M/S RAUNAQ FINANCE LTD., V. DCIT, Jaipur

ITA 83/JPR/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82815 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-07-2012
• Assessment Year: 1992-1993
• Appeal Filed On: 29-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Depreciation; Wrong claim; Difference of opinion; Reason to believe
• Section: 260A

Judgement Text

ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 83/JP/2010 ASSESSMENT YEAR: 1992-93 PAN : AAACR 9929 A M/S. RAUNAQ FINANCE LTD. VS. THE DCIT 418, SHALMAR COMPLEX CIRCLE- 2 CHURCH ROAD, JAIPUR JAIPUR NOW L-77, LAJPAT NAGAR, NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 120/JP/2010 ASSESSMENT YEAR: 2001-02 PAN : AAACR 9929 A THE DCIT VS. M/S. RAUNAQ FINANCE LTD. CIRCLE- 2 418, SHALMAR COMPLEX JAIPUR CHURCH ROAD, JAIPUR NOW L-77, LAJPAT NAGAR, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY:SHRI IMRAN AHMAD SIDDIQUI( REPRESENTAT IVE OF OFFICIAL LIQUIDATOR) DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 02-09-2014 DATE OF PRONOUNCEMENT: 31-10-2014 ORDER PER R.P. TOLANI, JM THESE ARE TWO APPEALS ONE BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1992-93 AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIP UR DATED 30-11-2009 AND ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 2 THE OTHER ONE BY THE REVENUE FOR THE ASSESSMENT YEA R 2001-02 AGAINST THE ORDER OF THE LD. CIT(A)-1, JAIPUR DATED 30-11-2009. BOTH PERTAIN TO PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2.1 THE GROUND RAISED BY THE ASSESSEE FOR THE ASSES SMENT YEAR 1992-93 IS AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF TH E LD. AO IN IMPOSING PENALTY U/S 271(1)(C) OF THE INCOME TAX AC T, 1961 AMOUNTING TO RS. 26,78,062/-. THE ACTION OF THE L D. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FAC TS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE PENALT Y OF RS. 26,78,062/- U/S 271(1)(C). 3.1 THE GROUND RAISED BY THE REVENUE FOR THE ASSES SMENT YEAR 2001-02 IS AS UNDER:- ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 18, 29,588- IMPOSED U/S 271(1)( C) READ WITH ITS EXPLANATION-1. 4.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY HAS GONE INTO LIQUIDATION AND BY THE ORDER OF HON'BLE HIGH COURT AN OFFICIAL LIQUIDATOR HAS BEEN APPOINTED WHO IS DULY IMPLEADED IN THE APPEAL PROCEEDINGS. VIDE LETTER ON 02-09-2014, THE OFFICIAL LIQUIDATOR HAS COMMUNI CATED AS UNDER:- 1. M/S. RAUNAQ FINANCE LTD. HAS BEEN ORDERED TO B E WOUND UP BY THE HON'BLE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH VIDE ITS ORDER AT 28-07-2011 PASSED IN S.B. C O. PET NO. 3/2009 AND THE OFFICIAL LIQUIDATOR ATTACHED TO THE RAJASTHAN ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 3 HIGH COURT WAS APPOINTED AS ITS LIQUIDATOR AND WITH EFFECT FROM SINCE THAT DATE THE OFFICIAL LIQUIDATOR IS ACT ING AS THE LIQUIDATOR OF THE COMPANY UNDER THE PROVISIONS OF T HE COMPANIES ACT, 1956. 2. THAT BOTH THE APPEALS CASES FOR THE ASSESSMENT Y EAR 1992-93 AND 2001-02 WHICH HAS BEEN FIXED FOR HEARIN G BEFORE YOUR HONOUR ARE PERTAINING TO THE PERIOD PRIOR TO T HE DATE OF WINDING UP I.E. 28-07-2011. 3. THAT THE OFFICIAL LIQUIDATOR HAS NO OTHER RECORD S AND PAPERS WITH HIM IN RESPECT OF THESE APPEALS, OT HER THAT WHAT IT HAS BEEN OBTAINED FROM THE HON'BLE INCOME TAX AP PELLATE TRIBUNAL (ITAT), JAIPUR BENCH, JAIPUR . 4.2 THE LD. DR ALSO CONTENDS THAT NO OTHER INFORMAT ION IS AVAILABLE WITH THEM. 5.1 ADVERTING TO ASSESSEE APPEAL FOR THE ASSESSMENT YEAR 1992-93 REGARDING PENALTY U/S 271(1)OF THE ACT, BRIEF FACT S OF THE CASE ARE THAT DEPRECIATION ON THE ASSETS PURCHASED FROM M/S. LONG MAN INDUSTRIAL TRADERS WAS DENIED WHICH WAS CONFIRMED BY ITAT. ON APPEAL U /S 260A OF THE ACT, THE HON'BLE RAJASTHAN HIGH COURT REMANDED THE ASSES SMENT TO THE FILE OF THE AO TO DECIDE THE SAME AFTER MAKING DETAILED ENQUIRY REGARDING THE GENUINENESS OF THE TRANSACTIONS BETWEEN M/S. LONGM AN INDUSTRIAL TRADERS AND THE ASSESSEE. THE PENALTY HAS BEEN LEVIED QUA T HIS ADDITION CONFIRMED IN THE SECOND ROUND, RELEVANT OBSERVATIONS OF THE LD. CIT(A) WHILE CONFIRMING THE PENALTY ARE AS UNDER:- ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 4 IN THE RE-ASSESSMENT PROCEEDINGS THE AO AFTER DEP UTING AN INSPECTOR CAME TO THE CONCLUSION THAT IT COULD N OT BE PROVED THAT SHRI MANISH MEHROTRA ENTERED INTO ANY TRANSACT ION WITH THE APPELLANT AND HAD SUPPLIED SHUTTERING TO M/S. U NITECH LTD. GIVEN ON LEASE. THE TRANSACTION WAS ONLY ON PAPER T RANSACTION AND SHRI MANISH MEHROTRA WAS ONLY A NAME LENDER. IN FIRST APPEAL THE GROUND OF APPEAL OF THE ASSESSEE WAS REJ ECTED. THOUGH M/S. UNITECH LTD. HAD CONFIRMED THAT THE SAI D SHUTTERING MATERIAL WAS USED FOR ITS CONSTRUCTION A CTIVITIES BUT IN THE ORIGINAL ASSESSMENT PROCEEDINGS NO EVIDENCE WAS PRODUCED TO SUBSTANTIATE THE CLAIM. AS THE ADDITION WAS CONFIRMED BY THE CIT(A) A SHOW CAUSE NOTICE U/S 271 (1)(C) WAS ISSUED AND AFTER CONSIDERING REPLY THE AO LEVIED PE NALTY BY INVOKING PROVISIONS OF EXPLANATION 1 TO SECTION 271 (1)(C). ON BOGUS CLAIM OF DEPRECIATION OF RS.5175000/-, PENALT Y WAS LEVIED RELYING ON THE DECISION IN THE CASE OF CIT V S. PREMIER BREWARIES LTD. 244 ITR 598 (KER). THE HONBLE KERAL A H.C. RELIED UPON THE DECISION OF HONBLE S.C. REPORTED I N 204 ITR 244. THE AO HAS ALSO OBSERVED IN THE PENALTY ORDER THAT IN THE CASE OF APPELLANT THE DECISION OF MADRAS H.C. IN TH E CASE OF SHRINIWASAN & CO. VS. CIT 97 ITR 431 IS APPLICABLE. THE AO HAS ALSO REPLIED UPON THE DECISION IN THE CASE OF K EDAR NATH SANWAL DAS VS. CIT 111 ITR 440 (P&H) WHEREIN THE FI NDING THAT LOSSES TO BE FORWARDED WERE FALSE WAS SUFFICIE NT TO HOLD THAT THERE WAS SCHEME ON THE PART OF THE ASSESSEE T O DEFEAT THE REVENUE. IN THE PRESENT CASE IT HAS PLANED A SCHEME OF HAWALA TRANSACTION OF SHUTTERING MATERIAL IN AGREEMENT WIT H M/S. UNITECH LTD., NEW DELHI AND SAME WAS MATERIALIZED B Y MAKING FORMAL LEASE AGREEMENT WITH IT. THE OTHER CONCERNS HAVE ALSO TAKEN SAME TYPE OF HAWALA BILLS FROM SHRI MANISH ME HROTRA AND TURNED UP FOR DISCLOSURE UNDER VDIS OR BEFORE T HE SETTLEMENT COMMISSION AND PAD TAXES. WITH THIS, IT WAS OBSERVED THAT MATERIALS BROUGHT ON RECORD WERE SUFF ICEIENT TO PROVE THE APPELLANTS INTENTION WHICH WAS TO CONCEA L HIS INCOME TO DEFEAT THE REVENUE DELIBERATELY. RELIANCE WAS PL ACED ON THE DECISION REPORTED IN 173 ITR 242 (AP). THE AO HAS A LSO RELIED UPON THE DECISION OF MADRAS H.C. IN THE CASE OF CEM ENT DISTRIBUTORS P. LTD. 60 ITR 586 (MAD) IN WHICH IT W AS FOUND THAT ASSESSEE HAD RECORDED BOGUS TRANSACTIONS IN OR DER TO ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 5 DISCLOSE ITS INCOME AT A MUCH LESSER FIGURE AND THU S THE APPELLANT HAD DELIBERATELY FURNISHED INACCURATE PAR TICULARS. THE AO HAS ALSO RELIED UPON THE DECISION OF HONBLE S.C. IN THE CASE OF SUMATI DAYAL 241 ITR 801(SC) AND CIT VS. E. V. RAJAN 151 ITR 189 (MAD). 5.2 THE ASSESSEE MADE VARIOUS CONTENTIONS DURING PE NALTY PROCEEDINGS WHICH DID NOT FIND FAVOR OF THE LD. CIT(A) BY FOLLO WING OBSERVATIONS. CONTENTION OF THE AR IS CONSIDERED. IT IS NOT A C ASE OF DIFFERENT OPINION OF THE AUTHORITIES AT DIFFERENT L EVEL. ORIGINALLY THE CLAIM OF DEPRECIATION WAS ACCEPTED AS GENUINE B UT SUBSEQUENTLY AS AN OUTCOME OF THE SEARCH PROCEEDING S IN THE CASE OF M/S. HCL FINANCE AND INVESTMENT LTD., DELHI REOPENING PROCEEDINGS WERE INITIATED IN THE CASE OF THE APPEL LANT AND CLAIM OF DEPRECIATION ON WOODEN SHUTTERING WAS DISA LLOWED. THE VERY BASIS OF INITIATING REOPENING PROCEEDINGS WAS THAT THE AO HAD REASON TO BELIEVE, BASED ON THE INFORMATION RECEIVED BY HIM, THAT CERTAIN INCOME HAD ESCAPED ASSESSMENT. TH E APPEAL AGAINST THE REOPENING PROCEEDINGS FILED BY THE APPE LLANT WAS DISMISSED AT THE LEVEL OF CIT(A) AS WELL AS TRIBUNA L. BOTH THE APPELLATE AUTHORITIES WERE HAVING CONCURRENT VIEWS. EVEN THE HONBLE HIGH COURT WITHOUT DISAPPROVING THE ACTION OF THE AO HAS SET ASIDE THE PROCEEDINGS FOR THE REASON THAT E NQUIRY COULD NOT BE MADE PROPERLY. THE COURT HAS OBSERVED THAT S H. MANISH MEHROTRA DID NOT CO-OPERATED THE AO BY NOT PRODUCIN G THE RELEVANT RECORD. TO HELP THE AO IN HIS INVESTIGATIO N THE HONBLE COURT DIRECTED THE AO TO DEPUTE HIS INSPECTOR AND M AKE DETAILED ENQUIRY. THUS THE AR IS NOT CORRECT IN STA TING THAT NO CONFIRMATIVE FINDINGS ARE ON RECORD AND FINDINGS HA VE BEEN CHANGING AT DIFFERENT LEVELS. SH. MANISH MEHROTRA DURING HIS CROSS EXAMINATION HA S CLEARLY ADMITTED THAT HE USED TO RECEIVE COMMISSION FROM SH. SURESH MEHROTRA IN CASH. IT IS THEREFORE OF NO SIGN IFICANCE THAT SH. MANISH MEHROTRA HAS NOT RECEIVED ANY PAYMENT DI RECTLY ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 6 FROM THE APPELLANT COMPANY. SH. MANISH MEHROTRA IN HIS CROSS EXAMINATION WHILE REPLYING QUESTION NO.15 HAS ALSO ADMITTED THAT AMOUNT OF RS.5175000/- WAS PAID BACK IN CASH. HE HAS FURTHER ADMITTED THAT HE HAD ISSUED BEARER CHEQUE A ND HANDED OVER TO SH. SURESH MEHROTRA FOR THE ULTIMATE DISPOS AL OF THE CASH WITHDRAWN FROM THE BANK. SH. MEHROTRA HAD ALSO ADMITTED THAT HE HAS NOT IMPLICATED M/S RAUNAQ FINACE LTD. T HAT HE DID NOT CARRY ON ANY BUSINESS IN SHUTTERING MATERIAL AN D THE TRANSACTIONS WERE MERELY ON PAPER AND ALL THE BANK AND CASH TRANSACTIONS WERE DONE BY MR. SURESH MEHROTRA. THE CONFESSIONAL STATEMENT OF SH. MANISH MEHROTRA CAN B E RELIED UPON WHEN IT IS SUPPORTED BY OTHER FACTS WHICH INCL UDES THE SURRENDER BY VARIOUS OTHER PARTIES WHO HAVE ENTERED INTO SIMILAR TRANSACTIONS WITH SH. MANISH MEHROTRA. AS A RESULT OF SEARCH ON SH. MANISH MEHROTRA VARIOUS PARTIES WHO H AVE MADE SIMILAR TRANSACTIONS WITH HIM HAVE MADE DISCLOSURE UNDER VDIS AS WELL AS SETTLEMENT COMMISSION. THIS IS SUFFICIEN T MATERIAL TO SUPPORT THE CONFESSIONAL STATEMENT OF SH. MANISH ME HROTRA. THE AR HAS RELIED UPON STATEMENTS OF SOME THIRD PAR TIES-SH. MAHENDRA SAINI AND VISHWANATH PAREEK WHICH ARE NOT MATERIAL. EVEN THE STATEMENT OF SH. VISHWANATH PARE EK ONY CONFIRMS THAT SH. MANISH MEHROTRA WAS DEALING IN SH UTTERING MATERIAL BUT THE STATEMENT IN NOWHERE PROVES THAT S H. MANISH WAS NOT INDULGING INTO UNSCRUPULOUS LEASE TRANSACTI ONS. IF SH. MANISH MEHROTRA OWNED AND INDUSTRIAL PLOT, IN NO WA Y IT PROVES THAT HE WAS NOT INVOLVED IN ISSUING BOGUS BI LLS. THE AO IN THE ASSESSMENT ORDER AS WELL AS IN THE PENALTY O RDER HAS PROVED THAT THE TRANSACTION BETWEEN THE APPELLANT A ND SH. MANISH MEHROTRA WAS ONLY A PAPER TRANSACTION. AS TH E APPELLANT DID NOT OWN THE ASSETS ON WHICH DEPRECIAT ION WAS CLAIMED, THE CLAIM MADE BY THE APPELLANT WAS FALSE. THE AO HAS RELIED UPON VARIOUS CASE LAWS WHEREIN THE COURTS HA VE HELD THAT ANY BOGUS CLAIM MAY ATTRACT CONCEALMENT PENALT Y. THE CASE LAWS RELIED UPON BY AO COULD NOT BE REBUTT ED SUCCESSFULLY. THE APPELLANT IS ALSO GUILTY OF FURNI SHING INACCURATE PARTICULARS OF ASSETS OWNED BY IT IN THE RETURN OF INCOME. FURTHER BY MAKING WRONG CLAIM OF DEPRECIATI ON THE APPELLANT IS ALSO GUILTY OF CONCEALING THE CORRECT PARTICULARS OF ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 7 INCOME. IN THE CASE OF CIT VS. PREMIER BREWARIES LT D. 244 OTR 598 (KER) IT WAS HELD THAT MAKING WRONG CLAIM DELIB ERATELY MAY ATTRACT PROVISIONS OF SEC.271(1)(C). IN THAT CA SE CLAIM OF EXPENDITURE ON REPAIRS OF EXISTING EQUIPMENTS WAS M ADE WHICH WAS FOUND FALSE AS THE EXPENDITURE WAS INCURRED FOR THE PURCHASE OF NEW EQUIPMENTS. THUS THE EXPENDITURE CL AIMED WAS NOT FOUND INCURRED. IN THE CASE OF CEMENT DISTRIBUT ORS PVT. LTD. REPORTED IN 60 ITR 586 (MAD) THE COURT HAS HELD THA T IF ASSESSEE HAD RECORDED BOGUS TRANSACTIONS IN ORDER T O DISCLOSE ITS INCOME AT MUCH LESSER FIGURE, PENALTY IS ATTRAC TED. FURTHER EXPLANATION (1) TO SEC 271(1)(C) CLEARLY STATE THAT PENALTY FOR CONCEALMENT IS LEVIABLE IF THERE IS A DIFFERENCE IN THE ASSESSED INCOME AND RETURNED INCOME, UNLESS THE ASSESSEE HAS OFFERED AN EXPLANATION WHICH IS NOT FALSE. IN THE PRESENT CASE EXPLANATION (1) IS APPLICABLE AS THERE IS A DIFFERENCE IN RETUR NED INCOME AND ASSESSED INCOME. THE EXPLANATION OFFERED BY THE APP ELLANT WAS PROVED TO BE FALSE AND THEREFORE SUB-CLAUSE (A) OF THE EXPLANATION IS APPLICABLE. THE PENALTY LEVIED BY TH E AO U/S 271(C) IS THEREFORE CONFIRMED. 5.3 WE HAVE HEARD LD. DRS CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS EMERGES THAT ASSESSM ENT TRAVELLED UPTO HON'BLE HIGH COURT AND AS PER DIRECTION OF HON'BLE HIGH COURT IT WAS FOUND BY THE AO THAT IMPUGNED TRANSACTION WAS NOT GENUINE AND SHRI MANISH MEHROTRA WAS ONLY A NAME LENDER. THUS THE PARTICULA RS FILED BY THE ASSESSEE WAS FOUND TO BE INACCURATE AND CAMOUFLAGING THE NAM E LENDING TRANSACTIONS INTO GENUINE TRANSACTIONS. THUS THERE IS A CLEAR FI NDING THAT THE PARTICULARS FILED WITH THE RETURNS WERE INACCURATE AS WELL AS C ONCEALED. IN VIEW THEREOF, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS RELIANCE PETRO ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 8 PRODUCTS, 322 ITR 158 DOES NOT HELP THE ASSESSEES CASE. AT THE SAME TIME THE DECISION OF HON'BLE APEX COURT IN THE CASE OF UNION OF INDIA VS DHARMENDRA TEXTILES, 306 ITR 277 IS APPLICABLE TO T HE ASSESSEES CASE WHICH DOES NOT SHIFT ANY ONUS ON THE ASSESSEE TO DEMONSTR ATE THE MENS REA OR CONTUMACIOUS CONDUCT OF THE ASSESSEE. IN THESE CIRC UMSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. THUS THE APPEAL OF THE ASSESSEE IS DISMISSED. 6.1 NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2001-02. 6.2 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C LAIMED DEDUCTION U/S 35D OF THE ACT ON AMORTIZATION BASIS IN THE RETURN OF I NCOME. HOWEVER, IN THE COMPUTATION OF INCOME IT CLAIMED ENTIRE EXPENDITURE INCURRED IN THIS BEHALF. SIMILARLY REGARDING TRAVELLING EXPENDITURE WHICH WA S DISCLOSED WITH THE RETURN OF INCOME, THE AO DISALLOWED THE SAME BY HOL DING THAT THE COMPANY WAS NOT BENEFITTED FROM TOURS CONDUCTED IN THIS BEH ALF. 6.3 IN FIRST APPEAL, THE LD. CIT(A) DELETED THE PEN ALTY BY FOLLOWING OBSERVATIONS. CONTENTION OF THE A.R. IS CONSIDERED. THE DISALLOWANCE OF EXPENDITURE U/S 35D ON ACCOUNT OF CLAIMING EXPENDITURE ENTIRELY IN ONE YEAR RATHER TH AN SPREADING OVER TO 10 YEARS AS PER THE PROVISIONS OF SECTION 35D CANNOT BE CONSIDERED AS EITHER FURNISHI NG OF ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 9 INACCURATE PARTICULARS OR CONCEALMENT OF PARTICULAR S OF INCOME. THE DISALLOWANCE MADE BY AO IN THE ASSESSME NT ORDER MAY BE JUSTIFIED BUT IT CANNOT ATTRACT PENALT Y FOR CONCEALMENT OF 271(1) AUTOMATICALLY. REGARDING DISALLOWANCE OF TRAVELING EXPENDITURE, IT IS NOT THE CASE OF AO THAT THE APPELLANT HAS NOT UNDERTAKING TRAVELLING THOUGH THE AO WAS NOT CONVIN CED ABOUT THE BUSINESS PURPOSE OF TRAVELLING. THE APPEL LANT HAS OFFERED AN EXPLANATION BUT IT WAS NOT SUPPORTED WITH CONCRETE EVIDENCE AND, THEREFORE, EXPENDITURE WAS N OT ALLOWED. THE AO HAS MADE DISALLOWANCE ON THE REASON THAT THE COMPANY WAS NOT BENEFITED FROM TOURS. THE EXPENDITURE INCURRED MAY NOT BE WHOLLY AND EXCLUSIV ELY FOR THE BUSINESS BUT IT CANNOT BE SAID THAT THE EXP ENDITURE WAS NOT MADE AT ALL OR IN OTHER WORDS THE CLAIM OF EXPENDITURE WAS NOT GENUINE. FURTHER, THE ISSUE IS NOT FREE FROM DEBATE AS THERE ARE DIFFERENT OPINION ON THE ISSUE OF MAKING DISALLOWANCE ON ACCOUNT OF PERSONAL USE IN THE CASE OF COMPANY. WHEN THERE IS DIFFERENCE OF OPINION, PENALTY FOR CONCEALMENT DO NOT ATTRACT. THE DISALLOWANCE OF INTEREST WAS MADE AS THE APPELLANT FAILED TO ESTABLISH THE NEXUS OF THE FUND S BORROWED WITH THE ADVANCING OF LOAN INTEREST FREE. THE CASE LAWS RELIED UPON BY THE A.R. WERE DECIDED SUBSEQUENT TO THE ASSESSMENT ORDER WHEREIN IT HAS B EEN HELD THAT WHEN AN ASSESSEE HAD BOTH BORROWED FUNDS AS WELL AS OWN FUNDS THERE WOULD BE A PRESUMPTION THAT THE AMOUNT WAS MADE OUT OF OWN FUNDS OF THE ASSESSEE. A S ON THIS ISSUE DIFFERENT VIEWS ARE AVAILABLE AS HELD BY HON'BLE RAJASTHAN H.C. IN THE CASE OF CIT VS HARSHVARDHAN CHEMICALS & MINERALS LTD. (SUPRA), PENALTY CANNOT BE IMPOSED. IN THIS CASE ALL THE THREE EXPENSES DISALL OWED BY THE AO AND MADE AS BASIS FOR LEVY OF PENALTY ARE SU CH THAT THESE DISALLOWANCES AUTOMATICALLY CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OR CONCEALING PARTICULARS OF INCOME. THE AO HAS INVOKE D EXPLANATION 1 TO SECTION 271(1) AND HAS CONSIDERED THE ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 10 DIFFERENCE IN ASSESSED INCOME AND RETURNED INCOME A S CONCEALMENT OF INCOME. SUB-CLAUSE (A) PROVIDES THAT PENALTY FOR CONCEALMENT IS NOT LEVIABLE IF THE ASS ESSEE OFFERS EXPLANATION AND EXPLANATION IS NOT CONSIDERE D AS FALSE. IN THE PRESENT CASE THE EXPLANATION WAS OFFE RED BUT THE SAME WAS NOT FOUND CORRECT ON MERITS BY THE AO AND ACTION OF AO WAS ALSO FURTHER CONFIRMED IN APPEAL. THE EXPLANATION OFFERED WAS NOT CONSIDERED AS BONAFIDE BY THE AO. ALL THE FACTS RELATED TO THE CLAIM WERE AVA ILABLE ON RECORD. EXPLANATION 1 RAISES INITIAL PRESUMPTION THAT THE ADDITION REPRESENTS CONCEALED INCOME OF THE ASS ESSEE. THE PRESUMPTION IS HOWEVER, REBUTABLE. THE ASSESSME NT PROCEEDINGS AND PENALTY PROCEEDINGS ARE WHOLLY DIST INCT AND SEPARATE OF EACH OTHER AND UNLESS IT IS PROVED THAT THE EXPLANATION OFFERED WAS NOT BONAFIDE OR SOME CONSCIOUS CONCEALMENT WAS PROVED, PROVISIONS OF EXPLANATION 1 MAY NOT ATTRACT. THE AO IS, THEREFORE , DIRECTED TO DELETE THE PENALTY LEVIED U/S 271(1)( C ) OF THE I.T. ACT ON VARIOUS DISALLOWANCES. 6.4 WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. WE FIND THAT ALL THE PARTICULARS ABOUT THE CLAIM U/S 35D AND TRAVELLING EXPENSES WERE FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETRO PRODUCTS (SUPRA) HAS CLEARLY HELD THAT IF THE RELEVANT PARTI CULARS ARE FILED ALONGWITH THE RETURN OF INCOME, THE MERE FACT IS THAT AO DISALLOW ED PART OF IT OR TOOK A DIFFERENT VIEW WILL NOT MAKE AMENABLE TO PENALTY U/ S 271(1)( C) OF THE ACT. THUS IN VIEW THEREOF, THE JUDGMENT OF HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (SUPRA) IS SQUARELY APPLICABLE TO THE ITA NO. 83/JP/2010 M/S. RANUQ FINANCE LTD. VS. DCIT CIRCLE- 2, JAIPUR 11 ASSESSEE'S CASE. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. 7.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE AND REVENUE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 - 10-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 31 ST OCT. 2014 *MISHRA COPY FORWARDED TO:- 1. M/S. RAUNAQ FINANCE LTD. NEW DELHI 2. THE DCIT, CIRCLE- 2, JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT 5..THE LD. DR 6.THE GUARD FILE (IT NO. 83/JP/2010) BY ORDER AR ITAT, JAIPUR