ACIT, New Delhi V. M/s DSL Software Ltd., New Delhi

ITA 861/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58742 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-02-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMARDR
• Assessee Lawyers: PINKY KAPOORARS
• Keywords: Bonafide belief; Earning of tax free income; Wrong claim; Competent authority
• Section: 14A; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI B BENC H BEFORE SHRI R.P. TOLANI , JM & SHRI A.N. PAHUJA, AM ITA NOS.861&862/DEL/2011 AYS:2003-04 & 2004-05 A.C.I.T.,CENTRAL CIRCLE-2, ROOM NO.323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTENSION,NEW DELHI V/S . M/S DSL SOFTWARE LTD., (NOW AMALGAMATED WITH HCL TECHNOLOGIES LTD.), 806, SIDDHARTHA, 96, NEHRU PLACE, NEW DELHI [PAN : AA ACHI1645P] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI NEERAJ JAIN & MS. PINKY KAPOOR,ARS REVENUE BY SHRI PRADEEP KUMAR,DR DATE OF HEARING 23-02-2012 DATE OF PRONOUNCEMENT 09-03-2012 O R D E R A.N.PAHUJA:- THESE TWO APPEALS FILED ON 11.02.2011 BY THE REVENU E AGAINST TWO SEPARATE ORDERS DATED 24.11.2010 OF THE LD. CIT (A)-III, NEW DELHI FOR THE AYS 2003-04 & 2004-05, RAISE THE FOLLOWING SIMILAR GRO UNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE PENALTY OF ` ` 10,00,000/- IN THE AY 2003-04 & ` 1,05,00,000/- IN THE AY 2004-05 LEVIED BY THE AO U/ S 271(1)(C) BY HOLDING THAT THE QUANTUM ADDITIONS MAD E BY THE AO U/S 10A AND 80HHE HAVE BEEN DELETED BY THE ITAT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE PENALTY WITHOUT APPRECIATING THE FACT THE DECIS ION OF THE ITAT DELETING THE QUANTUM ADDITION HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL U/S 260A HAS BEEN FILED IN THE HONBLE HIGH COURT. ITA N OS.861&862 /DEL./2011 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THA T CLAIM U/S 10A AND 80HHE ARE DEBATABLE ISSUES AND WRONG CLAIM OF DEDUCTION DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 4. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS AND IS NOT TENABLE IN LAW AND ON FACTS. 5. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AME ND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING T HE COURSE OF THE HEARING OF THE APPEAL. . 2. FACTS ,IN BRIEF, AS PER, RELEVANT ORDERS FOR TH E AY 2003-04 ARE THAT RETURN DECLARING INCOME OF ` ` 16,75,00,900/- FILED ON 01.12.2003 BY THE ASSESSEE, CARRYING ON THE BUSINESS OF SOFTWARE DEVELOPMENT AN D BPO SERVICES, AFTER BEING PROCESSED ON 19.03.2004 U/S 143(1) OF THE INCOME-TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ,ISSUED ON 11 TH OCTOBER, 2004. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE, INTER ALIA, DID NOT RECEIVE OR BRING IN C ONVERTIBLE FOREIGN EXCHANGE INTO INDIA WITHIN THE STIPULATED TIME ON ACCOUNT OF EXPO RTS MADE BY IT TO THE EXTENT OF ` 13,16,087/- IN LEELA UNIT & ` 25,08,077/- IN GNR UNIT. ACCORDINGLY, THE AO REDUCED THESE AMOUNTS FROM THE EXPORT TURNOVER WHIL E COMPUTING DEDUCTION U/S 80HHE & 10A OF THE ACT RESPECTIVELY. INTER ALIA, PE NALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT WERE ALSO INITIATED. ON APPEAL, THE GROUND RELATING TO NON RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE INTO INDIA WITHIN THE STIPULATED TIME ON ACCOUNT OF EXPORTS, WAS NOT PRESSED BEFORE THE LD. CIT(A). SUB SEQUENTLY, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY U/S 271(1) (C) OF THE ACT, THE ASSESSEE REPLIED THAT THEY HAD MENTIONED THE FACT OF UNRE ALIZED EXPORT PROCEEDS IN ANNEXURE-A TO FORM 10CCAF & 56F AND ON THEIR APPLIC ATION, SEEKING EXTENSION OF TIME ,AMOUNTS WERE SUBSEQUENTLY REALIZED. ACCORDING LY, IT WAS ARGUED THAT ALL FACTS RELATING TO UNREALIZED EXPORT PROCEEDS HAVING BEEN DISCLOSED ,NO PENALTY COULD BE IMPOSED. HOWEVER, THE AO DID NOT ACCEPT TH E EXPLANATION OF THE ITA N OS.861&862 /DEL./2011 3 ASSESSEE AND IMPOSED A PENALTY OF ` 10 LACS ON THE TAX SOUGHT TO BE EVADED ON THE INCOME OF ` 12,48,547/- ON THE GROUND THAT THE ASSESSEE, A WELL ESTABLISHED COMPANY HAVING THE BENEFIT OF BEST TAX ADVISORS AN D CONSULTANTS, CONCEALED THE PARTICULARS OF ITS INCOME . IT WAS FURTHER MENTIONE D THAT THE IF THE CASE OF THE ASSESSEE WAS NOT SELECTED FOR SCRUTINY OR ESCAPED THE EYES OF THE AO, THE ASSESSEE WOULD HAVE GAINED HUGE UNDUE BENEFIT. INTE R ALIA, THE AO REFERRED TO DECISION IN UNION OF INDIA V. DHARMENDRA TEXTILE PR OCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC). 3. SIMILARLY, IN THE AY 2004-05, THE AO DISALLO WED THE CLAIM FOR DEDUCTION U/S 10A & 80HHE,INTER ALIA, IN RELATION TO FOLLOWING U NREALIZED EXPORT PROCEEDS WITHIN THE STIPULATED TIME : U/S 10A IN RESPECT OF BPO UNIT - ` ` 16,30,084/- U/S 10A IN RESPECT OF GNR UNIT - ` ` 1,09,39,398/- AND U/S 80HHE (LEELA UNIT) - ` 4,24,06,183/- BESIDES, AN AMOUNT OF ` 6,83,493/- WAS DISALLOWED ,HAVING RECOURSE TO PROVISIONS OF SEC. 14A OF THE ACT AND CLAIM FOR DED UCTION OF PENALTY OF` ` 10,000/- WAS ALSO DISALLOWED. ACCORDINGLY, PENALTY PROCEEDIN GS U/S 271(1)(C) OF THE ACT WERE INITIATED. SUBSEQUENTLY, AFTER RECEIPT OF ORD ER OF THE ITAT, IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY U/S 271(1) (C) OF THE ACT, THE ASSESSEE REPLIED THAT THEY HAD MENTIONED THE FACT OF UNREA LIZED EXPORT PROCEEDS IN ANNEXURE-A TO FORM 10CCAF & 56F AND ON THEIR APPLIC ATION, SEEKING EXTENSION OF TIME ,AMOUNTS WERE SUBSEQUENTLY REALIZED. ACCORDING LY, IT WAS ARGUED THAT ALL FACTS RELATING TO UNREALIZED EXPORT PROCEEDS HAVING BEEN DISCLOSED ,NO PENALTY COULD BE IMPOSED. AS REGARDS DISALLOWANCE U/S 14A O F THE ACT, THE ASSESSEE REPLIED THAT SINCE NO EXPENDITURE WAS INCURRED IN R ELATION TO EXEMPT INCOME, THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT NO DISALL OWANCE WAS REQUIRED TO BE MADE U/S 14A OF THE ACT. REGARDING DISALLOWANCE OF PENALTY, THE ASSESSEE DID NOT OFFER ANY EXPLANATION. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND IMPOSED A PENALTY OF ` 1,05,00,000/- ON THE TAX SOUGHT TO BE ITA N OS.861&862 /DEL./2011 4 EVADED ON THE INCOME OF ` 1,46,,29,547/- ON THE GROUND THAT THE ASSESSEE,A WE LL ESTABLISHED COMPANY HAVING THE BENEFIT OF BEST TA X ADVISORS AND CONSULTANTS, CONCEALED THE PARTICULARS OF ITS INCOME. IT WAS FUR THER MENTIONED THAT THE IF THE CASE OF THE ASSESSEE WAS NOT SELECTED FOR SCRUTINY OR ESCAPED THE EYES OF THE AO, THE ASSESSEE WOULD HAVE GAINED HUGE UNDUE BENEF IT. INTER ALIA, THE AO REFERRED TO DECISION IN UNION OF INDIA V. DHARMENDR A TEXTILE PROCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC). 4. ON APPEAL, THE LD. CIT(A) CANCELLED THE PENALTY IN THE AY2003-04 IN THE FOLLOWING TERMS:- I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIO NS MADE BY THE APPELLANT, THE ASSESSMENT ORDER, THE CASE LAWS CITE D BY HIM IN SUPPORT OF HIS SUBMISSIONS AND ALSO GONE THROUGH TH E ASSESSMENT ORDER, THE ORDER OF CIT(A) AND ITAT AS WELL AS THE PENALTY ORDER MADE BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT. THE APPELLANT HAS CHALLENGED THE IMPOSITION OF PENA LTY ON TWO GROUNDS FIRSTLY THAT THERE WAS NEITHER ANY CONCEALM ENT NOR ANY FURNISHING OF INACCURATE PARTICULARS, THEREFORE, CO NCEALMENT PENALTY WAS ATTRACTED IN HIS CASE AND SECONDLY THE APPELLAN T HAS ARGUED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IN CONSEQUENCE OF WHICH PENALTY HAS BEEN IMPOSED, HAVE BEEN DELETED I N ENTIRETY BY HONBLE ITAT, DELHI VIDE ORDER DATED 31.03.2009 IN I.T. NO.1320 & 1446/D/08, HENCE, PENALTY DOES NOT SURVIVE AND IT S HOULD BE CANCELLED. I HAVE EXAMINED THE FACTS OF THE CASE VERY CAREFUL LY. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE ASSESSING OFFICER IN CONSEQUENCE OF DISALLOWANCE OF THE CLAIM OF THE ASSESSEE MADE U/S 10A AND 80HHE OF THE INCOME-TAX ACT. IT HAS BEEN HELD BY T HE ASSESSING OFFICER THAT BY MAKING WRONG CLAIMS OF DEDUCTION U/ S 10A AND 80HHE, THE ASSESSEE HAS DELIBERATELY CONCEALED ITS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. I AM OF THE VIEW THAT A DISALLOWANCE OF QUANTUM OF A CLAIM OF DEDUCT ION DOES NOT NECESSARILY IMPLY CONCEALMENT OR FURNISHING OF INAC CURATE PARTICULARS BECAUSE THE ISSUE REGARDING ALLOWABILIT Y OF DEDUCTION U/S 10A AS WELL AS U/S 80HHE WERE DEBATABLE ISSUES BECA USE SEVERAL DECISIONS ON THE ISSUE ON BOTH SIDES WERE AVAILABLE . MOREOVER, THE ADDITIONS MADE BY THE ASSESSING OFFICER HAVE ALREAD Y BEEN DELETED BY THE HONBLE ITAT, DELHI AND, THEREFORE, THE PENA LTY LEVIED IN CONSEQUENCE OF THOSE ADDITIONS DOES NOT SURVIVE. T HE PENALTY OF ITA N OS.861&862 /DEL./2011 5 `10,00,000/- IMPOSED BY THE ASSESSING OFFICER U/S 2 71(1)(C) OF THE INCOME-TAX ACT IS CANCELLED. 5. LIKEWISE, IN THE AY 2004-05, THE LD. CIT(A) CAN CELLED THE PENALTY AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSIO NS MADE BY THE APPELLANT, THE ASSESSMENT ORDER, THE CASE LAWS CITE D BY HIM IN SUPPORT OF HIS SUBMISSIONS AND ALSO GONE THROUGH TH E ASSESSMENT ORDER, THE ORDER OF CIT(A) AND ITAT AS WELL AS THE PENALTY ORDER MADE BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT. THE APPELLANT HAS CHALLENGED THE IMPOSITION OF PENA LTY ON TWO GROUNDS FIRSTLY THAT THERE WAS NEITHER ANY CONCEALM ENT NOR ANY FURNISHING OF INACCURATE PARTICULARS, THEREFORE, CO NCEALMENT PENALTY WAS ATTRACTED IN HIS CASE AND SECONDLY THE APPELLAN T HAS ARGUED THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IN CONSEQUENCE OF WHICH PENALTY HAS BEEN IMPOSED, HAVE BEEN DELETED I N ENTIRETY BY HONBLE ITAT, DELHI VIDE ORDER DATED 31.03.2009 IN I.T. NO.1320 & 1446/D/08, HENCE, PENALTY DOES NOT SURVIVE AND IT S HOULD BE CANCELLED. I HAVE EXAMINED THE FACTS OF THE CASE VERY CAREFUL LY. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE ASSESSING OFFICER IN CONSEQUENCE OF DISALLOWANCE OF THE CLAIM OF THE ASSESSEE MADE U/S 10A AND 80HHE OF THE INCOME-TAX ACT. IT HAS BEEN HELD BY T HE ASSESSING OFFICER THAT BY MAKING WRONG CLAIMS OF DEDUCTION U/ S 10A AND 80HHE, THE ASSESSEE HAS DELIBERATELY CONCEALED ITS INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. I AM OF THE VIEW THAT A DISALLOWANCE OF QUANTUM OF A CLAIM OF DEDUCT ION DOES NOT NECESSARILY IMPLY CONCEALMENT OR FURNISHING OF INAC CURATE PARTICULARS BECAUSE THE ISSUE REGARDING ALLOWABILIT Y OF DEDUCTION U/S 10A AS WELL AS U/S 80HHE WERE DEBATABLE ISSUES BECA USE SEVERAL DECISIONS ON THE ISSUE ON BOTH SIDES WERE AVAILABLE . MOREOVER, MAJOR ADDITIONS MADE BY THE ASSESSING OFFICER HAVE ALREADY BEEN DELETED BY THE HONBLE ITAT, DELHI AND, THEREFORE, THE PENALTY LEVIED IN CONSEQUENCE OF THOSE ADDITIONS DOES NOT S URVIVE. ONLY TWO ADDITIONS I.E. THE ADDITION OF `6,83,493/- AND THE DISALLOWANCE OF `10,000/- ON ACCOUNT OF PENALTY HAVE BEEN SUSTAINED BECAUSE THE GROUNDS WERE NOT PRESSED BY THE ASSESSEE BEFORE THE CIT(A), BUT THESE ADDITIONS ALSO DO NOT PROVE ANY CONCEALMENT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM INCLINED TO HOL D THAT PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT IS NOT JUSTIFIE D, THEREFORE, THE PENALTY OF `1,05,00,000/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT IS CANCELLED. ITA N OS.861&862 /DEL./2011 6 6. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR SUPPORTED TH E ORDERS, LEVYING PENALTY WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUBMITTED THAT AT THE TIME OF FILING OF THE RETURN , DEDUCTION U/S 10A & 80HHE OF THE ACT ON TH E UNREALIZED EXPORT PROCEEDS WAS CLAIMED UNDER THE BONAFIDE BELIEF THAT THEIR A PPLICATIONS BEFORE THE COMPETENT AUTHORITY, SEEKING EXTENSION OF TIME FOR REALIZING EXPORT CONSIDERATION, WOULD BE ACCEPTED WITHIN THE STIPULATED TIME. EVEN OTHERWISE, THERE WAS COMPLETE DISCLOSURE OF THE PARTICULARS IN THIS REGA RD, AT THE TIME OF FILING OF THE RETURN . INTER ALIA, THE LD. AR RELIED UPON DECISIO NS IN CIT V. ONKAR SARAN AND SONS, 195 ITR 1 (SC);BALWANT RAI & CO V. CIT, 274 I TR 269 (ALL.);RUPAM MERCANTILE LIMITED V. DCIT, 91 ITD 237 (AHD.) (TM) . IT WAS FURTHER POINTED OUT THAT THERE WAS NO FAILURE TO DISCLOSE PARTICULARS OF INCOME IN RESPECT OF THE UNREALIZED EXPORT PROCEEDS AT THE TIME OF FILING OF RETURN OR EVEN DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS .MERELY BECAUS E CERTAIN ADDITIONS/ ADJUSTMENTS WERE MADE IN THE ASSESSMENT, IT DID NOT NECESSARILY FOLLOW THAT PENALTY WAS TO BE LEVIED. IN THIS CONNECTION, DECIS IONS IN C.I.T. V. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158(SC) AND CIT V S. GLOBE SALES CORPORATION, 145 TAXMAN 530(DEL.); CIT VS. RAJEDEV SINGH AND CO, 202 TAXMAN 433 (DEL.) ; CIT AND DCIT VS. S.L.N. TRADERS, 243 CTR 407 (DEL.) ;CIT V. BRAHMAPUTRA CONSORTIUM LTD:, ITA 1582 OF 2010 (DEL.); CIT V. MA HAVIR IRRIGATION PVT. LTD , ITA NO. 1266/2009 (DEL. );CIT V. M/S MAHANAGAR TELEPHON E NIGAM LTD.,ITA NO. 626/2011 (DEL.);FORTIS FINANCIAL SERVICES LTD,ITA N OS. 4/DEL/2009 AND 5/DEL/2009 (DEL.);BUSINESS STANDARD DIGITAL LTD. VS ACIT, ITA NO. 1591/DEL/2010 (DEL.), WERE REFERRED TO. REGARDING PENALTY IN REL ATION TO DISALLOWANCE U/S 14A OF THE ACT IN THE AY 2004-05, THE LD. AR RELIED UPON D ECISIONS IN RELIANCE PETROPRODUCTS PVT. LTD(SUPRA)AND LIQUID INVESTMENT, ITA 240 OF 2009(DEL.). IN NUTSHELL, THE LD. AR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS WELL AS THE AFORESAID DECISIONS RELIED UPON ON BEHALF OF THE ASSESSEE. AS REGARDS PENALTY LEVIED IN RESPECT OF AMOUNT ITA N OS.861&862 /DEL./2011 7 PERTAINING TO DEDUCTION U/S 10A & 80HHE OF THE ACT, AS IS APPARENT FROM THE AFORESAID FACTS, THE ASSESSEE CLAIMED DEDU CTION ON THE BASIS OF REPORT DATED 27.11.2003 OF THE CA IN FOR M NO. 56 F & 10CCAF.IN NOTE NO.4 IN ANNEXURE A TO FORM 10CCAF & 56F, IT WAS CLEARLY MENTIONED THAT AN AMOUNT OF ` 47,52,071/- ON ACCOUNT OF EXPORT PROCEEDS WAS NOT REALIZED BEFORE THE END OF SIX MONTHS FROM THE END OF THE FY 2002-03 AND AN APPLICATION FOR EX TENSION OF TIME TO THE COMPETENT AUTHORITY WAS MADE. IT WAS ALSO ME NTIONED THAT CALCULATION FOR DEDUCTION U/S 10A & 80HHE PROCEEDED ON THE BASIS THAT PERMISSION OF THE COMPETENT AUTHORITY WOULD BE FORTHCOMING. SIMILARLY IN THE NOTE 2 IN ANNEXURE TO FORM 10CCAF & 56F DATED 30 TH OCTOBER,2004 RELEVANT FOR THE AY 2004-05, IT WAS ME NTIONED THAT EXPORT SALES OF ` 549.76 LACS WERE NOT REALIZED BEFORE THE END OF SIX MONTHS FROM THE END OF THE FY 2003-04 AND THAT COMP ANY WAS YET TO FILE AN APPLICATION FOR EXTENSION OF TIME. INTER AL IA, REFERENCE TO CIRCULAR NO. 20 DATED 28.1.2002 ISSUED BY THE RBI, WAS ALSO MADE. THE LD. CIT(A) IN THE IMPUGNED ORDERS CONCLUDED THA T A DISALLOWANCE OF QUANTUM OF A CLAIM OF DEDUCTION DOES NOT NECESSARIL Y IMPLY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS BECAUSE THE IS SUE REGARDING ALLOWABILITY OF DEDUCTION U/S 10A AS WELL AS U/S 80HHE WERE DEBATAB LE ISSUES. WE FIND THAT IT IS NOT A CASE WHERE THE ASSESSEE HAS NOT DISCLOS ED FULL DETAILS AT THE TIME OF FILING OF RETURNS OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN TERMS OF PROVISIONS OF SEC. 10A(5) AND 80HHE(4) OF THE ACT, THE DEDUCTION UNDER THESE SECTIONS IS NO T ADMISSIBLE UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FOR M, ALONG WITH THE RETURN OF INCOME, THE REPORT OF AN ACCOUNTANT, AS D EFINED IN THE EXPLANATION BELOW SUB-SECTION (2) OF SECTION 288, C ERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THESE SECTIONS. THE ASSESSEE, IN THE INSTANT CASE, MERELY MADE A BONAFIDE CLAIM FOR THE DEDUCTION IN T ERMS OF THE SAID CERTIFICATE WHILE POINTING OUT THAT THE AFORESAID A MOUNTS TOWARDS ITA N OS.861&862 /DEL./2011 8 EXPORTS WERE NOT REALIZED WITHIN THE STIPULATED PER IOD. NOT EVEN A WHISPER HAS BEEN MADE IN THE PENALTY ORDER AS TO WH ICH SPECIFIC PARTICULARS WERE FURNISHED INACCURATE OR WERE CONCE ALED. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME ' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NO T BEEN DEFINED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWE VER, NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTA NCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY, KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN . ACCORDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS CO N+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KEEP FROM SIGHT; TO PREVEN T THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF. THE OFFENC E OF CONCEALMENT IS, THUS, A DIRECT ATTEMPT TO HIDE AN I TEM OF INCOME OR A PORTION THEREOF FROM THE KNOWLEDGE OF T HE INCOME- TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRA NSCRIPT.'. 7.1. THE PENALTY U/S 271(1)(C) OF THE ACT IS LE VIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL S ETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN TH E CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS. CIT, 123 ITR 4 57, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE RE GARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDI NGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSING PENALTY U/S 271(1)(C) OF THE ACT ARE DIFF ERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. IT IS, THEREFORE, ITA N OS.861&862 /DEL./2011 9 NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION OR DISALLOWANCE MADE IN THE QUANTUM PROCEEDINGS ACTUALLY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SA ID PROVISIONS. THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT STIPULA TE THAT IF THE ASSESSING OFFICER OR THE CIT(APPEALS) OR THE COMMIS SIONER, IN THE COURSE OF PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS THEREOF , HE MAY DIRECT THAT SUCH PERS ON SHALL PAY BY WAY OF PENALTY A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF TAX SOUGHT TO BE EVADED BY A REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME. EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT MENTIONS THAT WHE RE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE AO OR T HE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR SUCH PERSON OFF ERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE A ND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DIS ALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESU LT THEREOF SHALL FOR THE PURPOSE OF CLAUSE (C) OF SECTION 271(1), B E DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. IN OTHER WORDS, THE NECESSARY INGREDIEN TS FOR ATTRACTING EXPLANATION 1 TO SECTION 271(1)(C) ARE THAT (I) THE PERSON FAILS TO OFFER THE EXPLANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY TH E AO OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE, OR (III) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND ITA N OS.861&862 /DEL./2011 10 FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE A ND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. 7.2 IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THREE CATEGORIES, THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1)(C) COME INTO PLAY, AND THE AMOUNT AD DED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE C ONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED, FOR THE PURPOSES OF CLAUSE (C) OF SECTION 271(1), AND THE P ENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSEE IS ABLE TO OFFER A N EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FI DE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATIO N 1 TO SECTION 271(1)(C) OF THE ACT, AND IN THAT CASE, THE PENALTY SHALL NOT BE IMPOSED. IN THE INSTANT CASE, THE ASSESSEE DISCHARG ED THE ONUS CAST ON IT IN TERMS OF EXPLANATION 1 TO SEC. 271(1) (C) OF THE ACT. HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROF F V. JT. CIT [2007] 210 CTR (SC) 228 : [2007] 291 ITR 519 (SC) W HILE CONSIDERING THE SCOPE OF THESE PROVISIONS U/S 271 (1)( C) OF THE ACT OBSERVED IN THE FOLLOWING TERMS: THE LEGAL HISTORY OF SECTION 271(1)(C) OF THE ACT TRACED FROM THE 1922 ACT PRIMA FACIE SHOWS THAT THE EXPLAN ATIONS WERE APPLICABLE TO BOTH THE PARTS. HOWEVER, EACH CA SE MUST BE CONSIDERED ON ITS OWN FACTS. THE ROLE OF THE EXPLAN ATION HAVING REGARD TO THE PRINCIPLE OF STATUTORY INTERPR ETATION MUST BE BORNE IN MIND BEFORE INTERPRETING THE AFOREMENTI ONED PROVISIONS. CLAUSE (C) OF SUB-SECTION (1) OF SECTIO N 271 CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVI ABLE IF THE ASSESSEE CONCEALS THE PARTICULARS OF HIS INCOME OR FURNISHES INACCURATE PARTICULARS THEREOF. BY REASON OF SUCH C ONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ALONE, THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE FOR PENALTY. IMPO SITION OF PENALTY IS NOT AUTOMATIC. LEVY OF PENALTY IS NOT ON LY DISCRETIONARY IN NATURE BUT SUCH DISCRETION IS REQU IRED TO BE ITA N OS.861&862 /DEL./2011 11 EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEP ING THE RELEVANT FACTORS IN MIND. SOME OF THOSE FACTORS APA RT FROM BEING INHERENT IN THE NATURE OF PENALTY PROCEEDINGS AS HAS BEEN NOTICED IN SOME OF THE DECISIONS OF THIS COURT , INHERES ON THE FACE OF THE STATUTORY PROVISIONS. PENALTY PROCE EDINGS ARE NOT TO BE INITIATED, AS HAS BEEN NOTICED BY THE WAN CHOO COMMITTEE, ONLY TO HARASS THE ASSESSEE. THE APPROAC H OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAIR AND O BJECTIVE. THE TERM 'INACCURATE PARTICULARS' IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT BY I TSELF BE FURNISHING OF INACCURATE PARTICULARS. EVEN IF THE E XPLANATIONS ARE TAKEN RECOURSE TO, A FINDING HAS TO BE ARRIVED AT HAVING REGARD TO CLAUSE (A) OF EXPLANATION 1 THAT THE ASSE SSING OFFICER IS REQUIRED TO ARRIVE AT A FINDING THAT THE EXPLANATION OFFERED BY AN ASSESSEE, IN THE EVENT HE OFFERS ONE, WAS FALSE. HE MUST BE FOUND TO HAVE FAILED TO PROVE THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATIN G TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HI M. THUS, APART FROM HIS EXPLANATION BEING NOT BONA FIDE, IT SHOULD HAVE BEEN FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS MATERIAL TO THE COMPUTATION OF HIS INCOME . 7.3 IN THE LIGHT OF AFORESAID OBSERVATIONS O F THE HONBLE APEX COURT , WHAT IS TO BE SEEN IN THE INSTANT CASE, IS WHETHER THE CLAIM FOR DEDUCTION U/S 10A AND 80HHE OF THE ACT, ON THE BASIS OF CERTIFICATE OF THE ACCOUNTANT, MADE BY THE ASSESSE E WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED, THE ASSESS EE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO ESTABLISH TH AT THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTIONS 10A AND 8 0HHE OF THE ACT WAS NOT BONA FIDE OR THAT ANY SPECIFIC PARTIC ULARS WERE CONCEALED OR FURNISHED INACCURATE. LIKEWISE MERE DI SALLOWANCE OF ` `6,83,493/- IN TERMS OF PROVISIONS OF SEC. 14A OF T HE ACT OR DISALLOWANCE OF ` `10,000/- ON ACCOUNT OF PENALTY ON THE BASIS OF TAX AUDIT REPORT, DOES NOT ,IN OUR VIEW, ATTRACT LEVY OF PENALTY . A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RELYING ON DIFFERENT INTERPRETATIONS DO ES NOT AMOUNT TO CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISH ING INACCURATE ITA N OS.861&862 /DEL./2011 12 PARTICULARS THEREOF BY THE ASSESSEE. HON'BLE APEX C OURT IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158/ 189 TAX MAN 322, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519/ 161 TAXMAN 218 (SC) AND UNION OF INDIA V. DHARMENDRA TE XTILE PROCESSORS [2008] 306 ITR 277 / 174 TAXMAN 571 (SC) CONCLUDED THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTI CULARS. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OR CONCEALED T HE PARTICULARS . ADMITTEDLY, THE CLAIM FOR DEDUCTION U/S 10A & 80HHE WAS DULY SUPPORTED BY THE CERTIFICATE OF THE CHARTERED ACCOU NTANT IN THE PRESCRIBED FORM WHILE THE FACTUM OF UNREALIZED EXPO RT SALE PROCEEDS WAS MENTIONED IN THE SAID CERTIFICATE. IN THIS VIEW OF THE MATTER, NO FAULT CAN BE FOUND WITH THE CLAIM OF THE ASSESSEE T HAT IT HAD CLAIMED THE DEDUCTION IN A BONA FIDE MANNER. MOREOVER, MER E FACT THAT THE REPORT PREPARED BY THE CA WAS NOT IN ACCORDANCE WI TH THE RELEVANT PROVISIONS OF THE ACT, WAS NOT ENOUGH TO HOLD THAT THE MISTAKE WAS NOT BONA FIDE. THIS VIEW IS SUPPORTED BY THE DECIS ION IN THE CASE OF CIT VS. DEEP TOOLS PVT. LTD., 274 ITR 603 (P&H),WHE RE IN ALSO LEVY OF PENALTY WAS HELD TO BE UNJUSTIFIED.. 7.4. IN THE CASE UNDER CONSIDERATION, AS POINTED O UT BY THE LD. CIT(A), THE ASSESSEE HAD GIVEN ALL THE PARTICULARS OF INCOME AN D HAD DISCLOSED ALL FACTS TO THE AO IN RELATION TO CLAIM FOR DEDUCTION U/S 10A & 80HHE OF THE ACT. THE LD. CIT(A) ,ACCORDINGLY, CONCLUDED THAT PENALTY CANNO T BE IMPOSED MERELY ON SUCH DISALLOWANCES. MERE DISALLOWANCE OF A CLAIM WILL NOT AMOUNT TO FILING OF INACCURATE PARTICULARS OF INCOME. IT CAN AT BEST B E A WRONG CLAIM NOT A FALSE CLAIM. IN SUCH CIRCUMSTANCES, HONBLE DELHI HIGH C OURT HELD IN THE CASE OF COMMISSIONER OF INCOME-TAX.VS BACARDI MARTINI INDIA LIMITED.,288 ITR 585(DEL) THAT NO PENALTY WAS LEVIABLE. IN CIT VS. HARSHVARD HAN CHEMICALS & MINERALS LTD. ITA N OS.861&862 /DEL./2011 13 (259 ITR 212) (RAJ),HONBLE RAJASTHAN HIGH COURT UP HELD THE FINDING OF THE TRIBUNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AM OUNT THOUGH THAT IS DEBATABLE, IN SUCH CASES, IT CANNOT BE SAID THAT TH E ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVAS ION OF THE TAX. RECENTLY, HONBLE APEX COURT IN RELIANCE PETRO PRODUCTS(SUPR A) HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY I TSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THUS, MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE IN RELATION TO EXEMPT INCOME, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT THE PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, WE ARE OF THE OPINION THAT THE DISALLOWANCE OF CLA IM FOR DEDUCTIONS U/S 10A & 80HHE IN RELATION TO UNREALISED EXPORTS OR DISALLO WANCE OF AN ESTIMATED AMOUNT, HAVING RECOURSE TO PROVISIONS OF SEC.14A THE ACT C ANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS THEREOF, ESPECIALLY WHEN ALL THE RELEVANT PARTICULARS WERE DISCLOSED BE FORE THE AO. THE FOLLOWING OBSERVATIONS MADE BY THE HONBLE APEX COURT IN THE AFORESAID CASE OF M/S RELIANCE PETRO PRODUCTS(SUPRA) ARE RELEVANT: 10. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITU RE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF T HE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEF ORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORREC T; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED TH AT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN ITEM OF RE CEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FA LSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE T HE TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PART ICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INC OME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPEN DITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUN D TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BE CAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINI ON, ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF T HE REVENUE THEN IN CASE OF ITA N OS.861&862 /DEL./2011 14 EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED B Y ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECT ION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 11. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT M ADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU & ANR. [(2009) 23VST 249 (SC )] AS REGARDS THE PENALTY ARE APPOSITE. IN THE AFOREMENTIONED DECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS IN TAMIL NADU GENERAL SALES TAX ACT, TH E COURT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME IN CORRECT STATEMENTS MADE IN THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REF LECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED: 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED I N THE TURNOVER ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDE THESE ITEMS IN THE DEALER'S TURNOVER DISALL OWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STAND S SET ASIDE.' THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN ITS RETURN . 5.3. IN VIEW OF THE FOREGOING, WE ARE OF THE OPI NION THAT MERE ERRONEOUS CLAIM IN THE ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY, ESPECIALLY WHEN THERE I S NOTHING ON RECORD TO SHOW THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NO T BONA FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE . IN THESE CIRCUMSTANCES, WE HAVE NO HESITATION IN UPHOLDING THE CONCLUSION OF THE LD. CIT(A) IN RESPECT OF LEVY OF PENALTY IN RELATION TO CLAIM FOR DEDUCTION U/S 10A AND 80HHE OF THE ACT AND EVEN IN RELATION TO ESTIMA TED DISALLOWANCE HAVING RECOURSE TO PROVISIONS OF SEC . 14A OF THE ACT OR DISALLOWANCE OF AMOUNT DISCLOSED IN TAX AUDIT RE PORT. CONSEQUENTLY, GROUND NOS. 1 TO 3 IN THESE TWO APPEA LS ARE DISMISSED. 8. GROUND NO. 4 IN THESE APPEALS , BEING GENERAL IN NATURE NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US ON THE S AID GROUND, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RES IDUARY GROUND ITA N OS.861&862 /DEL./2011 15 NO.5 IN THESE TWO APPEALS, ACCORDINGLY, BOTH THESE GROUNDS ARE DISMISSED. 9. IN THE RESULT, BOTH THESE APPEALS ARE DISMISS ED. SD/- SD/- (R.P. TOLANI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. A.C.I.T.,CENTRAL CIRCLE-2,ROOM NO.323, 3 RD FLOOR,ARA CENTRE, JHANDEWALAN EXTN.,NEW DELHI 2. M/S DSL SOFTWARE LTD.,(NOW AMALGAMATED HCL TECHNOLOGIES LTD.), 806, SIDDHARTHA, 96, NEHRU PLACE, NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-III,NEW DELHI. 5. DR, ITAT,B BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT