DCIT, Chandigarh V. M/s Bhushan Power & Steel Ltd., Chandigarh

ITA 71/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68535 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset; Question of law; Capital receipt; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.70 & 71 /CHD/2012 ASSESSMENT YEARS : 2005-06 & 2006-07 THE D.C.I.T., VS. M/S BHUSHAN POWER & STEEL LTD. , CENTRAL CIRCLE 1, 3, INDUSTRIAL AREA, PHASE I, CHANDIGARH. CHANDIGARH. PAN: AAACB9760D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 18.09.2013 DATE OF PRONOUNCEMENT : 25.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH EACH DATED 31.10.2011 RELATING TO ASSESSMENT YEARS 2005- 06 & 2006-07 AGAINST THE PENALTY LEVIED U/S 271(1)(C) OF INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE GROUND OF APPEAL RAISED BY THE REVENUE IN I TA NO.70/CHD/2012 READS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS.7,40,38,379/- LEVIED U/S 271(1)(C) BY THE AO ON THE ADDITION OF RS.20,22,09,664/- MADE ON ACCOUNT OF SALE TAX SUBSIDY BY TREATING IT AS REVENUE RECEIPT AS AGAINST CAPITAL RECEIPT DECLARED BY THE ASSESSEE IN VIEW OF THE JUDGMENT OF HON'BLE HIGH COURT IN ABHISHEK INDUSTRIES LTD., DESPITE THE FACT THAT THE CLAIM OF THE ASSESSEE THAT SALE TAX SUBSIDY WAS CAPITAL RECEIPT WAS NOT ACCEPTED BY THE 2 CIT (APPEAL) AND HON'BLE ITAT IN APPEAL BY THE ASSESSEE AGAINST QUANTUM ADDITION. 3. THE GROUND OF APPEAL RAISED BY THE REVENUE IN IT A NO.71/CHD/2012 READS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS.8,80,74,063/- LEVIED U/S 271(1)(C) BY THE AO ON THE ADDITION OF RS.26,16,57,943/- MADE ON ACCOUNT OF SALE TAX SUBSIDY BY TREATING IT AS REVENUE RECEIPT AS AGAINST CAPITAL RECEIPT DECLARED BY THE ASSESSEE IN VIEW OF THE JUDGMENT OF HON'BLE HIGH COURT IN ABHISHEK INDUSTRIES LTD., DESPITE THE FACT THAT THE CLAIM OF THE ASSESSEE THAT SALE TAX SUBSIDY WAS CAPITAL RECEIPT WAS NOT ACCEPTED BY THE CIT (APPEAL) AND HON'BLE ITAT IN APPEAL BY THE ASSESSEE AGAINST QUANTUM ADDITION. 4. BOTH THESE APPEALS RELATING TO THE SAME ASSESSEE AGAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WERE HEARD TOGE THER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 5. THE ISSUE ARISING THE PRESENT APPEAL IS IN RELAT ION TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT OF RS.7,40,38,379/ - IN ASSESSMENT YEAR 2005-06 AND RS.8,80,74,063/- IN ASSESSMENT YEAR 200 6-07. THE FACTS OF BOTH THE APPEALS BEFORE US ARE IDENTICAL AND REFERE NCE IS MADE TO THE FACTS IN ASSESSMENT YEAR 2005-06 TO ADJUDICATE THE ISSUE. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD SET UP A UNIT AT HOOGLY, DISTT. KOLKATTA, WHICH HAD STARTED COMME RCIAL PRODUCTION ON 13.5.2000. THE GOVERNMENT OF WEST BENGAL HAD FRAME D A SCHEME CALLED WEST BENGAL INCENTIVE SCHEME, 1993. THE ASSESSEE C LAIMED THAT IN TERMS OF THE SAID SCHEME, IT WAS ISSUED THE ELIGIBI LITY CERTIFICATE VIDE LETTER DATED 31.12.1998 AND AS PER THE SAID CERTIFI CATE THE SAID UNIT WAS ALLOWED REMISSION OF SALES TAX FOR A PERIOD OF 12 Y EARS UP TO 100% OF GROSS CAPITAL INVESTMENT. THE ASSESSEE CLAIMED THA T THE SAID SALES TAX 3 REMISSION WAS CAPITAL SUBSIDY GRANTED BY THE STATE GOVERNMENT TO THE ASSESSEE AND THE SAME WAS CLAIMED AS EXEMPT BEING C APITAL RECEIPT. THE ASSESSING OFFICER ELABORATELY CONSIDERED THE VARIOU S ASPECTS OF THE SUBSIDY GRANTED BY THE WEST BENGAL AND CASE LAWS ON THE SUBJECT AND RELYING UPON THE RATIO LAID DOWN BY THE PUNJAB & HA RYANA HIGH COURT IN CIT VS. ABHISHEK INDUSTRIES LTD. [286 ITR 1(P&H)] H ELD THAT THE INCENTIVES IN THE FORM OF SALES TAX EXEMPTION WERE REVENUE RECEIPT. THE ASSESSING OFFICER FURTHER OBSERVED AS UNDER: THE INCENTIVES ARE GIVEN BY THE WEST BENGAL GOVERN MENT TO ENCOURAGE ENTREPRENEURS TO SET UP INDUSTRIES/ UNITS IN THE BACKWARD AREAS O F THE STATE AND EARN EXTRA PROFITS IN THE LONG TERM BY WAY OF SALE TAX EXEMPTION OR COMPENSATE THE M FOR ANY POSSIBLE LOSS OF REVENUE DUE TO THE FACT THAT THEY HAVE CHOSEN TO SET UP THE UNITS IN BACKWARD AREAS. NO WHERE IN THE SCHEME OF THE WEST BANGAL GOVERNMENT, IT IS MENTIONED THAT CAPITA L INVESTMENTS IN THE UNIT WILL BE FINANCED IN FULL OR PARTLY. MOREOVER, THE EXEMPT ION IS LIMITED TO A MAXIMUM OF RS. 50 CRORES OR THE COST OF CAPITAL ASSETS, WHICH EVER IS LESS. IN VIEW OF THE ABOVE ARGUMENTS, THE SALES TAX EXEMP TION OF RS.20,22,09,664/- IS HELD TO BE A REVENUE RECEIPT OF THE ASSESSEE COM PANY. THIS REVENUE RECEIPT HAS BEEN MISCLASSIFIED BY THE ASSESSEE TO SUPPRESS THEIR LAW FUL INCOME. THEREFORE, AN ADDITION OF RS.20,22,09,664/- IS BEING MADE TO THE TOTAL INCOME OF THE ASSESSEE. 7. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WER E INITIATED. THE ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRME D BY THE CIT (APPEALS) AND THEREAFTER SHOW CAUSE NOTICE WAS ISSU ED TO THE ASSESSEE AND PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED AT RS.7.40 CRORES. 8. THE CIT (APPEALS) AFTER CONSIDERING THE REPLY OF THE ASSESSEE, WHICH IS INCORPORATED UNDER PARA 4.1 AT PAGES 2 TO 9 OF THE APPELLATE ORDER OBSERVED THAT WHEN THE ASSESSEE HAS CONCEALED PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS, CONDITI ONS LAID DOWN IN EXPLANATION (1) (SUPRA) HAVE TO BE EXAMINED . THE CIT (APPEALS) AFTER CONSIDERING THE ISSUE OF LEVY OF PENALTY ON THE ADD ITION OF RS.20,22,09,664/- ON ACCOUNT OF SALES TAX SUBSIDY O BSERVED AS UNDER: THE ASSESSING OFFICER HAS LEVIED THE PENALTY ON TH E ADDITION OF RS.20,22,09,664/- ON ACCOUNT OF SALES TAX SUBSIDY B Y TREATING IT AS REVENUE RECEIPT AS AGAINST CAPITAL RECEIPT DECLARED BY THE APPELLANT. THE ISSUE HAS BEEN 4 DECIDED IN FAVOUR OF REVENUE BY HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S ABHISHEK INDUSTRIES LTD. (286 ITR 1) BU T SLP AGAINST THE ORDER OF HIGH COURT STANDS ADMITTED BY THE HON'BLE SUPREME COURT. THE LD. COUNSEL HAS ARGUED THAT ONCE THEIR LORDSHIPS OF SUPREME COURT HAVE ADM ITTED THE QUESTION OF LAW, THE ISSUE ARISING THEREFROM IS DEBATABLE AND IN SUCH CI RCUMSTANCES, IT CANNOT BE A CASE FOR LEVY OF PENALTY U/S 271(L)(C). I AM ENTIRE LY IN AGREEMENT WITH THE ARGUMENT OF THE LD. COUNSEL IN THIS REGARD. IN FACT , HON'BLE DELHI HIGH COURT IN THE CASE OF M/S H.M.A. UDYOG PVT. LTD. ( 59 TAXMANN 394 ) HAS HELD THAT WHERE A QUESTION AS TO WHETHER THE EXPENDITURE INCURRED BY THE ASSES SEE IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE IS A DEBATABLE ISSUE AND EVEN I F IT IS ULTIMATELY DECIDED AGAINST THE ASSESSEE, IT COULD NOT BE SAID THAT THE ASSESSEE HAD ATTEMPTED TO CONCEAL PARTICULARS OF HIS INCOME OR FURNISHED INAC CURATE PARTICULARS TO ATTRACT PENALTY U/S 271(L)(C)OF THE ACT. HON'BLE SUPREME COURT HAS ALSO HELD IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. ( 322 ITR 158 ) THAT A MERE MAKING OF A C LAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS OF INCOME. THE PENALTY LEVIED U/S 271(L)(C) IN THE CASE OF M/S ABH ISHEK INDUSTRIES LTD. ON THE IDENTICAL ISSUE HAS ALREADY BEEN DELETED BY CIT(A)- I, LUDHIANA VIDE ORDER DATED 10.12.2010 IN APPEAL NO.7-IT/10-11. AFTER GOING THR OUGH THE RELIANCE PLACED BY THE LD. COUNSEL AND THE ORDER OF CIT(A)-I, LUDHIANA (SUPRA), I AM OF CONSIDERED VIEW THAT IT CANNOT BE SAID THAT THE APPELLANT HAD CONCE ALED ITS PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS. HENCE, PEN ALTY LEVIED U/S 271(1)(C) OF THE ACT ON THE ADDITION MADE ON ACCOUNT OF SALES TAX SU BSIDY IS CANCELLED. 9. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT (APPEALS). THE LEARNED D.R. FOR THE REVENUE POINTED OUT THAT T HE PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIED IN VIEW OF THE ADDI TION MADE IN THE HANDS OF THE ASSESSEE, IN TURN FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ABHI SHEK INDUSTRIES LTD. (SUPRA). THE LEARNED D.R. FOR THE REVENUE PLA CED RELIANCE ON THE ORDER OF THE HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. ZOOM COMMUNICATION P. LTD. [327 ITR 510 (DEL)]. 10. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT PURSUANT TO THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ABHISHEK INDUSTRIES LTD. (SUPRA) SLP AGAINST THE SAID DECISI ON HAD BEEN ADMITTED BY THE HON'BLE APEX COURT AND THE SAME IS PENDING. IT WAS THE CONTENTION OF THE LEARNED A.R. FOR THE ASSESSEE THA T THE SAME REFLECTS THAT THE ISSUE IS DEBATABLE AND ON ADDITION MADE ON THE BASIS OF SUCH DEBATABLE ISSUE, THERE WAS NO MERIT IN LEVYING OF P ENALTY U/S 271(1)(C) OF THE ACT. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE 5 THAT THE QUANTUM APPEALS AGAINST THE ADDITION CONFI RMED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE WERE PENDING BEFORE THE PUNJAB & HARYANA HIGH COURT. THE LEARNED A.R. FOR THE ASSESSEE FURT HER CONTENDED THAT THE DISPUTE ARISING IN THE PRESENT APPEAL WHETHER THE I NCENTIVE RECEIVED BY THE ASSESSEE UNDER THE WEST BENGAL INCENTIVE SCHEME WAS CAPITAL OR REVENUE IN NATURE. IT WAS POINTED OUT THAT SIMILAR ISSUE AROSE BEFORE THE CALCUTTA HIGH COURT IN CIT VS. RASOI LTD. [335 ITR 438 (CAL)] AND IT HAS BEEN HELD THAT THE GRANT OF SUBSIDY IN THE CASE WAS OF CAPITAL NATURE. IT WAS FURTHER POINTED OUT BY THE LEARNED A.R. FOR THE ASSESSEE THAT IN CIT VS. PONNI SUGARS & CHEMICALS LTD. [306 ITR 392 (SC)], THE HON'BLE SUPREME COURT HAVE HELD THAT THE SUBSIDY RECEIVED B Y THE ASSESSEE WAS CAPITAL IN NATURE. SIMILAR VIEW HAS BEEN IN SIYA R AM GARG 49 DTR (P&H) 126. FURTHER THE LEARNED A.R. FOR THE ASSESS EE PLACED RELIANCE ON THE DECISION BY THE HON'BLE SUPREME COURT IN CIT VS . RELIANCE PETROPRODUCTS PVT. LTD. [322 ITR 158 (SC)]. FURTHE R RELIANCE WAS PLACED ON THE RATIO LAID DOWN ON THE DECISION IN CIT VS. M /S GURDASPUR COOPERATIVE SUGAR MILLS [354 ITR 27 (P&H) WHERE PEN ALTY LEVIED U/S 271(1)(C) OF THE ACT ON SIMILAR ISSUE WAS DELETED B Y THE HON'BLE JURISDICTIONAL HIGH COURT. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. PENALTY FOR CONCEALMENT IS LEVIABLE U/S 271 (1)(C) OF THE ACT IN CASE ANY ONE OF THE TWO PRE-CONDITIONS ARE SATISFIED. THE PRE-CONDITI ONS FOR LEVY OF PENALTY ARE EITHER THE ASSESSEE HAD CONCEALED THE PARTICULARS O F ITS INCOME OR IN THE ALTERNATIVE, THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TWO CONDITIONS NEEDS TO BE FULFILLED BEFORE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. THE PROVISIONS OF THE ACT ENVI SAGES AN OPPORTUNITY OF HEARING TO BE AFFORDED TO THE ASSESSEE TO PROVE ITS BONAFIDES AND WHERE THE ASSESSEE IS ABLE TO PROVE THE BONAFIDES OF HIS CLAI M, WITH REGARD TO THE 6 PARTICULARS OF INCOME FURNISHED IN THE RETURN OF IN COME, IN SUCH CIRCUMSTANCES NO PENALTY IS LEVIABLE FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271 (1)(C) OF THE ACT. THE EXPRESSIONS CONCEALMENT AND INACCURATE PARTICULARS U/S 271 (1)(C) OF THE ACT HAS BEEN DELIBERATED UPON IN PLETHORA OF JUDGMENTS BY VARIOU S COURTS. THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILES & PROCESSORS C ASE (SUPRA), OBSERVED THAT THE PENALTY U/S 271 (1)(C) OF THE ACT IS A CI VIL LIABILITY. HOWEVER, THE LIABILITY IS PENAL IN NATURE THOUGH BEING CIVIL LIA BILITY AND THERE IS NO REQUIREMENT OF ESTABLISHING THE MENS REA OF THE INT ENTION OF THE ASSESSEE IN CASES WHERE THE ASSESSEE IS FOUND TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. HOWEVER, THE INFORMATION FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME TO THE BEST OF KNOWLEDGE OF THE ASSESSEE IS CORRECT AND COMPLETE, IT CANNOT BE SAID THAT THE ONUS ON THE ASSESSEE HAS NOT BEEN DISCHARGED TO PRO VE ITS BONAFIDES. WHERE ANY ADDITION TO, OR DISALLOWANCE FROM, HAD BEEN MAD E TO THE RETURNED INCOME, IT PER SE CANNOT BE THE FOUNDATION OF PENALTY U/S 2 71 (1)(C) OF THE ACT AS FINDINGS IN THE ASSESSMENT ORDER CANNOT BE TAKEN A CONCLUSIVE PROOF OF CONCEALMENT FOR THE PURPOSE OF LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. UNDER THE EXPLANATION 1 TO SECTION 271 (1)(C), THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE BONAFIDES OF HIS CLAIM AND WHERE THE ASSESSEE DISCHARGES ITS ONUS OF PROVING HIS CLAIM TO BE BONAFIDELY MADE, THE COU RTS HAVE HELD THAT THERE IS NO MERIT IN LEVY OF PENALTY U/S 271(1)(C) OF THE AC T. . 12. THE HON'BLE SUPREME COURT OF INDIA IN CIT, AHEM DABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) WHILE REFERRING IN T HE WORD PARTICULARS IN INACCURATE PARTICULARS OF INCOME, OBSERVED, A S PER LAW LEXICON, THE MEANING OF WORD PARTICULAR IS A DETAIL OR DETAIL S, THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN 7 SECTION 271 (1)(C) WOULD EMBRACE THE MEANING OF TH E DETAILS OF THE CLAIM MADE. IT WAS FURTHER HELD AS UNDER:- WE HAVE ALREADY SEEN THE MEANING OF THE WORD PART ICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WOR DS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT A CCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THE CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . (UNDERLINED SUPPLIED BY US) 13. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD (SUPRA) FURTHER NOTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRONEOUS OR FALSE NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUND TO BE FACTUALLY INCO RRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EX PENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALTY U/S 271 (1)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME, 14. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MILLS L TD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED THAT MAKING WRONG CLAI M FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTI CULARS WITHIN THE MEANING OF SECTION 271 (1)(C) OF THE ACT. 15. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE ISSUE IS HIGHLY DEBATABLE IN AS 8 MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE A ND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BASED ON ONE POSSIBLE VIE W, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASIS OF A POSSIBLE VIEW COUL D NOT BE TREATED AS CONCEALMENT OF ITS INCOME BY THE ASSESSEE OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT THE PENAL PR OVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 16. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SIDHARTHA ENTERPRISES [(2010) 228 CTR (P&H) 579 ] HELD THAT THE JUDGMENT OF THE HON'BLE SUPREME COURT IN DHARMENDRA TEXTILE (SUPRA) CANNOT BE READ AS LAYING DOWN THAT EVERY CASE WHERE PARTICULARS OF IN COME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS TH AT QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND P ENALTY UNDER S. 271(1)(C) HAD TO BE KEPT IN MIND AND APPROACH ADOPTED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF P ENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF TH E SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERA TE DEFAULT AND NOT A MERE MISTAKE. THIS BEING THE POSITION, THE FINDING HAVI NG BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS S IMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TAKEN BY THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE. 17. THE ISSUE ARISING IN THE PRESENT APPEAL IS RELA TING TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF ADDI TION ON ACCOUNT OF ASSESSABILITY OF SALES TAX SUBSIDY OF RS.20,22,09,6 64/- RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD TREATED THE SAID SUBSIDY AS CAPITAL RECEIPTS IN ITS RETURN OF INCOME BUT THE SAME WAS ASSESSED AS REVENUE RECEIPTS IN THE HANDS OF TH E ASSESSEE FOLLOWING THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH C OURT IN CIT VS. ABHISHEK INDUSTRIES LTD. (SUPRA). THE ASSESSEE HAS FILED AN APPEAL 9 AGAINST THE ORDER OF THE TRIBUNAL WHICH HAD BEEN AD MITTED IN ITA NO.515 OF 2009 VIDE ORDER DATED 9.9.2009 AND THE SAME IS P ENDING BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT FOR ADJUDICATIO N. FURTHER THE APPEAL RELATING TO ASSESSMENT YEAR 2006-07 HAS BEEN ADMITTED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO.113 O F 2010 VIDE ORDER DATED 8.3.2010 AND THE QUESTION ADMITTED IS IN RELA TION TO THE NATURE OF SALES TAX SUBSIDY BEING REVENUE RECEIPT INSTEAD OF CAPITAL RECEIPT. FURTHER SLP HAS BEEN PREFERRED AGAINST THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ABHISHE K INDUSTRIES LTD. (SUPRA) AND THE QUESTION OF LAW HAS BEEN ADMITTED V IDE ORDER DATED 12.1.2007 AND SLP IS PENDING BEFORE THE HON'BLE SUP REME COURT OF INDIA. 18. THE ISSUE ARISING VIDE PRESENT APPEAL IS IN REL ATION TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON SUCH DEBATABLE ISSUE. THE PLEA OF THE ASSESSEE IN THE PRESENT CASE WAS ADMITTED FOR ADJUD ICATION BEFORE THE HIGHER FORUMS, MAKES THE ISSUE DEBATABLE ISSUE. TH E ADDITION IN THE PRESENT CASE HAS BEEN MADE ON THE BASIS OF SUCH DEB ATABLE ISSUE THAT WHETHER THE SALES TAX SUBSIDY RECEIVED BY THE ASSES SEE WAS CAPITAL IN NATURE OR NOT. WE FURTHER FIND THAT SIMILAR ISSUE OF RECEIPT OF SUBSIDY UNDER THE WEST BENGAL INCENTIVE SCHEME HAS BEEN HEL D TO BE CAPITAL RECEIPT IN THE CASE OF CIT VS. RASOI LTD.(SUPRA) BY THE HON'BLE CALCUTTA HIGH COURT. THE UNIT OF THE ASSESSEE HAD BEEN ESTA BLISHED IN THE STATE OF WEST BENGAL AND THE CASE OF THE ASSESSEE IS THAT IT IS GOVERNED BY THE SAID SCHEME AS BEFORE THE HON'BLE CALCUTTA HIGH COU RT. IN VIEW THEREOF, THE ISSUE RAISED BEFORE US IS WHERE ADDITION HAS BE EN MADE IN RELATION TO SUCH DEBATABLE ISSUE, THE ASSESSEE COULD BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME MAKING IT EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10 19. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (SUPRA) ON THE IS SUE WHETHER THE AMOUNT OF GRANT-IN-AID WAS CAPITAL RECEIPT OR REVEN UE RECEIPT BEING DEBATABLE ISSUE HELD THAT THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT IMPOSABLE. THE RELEVANT FINDINGS OF THE HON'BLE PU NJAB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MI LLS (SUPRA) ARE AS UNDER: 3. WE FIND THAT THE RELIANCE ON THE ABOVESAID JUDGM ENT IS NOT TENABLE, AS IN THE AFORESAID CASE, THE DEDUCTIONS UNDER SECTION 80-O O F THE ACT WAS DECLINED FOR THE REASON THAT THE ASSESSEE HAS NOT PRODUCED ANY DETAI LS OF THE EXPENSES ALLEGEDLY INCURRED BY IT. THE DELHI HIGH COURT OBSERVED (PAGE 170): 'THE ASSESSEE, FOR CLAIMING DEDUCTION UNDER SECTION 80-O OF THE ACT, WANTED THE SAME AT 50 PER CENT OF THE GROSS INCOME RECEIVED IN CONV ERTIBLE FOREIGN EXCHANGE IN INDIA PROVIDED BY IT TO ITS FOREIGN CLIENTS. THE ASSESSIN G OFFICER, HOWEVER, WAS OF THE VIEW THAT ON CORRECT INTERPRETATION UNDER SECTION 80-O, DEDUCTION IS RESTRICTED TO THE NET INCOME AND, THEREFORE, EXPENDITURE INCURRED IN INDI A FOR EARNING THE FOREIGN EXCHANGE HAD TO BE DEDUCTED. THE ASSESSING OFFICER, THEREFOR E, WANTED THE ASSESSEE TO FURNISH THE DETAILS OF EXPENSES. AS THE ASSESSEE FAILED TO DO T HE NEEDFUL IN RESPECT OF VARIOUS PARTICULARS DEMANDED, THE ASSESSING OFFICER WAS LEF T WITH NO ALTERNATIVE BUT TO ESTIMATE SUCH EXPENDITURE IN THE RATIO OF PROPORTION OF FORE IGN INCOME TO THE TOTAL INCOME.' 4. IN THE PRESENT CASE, THERE IS NO DISPUTE ABOUT THE QUANTUM OF RECEIPT OF GRANT-IN-AID FROM THE STATE GOVERNMENT. THE ASSESSEE REFLECTED T HE SAME AS CAPITAL RECEIPT, WHEREAS IT HAS BEEN TREATED AS TO BE REVENUE RECEIPT. THE ISSU E WHETHER THE AMOUNT OF GRANT-IN-AID IS CAPITAL RECEIPT OR A REVENUE RECEIPT, IS A DEBATABL E ISSUE. THE FINDINGS RETURNED IN THE JUDGMENT RELIED UPON IS ON FEET OF NON-FURNISHING O F DETAILS OF EXPENSES. THE ISSUE WAS NOT DEBATABLE AS IN THE PRESENT CASE. THEREFORE, THE RE LIANCE ON THE DIVISION BENCH JUDGMENT IS MISCONCEIVED. 5. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY ERROR IN T HE FINDINGS RECORDED BY THE TRIBUNAL WHILE SETTING ASIDE THE PENALTY. CONSEQUENTLY, WE D O NOT FIND THAT THE ORDER OF THE TRIBUNAL GIVES RISE TO ANY SUBSTANTIAL QUESTION OF LAW FOR THE OPINION OF THIS COURT. 20. SIMILAR PROPOSITION HAS ALSO BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) (SUP RA). 21, THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) HAVE LAID DOWN THE P ROPOSITION THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE . 11 22. IN THE TOTALITY OF THE ABOVE SAID FACTS AND F OLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) AND THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN CIT VS. M/S GURDASPUR COOPERATIVE SUGAR MILLS (S UPRA) AND CIT VS. TEK RAM (HUF) (SUPRA) WE HOLD THAT IN VIEW OF THE D EBATABLE ISSUE RAISED, THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT IN THE FACTS OF THE PRESENT CASE WHERE THE CLAI M OF THE ASSESSEE THAT THE RECEIPTS WERE CAPITAL IN NATURE WAS REJECTED AN D THE RECEIPTS WERE HELD TO BE REVENUE IN NATURE AND HENCE TAXABLE. UP HOLDING HE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN ITA NO.70/CHD/2012. 23. THE FACTS AND THE ISSUES ARISING IN ITA NO.71/C HD/2012 ARE SIMILAR TO THE FACTS AND ISSUES IN ITA NO.70/CHD/2012. OUR DECISION IN ITA NO.70/CHD/2012 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.71/CHD/2012. 24. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH SEPTEMBER, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH