M/S. AVENTIS PHARMA LTD, MUMBAI V. THE DCIT CIR 8(1), MUMBAI

ITA 983/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6129 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-12-2009
• Assessment Year: misc
• Appeal Filed On: 12-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV M SHAH; J D MISTRI
• Keywords: Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI. BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO.983/MUM/2009 (ASSESSMENT YEAR : 1986-87) M/S. AVENTIS PHARMA LTD., SIR MATHURADAS VASANJI ROAD, ANDHERI (EAST), MUMBAI-400092 PAN AAACH2736F VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 8(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.D. MISTRI & SHRI SANJIV M. SHAH. RESPONDENT BY : SHRI K. SINGH. PER V. DURGA RAO, J.M. : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VIII, MUMBAI DT.2.12.2008. 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE COMPANY HAS MADE A PROVISION FOR ` .2,15,89,833 FOR PAYMENT OF COMMISSION TO M/S. CHEMI EXPORTS ON ITS EXPORTS. THE ASSESSING OFFICE R HAS CALLED FOR EXPLANATION WITH REGARD TO THE PAYMENT OF COMMISSIO N MADE TO THE ABOVE COMPANY. IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAS BEEN PAYING COMMISSION @ 10% ON THE EXPORTS OF PHARMACEUTICALS AND 7 % ON THE AGRO CHEMICALS AND VETERINARY PRODUCTS TO M/S. CHEM I EXPORTS. THE COMPANY HAS ALREADY RECEIVED APPROVAL FROM THE RESERVE BANK OF INDIA (IN SHORT RBI) FOR THE PAYMENT OF COMMISSION UPTO 31.12.1984. THE ASSESSEE-COMPANY HAS MADE AN APPLICATION TO RBI FOR GRANTING THE PERMISS ION TO PAY COMMISSION AT HIGHER RATES AND WAS FINALLY REFUSED PERMISSION BY RBI ON 31.10.1986. THE ITA NO. 983/MUM/09 2 ASSESSING OFFICER HAS NOT AGREED WITH THE EXPLANATI ON GIVEN BY THE ASSESSEE AND OBSERVED THAT THE COMMISSION PAYABLE AS PER THE APPROVED RATES OF THE RBI WAS ONLY ` .1,28,16,925 AND THE BALANCE OF ` .87,19,908 WAS TO BE DISALLOWED. THE ASSESSEE-COMPANY HAS SUBMITTED BEF ORE THE ASSESSING OFFICER THAT THE AMOUNT OF ` .37,08,601 RELATES TO KANDLA OPERATIONS, THE PROFIT OF WHICH ARE EXEMPT FROM TAX. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE BALANCE AMOUNT OF ` .50,11,307 WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. TH E ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) AND ALSO BEFORE THE TRIBUNAL, BOTH APPELLATE AUTHORITIES CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED THE P ROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. BEFORE THE ASSESSING OFFICER , THE ASSESSEE HAS EXPLAINED THAT THE ASSESSEE PAID THE COMMISSION AS PER THE OLD RATES PENDING ENHANCEMENT PERMISSION APPROVAL FROM THE RBI, THERE FORE, THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FILED INACCURATE P ARTICULARS. HENCE, PENALTY UNDER SECTION 271(1)(C) IS NOT APPLICABLE. HOWEVER, THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD AS UNDER : IN RESPECT OF DISALLOWANCE OF COMMISSION PAID TO CHEMI EXPORTS HIGHER THAN THAT PERMITTED BY THE RBI :- ON PERUSAL OF THE RECORDS AND THE SUBMISSIONS MADE BY THE ASSESSEE, IT IS SEE N THAT THE ASSESSEE HAS ENTERED IN AN AGREEMENT WITH M/S. CH EMI EXPORTS ON 21.9.1981 HOWEVER THE SAME IS NOT BINDING ON THE GOVERNMENT OR ITS AGENCIES I.E. THE RBI TO HONOUR T HE SAME. FURTHER AS PER THE PARA 6 OF THE AGREEMENT, IT HAS BEEN MENTIONED THAT THE SAID AGREEMENT IS SUBJECT TO THE APPROVAL OF THE RBI AND SHALL COME INTO FORCE WITH EFFECT FROM THE DATE OF SUCH APPROVAL, AND IT IS MENTIONED THAT THE AGREEME NT FOR A INITIAL PERIODS OF FIVE YEARS. IT IS FURTHER GATHERED FROM THE RECORDS THAT THE ASSESSEE HAD OBTAINED THE APPROVAL FROM RBI, FO R THE REMITTANCE OF COMMISSION AT THE RATE OF 10% ON THE EXPORTS OF PHARMACEUTICAL PRODUCTS AND AT THE RATE OF 7 % ON THE AGRO- PHARMACEUTICAL AND VETERINARY PRODUCTS TO USSR FOR A PERIOD UPTO ITA NO. 983/MUM/09 3 31.12.1984. THEREFORE AS PER PARA 6 OF THE AGREEME NT, IT IS VALID ONLY UPTO 31.12.1984 I.E. THE DATE UPTO WHICH THE S AID RATE WAS APPROVED BY THE RBI. ON PERUSAL OF THE REGISTRATION CERTIFICATE FOR REM ITTANCE OF COMMISSION ON EXPORT ISSUED BY THE RBI EXCHANGE CONTROL DEPARTMENT, UNDER NO. EC.BYX, COM-H 7/3281-85 DATED 19.4.11985 SUBMITTED BY THE ASSESSEE IT IS SEEN THA T THE APPROVAL FOR REMITTANCE OF COMMISSION, @ 10% OF FOB VALUE TO EXTERNAL GROUP OF COUNTRIES AND @ 5% ON FOB VALUE TO USSR, W AS VALID FOR A PERIOD FROM 1.1.1985 TO 21.9.1986. IT IS THEREF ORE CLEAR THAT ALL THE COMMISSION PAID TO A FOREIGN PARTY, @ ABOVE 5%, BEYOND 1.1.1985 IS IN VIOLATION OF THE RBI PROVISIONS. FU RTHER THE CONTENTIONS OF THE ASSESSEE THAT THEY WERE IN CORRE SPONDENCE WITH THE RBI FOR REVISING THE RATES CANNOT BE ACCEP TED AS IN THAT CASE THE ASSESSEE SHOULD HAVE DEFERRED THE PAYMENT OF COMMISSION @ OF EXCESS OF 5% TILL SUCH TIME AS AND WHEN THEY WOULD HAVE GOT A FAVOURABLE RESPONSE FROM THE RBI. AS THE ASSESSEE, WAS IN FULL KNOWLEDGE OF THE SAID FACT, H AD PAID, OR MADE PROVISIONS FOR THE PAYMENT OF COMMISSION TO A FOREIGN PARTY @ ABOVE 5%, THEY ARE LIABLE FOR IMPOSITION OF PENAL TY FOR CONCEALMENT OF INCOME AND OR FURNISHING OF INACCURA TE PARTICULARS AS DESCRIBED IN THE EXPLANATION 1 TO SECTION 271(1) (C) OF THE INCOME TAX ACT, 1961, IRRESPECTIVE OF THE CONTENTIO NS OF THE ASSESSEE THAT THEY HAVE REVERSED THE EXCESS PROVISI ON AND HAD OFFERED TO TAX, THE AMOUNT IN THE RETURN OF INCOME FOR THE NEXT ASSESSMENT YEAR, AS IT IS ONLY AN ACCEPTANCE OF MIS TAKE ON THE PART OF THE ASSESSEE AND CANNOT ABSOLVE THE ASSESSE E FROM IMPOSITION OF THE PENALTY. 3. AGGRIEVED THE ASSESSEE APPEALED BEFORE T HE LEARNED CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED WRITTEN SUBMISSI ON WHICH IS EXTRACTED AS UNDER : DISALLOWANCE OF EXPORT COMMISSION OF ` .50,11,307 IN PARAGRAPH 7.2 ON PAGE 3 OF THE PENALTY ORDER WHI CH IS UNDER APPEAL, THE LEARNED ASSESSING OFFICER HAS STATED TH AT HE COULD NOT ACCEPT THE CONTENTIONS OF THE APPELLANT COMPANY BEC AUSE ACCORDING TO HIM I) ALL THE COMMISSION PAID TO FORE IGN PARTY @ ABOVE 5% BEYOND 1.1.1985 WAS IN VIOLATION OF THE RB I PROVISIONS. HE HAS ALSO EXPRESSED A VIEW THAT THE CONTENTION OF THE APPELLANT COMPANY THAT IT WAS IN CORRESPONDENCE WITH RBI FOR REVISING THE RATES COULD NOT BE ACCEPTED AS IN THAT CASE THE APP ELLANT WOULD HAVE DEFERRED THE PAYMENT OF COMMISSION @ ABOVE 5% TILL SUCH TIME AS AND WHEN IT WOULD HAVE GOT A FAVOURABLE RES PONSE FROM THE RBI. ACCORDING TO THE AO, THE APPELLANT WAS IN FULL KNOWLEDGE OF THE SAID FACT, HAD PAID OR MADE PROVISIONS FOR T HE PAYMENT OF, ITA NO. 983/MUM/09 4 COMMISSION TO A FOREIGN PARTY @ 5% IT WAS LIABLE FO R IMPOSITION OF PENALTY FOR CONCEALMENT OF INCOME AND OR FURNISHIN G OF INACCURATE PARTICULARS AS DESCRIBED IN THE EXPLANAT ION 1 TO SECTION 271(1)(C) OF THE ACT. ACCORDING TO HIM, THE APPELL ANT COMPANYS REVERSAL OF THE PROVISION AND OFFERING IT TO TAX IN THE NEXT ASSESSMENT YEAR, WAS ONLY AN ACCEPTANCE OF MISTAKE ON THE PART OF THE APPELLANT AND COULD NOT ABSOLVE THE APPELLAN T FROM IMPOSITION OF THE PENALTY. YOUR HONOUR MAY KINDLY NOTE THAT THE LEARNED AO HIMS ELF HAS EXPRESSED THAT THE APPELLANT COMPANY HAD ONLY MADE A MISTAKE OF HAVING MADE AN EXCESS PROVISION AND THE SAME THE REFORE WAS CORRECTED ALSO BY IT IN THE NEXT ASSESSMENT YEAR. THUS IT IS CLEAR THAT THE LEARNED AO HAS IMPOSED PENALTY UNDER SECTI ON 271(1)(C) WITH REFERENCE TO DISALLOWANCE OF EXCESS PROVISION OF ` 50,11,307 ON THE BASIS THAT CLAIMING SUCH DEDUCTION IN THE RE TURN OF INCOME REPRESENTED A MISTAKE. HOWEVER, THE APPELLANTS SUBM IT THAT EVEN IF IT TO BE ASSUMED WITHOUT ADMITTING IT THAT IT HA D MISTAKENLY CLAIMED THE DEDUCTION OF EXCESS PROVISION FOR THE P AYMENT OF THE COMMISSION, THE SAME WAS NOT A DELIBERATE MISTAKE A ND EVEN THE LEARNED AO HAS ALSO NOT SAID IT TO BE A DELIBERATE MISTAKE AND, THEREFORE, RELYING ON THE RATIO OF THE DECISION OF THE M.P. HIGH COURT IN THE CASE OF CIT VS. SKYLINE AUTO PRODUCTS (P) LTD REPORTED IN (2004) 271 ITR 335, IN WHICH THE HIGH CO URT HELD THAT WHERE IT WAS A CASE OF BONAFIDE MISTAKE RATHER THAN A DELIBERATE MISTAKE ON THE PART OF THE ASSESSEE, SUCH A GROUND CANNOT BE A GOOD GROUND FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE MAY ADD THAT THE HONBLE CALCUTTA HIGH C OURT IN CIT VS. BENGAL IRON GALVANISING WORKS REPORTED IN (1987 ) 165 ITR 249 (CAL) UPHELD THE DECISION OF THE TRIBUNAL OF CA NCELING THE CONCEALMENT PENALTY IMPOSED BY THE IAC BY HOLDING T HAT ON FACTS, THE ASSESSEE BY ITS SUBSEQUENT CONDUCT MAY BE SAID TO HAVE ESTABLISHED THAT THERE WAS NO DELIBERATE INTENTION ON ITS PART TO CONCEAL ITS INCOME AND THE MISTAKE WAS SOUGHT TO BE RECTIFIED BY ITS SUBSEQUENT DISCLOSURE WHICH WAS ACTED UPON BY T HE ASSESSING OFFICER. IN THE APPELLANTS CASE ALSO ASSUMING WIT HOUT ADMITTING THE CLAIM FOR DEDUCTION IN THE ASSESSMENT YEAR UNDE R APPEAL WAS A MISTAKEN CLAIM, THE MISTAKE WAS DULY RECTIFIED BY OFFERING THE EXCESS AMOUNT IN THE NEXT ASSESSMENT YEAR AND THIS TREATMENT WAS DULY ACCEPTED IN THE NEXT ASSESSMENT. THUS REL YING ON THE RATIO OF THIS DECISION, THE LEVY OF PENALTY UNDER S ECTION 271(1)(C) IS NOT JUSTIFIED. IN THE CIRCUMSTANCES, THE PENALTY IS NOT REQUIRED T O BE LEVIED UNDER SECTION 271(1)(C) IN THIS ASSESSMENT. HERE RE LIANCE IS BEING ALSO PLACED ON THE DECISION OF THE HON'BLE SUP REME COURT IN THE CASE OF DIALUP N. SHROFF VS. JCIT REPORTED IN ( 2007) 291 ITR 519 (SC). ITA NO. 983/MUM/09 5 THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS HELD THAT THE ASSESSEE COMPANY DELIBERATELY CREATED THE PROVI SION TO REDUCE THE TAX LIABILITY AND THAT THE COMPANY HAS DELIBERATELY ENH ANCED THE COMMISSION PAYMENT WITHOUT RECEIVING, PERMISSION FROM THE RBI IN THE YEAR UNDER CONSIDERATION. THE PENALTY IMPOSED BY THE ASSESSIN G OFFICER UNDER SECTION 271(1)(C) WAS CONFIRMED BY THE CIT(A). 4. ON BEING AGGRIEVED THE ASSESSEE APPEALED BEFORE THE TRIBUNAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE WAS IN THE EARLIER YEARS PERMITTED TO PAY 10% ON T HE EXPORTS OF PHARMACEUTICALS AND 7 % ON THE AGRO CHEMICALS AND VETERINARY PRODUCTS TO M/S. CHEMI EXPORTS. THE AGENT M/S. CHEMI EXPORTS W AS DEMANDING OLD RATES FROM THE ASSESSEE. UNDER THOSE CIRCUMSTANCES, THE A SSESSEE HAS REQUESTED RBI TO APPROVE THE OLD RATES. PENDING REQUEST FOR ENHANCEMENT, THE ASSESSEE HAS PAID THE COMMISSION AS PER OLD RATES. THIS IS NEITHER AMOUNTING TO FILING OF INACCURATE PARTICULARS NOR C ONCEALMENT OF INCOME. THE ASSESSEE FILED RETURN OF INCOME ON 30.6.1986. RBI REJECTED THE REQUEST OF ASSESSEE FOR ENHANCEMENT OF RATES ON 31.10.1986. T HE REJECTION ORDER CAME SUBSEQUENT TO THE FILING OF RETURN, THEREFORE, IT I S NOT DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO PAY EXCESS COMMISSION A ND WHATEVER EXCESS AMOUNT PAID, SUBSEQUENTLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND PAID TAXES THEREON. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER PASSED BY THE AUTHORITIES BELOW . ITA NO. 983/MUM/09 6 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE ORD ERS OF THE AUTHORITIES BELOW. THE AO HAS IMPOSED PENALTY UNDE R SECTION 271(1)(C) ON THE GROUND THAT THE ASSESSEE PAID THE EXCESS COMMIS SION PAYMENT. IT IS AN ADMITTED FACT THAT AS PER THE OLD RATES THE ASSESSE E IS ENTITLED TO PAY 10% ON EXPORT OF PHARMACEUTICAL PRODUCTS AND 7 % ON AGRO PHARMACEUTICAL AND VETERINARY PRODUCTS AND THE RBI ALSO APPROVED PAYME NT OF THE ENHANCED COMMISSION UPTO 31.12.1984. THE ASSESSEE FILED RET URN OF INCOME ON 30.6.1986 AND CLAIM THE COMMISSION WHICH WAS PAID A S PER THE OLD RATES. THE ASSESSEE WAS ALSO REGULARLY CORRESPONDING TO TH E RBI WITH REGARD TO ENHANCEMENT OF COMMISSION PAYMENT. ULTIMATELY ON 3 1.10.1986, THE RBI REJECTED THE REQUEST OF THE ASSESSEE. FROM THE ABO VE FACTS AND EXPLANATION GIVEN BY THE ASSESSEE, WE FIND THAT THE ASSESSEE NE ITHER FILED INACCURATE PARTICULARS NOR CONCEALED THE INCOME. IN OUR CONSI DERED OPINION, SECTION 271(1)(C) HAS NO APPLICATION TO THE FACTS OF THE CA SE. WE, THEREFORE, CANCEL THE PENALTY ORDER AS CONFIRMED BY THE CIT(A). THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 8. THE SECOND GROUND ON WHICH THE PENALTY IMPOSED B Y THE ASSESSING OFFICER RELATING TO DISALLOWANCE OF PROFESSIONAL CH ARGES ON THE GROUND THAT AMOUNT WAS ALREADY ALLOWED AS A DEDUCTION FOR THE A .Y. 1985-86. 9. THE FACTS RELATING TO THE ISSUE ARE THA T THE ASSESSEE HAS RECEIVED PROFESSIONAL SERVICES FROM M/S. J.B. DADACHANDJI & CO. IN THE PREVIOUS YEAR TO THE A.Y. 1982-83 AND PENDING THE RECEIPTS OF ACT UAL BILLS PROVISIONS OF ` .2,00,000 WERE MADE IN THE ACCOUNTS OF THAT YEAR. FURTHER RECEIPT OF THE BILLS FOR ` .1,28,558, ON 31.12.1984, A CLAIM WAS RAISED, BY WA Y OF A LETTER, IN THE ASSESSMENT PROCEEDING FOR THE A.Y. 1985-86 AND THE SAME WAS ALLOWED ITA NO. 983/MUM/09 7 ON 30.9.1987. AS IN THE MEAN TIME ON THE BASIS OF THE RECEIPT OF THE ACTUAL BILLS IN THE PERIOD RELEVANT TO THE A.Y. 1986-87, T HE ASSESSEE MADE A CLAIM IN THE RETURN OF INCOME FILED ON 30.6.1986. ACCORD ING TO A.O. THE ASSESSEE SHOULD HAVE PRUDENTLY WITHDRAWN BY FILLING A REVISE D RETURN AND OR BY WAY OF A LETTER AS THE ASSESSEE HAD DONE IN THE ASSESSMENT PROCEEDINGS FOR THE A.Y. 1985-86. FAILURE OF THE ASSESSEE TO ACT WITH DUE D ILIGENCE AND BY THEMSELVES NOT HAVING WITHDRAWN THE CLAIM HAVE MADE THEMSELVES LIABLE FOR IMPOSITION OF THE PENALTY FOR CONCEALMENT OF INCOME AND OR FURNISHING OF INACCURATE PARTICULARS AS DESCRIBED IN THE EXPLANAT ION 1 TO SECTION 271(1)( C ) OF THE ACT. THE ASSESSEE HAS SUBMITTED BEFORE THE AO DURING THE PENALTY PROCEEDINGS AND EXPLAINED THAT PROFESSIONAL SERVICE S WERE RENDERED TO THE ASSESSEE COMPANY BY THE SOLICITORS FIRM M/S. J.B. DADACHANDJI & CO. IN THE PREVIOUS YEAR RELATING TO A.Y. 1982-83, EVEN THOUGH THE SOLICITORS HAD NOT RAISED THE BILL FOR THEIR SERVICES TO THE ASSESSEE COMPANY, THE ASSESSEE COMPANY HAD MADE A PROVISION FOR THE PAYMENT ON EST IMATE BASIS. WHEN THE COMPANY PAID THE SAME AMOUNT IN THE SUBSEQUENT YEAR THE CLAIM WAS RAISED BY WAY OF A LETTER IN THE ASSESSMENT PROCEED INGS FOR A.Y. 1985-86 AND SAME WAS ALLOWED ON 30.9.1987. THE ASSESSEE HAS FI LED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30.6.1986 BEFORE TH E CLAIM OF PROFESSIONAL FEES ALLOWED BY THE A.O. DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE ASSESSEE HAD ALREADY WRITTEN A LETTER TO THE A.O. O N 20.12.1988 REQUESTING HIM NOT TO ALLOW THE DEDUCTION OF ` .1,28,558. THE ASSESSEE HAS EXPLAINED ALL THE DETAILS BEFORE THE A.O. HOWEVER, THE A.O. HAS N OT AGREED WITH THE EXPLANATION OF THE ASSESSEE LEVIED THE PENALTY. ITA NO. 983/MUM/09 8 10. THE ASSESSEE HAS CARRIED THE MATTER IN APPEAL B EFORE THE CIT(A) AND SUBMITTED THAT THE CLAIM WAS MADE INADVERTENTLY AND A LETTER WAS WRITTEN TO THE ASSESSING OFFICER REQUESTING NOT TO ALLOW THE C LAIM OF PROFESSIONAL CHARGES MADE IN HIS RETURN. THE ASSESSEE HAS REITE RATED THE SAME SUBMISSIONS WHICH HE HAS MADE BEFORE THE A.O. HOWEVE R, THE CIT(A) CONFIRMED THE PENALTY ORDER OF THE A.O. ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER BEFORE THE TRIBUNAL. 11. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT EXP LN. 1 TO SECTION 271(1)(C) IS WRONGLY INVOKED IN THIS CASE, THE ASSESSEE NEITH ER FILED INACCURATE PARTICULARS NOR CONCEALED THE INCOME. 12. ON THE OTHER HAND, THE LEARNED D.R. SUPPOR TED THE ORDERS PASSED BY THE AUTHORITIES BELOW. 13. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECOR DS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CLAIM OF T HE ASSESSEE ON PROFESSIONAL CHARGES OF ` .1,28,558 RELATES TO A.Y. 1982-83. THE ASSESSEE HA S NOT RECEIVED BILL FROM THE M/S. J.B. DADACHNDJI & CO. F OR THE SERVICES RENDERED IN EARLIER YEAR. WHEN THE ASSESSEE RECEIVED A BILL F OR ` . 1,28,558 ON 31.12.1984, THE ASSESSEE BY WAY OF A LETTER, CLAIM WAS RAISED BEFORE THE A.O. DURING THE COURSE OF ASST. PROCEEDINGS IN A.Y. 1985-86. THE A.O. PASSED THE ASST. ORDER AND ALLOWED THE CLAIM OF THE ASSESSEE OF ` 1,28,558 ON 30.9.1987. THE ASSESSEE ALSO FILED RETURN OF INC OME ON 30.6.1986 FOR A.Y. 1986-87, THE SAME CLAIM WAS MADE WHILE FILING THE R ETURN AS A PRECAUTIONARY MEASURE. FROM THE ABOVE FACTS, IT IS VERY CLEAR TH AT AT THE TIME OF FILING OF THE RETURN FOR A.Y. 1986-87 DT.30.6.1986, THE A.O. HAS NOT ALLOWED THE CLAIM ITA NO. 983/MUM/09 9 MADE BY THE ASSESSEE AND THE A.O. ONLY ALLOWED THE CLAIM OF THE ASSESSEE WHILE PASSING THE ASST. ORDER DT.30.9.1987. IN VI EW OF THE ABOVE FACTS, WE FIND THAT THE EXPLANATION GIVEN BY THE ASSESSEE WIT H REGARD TO CLAIM OF ` 1,28,558 CLAIMED IN THE YEAR 1986-87 IS BONAFIDE AN D THE ASSESSEE NEITHER FILED INACCURATE PARTICULARS NOR CONCEALED THE INCO ME. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND THE PENALTY IMPOS ED ON THIS GROUND IS CANCELLED. THIS GROUND OF APPEAL FILED BY THE ASSES SEE IS ALLOWED. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 3 RD DEC., 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT.03.12.2010. *GPR COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT, MUMBAI (4) CIT(A), MUMBAI (5) DR, (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES ITA NO. 983/MUM/09 10 DATE INIT IALS 1. DRAFT DICTATED ON 25.11.2010 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 4. DRAFT DISCUSSED & APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SR.PS/PS 2.12.2010 6. KEPT FOR PRONOUNCEMENT ON 3.12.2010 7. FILE SENT TO BENCH CLERK 3.12.2010 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER.