M/s. Indian Chemical Industries, Ahmedabad v. The DY.CIT., Circle-11,, Ahmedabad

ITA 1884/AHD/2009 | 1998-1999
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 188420514 RSA 2009
Assessee PAN AAAFI3004J
Bench Ahmedabad
Appeal Number ITA 1884/AHD/2009
Duration Of Justice 1 year(s) 7 month(s) 23 day(s)
Appellant M/s. Indian Chemical Industries, Ahmedabad
Respondent The DY.CIT., Circle-11,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-01-2011
Date Of Final Hearing 20-01-2011
Next Hearing Date 20-01-2011
Assessment Year 1998-1999
Appeal Filed On 05-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ITA NO.1884/AHD/2009 (ASSESSMENT YEAR:-1998-99) INDIAN CHEMICAL INDUSTRIES S 61 MUNICIPAL INDUSTRIAL ESTATE BAPUNAGAR AHMEDABAD V/S ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-11 AHMEDABAD PAN: AAAFI 3004 J [APPELLANT] [RESPONDENT] ASSESSEE BY :- SMT. ARTI N SHAH AR REVENUE BY:- SHRI ANURAG SHARMA DR O R D E R A N PAHUJA: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST AN ORDER DATED 25-03-2009 OF THE LD. CIT(APPEALS)-XVI AHMEDABAD UPHOLDING THE PENALTY OF RS. 93 104/- LEVIED U/S. 271(1)(C) OF THE INCOME- TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT]. 2. FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.4 23 140/-FILED ON 28-10-1998 BY THE A SSESSEE MANUFACTURING DYE INTERMEDIATES WAS PROCESSED ON 3 1.3.1999 U/S 143(1)(A) OF THE ACT. THEREAFTER ASSESSMENT WAS RE OPENED U/S 147 OF THE ACT SINCE THE ASSESSEE CLAIMED EXCESS DEDUCT ION U/S 80HHC OF THE ACT TURNOVER FROM HIGH SEAS SALES HAVING NO T BEEN DISCLOSED SEPARATELY FOR THE PURPOSE OF COMPUTING THE DEDUCTI ON U/S 80HHC. CONSEQUENTLY A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 28.3.2001. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED U/S 143( 3) READ WITH SECTION 147 OF THE ACT ON 28-03-2002 DETERMINING T OTAL INCOME OF RS.6 89 049/- WHEREIN DEDUCTION U/S 80HHC OF THE AC T WAS REDUCED TO RS.85 35 501/- AS AGAINST THE CLAIM OF RS.88 01 512 SINCE TURNOVER OF RS.6 16 401/- ON HIGH SEAS SALES WAS N OT CONSIDERED. THE COST OF COMMODITIES IN THE SAID SALE WAS RS.5 96 461/-. INTER ALIA PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED. ON APPEAL INITIALLY THE LD. CIT(A) AND LATER THE I TAT VIDE THEIR ORDER ITA NO.1884/AHD/2009 2 DATED 12.4.2007 IN ITA N.2130/AHD./2003 UPHELD THE FINDINGS OF THE AO. THEREAFTER IN RESPONSE TO A SHOW CAUSE NOTICE BEFORE LEVY OF PENALTY THE ASSESSEE REPLIED VIDE LETTERS DATED 1 8/8/2007 AND 10/9/2007 THAT THEY HAD EFFECTED HIGH SEAS SALES AND THE PROFIT OF RS.1 20 000/- WAS REFLECTED IN PROFIT AND LOSS ACCO UNT . THE AO RECOMPUTED THE DEDUCTION AVAILABLE U/S.80HHC OF THE ACT BY INCLUDI NG HIGH SEAS SALES IN THE TOTAL TURNOVER AND ACCORDINGLY THE DEDUCTION HAD BEEN RE DUCED. THE MERE CHANGE IN THE CLAIM OF DEDUCTION U/S 80HHC OF THE ACT DUE TO DIFFERENCE IN ACCOUNTING TREATMENT IS NOT CONCEALMENT OF THE INCOME THE AS SESSEE ARGUED. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE A ND CONCLUDED THAT THE INCORRECT CLAIM FOR DEDUCTION U/S. 80HHC OF THE AC T AMOUNTED TO DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. ACCOR DINGLY A PENALTY OF RS.93104/- @ 100% OF THE TAX SOUGHT TO BE EVADED WAS IMPOSED.. 3. ON APPEAL THE LD. CIT(A) UPHELD THE LEVY OF PENALTY IN THE FOLLOWING TERMS: 4.ON THE BASIS OF THIS ARGUMENT THE APPELLANT CLAIM ED THAT THE DEDUCTION OF RS.1 20 000/- SHOWN UNDER THE HEAD OF 'OTHER INC OME' WAS BONAFIDE AND THEREFORE NO PENALTY U/S. 271(1)(C) SHOULD BE LEVIE D. I HAVE CONSIDERED THE SUBMISSIONS. THE CONTENTION OF THE AUTHORIZED REPRE SENTATIVE IS THAT THE APPELLANT HAS NOT CLAIMED ANY DEDUCTION ON THE AMOU NT OF RS.1 20 000/-. THERE WAS NO DELIVERY OF THE GOODS IN THE HIGH SEAS PURCHASE & SALES. FURTHER THE GROSS TOTAL INCOME OF THE APPELLANT IS ABOUT RS.92 00 000/- AND IT IS NOT EXPECTED THAT A PERSON SHOWING GROSS TOTA L INCOME OF RS.92 00 000/- WOULD EVADE THE TAX TO THE TUNE OF A PPROX. RS.93 000/-. FURTHER SINCE THIS WAS THE FIRST AND LAST TRANSACTI ON OF HIGH SEAS SALES AND PURCHASES ACCORDING TO HIM THE BENEFIT OF DOUBT S HOULD GO TO THE APPELLANT. THE ITAT MUMBAI IN ITA NO.7080/MUM/2008 DATED 12-12-2008 FOR A Y 1997-98 IN THE CASE OF SUPREME INDUSTRIES L TD. AFTER CONSIDERING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILE PROCESSORS & OTHERS 306 ITR 277 (SC) HELD THAT:- '(I)THE CLAIM OF THE ASSESSEE WAS PATENTLY WRONG AN D SUCH CLAIM COULD NOT AVOID PENALTY: (II) THE JUDGMENT OF THE SUPREME COURT IN UOI VS. D HARMENDRA TEXTILE PROCESSORS 174 TM 571 FORTIFIES THE INTERPR ETATION THAT WHERE THE ASSESSEE OFFERS AN EXPLANATION THE ONUS IS ON THE ASSESSEE TO ITA NO.1884/AHD/2009 3 SUBSTANTIATE THE EXPLANATION OR PROVE THE BONA FIDE S AND SHOW THAT THERE IS FULL DISCLOSURE OF ALL THE FACTS RELATING TO THE EXPLANATION. THE AO IS NOT OBLIGED TO PROVE THAT THERE WAS A WILLFUL ATTEMPT BY THE ASSESSEE OR THAT THE EXPLANATION OF THE ASSESSEE IS NOT BONA FIDE; (III) 271(1)(C) HAS BEEN ENACTED TO PROVIDE FOR A R EMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A C IVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTR ACTING CIVIL LIABILITY. 4.1 IN THIS CASE ALSO THOUGH THE APPELLANT DID NOT CLAIM THE DEDUCTION U/S. 80HHC ON THE PROFIT OF RS.1 20 000/- BUT IN VIEW OF EXPLANATION 1 TO SECTION 271 (1 J(C ) THE APPELLANT FAILED TO DISCL OSE ALL THE MATERIAL FACTS THAT THE PROFIT OF RS.1 20 000/- IS DUE TO PURCHASE AND SALE OF GOODS ON HIGH SEAS BASIS & THAT THE TURNOVER OF HIGH SEAS SA LES IS NOT INCLUDED IN THE TOTAL TURNOVER. IF THE APPELLANT MAKES A PATENTLY W RONG CLAIM THEN SUCH WRONG CLAIM WOULD NOT AVOID PENALTY AS HELD BY THE ITAT MUMBAI IN THE CASE OF SUPREME INDUSTRIES LTD. I THEREFORE HOLD TH AT EVEN THOUGH THE APPELLANT MAY HAVE BONAFIDE CLAIM SUCH CLAIM SHOUL D BE SUPPORTED BY THE DISCLOSURE OF MATERIAL FACTS WHICH WAS NOT MADE BY THE APPELLANT IN THE RETURN OF INCOME. I THEREFORE HOLD THAT IN VIEW OF EXPL. 1 TO SEC 271(1)(C ) THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING MINI MUM PENALTY OF RS.93 1047- IN THIS CASE. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE L EARNED CIT(A). WHILE RELYING UPON DECISIONS IN CIT VS. RELIANCE P ETRO PRODUCTS PVT. LTD. 2010) 322 ITR 158 (SC) CIT VS. HARSHVARD HAN CHEMICALS & MINERALS LTD. 259 ITR 212 (RAJ) CIT VS. CAPLIN PO INT LABORATORIES LTD. 293 ITR 524 (MAD) ACIT VS. ARISUDANA SPINNING MILLS LTD. (2009) 19 DTR (CHD) (TRIB) 1 MODEL FOOTWEAR (P) LTD . VS. ITO 124 ITD 353 (DEL) AND ORDER DATED 19-08-2010 IN DCIT VS . M/S PARSHWANATH HOUSING FINANCE CORPORATION LTD. IN ITA NOS.1435 TO 1437/AHD/2010.THE LEARNED DR ON THE OTHER HAND SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW AND RELIED UPON DEC ISION IN CIT VS. AMIT MOHAN BINDAL 317 ITR 1(SC). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. INDISPUTABLY THE AMOUNT OF RS. 1 20 000/- ON ITA NO.1884/AHD/2009 4 ACCOUNT OF PROFIT ON HIGH SEAS SALES WAS REFLECTED IN THE PROFIT AND LOSS ACCOUNT AND THE ASSESSEE DID NOT CONSIDER THE SAID PROFIT F OR THE PURPOSE OF DEDUCTION U/S 80HHC OF THE ACT. IT IS ONLY DURING REASSESSMENT PR OCEEDINGS THAT THE TURNOVER GENERATED THROUGH THE HIGHSEAS SALE WAS INCLUDED IN THE TOTAL TURNOVER FOR THE PURPOSE OF DEDUCTION U/S 80HHC OF THE ACT. IN TERM S OF PROVISIONS OF SEC. 80HHC(4) OF THE ACT THE DEDUCTION IS NOT ADMISSIB LE UNLESS THE ASSESSEE FURNISHES IN THE PRESCRIBED FORM ALONG WITH THE RE TURN OF INCOME THE REPORT OF AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB -SECTION (2) OF SECTION 288 CERTIFYING THAT THE DEDUCTION HAS BEEN CORRECTLY CL AIMED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION. THE ASSESSEE IN THE INS TANT CASE MERELY MADE A BONAFIDE CLAIM FOR THE DEDUCTION IN TERMS OF THE SA ID CERTIFICATE. IF IN THE PROCESS TURNOVER IN RELATION TO SOME PROFIT WAS NOT CONSIDE RED BY THE CHARTERED ACCOUNTANT THE ASSESSEE COULD NOT BE FAULTED. EVEN OTHER WISE THE AO IN THE ASSESSMENT ORDER OR THE PENALTY ORDER HAS NOT SPECI FIED AS TO WHETHER THE ASSESSEE CONCEALED THE PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS NOR EVEN THE LD. CIT(A) ADVERTED TO THESE ASPECTS. NOT EVEN A WHISPER HAS BEEN MADE IN THE IMPUGNED ORDERS AS TO WHICH SPECIFIC PA RTICULARS WERE FURNISHED INACCURATE OR WERE CONCEALED. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS O F INCOME' HAVE NOT BEEN DEFINED EITHER IN SECTION 271 OR ELSEWHERE IN THE A CT. HOWEVER NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY KEEPING OFF A CERTAIN PO RTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON THE WORD 'CONCEAL ' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE 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 TRANSCRIPT.'. ITA NO.1884/AHD/2009 5 5.1 THE PENALTY U/S 271(1)(C) OF THE ACT IS LEV IABLE 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 AN D DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGH AIAH & CO. VS. CIT 123 ITR 457 THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CAN NOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS. 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 DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADD ITIONS. IT IS THEREFORE NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIN D OUT AS TO WHETHER THE ADDITION OR DISALLOWANCE MADE IN THE QUANTUM PROCEEDINGS ACTUAL LY REPRESENTS THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVISAGED IN SEC. 27 1(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 STIPULATE THAT IF THE ASSESSING OFFICE R OR THE CIT(APPEALS) OR THE COMMISSIONER IN THE COURSE OF PROCEEDINGS UNDE R THIS ACT IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF HE MAY DIRECT THAT SUCH PERSON 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 PARTICULAR S OF HIS INCOME. EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT MENTIONS THAT WHERE 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 FO UND BY THE AO OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE OR SUCH PERSON OFF ERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND 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 TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THEN THE AMOUNT ADDED OR DIS ALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSE OF CLAUSE ( C ) OF SECTION 271(1) BE DEEMED TO REPRESENT THE INCOME IN RESPEC T OF WHICH PARTICULARS 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 ITA NO.1884/AHD/2009 6 ( II ) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE A O OR THE CIT (APPEALS) OR THE COMMISSIONER TO BE FALSE OR ( III ) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABL E TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM. 5.2 IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE T HREE CATEGORIES THEN THE DEEMING PROVISION PROVIDED IN EXPLANATION 1 TO SECTION 271(1)( C ) COMES INTO PLAY AND THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHICH PARTIC ULARS HAVE BEEN CONCEALED FOR THE PURPOSES OF CLAUSE ( C ) OF SECTION 271(1) AND THE PENALTY FOLLOWS. ON TH E OTHER HAND IF THE ASSESSEE IS ABLE TO OFFER AN EX PLANATION WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME HAVE BEEN DISCLOSED BY HIM THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION 1 TO SECTION 271(1)( C ) OF THE ACT AND IN THAT CASE THE PENALTY SHALL N OT BE IMPOSED. HONBLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF V . JT. CIT [2007] 210 CTR (SC) 228 : [2007] 291 ITR 519 (SC) WHILE 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 EXPLANATIONS WERE APPLIC ABLE TO BOTH THE PARTS. HOWEVER EACH CASE MUST BE CONSIDERED ON ITS OWN FA CTS. THE ROLE OF THE EXPLANATION HAVING REGARD TO THE PRINCIPLE OF STATU TORY INTERPRETATION MUST BE BORNE IN MIND BEFORE INTERPRETING THE AFOREMENTIONE D PROVISIONS. CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVIABLE IF THE ASSESSEE CONCEALS THE PARTICULARS O F 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. IMPOSITION OF PENALTY IS NOT AUTOMATIC. LE VY OF PENALTY IS NOT ONLY DISCRETIONARY IN NATURE BUT SUCH DISCRETION IS REQU IRED TO BE EXERCISED ON THE PART OF THE ASSESSING OFFICER KEEPING THE RELEVANT FACTO RS IN MIND. SOME OF THOSE FACTORS APART 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 PROCEEDINGS ARE NOT T O BE INITIATED AS HAS BEEN NOTICED BY THE WANCHOO COMMITTEE ONLY TO HARASS TH E ASSESSEE. THE APPROACH OF THE ASSESSING OFFICER IN THIS BEHALF MUST BE FAI R AND OBJECTIVE. ITA NO.1884/AHD/2009 7 THE TERM 'INACCURATE PARTICULARS' IS NOT DEFINED. F URNISHING OF AN ASSESSMENT OF VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHI NG OF INACCURATE PARTICULARS. EVEN IF THE EXPLANATIONS ARE TAKEN RECOURSE TO A F INDING HAS TO BE ARRIVED AT HAVING REGARD TO CLAUSE (A) OF EXPLANATION 1 THAT T HE ASSESSING 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 FAI LED TO PROVE THAT SUCH EXPLANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE F ACTS RELATING TO THE SAME AND MATERIAL TO THE INCOME WERE NOT DISCLOSED BY HIM. T HUS APART FROM HIS EXPLANATION BEING NOT BONA FIDE IT SHOULD HAVE BEE N FOUND AS OF FACT THAT HE HAS NOT DISCLOSED ALL THE FACTS WHICH WAS MATERIAL TO T HE COMPUTATION OF HIS INCOME. 5.3 IN THE LIGHT OF AFORESAID OBSERVATIONS O F THE HONBLE APEX COURT WHAT IS TO BE SEEN IN THE INSTANT CASE IS WHETHER THE CLA IM FOR DEDUCTION U/S 80HHC OF THE ACT ON THE BASIS OF CERTIFICATE OF THE ACCOUNTA NT MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVA NT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. THE ASSESSING OFF ICER HAS NOT BEEN ABLE TO ESTABLISH THAT THE CLAIM OF THE ASSESSEE FOR DEDUCT ION UNDER SECTIONS 80HHC WAS NOT BONA FIDE. A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RE LYING ON DIFFERENT INTERPRETATIONS DOES NOT AMOUNT TO CONCEA LMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME BY THE ASSESSEE.. IN THE CASE UNDER CONSIDERATION THERE IS NOTHING TO SUGGE ST THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OR CONCEALED T HE PARTICULARS . IN THIS BEHALF THE FOLLOWING OBSERVATIONS OF THE HONBLE APEX COUR T MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU & ANR. [(2009) 2 3VST 249 (SC)] AS REGARDS THE PENALTY ARE APPOSITE. 'SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPE LLANT'S ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVE R ARE DISCLOSED IN THE DEALER'S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INC LUDE THESE ITEMS IN THE DEALER'S TURNOVER DISALLOWING THE EXEMPTION PENALT Y CANNOT BE IMPOSED. THE PENALTY LEVIED STANDS SET ASIDE.' 5.4 IN THE INSTANT CASE THE RELEVANT TRANSACTI ONS OF HIGH SEAS SALES ARE INCORPORATED IN THE ACCOUNTS AND PROFIT WAS REFLECT ED IN THE PROFIT AND LOSS ACCOUNT. THE CHARTERED ACCOUNTANT DETERMINING THE DEDUCTION U/S 80HHC DID NOT CONSIDER THE SAID PROFIT AT ALL. ADMITTEDLY THE CLAIM FOR DE DUCTION U/S 80HHC WAS DULY SUPPORTED BY THE CERTIFICATE OF THE CHARTERED ACCOU NTANT IN THE PRESCRIBED FORM. IN THIS ITA NO.1884/AHD/2009 8 VIEW OF THE MATTER NO FAULT CAN BE FOUND WITH THE CLAIM OF THE ASSESSEE THAT IT HAD CLAIMED THE DEDUCTION IN A BONA FIDE MANNER. IN SIM ILAR CIRCUMSTANCES. HONBLE PUNJAB AND HARYANA HIGH COURT CANCELLED THE PENALTY LEVIED IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S.80I IN THE CASE OF CI T VS. SD RICE MILLS 275 ITR 206 (P&H). SIMILAR VIEW WAS TAKEN IN ACIT VS. ARISUDAN A SPINNING MILLS LTD. 19 DTR1(CHD.) AND MODEL FOOTWEAR P LTD. VS. ITO 124 IT D 353(DEL.) MOREOVER MERE FACT THAT THE REPORT PREPARED BY THE CA IN FORM 10C CAC WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80HHC(4) OF THE ACT WAS NOT ENOUGH TO HOLD THAT THE MISTAKE WAS NOT BONA FIDE. THIS VIEW IS SUPPORTED BY THE DECISION IN THE CASE OF CIT VS. DEEP TOOLS PVT. LTD. 274 ITR 603 (P&H) WHERE I N ALSO LEVY OF PENALTY WAS HELD TO BE UNJUSTIFIED. A SIMILAR VIEW WAS TAKEN IN CIT VS. CAPLIN POINT LABORATORIES LTD. 293 ITR 524(MAD.) 5.3 WE MAY POINT OUT THAT THE HONBLE APEX COURT I N THE AFORESAID DECISION IN AMIT MOHAN BINDAL(SUPRA) RESTORED THE M ATTER TO THE HONBLE HIGH COURT IN THE LIGHT OF THEIR DECISIONS IN DHARAMENDRA TEXTILE [2008] 306 ITR 277 (SC) AND RAJASTHAN SPINNING AND WEAVING MILLS [200 9] 8 SCC 231. THE LD. DR APPEARING BEFORE US DID NOT DEM ONSTRATE AS TO HOW THIS DECISION HELPS THE REVENUE. 5.4. 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 ARE OF THE OPINION THAT LEVY OF PENALTY IS NOT JUS TIFIED THEREFORE WE HAVE NO HESITATION IN VACATING THE FINDINGS OF THE LD. CIT (A). CONSEQUENTLY IMPUGNED ORDER LEVYING THE PENALTY UNDER SECTION 271 (1)( C) OF THE ACT IS CANCELLED. THEREFORE GROUND NOS.1.1 TO 1.5 TO IN THE APPEAL A RE ALLOWED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFO RE US IN TERMS OF THE RESIDUARY GROUND NO.2 IN THE APPEAL ACCORDINGLY THE SAID G ROUND IS DISMISSED. ITA NO.1884/AHD/2009 9 7. IN THE RESULT APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 28 -01-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 28-01-2011 COPY OF THE ORDER FORWARDED TO: 1. INDIAN CHEMICAL INDUSTRIES S 61 MUNICIPAL INDU STRIAL ESTATE BAPUNAGAR AHMEDABAD 2. ACIT CIRCLE-11 AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-XVI AHMEDABAD 5. DR ITAT AHMEDABAD BENCH-C AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD