The ACIT,Ahmedabad Circle-3, Ahmedabad V. Varun Finstock Pvt.Ltd., Ahmedabad

ITA 757/AHD/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9215 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 15-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Question of law; Speculation loss
• Section: 271(1)(c); 201

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' [BEFORE SHRI R V EASWAR VICE-PRESIDENT] [AND SHRI P K BANSAL ACCOUNTANT MEMBER] ITA NO.757/AHD/2007 [ASSESSMENT YEAR:- 2001-02] THE ASSISTANT COMMISSIONER OF INCOME- TAX, CIRCLE-3, AHMEDABAD V/S M/S VARUN FINSTOCK PVT. LTD., 27, NEW CLOTH MARKET, O/S RAIPUR GATE, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY :- SMT. NEETA SHAH RESPONDENT BY:- SHRI TUSHAR P HEMANI O R D E R PER P K BANSAL (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A ) DATED 23 RD NOVEMBER, 2006 FOR ASSESSMENT YEAR 2001-02, BY TAKI NG THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CANCEL ING THE PENALTY OF RS.5,39,620/- LEVIED U/S 271(1)(C) OF THE I.T. ACT. 2 THE BRIEF FACTS OF THE CASE ARE THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE PURCHASED 75800 SHARES O F SHARDUL SECURITIES LTD. @ RS.22/- PER SHARE FOR A TOTAL CON SIDERATION OF RS.16,67,600/-. THESE SHARES WERE HELD AS A CLOSING STOCK AS ON 31-03-2001 WHEN THE MARKET VALUE FELL TO RS.4/- PER SHARE. THESE SHARES WERE VALUED AT RS.3,03,200/- AND WERE SHOWN IN THE TRADING ACCOUNT AS WELL AS IN THE BALANCE-SHEET AT RS.3,03,200/-. 2 THUS THE ASSESSEE INCURRED A LOSS OF RS.13,64,400/- . THE AO TOOK THE VIEW THAT THIS LOSS IS A SPECULATION LOSS IN VI EW OF THE PROVISIONS OF EXPLANATION TO SECTION 73 AND ALLOWED IT TO BE CARRIED FORWARD FOR BEING SET OFF AGAINST THE SPECU LATION PROFIT OF THE SUBSEQUENT ASSESSMENT YEARS. ON THE BASIS OF TH ESE FACTS THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF T HE INCOME-TAX ACT, 1961. THE AO ISSUED A SHOW CAUSE NOTICE. THE A SSESSEE SUBMITTED ITS WRITTEN SUBMISSIONS VIDE LETTER DATED 04-11-2005 AND EXPLAINED THAT THE ASSESSEE CLAIMED THE LOSS IN THE P&L ACCOUNT FILED ALONG WITH THE RETURN OF INCOME. IN S CHEDULE-I TO THE P&L ACCOUNT, SHARE TRADING HAS BEEN SHOWN WHERE THE DETAILS OF PURCHASE OF ABOVE STOCK AND THE VALUE OF THE SAM E CLOSING STOCK HAS BEEN MENTIONED. THEREFORE, THE ASSESSEE H AS DISCLOSED ALL MATERIAL FACTS REQUIRED FOR COMPUTATION OF INCO ME. THE ASSESSEE HAS ALSO SUBMITTED THAT THE ABOVE LOSS HAS NOT BEEN CLAIMED ON THE BASIS OF ANY FACT WHICH IS FOUND TO BE FALSE. NEITHER THE CLAIM HAS BEEN MADE BY SUPPRESSING CERT AIN FACTS. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES CONTE NTIONS AND LEVIED THE PENALTY OF RS.5,39,620/- U/S 271(1)(C) O F THE ACT. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CANCELLED THE PENALTY BY OBSERVING AS UNDER:- 8. I HAVE CONSIDERED THE ABOVE SUBMISSIONS. THERE ARE DIVERGENT OPINIONS OF COURTS ON THE ISSUE. SOME OF THE DECISI ONS IN FAVOUR OF THE APPELLANT ARE AS UNDER: (I) SWAMINI LEASING & LNV. (P) LTD. VS. JCIT, ITAT D BENCH, MUMBAI, ITA NO.21 50/MUM/2000 DATED 26.5.2004. (II) DCIT VS. VENKATESHWAR LNV. & FINANCE(P) LTD., 92 TTJ CAL (SB) 1129 3 (III) GODAVARI CAPITAL LTD. VS. DCIT. (IV) AMAN PORTFOLI (P) LTD. VS DCIT, 82 TTJ 351 (DE L) (V) HSBC SECURITIES & CAPITAL MARKET (I) PVT. LTD. VS JCIT, ITA NO.3386/MUM/2001. (VI) DCIT VS. CONCORD COMMERCIALS PVT. LTD., 94 TTJ MUMB. (SB) SOME OF THE DECISIONS AGAINST THE ASSESSEE ARE AS U NDER: (I) RPG INDUSTRIES LTD. VS ACIT, 79 TTJ 819 (CAL) (II) ROHINI CAPITAL SERVICE LTD. VS. DCIT, 93 TTJ D EL. 137 (III) DCIT VS. FRONTLINE CAPITAL SERVICES LTD., 9 7 T1J DEL 201 (IV) SRJ SECURITIES V ACIT 81 TTJ DEL 484. (V) CIT VS. SUN DISTRIBUTORS & MINING CO. LTD., 68 TAXMAN 223 (CAL) (VI) DCIT VS. AAKRISH INVEST. & LEASING P. LTD., 90 TTJ (VII) PAHARPUR COOLING FANS LTD. VS.DCIT, 85 LTD 7 45 (KOL). 8.1 THUS THE ISSUE IS ONE ON WHICH TWO OPINIONS ARE POSSIBLE. THE DISALLOWANCE IS MADE PURELY ON A QUESTION OF LAW. I N SUCH A SITUATION, PENALTY U/S 271(1)(C) CANNOT BE IMPOSED. I FIND THA T THE APPELLANT HAS CLAIMED THE LOSS IN THE PROFIT AND LOSS ACCOUNT FIL ED ALONG WITH RETURN OF INCOME. IN SCHEDULE-I TO PROFIT & LOSS ACCOUNT S HARE TRADING HAS BEEN SHOWN WHERE THE DETAILS OF PURCHASE OF ABOVE S TOCK AND THE VALUE OF THE SAME CLOSING STOCK HAS BEEN MENTIONED. THEREFORE, IT CAN BE SAID THAT THE APPELLANT HAS DISCLOSED ALL THE MA TERIAL FACTS REQUIRED FOR COMPUTATION OF INCOME. THE ABOVE LOSS HAS NOT B EEN CLAIMED ON THE BASIS OF ANY FACT WHICH IS FOUND TO BE FALSE. N EITHER THE CLAIM HAS BEEN MADE BY SUPPRESSING CERTAIN FACTS. 8.2 FURTHER, THE APPELLANTS CLAIM IS SUPPORTED BY A NUMBER OF DECISIONS QUOTED AT PARA-8 ABOVE. THUS, THE ISSUE H AS BECOME DEBATABLE ON WHICH CLEARLY TWO OPINIONS ARE POSSIBL E. IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS & MINERAL LTD., 259 ITR 212, THE HONBLE RAJASTHAN HIGH COURT (JAIPUR BENCH) HAVE HE LD AS UNDER: 4 FROM THE FOREGOING DISCUSSION IT FOLLOWS THAT SUCH A DEDUCTION COULD BE AN ARGUABLE, CONTROVERSIAL OR A DEBATABLE QUESTION. IN SUCH A SITUATION THE CLAIM COULD NOT BE SAID TO BE FALSE. IF THIS WERE NOT SO, IT WOULD BECOME IMPOSSIBLE FOR ANY ASS ESSEE TO RAISE ANY CLAIMS OR CLAIM ANY DEDUCTIONS WHICH ARE DEBATABLE. IT IS NOT CERTAINLY THE INTENTION OF THE LEGISLATURE T O MAKE PUNISHABLE SUCH CLAIMS OR DEDUCTIONS UNDER SECTION 271(1)(C), IF THEY ARE NOT ACCEPTED. AFFIRMING THE DECISION OF THE APPELLATE TRIBUNAL, T HE HONBLE COURT IN THIS CASE HAVE HELD THAT NO PENALTY IS LEVIABLE WHE N THE ASSESSEE HAS CLAIMED DEDUCTION OF AN AMOUNT THAT WAS DEBATABLE. IT COULD NOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF TAX. 8.3 IN THE CASE OF CIT VS. S.P.K. STEELS (P) LTD., 270 1TR 156, THE HONBLE MADHYA PRADESH HIGH COURT HAVE HELD THAT NO PENALTY IS LEVIABLE U/S 271(1 )(C) IN A CASE WHERE LOSS IS GEN UINE BUT NOT ALLOWED BECAUSE OF DEEMING PROVISIONS OF EXPLANAITON TO SEC . 73. 8.4 THE APPELLANTS CASE IS SQUARELY COVERED BY THE ABOVE DECISIONS. ON CONSIDERATION OF THE FACTS OF THE CASE AND FOLLO WING THE DECISION OF HONBLE RAJASTHAN HIGH COURT AND HONBLE MADHYA PRA DESH HIGH COURT I HOLD THAT PENALTY IS NOT LEVIABLE IN THE CA SE OF APPELLANT WHERE ITS CLAIM OF SHARE TRADING LOSS HAS BEEN DISALLOWED . ACCORDINGLY, THE PENALTY LEVIED BY THE AO IS CANCELLED. 3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAWS AS C ITED BEFORE US. 4 SECTION 271(1)(C) READS AS UNDER: 271.(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) [OR THE COMMISSIONER] IN THE COURSE OF AN Y PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON - (A) .. (B) .. 5 (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, OR (D) .. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY, - EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, - (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND [FAILS TO PROVE THAT SUCH EXPLA NATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SA ME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FO R THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEME D TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. AS PER THE PROVISIONS OF SECTION 271(1)(C) THE PENA LTY UNDER THIS SECTION IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDING UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICUL ARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. TH E PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS BOTH ARE DIFFERENT. EXPLANATION 1 TO SECTION 271(1)(C) IN RESPECT OF ANY FACT RELATING T O THE COMPUTATION OF TOTAL INCOME STATES THAT THE AMOUNT ADDED OR DISALL OWED IN COMPUTING THE TOTAL INCOME OF AN ASSESSEE SHALL BE DEEMED TO BE T HE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEM ING PROVISION FOR CONCEALMENT IS NOT ABSOLUTE ONE. 6 EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THAT AN AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF A PERSO N FALLING UNDER CLAUSE (A) OR (B) OF EXPLANATION 1 SHALL, FOR THE PURPOSE OF SECTION 271(1)(C), BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAD BEEN CONCEALED. EXPLANATION 1 REFERS TO TWO SITUATIONS I N WHICH PRESUMPTION OF CONCEALMENT CREATED BY EXPLANATION 1 IS AVAILABLE. THE FIRST SITUATION IS WHERE THE ASSESSEE, IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME, FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR THE COMMISSIONER TO BE FALSE. THE SECOND SITUATION IS WHERE THE ASSESSEE, IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME, OFFERS AN EXPLANAT ION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND ALSO FAILS TO PROVE THAT S UCH EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE COMPUTA TION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESUMPTION AVAILABLE UN DER EXPLANATION 1 CANNOT BE DRAWN UNLESS THE CASE OF THE ASSESSEE FAL LS UNDER EITHER OF THE CLAUSES, VIZ., CLAUSE (A) OR CLAUSE (B). THE PRESUMPTION UNDER EXPLANATION 1 IS REBUTTABLE A ND NOT CONCLUSIVE. THE ASSESSEE CAN SUBMIT THE EXPLANATION AS THE ONUS SHIFTED ON THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PAR TICULARS OF THE INCOME. THE ASSESSEE IN THIS CASE HAS DULY SUBMITTED THE EX PLANATION. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE W HICH MAY PROVE THAT THE REVENUE HAS DETECTED THE CONCEALMENT OR THE EXP LANATION SUBMITTED BY THE ASSESSEE WAS FALSE ONE. EVEN THERE IS NO MAT ERIAL WHICH MAY PROVE THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS EXPLANATION. MERELY THE ADDITION HAS BEEN MADE IN THE ASSESSMENT IN OUR OPI NION THE ASSESSEE CAN NOT BE ENTRUSTED WITH THE PENALTY BY SIMPLY INVOKIN G EXPLANATION 1. 5 THE EXPLANATION SUBMITTED BY THE ASSESSEE, IN OU R OPINION, PROVED THAT THE ASSESSEE HAS DISCHARGED HIS ONUS AN D HAS REBUTTED THE 7 PRESUMPTIONS AVAILABLE TO THE REVENUE UNDER EXPLANA TION 1 TO SECTION 271(1)(C). THIS EXPLANATION GIVEN BY THE ASSESSEE C ANNOT BE REGARDED TO BE A FALSE EXPLANATION UNTIL AND UNLESS, IN OUR OPI NION, THE REVENUE PROVES THAT THE EXPLANATION GIVEN BY THE ASSESSEE I S FALSE. IN OUR OPINION, NO PENALTY U/S 271(1)(C) CAN BE IMPOSED ON THE ASSE SSEE. 6. IN THE CASE OF NATIONAL TEXTILES V CIT 249 ITR 125 (GUJ) THE QUESTION BEFORE THE HONBLE GUJARAT HIGH COURT WAS ABOUT THE LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF THE ADDITION MA DE U/S 68 BY RECOURSE TO EXPLANATION 1 BELOW SECTION 271(1)(C). IN THIS C ASE THE HONBLE GUJARAT HIGH COURT WHILE HOLDING THE IMPOSITION OF PENALTY WAS NOT JUSTIFIED OBSERVED:- IN ORDER TO JUSTIFY THE LEVY OF PENALTY, TWO FACTO RS MUST CO-EXIST, (I) THERE MUST BE SOME MATERIAL OR CIRCUMSTANCES LEADIN G TO THE REASONABLE CONCLUSION THAT THE AMOUNT DOES REPRESEN T THE ASSESSEES INCOME. IT IS NOT ENOUGH FOR THE PURPOSE OF PENALTY THAT THE AMOUNT HAS BEEN ASSESSED AS INCOME, AND (II) THE CIRCUMSTA NCES MUST SHOW THAT THERE WAS ANIMUS, I.E., CONSCIOUS CONCEALMENT OR ACT OF FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESS EE. EXPLANATION 1 TO SECTION 271(1)(C) HAS NO BEARING ON FACTOR NO.1 BUT HAS A BEARING ONLY ON FACTOR NO.2. THE EXPLANATION DOES NOT MAKE THE ASSESSMENT ORDER CONCLUSIVE EVIDENCE THAT THE AMOUNT ASSESSED WAS IN FACT THE INCOME OF THE ASSESSEE. NO PENALTY CAN BE IMPOSED IF THE F ACTS AND CIRCUMSTANCES ARE EQUALLY CONSISTENT WITH THE HYPOT HESIS THAT THE AMOUNT DOES NOT REPRESENT CONCEALED INCOME WITH THE HYPOTHESIS THAT IT DOES. IF THE ASSESSEE GIVES AN EXPLANATION WHIC H IS UNPROVED BUT NOT DISPROVED, I.E., IT IS NOT ACCEPTED BUT CIRCUMSTANC ES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE ASSESSEE S CASE IS FALSE, THE EXPLANATION CANNOT HELP THE DEPARTMENT BECAUSE THER E WILL BE NO MATERIAL TO SHOW THAT THE AMOUNT IN QUESTION WAS TH E INCOME OF THE ASSESSEE. ALTERNATIVELY, TREATING THE EXPLANATION A S DEALING WITH BOTH THE INGREDIENTS (I) AND (II) ABOVE, WHERE THE CIRCU MSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENCE THAT THE A SSESSEES EXPLANATION IS FALSE, THE ASSESSEE MUST BE HELD TO HAVE PROVED THAT THERE WAS NO MENS REA OR GUILTY MIND ON HIS PART. E VEN IN THIS VIEW OF THE MATTER THE EXPLANATION ALONE CAN NOT JUSTIFY LE VY OF PENALTY. ABSENCE OF PROOF ACCEPTABLE TO THE DEPARTMENT CANNO T BE EQUATED WITH FRAUD OR WILLFUL DEFAULT. 8 IN OUR OPINION, EVEN IF THE TRIBUNAL HAS CONFIRMED THE ADDITION DOES NOT MEAN THAT THE ASSESSEE HAS CONCEALED THE INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 7 SINCE THE LEARNED DR HAS VEHEMENTLY RELIED ON TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILES PROCESSORS (SUPRA), WE THEREFORE HAVE TO REFER TO THAT DECISION ALSO. IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS (SUPRA), WE NOTED THAT THE HON'BLE SUPREME COURT H AS HELD THAT PENALTY U/S 271(1)(C) IS A CIVIL LIABILIT Y AND THAT WILLFUL CONCEALMENT AND MENS REA ARE NOT ESSENT IAL INGREDIENTS FOR ATTRACTING THE CIVIL LIABILITY AS I S THE CASE IN THE MATTER OF PROSECUTION U/S 276 OF THE ACT. IT HAS FU RTHER BEEN HELD IN THAT CASE THAT MENS REA IS NOT AN ESSENTIAL INGR EDIENT FOR IMPOSING THE PENALTY. THE HON'BLE SUPREME COURT IN THIS CASE NOWHERE HELD THAT IF THE ADDITION IS MADE, PENALTY IS AUTOMATIC. THIS JUDGMENT DOES NOT OVERRULE THE EXPLANATIONS AP PENDED TO SECTION 271(1)(C). IT EVEN HELD THAT THE OBJECT BEH IND THE ENACTMENT OF SECTION 271(1)(C) READ WITH EXPLANATIO NS INDICATES THAT THE SAID SECTION HAS BEEN ENACTED TO PROVIDE F OR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION I S A CIVIL LIABILITY. THUS, THE RATIO LAID DOWN IN THIS JUDGME NT WAS CONFINED TO TREATING THE WILLFUL CONCEALMENT IS NOT ESSENTIA L FOR IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT. WHERE AN ASSE SSEE GENUINELY MAKES A CLAIMS FOR A PARTICULAR DEDUCTION BY DISCLOSING ALL THE NECESSARY FACTS RELATING TO THE SAME, THAT CANNOT BE REGARDED TO BE A CONCEALMENT EVEN IF THE ASSESSEES CLAIM IS REJECTED. THIS IS THE SETTLED LAW THAT PEN ALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND, T HEREFORE, IF ANY ADDITION IS MADE, IT DOES NOT MEAN THAT THE PEN ALTY WILL 9 AUTOMATICALLY BE LEVIED. IN THE PENALTY PROCEEDINGS THE ASSESSEE IS GIVEN AN OPPORTUNITY TO EXPLAIN HIS CASE IF HE S UCCESSFULLY EXPLAINS HIS POSITION AND IS NOT TRAPPED WITHIN THE PARAMETERS OF SECTION 271(1)(C) ALONG WITH THE EXPLANATIONS DEEMI NG THE CONCEALMENT OF INCOME, PENALTY CANNOT BE IMPOSED. I N THIS CASE, WE NOTED, THE PENALTY HAS BEEN IMPOSED FOR CONCEALM ENT OF INCOME BY THE ASSESSEE BY INVOKING EXPLANATION TO S EC. 271(1)(C). SECTION 271(1)(C) DEALS WITH THE TWO SIT UATIONS FOR IMPOSING THE PENALTY; (A) HAS CONCEALED THE PARTICULARS OF HIS INCOME; OR (B) HAS FURNISHED THE INACCURATE PARTICULARS OF SUCH INCOME. EXPLANATION 1 IS APPLICABLE ONLY IN CASE OF FIRST S ITUATION I.E. AMOUNT ADDED OR DISALLOWED IN THE TOTAL INCOME BE D EEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTIC ULARS HAVE BEEN CONCEALED. 8 INACCURATE PARTICULARS MEANS THAT THE PARTICUL ARS ARE INCORRECT OR INACCURATE OR NOT CORRECT. THAT MEANS, THE PARTICULARS HAVE NOT BEEN FURNISHED IN CORRECT / EXACT MANNER A S IS REQUIRED TO BE FURNISHED TO DETERMINE THE CORRECT INCOME CHA RGEABLE TO TAX OF THE ASSESSEE. AT THE TIME WHEN THE RETURN WAS FI LED BY THE ASSESSEE, CAN THE PARTICULARS SUBMITTED BY THE ASSE SSEE RELATING TO THE TOTAL INCOME, BE REGARDED TO BE INCORRECT. THE CLAIM MADE BY THE ASSESSEE IS BONA FIDE AS THERE ARE TWO VIEWS PO SSIBLE ON THE APPLICABILITY OF SECTION 73 OF THE ACT. MERELY THE CLAIM OF ASSESSEE NOT ACCEPTED DOES NOT MEAN THAT THE ASSESS EE BE PENALIZED. 10 9 IN VIEW OF OUR AFORESAID DISCUSSION, WE ARE OF T HE VIEW THAT THIS IS NOT A CASE WHERE THE ASSESSEE HAS SUBMITTED THE INACCURATE PARTICULARS OF HIS INCOME WHILE SUBMITTI NG THE INCOME-TAX RETURN AND, THEREFORE, WE CONFIRM THE OR DER OF THE CIT(A) DELETING THE PENALTY IMPOSED U/S 271(1)(C). 10 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04-09-2009 SD/- SD/- (R V EASWAR) VICE-PRESIDENT (P K BANSAL) ACCOUNTANT MEMBER DATE : 04-09-2009 COPY OF THE ORDER FORWARDED TO : 1. M/S VARUN FINSTOCK PVT. LTD., 27, NEW CLOTH MARK ET, O/S RAIPUR GATE, AHMEDABAD 2. THE ACIT, CIRCLE-3, AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-VII, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/ AR, ITAT, AHMEDABAD