M/S SANWARMAL VIMAL KUMAR HUF, Jaipur V. ITO, Jaipur

ITA 734/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7887 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-08-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 12-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROSHANTA MEENA
• Keywords: Bad and doubtful debts; Commercial expediency; Revised return
• Section: 37(1); 27; 148; 28; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.K. SAINI ) ITA NO. 734 & 735/JP/2011 ASSESSMENT YEARS : 2001-02 & 2002-03 PAN: AACHS 8777 G M/S. SANWARMAL VIMAL KUMAR SARRAF, HUF VS. THE IT O SARRAF INDUSTRIAL ESTATE, B-117, ROAD NO.9 WARD- 2 (2) VKI AREA, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJEEV SOGANI DEPARTMENT BY : MISS. ROSHANTA MEENA DATE OF HEARING : 22.08.2012. DATE OF PRONOUNCEMENT : 24.08.2012 ORDER PER N.K. SAINI, A.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS EACH DATED 13-06-2011 OF THE LD. CIT(A)-I, JAIPUR. SINCE THE ISSUE INVOLVED IN BOTH THESE APPEALS IS COMMON AND THE APPEALS ARE HEARD TOGETHE R, THEREFORE, THESE APPEALS ARE BEING DISPOSED OFF BY THIS CONSOLIDATED FOR THE SAKE OF C ONVENIENCE. 2. FIRST WE WILL DEAL WITH ITA NO. 734/JP/2011 FOR THE ASSESSMENT YEAR 2001-02. 2.1 IN THIS APPEAL, THE ONLY ISSUE RAISED BY THE AS SESSEE RELATES TO THE CONFIRMATION OF PENALTY AMOUNTING TO RS. 1,16,049/- LEVIED BY THE A O U/S 271(1)( C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2.2 THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASS ESSEE FILED THE RETURN OF INCOME ON 11-07-2001 DECLARING AN INCOME OF RS. 9,115/-. THER EAFTER, THE AO ISSUED THE NOTICE U/S 2 148 OF THE ACT ON 29-03-2004 AFTER RECORDING THE RE ASONS. IN RESPONSE TO SAID NOTICE, THE ASSESSEE FILED LATE REVISED RETURN ON 9-11-2004 DEC LARING AN INCOME OF RS. 2,50,208/-. HOWEVER, THE AO COMPLETED THE ASSESSMENT VIDE HIS O RDER DATED 28-03-2005 AT AN INCOME OF RS. 6,16,036/- AND INITIATED THE PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME OF RS. 6,06,925/-. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE FOLLOWING ADDITIONS MADE BY THE AO. PARTICULARS ADDITION BY THE AO AND CONFIRMED BY THE LD. CIT(A) DISALLOWANCE OF EXPENSES RS. 1,04,574/- DISALLOWANCE BAD DEBTS RS. 33,380/- DISALLOWANCE OF INTEREST EXPENSES RS. 99,322/- 2.3 AS REGARDS THE DISALLOWANCE OF EXPENSES AMOUNTI NG TO RS. 1,04,574/- IS CONCERNED, THE AO NOTICED THAT THE ASSESSEE IN THE RETURN OF INCOME HAD GIVEN A NOTE TO THE EFFECT THAT OUT OF THE TOTAL EXPENSES OF RS. 4, 18,296/-, 75% OF THE EXPENSES WHICH WORKED OUT TO RS. 3,13,722/- HAD BEEN ADDED BACK CO NSIDERING THE SAME AS EXPENSES ON AGRICULTURE. IN THE ASSESSMENT PROCEEDINGS, THE AO DID NOT ACCEPT THIS ADHOC CLAIM OF THE ASSESSEE AND MADE THE ADDITION OF RS. 1,04,574/-. T HE AO IN THE PENALTY PROCEEDINGS ALSO NOTICED THAT THE THEN AO HAD NOT ACCEPTED THE ADHOC CLAIM OF THE ASSESSEE IN RESPECT OF THE DEDUCTION FROM INTEREST INCOME WHICH WAS REC EIVED BY THE ASSESSEE FROM TWO FDRS IN THE BANK AND ON DEPOSITS WITH M/S. PREM NAT H MOTORS (RAJ.) PVT. LTD. THE AO DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE AGAINST THIS INTEREST INCOME BY HOLDING THAT INTEREST INCOME WAS NOT BUSINESS INCOM E OF THE ASSESSEE BUT INCOME FROM 3 OTHER SOURCES. THE AO ALSO DID NOT ALLOW THE CLAIM OF THE ASSESSEE FOR BAD DEBTS WRITTEN OFF. 2.4 THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING THAT THE ASSESSEE HAD NOT BEEN ABLE TO FILE ANY EVIDENCE IN THE MATTER BE FORE HIM. 2.5 THE AO INITIATED THE PENALTY PROCEEDINGS. THE S UBMISSIONS OF THE ASSESSEE BEFORE THE AO WERE AS UNDER:- WITH REFERENCE TO ABOVE, WE SUBMIT THAT OUR MR. R .S. SINGH APPEARED BEFORE YOU ON 03-03-09 AND 18-03-09 AND CL ARIFIED THAT THE CASE APPEAL ALREADY DECIDED IN OUR FAVOUR VIDE CIT ORDER DATED 13-12-2007 (COPY ENCLOSED). THEREFORE, WE REQUEST TO KINDLY DROP THE PENALTY PR OCEEDINGS U/S 271(1)(C ) READ WITH SECTION 274 OF THE I.T. ACT, 1 961 UNDER INTIMATION TO US. THE AO DID NOT FIND ANY MERIT IN THE ABOVE SUBMISSI ONS OF THE ASSESSEE BY OBSERVING THAT PROVISIONS OF SECTION 271(1) ( C) READ WITH ITS EXP LANATION 1 MADE IT CLEAR THAT IF THE ASSESSING OFFICER WAS SATISFIED THAT ANY PERSON HAD CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED THE INACCURATE PARTICULARS OF SUCH INCOME OR WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME OF ANY PERSON UNDER THIS ACT, SUCH PERSONS FAILS TO OFFER ANY EXPLANATION OR OFFERS A N EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER TO BE FALSE , OR SUCH PERSON OFFE RS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLAN ATION IS BONAFIDE 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 CASE OF THE ASSESSEE COME S WITHIN THE PURVIEW OF SECTION 271(1)( C) OF THE ACT. THE AO LEVIED THE PENALTY OF RS. 1,16,049/-. 4 2.6 THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT( A) AND THE SUBMISSIONS MADE BEFORE HIM ARE MENTIONED IN PARA 5.1 TO 5.4 OF THE IMPUG NED ORDER WHICH ARE REPRODUCED VERBATIM AS UNDER:- 5.1 REGARDING PENALTY IMPOSED ON EXPENSES DISALLO WED:- ALL THE EXPENSES DISALLOWED ARE FULLY VOUCHED. THIS IS NOT THE CASE OF LD. AO THAT THE BOGUS EXPENSES HAVE BEEN CLAIMED OR THE CL AIM IS WITHOUT INCURRING THE EXPENSES. THE ONLY REASON GIVEN BY TH E LD. AO FOR DISALLOWING THE EXPENSES IS THAT THESE EXPENSES ARE NOT REQUIRED TO BE INCURRED BY THE ASSESSEE FOR ITS BUSINESS. WHAT EXP ENSES ARE TO BE INCURRED IS THE DECISION OF THE ASSESSEE AND THE ASSESSING O FFICER CANNOT QUESTION THE WISDOM OF THE ASSESSEE IN THIS REGARD. EXPENDITURE INCURRED OUT OF BUSINESS EXPEDIENCY IS ALLOWABLE AS DEDUCTION EVEN IF THERE IS NO DIRECT PROFIT MOTIVE IN INCURRING THE EXPENDITURE. AS LONG AS THE EXPENDITURE IS INCURRED TO BENEFIT OR FACILITATE THE BUSINESS THE SAME QUALIFIES FOR DEDUCTION. IN APPLYING THE TEST OF COMMERCIAL EXPEDIENCY FOR D ETERMINING WHETHER THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF THE BUSINESS, REASONABLENESS OF THE EXPE NDITURE HAS TO BE JUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AN D NOT OF THE REVENUE. 5.2 PENALTY IMPOSED ON BAD DEBTS CLAIMED DISALLOWED :- FROM THE ABOVE IT IS CLEAR THAT THE CLAIM OF THE BAD DEB TS WAS GENUINE AND BONA FIDE SUPPORTED WITH COMPLETE DETAILS. IT IS A DIFFE RENT MATTER THAT OLD DETAILS COULD NOT BE GATHERED BY THE ASSESSEE FOR WHICH RE ASON THE CLAIM WAS DISALLOWED. IT IS MOST HUMBLY SUBMITTED THAT WHEN A DEBT IS APPEARING IN THE BOOKS, CONTINUING SINCE EARLIER YEARS AND WRITT EN OFF DURING THE YEAR UNDER CONSIDERATION, THERE CANNOT BE ANY DOUBT ABOU T THE GENUINENESS OF THE SAID CLAIM. IF IN THE OPINION OF THE LD. AO, TH E DEBT HAS NOT ARISEN OUT OF THE SALE TRANSACTION THEN IF THE SAME IS NOT ALL OWABLE U/S 36, IT WOULD BE OTHERWISE ALLOWABLE U/S 28 AS A BUSINESS LOSS IN VIEW OF THE ABOVE IMPOSING PENALTY ON MERE DISALLOWANCE OF THE ABOVE SHOULD NOT LEAD TO PENALT Y. THE ACTION OF THE LD. AO IN IMPOSING PENALTY IS UNJUSTIFIED. HENCE, PENAL TY ON THIS DISALLOWANCE MAY PLEASE BE DELETED. 5.3 PENALTY ON INTEREST OF RS. 90,000/- NOT ALLOWED :- THE LD. AO HAS NOT DISPUTED THE FACT THAT EXPENSES ARE INCU RRED. HE HAS ONLY MADE 5 AN ASSUMPTION OF NOT HAVING NEXUS WITH THE INTEREST INCOME EARNED. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDI TURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1) (C ). 5.4 IN VIEW OF THE ABOVE IMPOSING PENALTY ON MERE DISALLOWANCE OF THE ABOVE SHOULD NOT LEAD TO PENALT Y. THE ACTION OF THE LD. AO IN IMPOSING PENALTY IS UNJUSTIFIED. HENCE MAY PL EASE BE DELETED. RELIANCE WAS PLACED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010), 322 ITR 158. 2.7 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT THE ASSESSEE REPEATEDLY FAILED TO VERIFY THE NATURE OF THE EXPENSES CLAIMED AND THE BUSINESS OR COMMERCIAL EXPEDIENCY OF INCURRING THIS EXPENDITURE . HE FURTHER OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE BY WA Y OF VOUCHERS BEFORE THE AO OR THE LD. CIT(A) TO DISCHARGE HIS ONUS REGARDING THE CLAI M AND THEIR ALLOWABILITY U/S 37(1) OR U/S 36 OF THE ACT. ACCORDING THE LD. CIT(A), THE AO HAD BROUGHT ON RECORD THAT THE ASSESSEE FAILED TO FILE AN EVIDENCE IN SUPPORT OF H IS CLAIM FOR THE ADMISSIBILITY OF THESE EXPENSES. AS REGARDS THE DISALLOWANCE ON ACCOUNT OF BAD DEBTS AND INTEREST, THE LD. CIT(A) OBSERVED THAT REPEATED OPPORTUNITIES HAD BEE N GIVEN TO THE ASSESSEE BY VARIOUS ASSESSING AND APPELLATE AUTHORITIES BUT HE COULD NO T BRING ON RECORD ANY CORROBORATIVE EVIDENCE TO SUPPORT HIS SUBMISSION THAT BAD DEBTS C LAIMED WERE GENUINE AND BONAFIDE OR THAT THE INTEREST CHARGED ON EARLIER YEARS ON ACCOU NT OF SHRI JAGANNATH MEENA FOR PURCHASE OF AGRICULTURAL LAND WAS ALLOWABLE AGAINST NON-EXEMPT INTEREST INCOME. THE LD. CIT(A) WAS OF THE VIEW THAT THE FACTS IN THE CASE O F THE CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) RELIED UPON BY THE LD. AR OF THE ASSESSEE WERE DISTINCT FROM THE CASE OF 6 THE ASSESSEE. ACCORDINGLY, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO AMOUNTING TO RS.1,60,049/- U/S 271(1)( C) OF THE AC T. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.8 THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AO LEVIED THE PENALTY ON THAT INCOME ALSO WHICH WAS DISCLOSED BY THE ASSESSEE IN THE RET URN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. IT WAS CONTENDED THAT SECTION 148 OF TH E ACT PROVIDES THAT RETURN FILED IN RESPONSE TO NOTICE U/S 148 IS TO BE TREATED AS RETU RN FILED U/S 139 OF THE ACT AND NO PENALTY CAN BE IMPOSED. RELIANCE WAS PLACED ON THE FOLLOWIN G CASE LAWS. 1. CIT VS. SURESH CHAND MITTAL (2001), 251 ITR 9 (SC) 2. KAMAL KISHORE BAID (ITA NO.205/JP/2011 JAIPUR BEN CH) IT WAS CONTENDED THAT THE EXPENSES DEBITED TO PROFI T AND LOSS ACCOUNT WERE NOT RELATED TO THE AGRICULTURAL BUSINESS AND ALL THE EXPENSES WERE FULLY VOUCHED AND THAT IT WAS NOT THE CASE OF THE AO THAT BOGUS EXPENSES HAD BEEN CLAIME D OR THE CLAIM WAS WITHOUT INCURRING THE EXPENSES. IT WAS FURTHER STATED THAT FOR DISALL OWING THE EXPENSES THE ONLY REASON GIVEN BY THE AO WAS THAT THESE EXPENSES WERE NOT REQUIRED TO BE INCURRED BY THE ASSESSEE FOR ITS BUSINESS. IT WAS STATED THAT WHAT EXPENSES WERE TO BE INCURRED WAS THE DECISION OF THE ASSESSEE AND THE AO COULD NOT QUESTION THE WISDOM O F THE ASSESSEE IN THIS REGARD. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS. 1. EASTERN INVESTMENTS LTD. VS. CIT, 20 ITD 1 (SC) 2. CIT VS. WALCHAND & CO. (P) LTD. (1967), 65 ITR 381 (SC) 3. J.K. WOOLLEN MANUFACTURERS VS. CIT (1969) 72 ITR 61 2 (SC) 7 4. ALUMINUM CORPORATION OF INDIA LTD. VS. CIT, (1972) 85 ITR 11 (SC) 5. CIT VS. PANIPAT WOOLLEN & GENERAL MILLS CO LTD. (19 76) 103 ITR 66 (SC) 6. JAMSHEDPUR MOTOR ACCESSORIES STORES VS. CIT, (1974) , 95 ITR 664 (PAT) 7. STEEL CONTAINER LTD. VS. CIT, (1978) 112 ITR 995 (C AL.) IT WAS FURTHER CONTENDED THAT MERE DISALLOWANCE ON THE BASIS OF THE AOS PERCEPTION OF THE WAY THE BUSINESS SHOULD BE DONE, CANNOT LEAD TO PENALTY. AS REGARDS THE DISALLOWANCE OF THE INTEREST EXPENSES AMOUNTING TO RS. 99,322/-, IT WAS SUBMITTED THAT THE AO HAD NOT DISPUTED THE FACT THAT EXPENSES WERE INCURRED BUT M ADE AN ASSUMPTION OF NOT HAVING NEXUS WITH THE INTEREST INCOME EARNED. THEREFORE, M ERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTE D OR WAS NOT ACCEPTABLE TO REVENUE WOULD NOT ATTRACT TO THE PENALTY U/S 271(1)( C) OF THE ACT. IT WAS SUBMITTED THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE IN CORRECT OR INACCURATE. NOR ANY DETAILS SUPPLIED WERE FOUND TO BE FACTUALLY INCORRECT, FALS E OR BOGUS. THEREFORE, THERE WAS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C ) OF THE ACT. AS REGARDS THE DISALLOWANCE ON ACCOUNT OF BAD DEBTS, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE CLAIM OF THE BAD DEBTS WAS GENUINE AND BONA FIDE WHICH WAS SUPPORTE D WITH COMPLETE DETAILS, THE ONLY REASON FOR DISALLOWING THE CLAIM WAS THAT OLD DETAI LS COULD NOT BE GATHERED BY THE ASSESSEE. HOWEVER, THE DEBIT WAS APPEARING IN THE B OOKS CONTINUOUSLY SINCE EARLIER YEARS AND WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION , SO, THERE COULD NOT BE ANY DOUBT 8 ABOUT THE GENUINENESS OF HE SAID CLAIM. THEREFORE, IMPOSITION OF PENALTY ON MERE DISALLOWANCE WAS NOT JUSTIFIED. RELIANCE WAS PLACED ON FOLLOWING CASE LAWS. 1. APPROPRIATE AUTHORITY AND ANOTHER VS. KAILASH S UNEJA & ANOTHER (2001) 251 ITR 1 (SC). 2. CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010), 322 ITR 158 (SC) 2.9 IN HER RIVAL SUBMISSIONS, THE LD. DR SUBMITTED THAT CLAIM OF THE ASSESSEE WAS NOT GENUINE AND FOR THAT REASON ONLY, THE AO DISALLOWED THE CLAIM FOR THE EXPENSES, INTEREST AND BAD DEBTS. IT WAS FURTHER SUBMITTED THAT THE AD DITION MADE BY THE AO BY MAKING ABOVE DISALLOWANCES WAS UPHELD BY THE LD. CIT(A). T HEREFORE, THE PENALTY LEVIED BY THE AO U/S 271(1)(C ) WAS RIGHTLY CONFIRMED BY THE LD. CIT(A). 2.10 WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT C ASE, IT APPEARS THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCES OF THE EXPENSES , BAD DEBTS AND INTEREST EXPENSES AMOUNTING TO RS.1,04,574/-, 31,380/- AND 99,322/- R ESPECTIVELY WAS CONFIRMED BY THE LD. CIT(A). NOW THE QUESTION ARISES WHETHER THE CONFIRM ATION OF THE ADDITION ON ACCOUNT OF ABOVE DISALLOWANCES WAS SUFFICIENT TO LEVY THE PENA LTY U/S 271(1)( C )OF THE ACT, PARTICULARLY WHEN IT IS WELL SETTLED THAT THE ASSES SMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS ARE TWO DISTINCT AND DIFFERENT PROCEEDI NGS. IN THE PRESENT CASE, AS REGARDS TO THE DISALLOWANCE OF THE EXPENSES IS CONCERNED, IT I S NOTICED THAT THE AO DISALLOWED THE EXPENSES AMOUNTING TO RS. 1,04,574/- ONLY ON THE BA SIS OF THE NOTE GIVEN IN THE RETURN FILED THAT OUT OF THE TOTAL EXPENSES OF RS. 4,18,29 6/-, 75% OF THE EXPENSES WHICH WORKED OUT TO RS. 3,13,722/- HAD BEEN ADDED BACK CONSIDERI NG THE SAME AS EXPENSES ON AGRICULTURE. THE AO DID NOT BRING ANY MATERIAL ON R ECORD TO SUBSTANTIATE THAT THE EXPENSES 9 CLAIMED BY THE ASSESSEE AGAINST BUSINESS ACTIVITY W ERE NOT GENUINE OR THOSE WERE NOT INCURRED FOR THE BUSINESS NECESSITY. IN OUR OPINION , A MERE DISALLOWANCE OF THE EXPENSES ON THE BASIS OF THE NOTE GIVEN BY THE ASSESSEE IN T HE RETURN OF INCOME WAS NOT SUFFICIENT TO HOLD THAT THE ASSESSEE CONCEALED THE INCOME OR FURN ISHED THE INACCURATE PARTICULARS OF INCOME. AS REGARDS THE DISALLOWANCE OF BAD DEBTS IS CONCERNED, IT APPEARS THAT OLD DEBTS WERE WRITTEN OFF BY THE ASSESSEE DURING THE YEAR UN DER CONSIDERATION, THOSE DEBTS WERE APPEARING SINCE THE YEAR 1999 AND WERE RELATING TO SALE OF GOODS. THE BAD DEBTS WERE DISALLOWED FOR THE REASON THAT THE ASSESSEE COULD N OT FURNISH THE OLD DETAILS BUT THIS CONTENTION OF THE ASSESSEE WAS NOT REBUTTED AT ANY STAGE THAT BAD DEBTS WRITTEN OFF WERE APPEARING CONTINUOUSLY IN THE BOOKS OF ACCOUNTS. TH EREFORE, EVEN IF THE ADDITION WAS MADE ON ACCOUNT OF BAD DEBTS CLAIMED BY THE ASSESS EE, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF INCOME RELATING TO THE BAD DEBTS. AS REGARDS THE DISALLOWANCE OF IN TEREST EXPENSES IS CONCERNED, THE FACTS MENTIONED BY THE LD. CIT(A) IN PARA 4.3 AND 4.4 OF THE IMPUGNED ORDER WERE THAT THE ASSESSEE MADE PAYMENT OF RS. 1.20 LACS BY CHEQUE TO SHRI JAGANNATH MEENA AGAINST PURCHASE OF AGRICULTURAL LAND ON 19-09-1991 AND HE TOOK A PROMISSORY NOTE FROM SHRI JAGANNATH MEENA TO SAFEGUARD HIS INTEREST AS THE RE GISTRY OF LAND WAS PENDING. SINCE THE REGISTRY WAS NOT MADE BY SHRI JAGANNATH MEENA, THE ASSESSEE CHARGED INTEREST ON THE AMOUNT OF RS. 1.20 LACS AGAINST LAND PURCHASED, RS. 90,000/- WAS WRITTEN OFF DURING THIS YEAR. THE AO DID NOT ALLOW THIS CLAIM OF RS. 90,000 /- BY GIVING A FINDING THAT THERE WAS NO MENTION OF CHARGING INTEREST FROM SHRI JAGANNATH MEENA TILL HE GOT THE LAND REGISTERED WITH THE REGISTRAR IN THE PROMISSORY NOTE SUBMITTED . SIMILARLY, THE AO DISALLOWED THE PAYMENT OF INTEREST OF RS. 9,322/- TO M/S. ASIA TRA NSPORT CO. ON THE GROUND THAT THE 10 ASSESSEE HAD NOT BEEN ABLE TO GIVE ANY ADEQUATE PRO OF REGARDING THE PAYMENT OF THIS AMOUNT. IN THE PRESENT CASE, THE AO HAD NOT DISPUTE D THIS FACT THAT THE EXPENSES WERE INCURRED. THE ONLY REASON FOR DISALLOWING THE CLAI M WAS ON THE ASSUMPTION OF NOT HAVING NEXUS WITH THE INTEREST INCOME EARNED. HOWEVER, NO INFORMATION WHICH WAS GIVEN IN THE RETURN OF INCOME WAS FOUND TO BE INCORRECT OR INACC URATE, FALSE OR BOGUS. THEREFORE, A MERE DISALLOWANCE OF CLAIM BY ITSELF WILL NOT AMOUN T TO FURNISHING OF INACCURATE PARTICULARS OF INCOME FOR MAKING THE CONCEALMENT OF INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (2010) 321 ITR 158 HELD AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F 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' USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER 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 IMAGI NATION CAN MAKING AN INCORRECT CLAIM 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 PARTICULAR S 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 CO RRECT, 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 ERRONEOU S 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 FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. 11 IN THE PRESENT CASE ALSO, THE ASSESSEE DISCLOSED A LL THE DETAILS RELATING TO ITS CLAIM AND THE AO HAS NOT GIVEN ANY FINDING THAT ANY DETAILS SUPPL IED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. THEREF ORE, THERE WAS NO QUESTION OF INVITING THE PENALTY U/S 271(1)( C) OF THE ACT, AS PER THE R ATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD. (SUPRA). WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE AFORESAID REFERRED CASE, ARE OF THE VIEW THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE AO. ACCORDINGLY, THE SAME IS DELETED. ITA NO.735/JP/2011 A.Y. 2002-03 3.0 THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RE LATES TO THE CONFIRMATION OF PENALTY AMOUNTING TO RS. 1,39,152/- LEVIED BY THE AO U/S 27 1(1) (C ) OF THE ACT. 3.1 DURING THE COURSE OF HEARING, IT WAS THE COMMON CONTENTION OF BOTH THE PARTIES THAT FACTS OF THE CASE IN THIS YEAR ARE SIMILAR TO THE FACTS INVOLVED IN THE PRECEDING YEAR I.E. 2001-02 IN ITA NO.734/JP/2011. THE ONLY DIFFERENCE IS THAT IN THIS YEAR THE RETURN OF INCOME WAS FILED ON 29-07-2004 DECLARING AN INCOME OF RS. 64,055/- AND THE ASSESSEE FILED THE RETURN IN RESPONSE TO NOTICE U/S 148 OF T HE ACT DECLARING AN INCOME OF RS. 4,59,030/- WHICH WAS ASSESSED BY THE AO AT RS. 9,98 ,210/- AND THE PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME OF RS.9,34 ,155/- (RS. 9,98,210 MINUS RS. 64,055/-).THE DISALLOWANCES WERE MADE OUT OF THE EX PENSES AND INTEREST FOR RS. 9,1340/- AND RS. 38,709/- RESPECTIVELY, OTHERWISE THE FACTS OF THE CASE ARE SIMILAR AS WERE IN THE EARLIER YEAR. 12 3.2 AFTER CONSIDERING THIS COMMON CONTENTION OF BOT H THE PARTIES THAT FACTS OF THE CASE IN THIS YEAR ARE SIMILAR TO THE FACTS INVOLVED IN T HE PRECEDING YEAR, WE HOLD THAT OUR FINDING GIVEN IN FORMER PART OF THIS ORDER RELATING TO ITA NO.734/JP/2011 FOR THE ASSESSMENT YEAR 2001-02 SHALL APPLY MUTATIS MUTANDI S FOR THE APPEAL RELATING TO ASSESSMENT YEAR 2002-03 IN ITA 735/JP/2011. IN THAT VIEW OF THE MATTER, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS DELETED. 4. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 24-08-20 12) SD/- SD/- ( R.K. GUPTA ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR, *MISHRA COPY FORWARDED TO :- 1. M/S. SANWARMAL VIMAL KUMAR SARRAF, JAIPUR 2. THE ITO, WARD- 2 (2), JAIPUR BY ORDER 3. THE LD CIT (A) 4. THE LD. CIT 5. THE D/R 6. GUARD FILE (ITA NOS.734 & 735JP/2011) AR ITAT JAIPUR.