF THE ASSESSEE MAY NOT BE A CRITERIA, THE CONDUCT IS TO BE CONSIDERED. THU S, A MERE FACT THAT THE ADDITION IN THIS CASE HAS BEEN SUSTAI NED BY THIS -: 26: - 26 COURT BY ITSELF WOULD NOT LEAD TO THE AUTOMATIC APP LICATION TO SECTION 271(L). 13. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE DELE TE THE PENALTY. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 11 TH SEPTEMBER, 2015. CPU* 1.10