ACIT 20(3), MUMBAI V. F-5 SHLOK MEDIA SERVICES, MUMBAI

ITA 7037/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4242 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 15-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKUNDRAJ M CHATE
• Keywords: Depreciation; Business expenditure; Difference of opinion; Revenue expenditure
• Section: 143(3); 37(1); 27; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI BEFORE SHRI JASON P.BOAZ, AM AND SHRI SANDEEP GOSAI N, JM ./ I.T.A. NO. 7037/MUM/2013 ( / ASSESSMENT YEAR: 2007-08) ACIT-20(3), ROOM NO.506, 5 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI-400 012. / VS. M/S. F-5 SHLOK MEDIA SERVICES 401, 4 TH FLOOR, INDUS HOUSE, NEAR MONGINIS FACTORY, PLOT NO.53, NEW LINK ROAD, ANDHERI (WEST), MUMBAI-400 053. ./ ./PAN/GIR NO. AABFF 5820G ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI MUKUNDRAJ M. CHATE / RESPONDENT BY : NONE / DATE OF HEARING : 16/03/2016 !'# / DATE OF PRONOUNCEMENT : 06/04/2016 $% / O R D E R PER SANDEEP GOSAIN, J. M.: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)- 31, DATED 05. 09.2013 FOR A.Y. 2007-08 WHEREBY THE CIT(A) HAS PARTLY ALLOWED THE APPEAL FI LED BY THE ASSESSEE AND DELETED PART OF THE PENALTY. 2 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES THE GROUNDS RAISED BY REVENUE BEFORE US ARE AS UNDE R: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW A ND IN THE CIRCUMSTANCES OF THE CASE IN NOT CONSIDERING DECISI ON OF DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION (P) LTD. T O LEVY PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(APPEA LS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY. 5. AT THE VERY OUTSET, IT IS NOTICED THAT EVEN IN S PITE OF SEVERAL NOTICES, NONE HAS APPEARED ON BEHALF OF ASSESSEE AND ON THE PERUSAL O F ORDER SHEET WE HAVE NOTICED THAT NOBODY WAS APPEARING ON BEHALF OF ASSESSEE FOR THE LAST SEVERAL DATES. ALTHOUGH THE NOTICES WERE ALSO SERVED UPON THE ASSE SSEE FOR APPEARING BEFORE US, BUT EVEN THEN THE RESPONDENT HAS NOT PREFERRED TO A PPEAR AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED TODAY. ON THE OTHER HAND LD. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECI DED TO PROCEED WITH THE HEARING OF THE CASE EX-PARTE WITH THE ASSISTANCE OF THE LD. DR AND THE MATERIAL ON RECORD. 3 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM ENGAGED IN THE BUSINESS OF ADVERTISING, FILED ITS RETURN OF INCOME FROM A.Y . 2007-08 DATED 29.10.2007 DECLARING TOTAL INCOME OF RS.23,19,030/-. THE RETUR N WAS PROCESSED AND SELECTED FOR SCRUTINY AND ULTIMATELY AO PASSED THE ORDER OF ASSESSMENT THEREBY MAKING ADDITIONS ON SEVERAL GROUNDS. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE FILED APPEAL BEFORE CIT(A) AND THE CIT(A) VIDE ITS ORDER DATED 05.09.2013 DELETED THE DISALLOWANCE MADE U/S 40(A)(IA) AND CONFIRMED THE DISALLOWANCE ON ACCOUNT OF COMMISSION PAYMENT. THE CIT(A) FURTHER HELD THAT EXPENDITURE ON SOFTWARE IS CAPITAL IN NATURE AND DIRECTED THE AO TO ALLOW DEPRECIATION. AFTER PASSING OF THE ORDERS BY CIT(A) IN THE QUANTUM PROCEEDING, AO INITIATED THE PENALTY PROCEE DINGS AND IN THIS RESPECT STATUTORY NOTICES WERE SERVED UPON ASSESSEE AND ULT IMATELY AO AFTER CONSIDERING THE CASE LEVIED PENALTY OF RS.25,86,500/- COMPUTED ON THE CUMULATIVE ADDITIONS OF RS.86,21,669/-. AGGRIEVED BY THE ORDER OF PENALTY, ASSESSEE FILED A PPEAL BEFORE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE CASE OF THE ASSESS EE UPHELD THE LEVY OF PENALTY ON THE AMOUNT OF COMMISSION PAYMENT DISALLOWED. FURTHE R THE CIT(A) DELETED THE 4 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES PENALTY ON THE DISALLOWANCE OF SOFTWARE EXPENSES AN D IN THIS WAY LD. CIT(A) VIDE ITS ORDER DATED 05.09.2013 PARTLY ALLOWED THE APPEA L FILED BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE FILED THE PRESENT APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREIN ABOVE. GROUND NO. 1&2 SINCE BOTH THE GROUNDS RAISED BY THE ASSESSEE ARE I NTER-CONNECTED AND INTER- RELATED. THEREFORE, WE THOUGHT IT FIT TO DISPOSE OF F THE SAME THROUGH THE PRESENT CONSOLIDATED ORDER. 6. LD. DR REPRESENTING THE REVENUE RELIED UPON THE ORDERS PASSED BY AO REGARDING LEVY OF PENALTY. IT WAS SUBMITTED BY LD. DR THAT THE CIT(A) HAS ERRED IN NOT CONSIDERING THE DECISION OF DELHI HIGH COURT IN CASE OF CIT VS. ZOOM COMMUNICATION (P) LTD. TO LEVY PENALTY U/S 271(1) (C) OF INCOME TAX ACT. 7. BEFORE WE COME ON TO THE MERITS OF THE CASE IT I S NECESSARY TO ANALYSE THE ORDERS PASSED BY THE CIT(A) AND THE OPERATIVE PORTI ON OF CIT(A) ARE REPRODUCED BELOW: 5 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES 4. IN APPEAL IT HAS BEEN SUBMITTED AS FOLLOWS: 'DURING A. Y. 2007-08 THE ASSESSEE DECLARED INCOME OF RS. 23,90,030/- THE ASSESSING OFFICER ASSESSED A INCOME OF RS. 6,70,78, 150/- ON PASSING ORDER U/S. 143(3) OF THE INCOME TAX ACT 1961 (ITA). THE A DDITION TO THE RETURNED INCOME WAS ON THE FOLLOWING 3 GROUNDS:- U/S. 40(A) (IA) RS. 5,60,38,120/- 2. COMMISSION DISALLOWED RS. 31,21,669/- 3. SOFTWARE EXPENSES CONSIDERED AS CAPITAL RS. 55, 00,000/- AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE APPELLANT FILED AN APPEAL TO THE CIT(A) WHO DELETED THE ADDITION U/S. 40(A)(I A), ALLOWED DEPRECIATION ON SOFTWARE EXPENSES AND CONFIRMED THE ADDITION ON ACCOUNT OF COMMISSION PAID. THE ASSESSING OFFICER PASSED AN ORDER U/S. 27 1 (L)(C) OF THE ITA CONFIRMING PENALTY ON THE DISALLOWANCE OF COMMISSIO N PAID AND SOFTWARE EXPENSES. THE APPELLANT HAS FILED AN APPEAL AGAINST THIS PENALTY ORDER. OUR SUBMISSIONS IN THIS RESPECT ARE AS FOLLOWS:- 1. COMMISSION DISALLOWED OF RS. 31,21,669/- THE APPELLANT IN ITS COURSE OF BUSINESS CONDUCTED D URING A. Y. 2007-08 HAD PROCURED AN ORDER FOR ADVERTISING FROM M/S. DIAGEO INDIA. MR. UMASHANKAR PRASAD PROPRIETOR OF M /S. CALYX ENABLED ASSESSEE TO PROCURE THE CONTRACT AND AS PER AGREED TERMS WITH HIM THE A PPELLANT PAID A COMMISSION OF RS. 31,21,669/- AFTER WITHHOLDING TD S U/S. 194H OF THE ITA AND CLAIMED THE SAME AS BUSINESS EXPENDITURE. DURIN G THE COURSE OF ASSESSMENT AND THE APPELLATE PROCEEDING ENTIRE COMM UNICATION WITH M/S. CALYX WAS BROUGHT ON RECORD ALONG WITH THE BANK STA TEMENTS OF MR. UMASHANKAR PRASAD, HIS RETURN OF INCOME, LEDGER ACC OUNT COPIES OF THE AFORESAID IN THE BOOKS OF THE APPELLANT. THE ASSESS ING OFFICER SUMMONED MR. UMASHANKAR PRASAD AND TOOK HIS STATEMENT WHEREI N HE WAS ASKED VARIOUS QUESTIONS AS SET OUT IN THE ASSESSMENT ORDE R. YOUR HONOURS WILL APPRECIATE THAT NO QUESTION REGARDING THE COMMISSIO N RECEIVED FROM THE APPELLANT WAS PUT TO MR. UMASHANKAR PRASAD. HE WAS POSED ALL GENERAL QUESTIONS TO WHICH HE FURNISHED REPLIES. THE ASSESS ING OFFICER CONCLUDED THAT SINCE THE APPELLANT COULD NOT SHOW THE NEXUS B ETWEEN THE COMMISSION PAYMENT MADE AND THE BUSINESS THE SAID EXPENDITURE WAS NOT MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF APPELLANTS BUSI NESS. THE CIT (A) AFTER GOING THROUGH THE SUBMISSION AND CASE LAWS REFERRED TO, BY THE ASSESSING OFFICER CAME TO A CONCLUSION THAT IT WAS NOT CLEAR WHETHER MR. UMASHANKAR PRASAD HAD DISCLOSED THE RECEIPT OF COMMISSION IN H IS RETURN OF INCOME. 6 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES ALSO HE HELD THAT THERE WAS NO EVIDENCE BROUGHT ON RECORDS BY THE APPELLANT TO ESTABLISH THAT ANY SERVICES WERE RENDE RED FOR WHICH COMMISSION WAS PAID. IT IS ALSO OBSERVED BY HIM THA T M/S. DIAGEO INDIA PVT. LTD. DID NOT KNOW MR. UMASHANKAR PRASAD. THERE AFTER RELYING ON THE DECISION OF BOMBAY HIGH COURT IN CASE OF CHEMAUX PR IVATE LTD. VS. CIT (109 ITR 705), CALCUTTA HIGH COURT IN CASE OF VISHN U AGENCIES PVT. LTD. VS. CIT (117 ITR 754), KARNATAKA HIGH COURT IN CASE OF DCIT VS. MCDOWELL (291 ITR 107), APEX COURT IN CASE OF SWADESHI COTTO N MILLS (63 ITR 57) FOLLOWED IN LACHMINARAYAN MADAN VS. CIT (86 ITR 439 ) HE CONFIRMED THE DISALLOWANCE STATING THAT APPELLANT HAD FAILED TO S UBSTANTIATE THE COMMISSION PAYMENT. AT THE OUTSET WE DRAW YOUR KIND ATTENTION TO THE FA CT THAT THE ASSESSING OFFICER ERRED IN NOT UNDERSTANDING THE BASIC DETAIL S LIKE THE FACT THAT MR. AJAY MODGIL, PARTNER IN THE APPELLANT FIRM HAD KNOW N OF MR. UMESHENKER PRASAD PROPRIETOR OF M/S. CALYX WHO IN TURN KNEW M/ S. DIAGEO FROM WHOM THE APPELLANT HAD PROCURED A CONTRACT FOR ADVERTISI NG DURING THE FINANCIAL YEAR RELEVANT TO A. Y. 2007-08. THE COMMISSION DUE TO MR. UMASHANKAR PRASAD @ 4% ON THE TOTAL VALUE OF RS. 6,64,50,432/- (CONTRACT FROM DIAGEO) AMOUNTING TO RS. 26,58,017/- ALONGWITH REIM BURSEMENT OF EXPENSES OF RS. 1,23,228/- AND SERVICE TAX OF RS. 3 ,40,424/-, AGGREGATING TO RS. 31,21,669/- WERE PAYABLE AS AGREED UPON. THE AS SESSING OFFICER INSTEAD UNDERSTOOD THAT MR. AJAY WAS PARTNER OF CALYX. FURT HER AS M/S. DIAGEO SUBMITTED THAT THEY DID KNOW OF MR. URHASHANKAR PRA SAD, THE ASSESSING OFFICER HELD THE COMMISSION AS NOT INCURRED FOR BUS INESS PURPOSES. THE CIT(A) HAS PLACED RELIANCE ON VENOUS DECISIONS AS D ISCUSSED BELOW :- BOMBAY HIGH COURT IN CASE OF CHEMAUX PRIVATE LTD. V S. CIT (109 ITR 705) THE CIT(A) HAS REPRODUCED THE ORDER OF THE BOMBAY H IGH COURT IN HIS ORDER. THE BASIC FACTS IN THAT CASE WERE THAT SHRI A. M. KHOPKAR THE EMPLOYEE OF THE ASSESSEE COMPANY WAS AGREED BY THE CHAIRMAN TO RECEIVED COMMISSION OF SALE @ 2.5%. IT WAS CLAIMED BY MR. KH OPKAR THE COMMISSION WAS SPENT FOR PROCURING BUSINESS FOR WHI CH THERE WAS NO PROOF OF EXPENDITURE. THE AAC ACCORDINGLY DISALLOWED THE COMMISSION SINCE THE EXPENDITURE COULD NOT BE SUBSTANTIATED. WE MAY MENT ION HERE THAT IN THE CASE OF THE APPELLANT IS DISTINGUISHABLE ON FACTS S INCE IN THE PRESENT CASE IT IS NOT THE CLAIM OF THE APPELLANT THAT THE RECIPIEN T OF THE COMMISSION HAS INCURRED EXPENDITURE TO PROCURE BUSINESS. IN OTHER WORDS M/S. CALYX CHARGED THE APPELLANT COMMISSION @ 4% OF THE CONTRA CT AS THEIR SERVICE CHARGES AND HAS NOT CLAIMED THAT THEY HAVE IN TURN EXPENDED THIS AMOUNT. THEY HAVE REPORTED THIS AS A PART OF THEIR TURNOVER . 7 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES CALCUTTA HIGH COURT IN CASE OF VISHNU AGENCIES PVT. LTD. VS; CIT (117 ITR 754) IN THIS CASE THE CIT(A) HAS RELIED UPON ONLY ONE OB SERVATION CONTAINED IN PARA 26 OF THE ORDER GIVEN IN CASE OF MR. MANGILAL SETHIA WHICH IS REPRODUCED BELOW:- 26. ON A CAREFUL CONSIDERATION OF THE FACTS AS FOUN D, THOSE ON RECORD AND THE CONCLUSIONS DRAWN BY THE AUTHORITIES BELOW THER EON, IT APPEARS TO US THAT SO FAR AS MANGILAL SETHIA IS CONCERNED THE ASS ESSEE COULD NOT ESTABLISH THAT HE RENDERED ANY SERVICE TO THE ASSESSEE AS A S OLE SELLING AGENT. IT IS NOT IN EVIDENCE THAT MANGILAL DEPOSITED THE STIPULATED SUM OF RS. 10,000 TO THE ASSESSEE IN TERMS OF THE AGREEMENT OR THAT HE SECUR ED ANY ORDER FOR THE ASSESSEE FOR SALE OF THE STIPULATED PRODUCTS. IT WA S NOT ESTABLISHED THAT HE INCURRED ANY EXPENSES ON BEHALF OF THE ASSESSEE ON ACCOUNT OF ESTABLISHMENT OR PUBLICITY OR GODOWN RENT OR SIMILA R ITEMS IN CONNECTION WITH HIS AGENCY. BEFORE THE LTG, MANGILAL STATED TH AT THE BUSINESS HAS BEEN LOOKED AFTER BY HIS BROTHER, BHIKAMCHAND, AND THAT HE HIMSELF COULD NOT STATE ANYTHING AS TO THE SERVICES RENDERED IN CONNE CTION WITH THE AGENCY. THE ITO, THE AAC AND THE TRIBUNAL ALL HAVE COME TO THE CONCLUSION THAT NO SERVICES HAD BEEN SHOWN TO HAVE BEEN TENDERED BY TH E SOLE SELLING AGENT. IT DOES NOT APPEAR TO US THAT ANY RELEVANT EVIDENCE IN THIS CONNECTION WAS OMITTED TO BE CONSIDERED BY THE TRIBUNAL OR THAT IR RELEVANT MATERIAL WAS TAKEN INTO ACCOUNT IN COMING TO THE AFORESAID FINDI NGS. IN OUR VIEW THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT THE CO MMISSION PAID TO THE SOLE SELLING AGENT WAS WHOLLY OR EXCLUSIVELY FOR THE PUR POSES OF ITS BUSINESS. AND HAS NOT CONSIDERED THE FINDING OF THE CALCUTTA HIGH COURT IN PARA 28, 29, 30 WITH RESPECT TO ANOTHER COMMISSION AGENT SAM PAT & CO. THE SAME IS REPRODUCED BELOW:- 28. THE CATEGORIC EVIDENCE OF BHIKAMCHAND WAS THAT SAMPAT & CO. HAD NEGOTIATED THE TENDER THAT THE SAID FIRM HAD PERSON AL ACQUAINTANCE WITH THE OFFICERS OF THE GOVERNMENT, THAT SAMPAT & CO. HAD D ULY INSTRUCTED THE FACTORY STAFF OF THE ASSESSEE REGARDING SPECIFICATI ON AND THAT THEY HAD ATTENDED LOADING AND UNLOADING OF GOODS MANUFACTUR ED AND SUPPLIED. THE AUTHORITIES BELOW SEEM TO HAVE PROCEEDED ON THE BAS IS THAT SUCH STATEMENTS DO NOT CONSTITUTE ANY EVIDENCE AND THAT THE ASSESSE E HAD TO ESTABLISH ITS CASE ONLY BY DOCUMENTARY EVIDENCE. THE ORAL EVIDENC E WAS NOT CONSIDERED AT ALL. THE TRIBUNAL DID NOT APPLY ITS MIND OR ADVE RT TO THE VARIOUS RISKS AND RESPONSIBILITIES UNDERTAKEN AS ASSUMED BY SAMPAT & CO. UNDER ITS AGREEMENT WITH THE ASSESSEE. CLAUSES OF THE AGREEME NT, APART FROM THOSE CONNECTED WITH THE ACCEPTANCE OF THE SAID TENDER, A RE RELEVANT FOR THE 8 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES PURPOSE OF DETERMINING WHETHER SAMPAT & CO. WAS LAW FULLY ENTITLED TO THE REMUNERATION PAID TO IT BY THE ASSESSEE AND WHETHER SUCH REMUNERATION WAS PAID SOLELY AND EXCLUSIVELY FOR THE PURPOSE OF BUSI NESS OF THE ASSESSEE. THE TRIBUNAL ALSO FAILED TO APPRECIATE OR CONSIDER THE EVIDENCE OF BHIKAMCHAND IN THE ABOVE CONTEXT. 29. FOR THE REASONS GIVEN ABOVE, WE HOLD THAT THE F INDING OF THE TRIBUNAL FOR THE ASST. YRS. 1963-64 AND 1964-65 THAT THE REM UNERATION PAID TO SAMPAT & CO. AS MANUFACTURING SUPERVISOR WAS NOT DE DUCTIBLE AS BUSINESS EXPENDITURE UNDER S. 37(1) OF THE IT ACT, 1961, IS VITIATED BY NON- CONSIDERATION OF THE AFORESAID MATERIAL FACTS AND E VIDENCE ON RECORD WHICH WERE RELEVANT FOR ARRIVING AT SUCH FINDING. 30. WE, THEREFORE, SEND THE MATTER BACK TO THE TRIB UNAL WITH A DIRECTION TO CONSIDER THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE OBSERVATIONS MADE ABOVE AND DETERMINE THE QUESTION IN ACCORDANCE WITH LAW. THE TRIBUNAL WILL GIVE FURTHER OPPORTUNITY TO THE PARTIES FOR M AKING SUBMISSIONS ON THE POINT AND, IF NECESSARY, MAY TAKE FRESH EVIDENCE. FROM THE ABOVE IT CAN BE APPRECIATED THAT ORAL EVID ENCE APART FROM DOCUMENTARY EVIDENCE SUBMITTED TO THE AO/CIT(A) NEE DED TO BE CONSIDERED. IT WAS REPEATEDLY SUBMITTED BEFORE THE ASSESSING OFFICER. THAT IT WAS PERSONAL ACQUAINTANCE OF MR. UMASHANKAR PRASAD WITH PEOPLE AT DIAGEO WHICH ENABLED THE ASSESSEE TO PROCURE THE CO NTRACT FROM M/S. DIAGEO. THE FACT THAT SUCH INCOME IS REFLECTED BY M R. UMASHANKAR PRASAD IS EVIDENT FROM HIS RETURN OF INCOME FILED BEFORE T HE AO/CIT(A) AND COPY OF WHICH IS ENCLOSED HERE ONCE AGAIN. KARNATAKA HIGH COURT IN CASE OF DCIT VS. MCDOWELL ( 291 ITR 107) IN THIS CASE PAYMENT WERE SAID TO HAVE EBEN MADE TO AGENTS WHO PROVIDED SOME SERVICE FOR SALE OF LIQUOR BY ASSESSEE COMPANY . AS PER THE LAW APPLICABLE THE SALE WERE DIRECTLY MADE TO GOVERNMEN T AND ITS CORPORATION. CANVASSING WAS PROHIBITED THEREFORE ASSESSEEWAS HEL D AS NOT ENTITLED TO DEDUCTION OF COMMISSION. YOUR HONOURS WILL APPRECIA TE THAT THE FACTS IN THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE. APEX COURT IN CASE OF SWADESHI COTTON MILLS (63 ITR 57) IN THIS CASE THE DIRECTORS WERE PAID COMMISSION OF 1 % IN ADDITION TO REMUNERATION WHICH WAS HELD TO BE NON DEDUCTABLE AS IT WAS FOUND THAT NO SPECIAL EFFORTS WERE PUT IN BY THE DIRECTORS. IN TH E CASE BEFORE YOUR HONOURS THE APPELLANT SUCCESSFULLY GOT THE CONTACT FROM T-T /S. DIAGEO. 9 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES LACHMINARAYAN MADAN LAS VS. CIT (86 ITR 439) IN THIS CASE THE SELLING AGENCY AGREEMENT WAS ONLY A MAKE-BELIEVE ARRANGEMENT AND DEVICE TO MINIMIZE TAX LIABILITY OF THE ASSESSEE FIRM AND NOT GENUINE. IN THE PRESENT CASE BEFORE YOUR HONOUR THERE IS NO SUCH FINDING THAT THE ARRANGEMENT IS TO AVOID TAX SINCE MR. UMAS HANKAR PRASAD HAS REFLECTED THE SAME IN HIS TURNOVER. FROM THE ABOVE YOUR HONOURS WILL APPRECIATE THAT TH E APPELLANT HAS FURNISHED ALL ORAL EVIDENCE I DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM OF COMMISSION EXPENDITURE. THE ASSESSING OFFICER HA S DISALLOWED IT STATING THAT THERE WAS NO NEXUS BETWEEN THE EXPENSE AND THE APPELLANT'S BUSINESS. HE DID NOT APPRECIATE THE FACT THAT CONTRACT FROM M /S. DIAGEO WAS A LIVE NEXUS WITH THE EXPENSE INCURRED. THE CIT (A) PLACED RELIANCE ON THE AFORE STATED DECISIONS WHICH ARE CLEARLY DISTINGUISHABLE ON FACTS AND CONFIRMED DISALLOWANCE. THE DISALLOWANCE OF A CLAIM OF EXPENS E MADE BY THE ASSESSEE CAN CERTAINLY NOT BE BASIS FOR LEVY OF PENALTY. 2. SOFTWARE EXPENSES CONSIDERED AS CAPITAL RS.55,00 ,000/- THE ASSESSING OFFICER WAS FURNISHED WITH THE DOCUME NTARY EVIDENCE WITH RESPECT TO THE PURCHASE OF SOFTWARE FROM MR. SATISH PUJARI OF MICROBIT. THE SOFTWARE WAS ACQUIRED FOR EXECUTING OF THE ORDER FR OM M/S. DIAGEO. IT WAS EXPLAINED TO THE OFFICER THAT EVERY TYPE OF ADVERTI SEMENT REQUIRED DIFFERENT SOFTWARE AND ACCORDINGLY HAD LIMITED LIFE. THE ASSE SSING SUMMONS MR. SATISH AND SINCE HE DID NOT APPEAR HIM, HE REGARDED SOFTWARE EXPENSE TO BE CAPITAL IN NATURE AND ALSO NO DEPRECIATION TO BE GR ANTED. THE CIT(A) WAS FURNISHED WITH THE BANK STATEMENTS OF APPELLANT REF LECTING PAYMENT TO MIS. MICROBIT, THE FACT THAT INSTALLATION WAS PRE CONDIT ION FOR DOING BUSINESS WITH MIS. DIAGEO INDIA PVT. LTD. WAS ALSO STATED. T HE CIT(A) HAS ACCORDINGLY TREATED THE SOFTWARE EXPENDITURE TO BE CAPITAL IN NATURE AND HE ALLOWED DEPRECIATION ON ' THE SAME. FROM THE FACT FURNISHED ABOVE IT IS SUBMITTED THAT THE APPELLANT HAS UNDOUBTEDLY EXPENDED THE AFORESAID AMOUNTS FOR BUSI NESS PURPOSES AS EVEN THE CIT(A) HAS HELD SO. HE HAS BY ALLOWING DEPRECIA TION REDUCED THE DISPUTE TO CAPITAL VS. REVENUE. YOUR HONOUR WILL AP PRECIATE THAT THERE NEITHER ANY CONCEALMENT NOR ANY FURNISHING OF IN AC CURATE PARTICULARS BUT MERELY A DEBATE WHETHER THE SOFTWARE EXPENDITURE IS CAPITAL OR REVENUE. THIS CERTAINLY CAN NOT BE BASIS FOR CONFIRMING PENA LTY. FURTHER, WE DRAW YOUR KIND ATTENTION TO THE PROVISI ONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 WHICH READS AS FOLLOWS: 10 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES 271(1)(C) IF THE ASSESSING OFFICER OR THE COMMISSI ONER (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON- (A)----- (B)------ C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR F URNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- I) ---- II) ---- III) IN THE CASES REFERRED TO IN CLAUSE(C), IN ADDI TION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REA SON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR THE FURNISHING OF I NACCURATE PARTICULARS OF SUCH INCOME. [EXPLANATION 1 - WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT - A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFF ERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSION ER(APPEALS) OR THE COMMISSIONER TO BE FALSE, OR B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NO T ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFID E AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE( C) OF THIS SUB SECTION, BE DEEM ED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED'. YOUR GOODSELVES WILL APPRECIATE THAT SEC 271 (L)(C) DEALS WITH TWO SITUATIONS NAMELY: A)CONCEALMENT OF PARTICULARS OF INCOME OR (B)FURNISHING OF INACCURATE PARTICULARS OF INCOME . PENALTY CAN BE LEVIED ONLY IF EITHER OF THESE TWO C ONDITIONS IS SATISFIED AS HELD BY THE SUPREME COURT IN CIT V/S RELIANCE PETRO PRODUCTS PVT LTD. 11 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES [(2010)230 CTR 320 (SC)J [CIVIL APPEAL NO. 2463 OF 201 OJ. IT IS SUBMITTED THAT THE ASSESSEE HAS NEITHER CONCEALED T HE INCOME FROM BEING OFFERED TO TAX NOR HAS IT FURNISHED INACCURATE PART ICULARS OF SUCH INCOME EITHER IN THE RETURN OF INCOME OR DURING THE COURSE OF ASSESSMENT PROCEEDING U/S 143(3) OF ITA. WE DRAW YOUR KIND ATT ENTION TO THE DECISION OF DILIP N. SHROFF V/S. JCIT & ANR. [(2007) 291 ITR 519 (SC)] FOR INTERPRETATION OF THE ABOVE PHRASES AS ENSHRINED IN SEC 271 (1)(C): '43. THE EXPRESSION 'CONCEAL' IS OF GREAT IMPORTANC E. ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL IS CON + CELARE WHICH IMPLIES TO HIDE. IT MEANS TO BIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SI GHT; TO PREVENT THE DISCOVERY OF; TO WITHHOLD KNOWLEDGE OF. THE OFFENCE OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A POR TION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES. ' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRON EOUS; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. '' YOUR GOODSELVES WOULD APPRECIATE THAT THE APPELLANT HAS, NOT AT ANY SINGLE INSTANCE, MADE ANY ATTEMPT (WHETHER DELIBERATE OR I NTENTIONAL) TO HIDE THE FACT OR FURNISH ERRONEOUS/INACCURATE STATEMENTS WIT H REGARD TO THE EXPENDITURE INCURRED MADE DURING A.Y. 2007-08. THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON THE FACT THAT THE CIT (A) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFIC ER. THERE ARE PLETHORAS OF CASES FOR SECTION 271(1)(C) TO HOLD THE FACT THAT PENALTY CANNOT BE IMPOSED ON MERE MAKING OF THE CLA IM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF. THE HON'BLE SUPREME COURT IN CRR VIS RELIANCE PETRO PRODUCTS PVT . LTD. [(2010)230 CTR 320 (SC)] WHEREIN IT WAS HELD THAT M ERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY U/S . 271(1)(C) IS NOT ATTRACTED. ' .READING THE WORDS 'INACCURATE' AND 'PARTICULARS ' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEO US. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEI NG THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER S. 271 (1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. 12 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS E XPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN TH E RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S. 271 (L)(C). IF THE CON TENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLA IM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENA LTY UNDER S. 271 (1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. THE TRIBUNAL, AS WELL AS, THE CIT(A) AND THE HIGH COURT HAVE CORRECTLY RE ACHED THIS CONCLUSION.' THUS WE PRAY THAT NO PENALTY BE IMPOSED AS THERE IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS. WE SUBMIT THAT THE ASSESSING OFFICER HAS ONLY PROCE EDED ON SURMISES AS THE APPELLANT HAD ACTUALLY INCURRED THE SAID EXPENDITUR ES AND FULL DETAILS WERE FURNISHED TO HIM. UNDER THESE CIRCUMSTANCES WE REQUEST YOUR HONORS TO KINDLY DROP THE PENALTY LEVIED AND OBLIGE. /I 5. I HAVE CAREFULLY CONSIDERED THE FACTS RELATING T O THE LEVY OF PENALTY AS THEY EMERGE FROM THE ASSESSMENT AND PENALTY ORDERS. I HAVE ALSO PERUSED THE APPELLATE ORDER PASSED WITH REFERENCE TO THE QU ANTUM APPEAL IN THIS CASE. 5.12 REGARDING THE DISALLOWANCE OF SOFTWARE EXPENSE S, THE DISALLOWANCE HAS BEEN UPHELD BY THE CIT(A) HOLDING THAT THESE AR E IN THE NATURE OF CAPITAL EXPENSES. THUS I FIND THAT THE DISALLOWANCE IS MADE ON ACCOUNT OF A DIFFERENCE OF OPINION BETWEEN THE APPELLANT AND THE REVENUE AS TO THE CATEGORY IN WHICH THE CONCERNED EXPENSES FALL. 5.12.1 IT IS WELL ACCEPTED PRINCIPLE THAT WHEN THE DISALLOWANCE MADE BY AO ITSELF IS DEBATABLE IN NATURE, NO PENALTY FOR CONEA LMENT FOR SUCH DEBATABLE ISSUE CAN BE LVIED. THIS PRINCIPLE HAS BEEN ELABORA TED IN THE DECISIONS RENDERED IN THE CASES OF AJAIB SINGH & CO 253 ITR 6 30 (P&H), HARSHVARDHAN CHEMICALS & MINERALS LTD. 259 ITR 212 (RAJ.), SHIVLAL DESAI & SONS 114 ITR 377 (BOM.), KALYANI ENTERPRISE S 83 ITD 764 (MAD 13 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES TRIB), NATIONAL TEXTILES V/S CIT, 249 ITR 125 (GUJ. ), INDERSONS LEATHERS 328 ITR 167(P&H) AND GUJARAT CREDIT CORPORATION LTD . V. ACIT 116 IT] (SB)(AHD) 619. 5.13 IN THEIR JUDGMENT IN THE CASE OF CIT V/S FORTI S FINANCIAL SERVICES ITA NOS.243/2011 &244/2011, THE HON'BLE DELHI HIGH COUR T OBSERVED AS UNDER: 'IT IS SETTLED THAT WHEN TWO LEGAL INTERPRETATIONS WERE PLAUSIBLE AND. THERE WAS HONEST AND BONA FIDE DIFFERENCE OF OPINION, PEN ALTY FOR CONCEALMENT/FURNISHING OF INACCURATE PARTICULARS, S HOULD NOT AND CANNOT BE IMPOSED. IF THE VIEW TAKEN BY THE ASSESSEE REQUIRED CONSIDERATION AND WAS REASONABLY ARGUABLE, HE SHOULD NOT BE PENALIZED FOR TAKING THE POSITION. THE TAX STATUTES ARE COMPLEX AND THERE CAN BE A BON A FIDE DIFFERENCE OF OPINION ON LEGAL INTERPRETATION AND UNDERSTANDING O F A PROVISION. IN SUCH CASES, EVEN WHEN THE INTERPRETATION PLACED BY THE R EVENUE IS ACCEPTED, PENALTY SHOULD NOT BE IMPOSED IF THE CONTENTION OF THE ASSESSEE WAS PLAUSIBLE AND BONA FIDE. OF COURSE FULL FACTS SHOUL D BE DISCLOSED. ' 5.14 IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. REPORTED AT 322 ITR 158, IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STR ETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THE COURT HELD AS FOLLOWS: 'A GLANCE AT THE PROVISION OF S.271 (1)(C) WOULD SU GGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICU LARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NOT THE CASE OF CONCEALME NT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXI CON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT.' THEREF ORE, THE WORD 'PARTICULARS' USED IN THE S.EC.271(1)(C) WOULD EMBR ACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITI ON IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SU PPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. T HE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENA LTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH EREFORE, IT IS OBVIOUS 14 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SEC .271 (1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DIS PUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF H IS INCOME. 5.14.1 THIS PRINCIPLE HAS BEEN FOLLOWED IN THE JUD GEMENT OF VIP INDUSTRIES LTD. 21 DTR (MUM TRIB) 153. 5.15 IN THE PRESENT CASE, THE APPELLANT HAS CLAIME D EXPENSES INCURRED FOR PURCHASE OF SOFTWARE. THE CLAIM WAS EXAMINED DURING THE QUANTUM APPEAL PROCEEDINGS AND IT WAS FOUND THAT THE SOFTWARE HAD BEEN SPECIFICALLY DESIGNED TO MEET THE ADVERTISING NEEDS OF THE APPEL LANT'S CLIENT M/S DIAGEO, AND WAS INSTALLED FOR THE FIRST TIME IN THE YEAR UN DER CONSIDERATION. THE EXPENDITURE WAS HELD TO BE OF CAPITAL NATURE AS AGA INST REVENUE EXPENDITURE CLAIMED BY THE APPELLANT. THUS THE DISALLOWANCE STE MMED FROM THE DIFFERENCE OF OPINION. ACCORDINGLY, IN VIEW OF THE FACTS AND THE CITATIONS DISCUSSED ABOVE, I FIND THAT LEVY OF PENALTY ON THI S DISALLOWANCE CANNOT BE UPHELD. ACCORDINGLY, THE A.O. IS DIRECTED TO RECOMP UTE THE PENALTY WITH REFERENCE TO THE AMOUNT OF COMMISSION PAYMENT DISAL LOWED AND THE GROUNDS RAISED BY THE APPELLANT .ARE PARTLY ALLOWED . 8. WE HAVE CONSIDERED THE ARGUMENTS ADDRESSED BY LD . DR AND WE HAVE ALSO PERUSED THE ORDERS PASSED BY REVENUE AUTHORITIES, W E ARE OF THE CONSIDERED VIEW, THAT THE CIT(A) HAS RIGHTY DELETED THE DISALLOWANCE OF SOFTWARE EXPENSE BY DISCUSSING THE FACTS OF THE CASE AS WELL AS RELYING UPON THE SEVERAL JUDICIAL PRONOUNCEMENTS. WE ALSO FOUND THAT THE JUDICIAL PRO NOUNCEMENTS MENTIONED IN PARA 5.12 TO 5.14 ARE FULLY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE JUDGMENT PASSED IN RELIANCE PETRO PRODUCTS PRIVATE LTD. REPORTED AT 322 ITR 158, WHEREIN IT H AS BEEN HELD BY HONBLE SUPREME COURT THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY, IT IS TO BE ADHERED THAT UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PROVISIONS OF 15 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES PENALTY CANNOT BE INVOKED. IT HAS FURTHER BEEN HELD BY THE HONBLE SUPREME COURT THAT BY ANY STRETCH OF IMAGINATION, MAKING AN INCOR RECT CLAIM IN LAW CANNOT IN ITSELF TANTAMOUNTS TO FURNISHING INACCURATE PARTICULARS. THE HONBLE SUPREME COURT FURTHER HELD THAT IN ORDER TO ATTRACT THE PROVISION OF SECTION 271(1)(C) OF THE INCOME TAX ACT, THERE HAS TO BE CONCEALMENT OF PARTICULAR S OF THE INCOME OF THE ASSESSEE SECONDLY, THE ASSESSEE MUST HAVE FURNISH INACCURATE PARTICULARS OF HIS INCOME, IN THE PRESENT CASE BOTH THE ELEMENTS ARE M ISSING AS NO INFORMATION GIVEN BY THE ASSESSEE IN THE RETURN WAS FOUND TO BE INCOR RECT OR INACCURATE. IT IS SUBMITTED THAT MERE MAKING AN INCORRECT CLAIM IN LAW CANNOT T ANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. AS PER THE FACTS OF THE PRE SENT CASE THE DISALLOWANCE MADE BY CIT(A) IS ON ACCOUNT OF DIFFERENCE OF OPINION BE TWEEN THE ASSESSEE AND THE REVENUE AS TO THE CATEGORY IN WHICH THE CONCERNED E XPENSES FALL WHICH CERTAINLY IS A DEBATABLE IN NATURE . IT IS SETTLED LAW THAT WHEN THE DISALLOWANCE MADE BY AO/ CIT(A) ITSELF IS DEBATEABLE IN NATURE, NO PENALTY OF CONCEALMENT FOR SUCH DEBATABLE ISSUE CAN BE LEVIED. AND IN THIS RESPECT WE RELY UP ON JUDGMENT RENDERED BY HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASES OF AJAIB SINGH & CO. 253 ITR 630. WE HAVE ALSO CONSIDERED THE JUDGEMENT REN DERED BY LD. DR TITLED CIT VS. ZOOM COMMUNICATION (P) LTD. THE FACTS CONTAINE D IN THE SAID JUDGEMENT ARE ENTIRELY DIFFERENT AND DISTINGUISHABLE AND THEREFOR E THE JUDGMENT RENDERED BY DELHI HIGH COURT IN CASE CIT VS. ZOOM COMMUNICATION (P) LTD. IS NOT APPLICABLE TO 16 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS IT IS NOWHERE MENTIONED IN THE AFORE MENTIONED JUDGMENT THAT IF TWO VIEWS ARE POSS IBLE OR WHEN THE DISALLOWANCE MADE BY REVENUE ITSELF IS DEBATABLE IN NATURE, THEN PENALTY CAN BE LEVIED THEREFORE ON THE FACTUAL AND LEGAL ASPECTS THE AFORE MENTIONE D JUDGEMENT IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 9. AFTER ANALYZING THE AFORE MENTIONED ORDER WE FOU ND THAT THE CIT(A) HAS DEALT WITH THE ISSUES AND HAS PASSED JUDICIOUS AND WELL REASONED ORDER AND NO CIRCUMSTANCES HAVE BEEN BROUGHT BEFORE US IN ORDER TO CONTROVERT OR REBUT THE FINDINGS RECORDED BY THE CIT(A). THEREFORE, WE SEE NO REASON TO DEVIATE OR INTERFERE INTO THE FINDINGS RECORDED BY THE CIT(A) AND HENCE, WE REJECT THESE GROUNDS OF APPEAL RAISED BY THE REVENUE AND UPHOLD THE ORDER OF THE CIT(A). GROUND NO.3 IS GENERAL IN NATURE AND NEEDS NO SEPAR ATE ADJUDICATION. 11. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH APRIL, 2016 SD/- SD/- (JASON P. BOAZ) (SANDEEP GOSAIN) $ / ACCOUNTANT MEMBER &' $ / JUDICIAL MEMBER ( ) MUMBAI; *$ DATED :06.04.2016 PS. ASHWINI 17 ITA NO.7037/MUM/2013 (A.Y. 2007-08) ACIT VS.M/S. F-5 SHLOK MEDIA SERVICES / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI