Dy. CIT, Circle-1, Jalgaon V. Shri Amrish Ishwarlal Lalwani (Jain), Jalgaon

ITA 669/PUN/2013

• Counselvise Citation: 66924514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS S PRAVEENA
• Keywords: Business income; Opportunity of being heard; Wrong claim; Revised return
• Section: 133A; 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.669/PN/2013 (ASSESSMENT YEAR : 2004-05) DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, JALGAON. . APPELLANT VS. SHRI AMRISH ISHWARLAL LALWANI, (JAIN), 169 JOHARI BAZAR, JALGAON 425 001. PAN : AADPL1004A . RESPONDENT DEPARTMENT BY : MRS. S. PRAVEENA ASSESSEE BY : MR. NIKHIL PATHAK DATE OF HEARING : 26-06-2014 DATE OF PRONOUNCEMENT : 30-06-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGA INST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 09.01.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 20.0 6.2007 PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2004-05. 2. IN THIS APPEAL, THE SOLITARY DISPUTE RAISED BY T HE REVENUE IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE PENALTY OF RS.6,83,173/- IMPOSED U/S 271(1)(C) OF THE ACT. 3. IN BRIEF, THE RELEVANT FACTS ARE AS FOLLOWS. TH E RESPONDENT-ASSESSEE BEFORE US IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 ON 29.03.2005 DECLARING TOTAL INCOME OF RS. 86,83,830/- AND AGRICULTURAL INCOME OF RS.18,000/-. THE RETURN OF INCOME FILED BY THE ASSESSEE CONTAINED INCOME UNDER VARIOUS HEADS, NAMELY, INCOM E FROM HOUSE PROPERTY; ITA NO.669/PN/2013 A.Y. : 2004-05 INCOME BY WAY OF SALARIES FROM TWO PRIVATE LIMITED COMPANIES; BUSINESS INCOME BY WAY OF SHARE OF PROFITS/LOSS AND INTEREST FROM PARTNERSHIP FIRMS; LONG TERM CAPITAL GAIN ON SALE OF PLOTS; AND, INCOM E FROM OTHER SOURCES BY WAY OF BANK INTEREST, DIVIDEND, ETC.. THE RETURN O F INCOME FILED BY THE ASSESSEE WAS SUBJECT TO SCRUTINY ASSESSMENT U/S 143 (3) OF THE ACT WHEREBY THE TOTAL INCOME WAS ASSESSED AT RS.1,07,42,986/-. THE DIFFERENCE IN THE INCOME RETURNED AND THE INCOME ASSESSED WAS ON ACCO UNT OF FOLLOWING : (I) SHORT TERM CAPITAL GAIN ON SALE OF PLOTS IN GAT NO. 567, MAHALAXMI NAGAR WRONGLY TREATED AS LONG TERM CAPITAL GAIN RS.33,4 50/-; (II) BUSINESS INCOME ON SALE OF PLOT NO.97, CHINCHOLI WRONGLY DISCLOSED AS SALE OF A LONG TERM INVESTMENT RS.250/-; AND, (III) DISALLOWANCE OF I NTEREST EXPENDITURE, WHICH WAS PERTAINING TO AN EARLIER PERIOD RS.20,36,516/ -. THE AFORESAID ADDITIONS HAVE SINCE BECOME FINAL, INASMUCH AS THE SAME WERE CONFIRMED AS WRONG CLAIMS BY THE ASSESSEE HIMSELF IN THE COURSE OF THE ASSESSMENT PROCEEDINGS BY WAY OF A LETTER DATED 21.12.2006. IN-FACT, IN T HE ASSESSMENT PROCEEDINGS, ASSESSEE FILED A REVISED STATEMENT OF TOTAL INCOME INCORPORATING THE AFORESAID THREE ADDITIONS. 4. SUBSEQUENTLY, THE ASSESSING OFFICER HELD THE ASS ESSEE GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH IN THE MEANING OF SECTION 271(1)(C) OF THE ACT QUA THE AFORESAID ADDITIONS AN D VIDE ORDER DATED 20.06.2007, PENALTY EQUIVALENT TO 100% OF THE TAX S OUGHT TO BE EVADED WITH RESPECT TO THE AFORESAID ADDITIONS WAS LEVIED, WHIC H AMOUNTED TO RS.6,83,173/-. THE PENALTY SO IMPOSED BY THE ASSES SING OFFICER WAS DELETED BY THE CIT(A) VIDE ORDER DATED 28.02.2008. THE REV ENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, WHEREIN VIDE ORDER IN I TA NO.453/PN/2008 DATED 26.03.2010 THE ORDER OF THE CIT(A) WAS SET-ASIDE AN D THE MATTER WAS RESTORED BACK WITH A DIRECTION TO DECIDE THE ISSUE AFRESH A FTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IN PURSUANC E TO THE SUCH DIRECTION OF ITA NO.669/PN/2013 A.Y. : 2004-05 THE TRIBUNAL, IMPUGNED ORDER HAS BEEN PASSED BY THE CIT(A) WHEREBY THE PENALTY LEVIED HAS BEEN DELETED BY MAKING THE FOLLO WING DISCUSSION :- 4. I HAVE CAREFULLY GONE THROUGH THE PENALTY ORDER , ASSESSMENT ORDER, SUBMISSION OF THE APPELLANT AND THE MATERIAL AVAILABLE ON RECORD. AS REGARDS WRONG CLAIM OF LTCG ON SALE OF PLOTS INSTEA D OF STCG OF RS.33,450/-, I FIND THAT THE APPELLANT HAS NEITHER CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACCURATE FACTS OF INCOME BEF ORE THE AO. APPELLANT HOWEVER, MADE A WRONG CLAIM OF LTCG AS AGAINST STCG ON SALE OF PLOTS. THE HON'BLE SC IN THE CASE OF RELIANCE PETRO PRODUC TS HAS HELD THAT PENALTY U/S 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS REGARDING INCOME IS NOT LEVIABLE IN CASE OF DISALLOWANCE OF A NY LEGALLY NON SUSTAINABLE CLAIM MADE BY THE ASSESSEE. KEEPING IN VIEW THE DECISION OF THE HON'BLE SC IN RELIANCE PETRO PRODUCTS (SUPRA), AMOUNT INVOLVED AND THE STATUS OF THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT HE WOULD NOT HAVE MADE A WRONG CLAIM INTENTIONALLY. HENCE, PENAL TY ON THIS ISSUE IS DELETED. SIMILARLY, AS FAR AS PENALTY U/S 271(1)(C) ON RS.250/- WHICH THE APPELLANT HAD SHOWN AS LTCG INSTEAD OF BUSINESS INC OME IS CONCERNED, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT DID NO T HIDE THE TOTAL INCOME. HIS FAULT WAS THAT HE INCLUDED THE BUSINESS INCOME OF RS.250/- UNDER THE HEAD LTCG. PENALTY U/S 271(1)(C) ON THIS ACCOUNT IS ALSO NOT JUSTIFIED AND GETS DELETED. AS REGARDS PENALTY ON CLAIM OF INTERE ST PERTAINING TO AY 2002- 03 BUT CLAIMED IN AY 2004-05, I FIND THAT APPELLANT HAD PAID INTEREST OF RS.20,36,516/- TO GAJENDRA GEMS CORPORATION FOR THE F.Y. 2001-2002. THE SAME WAS ALSO OFFERED TO TAX BY THE RELEVANT PARTY FOR THE F.Y. 2001-2002. HOWEVER, IT REMAINED TO BE ACCOUNTED FOR IN APPELLA NT'S BOOKS FOR THE F.Y. 2001-2002 AND WAS ACCOUNTED FOR IN THE YEAR UNDER R EFERENCE I.E. F.Y 2003-2004. AS A RESULT, IN THE ORIGINAL RETURN OF I NCOME FILED BY APPELLANT DEDUCTION WAS CLAIMED IN RESPECT OF SAID EXPENDITUR E IN THE AY 2004-2005. THE SAID CLAIM WAS LATER WITHDRAWN BY APPELLANT VOL UNTARILY THROUGH THE REVISED STATEMENT OF TOTAL INCOME FILED ON 12/06/20 06 IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT SEEMS THAT IT WAS ONLY D UE TO MISTAKE ON THE PART OF ACCOUNTANT THAT THE APPELLANT COULD NOT CLA IM DEDUCTION IN RESPECT OF INTEREST PAYABLE IN THE AY 2002-2003 NOR IT COULD B E CLAIMED IN AY 2004- 2005 SINCE THE EXPENDITURE PERTAINED TO AY 2002-200 3. THE DEDUCTION WAS INITIALLY CLAIMED IN AY 2004-2005 ONLY BECAUSE THE SAME WAS ACCOUNTED FOR IN AY 2004-2005. IN VIEW OF THE ABOVE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT DID NOT MAKE DOUBLE CLAIM I.E. I N AY 2002-03 AND IN AY 2004-05 ALSO. IN MY VIEW THE APPELLANT MADE A LEGAL LY UNSUSTAINABLE CLAIM IN AY 2004-05 AS THE EXPENSES PERTAINED TO AY 2002- 03. THERE DOES NOT SEEM TO BE ANY MALAFIDE INTENTION ON THE PART OF TH E APPELLANT TO EVADE TAX BY CONCEALING INCOME OR FURNISHING INACCURATE PARTI CULARS OF HIS INCOME. RESPECTFULLY FOLLOWING THE HON'BLE SC'S DECISION IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA), I AM OF THE CONSIDERED VIEW THAT AO WAS NOT JUSTIFIED IN LEVYING THE PENALTY U/S 271(1)(C) ON R S.20,36,516/-. THE SAME IS DELETED. 5. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) , REVENUE IS IN APPEAL BEFORE US. ITA NO.669/PN/2013 A.Y. : 2004-05 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE APPEARIN G FOR THE REVENUE HAS CONTENDED THAT THE CIT(A) ERRED IN TREATING THE REVISED STATEMENT OF TOTAL INCOME FURNISHED BY THE ASSESSEE IN THE COURSE OF A SSESSMENT PROCEEDINGS AT PAR WITH A REVISED RETURN U/S 139(5) OF THE ACT. I T WAS THEREFORE CONTENDED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER, WHICH HAVE BECOME FINAL, CLEARLY ESTABLISH THAT THE INCOME DECLARED IN THE RETURN OF INCOME WAS ERRONEOUS QUA THE AFORESAID THREE ADDITIONS AND THEREFORE THE ASS ESSING OFFICER WAS JUSTIFIED IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. IN T HE COURSE OF HEARING, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT VIDE CIVIL APPEAL NO.9772 OF 2013 ORDER DATED 30.10.2013 TO SU BMIT THAT EVEN IN CASES OF VOLUNTARY DISCLOSURE OF INCOME, PENALTY U/S 271( 1)(C) OF THE ACT IS LEVIABLE. 7. ON THE OTHER HAND, THE LEARNED REPRESENTATIVE AP PEARING FOR THE RESPONDENT-ASSESSEE HAS VEHEMENTLY ARGUED THAT THE CIT(A) MADE NO MISTAKE IN DELETING THE PENALTY IN RESPECT OF THREE ADDITIONS FOR THE REASONS ASSIGNED IN THE IMPUGNED ORDER. IN SO FAR AS THE A DDITIONS ON ACCOUNT OF (I) SHORT TERM CAPITAL GAIN TREATED AS LONG TERM CAPITA L GAIN OF RS.33,450/-; AND, (II) BUSINESS INCOME WRONGLY TREATED AS LONG TERM C APITAL GAIN OF RS.250/- ARE CONCERNED, IT WAS A CASE OF AN INADVERTENT MISTAKE AND THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF ANY INACCURA TE PARTICULARS OF INCOME BEFORE THE ASSESSING OFFICER. ACCORDING TO THE LEA RNED COUNSEL, THE CIT(A) HAS REFERRED TO THE JUDGEMENT OF THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD., 322 ITR 158 TO HOLD THAT A MERE WRONG CLAIM WOULD NOT INVITE PENALTY U/S 271(1)(C) OF THE ACT IN THE ABSENCE OF ANY INACCURATE PARTICULARS OF INCOME IN THE RETURN OF I NCOME. 8. WITH REGARD TO THE DISALLOWANCE OUT OF INTEREST EXPENDITURE OF RS.20,36,516/-, THE LEARNED COUNSEL EXPLAINED THAT THE ASSESSEE HAD ACTUALLY PAID INTEREST TO M/S GAJENDRA GEMS CORPORATION DURI NG THE YEAR UNDER ITA NO.669/PN/2013 A.Y. : 2004-05 CONSIDERATION BUT AS IT PERTAINED TO AN EARLIER FIN ANCIAL YEAR OF 2001-02, THE SAME WAS DISALLOWED WHILE COMPUTING TOTAL INCOME FO R THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD VOLUNTARILY ACCEPT ED THE AFORESAID ERROR BY FILING A REVISED STATEMENT OF TOTAL INCOME IN THE C OURSE OF ASSESSMENT PROCEEDINGS ITSELF. THE LEARNED COUNSEL EXPLAINED THAT IT WAS ONLY DUE TO A MISTAKE ON THE PART OF THE ACCOUNTANT THAT ASSESSEE MADE A WRONG CLAIM IN THE RETURN OF INCOME. IT HAS BEEN EXPLAINED THAT T HE CLAIM IS OTHERWISE ALLOWABLE, BUT DUE TO A MISTAKE, IT HAS NEITHER BEE N ALLOWED IN THE CURRENT YEAR AND NOR IN THE PAST YEAR TO WHICH IT PERTAINS. BE THAT AS IT MAY, ACCORDING TO HIM, THE CLAIM MADE IN THE RETURN OF INCOME IS NEIT HER FANCIFUL OR BOGUS AS TO BE TREATED AS CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. IN SUM AN D SUBSTANCE, THE LEARNED COUNSEL HAS SUPPORTED THE ORDER OF THE CIT(A) IN DE LETING THE PENALTY. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THERE IS A DIFFERENCE BETWEEN THE RETURNED AND THE ASSESS ED INCOME. THE DIFFERENCE IS ON ACCOUNT OF THE FOLLOWING THREE ADDITIONS : (I ) SHORT TERM CAPITAL GAIN ON SALE OF PLOTS IN GAT NO.567, MAHALAXMI NAGAR WRONGL Y TREATED AS LONG TERM CAPITAL GAIN RS.33,450/-; (II) BUSINESS INCOME ON SALE OF PLOT NO.97, CHINCHOLI WRONGLY DISCLOSED AS SALE OF A LONG TERM INVESTMENT RS.250/-; AND, (III) DISALLOWANCE OF INTEREST EXPENDITURE, WHICH W AS PERTAINING TO AN EARLIER PERIOD RS.20,36,516/-. THE AFORESAID THREE ADDIT IONS HAVE SINCE BECOME FINAL AS THE ASSESSEE DOES NOT DISPUTE THE SAME. R ATHER THE STAND OF THE ASSESSEE IS THAT IN THE COURSE OF ASSESSMENT PROCEE DINGS ITSELF, HE FILED A REVISED STATEMENT OF TOTAL INCOME INCORPORATING THE AFORESAID THREE ADDITIONS. ITS A TRITE LAW THAT ASSESSMENT PROCEE DINGS AND THE PENALTY PROCEEDINGS ARE INDEPENDENT PROCEEDINGS AND THAT TH E FINDINGS IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE FOR THE P URPOSES OF ADJUDICATING THE LEVY OF PENALTY ALTHOUGH SUCH FINDINGS MAY BE R ELEVANT FOR THE PURPOSES OF PENALTY PROCEEDINGS. IN-FACT, AS PER THE HONBLE S UPREME COURT IN THE CASE OF ITA NO.669/PN/2013 A.Y. : 2004-05 ANANTHARAM VEERASINGAIAH & CO. VS. CIT, 123 ITR 457 , PENALTY PROCEEDINGS ARE INDEPENDENT OF THE ASSESSMENT PROCEEDINGS AND P ENALTY CANNOT BE LEVIED MERELY ON THE BASIS OF THE FINDINGS IN THE ASSESSME NT PROCEEDINGS. THUS, MERELY BECAUSE THE ADDITIONS MADE IN THE QUANTUM PR OCEEDINGS HAVE BECOME FINAL, DOES NOT AUTOMATICALLY ESTABLISH THE INGREDI ENTS OF SECTION 271(1)(C) OF THE ACT. THEREFORE, THE STAND OF THE REVENUE TO SU PPORT THE LEVY OF PENALTY BASED ON THE QUANTUM ASSESSMENT HAVING BEEN CONFIRM ED, IS NOT JUSTIFIED. 10. AS PER THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA), IN A CASE WHERE THERE IS A DIFFERENCE BETW EEN THE RETURNED AND THE ASSESSED INCOME, IN TERMS OF EXPLANATION TO SECTION 271(1)(C) OF THE ACT A PRESUMPTION OF CONCEALMENT ARISES, AND THE BURDEN I S ON THE ASSESSEE TO SHOW OTHERWISE ON THE BASIS OF COGENT AND RELIABLE EVIDENCE. AS PER THE HONBLE SUPREME COURT, WHEN SUCH INITIAL ONUS PLACE D BY THE EXPLANATION HAS BEEN DISCHARGED BY THE ASSESSEE, THE ONUS SHIFTS ON THE REVENUE TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT OTHERWISE, SO AS TO TRIGGER THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. IN THIS BACKGROUND, WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE. 11. THE SUBSTANTIVE DISPUTE IN THIS APPEAL RELATES TO THE PENALTY IMPOSED ON AN ADDITION OF RS.20,36,516/- REPRESENTING INTEREST PAID TO ONE, M/S GAJENDRA GEMS CORPORATION. THE DISCUSSION IN THE ASSESSMENT ORDER, THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS OTHER MA TERIAL ON RECORD REVEALS THE FOLLOWING FACTS. THE ASSESSEE HAD BORROWED MON EY FROM THE SAID CONCERN IN THE PAST YEARS, AND A COMPLETE COPY OF ACCOUNT O F THE SAID CONCERN HAS ALSO BEEN FILED. IT REVEALS THAT IN THE FINANCIAL YEAR 2001-02, THERE IS AN OPENING BALANCE OF RS.1,35,75,000/- AND AT THE YEAR END AS ON 31.03.2002, THERE IS A BALANCE OF RS.93,81,359/- AFTER CONSIDER ING REPAYMENTS OF RS.42,04,641/-. IN FINANCIAL YEAR 2001-02, NO INTE REST WAS PAID TO THE SAID CONCERN AS THERE IS NO ENTRY FOR INTEREST AND ASSES SEE DID NOT CLAIM ANY ITA NO.669/PN/2013 A.Y. : 2004-05 DEDUCTION ON ACCOUNT OF INTEREST EXPENSE WHILE COMP UTING ITS TOTAL INCOME FOR THE CORRESPONDING ASSESSMENT YEAR OF 2002-03. FOR THE FINANCIAL YEAR 2002- 03, THE OPENING BALANCE IS RS.93,81,359/- AND THE C LOSING BALANCE AS ON 31.03.2003 IS RS.28,97,947/-. IN THE SAID FINANCIA L YEAR, ASSESSEE CREDITED A SUM OF RS.7,28,922/- IN THE ACCOUNT OF THE SAID PAR TY ON ACCOUNT OF INTEREST AND SUCH AMOUNT WAS CLAIMED AS A DEDUCTION WHILE CO MPUTING TOTAL INCOME FOR THE ASSESSMENT YEAR 2003-04. IN THE COURSE OF HEAR ING, THE LEARNED COUNSEL SUBMITTED THAT CLAIM OF DEDUCTION OF INTEREST STAND S ALLOWED IN THE ASSESSMENT FOR ASSESSMENT YEAR 2003-04. NOW, FOR THE FINANCIA L YEAR 2003-04 CORRESPONDING TO THE ASSESSMENT YEAR UNDER CONSIDER ATION, THERE IS AN OPENING BALANCE OF RS.28,97,947/- TO WHICH ASSESSEE FURTHER CREDITED A SUM OF RS.20,36,516/-, TO THE ACCOUNT OF THE PARTY REPR ESENTING INTEREST, WHICH ACTUALLY PERTAINS TO THE EARLIER FINANCIAL YEAR OF 2001-02. THE CLOSING BALANCE AS ON 31.03.2004 IS RS.2,07,750/- AFTER CONSIDERING PAYMENTS MADE OF RS.52,18,750/-. THE INTEREST PAID OF RS.20,36,516/ - WAS CLAIMED AS A DEDUCTION WHILE COMPUTING TOTAL INCOME IN THE RETUR N OF INCOME FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SINCE THE AFO RESAID INTEREST EXPENSE, THOUGH PAID DURING THE YEAR UNDER CONSIDERATION, DI D NOT PERTAIN TO THE PERIOD UNDER CONSIDERATION, IT HAS BEEN DISALLOWED. ON FA CTS, THERE IS NO DISPUTE AND CLEARLY THE DISALLOWANCE IS JUSTIFIED. THE QUESTIO N TO BE EXAMINED IS AS TO WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE IS A GOOD GROUND FOR CANCELLATION OF PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE STAND OF THE ASSESSEE IS THAT THERE WAS NO ATTEMPT TO CONCEAL OR FURNISH ANY INACCURATE PARTICULARS OF INCOME AND THAT THE DISALLOWANCE IS MERELY AS A RESULT OF AN ERROR ON THE PART OF THE ACCOUNTANT OF THE ASSESSEE IN NOT MAKING THE ENTRIES CORRECTLY IN THE ACCOUNT BOOKS. THE CIT(A) HAS NOT ICED THAT IT IS A CASE WHERE THERE IS NO MALA-FIDE INTENTION ON THE PART OF THE ASSESSEE TO EVADE TAX BY CONCEALING OR FURNISHING INACCURATE PARTICULARS OF INCOME. ITA NO.669/PN/2013 A.Y. : 2004-05 12. IN OUR CONSIDERED OPINION, THE MISTAKE ON THE P ART OF THE ASSESSEE APPEARS TO BE BONA-FIDE AND PLAUSIBLE, HAVING REGAR D TO THE FACTS AND CIRCUMSTANCES OF THE CASE. OSTENSIBLY, THE TRANSAC TION REPRESENTED BY PAYMENT OF INTEREST TO M/S GAJENDRA GEMS CORPORATIO N IS A GENUINE AND BONAFIDE TRANSACTION, SINCE SIMILAR EXPENSE HAS BEE N ALLOWED TO BE DEDUCTED FOR COMPUTING TOTAL INCOME FOR THE PRECEDING ASSESS MENT YEAR OF 2003-04. THE DISALLOWANCE IN THIS YEAR IS ON A TECHNICAL CON SIDERATIONS, NAMELY, THAT THE INTEREST PAID PERTAINS TO AN EARLIER PERIOD AND NOT TO THE PERIOD UNDER ASSESSMENT. AS PER THE ASSESSEE, THE CORRECT YEAR OF DEDUCTION IS ASSESSMENT YEAR 2002-03. IN THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT EVEN FOR THE ASSESSMENT YE AR 2002-03, ASSESSEE DECLARED A POSITIVE TAXABLE INCOME AND PAID TAXES, AND THUS NON-CLAIMING OF SUCH A DEDUCTION WAS A BONAFIDE OVERSIGHT/MISTAKE A ND DID NOT RESULT IN ANY UNDUE BENEFIT TO THE ASSESSEE. IN THIS FACTUAL BAC KDROP, IT IS QUITE CLEAR THAT THE UNSUSTAINABLE CLAIM MADE ON ACCOUNT OF INTEREST PAYMENT DURING THE YEAR UNDER CONSIDERATION IS NOT AMENABLE TO BE CLASSIFIE D AS A MALA-FIDE CLAIM BECAUSE IN THE OVERALL SCENARIO ASSESSEE HAS LOST O UT ON THE CLAIM IN BOTH THE ASSESSMENT YEARS I.E. 2002-03 AS WELL AS 2004-05 I. E., THE YEAR UNDER CONSIDERATION. CONSIDERING THE ENTIRETY OF CIRCUMS TANCES, WE ARE UNABLE TO FIND ANY FAULT ON THE PART OF THE CIT(A) IN HOLDING THAT THE AFORESAID CLAIM DOES NOT REPRESENT ANY MALA-FIDE INTENTION ON THE PART O F THE ASSESSEE TO EVADE TAXES BY CONCEALING OR FURNISHING INACCURATE PARTIC ULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. CLEARLY, IT IS NOT A CASE WHERE, A CLAIM WAS INITIALLY MADE IN ASSESSMENT YEAR 2002-03 AND THEREAFTER A DOUBLE CLAIM HAS BEEN MADE IN THE YEAR UNDER CONSIDERATION ALSO. ON THE CONTRARY, IT IS A CASE WHERE DUE TO A MISTAKE ON THE PART OF THE ACCOUNTANT OF THE ASSESSEE, THE ASSESSEE HAS NOT BEEN ABLE TO CLAIM D EDUCTION IN RESPECT OF THE INTEREST PAYMENT ACTUALLY MADE TO THE CREDITOR EITH ER IN THE ASSESSMENT YEAR 2002-03 OR IN THE YEAR UNDER CONSIDERATION. THEREF ORE, CONSIDERING THE ENTIRETY OF CIRCUMSTANCES, IN OUR VIEW, THE EXPLANA TION RENDERED BY THE ITA NO.669/PN/2013 A.Y. : 2004-05 ASSESSEE IS BONA-FIDE AND PLAUSIBLE AND THERE IS NO MATERIAL LEAD BY THE REVENUE TO SHOW THAT SUCH EXPLANATION IS DEVOID OF BONA-FIDES OR IS FALSE. THUS, ON THIS ASPECT, WE HEREBY AFFIRM THE ORDER OF THE CIT(A). SIMILARLY, WITH REGARD TO THE OTHER TWO ITEMS OF INCOME, NAMELY, RS .32,450/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF PLOT; AND, RS.25 0/- ON ACCOUNT OF BUSINESS INCOME ON SALE OF PLOT ARE CONCERNED, WE FIND THAT THE CIT(A) HAS COME TO A CATEGORICAL FINDING THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS IN THIS REGARD, AND BY RELYING ON THE JUDGEMENT OF THE HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) P ENALTY HAS BEEN DELETED. IN OUR CONSIDERED OPINION, REVENUE HAS NOT DEMONSTRATE D ANY ERROR IN THE APPROACH OF THE CIT(A) ON THESE TWO ASPECTS HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ORDER OF THE CIT(A) ON THESE ASPECTS IS ALSO AFFIRMED. 13. BEFORE PARTING, WE MAY REFER TO THE JUDGEMENT O F THE HONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) WHI CH HAS BEEN RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN ORDER TO SUPPORT THE CASE OF THE REVENUE BEFORE US. IN THE CASE BEFORE THE HONBLE SUPREME COURT, THE ISSUE WAS WHETHER A VOLUNTARILY SURRENDER OF INCOME MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS CAN MITIGATE THE LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT. THE PROPOSITION WHICH IS EMERGING FROM THE JU DGEMENT OF THE HONBLE SUPREME COURT IS THAT A MERE VOLUNTARY DISCLOSURE D OES NOT MITIGATE THE RIGOURS OF SECTION 271(1)(C) OF THE ACT IN THE ABSE NCE OF ANY EXPLANATION FORTHCOMING FROM THE ASSESSEE TO REBUT THE PRESUMPT ION OF CONCEALMENT ARISING DUE TO EXPLANATION TO SECTION 271(1)(C) OF THE ACT. AS PER THE HONBLE SUPREME COURT WHEREVER THERE IS A DIFFERENCE BETWEE N THE REPORTED AND THE ASSESSED INCOME, THERE IS A PRESUMPTION OF CONCEALM ENT, AND THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT A ND RELIABLE EVIDENCE AND ONLY WHEN THE INITIAL ONUS PLACED ON THE ASSESSEE I S DISCHARGED, THE ONUS SHIFTS TO THE REVENUE TO SHOW THAT THE AMOUNT IN QU ESTION CONSTITUTED THE ITA NO.669/PN/2013 A.Y. : 2004-05 INCOME AND NOT OTHERWISE. IN THE CASE BEFORE THE H ONBLE SUPREME COURT, FACTUALLY IT WAS EMERGING THAT SUCH ONUS WAS NOT DI SCHARGED BY THE ASSESSEE BY GIVING A COGENT AND RELIABLE EXPLANATION WITH RE SPECT TO THE DIFFERENCE IN THE REPORTED AND ASSESSED INCOME. WE SAY SO, BECAUSE O F THE FOLLOWING DISCUSSION IN THE ORDER OF THE HONBLE SUPREME COUR T :- 9. 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 SEARCH 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 ASSES SMENT PROCEEDINGS HAS NOTICED THAT CERTAIN DOCUMENTS COMPRISING OF SH ARE APPLICATION FORMS, BANK STATEMENTS, MEMORANDUM OF ASSOCIATION OF COMPA NIES, AFFIDAVITS, COPIES OF INCOME TAX RETURNS AND ASSESSMENT ORDERS AND BLANK SHARE TRANSFER DEEDS DULY SIGNED, HAVE BEEN IMPOUNDED IN THE COURSE OF SURVEY PROCEEDINGS UNDER SECTION 133A CONDUCTED ON 16.12.2 003, IN THE CASE OF A SISTER CONCERN OF THE ASSESSEE. THE SURVEY WAS CO NDUCTED MORE THAN 10 MONTHS BEFORE THE ASSESSEE FILED ITS RETURN OF INCO ME. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DIS CLOSURE OF ITS INCOME, IT WOULD HAVE FILED THE RETURN DECLARING AN INCOME INC LUSIVE OF THE AMOUNT WHICH WAS SURRENDERED LATER DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASS ESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. IT IS THE STATUTORY DUTY O F 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 INCOME IN THE RE TURN OF INCOME FILED BY IT FROM YEAR TO YEAR. THE AO, IN OUR VIEW, HAS RECORDE D A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEAL ED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271 READ WITH SECTION 274 OF THE INCOME TAX ACT, 1961. 14. HOWEVER, IN THE CASE BEFORE US, FACTUALLY WE HA VE CONCLUDED THAT THE CIT(A) MADE NO MISTAKE IN CONCLUDING THAT THE EXPLA NATION RENDERED BY THE ASSESSEE IS COGENT AND RELIABLE AS WELL AS BONA-FID E. THEREFORE, EVEN AFTER APPLYING THE PROPOSITION LAID DOWN BY THE HONBLE S UPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) IN THE PRESENT CASE, FACTUALLY SPEAKING, PENALTY U/S 271(1)(C) OF THE ACT IS NOT ATTRACTED. THEREFO RE, IN OUR CONSIDERED OPINION, THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE C ASE OF MAK DATA PVT. LTD. (SUPRA) DOES NOT HELP THE REVENUE IN THE PRESENT CA SE. MOREOVER AS POINTED OUT BY THE LEARNED COUNSEL FOR THE RESPONDENT-ASSES SEE, BY RELYING ON THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT VS. M/S GEM GRANITES (KARNATAKA) VIDE TAX CASE (APPEAL) NO.504 OF 2009 DATED ITA NO.669/PN/2013 A.Y. : 2004-05 12.11.2013, THAT THE PROPOSITION LAID DOWN BY THE H ONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA) HAS TO BE EX AMINED IN THE CONTEXT OF FACTS AND CIRCUMSTANCES OF EACH CASE. 15. CONSIDERING THE ENTIRETY OF CIRCUMSTANCES IN TH E PRESENT CASE, WE ARE UNABLE TO DISTRACT FROM THE ULTIMATE CONCLUSION OF THE CIT(A), WHICH WE HEREBY AFFIRM. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH JUNE, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE