Western Indian States Motors Ltd., JODHPUR V. DCIT, JODHPUR

ITA 69/JODH/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7965 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: M L RANGA
• Keywords: Depreciation; Cost of acquisition; Wrong claim; Valuation report; Onus to prove; Revised return; Unabsorbed depreciation
• Section: 147; 148; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 69/JU/2012 ASSESSMENT YEAR: 2003-04 WESTERN INDIA STATE MOTORS LTD VS. THE DY. C.I.T RAILWAY STATION ROAD CIRCLE - 1 JODHPUR JODHPUR PAN NO. AAACW 2890 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.L. RANGA DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 27.11.2012 DATE OF PRONOUNCEMENT : 13.12.2012 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL FILED BY THE ASSESSEE FOR A.Y. 2003-04 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) DATED 28.12.2011. THIS APPEAL EMANATES FROM THE ORDER OF PENALTY PASSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT', FOR SHORT] D ATED 18.3.2011. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-COMPANY DERIVES INCOME FROM RUNNING A CINE MA HALL AND FROM LONG TERM CAPITAL GAINS [LTCG]. THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME [ROI] F OR A.Y. 2003-04 ON 28.11.2003, DECLARING TOTAL BUSINESS LOS S OF RS. 13,20,557/- WHICH COMPRISED OF BUSINESS LOSS OF RS. 10,39,373/- AND DEPRECIATION AT RS. 2,81,184/-. TH E ASSESSEE COMPANY HAD DECLARED LTCG AMOUNTING TO RS. 32,27,962/- ON SALE OF LAND IN THE A.Y. 2006-07. W HILE COMPLETING THE ASSESSMENT FOR THAT YEAR, THE A.O. N OTICED THAT THE LAND WAS ACTUALLY SOLD ON 10.4.2002, AND THEREFORE, THE LTCG ON SALE OF LAND IS TO BE CONSID ERED IN THE A.Y. 2003-04. CONSEQUENTLY, THE ASSESSMENT FOR A.Y. 2003-04 WAS MADE U/S 147/143(3) ON 21.11.2009. THE A.O. TAXED THE LTCG IN A.Y. 2003-04, ON SUBSTANTIVE BASI S. HE, HAS ALSO TAXED THIS LTCG IN A.Y. 2006-07 ON PROTECT IVE BASIS. ASSESSMENT FOR A.Y. 2003-04 WAS MADE ON 21.11.2009. 3. ON GOING THROUGH THE COMPUTATION OF TOTAL INCOME ATTACHED WITH THE RETURN OF INCOME [ROI] FILED IN PURSUANCE TO NOTICE U/S 148 DATED 18.12.2008, THE A .O. NOTICED THAT THE ASSESSEE HAD WORKED OUT INDEXED CO ST OF 3 ACQUISITION OF LAND ON THE BASIS OF APPROVED VALUER S REPORT DATED 27.10.2006 CLAIMING THAT THE LAND WAS PURCHAS ED PRIOR TO 1.4.1981. THE ASSESSEE WAS ASKED TO PRODU CE THE PURCHASE-DEED AS WELL AS SALE-DEED IN RESPECT OF TH E LAND IN QUESTION. IT WAS FOUND THAT THE ASSESSEE HAD EX ECUTED AN AGREEMENT FOR SALE OF LAND IN FAVOUR OF M/S U.N. AUTOMOBILES [PRIVATE] LTD AT A RATE OF RS. 45/- PER SQ. FT [EQUIVALENT TO 4.45 BIGHAS]. HOWEVER, IN SUPPORT O F PURCHASE OF LAND, THE ASSESSEE FURNISHED COPIES OF THESE SALE DEEDS IN RESPECT OF THREE PIECES OF LAND SITUA TED IN THE SAME AREA. THE DETAILS OF LAND PURCHASED BY TH E ASSESSEE-COMPANY IN THE YEAR 1981, ARE AS UNDER: OLD ARAJI NO. | NEW ARAJI NO. AREA (IN BIGHA) AREA (IN SQ, FEET) REMARKS 337 ! I 496 1 BIGHA 3 BISWA 1+3/20 = 1.15 BIGHA 1.15X153.5X153.5 = 27096. 5 SQ. FT. LAND AT ARAJI NO. 496 & 498 WAS PURCHASED FOR RS.45,000/ - 343/2 (KAJ 498 9 BISWA 9 BISWA = 0.45 BISWA 0.45X153,5X153.5 = 10603 SQ. FT. AS ABOVE 336 496 3 / 4 BIGHA 1 BISWA 0.8 BIGHA = 0.8X153.5X153.5 = 18850 SQ. FT RS.40,000/ - 329/2(KA) I 490 2 BIGHA 2X153.5X153.5 = 47125 SQ. FT. RS.20,000/ - 342/2(KA) 499 1 BISWA 0.05 BIGHA = 0.05X153.5X153.5 = 1178 SQ. FT. PURCHASE DEED IN RESPECT, OF THIS LAND WAS NOT FILED BY THE ASSESSEE TOTAL 4.45 BIGHA = 104852 SQ. FT. 1 NOTE: ONE BIGHA LAND IS EQUIVALENT TO 23562,25 SQ . FEET (153.5X153.5)/ IS ALSO EQUIVALENT TO 20 BISWAS. 4. AS THE ASSESSEE HAS NOT SUBMITTED SALE DEED IN RESPECT OF PURCHASE OF LAND AT ARAJI NO.499 (OLD A RAJI NO. 342/2KA), INDEXED COST OF LAND SOLD COLLECTIVELY CA NNOT BE DETERMINED CORRECTLY. THEREFORE, THE ASSESSEE WAS A SKED TO EXPLAIN HOW THE VALUE OF LAND PURCHASED TO BE DETER MINED IN ABSENCE OF SALE DEED OF LAND AT ARAJI NO.499 TO GET THE INDEXED COST OF LAND. IN REPLY, THE A.R. OF THE ASSESSEE CO MPANY SUBMITTED A LETTER CONTENTS OF WHICH ARE RE-PRODUCE D AS UNDER:- 'THAT IN RESPECT OF KHASRA NO. 490, 496 AND 498, TH E COMPANY HAS ALREADY FURNISHED THE COPY OF THE REGISTERED DO CUMENTS INVOLVING VALUE OF RS,114530/-.THE BALANCE OF THE VALUE OF RS,43645 MAY BE CONSIDERED TOWARDS THE KHASRA NO. 499. 5. AS THE COST PRICE OF LAND AT UDAI PUR WAS SHOWN AT RS.1,58,176/- IN THE BALANCE SHEET OF T HE ASSESSEE AS ON 31.3,2003, IN ABSENCE OF SALE DEED O F LAND 5 AT ARAJI NO. 499, THE COST PRICE OF ALL THE LAND AT UDAIPUR SHOWN IN THE BALANCE SHEET OF THE ASSESSEE COMPANY IS TAKEN FOR THE PURPOSE OF WORKING OUT INDEXED COST O F LAND, IN PLACE OF RS. 3,00,400/- BY THE ASSESSEE COMPANY ON THE BASIS OF VALUATION REPORT FURNISHED BY THE APPROVED VALUER. ACCORDINGLY, THE INDEXED COST OF THE PROPERTY SOLD IS RECALCULATED AS UNDER; COST OF ACQUISITION ( 1981-82 ) = RS. 158175 INDEXED COST OF ACQUISITION = RS. 158175 X 447 / 100 707042 SALES CONSIDERATION = 4720950 LESS : INDEXED COST OF ACQUISITION AS DETERMINED ABOVE = 7 07042 L ONG TERM CAPITAL GAIN ON SALE OF LAND = 4013 908 T OTAL INCOME OF THE ASSESSEE COMPANY FOR A.Y. 2003-0 4 IS COMPUTED AS UNDER INCOME FROM BUSINESS OR PROFESSION NET LOSS AS PER P&L ACCOUNT (-) RS. 13,20,557 ADD: ADDITION AS DISCUSSED IN PARA NO.8 ABOVE RS. 1,00,000/- NET BUSINESS LOSS (-)RS. 12,20,557/- BUSINESS LOSS 939373 + UNABSORBED DEPRECIATION 281 183 6 INCOME FROM CAPITAL GAIN AS DISCUSSED IN PARA NO. 6 ABOVE RS. 40,1 3,908/- NET TAXABLE INCOME UNDER THE HEAD RS. 27,93,351/ - SET OFF OF UNABSORBED DEPRECIATION OF EARLIER YEARS RS.21,97,262/- ASESSED INCOME [LONG TERM CAPITAL GAIN] RS. 5,96,089/- ROUNDED OFF TO RS. 5,96,090/- ACCORDINGLY, A PENALTY PROCEEDING/S U/S 271(1)(C) O F THE ACT WAS INITIATED. THE A.O. HAS DETERMINED THE LTG AT RS. 40,13,908/- WHICH WAS NOT SHOWN BY IT IN ITS ORIGIN AL RETURN OF INCOME [ROI]. AS A RESULT, THE A.O. IMPO SED PENALTY OF RS. 9,00,720/- U/S 271(1)(C) ON ACCOUNT OF CONCEALMENT OF INCOME. 6. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ASSESSEE HAD SOLD THE LAND ON 10.4.2002 AND HAD REC EIVED AN ADVANCE TOWARDS THE SALE WHICH WAS DULY DECLARED IN THE BALANCE SHEET FOR F.Y. 2002-03. THE ACTUAL EXE CUTION OF SALE DEED TOOK PLACE IN F.Y. 2005-06 AND THE ASS ESSEE HAS DISCLOSED LTCG IN A.Y. 2006-07. IT WAS PLEADED THAT IT WAS ONLY A TECHNICAL MISTAKE WHICH WAS RECTIFIED AT THE 7 INSTANCE OF THE A.O. BY ACCEPTING THE LTCG IN A.Y. 2003- 04. IT WAS STATED THAT THERE WAS NO MALFIDE INTENT ION ON THE PART OF THE ASSESSEE TO EVADE ANY TAX. HOWEVER , THE LD. CIT(A) HAS CONFIRMED THIS PENALTY. 7. NOW THE ASSESSEE IS FURTHER AGGRIEVED AND HAS RA ISED THE FOLLOWING GROUNDS: 1. THE ORDER PASSED BY THE LD. CIT(A) IS ERRONEOUS AND BAD IN LAW IN SO FAR AS HE HAS UPHELD THE ORDER PASSED BY THE LD. ASSESSING AUTHORITY U/S 271(1)(C) WITHOUT BONAFIDE EXPLANATION OF THE ASSESSEE. 2. THE ORDER PASSED BY THE LD. CIT(A) BE SET ASIDE AND PENALTY LEVIED U/S 271(1)(C) BE SET ASIDE 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. TH E LD. A.R. HAS SUBMITTED VIDE HIS WRITTEN SUBMISSIONS AS UNDER: 1.1 IN THIS CASE, DURING THE PREVIOUS YEAR RELEVAN T TO THE ABOVE SAID ASSESSMENT YEAR, THE ASSESSEE HAD SOLD L AND AT RS. 8 47,20,9507- ON 10-4-2002. THE SALE CONSIDERATION IN RESPECT OF SUCH SALE WAS RECEIVED BY THE ASSESSEE MUCH PRIOR T O THE SAID ASSESSMENT YEAR BUT THE SALE DEED WAS EXECUTED ON 1 0-4-2002. HOWEVER, DUE TO OVERLOOK THE CAPITAL GAIN IN RESPEC T OF SUCH SALE COULD NOT BE INCLUDED IN THE TOTAL INCOME OF T HE RELEVANT ASSESSMENT YEAR. THE COMPANY DECLARED THE LONG-TERM CAPITAL GAIN OF RS. 32,27,962/- IN RESPECT OF SUCH SALE IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2006-07. WHILE COMPLETING THE ASSESSMENT FOR A.Y. 2006-07, THE THEN AO NOTICE D THAT THE LAND WAS ACTUALLY SOLD ON 10-4-2002 AND, THEREFORE, THE LONG TERM CAPITAL GAIN ON SUCH SALE OF LAND IS ATTRACTED IN A.Y. 2003- 04. AFTER FINDING THESES FACTS, THE THEN AO TAXED T HE LONG TERM CAPITAL GAIN SHOWN IN A.Y. 2006-07 ON PROTECTIVE BA SIS AND SIMULTANEOUSLY INITIATED PROCEEDINGS UNDER SECTION 147 IN RESPECT OF A.Y. 2003-04. THE AO COMPLETED THE ASSES SMENT FOR THE A.Y. 2003-04 BY INDUCING THE LONG TERM CAPITAL GAIN ON THE SALE OF LAND IN THE TOTAL INCOME OF THE A.Y. 20 03-04. THE LD, AO HAS, HOWEVER, IMPOSED PENALTY UNDER SECTION 271(L)(C) ON THE GROUND THAT THE ASSESSEE CONCEALED PARTICULA RS OF INCOME FOR THE ASSESSMENT YEAR 2003-04. IN THIS REGARD, IT HUMBLY SUBMITTED THAT THIS WAS O NLY A TECHNICAL MISTAKE BY WHICH LONG TERM CAPITAL GAIN P ERTAINING TO ASSESSMENT YEAR 2003-04 WAS DECLARED BY THE ASSE SSEE SUO MOTU IN THE ASSESSMENT YEAR 2006-07. SINCE THE MIST AKE WAS RECTIFIED BY THE ASSESSEE ITSELF, IT CANNOT BE SAID THE COMPANY 9 CONCEALED PARTICULARS OF INCOME FOR THE ASSESSMENT YEAR 2003- 04. 1.2 THE RETURN OF INCOME OF THE ASSESSEE FOR THE AS SESSMENT YEAR 2003-04 WAS REOPENED UNDER SECTION 148 AND THE RETURN WAS PROCESSED UNDER SECTION 143(2) OF THE ACT, THE LONG TERM CAPITAL GAIN FROM THE SALE OF LAND WAS DULY ADDED I N THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2003-04 AND TOTAL IN COME WAS DETERMINED ACCORDINGLY. 2. NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS 2.1 THERE WAS NO CONCEALMENT OR FURNISHING OF INACC URATE PARTICULARS WITH THE INTENTION TO EVADE TAX. THOUGH THE LAND WAS SOLD ON 10-4-2002, BUT THE ADVANCE TOWARDS THE SALE OF LAND WAS RECEIVED LONG BEFORE THE PREVIOUS YEAR 200 2-03. THE ADVANCE AGAINST SALE OF LAND WAS APPEARING IN THE B ALANCE SHEET OF THE COMPANY AS A LIABILITY. WHEN THE SALE DEED WAS EXECUTED ON 10-4-2002, THE ACCOUNTS DEPARTMENT OF T HE COMPANY WAS INTIMATED ABOUT THE SAME. HENCE, THE AD VANCE AGAINST THE SALE OF LAND WAS COULD NOT BE WRITTEN O FF FROM THE BOOKS OF ACCOUNTS FOR THE FINANCIAL YEAR 2002-0 3. HOWEVER, THE ACCOUNTS DEPARTMENT OF THE COMPANY CAME TO KNOW ABOUT THE EXECUTION OF SALE DEED IN RESPECT OF THE LAND O NLY DURING THE FINALIZATION OF THE BOOKS OF ACCOUNTS FOR THE P REVIOUS YEAR 2005-06. CONSEQUENTLY, THE HEAD 'ADVANCE AGAINST SA LE OF LAND' 10 WAS WRITTEN FROM THE BOOKS OF ACCOUNTS FOR THE PREV IOUS YEAR 2005-06 AND THE LONG-TERM CAPITAL GAIN ON SALE OF L AND WAS DECLARED IN THE ASSESSMENT YEAR 2006-07, HOWEVER DU RING THE SCRUTINY ASSESSMENT PROCEEDING FOR A.Y. 2006-07, TH E SAID DISCREPANCY WAS NOTICED BY THE ID. AO, 2.2 AFTER COMPLETION OF ASSESSMENT PROCEEDING FOR A SSESSMENT YEAR 2006-07, THE ASSESSMENT FOR THE ASSESSMENT YEA R 2003-04 WAS RE-OPENED AND THE RETURN WAS PROCESSED FOR ASSE SSMENT UNDER SECTION 143(2) OF THE INCOME-TAX, ACT, 1961. THE LONG- TERM CAPITAL GAIN FROM THE SALE OF LAND WAS (DULY A DDED IN THE TOTAL INCOME FOR THE ASSESSMENT YEAR 2003-04 AND TH E ASSESSMENT WAS COMPLETED ACCORDINGLY. THERE WAS TEC HNICAL MISTAKE WHICH WAS RECTIFIED BY THE ASSESSEE AT THE INSTANCE OF THE AO. IT IS NOT THE CASE THAT THE LONG TERM CAPIT AL GAIN ON THE SALE OF LAND WAS NOT SHOWN BY ASSESSEE FOR ANY ASSESSMENT YEAR AT ALL. THE ASSESSEE HAD SHOWN THE SAME IN THE ASSESSMENT YEAR 2006-07 INSTEAD OF ASSESSMENT YEAR 2003- 04, HENCE, THE LONG-TERM CAPITAL GAIN DID NOT ESCAP ED THE ASSESSMENT AT ALL. 3. NO MALA FIDE INTENTION TO EVADE TAX INVOLVED 3.1 THE ASSESSEE HAD NO MALA FIDE INTENTION TO EVAD E TAX. THERE WAS TECHNICAL MISTAKE WHICH WAS RECTIFIED BY THE ASSESSEE SOON AFTER HAVING POINTED OUT THE ID. AO. A BONA FIDE 11 MISTAKE WITHOUT INTENTION TO EVADE CANNOT LEAD INVO CATION OF PENALTY UNDER SECTION 271(L)(C) OF THE ACT. IT IS S ETTLED PROPOSITION UNDER THE LAW THAT BEFORE LEVYING CONCE ALMENT PENALTY, THE MALA FIDE INTENTION TO EVADE TAX IS RE QUIRED TO BE ESTABLISHED. 3.1 IN THIS REGARD, THE ASSESSEE RELIES ON THE APEX COURT JUDGMENT IN T. ASHOK PAI V, CIT (2007)16(1) ITCL 230(SC), WHEREIN IT HAS BEEN HELD THAT IN TERMS OF EXPLANATI ON 1 TO SECTION 271(L)(C) THE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE , IN THE EVENT, HE OFFERS ONE WAS FALSE. ASSESSEE MUST BE FO UND TO HAVE FAILED TO PROVE THAT SUCH EXPLANATION IS NOT O NLY NOT BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AN D MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. THUS, APAR T FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD BE F OUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WERE MATERIAL TO THE COMPUTATION OF HIS INCOME. 3.1 THE PRIMARY BURDEN OF FURNISHING INACCURATE PAR TICULARS OF INCOME IS ON REVENUE AND IT IS ONLY ON DISCHARGE OF PRIMARY BURDEN THAT SECONDARY BURDEN OF PROOF WOULD SHIFT O N THE ASSESSEE. BOTH CONCEALMENT AND FURNISHING INACCURAT E PARTICULARS REFER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION OF FACTS. BY REASON O F MERE 12 CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENA LTY UNDER SECTION 271(L)(C) AS THE CONCEALMENT PENALTY IS NOT AUTOMATIC. OUR SUBMISSION IN THIS REGARD IS FORTIFIED ALSO BY THE APEX COURT: JUDGMENT IN THE CASE OF DILIP N. SHROFF V, JT. CIT & ANR. (2007) 16 (I) ITCL 246 (SC). 3.2 THE LAW IS WELL-SETTLED THAT AN ORDER IMPOSING PENALTY IS RESULT OF A QUASI-CRIMINAL PROCEEDING AND PENALTY S HOULD NOT ORDINARILY BE IMPOSED UNLESS THE OBLIGED EITHER ACT ED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT, CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. NO PENALTY SHOULD BE IMPOSED IF THE ASSESSEE WAS ACTING IN HONEST AND GENUINE BELIEF IN A PARTICULAR MANNER. IN HINDUSTAN STEEL LTD. V. STATE OF ORISSA (1972) 83 ITR 26 (SC) THE APEX COURT HAS HELD THAT PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENAL TY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIG ATION IS MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCIS ED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECH NICAL OR VENIAL BREACH OF PROVISIONS OF THE ACT OF WHEN THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 13 4. MERE ADDITION IN/DISALLOWANCE FROM INCOME DOES NOT AMOUNT TO CONCEALMENT 4.1 IT IS SETTLED PROPOSITION UNDER THE INCOME-TAX LAW THAT PENALTY UNDER SECTION 271(1) (C) IS NOT IMPOSABLE WHEN CERTAIN AMOUNT IS ADDED OR WHEN SOME DISALLOWANCES ARE MADE IN THE TOTAL INCOME OF THE ASSESSEE. MOREOVER, IT IS NOT A CASE OF ADDITIO N IN OR DISALLOWANCE FROM TOTAL INCOME. IT IS ONLY A CASE W HERE A PARTICULAR INCOME PERTAINING TO ASSESSMENT YEAR 2003-04 WAS SHOWN FOR THE ASSESSMENT YEAR 2006-07. IN K.C. BUILDERS VS. ASSTT. CI1 (2004) 265 ITR 562 (SC), IT WAS HELD THAT MERE OMISSION FROM THE RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALMENT NOR DELIBERATE FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLE SS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUM STANCES FOUND FORM WHICH IT CAN BE GATHERED THAT THE OMISSI ON WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVO ID THE IMPOSITION OF TAX THEREON, IT HAS TO BE PROVED THAT THE ASSESSEE HAS CONSCIOUSLY. IN CIT V. DHARAMPAL PREMCHAND LTD. (DEL), THE DELHI HIGH COURT HAS OBSERVED THAT THE LAST PORTION OF THE SEC TION, I.E., 'THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TOTAL 14 INCOME BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED' WOULD INDICA TE THAT IT IS ONLY THE ADDITION OR DISALLOWANCE TO THE TOTAL I NCOME THAT WOULD REPRESENT THE INCOME FOR THE PURPOSES OF LEVY OF PENALTY WITHIN THE MEANING OF EXPLANATION 1 TO SECTION 271( L)(C). IN OTHER WORDS, IF NO ADDITION OR DISALLOWANCE IS MADE IN COMPUTING TOTAL INCOME, THEN THERE WILL NOT BE ANY INCOME WHICH CAN BE DEEMED AS INCOME IN RESPECT OF WHICH P ARTICULARS HAVE BEEN CONCEALED. CLAUSE (C) TO EXPLANATION 4 TO SECTION 271(L)(C) EXPLAINS THE AMOUNT OF TAX SOUGHT TO EVAD E. IT MEANS THE DIFFERENCE BETWEEN TAX ON THE TOTAL INCOME ASSE SSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE AT SUCH TOT AL INCOME IS REDUCED BY THE AMOUNT ADDED. SINCE IN THE PRESEN T CASE THE AO HAS NOT MADE ANY ADDITION IN THE RETURNED INCOME , QUESTION OF WORKING OUT ANY TAX SOUGHT TO BE EVADED WOULD NOT ARISE. IN THIS CASE THE ASSESSEE HAS BEEN ASSESSED AT RETU RNED INCOME. NO ADDITION OR DISALLOWANCE WAS MADE IN OR FROM THE INCOME RETURNED BY THE ASSESSEE EXCEPT THE LONG TERM CAPIT AL GAIN FROM THE SALE OF LAND. HENCE, IN VIEW OF THE RATIO OF TH E ABOVE SAID JUDGMENT, THERE CANNOT BE CONCEALMENT WITHIN THE ME ANING OF SECTION 271(L)(C) OF THE INCOME TAX, 1961. ALSO IN SUREN ARVINDBHAI V. ITO (2011) 38 (II) ITCL 587 (AHD 'A'- TRIB), IT HAS BEEN OBSERVED THAT MERE ERRONEOUS CLAIM IN 15 THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY, ESPE CIALLY WHEN TAX HAD BEEN DEDUCTED AT SOURCE FROM THE AMOUNT CLA IMED EXEMPT WHILE THERE IS NOTHING ON RECORD TO SHOW THA T THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT BONA FI DE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED IN ACCURATE. THE TRIBUNAL FURTHER OBSERVED THAT MERE ERRONEOUS C LAIM IN THE ABSENCE OF ANY OR FURNISHING OF INACCURATE PART ICULARS, IS NO GROUND FOR LEVYING PENALTY, ESPECIALLY WHEN TAX HAD BEEN DEDUCTED AT SOURCE FROM THE AMOUNT CLAIMED EXEMPT W HILE THERE IS NOTHING ON RECORD TO SHOW THAT THE EXPLANA TION OFFERED BY THE ASSESSEE WAS NOT BONA FIDE OR ANY MA TERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. IN RANGANATHA ENTERPRISES V. ASSTT. CIT (2011) 38 (II) ITCL 570 (BANK 'A'- TRIB), IT HAS BEEN OBSERVED THAT IT IS A SETTLED PROPOSITION OF LAW IN MATTERS OF PENALTY THAT DI SALLOWANCES OF EXPENDITURE FOR TECHNICAL REASONS AND T HE CONSEQUENT ADDITION BY ITSELF, COULD NOT MAKE OUT A CASE OF CO NCEALMENT AGAINST AN ASSESSEE TO JUSTIFY IMPOSITION OF PENALT Y UNDER SECTION 271(1)(C). SIMILARLY, IN ITO V. PARIKH INVESTMENT & DEVELOPMEN TS (P) LTD. 2011) 39 (II) ITCL 62 (MUM' C' TRIB), IT HAS B EEN HELD THAT IT IS NOT THE CASE OF THE REVENUE THAT ASSESSEE HAS NOT FILED 16 COMPLETE PARTICULARS OF HIS INCOME OR IT IS NOT THE CASE OF, BONA FIDE BELIEF OR THE EXPLANATION OFFERED BY ASSE SSEE WAS FOUND TO BE FALSE OR UNTRUE, MAKING A WRONG CLAIM I S NOT AT PER WITH CONCEALMENT OR GIVING OF INACCURATE INFOR MATION, WHICH MAY WARRANT LEVY OF PENALTY UNDER SECTI ON. IN CIT V. SSP LTD. (2010) 34(1) ITCL 549 (P&H-HC), IT HAS BEEN HELD THAT MERE ERRONEOUS CLAIMING ABSENCE OF A NY CONCEALMENT OR GIVING OF INACCURATE PARTICULARS IS NO GROUND FOR LEVYING PENALTY. IN THE CASE OF J.P. SHARMA AND SONS V. CIT 1985 (151) ITR 333, THE HON'BLE HIGH COURT OF RAJASTHAN HAVE LAID DOWN THAT: 'MERE NON DISCLOSURE OF TRUE PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS IS N OT SUFFICIENT TO ATTRACT THE PENALTY PROVISIONS CONTAI NED IN SECTION 271(1)(C) OF THE INCOME TAX ACT. IN ORDER T HAT PENALTY MAY BE IMPOSED, THERE SHOULD BE CONSCIOUS CONCEALMENT OF PARTICULARS OR INACCURATE PARTICULAR S MUST HAVE BEEN FURNISHED DELIBERATELY BY THE ASSESSEE. T HE ENTIRETY OF THE CIRCUMSTANCES MUST BE TAKEN INTO CONSIDERATION AND THE CONDUCT OF THE ASSESSEE FROM THE INCEPTION TO THE CONCLUSION OF THE ASSESSMENT PROCE EDING MUST BE VIEWED IN ORDER TO FIND OUT WHETHER A CRIMI NAL INTENTION OF CONSCIOUS CONCEALMENT OF TRUE PARTICUL ARS OF INCOME OR DELIBERATE FURNISHING OF INACCURATE PARTI CULARS BY THE ASSESSEE HAS BEEN ESTABLISHED. WHERE A REVIS ED 17 RETURN IS FILED, THE CRUX OF THE MATTER IS THAT IF AFTER EXAMINING THE RETURN ARID THE ACCOUNTS OF THE ASSES SEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE INCOM E TAX OFFICER DISCOVERS AN OMISSION OR WRONG STATEMENT MA DE BY THE ASSESSEE AND, THEREAFTER, A REVISED RETURN IS F ILED, THEN THE ASSESSEE CANNOT BE ABSOLVED OF THE LIABILI TY FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C), BUT IF THE ASSESSEE HIMSELF VOLUNTARILY FILES A REVISED RETURN BEFORE THE ORDER OR ASSESSMENT IS MADE, AFTER HE HAS HIMSE LF DISCOVERED AN OMISSION OR WRONG STATEMENT IN THE OR IGINAL RETURN, THEN IN SUCH A CASE, PENALTY FOR CONCEALMEN T OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME, AS CONTEMPLATED UNDER S ECTION 271(1)(C) CANNOT BE IMPOSED. THE SAME WAS FOLLOWED BY THE HON'BLE HIGH COURT OF GUJARAT IN CIT VS. MANIBH AI & BROS [2007] 294 ITR 501. 9. PER CONTRA, THE LD. D.R. HAS SUPPORTED THE ORDER S OF THE AUTHORITIES BELOW, 10. WE HAVE CIRCUMSPECTED THE RIVAL SUBMISSIONS. BE FORE WE ANALYZE AND CONSIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT, A S EXPLAINED BY CATENA OF JUDICIAL PRONOUNCEMENTS, PENALTY CAN BE L EVIED IN THESE 18 CASES OR NOT, WE WOULD LIKE TO DISCUSS IN NUT SHELL THE RELEVANT LEGAL POSITION REGARDING SCHEME OF IMPOSITION OF A PENALT Y U/S 271(1)(C) OF THE ACT. WE MAY DISCUSS UNDER WHAT CIRCUMSTANCE S AND IN WHAT CONDITIONS PENALTY CAN BE LEVIED UNDER THIS SECTION . THERE ARE NO TWO OPINIONS ABOUT THE SETTLED POSITION OF LAW THA T REGULAR ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHICH OPERATE IN DISTINCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFERENT PARAMETERS ARE A PPLICABLE FOR MAKING QUANTUM ADDITION AND FOR LEVYING PENALTY UND ER SECTION 271(1)(C) OF THE ACT. THERE IS NO DISPUTE REGARDING THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) PENALTY CAN BE LEV IED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICULARS OF INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS, ALBEIT, THEY REFER TO A DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGESTIO FALSY. BY THE MERE REASON OF SUCH CONCEALMENT OR OF FURNISHING OF INACCURATE PAR TICULARS ALONE, THE ASSESSEE DOES NOT, IPSO FACTO, BECOME LIABLE TO A PENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOMATIC. MEA NING THEREBY, ANY 19 ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEV Y OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF I NACCURATE PARTICULARS OF INCOME. NOT ONLY IS THE LEVY OF PENA LTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KE EPING THE RELEVANT FACTORS IN MIND AND THE APPROACH OF THE TA XMAN MUST BE FAIR AND OBJECTIVE. THIS SUBJECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY, AFTER REFERRING TO DECISIONS IN THE CASES OF DILIP N. SHROFF VS JCIT & ANOTHER, 291 ITR 519, UN ION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369, AS WELL AS UNION OF INDIA VS RAJASTHAN SPG. & WVG. MILLS [2009] 13 S CC 448, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETROPRODUCTS PVT. LTD, 322 ITR 158, HAS RECENTLY HELD AS UNDER: 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, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS' U SED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF T HE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE C ANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS . IN 20 ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS . THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETUR N FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT 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 FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. 11. REVERTING TO THE FACTS OF THIS CASE, WE HAVE FO UND THAT THE ASSESSEE HAD ITSELF DISCLOSED THE FACTS RE LATING TO CAPITAL GAINS OF RS. 32,27,962/- IN RESPECT OF SALE IN THE 21 ROI FILED FOR A.Y. 2006-07. THE A.O. NOTICED THAT LAND WAS SOLD ON 10.4.2002, THE A.O. HAS TAXED LTCG ON PROTE CTIVE BASIS FOR A.Y. 2006-07 AND SIMULTANEOUSLY REOPENED ASSESSMENT FOR A.Y. 2003-04. THUS, THIS IS PURELY A TECHNICAL MISTAKE AND IT IS ASSESSEE ONLY WHO HAS S UO MOTTO DISCLOSED THIS FACT OF SALE. THUS, IT CANNOT BE SAID TO BE A CASE OF CONCEALMENT OF PARTICULARS OF INCOM E IN A.Y. 2003-04. THE ASSESSEE HAD RECEIVED ADVANCE TO WARDS THE SALE OF THIS LAND AND WAS BEING SHOWN AS LIABIL ITY IN THE BALANCE SHEET. THESE FACTS HAVE NOT BEEN DENIE D BY THE REVENUE. THE ACCOUNTS DEPARTMENT OF THE ASSESS EE- COMPANY CAME TO KNOW ABOUT THE EXECUTION OF SALE-DE ED IN RESPECT OF THE LAND WHILE FINALIZING THE BOOKS O F ACCOUNT FOR THE F.Y. 2005-06. THE ADVANCE AGAINST SALE OF LAND WAS WRITTEN OFF FROM THE BOOKS OF ACCOUNT FOR TH PR EVIOUS YEAR 2005-06 AND THE LTCG IN THE RETURN FILED FOR A .Y. 2003-04 WHILE FILING ROI IN PURSUANCE OF NOTICE U/S 148 OF THE ACT. THIS AMOUNT HAD ALREADY BEEN DULY DISCLOS ED TO THE DEPARTMENT IN EARLIER YEARS. IT IS NOT THE CAS E OF THE REVENUE THAT LTCG WAS NOT DISCLOSED BY THE ASSESSEE IN 22 ANY OF THE A.YS AT ALL. THUS, IN VIEW OF THE AFOREM ENTIONED DISCUSSION AND AFTER RELYING ON THE DECISIONS REPRO DUCED IN THE EARLIER PART OF THIS ORDER, WE ARE OF THE CONSI DERED OPINION THAT THIS IS NOT A FIT CASE FOR LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT. THIS IS NOT A CASE OF CONCE ALMENT OF PARTICULARS OF INCOME OR OF FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE HAVE TO DE LETE THE IMPUGNED PENALTY AND ALLOW THE GROUNDS OF THIS APPEAL. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH DECEMBER, 2012. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH DECEMBER, 2012 VL/- COPY TO: THE APPELLANT THE RESPONDENT BY ORDER THE CIT 23 THE CIT(A) ASSISTANT REGISTRAR THE DR ITAT, JODHPUR