ITO, New Delhi v. M/s. Marconi Telecommunication India Pvt. Ltd., New Delhi

ITA 1660/DEL/2013 | 2008-2009
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 166020114 RSA 2013
Assessee PAN AACCM7096H
Bench Delhi
Appeal Number ITA 1660/DEL/2013
Duration Of Justice 6 month(s) 21 day(s)
Appellant ITO, New Delhi
Respondent M/s. Marconi Telecommunication India Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-10-2013
Assessment Year 2008-2009
Appeal Filed On 21-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE T RIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO.1660/DEL/2013 (ASSESSMENT YEAR: 2008-09) ITO VS. MARCONI TELECOMMUNICATION INDIA WARD- 15(1) PVT. LTD . NEW DELHI (NOW KNOWN AS RSCD TELECOMMUNICATION INDIA P LTD.) B-92 HIMALAYA HOUSE 23 K.G. MARG NEW DELHI AACCM7096H (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. RENUKA JAIN GUPTA S R. DR REVENUE BY : SHRI. S. R. WADHWA ADV ORDER PER DIVA SINGH JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 22/1/2013 OF CIT(A) XI NEW DELHI PERTAINING TO 2008-09 ASSE SSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT 1961 AMOUNTING TO RS.6 60 000/-. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ADDITION MADE BY THE ASSESSING OFFICE R WHICH WAS THE BASIS OF IMPOSITION OF PENALTY OF RS.6 60 000/- WAS NOT CHALLENGED BY THE ASSESSEE COMPANY IN APPEAL. ITA NO. 1 660/DEL.13 2 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HO LDING THAT THE CLAIM OF EXPENSES BY THE ASSESSEE ON LEGAL & PROFE SSIONAL CHARGES EVEN WITHOUT BUSINESS DID NOT AMOUNT TO FURNISH INA CCURATE PARTICULARS. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED A RETURN DECLARING NIL INCOME (I.E LOSS OF RS.23 93 031/-). THE ASSESSMENT WAS CONCLUDED WHEREIN THE LOSS STOOD REDUCED TO 2 60 45 0/- AS A RESULT OF THE ADDITION OF RS.21 32 581/- WHEREIN THE CLAIM OF LEG AL & PROFESSIONAL CHARGES CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE ASSES SING OFFICER. THE FACT WHICH LED THE AO TO MAKE THE ADDITION WAS THAT THE ASSESSEE IN THE P & L ACCOUNT HAD SHOWN ONLY INTEREST INCOME OF RS.26 636 /-. ACCORDINGLY THE CLAIM OF LEGAL & PROFESSIONAL EXPENSES WAS REJECTED ON THE GROUND THAT THE SAME SHOULD HAVE BEEN INCURRED FOR RUNNING THE BUSI NESS WHICH WAS CONCLUDED TO HAVE CLOSED DOWN. AS A RESULT OF THIS ADDITION PENALTY PROCEEDINGS WERE INITIATED. THE EXPLANATION OFFERE D BY THE ASSESSEE IN THE PENALTY PROCEEDINGS THAT IT HAD NOT CONCEALED PARTI CULARS OF INCOME WAS NOT ACCEPTED ON THE GROUND THAT IT WAS A WRONG CLAIM AG AINST WHICH NO APPEAL HAD BEEN FILED BY THE ASSESSEE. RELIANCE WAS PLACED UPO N THE FOLLOWING DECISIONS BY THE AO TO IMPOSE PENALTY AMOUNTING TO RS. 6 60 0 00/-. 1. UNION OF INDIA VS. DHARMENDRA TEXTIL E PROCESSORS(2008) 306 ITR 0277- SC 2. KALPAKA BAZAR VS. COMMISSIONER OF IN CEM TAX (2009) 313 ITR 0414-KER 3. KUTTOOKARAN MACHINE TOOLS VS. ASSISTA NT COMMISSIONER OF INCOME- TAX (2009)313 ITR 0413-KER 4. COMMISSIONER OF INCOME-TAX VS. SMT. SAN TOSH SHARMA(2009)311 ITR 0353- DELHI. 5. COMMISSIONER OF INCOME-TAX VS. SATYA NAR AIN(2009)312 ITR 0334- ALL ITA NO. 1 660/DEL.13 3 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY THE CIT (A) TOOK INTO CONSIDERATION THE FOLLOWING FACTS AND ARGUMENTS ARE HEREUNDER:- 4. AS PER ASSESSMENT ORDER THE LD. AO STATED THA T DURING THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED THAT THE AS SESSED HAD CLAIMED LEGAL & PROFESSIONAL CHARGES OF RS.21 32 581/-. THE EXAM INATION OF PROFIT & LOSS ACCOUNT REVEALED THAT THE ASSESSEE HAD EARNED ONLY INCOME O FRS.26 636/- WHICH WAS INTEREST ON FIXED DEPOSITS. THE ASSESSI NG OFFICER HELD THT THE ASSESSED IS NOT ENTITLED FOR THE CLAIM OF THE EXPEN SES ON LEGAL & PROFESSIONAL CHARGES AS NO BUSINESS ACTIVITY WAS CARRIED OUT DUR ING THE YEAR. THUS THE ASSESSING OFFICER DISALLOWED LEGAL & PROFESSIONAL E XPENSES OF RS.21 32 581/-. PENALTY WAS LEVIED ON THIS DISALLOWANCE FOR THE RE ASON THAT THE ASSESSEE HAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDER ATION MAKE A WRONG CLAIM OF THE LEGAL & PROFESSIONAL EXPENSES WHICH WERE NOT ALLOWED UNDER THE PROVISIONS OF THE ACT. 5. DURING THE APPELLATE PROCEEDINGS THE A PPELLANT CONTENDED THAT 1. THE APPELLANT HAD INCURRED LEGAL AND PROFESSION AL CHARGES IN THE NORMAL COURSE OF BUSINESS FOR SEEKING PROFESSIONAL ADVICES OPINIONS PREPARATION AND MAINTENANCE OF ACCOUNTS MIS HANDLI NG OF TAX MATTER STATUTORY COMPLIANCES ETC. THE APPELLANT HAS DULY DISCLOSED ALL THE INFORMATION REGARDING INCOME AND EXPENSES IN THE TA X RETURN AND EVEN PROVIDED BANK STATEMENT COPY OF INVOICES AND CONF IRMATION FROM THE PARTIES ETC. IT PROVES THT NEITHER THERE HAS BEEN ANY UNDI SCLOSED INCOME NOR IT WAS FURNISHING OF INACCURATE PARTICULARS. THE CONTENTI ON OF LD. AO IS NOT JUSTIFIED IN LEVYING THE PENALTY FOR THIS CAUSE. 2. THE APPELLANT HAD EXACTLY SIMILAR CASE FOR THE A SSESSMENT YEAR 2009-10 WHEREIN THE DEPARTMENT HAD DISALLOWED THE EXPENSES OF RS.61 89 996/- TOWARDS LEGAL & PROFESSIONAL EXPENSES AND OTHER MIS CELLANEOUS EXPENSES. HEREIN THE DEPARTMENT HAS ACCEPTED THE CONTENTION O F THE ASSESSEE FOR NON LEVYING OF PENALTY U/S 271 (1) (C). THERE CANNOT B E 2 SEPARATE SENT OF ORDERS FOR THE SAME CASE. 3. THE APPELLANT HAS BEEN A LOSS MAKING COMPANY SIN CE THE YEAR OF ASSESSMENT UNDER CONSIDERATION AND EVEN PRIOR TO TH T AND HAS NEVER TAKEN ANY ADJUSTMENT OR BENEFIT OF SUCH LOSS AS CARRIED FORWA RD TO THE NEXT ASSESSMENT YEARS. CONSIDERING THE ABOVE FACTS RELIANCE HAS BEEN PL ACED ON RECENT JUDGMENT OF SUPREME COURT IN CIT AHMEDABAD VS. REL IANCE PETROPRODUCTUS PVT. LTD [(2010 322 ITR 1580) (SC)] IN WHICH IT WAS DECIDED THAT MERE ITA NO. 1 660/DEL.13 4 DISALLOWANCE OF EXPENSES COULD NOT BE THE SOLE BASI S FOR LEVYING PENALTY U/S 271 (1) (C). 4. THE APPELLANT IS ALREADY IN THE PROCESS OF CLOSI NG DOWN ITS BUSINESS AFFAIRS AND HAS NOT BEEN DOING ANY BUSINESS AT THE TIME OF PASSING THE ORDER BY LD. AO FOR DISALLOWANCE OF SUCH REVENUE EXPENDITURE S. HENCEFORTH TO THE BEST OF THE SPIRIT OF THE ASSESSEE AND REVENUE DEPARTMEN T AND TO AVOID UNNECESSARY LITIGATION THE APPELLANT DID NOT FILE ANY APPEAL A GAINST THE ORDER OF LD. AO TO RECLAIM THE ALLOWABILITY OF EXPENSES. THE LD. AO T OOK IT OTHERWISE AND SENT A NOTICE FOR LEVYING A PENALTY U/S 271 (1) (C). THE APPELLANT THROUGH HER REPRESENTATIVE FILED THE REPLY ON 25 TH MAY 2011 PLEADING THAT THE EXPENSES WERE ALSO GENUINE AND NEITHER CONCEALED ANY INCOME NOR INTENDED TO FURNISH ANY INACCURATE PARTICULARS BUT THE LD. AO WITHOUT HEARING ON THE PART OF THE APPELLANT PASSED THE ORDER LEVYING A PENALTY DEMAN D OF RS.6 60 000/-. 3.1. CONSIDERING THE SAME CONVINCED BY THE EXPLANA TION OFFERED HE QUASHED THE PENALTY PROCEEDINGS FORTIFYING THE VIEW TAKEN B Y RELYING UPON THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. R ELIANCE PETROPRODUCTS PVT. LTD (2010) 322 ITR 1580 (S.C) THE SPECIFIC PA RA FROM THE SAID JUDGMENT RELIED UPON IN THE IMPUGNED ORDER IS EXTRACTED HERE UNDER:- 8. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH THE M ENS REA. HOWEVER WE HAVE TO ONLY SE AS TO WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBS TERS DICTIONARY THE WORD INACCURATE HAS BEEN DEFINED AS:- NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT COPY OR TRANSCRIPT. THE MEANING OF THE WORD PARTICULARS IN THE EARLIE R PART OF THIS . READING THE WORDS IN CONJUNCTION THEY MUST MEAN TH E DETAILS SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE NOT EXACT OR CO RRECT NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THA T IN THIS CASE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSE E IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE THERE WOULD BE NO QUESTION OF INVITING THE PENALTY U/S 271 (1) (C) OF THE ACT. A MERE MAKING OF THE CLAIM WHICH IS NOT SUST AINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RET URN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 9. IT WAS THEREFORE REITERATED BEFORE US THAT THE AS SESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASS ESSEE HAD CLAIMED ITA NO. 1 660/DEL.13 5 EXCESSIVE DEDUCTIONS KNOWING THAT THEY RE INCORRECT ; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED T HAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN I TEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDITU RE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED AND BOTH TYPES ATTE MPT TO REDUCE THE TAXABLE INCOME AND THEREFORE BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONES INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE AS THE ASS ESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCU RATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. I T WAS UP T THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NO T. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM W AS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF W OULD NOT IN OUR OPINION ATTRACT THE PENALTY U/S 271 (1) (C). IF W E ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE T HE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON THE A SSESSEE WILL INVITE PENALTY U/S 271 (1) (C). THAT IS CLEARLY NOT THE I NTENDMENT OF THE LEGISLATURE. 4. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFO RE THE TRIBUNAL. 5. LD. SR. DR HEAVILY RELYING UPON THE ASSESSMENT O RDER CONTENDED THAT A WRONG CLAIM HAD BEEN FILED BY THE ASSESSEE AS SUCH THE AO IN THE PENALTY PROCEEDINGS WAS FULLY JUSTIFIED TO IMPOSE PENALTY U PON THE ASSESSEE. ACCORDINGLY IT WAS HER SUBMISSION THAT THE SAID ORD ER DESERVES TO BE UPHELD. IT WAS HER ARGUMENT THAT THE RELIANCE PLACED UPON T HE JUDGMENT OF THE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS ON FACT S IS MISPLACED AS THE ASSESSEE HAD MADE AN INCORRECT CLAIM AS THE RECORD DEMONSTRATES THAT NO APPEAL HAD BEEN FILED BY THE ASSESSEE AGAINST THE A DDITION MADE IN THE ASSESSMENT PROCEEDINGS WHICH FACT HAS BEEN TAKEN NO TE OF BY THE AO AND IGNORE BY THE LD. CIT(A). 6. LD. AR ON THE OTHER HAND HEAVILY RELYING UPON T HE IMPUGNED ORDER SPECIFIC PAGES 4 & 5 OF THE IMPUGNED ORDER ADDRESSI NG THE FACTUAL MATRIX ITA NO. 1 660/DEL.13 6 SUBMITTED THAT ITS NO ONES CASE THAT THE EXPENSES WERE NOT INCURRED. REFERRING TO THE SAID PARAS WHICH HAVE ALREADY EXTRACTED IN THE EARLIER PART OF THIS ORDER IT WAS SUBMITTED THAT THE EXPENSES WERE INCURRED FO R THE BUSINESS PURPOSES AS THE ASSESSEE WAS IN THE PROCESS OF WINDING UP ITS B USINESS ACTIVITIES FROM INDIA. IT WAS HIS SUBMISSION THAT FULL PARTICULARS IN REGARD TO THE NATURE OF EXPENSES WERE MADE AVAILABLE AND ALL DISCLOSURES HA D BEEN MADE IN THE RETURN AND IT WAS ONLY FROM THE INFORMATION AVAILABLE IN T HE RETURN THAT THE AO HAS CAME TO THE CONCLUSION THAT THE CLAIM WAS TO BE DIS ALLOWED. IT WAS HIS SUBMISSION THAT THE ASSESSEE TOOK A DECISION NOT TO CONTEST THE DISALLOWANCE AS NEITHER IT HAD ANY TAX IMPLICATION OF FOR THE ASSES SEE AND MOREOVER FOR ALL PRACTICAL PURPOSES THE ASSESSEE WANTED TO AVOID UNN ECESSARY LITIGATION. IT WAS HIS STAND THAT HAD THE ASSESSEE CHALLENGED THE DISA LLOWANCE IT WAS BOUND TO BE ALLOWED IN APPEAL. THE SAID VIEW IT WAS STATED HAD LEGAL SUPPORT FROM THE FOLLOWING CASE LAWS:- 1 . SREE MEENAKSHI MILLS LTD VS. CIT (1967) 63 ITR 207 (SC) 2. CIT VS. BIRLA COTTON SPINNING & WEAVING MILLS LTD (1971) 82 ITR 166 (SC). 3. CIT VS. DALMIA DADRI CEMENT LTD (19 80) 125 ITR 510 (DEL) 4. CIT VS. GANNON DUNDERLEY & CO. LTD (1979) 119 ITR 5 95 (B0M) 5. MODI SUGAR MILLS LTD VS. CIT (1973) 90 ITR 201 (ALL ) 6. BIST & SONS (DS) VS. CIT (1972) 85 ITR 254 (DEL) 7. BANSILAL ABIRCHAND SPG & WVG MILLS (RB) V. CIT (197 1) 81 ITR 34 (BOM) (FB) 8. CIT VS. CALCUTTA LANDING & SHIPPING CO. LTD (1970) 77 ITR 575 (CAL) 9. BINODIRAM BALCHAND VS. CIT (1963) 48 ITR 548 (MP) 10. SHARMA (SD) VS. CIT (1962) 45 ITR 107 (MAH) 11. CITVS. ANANDA BAZAR PATRIKA PVT. LTD. 184 ITR 542 (CAL) 12. JSHIVAKANTAPPA (H.S) V. CAGIT (1993) 204 ITR 349 (S C) ITA NO. 1 660/DEL.13 7 6.1. IT WAS ALSO SUBMITTED THAT THE DEPARTMENT HAS ALSO CLARIFIED THE POSITION IN ITS CIRCULAR LETTER BC TECH/6 (3) 72 DATED 13 TH APRIL 1972 THAT THE LEGAL/ACCOUNTANCY EXPENSES ARE ADMISSIBLE BEFORE TH E INCOME TAX AUTHORITIES RIGHT UP TO THE SUPREME COURT. THE OPERATIVE PART OF THE SAID CIRCULAR RELIED UPON IS EXTRACTED FROM THE WRITTEN SUBMISSION FILED :- ALL LEGAL/ACCOUNTANCY EXPENSES INCURRED IN CONNECTI ON WITH THE PROCEEDINGS BEFORE THE INCOME-TAX AUTHORITIES R IGHT UP TO THE STAGE OF THE SUPREME COURT WILL BE ALLOWED BY W AY OF DEDUCTION U/S 10 (2) (CV)/37 OF THE 1922/1961 ACTS. 6.2 IT WAS ALSO HIS SUBMISSION THAT IN TH E SUBSEQUENT ASSESSMENT YEAR IDENTICAL EXPENSES WHICH WERE ALMOST THREE TIMES CO MPARABLE TO THE PRESENT CLAIM I.E. RS.61 89 996/- WERE CLAIMED BY THE ASSES SSEE IN AN IDENTICAL MANNER WHICH WERE ALSO DISALLOWED BY THE AO HOWEVER NO P ENALTY PROCEEDINGS AGAINST THE SAID ACTION HAD BEEN INITIATED AS THE DEPARTMEN T HAS NOT DOUBTED THE BONAFIDE OF THE ASSESSEE AS THE CLAIM WAS MADE UNDER A BONAF IDE BELIEF THAT LEGITIMATE BUSINESS EXPENSES WERE ALLOWABLE EXPENDITURE. THESE FACTS IT WAS SUBMITTED HAVE NOT BEEN DISPUTED. 6.3 IN THESE CIRCUMSTANCES IT WAS ARGUED THAT THE RE WAS NO OCCASION TO HOLD THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OR H AD ATTEMPTED TO CONCEAL ITS INCOME AS ALL FACTS WERE FULLY DISCLOSED AND NO DOU BT DISALLOWANCE WAS MADE HOWEVER THE CLAIM MADE BY THE ASSESSEE WAS GENUINE AND UNDER A BONAFIDE BELIEF THAT LEGAL AND PROFESSIONAL EXPENSES HAVE TO BE ALL OWED AND SINCE THERE WAS NO TAX LIABILITY AND THE COMPANY WAS CLOSING DOWN ITS DECISION NOT TO AGITATE THE ISSUE AS IT DID NOT WANT TO ENTER INTO A LONG TAX L ITIGATION CANNOT LEAD TO THE CONCLUSION THAT THE EXPLANATION OFFERED BE DISCREDI TED MERELY BECAUSE THE ADDITION HAS BEEN ACCEPTED BY THE ASSESSEE. IT WAS SUBMITTED THAT IT IS A MATTER OF RECORD THAT RIGHT FROM ITS INCEPTION THE ASSESSEE C OMPANY HAS BEEN MAKING A LOSS AND NO ADJUSTMENT OF BENEFIT OF CARRIED FORWARD OF LOSSES ETC WAS EVER CLAIMED BY ITA NO. 1 660/DEL.13 8 THE ASSESSEE SO AS TO REDUCE ITS FUTURE TAX LIABILI TY. THUS IT WAS ALLEGED THERE WAS NO REASON WHATSOEVER TO CLAIM AN INCORRECT DEDUCTIO N AND THEREBY INCREASE THE LOSS. IT WAS RE-ITERATED THAT THE CLAIM WAS MADE U NDER A BONAFIDE BELIEF WHICH WAS SUPPORTED BY THE CASE LAW. 6.4 THE JUDGMENTS RELIED UPON BY THE AO IT WAS SUBM ITTED WERE NOT APPLICABLE WHEREAS THE JUDGMENT IN THE CASE OF UNIO N OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC) WHEREIN IT WAS HELD THAT WILLFUL CONCEALMENT IS NOT A LEGAL REQUIREMENT AND IT CAN B E LEVIED EVEN IF THE ASSESSEES ACT RESULTED IN DEDUCTION OF LOSSES AND NO TAX WAS PAYABLE IN THE FACTS OF THE ASSESSEES CASE. IT WAS ARGUED THAT TH E DEDUCTION CLAIMED WAS UNDER A BONAFIDE BELIEF AND APART FROM THE VARIOUS CASE LAWS RELIED UPON THE BOARD CIRCULAR ALSO SHOWED THAT THE EXPENSES WERE D EDUCTIBLE. SIMILARLY IT WAS ARGUED THAT THE DECISIONS OF THE KARNATAKA HIGH COURT IN THE CASE OF KALPAKA BAZAR VS. CIT (200() 313 ITR 414 (KER) WAS NOT RELEVANT BECAUSE THE PENALTY WAS LEVIED THEREIN DUE TO INFLATION OF PURCHASES AND NO ACTUAL PURCHASES WERE MADE. SIMILARLY IN THE CASE OF KUTT OOKARAN MACHINE TOOLS VS. ACIT (2009) 313 ITR 413 (KER) IT WAS A FACT ON RECORD THAT THE ASSESSEE HAD MADE A BOGUS CLAIM OF INVESTMENT ALLOWANCE AND DEPRECIATION WAS MADE AS SUCH THE FACTS WERE ENTIRELY DISTINGUISHABLE AS INVESTMENT ITSELF IT WAS NOT PROVED WHAT TO TALK OF DEPRECIATION. IN THE FACTS OF THE PRESENT CASE IT WAS SUBMITTED THE EXPENSES HAVE LEGITIMATELY BEEN INCUR RED AND ARE FULLY SUPPORTED BY DOCUMENTS AND THE INCURRING OF EXPENDI TURE HAS NOT BEEN DOUBTED BY THE AO WHO HAS ONLY DISALLOWED THE SAME ON THE BELIEF THAT THE BUSINESS WAS NOT RUNNING SO THE CLAIM WAS NOT BE AL LOWED IGNORING THE POSITION THAT LEGAL AND ACCOUNTING EXPENSES WERE LE GITIMATELY TO BE ALLOWED HAD THE ASSESSEE AGITATED THE ISSUE AND ANYWAY IT W AS ARGUED THAT THE CLAIM ITA NO. 1 660/DEL.13 9 WAS MADE UNDER BONAFIDE BELIEF OF THE ASSESSEE. SI MILARLY THE JUDGMENT IN THE CASE OF CIT VS. SANTOSH SHARMA(2000)311 ITR353(DEL) ALSO WAS NOT APPLICABLE AS IT IS RENDERED IN THE CONTEXT OF THE FORMAT REQUIRED FOR RECORDING SATISFACTION WHICH IS NOT AN ISSUE IN THE PRESENT P ROCEEDINGS. THE DECISION OF CIT VS. SATYA NARAIN (2009) 312 ITR 334 (ALL) WAS A GAIN INAPPLICABLE AS THEREIN THE ASSESSEE DID NOT FURNISH ANY REASONABLE EXPLANATION WHICH IS NOT A FACT IN THE PRESENT PROCEEDINGS. RELIANCE WAS FURT HER PLACED ON CIT VS. RELIANCE PETROPRODUCTS PVT. LTD 322 ITR 158 (SC) AN D PRICE WATERHOUSE COOPER PVT. LTD VS. CIT 348 ITR 306 (S.C). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD ON A CONSIDERATION OF THE SAME WE ARE OF THE VIEW IN THE LIGHT OF THE FACTS AND ARGUMENTS AND LEGAL POSITION CANVASSED BY THE PARTIES BEFORE THE BENCH THAT THE IMPUGNED ORDER DESERVES TO BE UPHELD . IT IS A SETTLED LEGAL POSITION THAT ASSESSMENT PROCEEDINGS AND PENALTY PR OCEEDINGS ARE SEPARATE AND DISTINCT. IT IS ALSO A SETTLED LEGAL POSITION THAT MERELY BECAUSE THE ADDITION IN THE ASSESSMENT PROCEEDINGS HAS BEEN ACCEPTED IT DOE S NOT PER SE NECESSARILY LEAD TO THE CONCLUSION THAT PENALTY HAS TO BE IMPOS ED. WHAT IS RELEVANT TO BE CONSIDERED IS THE EXPLANATION WHICH THE ASSESSEE OF FERS IN THE PENALTY PROCEEDINGS AND WHETHER IT CAN BE FOUND TO BE ACCEP TABLE ON FACTS AND LAW. IT IS SEEN THAT THE ASSESSEE HAS CONTENDED THAT NO INA CCURATE PARTICULARS HAVE BEEN FILED AND THE CLAIM IS BASED ON BONAFIDE BELIE F THAT THE EXPENSES CLAIMED WERE ALLOWABLE EXPENSES. IT IS ALSO SEEN BEFORE THE LD. CIT(A) THE ASSESSEE HAS FURTHER BROUGHT TO THE NOTICE OF THE SAID AUTHO RITY THAT IN THE SUBSEQUENT ASSESSMENT YEAR AN IDENTICAL CLAIM OF RS.61 89 000/ - ODD AS OPPOSED TO RS.21 LAKH ODD IN THE YEAR UNDER CONSIDERATION DESPITE BE ING DISALLOWED HAS NOT LEAD TO THE IMPOSITION OF PENALTY U/S 271(1)(C) AS SUCH ON THE VERY SAME FACTS THE ITA NO. 1 660/DEL.13 10 AO IN THE NEXT ASSESSMENT YEAR ACCEPTED THE CLAIM O F BONAFIDE BELIEF. THE SAID ARGUMENT RECORDED IN THE IMPUGNED ORDER HAS NO T BEEN REBUTTED BY THE REVENUE. IT IS FURTHER SEEN THAT IT HAS ALSO BEEN C ANVASSED THAT THE ASSESSEE HAS BEEN A LOSS MAKING COMPANY RIGHT FROM THE INCEPTION AND IS IN THE PROCEEDING OF WINDING UP ITS ACTIVITY IN INDIA AS SUCH THERE W OULD BE NO BENEFIT IN TRYING TO ENHANCE ITS LOSS SO AS TO SEEK A POSSIBLE REDUCT ION IN ITS FUTURE TAX LIABILITY. IT HAS ALSO BEEN ARGUED THAT NO TAX LIABILITY DESPI TE THE DISALLOWANCE HAS RESULTED AS A RESULT OF THIS THE ASSESSEE IN THE PR OCESS OF WINDING UP CHOSE NOT TO LITIGATE FURTHER. NONE OF THESE ARGUMENTS HAVE BEEN ASSAILED BY THE REVENUE WHICH HAVE BEEN TAKEN INTO CONSIDERATION BY THE LD. CIT(A) IN COMING TO THE CONCLUSION IN FAVOUR OF THE ASSESSEE. THE DECISIONS RELIED UPON BY THE REVENUE HAVE ALSO BEEN DISTINGUISHED BY THE LD. AR WHICH ARGUMENTS HAVE NOT BEEN COUNTERED BY THE REVENUE. FURTHER TH E ASSESSEE HAS ALSO FORTIFIED ITS ARGUMENTS RELYING UPON VARIOUS CASE L AWS WHICH LEAD TO THE FORMATION OF THE BELIEF OF THE ASSESSEE THAT THE EX PENDITURE CLAIMED WAS AN ALLOWABLE EXPENDITURE. THE DECISIONS HAVE BEEN REF ERRED TO IN THE EARLIER PART OF ITS ORDER AS SUCH THE SAME ARE NOT REPEATED FOR THE SALE OF BREVITY. THESE DECISIONS HAVE NOT BEEN AGUED TO BE IRRELEVANT OR I NAPPLICABLE. ACCORDINGLY IN THE LIGHT OF THE PECULIAR FACTS AND CIRCUMSTANCES O F THE CASE BEING SATISFIED BY THE REASONING AND FINDING OF THE LD. CIT(A) WE FIN D NO GOOD REASON TO INTERFERE WITH THE CONCLUSION ARRIVED AT THE IMPUGN ED ORDER AS SUCH IS UPHELD. THE GROUND RAISED BY THE DEPARTMENT ACCORDINGLY IS REJECTED. 8. IN THE RESULT APPEAL OF THE DEPAR TMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/10 / 2013. ITA NO. 1 660/DEL.13 11 SD/- S D/- (SHAMIM YAHYA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF OCTOBER 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.