AJAY KUMAR BAID, MUMBAI V. ITO 14(3)(1), MUMBAI

ITA 5946/MUM/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0341 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVDR
• Keywords: Unexplained investment; Gift; Depreciation; Opportunity of being heard; Question of law; Reasonable cause; Wrong claim; Onus to prove
• Section: 143(3); 142(1); 133A; 260A; 80IB; 133(6); 69; 148; 6; 144; 2; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.5946/MUM/2014 ASSESSMENT YEAR: 2008 - 2009 AJAY KUMAR BAID 1 ST FLOOR, CHANDRA MAHAL, 241, PRINCESS STREET, MUMBAI 400 020 / VS. INCOME TAX OFFICER 14(3)(1) MUMBAI ( ! /ASSESSEE) ( ' / REVENUE P.A. NO. AAAPB5350N ! / ASSESSEE BY NONE ' / REVENUE BY SHRI RAJESH KUMAR YADAV-DR # '$ % !& / DATE OF HEARING : 05/02/2018 % !& / DATE OF PRONOUNCEMENT 05/02/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 8TH JULY 2014, OF THE LEARNED FIRST APPELLATE AUTHO RITY, CONFIRMING THE PENALTY OF RS 1,46,310/- IMPOSED U/S . 2 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WITHOUT PROPERLY APPRECIATING THE PROVISIONS OF THE ACT. 2. DURING THE HEARING NONE WAS PRESENT FOR THE ASSE SSEE INSPITE OF ISSUANCE OF NOTICES. IT IS NOTED THAT T HIS APPEAL WAS FILED BY THE ASSESSEE ON 22.09.2014 AND WAS ADJ OURNED ON 11.04.2016. ON THAT DATE NONE APPEARED FOR THE ASSESSEE AND REGISTERED NOTICE WAS ISSUED. ON 28TH JUNE 2017 AGAIN REGISTERED NOTICE WAS ISSUED STILL NOBOD Y APPEARED FOR THE ASSESSEE. AGAIN ON 30TH OCTOBER 2 017 NOBODY APPEARED FOR THE ASSESSEE AND REGISTERED NOT ICE WAS ISSUED FOR TODAY I.E. 5TH FEBRUARY 2018. THE COPIE S OF THE REGISTERED NOTICES IS AVAILABLE ON RECORD. THE ASS ESSEE NEITHER APPEARED NOR MOVED ANY ADJOURNMENT PETITION . IT SEEMS THAT THE ASSESSEE HAS NOTHING TO SAY, THEREFO RE, WE PROCEED TO DISPOSE OF THIS APPEAL ON THE BASIS OF T HE MATERIAL AVAILABLE ON RECORD. SHRI RAJESH KUMAR YADAV, LEAR NED DR STRONGLY DEFENDED IMPOSITION AS WELL AS CONFIRMATIO N OF PENALTY AND PLACED RELIANCE UPON THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAMSON MAR ITIME LTD. VS. CIT (ITA NO. 1718 OF 2014) ORDER DATED 9TH MARCH 2017 AND THE OBSERVATION MADE IN THE IMPUGNED ORDER . THE 3 CRUX OF THE ARGUMENT IS BY PLACING RELIANCE UPON TH E IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE DECLARED INCOME OF RS 6,86,50 0/- WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. THE CA SE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND, THEREFORE, NOTICE U/S. 143(2) WAS SERVED UPON THE ASSESSEE. AGAIN NO TICE U/S. 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE DAT ED 18.10.2010 WERE ISSUED TO THE ASSESSEE. THE ASSESS EE ATTENDED THE PROCEEDINGS. THE ASSESSMENT WAS COMPL ETED U/S. 143(3) DETERMINING THE TOTAL INCOME AT RS 13,3 0,040/- AS AGAINST THE RETURNED INCOME OF RS 6,86,500/-. A N ADDITION OF RS 6,43,540/- (UNDISCLOSED INTEREST OF RS 1,03,430/- AND UNDISCLOSED FDS OF RS 5,40,110/- WAS MADE U/S. 69 OF THE ACT. PENALTY PROCEEDINGS WERE INITI ATED WITH THE ISSUANCE OF SHOW CAUSE NOTICE U/S. 274 R.W.S. 2 71(1)(C) OF THE ACT. THE ASSESSEE IN HIS COMPUTATION OF INC OME AND ALSO IN THE BALANCE SHEET SHOWED TWO MINOR CHILDREN REVEALING THAT THE INTEREST RECEIVED OF RS 1,03,430 /- FROM M/S RAY BAN INDIA HOLDINGS INC. (80,950/-) , RS 13, 549/- 4 FROM UNION BANK OF INDIA AND FURTHER RS 8,931/- FRO M UNION BANK OF INDIA, GUJARAT, WHICH WAS NOT INCLUDE D IN THE INCOME OF THE ASSESSEE. THIS FACT WAS BROUGHT TO T HE NOTICE OF THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 2N D NOVEMBER 2010 STATED THAT ASSESSEE HAS NOT RECEIVED ANY INTEREST INCOME FROM THE AFORESAID PARTIES/BANKS. ON FURTHER VERIFICATION, FROM THE BANK STATEMENT, IT W AS FOUND THAT THE INTEREST AMOUNTING TO RS 22,480/- WAS EARN ED BY THE ASSESSEE FROM FD OF RS 2,08,127/- CLAIMED AS RE CEIVED AS GIFT FROM MATERNAL GRANDMOTHER AND RS 3,31,980/- CLAIMED TO FROM AGRICULTURAL INCOME BY THE WIFE OF THE ASSESSEE. THE ASSESSEE DID NOT SUBSTANTIATE THE SO URCE OF THE INVESTMENT AND THUS, THE AMOUNT OF RS 5,40,110/ - WAS ADDED AS UNEXPLAINED INVESTMENT TO THE INCOME OF TH E ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE ALSO INITIATED. PENALTY OF RS 1,46,310/- WAS ADDED BY T HE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEAR NED CIT(A). THE ASSESSEE IS IN APPEAL BEFORE THIS TRIB UNAL. 4. IF THE OBSERVATION MADE IN THE PENALTY ORDER, LE ADING TO LEVY OF PENALTY, CONCLUSION DRAWN IN THE IMPUGNED O RDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY TH E LD. DR, 5 IF KEPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE DID NOT DECLARE THE INTE REST INCOME EITHER IN THE RETURN OF THE MINOR CHILDREN OR IN TH E RETURN OF THE ASSESSEE, BEING THE GUARDIAN OF THE MINOR CHILD REN. IF THE CASE WOULD NOT HAVE BEEN SELECTED FOR SCRUTINY, THE INTEREST INCOME SO EARNED WOULD HAVE GONE TAX FREE. IT IS ALSO NOTED THAT THE CASE OF THE ASSESSEE IS COVERED BY THE RATIO LAID DOWN BY THE TRIBUNAL VIDE ORDER DATED 18/12/2015 (ITA NO.1530/MUM/2015), WHEREIN, IT WAS HELD AS UNDER:- THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI (CIT(A) FOR SHORT) DATED 24.12.2014, DISMISSING THE ASSESSE ES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) R/W S. 254 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2004-05 VIDE ORDER DATED 24.12.2012. 2. THE APPEAL, PER ITS FIVE GROUNDS, RAISES A SINGL E ISSUE, I.E., THE VALIDITY IN LAW OF THE DISALLOWANCE OF CLAIM FOR DE DUCTION U/S.80- IB(4) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS IS THE SECOND ROUND BEFORE THE TRIBUNAL; IT, IN THE FI RST INSTANCE RESTORING THE MATTER BACK TO THE FILE OF THE ASSESS ING OFFICER (A.O.) WITH A VIEW TO ALLOW ONE MORE OPPORTUNITY TO THE AS SESSEE TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S. 80-IB. TH E ASSESSEE BEING, IN VIEW OF THE REVENUE AUTHORITIES, UNABLE TO IMPRO VE ITS CASE IN ANY MANNER IN THE SET ASIDE PROCEEDINGS, CONFIRMED THE DISALLOWANCE, SO THAT, AGGRIEVED, THE ASSESSEE IS I N APPEAL. IT WOULD BE IN ORDER TO REPRODUCE THE RELEVANT PART OF THE SAID ORDER BY THE TRIBUNAL (IN ITA NO. 7117/MUM/2007 DATED 30. 3.2011/PB PGS. 1-8): 7 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE PARTIES, PERUSED THE ORDERS OF THE ASSESSING OF FICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF TH E ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECIS IONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT TH AT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 6 80IB ON THE GROUND THAT THE NOTICE U/S 133(6) SENT TO THE PARTIES, FROM WHOM THE PLANT & MACHINERY WERE PURCH ASED, WERE RETURNED UN-SERVED. FURTHER, THE ASSESSEE HAD TAKEN OVER THE RUNNING UNIT OF M/S VINOD PLASTICS. THEREF ORE, IN ABSENCE OF VERIFIABLE EVIDENCE OF INSTALLATION OF P LANT & MACHINERY WORTH RS.6,86,847/-, THE BENEFIT OF DEDUC TION U/S 80IB CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE. SIN CE THERE WAS NO COOPERATION FROM THE SIDE OF THE ASSES SEE TO THE STATUTORY NOTICES, THE ASSESSING OFFICER DISALL OWED THE CLAIM OF THE ASSESSEE IN THE EX-PARTE ORDER PASSED BY HIM. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASS ESSEE THAT AFTER THE PLANT & MACHINERY WERE PURCHASED, IT HAS NO CONTROL OVER THE SELLER. IN OUR OPINION, FOR CLAIMI NG DEDUCTION U/S 80IB, THE ASSESSEE MUST FULFIL THE CONDITIONS L AID DOWN IN THE PROVISIONS. HIS ONUS IN THE INSTANT CASE WAS MO RE SINCE IT HAD TAKEN OVER A RUNNING UNIT NAMELY M/S VINOD P LASTICS. IT WAS ALL THE MORE NECESSARY ON THE PART OF THE AS SESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF T HE ASSESSING OFFICER THAT IT HAD PURCHASED PLANT & MAC HINERY WORTH RS. 6,86,847/-, WHICH IS MORE THAN 80% OF THE TOTAL VALUE OF THE PLANT & MACHINERY. THE RESPONSIBILITY OF THE ASSESSEE INCREASES WHEN THE NOTICES WERE ISSUED U/S 133(6) ARE RETUNED BY THE POSTAL AUTHORITIES AND TH E WARD INSPECTOR DEPUTED BY THE ASSESSING OFFICER ALSO WAS UNABLE TO TRACE THE PARTIES AT THE GIVEN ADDRESSES BY THE ASSESSEE. 7.1 IN THE INSTANT CASE, THE ASSESSEE FAILED TO DIS CHARGE THE ONUS CAST ON IT. HOWEVER, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE MAY BE GIVEN O NE MORE OPPORTUNITY TO SUBSTANTIATE WITH EVIDENCE TO T HE SATISFACTION OF THE ASSESSING OFFICER REGARDING FUL FILMENT OF THE CONDITIONS FOR CLAIMING DEDUCTION U/S 80IB. WE THEREFORE, DEEM IT PROPER TO RESTORE THE MATER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE IT S CLAIM OF DEDUCTION U/S 80IB. THE ASSESSING OFFICER SHALL DEC IDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVIN G DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESS EE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 3. THE PARTIES WERE HEARD AND THE MATERIAL ON RECOR D PERUSED. THE FIRST OBSERVATION IN THE MATTER IS THAT THE ASS ESSMENT IN THE FIRST ROUND WAS FRAMED U/S.144 OF THE ACT, I.E., AS A BEST JUDGMENT ASSESSMENT. THE ASSESSEE DID NOT CHALLENGE THE SAME , I.E., THE INVOCATION OF SECTION 144 BY THE ASSESSING AUTHORIT Y. THE TRIBUNAL, NEVERTHELESS, IN THE INTEREST OF JUSTICE RESTORED T HE MATTER BACK FOR A FRESH DECISION IN ACCORDANCE WITH LAW, THEREBY EF FECTIVELY CONVERTING A SECTION 144 ASSESSMENT (DATED 13.12.20 06), WHICH ASPECT OF THE ASSESSMENT WAS NOT IN DISPUTE, INTO A SECTION 143(3) ASSESSMENT. THE HONBLE HIGH COURT IN CIT VS. RAYAL A 7 CORPORATION P. LTD. [1995] 215 ITR 883 (MAD) HAS CL ARIFIED THAT THIS IS IMPERMISSIBLE IN LAW. IT STANDS EXPLAINED THAT T HE ASSESSING AUTHORITY IS THE BEST JUDGE OF THE SITUATION. IT IS HIS BEST JUDGMENT AND NOT OF ANYONE ELSE. THE QUESTION AS TO WHETHER HE HAS COMMITTED ANY ERROR IN HIS JUDGMENT U/S. 144 OF THE ACT CAN BE DECIDED ONLY ON THE BASIS OF THE MATERIALS GATHERED BY HIM AND NOT ON THE BASIS OF ANY MATERIALS THAT ARE LATER PRODUC ED BY THE ASSESSEE. THERE CANNOT BE A PROCEDURE WHERE THE BES T JUDGMENT OF THE A.O. IS SUBJECT TO DISCRETION OF THE ASSESSE E TO PRODUCE EVIDENCE/MATERIAL AT THE APPELLATE STAGE AND, THUS, CONVERT THE PROCEEDINGS OF THE BEST JUDGMENT ASSESSMENT INTO TH E PROCEEDINGS OF A REGULAR ASSESSMENT. THE TRIBUNALS ORDER IN TH E FIRST ROUND STANDS ACCEPTED, ATTAINING FINALITY, SO THAT IT IS BINDING ON THE PARTIES AS WELL AS THE TRIBUNAL. THIS ASPECT IS, HO WEVER, EMPHASIZED ONLY TO UNDERLINE THAT EVEN AS ALLOWANCE OF OPPORTUNITY TO THE ASSESSEE TO ESTABLISH ITS CASE W AS NOT IN DISPUTE, THE TRIBUNAL YET SET ASIDE THE ASSESSMENT SO AS TO ALLOW THE ASSESSEE ANOTHER, ONE LAST OPPORTUNITY TO SUBST ANTIATE HIS CLAIM. THIS, DESPITE IT BEING OF THE OPINION THAT T HE ASSESSEE HAD NOT DISCHARGED THE ONUS CAST ON IT, WHICH WAS IN TH E FACTS AND CIRCUMSTANCES OF THE CASE HEAVY IN-AS-MUCH AS IT HA D TAKEN OVER A RUNNING UNIT, M/S. VINOD PLASTICS AND, FURTHER, THE NOTICES U/S.133(6) TO THE PARTIES FROM WHOM MACHINERY CON STITUTING 88% OF THE TOTAL MACHINERY - HAD BEEN PURCHASED, HAD CA ME BACK UNSERVED EVEN AT THE NEW ADDRESSES SUPPLIED BY THE ASSESSEE. THIS IS IN FACT THE THIRD ROUND BEFORE THE TRIBUNAL ; IT HAVING DISMISSED THE ASSESSEES APPEAL EARLIER FOR NON-PRO SECUTION VIDE ITS ORDER DATED 09.7.2010, WHICH WAS SUBSEQUENTLY RECALLED. THE ASSESSEE IN THE SET ASIDE PROCEEDINGS FILED AFF IDAVITS FROM PARTNERS AND EMPLOYEES OF THE ASSESSEE-FIRM AND EVE N THEIR FRIENDS. THE SAME STAND DISMISSED AS BEING FROM INT ERESTED PARTIES. HOW COULD THAT, IT IS WONDERED, BE FAULTED ? HOW COULD THE AFFIDAVITS, FURNISHED ON ITS OWN BY THE ASSESSEE, BE REGARDED AS EVIDENCE, PARTICULARLY IN THE FACTS AND CIRCUMSTANC ES OF THE CASE? THE QUESTION IS NOT OF THE GOODS (INJECTION MOULDED PLASTIC PRODUCTS) BEING NOT PRODUCED BY THE ASSESSEE, OR OF THE REVENUE NOT FINDING ANY DEFECT IN ITS BOOKS OF ACCOUNT. A D ISALLOWANCE OF A CLAIM, FOR WANT OF SATISFACTION OF THE CONDITION OF THE RELEVANT PROVISION, IS NOT PREDICATED UPON REJECTION OF THE BOOKS OF ACCOUNT. THE ISSUE IS THE GENUINENESS OF THE PURCHASE OF MAC HINERY, AND WHICH IS TO ESTABLISHED BY THE ASSESSEE. IT CAN REL Y ON THE BOOKS OF ACCOUNT NO DOUBT, BUT THE ENTRIES THEREIN, IT IS TR ITE LAW, ARE NOT CONCLUSIVE OR DETERMINATIVE OF THE MATTER. THE ASSE SSEE HAVING TAKEN OVER A RUNNING UNIT, I.E., WHICH WAS ALREADY IN PRODUCTION, THE PRODUCTION OF GOODS IS NOT DENIED OR IN DISPUTE. BU T, HAVING TAKEN OVER A RUNNING UNIT, THE ASSESSEE, YET, ACQUIRES MA CHINERY ONLY FOR RS.86,505/-, I.E., AT A FRACTION OF THE TOTAL MACHI NERY REQUIRED FOR PRODUCTION, PURCHASING THE BALANCE MACHINERY COSTIN G RS.6.87 LACS FROM OUTSIDE WHICH IS PUZZLING INDEED. THE ASSESS EE HAS IN THE SAID PROCEEDINGS FURTHER CLARIFIED THAT IT WAS NOT IN A POSITION TO MAKE AVAILABLE THE CURRENT ADDRESSES OF THE PARTIES . HOW, THEN, 8 CAN IT ASSAIL THE REVENUE FOR HOLDING THAT NO IMPRO VEMENT IN ITS CASE STANDS MADE BY THE ASSESSEE? RATHER, THAT BEIN G THE POSITION, ON WHAT BASIS, IT IS WONDERED, DID IT SEE K INDULGENCE BY THE TRIBUNAL FOR BEING ALLOWED ONE MORE OPPORTUNITY TO ESTABLISH ITS CASE. TRUE, THE ASSESSEE CANNOT EXERCISE ANY CONTRO L OVER THE PARTIES ONCE THE TRANSACTION IS OVER, A POINT SOUGH T TO BE EMPHASIZED WITH REFERENCE TO CASE LAW. HOWEVER, IN THE PRESENT CASE, IT NEEDS TO BE NOTED, AS WAS ALSO BY THE TRIB UNAL ON THE EARLIER OCCASION, THAT THE WARD INSPECTOR HAD REPOR TED THE PARTIES TO BE UNTRACEABLE, I.E., NOT EXISTING AT THE GIVEN ADDRESSES (REFER PARA 2 OF THE ASSESSMENT ORDER). THIS IS DEFINITELY A DIFFERENT MATTER. SURELY, THE ASSESSEE COULD NOT BE PREJUDICE D WHERE THE CORRESPONDING PARTY HAD SHIFTED ITS ADDRESS OR REL OCATED, BUT THE MOOT POINT IN THE PRESENT CASE IS: IS IT SO? WHERE DID THE PARTIES DISAPPEAR? A PARTY MAY SHIFT ADDRESS, BUT THERE WOU LD BE A HOST OF ANTECEDENTS AND EVIDENCES TO SHOW THAT IT WAS EXIST ING AT THE GIVEN ADDRESS DURING A PARTICULAR PERIOD. THE REPOR T BY THE WARD INSPECTOR, WHICH HAS NOT BEEN CHALLENGED, COMPLETEL Y INDICTS AND DISPROVES THE ASSESSEES CASE. EVEN THE DATE (OR AP PROXIMATE TIME) OF CHANGE OF ADDRESS HAS NOT BEEN SPECIFIED. WHY, INAS- MUCH AS ITS REGISTRATION UNDER THE VARIOUS LAWS, IN CLUDING UNDER THE ACT IN THE FORM OF PAN; ELECTRICITY CONNECTION, ETC . WOULD OBTAIN, INFORMATION ON THEIR CURRENT ADDRESSES WOULD BE AVA ILABLE AND COULD BE SOUGHT FROM THE RELEVANT DEPARTMENTS. AN EXAMINATION OF THE MATERIAL ON RECORD ALSO INSPI RES LITTLE CONFIDENCE. IN THE BILL OF M/S. POLYERA INDUSTRIES, JOGESHWARI (W), MUMBAI DATED 07.4.2003 (PB PG. 9), AS POINTED OUT B Y THE LD. DR, THE ASSESSEES NAME IS OVERWRITTEN. THE BILL STATES OF THE PAYMENT TERMS AS IMMEDIATE, WHILE THE PAYMENTS HAVE BEEN MADE ONLY IN JULY, 2006 (PB PG. 10). THAT IS, A PARTY SELLING GO ODS ON CASH BASIS, YET ALLOWS, FOR NO APPARENT REASON, CREDIT F OR 27 MONTHS; THE ASSESSEE MAKING THE PAYMENT AT THE TIME WHEN THE AS SESSMENT PROCEEDINGS WERE ON. THE PAYMENT TO THE OTHER PARTY , M/S. MEWA HYDRAULICS, NEW DELHI, IS AGAIN OVER AN EXTENDED PE RIOD - FROM JULY, 2004 (I.E., 15 MONTHS AFTER THE DATE OF PURCH ASE 15.4.2003) TO MARCH, 2006. HOW COULD, THEN, THE ASSESSEE SAY T HAT HE WAS NOT AWARE OF THE WHEREABOUTS OF THE PARTIES AFTER T HE GOODS (MACHINERY) WAS PURCHASED? WHY COULD THE ASSESSEE, PAYING THE PARTIES, AND THUS IN TOUCH WITH THEM, NOT SUPPLY TH EIR ADDRESS OR EVEN PRODUCE THEM BEFORE THE A.O.? RATHER, ON THE OTHER HAND, IT IS ONLY WHERE THE PARTIES HAVE TREMENDOUS TRUST AND CONFIDENCE IN EACH OTHER, THAT CREDIT, FOR YEARS, IS ALLOWED. THI S FACT, WHICH IS DIVORCED FROM THE BUSINESS REALITIES, NAY, THE TERM S OF THE CONTRACT ITSELF, MAKES THE TRANSACTIONS AS HIGHLY SUSPECT. F URTHER, IF THE PARTIES HAVE ONCE AGAIN CHANGED THEIR ADDRESSES, IN -AS-MUCH AS THEY WERE NOT FOUND AT THE CHANGED ADDRESS SUPPLIED BY THE ASSESSEE, THE QUESTION IS: WHICH ARE THESE PARTIES THAT CHANGE THEIR ADDRESSES - A PROCESS THAT DISLOCATES ONE COM PLETELY, BESIDES ENTAILING PROHIBITIVE COSTS, EVER SO OFTEN? THERE IS, IN ANY CASE, NO CONTEMPORANEOUS MATERIAL EVIDENCING THE PU RCHASE, VIZ. 9 OCTROI, FREIGHT, TRANSIT INSURANCE, INSURANCE, ETC. ON RECORD, OR EVEN EXPENDITURE BY WAY OF UNLOADING AND INSTALLATION OF THE MACHINERY. THE ASSESSEES CASE REMAINS WHOLLY UNPROVED, IF NO T DISPROVED. IT HAS, RATHER, ABUSED THE PROCESS OF LAW ONLY WITH A VIEW TO GAIN TIME IN THE HOPE OF A FAVOURABLE VERDICT IN-AS-MUCH AS A LL IT FURNISHES IN THE SET ASIDE PROCEEDINGS IN EVIDENCE IS AFFIDAVITS FROM SELF AND RELATED PARTIES. THE ONUS TO PROVE ITS RETURN, AND THE CLAIMS PREFERRED THEREBY, IS ONLY ON THE ASSESSEE (REFER: CIT VS. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 (SC)), WHICH IT HAS C OMPLETELY FAILED TO. RELIANCE ON CASE LAW; THE MATTER BEING P RIMARILY FACTUAL, TO BE DECIDED BASED ON FACTUAL FINDINGS, IS OF LITT LE CONSEQUENCE. IN FACT, AS REGARDS THE PROPOSITION OF LAW, THE REVENU E HAS RELIED ON CASE LAW, WHICH HAS NOT BEEN MET BY THE ASSESSEE (R EFER PARA 2, PG. 4 OF THE ASSESSMENT ORDER). I, ACCORDINGLY, CON FIRM THE ASSESSMENT. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 5. ITS OUR DUTY TO ANALYZE SECTION 271(1)(C) OF TH E ACT, WHICH IS REPRODUCED HEREUNDER:- 271. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON XXXXXXXXXXXXXXXXXXXXX ( C ) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR XXXXXXXXXXXXXXXXXXXXXXXXXX EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, ( A ) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFE RS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE 48 [PRINCIPAL COMMISSIONER OR] COMMISSIONER TO BE FALSE, OR ( B ) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE ( C ) OF 10 THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. XXXXXXXXXXXXXXXXXXX EXPLANATION 2. WHERE THE SOURCE OF ANY RECEIPT, DEPOSIT, OUTGOING OR INVESTMENT IN ANY ASSESSMENT YEAR IS CLAIMED BY ANY PERSON TO BE AN AMOUNT WHICH HAD BEEN ADDED IN COMPUTING THE INCOME OR DEDUCTED IN COMPUTING THE LOSS IN THE ASSESSMENT OF SUCH PER SON FOR ANY EARLIER ASSESSMENT YEAR OR YEARS BUT IN RESPECT OF WHICH NO PENALTY UNDER CLAUSE ( III ) OF THIS SUB-SECTION HAD BEEN LEVIED, THAT PART OF THE AMOUNT SO ADDED OR DEDUCTED IN SUCH EARLIER ASSESSMENT YEA R IMMEDIATELY PRECEDING THE YEAR IN WHICH THE RECEIPT, DEPOSIT, O UTGOING OR INVESTMENT APPEARS (SUCH EARLIER ASSESSMENT YEAR HE REAFTER IN THIS EXPLANATION REFERRED TO AS THE FIRST PRECEDING YEAR) WHICH IS SUFFICIENT TO COVER THE AMOUNT REPRESENTED BY SUCH RECEIPT, DEPOSIT OR OUTGOING OR VALUE OF SUCH INVESTMENT (SUCH AMOUNT O R VALUE HEREAFTER IN THIS EXPLANATION REFERRED TO AS THE UTILISED AMOUNT) SHALL BE TREAT ED AS THE INCOME OF THE ASSESSEE, PARTICULARS OF WHICH HAD BEEN CONCEALED OR INACCURATE PARTICULARS OF WHICH HAD BEEN FURNISH ED FOR THE FIRST PRECEDING YEAR; AND WHERE THE AMOUNT SO ADDED OR DE DUCTED IN THE FIRST PRECEDING YEAR IS NOT SUFFICIENT TO COVER THE UTILISED AMOUNT, THAT PART OF THE AMOUNT SO ADDED OR DEDUCTED IN THE YEAR IMMEDIATELY PRECEDING THE FIRST PRECEDING YEAR WHICH IS SUFFICI ENT TO COVER SUCH PART OF THE UTILISED AMOUNT AS IS NOT SO COVERED SH ALL BE TREATED TO BE THE INCOME OF THE ASSESSEE, PARTICULARS OF WHICH HA D BEEN CONCEALED OR INACCURATE PARTICULARS OF WHICH HAD BEEN FURNISHED FOR THE YEAR IMMEDIATELY PRECEDING THE FIRST PRECEDING YEAR AND SO ON, UNTIL THE ENTIRE UTILISED AMOUNT IS COVERED BY THE AMOUNTS SO ADDED OR DEDUCTED IN SUCH EARLIER ASSESSMENT YEARS. EXPLANATION 3. WHERE ANY PERSON FAILS, WITHOUT REASONABLE CAUSE, TO FURNISH WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) OF SECTION 153 A RETURN OF HIS INCOME WHICH HE IS REQUIRED TO FURNIS H UNDERSECTION 139 IN RESPECT OF ANY ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1989, AND UNTIL THE EXPIRY OF THE PER IOD AFORESAID, NO NOTICE HAS BEEN ISSUED TO HIM UNDER CLAUSE ( I ) OF SUB-SECTION (1) OF SECTION 142 OR SECTION 148 AND THE ASSESSING OFF ICER OR THE COMMISSIONER (APPEALS) IS SATISFIED THAT IN RESPECT OF SUCH ASSESSMENT YEAR SUCH PERSON HAS TAXABLE INCOME, THEN, SUCH PER SON SHALL, FOR THE PURPOSES OF CLAUSE ( C ) OF THIS SUB-SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME IN RESPECT OF SUCH ASSESSMENT YEAR, NOTWITHSTANDING THAT SUCH PERSON FURNISHES A RETURN OF HIS INCOME AT ANY TIME AFTER THE EXPIRY OF THE PERIOD A FORESAID IN PURSUANCE OF A NOTICE UNDER SECTION 148. XXXXXXXXXXXXXXXXXXX (5) THE PROVISIONS OF THIS SECTION AS THEY STOOD IM MEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989 SHALL APPLY TO AND IN RELATIO N TO ANY ASSESSMENT FOR THE ASSESSMENT YEAR COMMENCING ON TH E 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR AND 11 REFERENCES IN THIS SECTION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERENCES TO THOSE PROVISION S AS FOR THE TIME BEING IN FORCE AND APPLICABLE TO THE RELEV ANT ASSESSMENT YEAR. 6. CONSIDERING THE PROVISION OF THE ACT, MATERIAL FACTS AVAILABLE ON RECORD, AND THE RATIO LAID DOWN IN FOLLOWING CASES, IT CAN BE CONCLUDED THAT IT WAS A CONSCIOUS ACT OF THE ASSESSEE TO HIDE SOMETHING FROM THE DEPA RTMENT. THE RATIO LAID DOWN IN THE FOLLOWING THE CASES, SUP PORTS THE CASE OF THE REVENUE. I. CIT VS SATISH MEDICAL AGENCIES 277 ITR 394 (ALL.) II. JYOTI LAXMAN KONKAR VS CIT 292 ITR 163 (BOM.), III. DEEPAK CONSTRUCTION COMPANY VS CIT 293 ITR 285(GUJ.) IV. CIT VS MAHAVIR PRASAD BAJAJ 298 ITR 109(JHAR.) V. D & H SECHERON ELECTRODS PVT. LTD. VS CIT 281 ITR 421 (MP.) VI. SHRI NITHYAKALYANI TEXTILES LTD. VS DCIT 282 ITR 154 (MAD.) VII. LMP PRECISION ENGINEERING COMPANY LTD. VS DCIT (330 ITR 93) (GUJ.) VIII. CIT VS DEEP CHAND 336 ITR 292 (P & H) IX. SETHY INDUSTRIES CORPORATION VS DCIT 338 ITR 243 (P &H) X. B.DAMODAR V.B. JEWELLERS VS JCIT 353 ITR 206 (KARNA.) XI. STANDARD HIND COMPANY VS CIT (2014) 361 ITR 370 (ALL.) XII. BAJRANG GLASS EMPORIUM VS CIT (2014) 361 ITR 376 (ALL.) XIII. INDUS ENGINEERING COMPANY VS ACIT (2010) 323 ITR 302 (BOM.), 12 7. LIKEWISE IN THE CASE OF CIT VS SOMANI EVERGREE KNIT LTD. (2013) 352 ITR 592 (BOM.), THERE WAS EXCE SS CLAIM OF DEPRECIATION. RECTIFICATION WAS MADE BY THE ASSE SSEE DURING ASSESSMENT PROCEEDINGS AND THE MISTAKE WAS B ONA FIDE. IN THAT SITUATION, THE HON'BLE JURISDICTIONAL HIGH COURT TOOK A DECISION THAT PENALTY IS NOT LEVIABLE. HOWEV ER, IN THE PRESENT APPEAL, AS DISCUSSED ABOVE, THERE IS CONSCI OUS CONCEALMENT OF INCOME BY THE ASSESSEE, BY MAKING A WRONG CLAIM, FURNISHING OF INACCURATE PARTICULAR OF INCOM E, RESULTING INTO CONCEALMENT OF SUCH INCOME, THEREFOR E, BEING ON DIFFERENT FACTS, THE DECISION RELIED UPON IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. 8. IN THE CASE OF CIT & ANORS. VS S.L. N. TRADERS ( 2012) 341 ITR 235, THE EXPLANATION OF THE ASSESSEE WAS AC CEPTED BY THE CIT(A) AS WELL AS BY THE TRIBUNAL. WHEREAS, IN THE PRESENT APPEAL, THE LD. ASSESSING OFFICER, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS THE TRIBUNAL HAS NOT ACCEPTED THE EXPLANATION OF THE AS SESSEE. 9. NOW, WE SHALL DEAL WITH THE CASE, IN THE CASE O F MAK DATA P. LTD. VS. COMMISSIONER OF INCOME TAX (2013) 263 CTR (SC) 1: (2013) 358 ITR 593 (SC) : (2 013) 94 13 DTR (SC) 379. THE RELEVANT OBSERVATION/DECISION MAD E BY HON'BLE APEX COURT IS REPRODUCED HEREUNDER FOR READ Y REFERENCE AND ANALYSIS:- 6. WE HAVE HEARD COUNSEL ON EITHER SIDE. WE FULLY CONCUR WITH THE VIEW OF THE HIGH COURT THAT THE TRIBUNAL H AS NOT PROPERLY UNDERSTOOD OR APPRECIATED THE SCOPE OF EXP LANATION 1 TO SECTION 271(1) (C) OF THE ACT, WHICH READS AS FOLLOWS : 'EXPLANATION 1 WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON U NDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE, OR (B)/- SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLAN ATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOW ED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' THE AO, IN OUR VIEW, SHALL NOT BE CARRIED AWAY BY T HE PLEA OF THE ASSESSEE LIKE 'VOLUNTARY DISCLOSURE', 'BUY PEAC E', 'AVOID LITIGATION', 'AMICABLE SETTLEMENT', ETC. TO EXPLAIN AWAY ITS CONDUCT. THE QUESTION IS WHETHER THE ASSESSEE HAS O FFERED ANY EXPLANATION FOR CONCEALMENT OF PARTICULARS OF I NCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. EXPLAN ATION TO SECTION 271(1) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AO, BETWEEN REPORTED A ND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WH EN THE INITIAL ONUS TAXPUNDIT.ORG PLACED BY THE EXPLANATIO N, HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVE NUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE IN COME AND NOT OTHERWISE. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED TH E ADDITIONAL SUM OF RS.40,74,000/-WITH A VIEW TO AVOI D 7 LITIGATION, BUY PEACE AND TO CHANNELIZE THE ENERGY AND RESOURCES TOWARDS PRODUCTIVE WORK AND TO MAKE AMICA BLE SETTLEMENT WITH THE INCOME TAX DEPARTMENT. STATUTE DOES NOT RECOGNIZE THOSE TYPES OF DEFENCES UNDER THE EXPLANA TION 1 TO 14 SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE APPELLANT-ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PRO VIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HI S CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALT Y. WE ARE OF THE VIEW THAT THE SURRENDER OF INCOME IN THIS CASE IS NOT VOLUNTARY IN THE SENSE THAT THE OFFER OF SUR RENDER WAS MADE IN VIEW OF DETECTION MADE BY THE AO IN THE SEA RCH CONDUCTED IN THE SISTER CONCERN OF THE ASSESSEE. IN THAT SITUATION, IT CANNOT BE SAID THAT THE SURRENDER OF INCOME WAS VOLUNTARY. AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SH ARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPANIES, AFFIDAVITS, COPIES OF INC OME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANS FER 8 DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURS E OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CONDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCOME. HAD IT BEEN TH E 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. CONSEQUEN TLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECL ARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY OF THE ASSESSEE TO RECORD ALL ITS TRANSACTIONS IN THE BOOKS OF ACCOUNT, TO EXPLAI N THE SOURCE OF PAYMENTS MADE BY IT AND TO DECLARE ITS TRUE INCO ME IN THE RETURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO IN OUR VIEW, HAS RECORDED A CATEGORICAL FIND ING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TR UE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PRO CEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCO ME TAX ACT, 1961. THE AO HAS TO SATISFY WHETHER THE PENALTY PROCEEDIN GS BE INITIATED OR NOT DURING THE COURSE OF THE ASSESSMEN T PROCEEDINGS AND THE AO IS NOT REQUIRED TO RECORD HI S SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT IN TO WRITING. THE SCOPE OF SECTION 271(1)(C) HAS ALSO BEEN ELABOR ATELY DISCUSSED BY THIS COURT IN UNION OF INDIA VS. DHARM ENDRA TEXTILE PROCESSORS (2008) 13 SCC 369 AND CIT VS. AT UL MOHAN BINDAL (2009) 9 SCC 589. THE PRINCIPLE LAID DOWN BY THIS COURT, IN OUR VIEW, HAS BEEN CORRECTLY FOLLOWED BY THE REVENUE AND WE FIND NO IL LEGALITY IN THE DEPARTMENT INITIATING PENALTY PROCEEDINGS IN TH E INSTANT CASE. WE, THEREFORE, FULLY AGREE WITH THE VIEW OF T HE HIGH COURT. HENCE, THE APPEAL LACKS MERI AND IS DISMISSE D. THERE SHALL BE NO ORDER AS TO COSTS. 15 10. DURING HEARING BEFORE US THE LEARNED DR RELIED UPON THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAMSON MARITIME LIMITED VS. CIT (SUPRA), WH EREIN IT WAS HELD AS UNDER: THIS APPEAL UNDER SECTION 260A OF THE INCOME TAX AC T, 1961 (THE ACT), CHALLENGES THE ORDER DATED 18 TH JUNE, 2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (THE TRIBUNAL) . THE IMPUGNED ORDER DATED 18 TH JUNE, 2014 IS IN RESPECT OF ASSESSMENT YEAR 2007- 08. 2 THE REVENUE URGES THE FOLLOWING QUESTION OF LAW, FOR OUR CONSIDERATION: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF T HE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN UPHOLDIN G IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT ON A FINDING THAT THE APPELLANT HAD CONCEALED ITS I NCOME AND/OR FURNISHED INACCURATE PARTICULARS OF ITS INCO ME IN RESPECT OF THE APPORTIONMENT OF FOREIGN EXCHANGE FLUCTUATION LOSS BETWEEN THE TONNAGE INCOME AND NON - TONNAGE INCOME WHILE FILING THE RETURN OF INCOME FO R A. Y. 200708.? 3 THE APPELLANT ASSESSEE IS ENGAGED IN SHIPPING BUS INESS. THE APPELLANT ASSESSEE IS ASSESSED TO TAX UNDER CHA PTER XIIG OF THE ACT TO THE EXTENT ITS INCOME IS EARNED FROM VESSELS, SATISFYING/ QUALIFYING THE REQUIREMENTS THEREOF (TO NNAGE INCOME). SO FAR AS THE INCOME FROM OTHER VESSELS I. E. NON QUALIFYING VESSELS (NON-TONNAGE INCOME) IS CONCERNE D, THE SAME IS SUBJECTED TO TAX UNDER THE HEAD PROFIT & GAIN FROM ITS BUSINESS OR PROFESSION . THUS, CLASSIFYING ITS INCOME AS TONNAGE BUSINESS AND NON-TONNAGE BUSINESS. DURING T HE SUBJECT ASSESSMENT YEAR, THE APPELLANT ASSESSEE HAD SUFFERED FOREIGN EXCHANGE LOSS IN RESPECT OF ITS TO NNAGE BUSINESS WHICH IS TAXABLE UNDER CHAPTER XIIG OF THE ACT. HOWEVER, THE ABOVE FOREIGN EXCHANGE LOSS OF RS.9.37 LAKHS WAS DEBITED TO COMPUTE ITS NON-TONNAGE INCOME WHILE BRINGING IT TO TAX UNDER PROFIT & GAIN FROM BUSINESS OR PROF ESSION. 4 THEREAFTER, ON 14 TH JANUARY, 2009, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTIONS 142(1) & 143(2) OF T HE ACT, CALLING VARIOUS DETAILS/ INFORMATION AS SET OUT IN THE ANNEXURE 16 THERETO. THIS INCLUDED INFORMATION REGARDING DETAIL S OF EXPENSES DEBITED IN ITS PROFIT & LOSS ACCOUNT AND E XPENSES INCURRED ON ACCOUNT OF FOREIGN EXCHANGE. THEREAFTER , THE APPELLANT ASSESSEE RESPONDED TO THE SAME AND BY ORD ER DATED 24 TH DECEMBER, 2009, THE ASSESSING OFFICER DETERMINED TH E APPELLANT ASSESSEE TO AN INCOME OF RS.2.58 CRORES U NDER SECTION 143(3) OF THE ACT. THIS WAS AFTER ADDING TH E FOREIGN EXCHANGE LOSS OF RS.9.37 LAKHS WHICH HAD BEEN INCOR RECTLY DEBITED WHILE COMPUTING ITS NON- TONNAGE INCOME. TH E ORDER OF THE ASSESSING OFFICER RECORDS THAT THIS WAS DONE AF TER IT WAS FOUND ON VERIFICATION THAT NO FOREIGN EXCHANGE LOSS WAS INCURRED IN RESPECT OF NON-TONNAGE INCOME. BESIDES, INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 5 THEREAFTER, ORDER DATED 30 TH JUNE, 2010, WAS PASSED BY THE ASSESSING OFFICER, IMPOSING A PENALTY UNDER SECTION 271(1)(C) OF THE ACT, WHEREIN IT SPECIFICALLY RECORDS THE FAC T THAT THOUGH THERE WERE NO TRANSACTION IN FOREIGN CURRENCY RESUL TING IN FOREIGN EXCHANGE LOSS, IN CASE OF NON-TONNAGE INCOM E, YET THE APPELLANT ASSESSEE HAD DEBITED EXCHANGE LOSS TO ITS NON- TONNAGE BUSINESS ONLY TO REDUCE ITS NON-TONNAGE INC OME BEING OFFERED TO TAX. THEREFORE, BY AN ORDER DATED 30 TH JUNE, 2010, THE ASSESSING OFFICER IMPOSED A PENALTY OF RS.3.09 LAKHS BEING 100% TAX SOUGHT TO BE EVADED BY DEBITING FORE IGN EXCHANGE LOSS OF RS.9.37 LAKHS TO DETERMINE ITS NON -TONNAGE INCOME. 6 BEING AGGRIEVED, THE APPELLANT ASSESSEE CARRIED T HE ABOVE ISSUE OF PENALTY IN APPEAL TO THE COMMISSIONER OF I NCOME TAX (APPEALS) [CIT(A)]. BY ORDER DATED 15 TH JULY, 2012, THE CIT(A) DISMISSED THE ASSESSEE'S APPEAL. THIS, BY HOLDING T HAT THERE WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSE E TO FURNISH INACCURATE PARTICULARS SO AS TO REDUCE ITS TAXABLE INCOME. THE EXPLANATION OF MISTAKE OFFERED FOR THE SAME BY THE APPELLANT WAS NOT FOUND TO BE SATISFACTORY EVEN BY THE CIT(A) . 7 BEING AGGRIEVED, THE APPELLANT ASSESSEE FILED A S ECOND APPEAL TO THE TRIBUNAL AGAINST IMPOSITION OF PENALT Y. BY THE IMPUGNED ORDER DATED 18 TH JUNE, 2014, THE TRIBUNAL UPHELD THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. THIS BY NEGATIVING THE ASSESSEE'S CONTENTION BEFORE IT T HAT ALLOCATING/ DEBITING THE FOREIGN EXCHANGE LOSS TO D ETERMINE ITS NON-TONNAGE INCOME, WAS A MISTAKE AND THE MISTAKE H AD BEEN VOLUNTARILY DISCLOSED BY THE APPELLANT DURING THE A SSESSMENT PROCEEDINGS. THE CONTENTION OF THE APPELLANT WAS NO T ACCEPTED AS THE SO CALLED DISCLOSURE WAS MADE BY THE APPELLA NT ONLY AFTER IT RECEIVED NOTICES UNDER SECTION 142(1) & 14 3(2) OF THE ACT, CALLING FOR VARIOUS DETAILS. MOREOVER, THE EXP LANATION 17 OFFERED BY THE APPELLANT FOR HAVING DEBITED FOREIGN EXCHANGE LOSS TO DETERMINE NON-TONNAGE LOSS, WAS NOT FOUND T O BE SATISFACTORY BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A). THE IMPUGNED ORDER OF THE TRIBUNAL ALSO PLACED RELI ANCE UPON THE DECISION OF THE APEX COURT IN MAK DATA P. LTD., V/S. OMMISSIONER OF INCOME TAX ACT, 1961 (HEREINAFTER TH E ACT) 358 ITR 593 , THAT VOLUNTARY DISCLOSURE ITSELF DOES NOT RELEASE THE ASSESSEE FROM PENAL CONSEQUENCES. 8 THE GRIEVANCE OF THE APPELLANT ASSESSEE BEFORE US IS THAT IT HAD ITSELF BROUGHT ITS MISTAKE OF DEBITING THE LOSS ON ACCOUNT OF FOREIGN EXCHANGE FLUCTUATION TO DETERMINE ITS NON-T ONNAGE INCOME TO THE NOTICE OF THE ASSESSING OFFICER. THIS , ACCORDING TO HIM, IS STATED IN ITS AFFIDAVIT DATED 23 RD JUNE, 2010 FILED DURING THE PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER. HOWEVER, THE ABOVE AFFIDAVIT AS FILED BY THE APPELL ANT DURING PENAL PROCEEDINGS, HAS BEEN IGNORED BY ALL THE AUTH ORITIES INCLUDING THE TRIBUNAL WHILE PASSING THE IMPUGNED O RDER. IT IS SUBMITTED THAT THE ABOVE FACT ITSELF WOULD JUSTIFY DROPPING OF ANY PENAL PROCEEDINGS AGAINST APPELLANT ASSESSEE. IT WAS ALSO SUBMITTED BEFORE US THAT DEBITING OF THE FOREI GN EXCHANGE LOSS TO ARRIVE ITS NON-TONNAGE INCOME, WAS A MISTAK E AND NO PENALTY BE IMPOSED FOR THE MISTAKE COMMITTED. RELIA NCE WAS PLACED UPON THE APEX COURT'S DECISION IN PRICE WATERHOUSE COOPERS (P) LTD., V/S. CIT 348 ITR 306 TO CONTEND THAT MISTAKES MADE BY AN ASSESSEE CANNOT BE THE BASIS FO R IMPOSITION OF PENALTY. IN THE ABOVE VIEW, IT IS SUB MITTED THAT THE APPEAL BE ADMITTED. 9 FROM THE RECORD IT IS CLEAR THAT THE NOTICE UNDER SECTIONS 142(1) AND 143(2) OF THE ACT WERE ISSUED TO THE APP ELLANT ON 14 TH JANUARY, 2009. THE NOTICE ALSO CONTAINS AN ANNEXURE , SEEKING DETAILS OF EXPENSES DEBITED TO PROFIT AND L OSS ACCOUNT, ALONG WITH DETAILS OF FOREIGN EXCHANGE EXP ENSES. EVEN ACCORDING TO THE APPELLANT, THE ALLEGED MISTAK E ON ITS PART WAS POINTED OUT BY A LETTER DATED 23 RD SEPTEMBER, 2009 DURING ASSESSMENT PROCEEDINGS WHERE IT STATED THAT IT HAD COMMITTED A MISTAKE IN DEBITING FOREIGN EXCHANGE LO SS TO ITS DETERMINE NON-TONNAGE INCOME, WHEN IN FACT, NO FORE IGN EXCHANGE LOSS WAS INVOLVED IN RESPECT OF ITS NON-TO NNAGE BUSINESS. THUS, IT IS CLEAR THAT SO CALLED MISTAKE AS CLAIMED BY THE APPELLANT ASSESSEE, WAS ONLY AFTER NOTICES DATE D 14 TH JANUARY, 2009 WERE ISSUED UNDER SECTIONS 142 AND 14 3 OF THE ACT. IT WAS ONLY AN ATTEMPT TO PRE-EMPT THE REVENUE FINDING OUT THE APPELLANT HAD FURNISHED INACCURATE PARTICUL ARS. THEREFORE, IT CANNOT BE SAID THAT IT WAS VOLUNTARY DISCLOSURE. IN FACT, THE APEX COURT IN MAK DATA (P) LTD., (SUPRA) HAS OBSERVED THAT THE ASSESSING OFFICER, IN OUR VIEW, SHALL NOT BE 18 CARRIED AWAY BY THE PLEA OF THE ASSESSEE LIKE VOLU NTARY DISCLOSURE, BUY PEACE, AVOID LITIGATION AMICA BLE SETTLEMENT ETC. TO EXPLAIN ITS CONDUCT. THE APEX COURT HAS ALSO FURTHER OBSERVED THAT IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE APPELLANT ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PRO VIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HI S CONCEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALT Y. IN THE PECULIAR FACT OF THE PRESENT CASE, THE SO CALLED VO LUNTARY DISCLOSURE WAS ONLY AFTER THE ASSESSING OFFICER INI TIATED PROCEEDINGS UNDER SECTION 142 OF THE ACT. THUS, IT WAS NOT A VOLUNTARY DISCLOSURE. IN FACT, THE ASSESSMENT ORDER DATED 24 TH DECEMBER, 2009 UNDER SECTION 143(3) OF THE ACT ALSO RECORDS THE FACT OF VERIFICATION BY THE ASSESSING OFFICER, LEADING TO A FINDING THAT THE APPELLANT ASSESSEE HAD DEBITED FOR EIGN EXCHANGE LOSS TO ARRIVE ITS NON-TONNAGE INCOME. THI S ORDER WAS ACCEPTED AND NO GRIEVANCE IN RESPECT OF THE SAM E BEING FOUND BY THE ASSESSING OFFICER, WAS MADE BY THE APP ELLANT ASSESSEE. IT IS ONLY IN PENALTY PROCEEDINGS THAT T HIS ISSUE IS RAISED FOR THE FIRST TIME. FURTHER, THE APPELLANT A SSESSEE BESIDES STATING IT IS A MISTAKE, HAS NOT OFFERED AN Y EXPLANATION. THEREFORE, THE EXPLANATION UNDER SECTION 271(1)(C) OF THE ACT WAS NOT FOUND TO BE SATISFACTORY BY THE AUTHORITIES UNDER THE ACT AND PENALTY IMPOSED AND SUSTAINED. 10 RELIANCE PLACED BY THE APPELLANT ASSESSEE UPON T HE DECISION OF THE APEX COURT IN PRICE WATERHOUSE COOP ERS (P) LTD., (SUPRA), IS INAPPROPRIATE IN THE FACTS OF THE PRESENT CASE. IN THE ABOVE CASE, THE APEX COURT NOTED THE FACT TH AT TRIBUNAL HAD ITSELF COME TO A FINDING THAT THERE WAS A SILLY MISTAKE ON THE PART OF THE ASSESSSEE IN NOT HAVING ADDED THE P ROVISION FOR GRATUITY TO ITS TOTAL INCOME EVEN WHEN THE DOCUMENT S ACCOMPANYING THE RETURN OF INCOME, DID SHOW THAT PR OVISION FOR GRATUITY IS NOT ALLOWABLE AS DEDUCTION UNDER SECTIO N 40(7) OF THE ACT. THUS, IT WAS ONLY A COMPUTATION ERROR IN T HE RETURN OF INCOME. IN THE PRESENT FACTS, NONE OF THE AUTHORITI ES INCLUDING THE TRIBUNAL HAVE FOUND THE DEBIT OF FOREIGN EXCHAN GE LOSS TO ITS NON-TONNAGE BUSINESS WAS MADE ON ACCOUNT OF A M ISTAKE. NOR CAN IT BE CLASSIFIED AS AN COMPUTATION ERROR AF TER COMPLETE DISCLOSURE. THUS, THE AFORESAID DECISION DOES NOT A SSIST THE APPELLANT ASSESSEE. 11 WE NOTE THAT ALL THE THREE AUTHORITIES HAVE COME TO A FINDING OF FACT, ADVERSE TO THE APPELLANT, THAT THE SO CALL ED VOLUNTARY DISCLOSURE WAS NOT VOLUNTARY, BUT MADE ONLY IN RESP ONSE TO NOTICES UNDER SECTIONS 142 AND 143 OF THE ACT. THIS FINDING OF FACT IS NOT SHOWN TO BE PERVERSE AND/OR ARBITRARY, WARRANTING 19 INTERFERENCE. IN VIEW OF THE ABOVE, THE QUESTION AS FRAMED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF L AW. 11. WE FIND THAT IN THE AFORESAID ORDER THE HON'BLE JURISDICTIONAL HIGH COURT DULY CONSIDERED THE DECIS ION FROM HON'BLE APEX COURT IN MAK DATA PVT LTD VS. CIT 358 ITR 593 (SC), PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT 348 ITR 306 (SC) AND THEREAFTER REACHED TO A PARTICULAR CONCLUS ION. IN THE PRESENT APPEAL BEFORE US THE INTEREST INCOME EA RNED FROM FIXED DEPOSITS WAS NEVER DISCLOSED BY THE ASSE SSEE THUS, THERE IS FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME LEADING OF CONCEALMENT OF INCOME, THUS, WE F IND NO INFIRMITY IN THE CONCLUSION OF THE LEANED CIT(A). RESULTANTLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 12. FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED . THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED DR AT THE CONCLUSION OF THE HEA RING ON 5 TH FEBRUARY, 2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; + DATED : /02/2018 SA 20 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 2 2 # 3! , ( ,- ) / THE CIT, MUMBAI. 4. 2 2 # 3! / CIT(A)- , MUMBAI 5. 5'6 0! , 2 ,-& , , # $ / DR, ITAT, MUMBAI 6. 7 8$ / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI