ACIT-6, Jhansi V. M/s Rai Wines, Jhansi

ITA 620/AGR/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2442 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-02-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 03-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Rejection of books of accounts; Unexplained investment; Difference of opinion; Revised return
• Section: 145; 12; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 620/AGRA/2008 ASSTT. YEAR : 1998-99 A.C.I.T. 6, JHANSI VS. M/S. RAI WINES, RAS BAHAR COLONY, JHANSI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : SHRI R.C. TOMAR, ITP ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 16.07.2008 BY WHICH THE CIT(A) HAS DELETED THE PENALTY IMPOSED ON THE ASSESSEE BY THE ASSESSING OFFICER FOR FILING OF THE INACCURATE PARTICULARS IN RESPECT OF THE SALES MADE BY THE ASSESSEE BY OBSERVING UNDER PARA 4 OF HIS ORDER AS UNDER : I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ABOVE SUBMISSIONS OF AR AND THE POSITION OF LAW. THERE WAS A DIFFEREN CE OF OPINION AS REGARDS THE INCOME OF THE APPELLANT. SINCE THE AO AND CIT(A) AD OPTED DIFFERENT ESTIMATES IN ASSESSING THE INCOME OF THE APPELLANT, THEREFORE, I T CANNOT BE SAID THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF I TS INCOME OR CONCEALED THE PARTICULARS OF HIS INCOME SO AS TO ATTRACT CLAUSE ( C) OF SECTION 271(1) OF THE INCOME TAX ACT. IN MY OPINION, IN THESE CIRCUMSTANC ES THE PENALTY U/S. 271(1)(C) IS NOT LEVIABLE. THEREFORE, THE ORDER IMPOSING PENALTY U/S. 271(1)(C) IS QUASHED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SUBMITTED HIS RETURN OF INCOME ON 31.10.1998 AT AN INCOME OF RS.9,93,630/- SHOWING TH E SALE OF COUNTRY LIQUOR AT RS.3,56,12,160/- AND FOREIGN LIQUOR AT RS.94,86,564/- TOTAL AT RS.4, 50,98,724/-. THE ASSESSING OFFICER ASKED FOR 2 EVIDENCE IN RESPECT OF SALES. THE ASSESSEE COULD NO T PRODUCE THE SALES VOUCHERS FOR JUSTIFYING THE SALE RATE PER BULK LITRE. THE ASSESSING OFFICER, TH EREFORE, REJECTED THE BOOKS OF ACCOUNTS AND ESTIMATED THE PROFIT BY APPLYING THE RATE OF 5% ON THE ESTIMATED SALES OF RS.6,56,00,748/-. IN FURTHER APPEAL BEFORE THE CIT(A), THE CIT(A) ACCEPT ED THE INDIA MADE FOREIGN LIQUOR FIGURE AS PER BOOKS, BUT SO FAR AS THE SALES OF COUNTRY LIQUO R IS CONCERNED, IN THE ABSENCE OF NON-PRODUCTION OF THE SALES VOUCHERS BY THE ASSESSEE, THE SALE PRI CE OF COUNTRY LIQUOR WAS WORKED OUT @ 30.70 PER BULK LITRE AGAINST THE RATE SHOWN BY THE ASSESS EE @ 28.38 PER BULK LITRE AND ESTIMATED BY THE ASSESSING OFFICER @ RS.39.70 PER BULK LIRE. THE SAL ES RATE HAS BEEN WORKED OUT PER BULK LITRE ON THE BASIS OF THE COMPARATIVE INSTANCES OF THE EARLI ER YEAR AND THE SALES MADE BY OTHER COMPETITORS IN THE AREA. THE CIT(A) ALSO NOTED THAT SINCE ALL T HE EXPENDITURE INCURRED BY THE ASSESSEE HAD DULY BEEN ACCOUNTED FOR IN ITS BOOKS OF ACCOUNTS, T HE DIFFERENCE IN THE SALES REPRESENTS THE SALE CONSIDERATION RECEIVED OUTSIDE THE BOOKS OF ACCOUNT AND ACCORDINGLY, ADDITION TO THE EXTENT OF RS.20,08,880/- WAS CONFIRMED. THE ASSESSEE WENT IN APPEAL BEFORE THE ITAT. THE INCOME-TAX APPELLATE TRIBUNAL CONFIRMED THE RATE AT 30.70 PER BULK LITRE BY OBSERVING AS UNDER PARA 7 OF ITS ORDER : BEFORE US THE ASSESSEE HAS NOT BEEN ABLE TO BRING ANY EVIDENCE CONTRARY TO THE FINDINGS GIVEN BY THE LD. CIT(APEALS) THAT T HE BULK SALE RATE WAS LESS THAN RS.,30.70 PER LITRE. IN THE ABSENCE OF ANY CONTRARY EVIDENCE, THE RATE ADOPTED BY LD. CIT(APPEALS) AT RS.30.70 AS AGAINST 39.70 TAKEN BY ASSESSING OFFICER, IS QUITE REASONABLE. 3. THE ASSESSING OFFICER ALTHOUGH INITIATED THE PEN ALTY PROCEEDINGS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT IMPOSED THE PENALTY ON THE ASSESSEE VIDE ORDER DATED 19.06.2007 FOR FILING THE INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE @ 200% OF THE TAX SOUGHT TO BE EVADED IN THE FOLLOWING MANNER : 3 LOOKING TO THE FACTS AND CIRCUMSTANCES AS MENTIONE D ABOVE I AM OF THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF ITS INCOME AND ACCORDINGLY, PENALTY U/S. 271(1) OF THE I.T. ACT, 1961 IS LEVIABLE. THE MINIMUM PENALTY LEVIABLE U/S. 271(1)(C) OF THE I.T. ACT, 19 61 IS A SUM NOT LESS THAN THE TAX SOUGHT TO BE EVADED AND MAXIMUM PENALTY LEVIABLE U/ S. 271(1)(C) OF THE I.T. ACT, 1961 SHALL NOT EXCEED THREE TIME, THE AMOUNT OF TAX SOUGHT TO BE EVADED. MINIMUM AND MAXIMUM PENALTY LEVIABLE U/S. 271(1)(C) WORKS O UT TO RS.10,18,108/- AND RS.30,54,324/- RESPECTIVELY. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE A PENALTY OF RS.20,36,220/- IS BEING IMPOSED. ISSUE NOTICE OF DEMAND AND CHALLAN. 4. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A), B UT THE CIT(A) QUASHED THE PENALTY ORDER BY HOLDING IN A SUMMARY MANNER THAT THERE WAS A DIF FERENCE OF OPINION AS REGARDS THE INCOME OF THE ASSESSEE SINCE THE AO AND CIT(A) ADOPTED DIFFER ENT ESTIMATES WHILE DETERMINING THE INCOME OF THE ASSESSEE. HE, THEREFORE, TOOK THE VIEW THAT IT CANNOT BE SAID THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR CONCEALED T HE PARTICULARS OF HIS INCOME SO AS TO ATTRACT CLAUSE (C) OF SECTION 271(1) OF THE INCOME-TAX ACT. THE REVENUE HAS COME IN APPEAL BEFORE US. 5. THE LEARNED DR VEHEMENTLY CONTENDED THAT THE CIT (A) HAS NOT APPLIED HIS MIND TO THE FACTS OF THE CASE. IT IS NOT THE CASE OF ESTIMATES OF THE INCOME. THE PENALTY HAS BEEN IMPOSED FOR FILING INACCURATE PARTICULARS OF THE INCOME BY WAY OF UNDERSTATEMENT OF SALE CONSIDERATION BY THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO PROVE THE SALE CONSIDERATION AS RECORDED IN THE BOOKS OF ACCOUNT. THE TRIBUNAL HAS DULY CONFIRMED THE SALE P RICE @ 30.70 PER BULK LITRE. IT IS NOT THE CASE WHERE THE PENALTY HAS BEEN IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE HAS NOWHERE DISCHARGED HIS ONUS BY PROVING THE RATE OF COUNTRY LIQUOR PER BULK LITRE. THEREFORE, IT IS A FIT CASE WHERE PENALTY MUST HAVE BEEN CONFIRMED. 4 6. THE LEARNED AR, ON THE OTHER HAND, CONTENDED THA T THE INCOME WAS DETERMINED BY ESTIMATION BOTH AT THE LEVEL OF AO AND THE CIT(A) W ITH VAST VARIATION AS UNDER: SALES COUNTR Y LIQUOR INDIA MADE FOREIGN LIQUOR TOTAL NET PROFIT INCOME AS SHOWN BY ASSESSEE 3,56,12,16 0 9486564 4509872 4 3.79% (COMBINED) AND 5.17% ON COUNTRY LIQUOR. . 9,93625 AS ESTIMATE D BY THE A.O. 4,98,13,85 3 157363957 6560074 8 5% COMIBINED 32,80,037 ADDITION AS PER AO 22,86,412 AS ESTIMATE D BY THE CIT(A) 3,85,21,04 0 9486564 (ACCEPTD AS SHOWN ON SAME SET OF FACTS, BOOKS OF A/C AND METHOD OF ACCOUNT ING.) 4800760 4 NO RATE APPLIED. DIFFERENCE IN SALES OF COUNTRY LIQUOR AS PER ESTIMATED RATE OF SALE(48007604- 45098724=2908 880) AS SHOWN ARRIVED AT ON ESTIMATE BASIS ADDED AS PROFIT + FURTHER PROFIT OF RS 993625 AS DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME BOTH FOR COUNTRY LIQUOR AND IMFL ADDED.. RS 2908880 +RS99362 5RS39025 16 DIFFEREN CE IN ESTIMATED SALES2908 880 +NET PROFIT OF 993625 SHOWN IN RETURN ON ACCOUNT O FCOUNTRY LIQUOR AND IMFL)=TO TAL ADDITION 3902516 ENHANCE MENT IN INCOME BY RS 1338780 (3902510- 2563730) ESTIMATED BY AOAFTER ALLOWING CREDIT FOR DEDUCTION U/S 40(B) THE ESTIMATED DIFFERENCE IN SALES WAS ON ACCOUNT OF ESTIMATED SALE RATE PER BULK LITRE AT DIFFERENT RATES BOTH BY THE AO AND BY THE CIT(A) AS UNDER: 5 PURCHASE OF LIQUOR . QUANTITY IN BULK LITRE. AMOUNT OF SALE SALE RATE PER BULK LITRE. FOREIGN LIQUOR. AS SHOWN 1254757B.L 3,56,12,160 28.38 P.B.L RS 9486 564 AS PER AO 1254757 4,98,13,853 39.70 P.B.L. RS 15786 395 AS PER CIT(A) 1254757 3,85,21,040 30.70 P.B.L. RS94 86564 THE ASSESSEE MAINTAINED COMBINED ACCOUNT FOR THE SA LE OF COUNTRY LIQUOR AND FOREIGN LIQUOR. THE ACCOUNT FOR SALE OF FOREIGN LIQUOR WAS ACCEPTED ON THE SAME SET OF FACTS AS IN THE CASE OF COUNTRY LIQUOR BUT RESULTS OF COUNTRY LIQUOR WAS NOT ACCEPT ED ON THE GROUND THAT NO SALE VOUCHERS ARE AVAILABLE. HENCE THE INVOCATION OF PROVISIONS OF SE C.145(3) AND THE REJECTION OF BOOKS OF ACCOUNTS ON THIS MERE GROUND WAS NOT JUSTIFIED AS P ER RATIO LAID DOWN IN THE CASE OF CIT V SADRUDDIN HUSSAIN (2003) ITR677(RAJ), WHEREIN IT WA S HELD THAT WHEN THE ASSESSEE HAD PRODUCED RELEVANT BOOKS OF ACCOUNT BUT HAD NOT PROD UCED SALES VOUCHERS, THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC.145. TH E HEAD NOTES OF THE DECISION IN THE CASE OF ASHOK KUMAR & CO. VS. ITO (ASR) 138 TAXMAN 70 READ AS UNDER : SEC. 145 OF THE IT ACT-METHOD OF ACCOUNTING -REJECT ION OF ACCOUNTS-1990- 91- THE ASSESSEE WAS A LIQUOR DEALER. IT HAD FURNI SHED AUDITED ACCOUNTS ALONG WITH RETURN OF INCOME- IT HAD MAINTAINED STATUTORY REGISTER PRESCRIBED EXCUSE AUTHORITIES- NO DEFECTS IN ACCOUNT BOOKS MAINTAINED BY THE ASSESSEE WERE POINTED OUT - NO SALES, PURCHASE WERE FOUND OUTSIDE THE BOO KS- WHETHER THE AO COULD INVOKE PROV. OF SEC.145 MERELY ON THE GROUND THAT A SSESSEE HAD NOT PRODUCED CERTAIN SALE VOUCHER, SALE BILLS AND BRANDWISE DETA ILS OF LIQUOR PURCHASE AND SOLD - HELD -NO. 142 TAX MAN 46-ITAT( PER PRESIDENT AS 3RD MEMBER) TRIVENI PHARMA VS ITO - HELD WHEN COMPLETE LEDGER ACCOUNT OF PURCHASE AND SALES WAS MAINTAINED, IT COULD NOT BE SAID THAT 6 ACCOUNTS OF THE ASSESSEE WERE NOT SUBJECTED TO VERI FICATION. STOCK AVAILABLE ON ANY DATE COULD BE FOUND OUT BY MAKING REFERENCE TO THE LEDGER ACCOUNT . THEREFORE THE BOOKS OF ACCOUNTS COULD NOT BE REJECTED ON THE GROUND THAT THEY WERE NOT CORREC T OR INCOMPLETE OR NOT SUBJECTED TO VERIFICATION. ALLAHABAD HIGH COURT - SAHEBUDDIN & SONS VS CST UP (1976)38STC47(ALL) ACCOUNT BOOKS - REJECTION - METHOD OF ACCOUNTING -R ECORDING SALES BY COUNTING CASH IN TILL AT END OF DAY- WHETHER RECOGNIZED METHOD - WHETHER ACC OUNT CAN BE REJECTED ON THAT GROUND - HELD NO. UMA AERO SALES (P)LTD VS ACIT (ITAT-DELHI BENCH)55 TTJ386 ACCOUNTS-REJECTION - ASSESSEE MAINTAINING FULL AND COMPLETE ACCOUNTS WHICH ARE SUPPORTED BY EXCISE RECORDS - NO SPECIFIC DEFECT IN ACCOUNTS POI NTED OUT - REJECTION OF ACCOUNT AND ADDITION MADE BY APPLYING HIGHER GROSS PROFIT RATE NOT JUSTI FIED. PATNA HC MD UMER VS CIT BIHAR, 101 ITR525 ASSESSEE - LIQUOR CONTRACTOR- HELD THAT THE ONLY TW O DEFECTS FOUND BY THE ITO FOR REJECTING THE BOOK PROFIT WERE THAT, IN THE ABSENCE OF CASH MEMOS , THE SALES WERE NOT VERIFIABLE AND THAT CERTAIN TRANSACTION WERE NOTED IN LUMP SUM - NO FINDING WAS RECORDED BY THE DEPTT. AUTHORITIES AS TO THE UNACCEPTABILITY OF METHOD AND IRREGULARLY OF ACCOU NTS KEPT BY ASSESSEE. IT IS WELL SETTLED THAT IN ABSENCE OF SUCH A FINDING RECORDED BY THE AUTHORITI ES, THE BOOKS OF ACCOUNTS CANNOT BE IGNORED. 6.1 IT WAS ALSO CONTENDED THAT IN THE CASE OF ASSES SEE NO SALES OR PURCHASES HAVE BEEN FOUND OUT SIDE THE BOOKS. THE SALES ARE PROGRESSIVE. THE QUOTA AND CONTRACT MONEY (BID MONEY) WAS HIGHER BY 8.5% I.E. RS 3,30,75,000 AS AGAINST 3,04, 53,228 OF THE PRECEDING YEAR. TO STAND WITH COMPETITION AND THE FACT THAT THE ASSESSEE HAS TO L IFT HIGHER QUOTA AND TO AVOID LOSS THE QUOTA IN THE MONTH OF MARCH HAD TO BE SOLD EVEN AT LOWER RAT E @ RS 24 PER BULK LITRE AND HENCE THERE WAS SLIGHT FALL AS COMPARED TO PRECEDING YEAR. THE LEAR NED CIT(A) IN QUANTUM APPEAL HAS ACCEPTED THE QUANTITY PURCHASED, QUANTITATIVE SOLD, WITH NO ADVERSE COMMENTS ON AUTHENTICITY OF STOCK OR 7 RATE OF PURCHASE AND EVEN THE EXPENSES HAVE BEEN A CCEPTED IN TOTO. EVEN THE COMPARABLE CASES AS RELIED UPON BY THE ASSESSEE HAVE BEEN ACCEPTED B Y THE LEARNED CIT(A) AS PER PARA 4.3(INTERNAL PAGE 11 2ND PARA PAPER BOOK PAGE52 )IN REMAND PROCE EDINGS HAD HELD AS UNDER : 'FURTHER, IT HAS ALSO TO BE KEPT IN VIEW THAT A S COMPARED TO THE APPELLANT THE OTHER PERSONS OPERATING IN NEARBY AREAS, HAVE SHOWN A LOWER SELLI NG RATE OF COUNTRY LIQUOR WHICH RANGED BETWEEN RS 24-RS 28 PER LITRE. IN THIS REGARD IT M AY BE MENTIONED THAT SINCE IN THESE CASES LOWER RATES WERE COMMUNICATED BY THE AR, THE AO VIDE THIS OFFICE LETTER DATED 13.12.2001 WAS ASKED TO INTIMATE THE CORRECTNESS OF THESE RATES AFTER VERIF YING THE SAME. THE A.O. HAS NOT CONTROVERTED THESE RATES AND, THEREFORE, IT IS PRESUMED THAT THE RATES GIVEN BY THE A.R. FOR THESE PERSONS ARE CORRECT. 6.2 THUS IT WAS STATED THAT THE ASSESSEE HAS BEEN A BLE TO SUBSTANTIATE THE CLAIM OF PROFIT DISCLOSED BY BRINGING ON RECORD THE COMPARABLE CASE S WHICH EVEN ACCORDING TO CIT(A) THE AO HAS NOT BEEN ABLE TO CONTROVERT IN REMAND PROCEEDIN GS.(P B PAGE 52). EVEN IN THE PENALTY PROCEEDINGS THE AO HAS NOT BROUGHT ANY ADVERSE MATE RIAL ON RECORD EXCEPT CALCULATING PENALTY ON THE BASIS OF INCOME DETERMINED. 6.3. THE METHOD OF WORKING OUT THE PROFIT ON ESTIMA TE BASIS BY THE AO AT RS3280037 AS PER WORKING GIVEN IN THE LAST PARA OF AO'S ORDER (PB PA GE 41) HAS BEEN REJECTED BY THE CIT(A) AND HE HAS HAS ESTIMATED THE PROFIT AS PER HIS OWN WORK ING AT RS2908880 AND FURTHER TO IT INSTEAD OF ALLOWING CREDIT FOR THE PROFIT ALREADY DISCLOSED IN THE RETURN ADDED THE NET PROFIT DISCLOSED AT RS 993625. THUS THE INCOME ESTIMATED BY CIT(A) STOOD AT RS3902516 (PAPER BOOK PAGE 54 - INTERNAL PAGE 13 PARA 4,4) AND IT GIVES A RATE IN THE VICINITY OF 10.24%.FOR COUNTRY LIQUOR AGAINST 5.17% FOUND BY THE AO. THUS, IT WAS SUBMITTED THAT IT IS A CASE OF PURELY ESTIMATION OF INCOME 8 AT DIFFERENT FIGURES, WITH DIFFERENT RATES AND WITH DIFFERENT METHOD OF WORKING OUT THE ESTIMATED PROFIT AT THE LEVEL OF AO AND THE LD. CIT(A) IN AS MUCH AS ON SAME SET OF FACTS ESTIMATING SALES OF IMFL BY AO AND ACCEPTING THE SALES BY THE CIT(A). R ELIANCE IS PLACED ON THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NUCHEM LTD VS DY.CIT (1 994)49 TTJ(DEL)177 WHEREIN IT WAS HELD THAT WHEN THE ASSESSEE HAS DISCLOSED ALL MATERIAL F ACTS PERTAINING TO COMPUTATION OF INCOME AND SAME WERE NOT FOUND TO BE FALSE, ADDITIONS WERE MAD E ON ACCOUNT OF DIFFERENCE OF OPINION, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULAR THEREOF. THE DIVISION BENCH OF HONORABLE DELHI HIGH COURT IN THE CASE OF CIT VS BACARDI MARTINI INDIA LTD.(2007)288 ITR 585 (DEL) H AS HELD THAT MERELY BECAUSE THERE WAS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER, IT CAN NOT BE SAID THAT THE ASSESSEE HAD INTENTION TO CONCEAL HIS INCOME. IN TH E CASE OF THE ASSESSEE THE ADDITION HAS BEEN SUSTAINED MERELY ON THE BASIS OF AN OPINION. THERE IS THUS A DIFFERENCE OF OPINION ON THE BASIS OF WHICH ADDITION HAS BEEN SUSTAINED. PENALTY, IN SUC H CIRCUMSTANCES, IS NOT JUSTIFIED. FOR THIS RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS : (I) CIT VS PREM DAS (2001)248 ITR 234(P&H) (II) DURGA KAMAL RICE MILLS VS CIT (2004)265 ITR25 (CAL) (III) CIT VS HARSHVARDHAN CHEMICALS & MINERAL LTD (2003) 259 ITR212(RAJ) MERE FACT THAT THE ADDITION HAS BEEN CONFIRMED BY T HE HONORABLE TRIBUNAL DOES NOT JUSTIFY LEVY OF PENALTY. FOR THIS, RELIANCE HAS BEEN PLACED ON THE FOLLOWING DECISIONS: (I) CIT VS INDEN BISLERS (1999)240 ITR943 (MAD) (II) CIT VS BHARAT MINERALS SALES CORPN.(2002) (III)253 ITR 419 (CAL)IT VS S. SANKARAN (2002)175 C TR(MAD)62. 9 6.4. RELYING UPON THE DECISION OF THE CALCUTTA HIGH IN THE CASE OF CIT VS BIMAL KUMAR DAMANI (2003)(2003)261 ITR87(CAL) AND DURGA KAMAL R ICE MILLS VS CIT(SUPRA) IT WAS SUBMITTED THAT THE OBSERVATION OF THE HONORABLE TRI BUNAL IN QUANTUM PROCEEDINGS CANNOT BE TAKEN CONCLUSIVE FINDING FOR THE PURPOSE OF LEVY OF PENAL TY FOR THE CONCEALMENT. 6.5, EXPLN.1 TO S.271(1)(C) CASTS A DUTY ON THE AO TO FIRST RECORD REASONS THAT THERE HAS BEEN CONCEALMENT OF INCOME AND THEN SEEK EXPLANATION OF THE ASSESSEE AND THEREAFTER PENALTY CAN BE IMPOSED ONLY IF ANY AMOUNT IS FOUND TO BE CONCEALED OR EXPLANATION FOUND TO BE FALSE. THE AO HAS FAILED TO RECORD ANY SUCH FINDING IN THE ASSESS MENT ORDER. RELIANCE IS PLACED ON THE DECISION OF HONORABLE SUPREME COURT IN THE CASE OF KC BUILDE RS VS CIT (2004)265 ITR 562 (SC). THERE HAS BEEN NO INTENTION TO CONCEAL THE INCOME OR FURN ISH INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY PENALTY, IN THIS CASE WAS NOT WARRANTED . 6.6 THE CASE REFERRED BY THE CIT(A) WHILE MAKING ES TIMATE OF SALES OF HONORABLE SUPREME COURT - COMMISSIONER OF SALES TAX MADHYA PRADESH V S HM ESUFALI HM ABDULALI, IS IRRELEVANT BECAUSE THE TEXT OF THAT JUDGEMENT - 'BEST JUDGMEN T ASSESSMENT - PRINCIPLES -SALES TAX - ESCAPED TURNOVER - WHETHER BEST JUDGMENT ASSESSMENT CAN BE MADE - DETERMINATION OF SALES FOR 19 DAYS NOT ENTERED IN ACCOUNT BOOKS- WHETHER CAN FORM BASI S FOR ESTIMATING ESCAPED TURNOVER FOR WHOLE YEAR- ' 6.7 AS THERE WAS NO SALES OF 19 DAYS OR FOR ANY OTH ER PERIOD OF DAYS WERE FOUND UNRECORDED, THE SAID RATIO IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. A CONSPECTUS OF THE EXPLANATION MAKES IT CLEAR THAT THE STATUTE VISUALIZED THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS TO BE 10 WHOLLY DISTINCT AND INDEPENDENT OF EACH OTHER. IN E SSENCE, THE EXPLANATION IS A RULE OF EVIDENCE. PRESUMPTION WHICH ARE REBUTTABLE IN NATURE ARE AVAI LABLE TO BE DRAWN. THE INITIAL BURDEN OF DISCHARGING ONUS OF REBUTTAL IS ON THE ASSESSEE WHI CH HE HAS DISCHARGED BY BRINGING ON RECORD THE COMPARABLE CASES. THE TRADING RESULTS ARE SUPPORTE D BY THE AUDITED BOOKS OF ACCOUNTS. NO PURCHASE OR SALES HAVING BEEN FOUND UNRECORDED, THE RE BEING NO DISPUTE ABOUT THE QUANTITY PURCHASED AND SOLD. THE APPELLANT IN THE PENALTY PR OCEEDINGS HAVING FURTHER EXPLAINED BEFORE THE AO: I) QUANTITATIVE ACCOUNTS ARE MAINTAINED AND DETAIL S ARE MENTIONED IN THE AUDIT REPORT. II) ACCOUNTS ARE AUDITED BY A CHARTERED ACCOUNTAN T SUPPORTED BY AUDIT REPORT U/S 44AB. III) PURCHASES ARE FULLY VERIFIABLE. IV) DUTY PAID, PERMIT FEE, SEALING CHARGES PAID TO THE GOVT IS VERIFIABLE. SALES DETAILS ARE ALSO AVAILABLE. V) LICENSE MONEY PAID IS FOR COUNTRY LIQUOR AND IMFL . AS PER TERMS OF THE CONTRACT AND IN THE CASE OF SHORT LIFTING OF GOODS AS PER MONTHLY T ARGET THAN THE ASSESSEE HAS TO DEPOSIT/PAY THE DIFFERENCE AMOUNT ON ACCOUNT OF SHO RT LIFTING OF HE GOODS. VI) IN AY 98-99 IN THE YEAR UNDER ASSESSMENT THERE IS S TEEP INCREASE IN MINIMUM GUARANTEE LEAVING LESS MARGIN TO THE PROFIT IN THIS YEAR AS C OMPARED TO THE PRECEDING YEAR 97-98. VII) THE ASSESSEE MAINTAINED CASH BOOK, LEDGER WITH DAY TO DAY BALANCE SHEET, DETAILS OF EXPENSES ETC. VIII) SEC.145(3) NOT APPLICABLE BECAUSE: IX) DAY TO DAY STOCK POSITION IS MAINTAINED./ X) SALES CAN BE VERIFIED BY SALES MAN THROUGH RATES PR EVAILING AT THAT TIME AND THEIR STATEMENT OF STOCK. THE SALE PROCEEDS ARE COLLECTE D FROM THE SALES MAN ON THE BASIS OF QUANTITY OF LIQUOR SOLD AND RECORDED IN THE BOOKS OF ACCOUNTS WHICH HAVE BEEN SUBJECTED TO AUDIT. THE SALES ARE SUBJECTED TO CLOSE MONITORI NG AND SUPERVISION OF EXCISE AUTHORITIES. 11 THUS THERE WAS NO FAILURE TO OFFER AN EXPLANATION O N THE PART OF THE ASSESSEE AND EXPLANATION OFFERED WAS SUBSTANTIATED WITH RELEVANT RECORDS AND MATERIAL. EXPLANATION 1 COMES INTO OPERATION WHEN, IN RESPECT OF ANY FACTS MATERIAL TO THE COMPU TATION OF TOTAL INCOME OF ANY PERSON, THERE IS FAILURE TO OFFER ANY EXPLANATION OR AN EXPLANATION IS OFFERED WHICH IS FOUND TO BE FALSE BY THE AO OR THE APPELLATE AUTHORITY, OR AN EXPLANATION IS OF FERED WHICH IS NOT SUBSTANTIATED. IN SUCH A CASE THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED . BUT IN ASSESSEES CASE THERE IS NEITHER FAILURE TO OFFER ANY EXPLANATION OR THE EXPLANATION OFFERED BY HIM IS FOUND TO BE FALSE BY THE AO RATHER ON THE OTHER HAND THE LEARNED CIT(A) IN PENALTY PRO CEEDINGS, HAVING BEEN SATISFIED WITH THE EXPLANATION FURNISHED BY THE APPELLANT AND AFTER CO NSIDERING ALL THE FACTUAL AND LEGAL POSITION HAS CANCELLED THE PENALTY AND AGAINST THE CANCELLATION OF PENALTY NO MATERIAL HAS BEEN PLACED BY THE REVENUE BEFORE THE HONORABLE ITAT. 6.8 MERE NON ACCEPTANCE OF THE EXPLANATION OFFERED BY THE ASSESSEE CAN NOT FORM A BASIS FOR THE SATISFACTION OF THE AO TO THE EFFECT THAT THE A SSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS I NCOME. THE AO MUST HAVE SOME DEFINITE EVIDENCE TO REFUSE TO ASSESEE'S CLAIM OR EVIDENCE O R EXPLANATION. IT WAS FURTHER SUBMITTED THAT THEIR LORDSHIP OF SUPREME COURT IN JEEVAN LAL SHAH'S CASE (1994) 205 ITR 244 HAS HELD THAT THE PRESUMPTION IS NOT ABSOLUTE, IT IS REBUTTABLE. STILL FURTHER THE ASSESSEE WAS HELD ENTITLED TO PROVE THAT THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON HIS PART. IN THE CASE OF APPELL ANT THE ASSESSEE HAD NOT ONLY GIVEN A PLAUSIBLE EXPLANATION BUT ALSO THAT IT HAD COMMITTED NO FRAUD OR WILLFUL NEGLECT. THE ASSESSEE'S CASE DOES NOT FALL WITHIN THE MISCHIEF OF SEC.271(1)(C). 12 6.9 RELIANCE WAS ALSO PLACED ON THE HONORABLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS AJAIB SINGH & CO 253 ITR 630 WHERE IT HAS BEEN HELD THAT THE 'ADDITION TO INCOME BASED ON ESTIMATE AND DISALLOWANCE OF EXP - TRIBUNAL JUSTIFIED IN CANCELING PENALTY. INCOME TAX ACT.1961 SS.260A, 271(1)(C). DISALLOWANC E OF AN EXPENSE PER SE CANNOT MEAN THAT THE ASSESSEE FURNISHED INCORRECT PARTICULARS OF ITS INCOME. CONCEALMENT INVOLVES PENAL ACTION. IT HAS TO BE PROVED AS A CONSCIOUS ACT. THE ESSENTIAL PRE CONDITION FOR INVOKING EXPLANATION 1 TO SECTION 271(1) OF THE INCOME TAX ACT 1961IS THAT T HE ASSESSEE 'FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR T HE COMMISSIONER (APPEALS) TO BE FALSE' IT IS ONLY IN SUCH A SITUATION THAT THE ASSESSING OFFICER CAN INVOKE THE EXPLANATION TO SECTION 271(1)(C). SINCE IN THE CASE OF APPELLANT THE ADDI TION IS FOUND TO HAVE BEEN SUSTAINED ON ESTIMATE BASIS, AND THE ASSESSEE HAD NOT ONLY GIVEN A DEBAT ABLE EXPLANATION, BUT ALSO THAT IT HAD COMMITTED NO FRAUD OR WILLFUL NEGLECT AND HENCE THE PENALTY WAS NOT LEVIABLE WHICH HAS BEEN RIGHTLY DELETED BY THE CIT(A). 6.10 NOW COMING TO PART (B) OF THE EXPLANATION, THE ESSENCE IS THAT WHEN THE ASSESSEE IS ABLE TO OFFER A REASONABLE EXPLANATION BASED ON SOME EVI DENCE, THE INCOME TAX OFFICER CANNOT INVOKE PART (B) OF THE EXPLANATION UNLESS HE HAS GIVEN A F INDING BASED ON SOME CONTRADICTORY EVIDENCE TO DISAPPROVE THAT EXPLANATION OFFERED BY THE ASSES SEE WHICH THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM. SINCE THE ASSESSEE HAS DISCLOSED ALL THE RELEVANT MATERIA L FACTS FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAS OFFERED EXPLANATION IN THI S REGARD WHICH WAS NOT FOUND FALSE BY THE AO. 13 THE EXPLANATION OF THE ASSESSEE REGARDING THE INCOM E DISCLOSED IS SUPPORTED BY AUDITED BOOKS OF ACCOUNTS, SUPPORTED BY THE AUDIT REPORT U/S 44 AB A ND IS BONA FIDE. THE REVENUE DID NOT DISPUTE THAT THE PARALLEL CASES SITED BY THE ASSESSEE AS HA VE BEEN FOUND NO FAULT WITH BY THE CIT(A) AS PER HIS SPECIFIC OBSERVATION AND FINDING GIVEN IN PARA 4.4. (PAPER BOOK PAGE 52 2ND PARA) AS DISCUSSED IN PRECEDING PARAGRAPHS ALSO. 6.11 THE HONORABLE RAJASTHAN HIGH COURT IN THE CASE OF SHIV LAL TAK V S CIT (2001)251 ITR 373,379-80(RAJ) HAS HELD WHERE IN RESPECT OF ANY AMOUNT ADDED OR D ISALLOWED AND ANY EXPLANATION IS OFFERED BY SUCH PERSONS WHIC H IS NOT ACCEPTED BUT SUCH EXPLANATION IS BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE EXPLANATION SHALL N OT APPLY. 6.12 THE HONORABLE GUJARAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS CIT(2001) 249 ITR 125(GUJ) HAS HELD THAT UNTIL AND UNLESS THE EXPLANATION IS FOUND TO BE FALSE OR MALAFIDE, THE MISCHIEF OF SEC.271(1) CANNOT BE ATTRACTED. WHER E TWO VIEWS ARE POSSIBLE, NO PENALTY CAN BE IMPOSED IS A PRINCIPLE THAT HAS BEEN ENUNCIATED IN NATIONAL TEXTILES (SUPRA) 6.13 IN ASSESSEES CASE HE HAD FURNISHED FULL PARTI CULARS OF PURCHASE AND SALES AND SUPPORTED BY QUANTITATIVE TALLY WITH COMPLETE DETAILS OF EXPE NSES FOR THE COUNTRY LIQUOR AND IMFL. ON THE SAME SET OF FACTS THE SALES AND RESULTS DISCLOSED F OR IMFL HAVE BEEN ACCEPTED AND THE RESULTS OF COUNTRY LIQUOR HAVE NOT BEEN ACCEPTED WITH UNDISPUT ED APPRECIATION OF FACT THAT THE EXPENSES ON COUNTRY LIQUOR AND PURCHASES THERE OF WITH QUANTITA TIVE DETAILS ARE FOUND NO FAULT WITH AND RATHER 14 ESTIMATING DIFFERENT SALE RATES BOTH AT THE LEVEL O F AO AND CIT(A) AND WORKING OUT DIFFERENT ESTIMATED INCOME ON DIFFERENT METHOD ADOPTED BY THE AO AND THE CIT(A). COMPARABLE CASES SITED BY THE ASSESSEE HAD BEEN ACCEPTED BY THE CIT( A) IN APPEAL AGAINST QUANTUM ASSESSMENT AFTER AFFORDED OPPORTUNITY TO THE AO IN REMAND PROC EEDINGS.(PB PAGE 52). 6.14 IN CIT VS PK NARAYANAN(1999)238 ITR 905(KER) I T WAS HELD THAT UNLESS THE AMOUNT IS OWED BY THE ASSESSEE AND THERE IS A CONCLUSIVE FIND ING TO THAT EFFECT IS NOT HIT BY EXPLANATION 1 TO SEC.271(1)(C). 6.15 THE ITAT (MUMBAI BENCH) IN THE CASE OF MIMOS I NVESTMENT CO P LTD VS ITO REPORTED IN(2010) 6 DTR (TRI) 789 HAS VIDE PARA 20 HELD - WHEN THE ASSESSEE HAS FURNISHED ALL THE MATERIAL FACTS FOR THE PURPOSE OF COMPUTATION O F TOTAL INCOME, THE AO IS DUTY BOUND TO CALCULATE TOTAL INCOME IN ACCORDANCE WITH LAW WHICH MAY BE DIFFERENT FROM THE TOTAL INCOME CALCULATED BY THE ASSESSEE. MERE FACT THAT THE AO WHILE DISCHARGING HIS DUTY IN RECALCULATION THE TOTAL INCOME IN ACCORDANCE WITH LAW, WHICH IS NOT T HE SAME AS CALCULATED BY THE ASSESSEE, IT CANNOT BE HELD THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME OR THERE IS D EEMED CONCEALMENT OF PARTICULARS AND HAD CANCELLED THE PENALTY IMPOSED BY THE AO. 6.16 ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE PROCEEDINGS. MERELY BECAUSE ADDITION HAS BEEN MADE AND SUSTAINED IN APPEAL DOES NOT BY ITSELF, JUSTIFY IMPOSITION OF PENALTY. RELIANCE IN THIS REGARD IS FURTHER PLACED ON THE JUDGMENT OF HONORABLE 15 PUNJAB & HARYANA HIGH COURT (FULL BENCH) IN THE CAS E OF VISHWA KARMA INDUSTRIES VS CIT 135 ITR 652 (P&H FB). WHILE ADDITION CAN BE MADE ON TH E GROUND THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT FOUND TO BE SATISFACTORY, BUT FOR THE PURPOSE OF LEVY OF PENALTY UNDER SEC 271(1), THE AO STILL REQUIRES TO DEMONSTRATE THAT THE CONDUCT OF THE ASSESSEE WAS DISHONEST OR CONTUMACIOUS. UNTIL THERE IS MATERIAL OR EVIDENCE TO SHOW THAT THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS THERE, T HE AO WILL NOT BE JUSTIFIED FOR LEVYING PENALTY UNDER SEC.271(1)(C). 6.17 THE FINDING RECORDED BY THE AO IN THE ASSESSME NT PROCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE IN PENALTY PROCEEDINGS. THIS IS THE LAW ENUNCIATED BY THE HONORABLE SUPREME COURT IN THE CASE OF ANANTHARAM VEERASINGHAIAH AND CO. VS CIT(1980)123 ITR 457 . 6.18 WHEN ALL THE FACTS WERE PLACED BEFORE THE AO A ND THE APPELLATE AUTHORITIES, BY THE ASSESSEE ITSELF, BY NO STRETCH OF IMAGINATION IT CA N BE SAID THAT THE ASSESSEE HAD CONCEALED THE SAME. DIVERGENT VIEWS AMONGST THE DEPARTMENTAL AUTH ORITIES I.E. BY THE AO AND THE LEARNED CIT(A) IN QUANTUM PROCEEDINGS TAKEN BY THE AS IS AP PARENT FROM THE DIFFERENT METHOD OF CALCULATION OF INCOME THAT TOO BY ESTIMATE INDICATE THAT IT WOULD BE UNSAFE TO INFER THAT THE ASSESSEE WAS GUILTY OF CONCEALMENT OF INCOME OR FUR NISHING OF INACCURATE PARTICULARS THERE OF. IN THE CASE OF THE ASSESSEE IT CANNOT BE SAID THAT THE ASSESSEE WITHHELD ANY RELEVANT INFORMATION REGARDING HIS INCOME EXPENDITURE AND RECEIPTS FROM THE ASSESSING OFFICER. IT BEARS REPETITION THAT THE FIGURES ARRIVED AT BY THE ASSESSING OFFICER PER TAINING TO THE PURCHASE, SALES , EXPENSES, QUANTITATIVE DETAILS OF PURCHASE AND SALES WA A FIG URE DISCLOSED BY THE ASSESSEE HIMSELF 16 6.19 WITH REGARD TO THE PROVISIONS OF SEC.271(1)(C) OF THE ACT, PERTAINING TO PENALTY, THE HONORABLE SUPREME COURT HAS AUTHORITATIVELY LAID DO WN THAT MAKING OF A CLAIM BY THE ASSESSEE WHICH IS NOT SUSTAINABLE WILL NOT AMOUNT TO FURNISH ING INACCURATE PARTICULARS . IN CIT VS RELIANCE PETROPRODUCTS PVT. LTD (2010) 322 ITR 158 (SC), THE COURT HELD AS FOLLOWS (PAGE 163): : 'AS PER LAW LEXICON, THE MEANING OF THE WORD ' PA RTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE),; THE DETAILS OF A CLAIM, OR THE SEPARATE ITEM OF AN ACCOUNT, THEREFORE, THE WORD 'PARTICULAR' USED IN SECTION 2 71(1) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FO UND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FAC IE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS.' 6.20 THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO E XPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS, THE PEN ALTY PROVISIONS CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM I N LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. 6.21 IN THE CASE OF CIT VS BACARDI MARTINI INDIA LT D(2007) 288 ITR 585(DELHI), DIVISION BENCH OF THE COURT HELD THAT MERELY BECAUSE THERE W AS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER, IT CANNOT BE SAID THAT T HE ASSESSEE HAD INTENTION TO CONCEAL HIS INCOME. 6.22 THE CASE OF THE ASSESSEE IS NOT A CASE WHERE T HE ASSESSEE HAD NOT BEEN ABLE TO EXPLAIN ANY EXPENDITURE OR HAD FAILED TO GIVE ANY DETAILS. THE NET PROFIT BY ESTIMATE WAS APPLIED BECAUSE OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE, AO AND EVEN THERE WAS DIFFERENCE OF OPINION 17 BETWEEN THE AO AND THE CIT(A). SINCE THERE WAS FULL DISCLOSURE OF ALL THE RELEVANT MATERIAL, IT CANNOT BE SAID THAT THE CONDUCT OF THE ASSESSEE ATT RACTED PROVISIONS OF SECTION 271(1)(C) OF THE ACT.EXPLN.1(A) IS NOT ATTRACTED. ASSESSEE HAVING DI SCLOSED ALL THE MATERIAL FACTS, ONUS PLACED UPON IT UNDER EXPLN (B) ALSO STOOD DISCHARGED. THE INCOME WAS DETERMINED ON THE BASIS OF MERE ESTIMATE AND THEREFORE PENALTY UNDER SECTION 271(1) (C) READ WITH EXPLANATION 1 WAS NOT JUSTIFIED AND THE LEARNED CIT(A) HAD RIGHTLY DELETED THE PENA LTY. 6.23 THE HONORABLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS MODI INDUSTRIAL CORPORATION REPORTED IN (2010)34 DTR (P&H)158 HAD H ELD: 'PENALTY UNDER SECTION 271(1)(C) -CONCEALMENT- ADDI TIONS BASED ON ESTIMATE - AO MADE ADDITION - IN APPEAL, TRIBUNAL APPLIED FLAT RATE OF 10 PRCENT FOR WORKING OUT UNACCOUNTED PROFITS - THE REFORE, ASSESSEE'S ASSESSMENT HAVING BEEN MADE ON ESTIMATE BASIS, PENALTY UNDER SECTION 271(1)(C) IS NOT IMPOSABLE VIS A VIS THE ADDITION MADE TO THE INCOME- CIT VS DEVI DAYAL ALUMINIUM INDUSTRIES(P) LTD (1987 )171 ITR683(ALL ) IN THIS CASE, THE ADDITIONS WERE MADE AND THE SAME WERE UPHELD BY THE TRIBUNAL. THE TRIBUNAL DELETED THE PENALTY ON THE GROUND THAT THE REJECTIO N OF AN EXPLANATION OF THE ASSESSEE DID NOT RENDER EXPLANATION FALSE. ON REFERENCE THE HONORAB LE ALLAHABAD HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL. 6.24 IN THE FOLLOWING CASES WHERE THE INCOME WAS ES TIMATED BY REJECTING THE BOOK RESULTS, PENALTY WAS IMPOSED U/S 271(1)(C) ON THE GROUND TH AT THE ADDITION WAS MADE ON THE BASIS OF 18 ESTIMATE. THE TRIBUNAL ON THE GROUND THAT ADDITION S HAVE BEEN MADE ON ESTIMATE BASIS, CANCELLED THE PENALTY WHICH WAS UPHELD BY THE HONORABLE HIGH COURTS: (I) CIT VS AJAIB SINGH & CO.253 ITR 630(PUNJ.& HARYANA ) (II) JCIT VS VXL (INDIA)LRTD.(ITAT-AMRITSAR) (2005)94 TT J(ASR)513 (III) HP STATE FOREST CORP.LTD VS DCIT (2005)93 ITD 442(C HD,) (IV) CIT VS MODI INDUSTRIAL CORP. (2010)34 DTR(P&H)158(P UNJ & HAYANA HIGH COURT) (V) CIT VS. DEVI DAYALALUMINIUM INDUSTRIES (P LTD.(1987 ) 171ITR683(ALL.) (VI) CIT VS RAVAIL SINGH & CO.(2002)254 ITR 191(P&H) (VII) CIT VS DHILLON RICE MILLS (2002)256 ITR 447 (P&H) (VIII) CIT VS BHARAT RICE MILLS (2001)250 ITR 584(P&H) (IX) ITO VS NANDI STEEL WORKS (P LTD.(1997)63 ITD364 (BA NG) (X) TRIBUNAL INDORE BENCH IN THE CASE OF LAXMI DAL MILL S VS ITO(1995)53 TTJ(IND)425 IN VIEW OF AFORESAID FACTS AND LEGAL POSITION THE P ENALTY WAS RIGHTLY CANCELLED BY THE C.I.T. (A) AND IT WAS REQUESTED THAT THE APPEAL FILED BY THE R EVENUE MAY KINDLY BE DIRECTED TO BE CANCELLED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE H AVE ALSO GONE THROUGH THE CASE LAWS CITED BEFORE US. IN THIS CASE THE ASSESSING OFFICER HAS IMPOSED THE PENALTY FOR FILING THE INACCURATE PARTICULARS OF INCOME NOT FOR CONCEALING THE PARTIC ULARS OF INCOME AS HAS BEEN VEHEMENTLY ARGUED BY THE LEARNED AR. SECTION 271(1)(C ) READS AS UND ER: 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSION ER (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON - (A) .. (B) .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - 19 (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 FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT 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 COMPUTATION OF HIS TOT AL 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 PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS AP PARENT THAT PENALTY U/S 271(1)(C ) IS LEVIABLE IF THE A.O. IS SATISFIED IN THE COURSE OF ANY PROCEEDI NGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF THE INCOME. THE PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS, BOTH ARE DIFFERENT. THE PENALTY UNDER THIS SECTION CAN BE LEVIED ON TWO CHARGES I.E. FOR CONCE ALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF PROVISIONS OF SECTION 271(1)(C), WE ARE OF THE VIEW THAT THERE MUST BE CLEAR FINDING AB OUT THE CHARGE OF THE PENALTY. IT IS INCUMBENT ON THE A.O. OR THE OFFICER IMPOSING THE PENALTY TO STATE WHETHER THE PENALTY WAS BEING LEVIED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME. IN THE ABSENCE OF SUCH A FINDING, AN ORDER PASSED BY THE C ONCERNED AUTHORITY IMPOSING PENALTY UNDER SECTION 271(1)(C) WILL BE VOID. THE WORD CONCEAL AS PER WEBSTER DICTIONARY MEANS TO HIDE, WITH DRAW OR REMOVE FROM OBSERVATION, COVER OR KEEP AWAY FROM SIGHT, TO KEEP SECRET, TO AVOID DISCLOSING OR DIVULGING. THAT MEANS NON-DISCLOSURE OF PARTICULARS OF INCOME, ON THE OTHER HAND, WHERE THE PARTICULARS ARE DISCLOSED BUT SUCH DISCLO SURE IS NOT CORRECT AND TRUE OR ACCURATE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULAR S OF INCOME. FOR EXAMPLE, IN A CASE OF A BUSINESSMAN EVEN THE PARTICULAR TRANSACTION OF SALE IS NOT SHOWN IN THE BOOKS IT WOULD AMOUNT TO 20 CONCEALMENT OF PARTICULARS OF INCOME WHILE THE SALE IS SHOWN BUT AT LESSER VALUE, IT WOULD AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS PERTINENT TO NOTE THAT THRUST OF LEVY IS UPO N THE PARTICULARS OF INCOME WHICH ARE EITHER CONCEALE D OR FURNISHED INACCURATELY BY THE ASSESSEE. THE EXPRESSION PARTICULARS REFER TO THE FACTS, DETA ILS, SPECIFIC OR THE INFORMATION ABOUT SOMEONE OR SOMETHING. THUS, THE DETAILS OR INFORMATION ABOUT THE INCOME WOULD DEAL WITH FACTUAL DETAILS OF THE INCOME AND CANNOT BE UNDERSTOOD TO AREAS WHICH ARE SUBJECTIVE SUCH AS STATUS OF TAXABILITY OF AN INCOME, ADMISSIBILITY OF DEDUCTION AND INTERPRET ATION OF LAW. THE HONBLE SUPREME COURT IN THE DECISION OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) AS RELIED ON BY THE LD. AR HAS LAID DOWN THAT AS PER LAW LEXICON THE ME ANING OF THE WORD PARTICULARS IS DETAIL OR DETAILS (IN PLURAL SENSE), THE DETAILS OF A CLAIM O R SUPPORTING ITEMS OF AN ACCOUNT. THUS, IT WAS HELD THAT THE MEANING OF THE WORD PARTICULARS USE D IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. IN THE CASE OF THE ASSE SSEE, IT IS A FACT THAT INFORMATION GIVEN FOR THE SALE PRICE WAS FOUND TO BE INCORRECT OR INACCURATE AND ULTIMATELY UPHELD BY THE ITAT. THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IN WHICH THE HONBLE SUPREME COURT HAS HELD AS UNDER IN OUR OPINION WILL NOT BE APPLICABLE IN THE CASE OF THE ASSESSEE :- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SEC ONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TH E MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAM OUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE TH AT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE 21 ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A ME RE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. 8. WE MAY POINT OUT AT THIS STAGE THAT THE EXAPLANA TION-1 TO SECTION 271(1)(C) IS APPLICABLE ONLY FOR CONCEALMENT OF PARTICULARS OF INCOME. IT CANNOT BE APPLIED WHERE CHARGE AGAINST THE ASSESSEE IS FOR FURNISHING OF INACCURATE PARTICULAR S OF INCOME. WHERE THE CHARGE AGAINST THE ASSESSEE IS CONCEALMENT OF PARTICULARS OF INCOME, T HE ONUS IS ON THE A.O. TO ESTABLISH EITHER THAT THE ASSESSEE HAS NOT DISCLOSED THE PARTICULARS OF I NCOME UNDER THE MAIN PROVISIONS OR THE CASE OF THE ASSESSEE FALLS WITHIN THE EXPLANATION GIVEN UND ER SECTION 271(1)(C). EXPLANATION 1 TO SECTION 271(1)(C) STATES THAT THE AMOUNT ADDED OR DISALLOWE D IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPEC T OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION IS NOT ABSOLUTE ONE BUT IS R EBUT TABLE ONE. IT ONLY SHIFTS THE ONUS ON THE ASSESSEE. EXPLANATION 1 REFERS TO THE TWO SITUATIO NS IN WHICH PRESUMPTION OF THE CONCEALMENT OF THE PARTICULARS OF INCOME IS DEEMED. THE FIRST SIT UATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOM E FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUND BY THE AO OR THE COMMIS SIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATION, WHICH THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE ONE AND THAT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESUMPTION AVAILA BLE UNDER EXPLANATION TO SECTION 271(1), 22 CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FAL LS UNDER EITHER OF THE CLAUSES (A) OR (B). THIS EXPLANATION, THEREFORE, DOES NOT AND CANNOT APPLY T O THE CASE WHERE ADDITION/DISALLOWANCE HAS BEEN MADE BY REJECTION OF LEGAL CLAIM MADE BY THE A .O. BONAFIDE OF LEGAL CLAIM IS NOT THE SUBJECT MATTER OF THE EXAPLANATION-1. THEREFORE, H ONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) HAS HELD THAT MERE REJECTION OF LEGAL CLAIM WOULD NOT INVITE PENALTY. THIS WOULD ALSO APPLY WHERE THE CHARGE AGAINST THE ASSES SEE IS CONCEALMENT OF PARTICULARS OF INCOME. IF WE LOOK AT THE PROVISIONS OF SECTION 271(1)(C) A ND EXPLANATION-1 FROM A DIFFERENT ANGLE, THE A.O. IS BOUND TO BRING ON RECORD SPECIFIC CHARGE AG AINST THE ASSESSEE WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME. IN THE CASE OF CONCEALMENT OF PARTICULARS OF INCOME, INITIAL ONUS WILL GET SHIFTED ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF INCOME DUE TO THE APPLICABILITY OF EXPLANATION I. WHILE, IN THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE ONUS REMAINS ON THE REVENUE TO PROVE THAT THE ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS OF INCOME. 9. WE HAVE GONE THROUGH THE ORDER OF ASSESSING OFFI CER IN THIS CASE AND WE NOTED THAT IN THIS CASE, THE ASSESSING OFFICER HAS NOT INVOKED EX PLANATION 1 TO SECTION 271(1)(C). THE PENALTY U/S. 271(1)(C) OF THE INCOME-TAX ACT HAS BEEN LEVIE D FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN THE FOLLOWING MANNER : LOOKING TO THE FACTS AND CIRCUMSTANCES AS MENTIONE D ABOVE I AM OF THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF ITS INCOME AND ACCORDINGLY, PENALTY U/S. 271(1)(C) OF THE I.T. ACT , 1961 IS LEVIABLE. THE MINIMUM PENALTY LEVIABLE U/S. 271(1)(C) OF THE I.T. ACT, 19 61 IS A SUM NOT LESS THAN THE TAX SOUGHT TO BE EVADED AND MAXIMUM PENALTY LEVIABLE U/ S. 271(1)(C) OF THE I.T. ACT, 1961 SHALL NOT EXCEED THREE TIME, THE AMOUNT OF TAX SOUGHT TO BE EVADED. MINIMUM AND MAXIMUM PENALTY LEVIABLE U/S. 271(1)(C) IS WORK S OUT TO RS.10,18,108/- AND RS.30,54,324/- RESPECTIVELY. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, A PENALTY OF RS.20,36,220/- IS BEING IMPUGNED . ISSUE NOTICE OF DEMAND AND CHALLAN. 23 10. NOW, THE QUESTION ARISES WHETHER THE REVENUE HA S DISCHARGED ITS BURDEN OF PROVING THAT THE ASSESSEE HAD SUBMITTED INACCURATE PARTICULARS O F INCOME OR NOT. THE ASSESSING OFFICER HAD ASKED THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS ABOUT THE RATE PER BULK LITRE AT WHICH THE LIQUOR WAS SOLD BUT THE ASSESSEE DID NOT SUBMIT THE EVIDENCE IN FORM OF SALES MEMO ETC. TO PROVE THE RATE AT WHICH THE COUNTRY LIQUOR WAS SOLD. THE ASSESSING OFFICER ESTIMATED THE RATE @ 39.7 PER BULK LITRE AGAINST AVERAGE SALE RAT E WORKED OUT AS PER RECORD OF THE ASSESSEE AT THE RATE OF 23.36 PER BULK LITRE. THE ASSESSING OFFICER IN THIS REGARD RELIED AT THE SALE PRICE ADMITTED BY M/S. RAMESH CHAND VIRENDRA KUMAR RAI. WHEN THE A SSESSEE WENT IN APPEAL BEFORE THE CIT(A), THE CIT(A) COMPARED THE SALES EFFECTED BY T HE ASSESSEE IN THE IMMEDIATE PRECEDING YEAR AND THE SALE RATE WAS ADMITTED AT THE RATE OF 31.30 PER BULK LITRE. AGAINST THIS, THE CIT(A) ADOPTED THE SALE RATE AT THE RATE OF 30.70 PER BULK LITRE B Y ALLOWING THE REBATE OF 60 PAISA PER BULK LITRE. WHEN THE MATTER WENT BEFORE THE TRIBUNAL, THE TRIBU NAL HAS GIVEN CLEAR CUT FINDING THAT THE ASSESSEE HAD NOT BEEN ABLE TO BRING ANY EVIDENCE CO NTRARY TO THE FINDING GIVEN BY THE CIT(A) THAT THE BULK SALE RATE WAS LESS THAN RS.30.70 PER BULK LITRE. THE TRIBUNAL IN THE ABSENCE OF ANY CONTRARY EVIDENCE, CONFIRMED THE RATE ADOPTED BY TH E LEARNED CIT(A) IN THE FOLLOWING MANNER : 7. WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DIS PUTE THAT ASSESSEE HAS NOT MAINTAINED SALE VOUCHERS IN RESPECT OF SALES AF FECTED BY THE ASSESSEE. THEREFORE, ACTUAL SALES CANNOT BE DETERMINED. WHEN THE SALES ARE NOT DETERMINABLE, THE ACTUAL PROFIT CANNOT BE DETERMINE D FROM THE SALES SHOWN BY THE ASSESSEE. ACCORDINGLY, THE PROVISIONS OF SECTION 14 5(3) WILL BE APPLICABLE. UNDER SECTION 145(3) WHERE THE ASSESSING OFFICER IS NOT S ATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE. OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUNTIN G STANDARD AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED B Y ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVID ED IN SECTION 144. IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS ESTIMATED THE SALES BASED ON THE SALES PER LITRE ADMITTED BY OTHER PERSONS ENGAGED IN SIMI LAR BUSINESS IN THE SAME LOCALITY. THEREFORE, ASSESSING OFFICER HAS FOLLOWE D THE PROCEDURE FOR MAKING AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE ACT. THE ASSESSEE WAS 24 DUTY BOUND TO MAINTAIN THE SALE BILLS IN ORDER TO E SCAPE THE RIGORS OF SECTION 145(3) OF THE ACT. IN THE ABSENCE OF ACTUAL SALES I T IS IMPOSSIBLE TO DETERMINE THE CORRECT PROFITS EARNED BY THE ASSESSEE. ON APPEAL, LD. CIT (APPEALS) HAS COMPARED THE SALES AFFECTED BY ASSESSEE IN THE IMME DIATE PRECEDING YEAR. THE SALE RATE WAS ADMITTED AT RS.31.30 PER LITRE. AGAIN ST THIS, LD. CIT(APPEALS) HAS ADOPTED THE SALE RATE AT RS.30.70 BY ALLOWING THE R EBATE OF 60 PAISA PER LITRE FOR CERTAIN VARIATIONS DUE TO INCREASE IN QUOTA AND CON TRACT MONEY. BEFORE US, THE ASSESSEE HAS NOT BEEN ABLE TO BRING ANY EVIDENCE CO NTRARY TO THE FINDINGS GIVEN BY LD. CIT(APPEALS) THAT THE BULK SALE RATE WAS LESS T HAN RS.30.70 PER LITRE. IN THE ABSENCE OF ANY CONTRARY EVIDENCE, THE RATE ADOPTED BY LD. CIT(APPEALS) AT RS.30.70 AS AGAINST 39.70 TAKEN BY ASSESSING OFFICE R, IS QUITE REASONABLE. 11. NO DOUBT, PENALTY PROCEEDINGS AND THE ASSESSME NT PROCEEDINGS BOTH ARE DIFFERENT AND IF THE ASSESSEE COULD NOT ADDUCE THE EVIDENCE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, HE SHOULD HAVE ADDUCED THE EVIDENCE DURING THE COURSE OF THE PENALTY PROCEEDINGS. BUT IN THE CASE BEFORE US, THE ASSESSEE, AGAIN COULD NOT ADDUCE ANY EVIDENCE WHICH MAY PROVE THAT THE ASSESSEE HAD SOLD THE LIQUOR AT A RATE LESS THAN RS.30.70 PE R BULK LITRE. THE LEARNED AR, EVEN THOUGH HAS ARGUED IS CASE IN DETAIL AND EVEN STATED THAT THE P ROVISO TO SECTION 145 SHOULD NOT BE TAKEN INTO ACCOUNT KNOWING FULLY THAT THE ASSESSEE IS AGAINST THE ORDER OF PENALTY IMPOSED U/S. 271(1)(C). THUS, THE TRIBUNAL CANNOT LOOK INTO THE MERITS OF T HE CASE ABOUT THE REJECTION OF THE BOOKS AND THE ADDITIONS CONFIRMED BY THIS TRIBUNAL VIDE ORDER DAT ED 29.12.2006. THE TRIBUNAL CANNOT REVIEW THE ORDER PASSED BY IT. NO SUCH POWER IS GIVEN TO T HIS TRIBUNAL EITHER U/S. 254 OR U/S. 254(2). THE JURISDICTION OF THIS TRIBUNAL ARE LIMITED TO THE GR OUNDS OF APPEAL BEFORE THE TRIBUNAL. WE, THEREFORE, REJECT THE CONTENTION OF THE LEARNED AR SO FAR AS IT RELATES TO THAT THE PROVISIONS OF SECTION 145(3) WERE NOT APPLICABLE IN THE CASE OF T HE ASSESSEE. THE CASE LAW RELIED UPON IN THIS REGARD ARE NOT REQUIRED TO BE DISCUSSED BY US, AS W E DO NOT HAVE ANY JURISDICTION TO ADJUDICATE THIS ISSUE WHILE HEARING THE APPEAL IN RESPECT OF T HE ORDER PASSED U/S. 271(1)(C). 25 12. THE LEARNED AR HAS ALSO ARGUED BEFORE US THAT T HE ADDITIONS HAVE WRONGLY BEEN SUSTAINED BY THE TRIBUNAL. THIS ISSUE ALSO DOES NOT ARISE BEF ORE US. WE, THEREFORE, REJECT THIS CONTENTION ALSO. THE LEARNED AR HAS RAISED THE CONTENTION THAT THERE IS A DIFFERENCE OF OPINION BETWEEN THE ASSESSING OFFICER AND THE APPELLATE AUTHORITY SO FA R AS THE APPLICATION OF RATE PER BULK LITRE IS CONCERNED. IN THIS REGARD, HE RELIED ON THE DECISIO N DELHI BENCH OF TRIBUNAL IN THE CASE OF NUCHEM LTD. VS. DCIT 49 TTJ (DEL.)177, OF DELHI HIG H COURT IN THE CASE OF CIT VS. BACARDI MARTINI INDIA LTD. (2007) 288 ITR 585 (DEL.), OF PU NJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. PREM DAS 248 ITR 234, DURGA KAMAL RICE MILL S VS. CIT 265 ITR 25 (CAL.), CIT VS. HARSHVARDHAN CHEMICALS & MINERAL LTD. 259 ITR 212 ( RAJ.). THESE DECISIONS IN OUR OPINION WILL NOT ASSIST THE ASSESSEE. IN THE CASE OF THE ASSESSE E, THERE IS NO DIFFERENCE OF OPINION BETWEEN THE SAME QUASI JUDICIAL AUTHORITIES. IF THIS CONTENTION OF THE ASSESSEE IS ACCEPTED THEN EACH AND EVERY CASE WHERE THE ASSESSEE GETS THE RELIEF OR ADDITION GETS REDUCED BY APPELLATE AUTHORITY, ACCORDING TO THE AR, NO PENALTY WILL BE LEVIABLE. SUCH INTERP RETATION IN OUR OPINION IS NOT A VALID INTERPRETATION. WE HAVE GONE THROUGH THESE DECISION S AND WE FIND THAT THESE DECISIONS ARE NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. BACARDI MARTINI INDIA LTD. (SUPRA) RELATES TO THE CASES WHERE THE PENALTY HAS BEEN LEVIED FOR THE CONCEALMENT OF INCOME NOT FOR FILING OF INA CCURATE PARTICULARS OF INCOME. IN THE CASE OF DURGA KAM RICE MILLS VS. CIT (SUPRA), THE HONBLE P UNJAB & HARYANA HIGH COURT HAS HELD THAT THE ASSESSING OFFICER SHOULD GIVE INDEPENDENT FINDI NG IN THE PENALTY PROCEEDINGS. IMPOSITION OF THE PENALTY ON THE BASIS OF QUANTUM PROCEEDINGS CAN NOT BE MADE. IN THIS CASE, IT WAS FURTHER HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND NO CLEAR AND DEFINITE INFERENCE IS DRAWN, PENALTY CANNOT BE IMPOSED FOR CONCEALMENT OF INCOME. IN THIS CASE, PE NALTY WAS IMPOSED BY INVOKING EXPLANATION 1 26 TO SECTION 271(1)(C). THIS DECISION WILL ALSO NOT A SSIST THE ASSESSEE, AS IN THE CASE OF ASSESSEE PENALTY HAS NOT BEEN IMPOSED BY INVOKING THE EXPLAN ATION 1 TO SECTION 271(1)(C). 13. THE DECISION IN THE CASE OF CIT VS. HARSHVARDHA N CHEMICALS & MINERAL LTD. (SUPRA) ALSO RELATES TO A CASE WHERE THE PENALTY HAS BEEN IMPOSE D FOR CONCEALMENT OF THE PARTICULARS OF INCOME IN TERMS OF EXPLANATION TO SECTION 271(1)(C) . THEREFORE, THIS DECISION WILL ALSO NOT APPLY TO THE CASE OF THE ASSESSEE. IN THE CASE OF CIT VS. PREM DASS (SUPRA), PENALTY WAS IMPOSED FOR THE CONCEALMENT OF INCOME NOT FOR FILING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THIS DECISION WILL ALSO NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE. 14. IN THE CASES OF CIT VS. INDEN BISLERS 240 ITR 9 43 (MAD.), CIT VS. BHARAT MINERALS SALES CORPN., 253 ITR419 (CAL.), CIT VS. BIMAL KUMAR DAMA NI, 261 ITR 87 (CAL.), AS RELIED UPON BY THE ASSESSEE, ALSO THE PENALTIES WERE LEVIED FOR CO NCEALMENT OF PARTICULARS OF INCOME. IN THE PRECEDING PARAGRAPH WE HAVE ALSO HELD THAT TWIN CHA RGES, I.E., CONCEALMENT OF THE PARTICULARS OF INCOME AND FILING OF INACCURATE PARTICULARS OF INCO ME ARE DIFFERENT. THE PENALTY IN THE IMPUGNED CASE HAS NOT BEEN IMPOSED FOR THE CONCEALMENT OF TH E PARTICULARS OF THE INCOME, BUT FOR FILING THE INACCURATE PARTICULARS OF INCOME, AS THE ASSESSEE H AS SHOWN THE BULK SALE OF LIQUOR AT A LOWER PRICE. 15. WE HAVE ALSO GONE THROUGH THE DECISION IN THE C ASE OF K.C. BUILDERS VS. CIT, 265 ITR 562 (SC). IN THIS CASE IT WAS HELD THAT WHERE THE A DDITIONS MADE IN THE ASSESSMENT ORDER ON THE BASIS OF WHICH PENALTY FOR CONCEALMENT IS LEVIED, A RE DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A CASE, NO PENALTY CAN SURVIVE AND THE 27 PENALTY IS LIABLE TO BE CANCELLED. THIS DECISION AL SO, IN OUR OPINION, WILL NOT APPLY TO THE FACTS OF THE CASE OF THE ASSESSEE AS IN THE CASE OF ASSESSEE , THE TRIBUNAL HAS NOT DELETED THE ADDITION BUT THE SALE RATE TAKEN BY THE CIT(A) WAS DULY CONFIRME D BY THE TRIBUNAL AND, THEREFORE, THE PENALTY WAS LEVIED FOR FILING THE INACCURATE PARTICULARS OF THE INCOME. 16. THE RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF JEEVAN LAL SHAH, 205 ITR 244 IS ALSO, IN OUR OPINION, OUT OF CONTEXT , AS IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS NOT INVOKED THE PRESUMPTION AS IS AVAILABLE UND ER EXPLANATION TO SECTION 271(1)(C). THIS DECISION WILL ALSO NOT ASSIST THE ASSESSEE. 17. THE DECISION OF HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF CIT VS. AJAIB SINGH & CO. 253 ITR 630, OF RAJASTHAN HIGH COURT I N THE CASE OF SHIV LAL TAK VS. CIT, 251 ITR 373, GUJRAT HIGH COURT IN THE CASE OF NATIONAL TEXTILES VS. CIT, 249 ITR 125 (GUJ) AS HAVE BEEN HEAVILY RELIED UPON BY THE LEARNED AR, ARE ALS O NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US, AS IN THESE CASES, THE PENALTY HAS BEEN IMPOSED U/S. 271(1)(C) BY THE ASSESSING OFFICER FOR CONCEALMENT OF PARTICULARS OF INCOME BY INVOKING EX PLANATION TO SECTION 271(1)(C), BUT AT THE COST OF REPETITION, WE MAY POINT OUT THAT IN THE CA SE OF THE ASSESSEE, THE ASSESSING OFFICER HAS LEVIED THE PENALTY FOR FILING THE INACCURATE PARTIC ULARS OF INCOME AND NOT FOR CONCEALMENT OF PARTICULARS OF INCOME. 18. THE OTHER DECISION, AS RELIED ON BY THE LD. AR IN THE CASE OF CIT VS. P.K. NARAYANAN 238 ITR 905 AND MIMOS INVESTMENT CO. P. LTD. VS. ITO, 6 DTR (TRIB) 789 WILL ALSO NOT ASSIST THE 28 ASSESSEE IN THE SIMILAR MANNER AS IN THE CASE OF TH E ASSESSEE, PENALTY HAS BEEN IMPOSED FOR FILING THE INACCURATE PARTICULARS OF THE INCOME. 19. THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF VISHWAKARMA INDUSTRIES VS. CIT, 135 ITR 652 ALSO RELATE TO THE APPLICABILITY OF THE EXPLANATION OF SECTION 271(1)(C). SIMILARLY, THE OTHER DECISIONS RELIED ON BY THE LEARNED AR, NAMELY CIT VS. MODI INDUSTRIAL CORPN., 34 DTR (P&H) 158, CIT VS. DEVI D AYAL ALUMINIUM INDUSTRIES (P) LTD., 171 ITR 683 (ALL.), JCIT VS. VXL (INDIA) LTD. (ITAT AMR ITSAR), 94 TTJ 513, H.P. STATE FOREST CORP. LTD. VS. DCIT93 ITR 442 (CHD.), CIT VS. RAVAIL SING H & CO., 254 ITR 191 (P&H), CIT VS. DHILLON RICE MILLS, 256 ITR 447 (P&H), CIT VS. BHAR AT RICE MILLS, 250 ITR 584 (P&H), ITO VS. NANDI STEEL WORKS (P) LTD., 63 ITD(BANG) AND DECISI ON OF ITAT INDORE IN THE CASE OF LAXMI DAL MILLS VS. ITO, 53 TTJ (IND.) 425, ARE ALSO NO A PPLICABLE IN THE CASE OF THE ASSESSEE. 20. WE HAVE ALSO GONE THROUGH THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. IFCI LTD., 328 ITR 611. THIS DECISION WILL ALSO NOT ASSI ST THE ASSESSEE. IN THIS CASE, THE ASSESSEE HAS CLAIMED THE DEDUCTION OF LOSS. THE DETAILS IN RESPE CT OF THE CLAIM WERE DULY FURNISHED BY THE ASSESSEE. THE CLAIM OF ASSESSEE WS REJECTED. UNDER THESE FACTS, THE HONBLE HIGH COURT HELD THAT THE CANCELLATION OF PENALTY IS VALID. WE MAY POINT OUT THAT IN THE CASE OF ASSESSEE, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF THE RATE AT WHICH THE BULK LIQUOR SALES PER LITRE WAS MADE NEITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, CIT(A) OR BEFORE THE TRIBUNAL NOR NOW BEFORE US DURING THE COURSE OF PEN ALTY PROCEEDINGS. THE DECISION, SO RELIED, IN OUR OPINION, WILL NOT ASSIST THE ASSESSEE. 29 21. WE MAY POINT OUT THAT THE HONBLE JURISDICTIONA L HIGH COURT IN THE CASE OF RAJ KUMAR CHAURASIA VS. CIT, 288 ITR 329, ALTHOUGH WHILE DEAL ING WITH THE PENALTY IMPOSED FOR CONCEALMENT OF INCOME BY INVOKING EXPLANATION TO SE CTION 271(1)(C), HAS HELD THAT THE FINDING IN QUANTUM PROCEEDINGS IS RELEVANT FOR IMPOSING THE PE NALTY U/S. 271(1)(C). IN THIS CASE IT WAS HELD AS UNDER : AFTER THE AMENDMENT MADE IN SECTION 271 OF THE INC OME-TAX ACT, 1961, IN THE YEAR 1964 IN CERTAIN CIRCUMSTANCES, THE ONUS LI ES UPON THE ASSESSEE TO PROVE THAT THE DIFFERENCE BETWEEN THE ASSESSED INCOME AND THE RETURNED INCOME HAS NOT BEEN CONCEALED BY HIM NOR HAS THERE BEEN ANY FRAUD OR GROSS OR WILLFUL NEGLECT ON HIS PART TO GIVE CORRECT PARTICULARS OF HIS INCOME. THE ASSESSEES FATHER WAS RUNNING A SHOP SELLING CI GARETTES AND COOL DRINKS. SUBSEQUENTLY THE ASSESSEE WAS ASSESSED IN R ESPECT OF THE INCOME FROM THE SHOP. HE GOT MARRIED IN 1972. HE FILED HIS RETURNS FOR THE ASSESSMENT YEARS 1975- 76 AND 1976-77 IN JULY, 1976. MORE OR LESS SIMULTAN EOUSLY A RETURN OF INCOME WAS FILED IN HIS WIFES NAME ALSO DECLARING INCOME FROM SALE OF COOL DRINKS. ON OR ABOUT SEPTEMBER 15, 1976, THE ASSESSEE FILED HIS RE VISED RETURNS FOR THE ASSESSMENT YEARS 1974-75, 1975-76 AND 1976-77 SHOWI NG INCOME AT RS. 21,546, RS. 45,690 AND RS. 15,500 RESPECTIVELY. THE REVISED RETURNS INCLUDED INCOME FROM UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT AND FIXE D DEPOSITS. THE ASSESSEES PLEA IN RESPECT OF THESE ASSESSMENT YEARS WAS THAT HE HAD STOPPED DOING COOL DRINKS BUSINESS AND THAT THE SAID BUSINESS WAS BEIN G DONE BY HIS WIFE AND AS SUCH THE INCOME FROM THE COOL DRINKS BUSINESS WAS NOT IN CLUDED IN HIS RETURN AND THAT IT WAS PART OF THE RETURNS FILED IN THE NAME OF HIS WI FE. AS REGARDS UNEXPLAINED INVESTMENTS, HE PLEADED THAT THEY REPRESENTED FUNDS LEFT BY HIS LATE FATHER BUT OF WHICH HE HAD NO EVIDENCE AND SO THEY WERE OFFERED F OR ASSESSMENT. THE INCOME- TAX OFFICER EXAMINED THE VARIOUS CLAIMS OF THE ASSE SSEE AND FOUND THAT THEY COULD NOT BE BELIEVED. HE MADE ADDITIONS TO THE INCOME AN D ALSO LEVIED PENALTIES. THE TRIBUNAL FOUND THAT THE INCOME-TAX AUTHORITY IN THE QUANTUM APPEAL HAD HELD THAT THE COOL DRINKS BUSINESS WHICH WAS ALLEGED TO BE CA RRIED ON IN THE NAME OF THE ASSESSEES WIFE ACTUALLY BELONGED TO HIM. THE TRIBU NAL CONFIRMED THE ORDER OF PENALTY. ON A REFERENCE : HELD,_ THAT IT WAS NOT IN DISPUTE THAT THE COOL DRI NKS BUSINESS CARRIED ON BY THE ASSESSEE IN THE NAME OF HIS WIFE HAD BEEN HELD BY T HE TRIBUNAL, WHICH WAS THE LAST FACT FINDING AUTHORITY, TO BE THE BUSINESS CARRIED ON BY THE ASSESSEE AND THE INCOME EARNED THEREFROM HAD BEEN INCLUDED IN HIS IN COME. THE INVESTMENTS INTRODUCED BY THE ASSESSEE REMAINED UNEXPLAINED BY THE ASSESSEE AND WERE OFFERED BY THE ASSESSEE HIMSELF TO BE ADDED IN HIS INCOME. IN THE PENALTY PROCEEDING, APART FROM THE EXPLANATION WHICH WAS GI VEN BY THE ASSESSEE IN THE ASSESSMENT PROCEEDING, NEITHER ANY FRESH MATERIAL N OR ANY EVIDENCE HAD BEEN 30 PLACED BEFORE THE AUTHORITIES NOR ANY OTHER PLAUSIB LE EXPLANATION HAD BEEN OFFERED TO SHOW THAT THERE WAS NO GROSS OR WILLFUL NEGLECT ON HIS PART NOR WAS THERE ANY FRAUD IN NOT DISCLOSING THE CORRECT INCOM E. IN THE CIRCUMSTANCES, THE FINDINGS RECORDED BY THE AUTHORITIES IN THE QUANTUM PROCEEDINGS BECAME RELEVANT AND IF THE AUTHORITIES HAD RELIED UPON THE FINDING RECORDED IN THE ASSESSMENT PROCEEDING, IT COULD NOT BE SAID THAT THE PENALTY P ROCEEDINGS WERE VITIATED. IT WAS ADMITTED THAT THE EXPLANATION AS INSERTED AT THE EN D OF SUB-SECTION (1) OF SECTION 271 OF THE ACT WAS APPLICABLE. THE ASSESSEE HAD NOT GIVEN ANY FRESH EXPLANATION EXCEPT WHAT HAD BEEN STATED BY HIM IN THE QUANTUM P ROCEEDING. THE EXPLANATION HAD BEEN PROVED TO BE FALSE. THE IMPOSITION OF PENA LTY WAS THEREFORE VALID. 22. WE ARE OF THE VIEW THAT THE DECISION OF JURISDICTIO NAL HIGH COURT IS EQUALLY APPLICABLE IN THE CASE OF THE ASSESSEE. THE BULK LIQUOR SALE RATE PER LITRE AT RS.30.70 HAS BEEN CONFIRMED BY THE TRIBUNAL AGAINST WHICH THE ASSESSEE HAS SHOWN THE A VERAGE BULK RATE OF RS.28.38 WHICH CLEARLY SHOWS THAT THE ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS OF INCOME. THE CIT(A) IN OUR OPINION WAS NOT CORRECT IN LAW IN DELETING THE PENA LTY IN SUCCINCT MANNER BY OBSERVING AS UNDER WITHOUT LOOKING INTO THE PENALTY ORDER AND THE ORDE R OF THIS TRIBUNAL MERELY ON THE BASIS THAT THERE IS A DIFFERENCE OF OPINION AS REGARDS THE INC OME OF THE ASSESSEE WHILE, IN FACT, THIS IS NOT THE CASE OF DIFFERENCE OF OPINION, BUT A CASE OF FILING OF INACCURATE PARTICULARS OF INCOME BY SHOWING RATE OF COUNTRY LIQUOR AT RS.28.38 PER BULK LITRE : I HAVE CONSIDERED THE FACTS OF THE CASE, THE ABOVE SUBMISSIONS OF AR AND THE POSITION OF LAW. THERE WAS A DIFFERENCE OF OPIN ION AS REGARDS THE INCOME OF THE APPELLANT. SINCE THE AO AND CIT(A) ADOPTED DIFFEREN T ESTIMATES IN ASSESSING THE INCOME OF THE APPELLANT, THEREFORE, IT CANNOT BE SA ID THAT THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME OR C ONCEALED THE PARTICULARS OF HIS INCOME SO AS TO ATTRACT CLAUSE (C) OF SECTION 271(1 ) OF THE INCOME-TAX ACT. IN MY OPINION, IN THESE CIRCUMSTANCES THE PENALTY U/S. 27 1(1)(C) IS NOT LEVIABLE. THEREFORE, THE ORDER IMPOSING PENALTY U/S. 271(1)(C ) IS QUASHED. ACCORDINGLY WE SET ASIDE THE ORDER OF CIT(A). BUT KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE IMPOSED THE MINIMUM PENALTY. THE MINIMUM PENALTY FOR THE TAX SOUGHT TO BE EVADED WAS RS.10,18,108/-. WE 31 ITA NO. 620/AGRA/2008 ACCORDINGLY DIRECT THE ASSESSING OFFICER TO IMPOSE PENALTY OF RS.10,18,108/-. 23. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.03.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH MARCH, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY