DCIT 24(2), MUMBAI V. UNISYNTH CHEMICALS, MUMBAI

ITA 5967/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8975 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Business income; Initiation of penalty proceedings
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 5967/MUM/2014 (ASSESSMENT YEAR: 2010-11) D C I T 24(2) VS. M/S. UNISYNTH CHEMICALS 6 TH FLOOR, PRATYAKSHA KAR BHAVAN, BKC, BANDRA (E) MUMBAI 400051 106 - 107, ADVENT ATRIA CHINCHOLI BUNDER ROAD MALAD (W), MUMBAI 400064 PAN AAAFU1724D APPELLANT RESPONDENT APPELLANT BY: SHRI RAJESH K. ARVIND RESPONDENT BY: SHRI VIMAL PUNMIYA DATE OF HEARING: 16.12.2016 DATE OF PRONOUNCEMENT: 11.01.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-34, MUMBAI DATED 31.07.2014 FOR A.Y. 2010-11 DELETING T HE PENALTY OF ` 14,53,833/- LEVIED UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, A FIRM ENGAGED IN MANUFACTURE AND TRADING OF CHEMICALS, FILED ITS RETURN OF INCOME FOR A.Y. 2010 -11 ON 25.09.,2010 DECLARING TOTAL INCOME OF ` 2,45,67,888/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS TAKEN UP FOR SCRUTINY. ON THE BASIS OF INFORMATION RECEIVED FROM DGIT (INV), THE ASSESSING OFFICER (AO) CONDUCTED A SURVEY ACTION UNDER SECTION 133A OF THE ACT ON 08.01.2013 AT THE BUSINESS PREMISES OF THE ASSESSEE. IN THE COURS E OF SURVEY STATEMENT OF SHRI MANOJ SHARMA, PARTNER IN THE ASSESSEE FIRM WAS RECORDED WHEREIN HE ADMITTED INCOME OF ` 47,04,960/- AS DIFFERENCE OF DISPUTED/BOGUS PURCHASES AND SALES FOR THE YEAR UNDER CONSIDERATIO N. THE ASSESSMENT WAS ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 2 COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDE R DATED 28.01.2013, WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T ` 2,95,08,260/-, INTER ALIA, MAINLY ON ACCOUNT OF UNDISCLOSED INCOME OF ` 47,04,960/- ADMITTED IN THE COURSE OF SURVEY ACTION AND PENALTY PROCEEDINGS UNDER SECTION 274 R.W.S. 271 OF THE ACT WERE INITIATED SI MULTANEOUSLY FOR CONCEALMENT OF INCOME. NO APPEAL WAS PREFERRED BY T HE ASSESSEE AGAINST THE ORDER OF ASSESSMENT AND THE MATTER ATTAINED FIN ALITY. 2.2. `THE ASSESSING OFFICER TOOK UP PENALTY PROCEED INGS INITIATED UNDER SECTION 271(1)(C) OF THE ACT AND ISSUED LETTER DATE D 30.03.2013 TO THE ASSESSEE CALLING UPON IT TO EXPLAIN AS TO WHY PENAL TY SHOULD NOT BE LEVIED THEREUNDER. THE ASSESSEE FURNISHED ITS REPLY (EXTRA CTED ON PG. 4 OF THE PENALTY ORDER) SUBMITTING THAT THE INCOME IN RESPEC T OF DISPUTED/BOGUS PURCHASES OF ` 47,04,960/- WAS MADE ONLY DUE TO THE FACT THAT THE PARTIES REFERRED TO IN THE ORDER OF ASSESSMENT TO/FROM WHOM SALES AND PURCHASES WERE MADE HAD DISOWNED THE TRANSACTIONS AND DID NOT COOPERATE WITH IT AND THEREFORE THE ASSESSEE WAS NOT IN A POSITION TO SUBSTANTIATE ITS CLAIM WITH EVIDENCE TO PROVE THAT THE DEALINGS WITH THESE PARTIES WERE IN ORDER. THE AO BRUSHED ASIDE THE EXPLANATION PUT FORTH OBSE RVING THAT THE SAME APPEARS TO HAVE BEEN FURNISHED FOR THE SAKE OF GIVI NG AN EXPLANATION AND THAT SINCE THE ASSESSEE COULD NOT PRODUCE THE PARTI ES FROM WHOM PURCHASES WERE MADE, THE PURCHASES ARE FOUND TO BE FROM NON-EXISTENT PARTY AND THEREFORE THE VERY EXISTENCE OF PURCHASE IS NEGATED. AFTER OBSERVING THAT THE PARTIES FROM WHOM PURCHASES WERE MADE WERE NON- EXISTENT, THE AO STATES THE PURCHASE PARTIES IN QUE STION HAVE DEPOSED BEFORE SALES TAX AUTHORITIES THAT THEY HAVE NEITHER MADE ANY PURCHASE/SALES AND ARE SIMPLY INVOLVED IN ISSUING O F BILLS. IN THAT VIEW OF THE MATTER, THE AO PROCEEDED TO LEVY PENALTY OF ` 14,53,833/- UNDER SECTION 271(1)(C) OF THE ACT @100% OF TAX SOUGHT TO BE EVAD ED ON SUCH PURCHASES AMOUNTING TO ` 47,04,060/-. 2.3 AGGRIEVED BY THE ORDER LEVYING PENALTY OF ` 14,53,833/- UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2005-06, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-34, MUMBAI. THE LEARNED CIT(A) AL LOWED THE ASSESSEES ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 3 APPEAL AND DELETED THE AFORESAID PENALTY LEVIED UND ER SECTION 271(1)(C) OF THE ACT VIDE ORDER DATED 31,07.2014. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CI T(A)-34, MUMBAI DATED 31.07.2014 DELETING THE PENALTY OF ` 14,53,883/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR A.Y. 2005-06 HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S .271(1)(C) OF RS.14,53,833/- ON THE ADDITION MADE ON THE BASIS OF ADMITTED UNDISCLOSED INCOME OF RS,47,04,960/- DURING THE COU RSE OF SURVEY U/S. 1 33A OF THE I.T. ACT. WHICH PROVED CON CEALMENT OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN CONCLUDING THAT THE ADDITION IS ON ACCOUNT OF OFFERED & ACCEPTED INCOME WHICH DOES NOT MEAN THAT THE ASSESSEE HAS AGREED FOR PENALTY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) FAILED TO NOTE THAT THE ASSESSEE HIMSELF IN QUESTION NO. 11 IN THE STATEMENT RECORDED UNDER OATH ADMITTE D THAT THE PURCHASES ARE BOGUS AND THE ASSESSEE HIMSELF ARRIVE D AT THE UNDISCLOSED INCOME OF RS.47,04,960/-. THE CIT(A) FA ILED TO NOTE THAT THE ADMITTED ADDITIONAL INCOME WAS DUE TO THE INVESTIGATIONS CARRIED OUT BY THE DEPARTMENT AND IT IS NOT A VOLUNTARY OFFER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ONUS TO ESTABLISH THE IDENTITY AND GENUINENESS OF ANY PURCHASE APPEARING IN THE BOOKS LIES WITH THE ASSESSEE WHICH ASSESSEE HAD FAI LED TO SATISFY DURING THE ASSESSMENT PROCEEDINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSE SSEE DID NOT PREFER APPEAL AGAINST THE ORDER PASSED U/S.143(3) O F THE ACT. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APPELLA NT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUN D WHICH MAY BE NECESSARY.' 3.2 THE LEARNED D.R. WAS HEARD IN SUPPORT OF THE GR OUNDS RAISED (SUPRA). IT WAS FURTHER SUBMITTED THAT VOLUNTARY SURRENDER O F INCOME BY THE ASSESSEE IN THE COURSE OF SURVEY PROCEEDINGS, SUBJE CT TO DROPPING OF PENALTY PROCEEDINGS, DOES NOT ABSOLVE THE ASSESSEE FROM LIABILITY OR PENALTY. IN SUPPORT OF THIS PROPOSITION THE LEARNED D.R. PLACED RELIANCE ON ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 4 THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF MAK DATA P. LTD. VS. CIT (2013) 358 ITR 593 (SC). 3.3.1 PER CONTRA, THE LD. REPRESENTATIVE FOR THE AS SESSEE PLACED STRONG SUPPORT ON THE IMPUGNED ORDER OF THE CIT(A) DELETI NG THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSESSM ENT YEAR 2005-06. THE LD. REPRESENTATIVE FOR THE ASSESSEE REITERATED THE FACTUAL SUBMISSIONS AND LEGAL PROPOSITIONS PUT FORTH BY IT BEFORE THE CIT(A ) AND EXTRACTED AT PARA 3.2 AT PAGES 3 TO 19 THEREOF IN FURTHER WRITTEN SUB MISSIONS FILED BEFORE THE BENCH. IN SUBMISSIONS PUT-FORTH THE LD. REPRESENTA TIVE FOR THE ASSESSEE, INTER-ALIA, CANVASSED THE FOLLOWING PROPOSITIONS:- (I) WHEN THE ASSESSEE HAS VOLUNTARILY SURRENDERED I NCOME UNDER SURVEY/SEARCH PROCEEDINGS AS IN THE CASE ON HAND TO AVOID LITIGATION OR TO BUY PEACE, THE SAME CANNOT BE CONSIDERED AS A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. (II) THE NON-CO-OPERATION OF PARTIES SHOULD NOT BE MADE A GROUND FOR TREATING THE ASSESSEES CASE AS ERRONEOUS, FICTITIO US OR CONCEALMENT, MERELY BECAUSE THE NON-ACCEPTANCE OF OTHER PARTIES TO THE TRANSACTIONS ENTERED TO WITH THE ASSESSEE, AND SHOU LD NOT BE THE REASON BEHIND LEVY OF PENALTY UNDER SECTION 271(1) (C) OF THE ACT. (III) PENALTY UNDER SECTION 271(1)(C) OF THE ACT NO T EXIGIBLE ONLY FOR THE REASON THAT NO APPEALS WERE FILED AGAINST THE QUANT UM ADDITIONS, AS PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT P ROCEEDINGS. (IV) WHILE PENALTY PROCEEDINGS IN THE CASE ON HAND WERE INITIATED BY ASSESSING OFFICER IN THE SHOW CAUSE NOTICE ON ONE L IMB OF SEC.271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTIC ULARS OF INCOME THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT THE AO H AS LEVIED THE PENALTY ON ANOTHER LIMB OF SECTION 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. RELIANCE WAS PLACED ON THE DECISIONS OF THE CO-ORDINATE BENCH OF ITAT, MUMBAI IN THE CASE OF (I) MISS SHALINI KARAN KUMAR VS. ACIT (IN THIS APPEAL N O.5457/MUM/ ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 5 2011 DATED 02/09/2016 AND (II) DHARNI DEVELOPERS V . ACIT (2015) (40 ITR (TRIBUNAL) 120) (MUMBAI TRIB). 3.3.2 AN AFFIDAVIT DATED 10/6/2016 SWORN TO BY SHRI MANOJ SHARMA, PARTNER IN THE ASSESSEE FIRM HAS ALSO BEEN FILED IN WHICH IT IS STATED THAT PURSUANT TO THE SURVEY ACTION UNDER SECTION 133A OF THE ACT IN THE ASSESSEES CASE ON 08/01/2013, ADDITIONAL INCOME WA S DECLARED FOR THREE YEARS AS UNDER ON THE SAME INCOME:- S.NO. ASST.YEAR AMOUNT IN (RS.) 1. 2009 - 10 59,77,088 2. 2010 - 11 47,04,960 3. 2011 - 12 36,72,900 TOTAL 1,43,54,948/ - IT IS STATED THAT WHILE PENALTY PROCEEDINGS WERE IN ITIATED BY THE ASSESSING OFFICER FOR ALL THESE ASSESSMENT YEARS (SUPRA), PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT WAS ONLY LEVIED FOR THIS ASS ESSMENT YEAR I.E.2010-11 AND NOT FOR THE OTHER TWO YEARS. OTHER ARGUMENTS S TATED THEREIN WAS IN RESPECT OF THE PROPOSITION PUT UP IN ITS SUB MISSIO NS BEFORE THE CIT(A). THE LD. REPRESENTATIVE FOR THE ASSESSEE PRAYED THAT THE ORDER OF THE CIT(A) DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C ) OF THE ACT BE UPHELD AND REVENUES APPEAL DISMISSED. 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. ON A PERUSAL OF THE IMPUGNED ORDER, IT IS S EEN THAT THE CIT(A) HAS DELETED THE PENALTY OF RS.14,53,833/- HOLDING AS UN DER AT PARAS 3.3 TO 3.6 AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSI ONS OF THE APPELLANT, MATERIAL AVAILABLE ON RECORD AND THE IMPUGNED PENA LTY ORDER. ON PERUSAL OF THE PARA 3.4& 3.5 OF THE PENALTY ORDER WHICH ARE A S UNDER: 3.4 THUS, FROM THE ABOVE EXTRACT OF STAMEN RECORDED OF SHRI MANOJ SHARMA, IT WAS SEEN THAT THE ASSESSEE HAD OFFERED RS. 47,04,96 0/ - [ DIFFERENCE BETWEEN BOGUS PURCHASES OF RS. 2,15,28,000/- AND BO GUS SALES OF RS. ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 6 1,68,23,040/-] AS 'UNDISCLOSED INCOME' FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION, I.E., A. Y.2010-11. 3.5 ACCORDINGLY, THE SAME WAS ADDED TO THE TOTAL IN COME OF THE ASSESSEE AS 'UNDISCLOSED INCOME' OFFERED BY THE ASSESSEE ON ACC OUNT OF BOGUS PURCHASES AND BOGUS SALES THEREOF THE SAID 'UNDISCLOSED INCOM E' 0 RS. 47,04,960/- WAS OFFERED BY THE ASSESSEE, AS A RESULT OF SURVEY ACTION U/S.133A CONDUCTED ON 08.01.2013 AS THE BUSINESS PREMISES O F THE ASSESSEE FIRM. ADDITION WAS MADE ON THE BASIS OF INCOME OFFERED BY THE APPELLANT AS UNDISCLOSED INCOME ON ACCOUNT OF THE DIFFERENCE OF BOGUS PURCHASE AND SALES. PENALTY WAS LEVIED BY AO ON THIS ADDITION BY CONCLUDING THAT INCOME WAS OFFERED AS UNDISCLOSED INCOME. BUT CIRCUMSTANCE S UNDER WHICH HE OFFERED INCOME SHOULD NOT BE GIVEN AS MUCH IMPORTAN CE WHICH ARE REQUIRED BEFORE LEVY OF PENALTY. THE APPELLANT OFFERED INCOM E BECAUSE DISPUTED PARTIES ARE CO-OPERATE WITH APPELLANT AND APPELLANT IS ALSO NOT IN A POSITION TO SUBSTANTIATE HIS CLAIM WITH FULL EVIDENCE. THERE FORE, IN ORDER TO BUY PEACE AND TO AVOID LENGTHY LITIGATIONS, OFFERED INCOME W HICH IS OUT RIGHTLY ACCEPTED BY AO. CLAIM NOT SUBSTANTIATE WITH DOCUMEN T CANNOT BE LEAD TO INACCURATE PARTICULARS. THEREFORE, THE SAME CANNOT BE SUBJECTED TO INITIATION OF PENALTY PROCEEDINGS UNDER THE PRETEXT OF CONCEA LMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS U/S 271(1)(C) . AS THE ADDITION WAS MADE OFFERED BY APPELLANT AND ACCEPTED BY AO DOES NOT ME AN THAT APPELLANT IS ALSO AGREE FOR THE PENALTY. THUS, IN CASE OF ADDITI ON MADE ON AGREED BASIS PENALTY CANNOT BE LEVIED BECAUSE ADDITION WAS MADE BECAUSE OF CONCEALMENT IT WAS MADE FOR PEACE. 3.4. IN SUPPORT OF MY VIEW I PLACED RELIANCE ON DEC ISION OF HON'BLE MADRAS HIGH COURT IN CASE OF CIT VIS JAYARAJ TALKIES (1999 ) 239 ITR 914 (MAD HC) HELD THAT:- THE REVENUE CONTENDS THAT AS THE ASSESSEE-OWNER OF THE THEATRE WHO HAD DERIVED INCOME FROM LEASING THE SAME, HAD AFTER FIL ING A RETURN CLAIMING DEDUCTION OF A SUM OF RS. 4,125 AND RS. 16,348 TOWA RDS BUILDING MAINTENANCE AND FURNITURE REPAIRS RESPECTIVELY, HIM SELF VOLUNTEERED TO OFFER THESE SUMS AS PART OF HIS INCOME ON ACCOUNT OF THE DIFFICULTY ENCOUNTERED BY HIM IN SECURING NECESSARY VOUCHERS AND RECEIPTS. TH AT CONDUCT OF THE ASSESSEE ACCORDING TO THE REVENUE WAS BY ITSELF SUF FICIENT TO SHOW THAT THERE WAS CONCEALMENT. THE SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR AND GENERAL MILLS LTD. V. CIT [1987] 168 ITR 705, HAS POINTED OUT THAT NOT EVERY CASE OF NONDISCLOSURE WARRANTS IMPOSITION OF PENALTY AS THE ASSESSEE MAY FORGO A DEDUCTION OR OFFER HIGHER SUMS FOR TAXATION FOR A H UNDRED AND ONE DIFFERENT REASONS AND ALL OF THEM CANNOT BE REGARDED AS REASO NS WHICH ARE UNWORTHY 0] ACCEPTANCE. THE SUPREME COURT IN THAT CASE HELD THAT THE TRIBUNAL WHICH HAD HELD THAT PENALTY WAS NOT IMPOSABLE HAVING REGA RD TO THE CIRCUMSTANCES IN THE CASE HAD HELD SO RIGHTLY. THE SUPREME COURT OBSERVED THAT FROM THE ASSESSEE A GREEING TO ADDITIONS TO HIS INCOME, IT DOES NOT FOLLOW THAT THE AMOUNT AGRE ED TO BE ADDED WAS CONCEALED INCOME. THERE MAY BE A HUNDRED AND ONE RE ASONS FOR SUCH ADMISSION. THE REASONS OFFERED IN THE CASE HAS RIGH TLY BEEN HELD BY THE TRIBUNAL TO BE RELEVANT REASONS. ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 7 THE QUESTION REFERRED TO US IS THEREFORE, ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN PRESENT CASE ALSO APPELLANT OFFERED INCOME BECA USE OF NON-CORPORATION OF PARTY AND HIS INABILITY TO PROVE TRANSACTION WITH S UPPORTING DOCUMENTS. BUT DOES NOT MEAN THAT THERE IS CONCEALMENT OF INCOME. 3.5. I FURTHER REPLY ON FOLLOWING DECISIONS FOR MY VIEW THAT PENALTY CANNOT BE LEVIED ON ADDITION MADE ON AGREED BASIS. A) CIT V/S SUARAJ BHAN (2007) 294 ITR 481 (P&H HC) B) CIT V/S SURESH CHANDRA MITTALS (2001) 251 ITR 9 (SC) C) CIT VS. MANJUNATHA COTTON AND GINNING FACTORY (K ER HC) D) SIR SHADI LAL SUGAR & GENERAL MILLS LTD. V/S CIT (1987) 168 ITR 705 (SC) 3.6. IN VIEW OF THE ABOVE DISCUSSION, IN MY OPINION PENALTY CANNOT BE LEVIED IN PRESENT CASE. THEREBY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY U/S 271(1)(C) AMOUNTING TO RS. 14,53,833/-. HENCE, THESE GROUND OF APPEAL IS ALLOWED 3.4.2 FROM A PERUSAL OF THE FINDING OF THE CIT(A) I N THE IMPUGNED ORDER IT IS SEEN THAT THE ADDITION OF RS.47,04,960/-, ON THE BASIS OF WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED BY TH E ASSESSING OFFICER, WAS ON ACCOUNT OF UNDISCLOSED INCOME ON ACCOUNT OF BOGU S PURCHASES AND SALES. ON AN APPRECIATION OF THE MATERIAL ON RECOR D WE ARE INCLINED TO CONCUR WITH THE VIEW OF THE CIT(A) THAT THE EXPLANA TION PUT-FORTH BY THE ASSESSEE IN THE PENALTY PROCEEDINGS WAS A PLAUSIBLE ONE, INASMUCH AS, THE CIRCUMSTANCES ON WHICH THE ADDITIONAL INCOME WAS OF FERED WAS BECAUSE THE DISPUTED PARTIES WITH WHOM THESE TRANSACTIONS WERE MADE WERE NON- COOPERATIVE AND THE ASSESSEE HAVING NO CONTROL OVER THOSE PARTIES WAS, THEREFORE, NOT ABLE TO SUBSTANTIATE ITS CLAIM WITH NECESSARY MATERIAL EVIDENCE. THEREFORE, THE ASSESSEE WAS CONSTRAINED I N ORDER TO AVOID LENGTHY LITIGATION TO OFFER THE ADDITIONAL INCOME, WHICH WA S ACCEPTED AS SUCH THE ASSESSING OFFICER. THE HONBLE APEX COURT IN THE C ASE OF MAK DATA P. LTD. (2013) 358 ITR 593(SC) WHILE CONSIDERING THE PROVIS IONS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT OBSERVED THAT TH E GENERAL PRINCIPLES OF LAW IN RESPECT OF PENALTY FOR CONCEALMENT OF INCOME, DO ES NOT GRANT THE ASSESSEE AUTOMATIC IMMUNITY FROM PENALTY ON ACCOUNT OF SURRENDER OR ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 8 VOLUNTARY DISCLOSURE OF INCOME. AS PER THE PROVISI ONS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, THE QUESTION IS WHETH ER THE ASSESSEE HAS OFFERED ANY EXPLANATION FOR CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE CASE OWN HAND WE FIND THAT THE REQUIREMENT LAID DOWN BY THE HONBLE COURT HAS BEE N MET BY THE ASSESSEE INASMUCH AS, AS OBSERVED BY THE CIT(A), THE ASSESSE ES EXPLANATION (SUPRA) WHICH APPEARS PLAUSIBLE AND WHICH EXPLANATI ON, THOUGH BRUSHED ASIDE BY THE ASSESSING OFFICER AS AN AFTERTHOUGHT, HAS NOT BEEN BROUGHT OUT OR FOUND TO BE FALSE IN RESPECT OF FURNISHING O F PARTICULARS. WE, THEREFORE, UPHOLD THIS VIEW OF THE CIT(A) AND CONSE QUENTLY UPHOLD HER ORDER DIRECTING THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED IN THE CASE ON HAND FOR ASSESSMENT YEAR 2009-10. CONSEQUENTLY, REVENUES GROUNDS RAISED AT S.NO.1 TO 6 ARE DISMISSED. 3.4.2 ANOTHER CONTENTION OF THE ASSESSEE RAISED IN THE COURSE OF HEARING BEFORE THE BENCH WAS THAT PENALTY UNDER SECTION 271 (1)(C) OF THE ACT MAY BE LEVIED EITHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THAT THE ASSES SING OFFICER IS ENTITLED TO LEVY THE PENALTY UNDER THE LIMIB UNDER WHICH THE PROCEEDINGS WERE INITIATED. THE ATTENTION OF THE BENCH WAS DRAWN TO THE ORDER OF ASSESSMENT WHEREIN THE ASSESSING OFFICER HAS INITIA TED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME ( PARA 6.5 OF ASSESSMENT ORD ER). INVITING OUR ATTENTION TO THE PENALTY ORDER (PARA 10) THE LD. RE PRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER LEVIE D PENALTY FOR WILLFULLY FURNISHING INACCURATE PARTICULARS OF INCOME LEADIN G TO CONCEALMENT. IN THESE CIRCUMSTANCES, IT IS CONTENDED THAT THE PENAL TY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN THE CASE ON HAND IS NOT SU STAINABLE. EVEN THOUGH THIS LEGAL ISSUE MAY NOT HAVE BEEN URGED BEFORE TH E AUTHORITIES BELOW, SINCE THE SAME IS A PURELY LEGAL ISSUE AND ALL FACT S RELATING THERETO ARE AVAILABLE ON RECORD. THE SAME ARE ADMITTED FOR ADJU DICATION BEFORE US IN THIS APPEAL IN KEEPING WITH THE DECISION IN THE CAS E OF THE HONBLE APEX COURT IN NTPC (229 ITR 383)(SC). THERE IS NO DISPU TE WITH REGARD TO THE ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 9 FACT THAT THE ASSESSING OFFICER INITIATED PENALTY P ROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN THE ORDER OF ASSESSMENT FOR CONCEALMENT OF PARTICULARS OF INCOME BUT HOWEVER PROCEEDED TO LEV Y THE SAID PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME LEA DING TO CONCEALMENT. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SMT.SHALINI KARAN KU MAR IN ITA NO.5457/MUM/2011 DATED 02/09/2016, WHEREIN FOLLOWIN G THE DECISION IN THE CASE OF DHARNI .DEVELOPERS (2015) (61 TAXMAN.CO M 208), IT HAS BEEN HELD AS UNDER AT PARA 6 AND 7 THEREOF:- 6. THE IDENTICAL OBSERVATIONS HAVE BEEN MADE BY THE ASSESSING OFFICER IN OTHER YEARS UNDER CONSIDERATION ALSO. SINCE THE PEN ALTY NOTICES ARE ISSUED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN OUR VIEW, THE SAID NOTICES HAVE TO BE READ ALONG WITH THE ASSESSMENT ORDER. AC CORDINGLY, EVEN IF THE ASSESSING OFFICER HAS FAILED TO STRIKE DOWN ANYONE OF THE TWO DEFAULTS, THE INTENTION OF THE ASSESSING OFFICER FOR INITIATING T HE PENALTY PROCEEDINGS COULD BE ASCERTAINED FROM THE ASSESSMENT ORDER. IN ALL TH E YEARS UNDER CONSIDERATION, THE SOLITARY ADDITION MADE BY THE AS SESSING OFFICER WAS RELATED TO UNACCOUNTED BUSINESS RECEIPTS. THE ABOVE SAID OBSERVATIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDERS W OULD SHOW THAT THE PENALTY PROCEEDINGS WERE INITIATED FOR 'CONCEALMENT OF PARTICULARS OT COME' ONLY. HOWEVER IN THE PENALTY ORDER, THE ASSESSING O FFICER HAS CONCLUDED AS UNDER: 'THUS IT IS CLEAR THAT THE ASSESSEE HAS TRIED TO EV ADE THE TAXES ON INCOME BY FILING INACCURATE PARTICULARS OF THEIR IN COME AND THEREBY CONCEALING THE SAME. I THEREFORE, HOLD THAT THE ASS ESSEE IN THIS CASE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS O F THEIR INCOME FOR RELEVANT PREVIOUS YEAR THEREBY ATTRACTING PENALTY PROVISION UNDER SECTION 271 (L)( C) OF THE INCOME-TAX ACT. I AM THE REFORE, SATISFIED THAT THIS IS A FIT CASE FOR LEVY OF PENALTY UNDER SECTIO N 271(L)(C) OF THE ACT, 1961.' 7. THUS, IT CAN BE NOTICED THAT THE ASSESSING OFFIC ER, AFTER HAVING INITIATED PROCEEDINGS FOR 'CONCEALING THE PARTICULARS OF INCO ME', HAS LEVIED PENALTY FOR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME'. FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINAT E BENCHES IN THE CASE OF SMT. SHALINI KARAN KUMAR(SUPRA) AND DHARNI DEVELOPERS (SUPRA), WE FIND THERE IS MERIT IN THE CONTENTION OF THE ASS ESSEE ON THE LEGAL ISSUE URGED BY IT AND, THEREFORE, HOLD THAT THE IMPUGNED PENALTY LEVIED UNDER ITA NO. 5967/MUM/2014 M/S. UNISYNTH CHEMICALS 10 SECTION 271(1)(C) OF THE ACT IS NOT SUSTAINABLE AND CANCEL THE SAME ON THIS GROUND ALSO. 4. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT Y EAR 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 11 TH JANUARY, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -34, MUMBAI 4. THE CIT - 24, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI NP/V.M SR.PS