DEEPAK CLASSES BORIVALI (P) LTD, MUMBAI v. ITO 5(1)(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY (AM) & SHRI R.S. PAD VEKAR(JM) I.T.A.NO.3382/ MUM/2009 (A.Y. 2000-01 ) DEEPAK CLASSES BORIVALI (P) LTD. 1303 ATMAJ APARTMENT 94-C AUGUST KRANTI MARG KEMPS CORNER MUMBAI-400 036. PAN: A AVCD0780A VS. INCOME-TAX OFFICER-5(1)(3) ROOM NO.569 5 TH FLOOR AAYKAR BHAVAN M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY SHRI S.C. TIWARI & MS.MEGHANA BUTALA. RESPONDENT BY SHRI T.T. JACOB. O R D E R PER J. SUDHAKAR REDDY AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE CIT(A)-V MUMBAI DATED 28-04-2009 FOR THE ASSESSME NT YEAR 2000-01 WHEREIN HE HAS CONFIRMED THE PENALTY LEVIED U/S.271(1)(C) O F THE ACT. FACTS IN BRIEF : 2. THE ASSESSEE IS A COMPANY AND HAS FILED ITS RET URN OF INCOME ON 16-08- 2000 DECLARING TOTAL INCOME OF RS.8 11 990/-. THE R ETURN WAS PROCESSED U/S.143(1) ON 14-03-2002. THEREAFTER THE ASSESSMEN T WAS FRAMED U/S.143(3) READ WITH SEC. 147 ON 29-03-2004. 3. THE ASSESSEE COMPANY IS RUNNING COACHING CLASSES IN WESTERN SUBURBS AND CENTRAL SUBURBS OF MUMBAI. IT FILED RETURN OF INCOM E FOR EACH BRANCH SEPARATELY. ALL THESE PRIVATE COMPANIES ARE NO LONGER IN EXISTE NCE AS THEY HAVE MERGED WITH ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 2 M/S. DEEPAK EDUCATION LTD. W.E.F. 14-02-2000. AT PA RA- 4 OF THE ASSESSMENT ORDER DATED 29-03-2004 THE FOLLOWING FACTS ARE STA TED : DURING THE FINANCIAL YEAR 1999-2000 RELEVANT TO AS SESSMENT YEAR 2000-2001 THE ASSESSEE COMPANY ENTERED INTO A NON- COMPETITION AGREEMENT WITH MR. NIRAJ VORA PROPRIE TOR OF M/S. PLUTO COMMERCIAL CLASSES (HAVING ITS BRANCHES AT BORIVALI -KANDIVALI- MULUND-VILE PARLE-DADAR-DAHISAR) HAVING ITS PRINCIP AL PLACE OF OFFICE AT GROUND FLOOR AMBAJI DHAM OPP. GOKHALE HIGH SCH OOL FACTORY LANE BORIVLI (W) MUMBAI 400 092 VIDE AGREEMENT DA TED THE 1 ST DAY OF JULY 1999. VIDE THIS AGREEMENT THE COMPANY HAS ACQUIRED THE BUSINESS OF COACHING CLASSES CARRIED ON BY M/S. PLUTO COMMERCIAL CLASSES. FOR THIS BUSINESS TRANSACTION THE ASSESSEE COMPANY HAS PAID AN AMOUNT OF RS.9 LAKHS TO M/S. P LUTO COMMERCIAL CLASSES ON 30.03.2000. ON A PERUSAL OF P ROFIT AND LOSS ACCOUNT FILED ALONGWITH THE RETURN OF INCOME THE A SSESSEE COMPANY HAS DEBITED THE PAYMENT OF RS.9 LAKHS AS REVENUE E XPENDITURE UNDER THE HEAD NON-COMPETING FEES. 4. THE FACTS OF THE ADDITION WHICH RESULTED IN LEV Y OF THE PENALTY ARE BROUGHT OUT AT PAGE-9 OF THE ASSESSMENT ORDER UNDER THE HEA D PROFESSIONAL FEES AS UNDER : THE ASSESSEE HAS DEBITED IN ITS PROFIT AND LOSS AC COUNT A SUM OF RS.26 77 958/- TOWARDS PROFESSIONAL CHARGES PAID TO PROFESSORS/LECTURERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE WAS ASKED TO BIFURCATE THE PROFESSIONAL CHARGES PAID WITH NAMES AND ADDRESSES OF PARTIES. VERIFICATION OF THE DETAILS FILED ON 19.09 .2003 SHOWS THAT THE ASSESSEE HAS PAID A SUM OF RS.15 18 000/- TO MR. NI RAJ VORA DIRECTOR OF M/S. PLUTO PROFESSIONAL SERVICES P.LTD. SUMMONS UND ER SECTION 131 OF THE INCOME-TAX ACT WAS ISSUED TO SHRI NEERAJ VORA ON 23 .09.2003 WHICH WAS DULY SERVED ON THE ASSESSEE ON 24.09.2003. IN RESPO NSE TO THE SUMMONS SHRI NIRAJ J.VORA ATTENDED AND FILED LETTER DATED 30.09.2003 WHEREIN IT HAS BEEN STATED THAT DURING THE YEAR UNDER SCRUTIN Y HE HAS RECEIVED A SUM OF RS.5 00 000/- AS PROFESSIONAL FEES FROM M/S. DEEPAK CLASSES PVT.LTD. AND BREAK-UP OF THE SAME GIVEN AS UNDER : DATE OF RECEIPT AMOUNT (RS.) BRANCH 06.07.1999 1 00 000/- BO RIVLI 07.07.1999 82 000/- MALAD 09.07.1999 1 18 000/ - BORIVLI TOTAL 5 00 000-/- HENCE THERE IS AN EXCESS DEBIT OF RS.10 18 000/-.V IDE THIS OFFICE LETTER DATED 1 ST OCTOBER 2003 THE ASSESSEE WAS ASKED TO EXPLAIN T HE ABOVE DIFFERENCE. IN REPLY TO THIS LETTER THE ASSESSEE V IDE ITS LETTER DATED 24.11.2003 HAS EXPLAINED THE DIFFERENCE WHICH IS RE PRODUCED BELOW : ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 3 ENCLOSED PLEASE FIND DETAILS OF REMUNERATION PAID TO PROFESSORS OF PLUTO CLASSES THROUGH MR. NIRAJ VORA. SR.NO. NAME OF THE PROFESSOR AMOUNT (RS.) ------ ------------------------------------------- ------------------------------------ 1 GAJANAN MORE 268 900 JAI BHAWANI MITRA MANDAL NR. POLICE CHOWKI POISAR KANDIVALI(E) MUMBAI-101. 2 DEEPAK BHINGE R.NO.10 GAONDEVI CHAWL GAONDEVI ROAD POISAR KANDIVALI(E) MUMBAI-101. 325 500 3 LALIT JHA JAWLA COMPOUND NAJIWADI POISAR 345 600 KANDIVALI(E) MUMBAI-101. 4 DEVAND BUDDHEV E WING FLAT NO.104 NISARG APART. 60 000 MAHAVIR NAGAR DAHANUKAR WADI KANDIVALI(W) MUMBAI-67. TOTAL 1 000 000 NECESSAY SUPPORTING PAPERS ENCLOSED HEREWITH . AFTER DETAILED ENQUIRY THE A.O. DISALLOWED AN AMOU NT OF RS.10 36 000/-CLAIMED AS EXPENDITURE ON WHICH THE FIRST APPELLATE AUTHORI TY CONFIRMED THE ADDITION BY HIS ORDER DATED 03-08-2004. THE MATTER WAS CARRIED IN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL (B BENCH) IN ITA NO.65 48/MUM/2004 VIDE ORDER DATED 25-10-2005 RESTORED THE MATTER TO THE FILE O F THE A.O. BY OBSERVING AS FOLLOWS : 5. WE CONSIDERED THE MATTER IN DETAIL. WE DO N OT IN ANY WAY DIFFER FROM THE VIEW EXPRESSED BY THE LD. DEPARTMEN TAL REPRESENTATIVE. BUT WE FIND SOME MITIGATING CIRCUMS TANCES IN FAVOUR OF THE ASSESSEE WHICH CANNOT BE IGNORED WHILE DECI DING THIS APPEAL. THE ASSESSEE IS CARRYING ON THE BUSINESS OF COACHIN G CLASSES FOR THE LAST SO MANY YEARS AND AS STATED BY THE ASSESSEE IN THE OPEN COURT IS ASSESSED TO INCOME-TAX FOR THE LAST 25 YEARS. TH EREFORE THE INCIDENCE OF EXPENSES CLAIMED BY THE ASSESSEE BY WA Y OF DEDUCTION IS REGULAR CLAIM MADE BY THE ASSESSEE AND ITS REASO NABLENESS SHOULD NOT BE SUSPECTED WITHOUT SUFFICIENT PROVOCATION. TH ERE IS NO CASE ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 4 HERE THAT THE REMUNERATION PAID BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR WAS EXORBITANTLY HIGH WHEN COMPARED TO SUCH PAYMENTS MADE FOR THE EARLIER ASSESSMENT YEARS. ALL THE DISPUTE PAYMENTS WERE MADE BY THE ASSESSEE BY WAY OF CROSSE D CHEQUES. THE IDENTITIES OF THE PROFESSORS WERE GIVEN TO THE ASSESSING AUTHORITY AND OTHER PARTICULARS WERE ALSO GIVEN TO THE ASSESSING AUTHORITY EXCEPT THE DETAILS LIKE PERMANENT ACCOUNT NUMBER AND THE FORMAL CONFIRMATION LETTER. SOMETIMES THERE IS A PR ACTICAL DEFECT IN GETTING APPROPRIATE CONFIRMATIONS FROM THE PERSONS WHO HAD IN FACT RECEIVED PAYMENTS IN THE PAST. SOMETIMES THEY REFUS E TO GO ALONG WITH THE INCOME-TAX PROCEEDINGS; BUT NOW THE ASSESS EE HAS ANYHOW COLLECTED CONFIRMATION LETTERS FROM ALL THE PROFESS ORS ALONG WITH THE PARTICULARS LIKE THEIR PERMANENT ACCOUNT NUMBERS. THE ASSESSEE IN SECOND ROUND OF ASSESSMENT PROCEED INGS VIDE ITS LETTER DATED 11-10-2006 AS APPEARING IN PARA 8 AT PAGE 3 OF THE ASSESSMENT ORDER DATED 29- 11-2006 STATED AS FOLLOWS : 8. THE ASSESSEE VIDE LETTER DATED 11.10.2006 FIL ED A LETTER STATING THE FOLLOWING : (A) 1. THE NAMES ADDRESSES TELEPHONE NO. AND P/A NO. OF ALL THE FOUR PROFESSORS OF PLUTO CLASSES ARE CONFIRED A S CORRECT. 2. ONE PROFESSOR HAS CONFIRMED THAT HE HAS RECEIVED THE PAYMENT FROM M/S.PLUTO COMMERCE CLASSES. HE IS ALSO WORKING AT PRESENT WITH P LUTO CLASSES. 3. THREE OTHER PROFESSORS HAVE NOT CONFIRMED THAT THEY RECEIVED THE PAYMENT FROM M/S. PLUTO CLASSES. 4. NONE OF THEM HAVE FILED THEIR IT RETURNS FOR 1999-2000. 5. ALL OF THEM ARE RUNNING COMMERCE COACHING CLASSES A T PRESENT. 6. FROM (2) (3) & (4) ONE CAN EASILY UNDERSTA ND THEIR DEPOSITION AND STATEMENT FILED BEFORE YOU. 6. THEY HAVE APPEARED BEFORE YOU AFTER A LOT PURSUATI ON & PERSONAL REQUEST BY THE UNDERSIGNED EVEN THOUGH TH EY WERE NOT WORKING UNDER HIM AT ANY TIME. (B) ENCLOSED PLEASE FIND A COPY OF THE LETTER DATED 29.09.2006 ADDRESSED TO YOU BY MR. NIRAJ VORA (CC TO US) THE C ONTENT OF WHICH ARE SELF EXPLANATORY. YOU MAY COMPARE HIS STATEMENTS/PA PERS FILED WITH YOUR PREDECESSOR WHICH YOU AND THE LETTER TO ARRIVE AT YOUR CONCLUSION. ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 5 (C) ENCLOSED PLEASE ALSO FIND THE COMMENTS OF THE TRIBUNAL MEMBERS IN THEIR JUDGEMENT/ORDER PASSED IN THE SAME MATTER (IN PARA (5)). (D) DEE[AL COMMERCE CLASSES ARE FILING INCOME -TAX RETURNS FROM 1970-71 TO 2005-06 I.E. LAST 35 YEARS AND EVERY YEA R WITH THE INCOME RETURNED AS THE INCOME ASSESSED. (E) REGARDING YOUR LAST PARA PLEASE NOTE THAT THOSE DET AILS CAN COME FROM M/S.PLUTO CLASSES AND NOT FROM DEEPAK CLA SSES. WE HAVE INCORPORATED THEIR TRANSACTION IN OUR BOOKS WITH NET PAYMENTS TO THEM WHICH IS CONFIRMED AND PROVED FROM THE BANK STATEMENTS OF DEEPAK COMMERCE CLASSES. THE A.O. ON THE GROUND THAT THE REPLY IS VAGUE AND WITHOUT ANY DOCUMENTARY EVIDENCE WHATSOEVER REPEATED THE DISALLOWANCE. THE REAFTER PENALTY U/S. 271(1)(C) OF THE ACT WAS LEVIED. THE ASSESSEE CARR IED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY CONFIRMED THE PENALTY. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING REVISED GROUND : BASED ON THE FACTS OF THE CASE THE PROVISIONS OF THE LAW AND HON. BOMBAY TRIBUNAL DECISION IN VIP INDUSTRIES (21 DTR) DISTINGUISHING HON. SUPREME COURT DECISION IN DHARMENDRA TEXTILES (309 ITR) THE IMPUGNED CIT (A) ORDER IS NOT IN ACCORDANCE WITH LA W. 6. MR. S.C. TIWARI APPEARING FOR THE ASSESSEE SUB MITTED THAT IT WAS PLUTO CLASSES WHICH HAD CONDUCTED THE BUSINESS ACTIVITY F OR THE PERIOD OF 4 MONTHS AND HAD IN FACT PAID THE AMOUNT BY CROSSED CHEQUES TO 4 PERSONS WHO WERE THE TEACHING FACULTY. HE SUBMITTED THAT THE ASSESSEE C ONSEQUENT TO AN AGREEMENT WITH M/S. PLUTO PROFESSIONAL SERVICES P. LTD. TOOK OVER NOT ONLY THE INCOME BUT ALSO THE EXPENDITURE RECORDED BY PLUTO PROFESSIONAL SERVICES P.LTD. AND CLAIMED THE SAME AS EXPENDITURE. IT WAS DUE TO THE STRATEGI C ALLIANCE ENTERED INTO BETWEEN DEEPAK CLASSES BORIVALI (P) LTD. AND PLUTO PROFESSIONAL SERVICES P.LTD. THAT A NON-COMPETE AGREEMENT WAS ENTERED INTO AND A LL THE INCOMES AND EXPENSES OF ALL CLASSES WERE ACCOUNTED BY THE ASSES SEE. HE SUBMITTED THAT THIS MOVE MISFIRED AND THE PROFESSORS OF BOTH THE SIDES LEFT AND CONSEQUENTLY THE ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 6 ASSESSEE WAS SADDLED WITH AN ACCUMULATED LOSS OF RS .8 CRORES IN THE LAST 5 YEARS. HE SUBMITTED A FACT SHEET TO EXPLAIN HOW THE ENTRIE S WERE PASSED IN THE BOOKS OF ACCOUNT IN PURSUANCE OF THE UNDERSTANDING BETWEEN T HE TWO PARTIES. HE SUBMITTED THAT THE TRIBUNAL HAD EARLIER OBSERVED TH AT THE CLAIMS MADE BY THE ASSESSEE WERE NOT EXCESSIVE OR EXORBITANTLY HIGH AN D THAT ALL PAYMENTS WERE MADE BY CROSS CHEQUES. HE POINTED OUT THAT THE ASSE SSEE HAD NO CONTROL OVER THE PROFESSORS WHO WERE EMPLOYED BY THE ERSTWHILE PLUTO COMMERCE CLASSES. HE SUBMITTED THAT THE PAYMENTS WERE IN FACT MADE TO MR . NIRAJ VORA OF PLUTO COMMERCE CLASSES AND IT WAS MR. NIRAJ VORA WHO HAD SUBMITTED THAT THE PAYMENTS WERE MADE TO THESE PROFESSORS WHEN HE WAS RUNNING THE CLASSES. HE SUBMITTED THAT IT IS POSSIBLE THAT THE PROFESSORS I N QUESTION WHO RECEIVED THE PAYMENTS BY CROSSED CHEQUES HAD NOT ACCOUNTED FOR T HE SAME IN THEIR INCOME- TAX RETURNS AND THUS HAD REFUSED TO CO-OPERATE WITH THE ASSESSEE TO PROVE THE EXPENDITURE. HE SUBMITTED THAT THE ASSESSEE HAS GIV EN AN EXPLANATION TO THE A.O. AND THE A.O. HAS NOT FOUND THAT THE EXPLANATIO N IS FALSE AND THAT UNDER THESE CIRCUMSTANCES PENALTY CANNOT BE LEVIED. HE SU BMITTED THAT MERE DISALLOWANCE OF A CLAIM CANNOT RESULT IN LEVY OF PE NALTY FOR CONCEALMENT OR FURNISHING INACCURATE PARTICULARS. 6. MR. T.T. JACOB THE LD. DEPARTMENTAL REPRESENTAT IVE ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE CLAIMED CERTAIN EXPENDI TURE AND CONSEQUENT TO THE INVESTIGATION MADE BY THE DEPARTMENT IT HAS COME T O LIGHT THAT THE CLAIM IS NOT GENUINE. HE TOOK US THROUGH THE ORDER OF THE A.O. A ND POINTED OUT THAT THE A.O. GOT THE EXPENDITURE VERIFIED THROUGH THE WARD INSPE CTOR AND AFTER GATHERING EVIDENCE HE HAS COME TO A CONCLUSION THAT THE EXPE NDITURE CLAIMED WAS FALSE. HE RELIED ON THE ORDER OF THE A.O. AS WELL AS CIT(A) A ND SUBMITTED THAT CLAIMING OF FALSE EXPENDITURE IS NOTHING BUT CONCEALMENT AS WEL L AS FURNISHING INACCURATE PARTICULARS. ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 7 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERAT ION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE P APERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 8. IN THIS CASE THE UNDISPUTED FACT IS THAT THE EX PENDITURE IN QUESTION I.E. PAYMENTS MADE TO VARIOUS PROFESSORS WAS MADE BY MR . NIRAJ VORA OF PLUTO CLASSES PRIOR TO THE ASSESSEE TAKING OVER BOTH THE INCOME AND THE EXPENDITURE FURNISHED BY PLUTO CLASSES AS PART OF THE AGREEMEN T. MR. NIRAJ VORA HAS PAID THESE AMOUNTS TO THE PROFESSORS BY WAY OF CROSSED C HEQUES. THE ASSESSEE HAD REIMBURSED MR. NIRAJ VORA OF VARIOUS AMOUNTS CLAIME D BY HIM AS PER THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND PLU TO COMMERCE CLASSES. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT DISALLOWANCE OF THE EXPENDITURE REIMBURSED TO MR. NIRAJ VORA BY THE ASSESSEE COMPANY CANNOT LEAD TO A CONCLUSION THAT THE ASSESSEE HAS EITHER C ONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS. THE ASSESSEE HAS OFFERED AN EXPLANATION STATING THAT AS FAR AS THE PAYMENTS TO THOSE 4 PROFESSORS A RE CONCERNED THE SAME WERE MADE BY PLUTO CLASSES AND THE ASSESSEE COULD PASS O N SUCH INFORMATION THAT IT COULD OBTAIN FROM PLUTO CLASSES FROM TIME TO TIME. HE FURTHER SUBMITTED THAT THE ASSESSEE DID NOT HAVE ANY ACCESS OR NEED TO VERIFY THE SIGNATURE ON THE CONFIRMATION LETTERS OR EVEN THE EDUCATIONAL QUALIF ICATIONS OF THE PROFESSORS AS THEY WERE NEITHER DIRECTLY EMPLOYED BY THE ASSESSEE NOR DIRECT PAYMENTS WERE MADE BY THE ASSESSEE. ALL THESE PROFESSORS ARE RUNN ING COACHING CLASSES EVEN AS ON TODAY INDIVIDUALLY IN SMALL OUTFITS. THIS EXPLAN ATION IN OUR CONSIDERED OPINION IS A PLAUSIBLE EXPLANATION. THE CLAIM OF THE ASSESS EE IN OUR HUMBLE OPINION IS A BONA FIDE CLAIM UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE. THE EXPLANATION GIVEN HAS NOT BEEN HELD TO BE FALSE. UNDER THESE CIRCUMSTANCES WE HOLD THAT THE PENALTY IN QUESTION HAS BEEN WRONGLY SUSTAINED BY THE FIRST APPELLATE AUTHORITY. ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 8 9. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN (2010) 322 ITR 158 (SC) HELD AS FOLLOWS : A GLANCE AT THE PROVISIONS OF SECTION 271(1) OF T HE INCOME-TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULAR S USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACC URATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DET AILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOR ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. APPLYING THE PROPOSITION LAID DOWN BY THE HONBLE S UPREME COURT TO THE FACTS OF THE CASE WE ALLOW THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED ON THE 19TH DAY OF APRIL 2010 . SD/- SD/- (R.S. PADVEKAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUN TANT MEMBER MUMBAI:19TH APRIL 2010 NG: ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 9 COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-V MUMBAI. 4 CIT MC-V MUMBAI. 5.DR D BENCH MUMBAI. 6 GUARD FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA NO.3382/M/09 DEEPAK CLASSES BORIVALI (P) LTD. 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 6-4-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 7-4-10 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER