The ACIT, Vapi Circle, Vapi V. M/s. Super India Construction, Vapi

ITA 703/AHD/2009

• Counselvise Citation: 70320514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 04-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained expenditure; Wrong claim; Difference of opinion; Revised return
• Section: 133A; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI B. P. JAIN , AM) ITA NO. 703/AHD/2009 A. Y.: 2005-06 THE A. C. I. T., VAPI CIRCLE, ROOM NO.303, SHIVAM COMPLEX, GUNJAN CHAR RASTA, NH- 8, VAPI VS M/S. SUPER INDIA CONSTRUCTION, SAHARAM MARKET, 1 ST FLOOR, GIDC, VAPI, VAPI PA NO. AAYFS 4926 R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI B. L. YADAV, DR RESPONDENT BY SHRI M. K. PATEL, AR DATE OF HEARING: 21-12-2011 DATE OF PRONOUNCEMENT: 30-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 10 TH DECEMBER,2008 FOR ASSESSMENT YEAR 2005-06, CHALLENG ING THE CANCELLATION OF PENALTY U/S 271 (1) ( C ) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THIS CASE ARE THAT THE AS SESSMENT IN THIS CASE WAS COMPLETED BY MAKING AN ADDITION OF RS.1,0 4,03,421/- ON ACCOUNT OF UNDER VALUATION OF WIP AND UNEXPLAINED E XPENDITURE AND PENALTY U/S 271 (1) ( C ) OF THE IT ACT WAS INITIAT ED DURING THE COURSE OF ASSESSMENT. DURING THE COURSE OF PENALTY PROCEEDING S THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE PAINTING WORKS HAD BEEN CARRIED OUT ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 2 AT VARIOUS SITES AND IS AN INTEGRAL PART OF THE CON TRACT AND BILLS OF PAINTING WORKS HAD BEEN RECEIVED AT THE END OF THE YEAR AND HAVE BEEN ACCOUNTED ACCORDINGLY AS PER THE MERCANTILE SY STEM OF ACCOUNTING. IT WAS SUBMITTED BEFORE THE AO THAT THE COST OF SUCH PAINTING WORKS WAS ABOUT 2% OF THE TOTAL EXPENDITUR E AND CONSIDERING THE VOLUME OF WORKS EXECUTED THE AMOUNT IN QUESTION IS NOT MATERIAL. IT WAS ALSO SUBMITTED BEFORE THE AO THAT THE ASSESS EE HAS ACCEPTED THE MISTAKE OF THE FAILURE TO MAINTAIN CORRELATED R ECORDS AND ACCEPTED THE SAID ADDITION AND HAD ALREADY PAID TAX ON THE S AME. THUS ACCORDING TO THE ASSESSEE THE SAID AMOUNT WAS DISCL OSED AS AN INCOME DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE IT ACT CONDUCTED DURING THE YEAR. THE AO DID NOT ACCEP T THE SUBMISSION AND OBSERVED THAT THE ASSESSEE FAILED TO PROVE BOTH AT THE TIME OF ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDIN GS THAT THE PAINTING EXPENSES ARE INCURRED AND INCORPORATED IN THE BILLS RAISED BY IT. ACCORDING TO THE AO CONSIDERING THE QUANTUM OF PAINTS CONSUMED, THE ASSESSEE COULD HAVE EASILY ASCERTAINED THE AMOU NT OF PAINTING WORKS THAT HAS TO BE INCORPORATED IN THE BILLS ISSU ED TO THE CUSTOMERS. THE AO ACCORDINGLY MADE AN INFERENCE THAT THE EXPEN DITURE INCURRED IS NOT GENUINE. THEREFORE, THE AO CONCLUDED THAT TH E EXPLANATION GIVEN BY THE ASSESSEE IS NOT TRUE AND BONA FIDE AND IT HAS INFLATED THE EXPENSES WHICH LED TO FURNISHING OF INACCURATE PART ICULARS OF INCOME. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ORDER IMPOSING PENALTY WAS PASSED WITHOUT APPRECIATING FACTS OF TH E CASE AVAILABLE ON RECORD, SUBMISSIONS MADE BY THE ASSESSEE AT THE TIME OF SURVEY PROCEEDINGS, ASSESSMENT PROCEEDINGS AND PENALTY PRO CEEDINGS IN ITS CORRECT PERSPECTIVE AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 3 THE CASE. THE ASSESSEE SUBMITTED THAT THE PAINTING WORK WAS DONE BY THE SUB-CONTRACTOR M/S. OM PAINTING WORKS AND THE B ILL WAS RAISED AT THE END OF THE YEAR AND THAT THESE AMOUNTS WERE PAI D TO M/S. OM PAINTING WORKS SUBSEQUENTLY. THE ASSESSEE CONTENDED THAT THE GENUINENESS OF THE EXPENDITURE CANNOT BE DOUBTED. I T WAS FURTHER SUBMITTED BEFORE THE LEARNED CIT(A) THAT IN THE ASS ESSMENT ORDER THE AO DID NOT QUESTION THE GENUINENESS OF THE EXPENDIT URE BUT THE ADDITION WAS MADE ON THE FACT THAT THERE WAS NO SPE CIFIC MENTION OF THE WORD PAINTING WORK IN ANY OF THE BILLS RAISED BY THE ASSESSEE. ACCORDING TO THE ASSESSEE THE ADDITION HAS BEEN MAD E IN AN ARBITRARY MANNER WITHOUT MAKING PROPER ENQUIRY ABOUT DIFFEREN T FACTS OF THE CASE AND THE ASSESSEE DID NOT FILE FURTHER APPEAL A GAINST THE ASSESSMENT ORDER ONLY TO BUY PEACE OF MIND. BUT THI S DID NOT MEAN THAT IT HAS CONCEALED ANY INCOME OR HAS FURNISHED I NACCURATE PARTICULARS. THE ASSESSEE SUBMITTED COPY OF THE LED GER ACCOUNT OF M/S. OM PAINTING WORKS IN ITS BOOKS FOR THE SUBSEQU ENT PERIOD ALONG WITH COPY OF BANK STATEMENT REFLECTING THE PAYMENTS MADE AS AN EVIDENCE TO PROVE THAT THESE AMOUNTS WERE PAID SUBS EQUENTLY. 3. THE LEARNED CIT(A) ACCEPTED THE EXPLANATION OF T HE ASSESSEE THAT NO PENALTY IS LEVIABLE ON THIS ISSUE. HIS FIND INGS IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER: I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPEL LANT. ADMITTEDLY THE ADDITION HAS BEEN MADE BY THE AO ON THE FINDING THAT THE APPELLANT HAD NOT SHOWN THE DESCRI PTION OF PAINTING WORK IN ANY OF THE SUBSEQUENT BILLS RAISED BY IT AND THE AO HAS NOT DOUBTED THE INCURRING OF THE EXPENDITURE . THE AO HAS LEVIED THE PENALTY IN A SUMMARY MANNER WITHOUT GIVING ANY ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 4 SPECIFIC REASON AS TO HOW THE APPELLANT HAS CONCEAL ED ITS INCOME OR FURNISHED INACCURATE PARTICULARS. THE APP ELLANT SUBMITTED BEFORE ME COPY OF LEDGER ACCOUNT OF M/S. OM PAINTING WORKS IN THE BOOKS OF ACCOUNTS OF T HE APP ELLANT FOR THE SUBSEQUENT PERIODS ALONG WITH COPY OF BANK STAT EMENT EVIDENCING THAT THE AMOUNTS WERE PAID SUBSEQUENTLY. THUS THE APPELLANT HAS PROVED THAT THE EXPENDITURE WAS GENUI NELY INCURRED BY IT. THE DISCLOSURE WAS MADE DURING THE COURSE OF SURVEY AFTER THE CLOSURE OF THE ACCOUNTING PERIOD A ND HENCE THE APPELLANT HAS RIGHTLY POINTED OUT THAT THE ADDITION WAS ACCEPTED TO ADHERE TO THE DECLARATION AT THE TIME OF SURVEY. 3.1 FURTHER, THE FACTS AS REGARDS THE ADDITION ON A CCOUNT OF UNDER VALUATION OF WORKS IN PROGRESS (WIP) THE AO OBSERVE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT EXPENSES PERT AINING TO GHCL WERE DEBITED IN THE PROFIT AND LOSS ACCOUNT. HOWEVE R, NO RECEIPTS OR WIP WAS SHOWN IN THE RETURN OF INCOME FILED BY SUCH PARTY. THE DETAILS FILED IN RESPECT OF OPENING WIP DID NOT IND ICATE ANY AMOUNT PERTAINING TO GHCL JOBS AND THE ASSESSEE SUBMITTED BEFORE THE AO THAT NO BILLS WERE RAISED DURING THE YEAR. BY NOT S HOWING WORK IN PROGRESS OF GHCL WORKS IN THE CREDIT SIDE OF PROFIT AND LOSS ACCOUNT ACCORDING TO THE AO THE ASSESSEE HAS REDUCED THE PR OFIT BY RS.7,37,596/- AND THEREFORE, THE AMOUNT WAS ADDED T O THE INCOME OF THE ASSESSEE. THE AO ALSO OBSERVED FROM THE BILL RA ISED ON M/S. ALOK INDUSTRIES LTD. THAT THE ASSESSEE HAD NOT SHOWN COR RECT VALUE OF WIP. BY NOT SHOWING THE CORRECT VALUE OF WIP ACCORDING T O THE AO THE ASSESSEE HAS REDUCED THE TAXABLE PROFIT FROM ITS BU SINESS OPERATIONS AND HAS SUPPRESSED THE VALUE OF WIP PERTAINING TO C ONTRACT AT ALOKS SITE BY RS.75,09,125/-. THUS THE TOTAL AMOUNT OF RS .82,46,721/- (RS.75,09,125/- + RS.7,37,596/-) WAS ADDED TO THE I NCOME OF THE ASSESSEE FIRM. DURING THE COURSE OF PENALTY PROCEE DINGS THE ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 5 ASSESSEE SUBMITTED BEFORE THE AO THAT DUE TO ON GOI NG WORKS THE VALUE OF SAID WORKS WAS NOT CONSIDERED WHILE CALCUL ATING WORKS IN PROGRESS BY OVERSIGHT. IT WAS SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAVING NOT EMPLOYED ANY PROFESSIONAL ACCOU NTANT DUE TO PAUCITY IN THE AREA, THE WIP WAS ERRONEOUSLY CALCUL ATED WITHOUT ANY SUCH INTENTION OF CONCEALMENT OR FURNISHING INACCUR ATE PARTICULARS AND THE INCOME FOR THE SAME HAD ALREADY BEEN RECORDED B Y THE ASSESSEE IN THE SUBSEQUENT YEAR. THE ASSESSEE HAS ACCEPTED T HE ADDITION AND HAS ALREADY PAID TAX ON IT AND HAD VOLUNTARILY ADMI TTED THE SAID DISCREPANCY DURING THE SURVEY PROCEEDINGS U/S 133A OF THE IT ACT IN ANTICIPATION OF THE FINALIZATION OF THE ASSESSMENT PROCEEDINGS IN ORDER TO PREVENT PENALTY PROCEEDINGS. IT WAS ALSO SUBMITT ED BEFORE THE AO THAT ALL THE RECORDS/EVIDENCES/ DOCUMENTS WERE PLAC ED BEFORE THE THEN AO DURING ASSESSMENT PROCEEDINGS AND HENCE THE ASSESSEE COULD NOT BE HELD TO HAVE FURNISHED INACCURATE PART ICULARS. THE INCOME HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS P REPARED BEFORE THE DATE OF SURVEY. THE AO DID NOT ACCEPT THE SUBM ISSION PUT FORTH BY THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAD NOT REFLECTED THE CORRECT INCOME IN THE RETURN OF INCOME FOR ASSE SSMENT YEAR 2005- 06 AND THE FACTS AND SUBMISSIONS GIVEN BY THE ASSES SEE CANNOT BE TERMED AS BONA FIDE. THUS ACCORDING TO THE AO IT WA S DELIBERATE INTENTION OF THE ASSESSEE TO FURNISH INCORRECT PART ICULARS OF INCOME. IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT SURVEY TOOK PLACE ON 01-10-2007 AND QUANTUM ASSESSMENT ORDER WAS PASSED ON 28-12-2007 SHOWING THAT THE NON-INCLUSION OF THE IM PUGNED AMOUNTS IN THE RETURN OF INCOME WAS NOT INTENTIONAL BUT A G ENUINE BONA FIDE MISTAKE. WITHOUT PREJUDICE TO THE ABOVE, IT WAS SUB MITTED BY THE ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 6 ASSESSEE BEFORE THE LEARNED CIT(A) THAT (1) THE TO TAL AMOUNT RECEIVED FROM THE CUSTOMER WAS NOT UNDER DISPUTE, ( 2) BEFORE PROMULGATION OF AS-7 AS WELL THE CONTRACT RECEIPTS COULD HAVE BEEN ACCOUNTED FOR ON COMPLETED CONTRACT BASIS. THE TRUE PROFITS FROM A CONTRACT CAN BE ASCERTAINED ONLY ON COMPLETING THER EOF AND NOT AS AN INTERIM DATE AND (3) EVEN IF, THE SURVEY HAS NOT TAKEN PLACE THE TOTAL PROFITS ARISING TO THE ASSESSEE FROM THE CONT RACT WOULD HAVE BEEN THE SAME AND THE ASSESSEE WOULD HAVE PAID THE SAME QUANTUM OF TAXES. THE TAX SOUGHT TO BE EVADED BY THE ASSESS EE IS NIL. THUS, IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE AS SESSEE HAS NOT CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PA RTICULARS OF INCOME WHICH HAS RESULTED IN A LOSS OF REVENUE. THE ASSESSEE ALSO PLACED BEFORE THE LEARNED CIT(A) COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 AND POINTED OUT THAT THE AO HAS ACCEPTED OPENING WIP AS A FIGURE INCLUSIVE OF THE AFORESAID ADDITION. 5. THE LEARNED CIT(A) CONSIDERING THE TOTALITY OF T HE FACTS AND CIRCUMSTANCES DELETED THE PENALTY. HIS FINDINGS IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE PENALTY ORDER. IT IS A CASE OF A BUILDING CONTRACT WHERE CONSTRUCTION ACTIVITY IS DONE OVER A PERIOD OF TIME . THE CONTRACTORS WOULD IN TURN EMPLOY SUB CONTRACTORS WH O WOULD RAISE BILLS USUALLY ON COMPLETION OF THE WORK. IT I S ALSO A POINT TO NOTE THAT THE APPELLANT FIRM DID NOT HAVE ANY TECHN ICALLY OR PROFESSIONALLY QUALIFIED ACCOUNTING STAFF AND THE R ECORDS COULD NOT BE EXPECTED TO BE MAINTAINED IN AN ERROR FREE M ANNER. IT IS SEEN THAT ALTHOUGH THE WORK WAS CARRIED OUT BY THE APPELLANT IN FY 2004-05, IT WAS CERTIFIED IN FY 2005-06 ONLY BUT THE EXPENSES INCURRED IN THIS REGARD WERE BOOKED IN FY 2004-05 ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 7 BUT IT IS ALSO A FACT THAT THE ENTIRE AMOUNT HAS BE EN INCLUDED IN THE INCOME FOR FY 2005-06 BUT NO EXPENDITURE HAS BE EN BOOKED AGAINST THIS INCOME IN THE SAID YEAR. IT IS APPARENTLY ONLY AN ACCOUNTING ERROR WHICH WAS NOT DETECTED EVE N BY THE AUDITORS IN THEIR STATUTORY AUDIT U/S 44AB OF THE A CT. THEREFORE, IT IS A CASE OF TECHNICAL ERROR AND TO ME IT APPEARS T HAT THE APPELLANT DID NOT HAVE ANY DELIBERATE INTENTION TO FURNISH INACCURATE PARTICULARS OF INCOME SINCE THE ENTIRE A MOUNT HAS BEEN OFFERED FOR TAXATION IN THE NEXT YEAR. FURTHER , IN RESPECT OF UNEXPLAINED EXPENDITURE THE ADDITION WAS MADE AND P ENALTY LEVIED ONLY BECAUSE THE APPELLANT COULD NOT CO-RELA TE THE BILLS RAISED BY IT FOR THE CONTRACT WORK DONE FOR THE THI RD PARTIES WITH THE ACTUAL PAINTING WORK DONE. IT IS A COMMON PRACT ICE NOT TO MENTION THE COST OF PAINTING WORK SEPARATELY IN THE BILLS RAISED FOR THE TOTAL WORK DONE BUT IT IS A FACT THAT THE A PPELLANT INCURRED EXPENDITURE ON THIS ACCOUNT AND THE PAYMENTS TO M/S . OM PAINTING WORKS WAS MADE BY REGULAR BANKING CHANNELS AS IT APPARENT FROM THE COPY OF THE LEDGER ACCOUNT OF THE SAID PARTY. IT IS ALSO SEEN THAT THE AO HAS NOT COMMENTED ON TH E PAYMENT PART BUT HAS ONLY MADE THE ADDITION AND IMPOSED A P ENALTY FOR NOT MENTIONING PAINTING WORK IN THE BILLS RAISED BY THE APPELLANT FOR THE CONTRACT WORK. SINCE THERE IS NO DISPUTE RE GARDING THE PAYMENT MADE TO THE SUB CONTRACTOR, WHILE THE ADDIT ION WAS NOT CONTESTED BY THE APPELLANT, IT IS NOT A CASE WHERE THE EXPLANATION OF THE APPELLANT WAS FOUND TO BE FALSE AND THEREFORE EXPLANATION-1 TO SECTION 271 (1) ( C ) OF THE ACT I S NOT ATTRACTED. THE PENALTY IMPOSED IN THIS CASE IS HEREBY CANCELLE D. IN THE RESULT THE PENALTY LEVIED ON THIS ADDITION IS DIREC TED TO BE DELETED. IN THE RESULT THE APPEAL IS ALLOWED. 6. THE LEARNED DR RELIED UPON THE ORDER OF THE AO L EVYING THE PENALTY AGAINST THE ASSESSEE AND SUBMITTED THAT THE ACCOUNTS OF THE ASSESSEE ARE AUDITED, THEREFORE, THERE WAS NO REASO N TO SHOW THAT THE ASSESSEE WAS NOT HAVING ANY PROFESSIONALLY QUAL IFIED PERSON TO LOOK AFTER ACCOUNTS OF THE ASSESSEE. NO EVIDENCES H AVE BEEN FILED TO SHOW PAINTING WORK IS DONE FOR THE ASSESSEE. HE SUB MITTED THAT BOTH ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 8 THE ADDITIONS HAVE BEEN ACCEPTED BY THE ASSESSEE BE CAUSE NO FURTHER APPEAL HAS BEEN FILED CHALLENGING THE ADDIT IONS. THEREFORE, IT IS A FIT CASE OF FILING INACCURATE PARTICULARS OR C ONCEALMENT OF INCOME. THEREFORE, PENALTY WAS RIGHTLY LEVIED BY THE AO AND THE LEARNED CIT(A) SHOULD NOT HAVE CANCELLED THE PENALTY IN THE MATTER. 7. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT ADDITION ON ACCOUNT OF UNEXPLAINED E XPENDITURE WAS MADE MERELY BECAUSE THE WORD PAINTING WORK WAS NO T MENTIONED IN THE BILLS. HOWEVER, THE BILLS RAISED BY THE SUB-CON TRACTOR WERE SUBJECTED TO PAYMENTS WHICH WERE PROPERLY ACCOUNTED IN THE LEDGER ACCOUNT OF THE ASSESSEE AND PAYMENTS HAVE BEEN MADE IN THE SUBSEQUENT ASSESSMENT YEAR. HE HAS REFERRED TO THE LEDGER ACCOUNTS OF THE SUB-CONTRACTOR COPIES OF WHICH IS FILED AT P AGES 12, 13 AND 14 OF THE PAPER BOOK AND SUBMITTED THAT GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DOUBTED BY THE AO AND ALL THE PAYMENTS WERE MADE TO THE SUB-CONTRACTORS THOROUGH ACCOUNT PAYEE CHEQUES SUBSEQUENTLY. WITH REGARD TO THE ADDITION ON ACCOUNT OF WORK IN P ROGRESS, HE HAS SUBMITTED THAT THE ADDITION WAS MADE TO THE OPENING STOCK IN THE NEXT YEAR AND ALL THE BILLS WERE APPROVED IN THE NEXT YE AR; THEREFORE, THERE WAS NO LOSS TO THE REVENUE. IT WAS AN ISSUE OF TAXA BILITY OF INCOME WHETHER IN THE ASSESSMENT YEAR UNDER APPEAL OR IN T HE SUBSEQUENT YEAR. THEREFORE, ON MERE DIFFERENCE OF OPINION PENA LTY WAS RIGHTLY CANCELLED BY THE LEARNED CIT(A). HE HAS REFERRED TO PB-41 WHICH IS ASSESSMENT ORDER OF SUBSEQUENT ASSESSMENT YEAR 2006 -07 IN WHICH BECAUSE OF THE ADDITION MADE IN THE ASSESSMENT YEAR UNDER APPEAL ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 9 ON ACCOUNT OF WORK IN PROGRESS; THE ASSESSEE FILED REVISED RETURN WHICH HAS BEEN ACCEPTED BY THE AO. HE HAS SUBMITTED THAT SINCE THE BILLS WERE SETTLED IN THE NEXT YEAR AND TDS WERE AL SO DEDUCTED IN THE NEXT YEAR, THEREFORE, DUE TO THIS REASON THERE WAS DIFFERENCE IN THE INCOME OFFERED FOR TAXATION AND ON REALIZING THE MI STAKE IN THE ACCOUNT, THE ASSESSEE ACCEPTED BOTH THE ADDITIONS A ND NO APPEAL HAS BEEN FILED. HE HAS, THEREFORE, SUBMITTED THAT I T IS NOT A FIT CASE OF LEVY OF PENALTY FOR FILING INACCURATE PARTICULARS O F INCOME OR CONCEALMENT OF INCOME. THE LEARNED CIT(A) ON PROPE R APPRECIATION OF THE FACTS AND MATERIALS ON RECORD RIGHTLY CANCEL LED THE PENALTY IN THE MATTER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. THE ASSESSEE EXP LAINED THAT PAINTING WORK WAS DONE BY THE SUB-CONTRACTOR M/S. O M PAINTING WORKS AND ALL THE BILLS WERE RAISED AT THE END OF T HE YEAR WHICH WAS PAID SUBSEQUENTLY. THE GENUINENESS OF THE EXPENDITU RE WAS NOT DOUBTED BY THE AO. THE AO DOUBTED THE PAYMENTS BECA USE THERE WAS NO SPECIFIC MENTION OF THE WORD PAINTING WORK IN THE BILLS RAISED BY THE ASSESSEE. SUCH A REASON WAS NOT SUFFICIENT T O DISBELIEVE THE CLAIM OF THE ASSESSEE. FURTHER, THE ASSESSEE CLAIME D THAT COST OF SUCH PAINTING WORK WAS ABOUT 2% AND COPIES OF THE L EDGER ACCOUNTS OF THE PARTIES WERE FILED IN THE PAPER BOOK REFERRE D TO ABOVE WHICH CLEARLY SUPPORT THE CONTENTION OF THE ASSESSEE THAT PAYMENTS WERE MADE TO THE SUB-CONTRACTOR FOR PAINTING WORK. THE A O WITHOUT APPRECIATING THE FACTS AND WITHOUT POINTING OUT AS TO HOW BY NOT MENTIONING THE PAINTING WORKS IN THE BILLS WOULD PR OVE THAT THE ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 10 ASSESSEE CONCEALED PARTICULARS OF INCOME OR FILED I NACCURATE PARTICULARS OF INCOME. THE LEARNED CIT(A) ON PROPE R APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RIGHTLY HELD THAT NO CASE OF LEVY OF PENALTY IS MADE OUT ON SUCH ADDITION. WITH REGARD T O THE ADDITION MADE ON ACCOUNT OF UNDER VALUATION OF WORK IN PROGR ESS, THE ASSESSEE CLAIMED THAT THE AO HAS NOT CONSIDERED THE ONGOING WORK. IT WAS EXPLAINED THAT THE BILLS WERE SETTLED IN THE NEXT YEAR, THEREFORE, DUE TO MISTAKE THERE WAS A DISCREPANCY. FURTHER, TH E ADDITION MADE IN THE ASSESSMENT YEAR UNDER APPEAL WAS TAKEN AS OP ENING STOCK IN THE NEXT ASSESSMENT YEAR AND THE ASSESSEE FILED REV ISED RETURN IN THE NEXT YEAR REDUCING THE INCOME IN THE SUBSEQUENT YEA R. IN THAT PROCESS REVENUE IS NOT AT LOSS AS FAR AS TAXABILITY OF INCOME IS CONCERN. SINCE, SIMILAR ADDITION IS CONSIDERED IN T HE SUBSEQUENT YEAR, THEREFORE, IT MAY NOT BE A CASE OF FILING INACCURAT E PARTICULARS OR CONCEALMENT OF ANY PARTICULAR. THE LEARNED CIT(A) O N PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD RI GHTLY TREATED THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY. THE EXPLANATI ON OF THE ASSESSEE FINDS SUPPORT FROM THE DETAILS SUBMITTED BEFORE THE AUTHORITIES BELOW BECAUSE THE BILLS WERE APPROVED IN THE NEXT YEAR AN D IN THE NEXT YEAR TDS WAS ALSO DEDUCTED. THE ASSESSEE ON REALIZING TH E MISTAKE DID NOT PREFER ANY APPEAL AND SUBSEQUENTLY EFFECT HAS B EEN GIVEN IN THE NEXT ASSESSMENT YEAR. 9. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) HELD THAT A GLANCE AT THE PROVISIONS OF SECTION 271(1) (C ) OF THE INCOME-TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE COVERED BY IT, THERE HA S TO BE ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 11 CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASS ESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1) ( C ) WOULD EMBRACE THE DETA ILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAI M TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RET URN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TH E TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAI LS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENAL TY UNDER SECTION 271(1) ( C ). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. DECISION OF THE GUJARAT HIGH COURT AFF IRMED. ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 12 10. THE HONBLE SUPREME COURT IN THE CASE OF M/S. R AJASTHAN SPINNING & WEAVING MILLS 2009 TIOL 63 SC HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMATIC. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SAHABAD CO-OP. SUGAR MI LLS LTD. 322 ITR 73 (P&H) HELD THAT MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION, WH ICH MAY CALL FOR LEVY OF PENALTY U/S 271 (1) ( C ) OF THE ACT. THE H ONBLE PUNJAB & HARYANA HIGH COURT AGAIN IN THE CASE OF CIT VS SIDH ARTHA ENTERPRISES 322 ITR 80 (P & H) HELD THAT LOSS SUFFE RED ON SALE OF MACHINERY WRONGLY TAKEN AGAINST PROFIT OF BUSINESS. ASSESSEE ON REALIZATION MISTAKE COMMITTED BY THE COUNSEL ACCEPT ED THE DECISION OF THE AO. NO DELIBERATE DEFAULT. APPELLATE AUTHORI TIES JUSTIFIED IN DELETING THE PENALTY U/S 271 (1) ( C ) OF THE IT AC T. 11. CONSIDERING THE FACTS OF THE CASE AS NOTED ABOV E, IN THE LIGHT OF THE ABOVE DECISIONS AND IN THE LIGHT OF THE FINDING S OF THE LEARNED CIT(A), WE ARE OF THE VIEW THAT IT IS NOT A FIT CAS E FOR IMPOSITION OF PENALTY. THE LEARNED CIT(A) HAS ON PROPER APPRECIAT ION OF FACTS AND MATERIAL ON RECORD RIGHTLY CANCELLED THE PENALTY U/ S 271 (1) ( C ) OF THE IT ACT. WE ACCORDINGLY CONFIRM HIS FINDINGS AND DIS MISS THE APPEAL OF THE REVENUE. ITA NO.703/AHD/2009 ACIT, VAPI CIRCLE, VAPI VS M/S. SUPER INDIA CONSTRU CTION 13 12. AS A RESULT, THE DEPARTMENTAL APPEAL IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B. P. JAIN) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD