ACIT, New Delhi v. Sh. Dinesh Goel,, New Delhi

ITA 3537/DEL/2010 | 2004-2005
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 353720114 RSA 2010
Assessee PAN AAEPG8280G
Bench Delhi
Appeal Number ITA 3537/DEL/2010
Duration Of Justice 7 month(s) 3 day(s)
Appellant ACIT, New Delhi
Respondent Sh. Dinesh Goel,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2011
Date Of Final Hearing 21-01-2011
Next Hearing Date 21-01-2011
Assessment Year 2004-2005
Appeal Filed On 22-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA HONBLE VICE PRESI DENT AND SHRI I.P. BANSAL JUDICIAL MEMBER ITA NO.3537/DEL/2010) ASSESSMENT YEAR : 2004-05 ACIT CIRCLE 24 (1) ROOM NO.238-B 2 ND FLOOR CR BUILDING IP ESTATE NEW DELHI. VS. DINESH GOEL 945 SEC-A POCKET B & C VASANT KUNJ NEW DELHI. PAN : AAEPG8280G (APPLICANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH GOEL REVENUE BY : MS ANUSHA KHURANA SR. DR O R D E R PER I.P. BANSAL JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIRECT ED AGAINST THE ORDER PASSED BY THE CIT (A) DATED 25 TH MAY 2010 FOR ASSESSMENT YEAR 2004-05. GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ASSESSEE LD. CIT (A) HAS ERRED IN LAW AND ON THE FAC TS IN DELETING THE PENALTY IMPOSED BY THE A.O. AT ` 2 43 118/- U/S 271 (1)(C) OF THE INCOME TAX ACT 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND A NY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. A SUM OF ` 7 36 723/- WAS CLAIMED BY THE ASSESSEE OUT OF HIS OTHER BUSINESS INCOMES BY MAKING THE FOLLOWING NARRATIO N:- ITA NO.3537/DEL/2010 2 SET OFF AND CARRY OVER OF BUSINESS LOSS OF 25% SHAR E IN M/S GEE MARKETING NETWORK IN WHICH THE ASSESSEE WAS A PARTNER. 3. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSE SSEE AS TO WHY SUCH AMOUNT SHOULD NOT BE DISALLOWED AND IN T HE SHOW CAUSE NOTICE DATED 15 TH DECEMBER 2006 THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT EXPLANATION IN THIS REGARD AS FOLLOWS:- YOU HAVE CLAIMED BUSINESS LOSS FOR RS.736723/- WHI CH WAS TRANSFERRED FROM M/S GMN. YOU HAVE TO JUSTIFY THAT A RETU RN WAS AUDITED BY A QUALIFIED CA AND SUCH TYPE MANNER TO CONC EAL THE INCOME FROM TAXABLE INCOME IS A DELIBERATELY UNCORREC TABLE MISTAKE. THEREFORE YOU ARE DESERVED TO PANELIZE U/S 271(1)(C) OF IT ACT 1961 FOR FURNISHING INACCURATE PARTICULARS WITH ITR. 4. IN RESPONSE TO THE SAID QUERY OF THE ASSESSING OFFICER NO DETAILS WHATSOEVER WERE SUBMITTED BY THE ASSESSEE. HENCE THE AD DITION WAS MADE BY THE ASSESSING OFFICER BY MAKING THE FOLLOWING O BSERVATIONS IN THE ASSESSMENT ORDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT HAS BE EN REVEALED THAT THE ASSESSEE HAS CLAIMED BUSINESS LOSS O F RS.736723/- WHICH WAS TRANSFERRED FROM M/S GMN IN WH ICH THE ASSESSEE WAS PARTNER. THE ASSESSEE WAS ASKED VIDE N OTE SHEET ENTRIES ON 22.11.2006 AND SHOW CAUSE NOTICE DATED 15.1 2.2006 WITH EXPLANATION THAT YOU HAVE TO JUSTIFY SET OFF AND CARR Y OVER OF BUSINESS LOSS AND WHY IT MAY NOT BE ADDED BACK IN YOU R TAXABLE INCOME. ASSESSEE WAS ALSO SHOW CAUSED THAT WHY NOT BE PENALTY PROCEEDINGS INITIATED AGAINST YOU AS PER INCOME TAX PROVISIONS U/S 271(1)(C) OF THE INCOME TAX ACT 1961 FOR INACCURATE PARTICULARS FURNISH WITH THE RETURN. THEREA FTER THE ENTIRE BUSINESS LOSS IS DISALLOWED AND PENALTY PROCEE DINGS HAVE BEEN INITIATED FOR CONCEALMENT OF INCOME. 5. ACCORDINGLY THE CLAIM OF THE ASSESSEE REGARDING THE BUSINESS LOSS OF ` 7 36 723/- WAS NOT ADMITTED. ITA NO.3537/DEL/2010 3 6. AGAINST THE SHOW CAUSE NOTICE ISSUED FOR LEVY OF PENA LTY THE ASSESSEE DID NOT SUBMIT ANY REPLY AND THEREFORE THE ASSE SSING OFFICER INFERRED THAT THE ASSESSEE HAS NOTHING TO STATE IN DEFENC E AND ACCORDINGLY HE HAS HELD THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS OF HIS INCOME AND THE ASSESSEES ACT CANNOT BE REGARDED AS AN INNOCENT ACT AS THE SAME WAS A CONSCIOUS ACT. IT WIL L BE RELEVANT TO REPRODUCE THE FOLLOWING OBSERVATIONS OF THE ASSESSING OFF ICER FROM THE PENALTY ORDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS F OUND THAT ASSESSEE HAD ADJUSTED LOSS OF RS.7 36 723/- OF HIS P ARTNERSHIP CONCERN WHICH WAS NOT ALLOWABLE. HENCE THIS ADJUSTM ENT WAS DISALLOWED AND PENALTY PROCEEDINGS U/S 271(1)(C) OF THE IT ACT WERE INITIATED VIDE A SHOW CAUSE NOTICE DATED 27.12.20 06 FIXING THE CASE FOR 27.01.06. NOBODY ATTENDED IN RESPONSE TO THIS NOTICE. THEREAFTER ANOTHER SHOW CAUSE NOTICE U/S 271( 1)(C) OF THE IT ACT DATED 29.5.2007 WAS ISSUED FIXING THE CASE F OR 11.6.2007. HOWEVER ON 11.6.2007 ALSO NEITHER ANYBO DY ATTENDED NOR ANY REQUEST FOR ADJOURNMENT WAS MADE. THIS CLEARLY SHOWS THAT THE ASSESSEE HAS NOTHING TO STATE IN HI S DEFENSE FOR THE DEFAULT WHICH HAS OCCURRED AND NARRATE D AND ACCORDINGLY PENALTY PROCEEDINGS ARE DECIDED ON THE BA SIS OF MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAD WRONGLY ADJUSTED THE LOSS OF HIS PAR TNERSHIP CONCERN AMOUNTING TO RS.7 36 723/- AGAINST THE BUSINESS INCOME OF HIS PROPRIETARY CONCERN THEREBY REDUCING THE TAXABLE INCOME IN HIS OWN HAND. THE SAID ADJUSTMENT WAS AGAINST THE L AW AND THEREFORE THE SAME WAS DISALLOWED AND PENALTY PROCEED INGS U/S 271(1)(C) OF THE IT ACT WAS INITIATED. THE CASE OF THE ASSESSEE FALLS WITHIN THE AMBIT OF SECTION 271(1)(C) OF THE IT A CT 61 AS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF I NCOME. THE ACT OF THE ASSESSEE CANNOT BE REGARDED AS AN INNOC ENT ACT AS THE SAME IS A CONSCIOUS ACT. THIS ACT IS AN ACT OF GROSS AND WILLFUL NEGLECT ON HIS PART AND HE HAS FURNISHED INAC CURATE PARTICULARS DELIBERATELY WHICH IS NOT CAPABLE OF BEIN G REGARDED AS INNOCENT ACT. THE ASSESSEE CANNOT AFFORD TO BE ROUTI NELY CARELESS AND CASUAL WHILE SUBMITTING THE RETURNS. THE ASSESSEE CERTAINLY DOES HAVE A DUTY TO VERIFY THE PARTICULARS FUR NISHED BY HIM AND ENSURE THAT THE PARTICULARS FURNISHED ARE INDEE D ACCURATE. FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF TWO FORMS EITH ER AN ITEM F RECEIPT MAY BE SUPPRESSED FRAUDULENTLY OR AN I TEM OF ITA NO.3537/DEL/2010 4 EXPENDITURE MAY BE FALSELY (OR IN AN AGGREGATED AMOUN T) CLAIMED. BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME. BOTH TYPES AMOUNT TO CONCEALMENT OF THE PARTICULARS OF ONE S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULAR S OF INCOME. PENALTY MUST BE IMPOSED FOR EITHER OR BOTH SUCH ATTEMPTS. A REFERENCE CAN BE MADE TO THE JUDICIAL PRONOUNCEMENT BE VARIOUS HIGH COURTS AS DETAILED BELOW: 1. CIT VS. INDIA SEA FOODS 1976 105 ITR 708 (KERAL A) 2. NAGAIN CHAND SHIV SAHEY VS. CIT (1938) 6 ITR 534 (LAH) 3. CIT VS. GATES FOAM AND RUBBER COMPANY (1973) 91 ITR 467 (KERALA). 7. IT WAS ONLY BEFORE THE CIT (A) IT WAS CLAIMED BY THE ASSESSEE THAT HE WAS UNDER BONA FIDE BELIEF THAT HE IS ENTITLE D TO GET LOSS INCURRED BY HIM IN RESPECT OF AFOREMENTIONED FIRM. I T WAS SUBMITTED THAT IT WAS ONLY A MISTAKE COMMITTED BY THE ASSESSEE WHIC H COULD EVEN BE RECTIFIED. RELIANCE WAS MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P VT. LTD. 322 ITR 158 (SC) AND CONSIDERING THESE SUBMISSIONS OF THE ASSESSEE L EARNED CIT (A) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD SHOWN ALL THE DETAILS IN COMPUTATION OF INCOME AND IT WAS NOT A CASE WHERE LEARNED ASSESSING OFFICER HAS MADE ANY DISCOVERY OF NEW FACTS INDICATING CONCEALMENT OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME AND APPLYING THE RATIO OF AFOREMENTIONED DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPR ODUCTS (SUPRA) THE PENALTY HAS BEEN DELETED. THE DEPARTMENT IS AGGR IEVED HENCE IN APPEAL. 8. THIS CASE WAS FIRST HEARD ON 31 ST DECEMBER 2010 WHEN IT WAS ARGUED BY LEARNED AR THAT IT WAS SIMPLY A CASE OF NON- ACCEPTANCE OF THE ASSESSEES PLEA REGARDING ALLOWABILITY OF LOSS ARISING TO HIM IN RESPECT OF A FIRM IN WHICH HE WAS A PARTNER AND THE I SSUE IS COVERED BY THE AFOREMENTIONED DECISION OF HONBLE SUPREME COURT . HOWEVER AT THE TIME OF DICTATION IT WAS FOUND THAT THE CLAIM O F THE ASSESSEE OF BUSINESS LOSS OF ` 7 36 723/- WAS REGARDING THE CONCERN I N WHICH THE ITA NO.3537/DEL/2010 5 ASSESSEE WAS A PARTNER. TAKING NOTE OF SUCH FACT IT WAS CONSIDERED PROPER TO CALL FOR THE ASSESSMENT RECORD AND THE PRESENT CASE WAS REFIXED FOR CLARIFICATION ON 31 ST DECEMBER 2010 ITSELF AND LEARNED DR WAS REQUIRED TO SUBMIT THE ASSESSMENT RECORD. THE CASE WA S FIXED ON 21 ST JANUARY 2011 AND THEREAFTER IT WAS ADJOURNED TO 18 TH FEBRUARY 2011 ON WHICH DATE BOTH THE PARTIES HAD APPEARED. 9. LEARNED DR AFTER NARRATING THE FACTS SUBMITTED T HAT THE ASSESSEE HAS MADE A CLAIM WHICH COULD NOT BE SUPPORTED BY HIM EITHER BY THE PROVISIONS OF THE INCOME-TAX ACT OR BY SHOWING ANY DECISION. SHE SUBMITTED THAT IN RESPONSE TO QUERY RAISED BY THE A SSESSING OFFICER REGARDING JUSTIFICATION OF SUCH CLAIM THE ASSE SSEE DID NOT SUBMIT ANY REPLY. SHE SUBMITTED THAT IN RESPONSE TO SHO W CAUSE NOTICE NO EXPLANATION WHATSOEVER WAS FILED BY THE ASSE SSEE. THUS SHE SUBMITTED THAT THE CASE OF THE ASSESSEE CLEARLY FALLS W ITHIN THE AMBIT OF SECTION 271(1)(C) AND EXPLANATION (1) THER ETO AS THE ASSESSEE HAS SUBMITTED INACCURATE PARTICULARS OF HIS INCOME. HE SUBMITTED THAT THE ASSESSEE CANNOT PLACE RELIANCE UPON THE AFOREMENTIO NED DECISION OF HONBLE SUPREME COURT AS IN THAT CASE THE CLAIM OF THE ASSESSEE WAS NOT WHOLLY UNSUBSTANTIABLE WHEREAS IN THE PRESENT CA SE THE CLAIM OF THE ASSESSEE IS WHOLLY UNSUBSTANTIABLE. SHE REFERRED T O THE RECENT DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF C IT VS. ZOOM COMMUNICATION PVT. LTD 327 ITR 510 (DEL) IN WHICH T HE AFOREMENTIONED DECISION OF HONBLE SUPREME COURT WAS CONSIDERED AND I T WAS HELD THAT PENALTY IN CASES OF CLAIMS WHICH ARE WHOLLY UNSUBSTANTIA BLE IN LAW IS TO BE UPHELD AND THUS SHE PLEADED THAT LEARNED CIT (A) HAS WRONGLY DELETED THE PENALTY AND HIS ORDER SHOULD BE SET ASIDE A ND THAT OF ASSESSING OFFICER BE RESTORED. ITA NO.3537/DEL/2010 6 10. ON THE OTHER HAND RELYING UPON THE ORDER OF CI T (A) AND AFOREMENTIONED DECISION OF HONBLE SUPREME COURT IT WAS SUBMITTED BY THE ASSESSEE THAT THE ORDER OF THE CIT (A) SHOULD BE UPH ELD. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS I N THE LIGHT OF THE MATERIAL PLACED BEFORE US. RIGHT FROM THE BEGINN ING THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM MADE BY HI M IN THE RETURN OF INCOME. APPARENTLY THE LOSSES AROSE TO THE ASSESSEE OUT OF FIRM ARE NOT ALLOWABLE IN THE HANDS OF THE PARTNERS. IT IS ALSO NOT THE CASE OF THE ASSESSEE THAT ANY OF THE PROVISIONS CONTAINED IN INCOME-T AX ACT SUPPORT SUCH CLAIM. THE DETAILS ON THE BASIS OF WHICH SU CH CLAIM WAS MADE WAS NOT EVEN FILED EITHER BEFORE THE ASSESSING OFFI CER OR THE CIT (A). DURING THE COURSE OF HEARING BEFORE US THE ASSESSE E HAS SUBMITTED THE COMPUTATION OF STATEMENT OF INCOME IN R ESPECT OF GEE MARKETING NETWORK AND THE COMPUTATION IS AS FOLLOWS:- COMPUTATION STATEMENT OF INCOME NAME OF THE ASSESSEE : M/S GEE MARKETING NETWORK ADDRESS : LANE NO.7 ROAD NO.4 BLOCK-A MAHIPALPUR EXTN. NEW DELHI-37. ASSESSMENT YEAR : 2004-05 WARD NO. : WARD 24 (1) GIR/PAN NO. : NOT YET ALLOTTED STATUS : PARTNERSHIP NET PROFIT AS PER PROFIT & LOSS A/C OF THE FIRM FOR THE YEAR ENDED ON 31 ST MARCH 2004. 127623.54 SET OFF AND CARRIED FORWARD OF LOSSES OF PREVIOUS YEAR NET LOSS OF A.Y. 02-03 -2853847.80 NET LOSS OF A.Y. 03-04 -220668.95 -3074516.75 ______________ NET LOSS OF THE FIRM IS DISTRIBUTED AMONG PARTNERS IN THEIR PROFIT SHARING RATIO -2946893.21 DINESH GOEL 25% -736723.30 PARIKSHIT GOEL 25% -736723.30 S.C. GOEL 25% -736723.30 AJAY GUPTA 25% -736723.30 ITA NO.3537/DEL/2010 7 THIS FIRM HAS CLOSED ITS BUSINESS ACTIVITIES DURING THI S FINANCIAL YEAR. HENCE NET LOSS OF RS.29 46 893.21 IS DISTRIBUTED AMON G PARTNER IN THEIR PROFIT SHARING RATIO AND TO BE CARRIED OVER BY PARTNER S. THE FIRM HAD DISCONTINUED ITS BUSINESS. THIS IS LAST FINANCIAL YEA R OF BUSINESS ACTIVITIES OF THE FIRM. FOR GEE MARKETING NETWORK SD/- (PARIKSHIT GOEL) PARTNER 12. AS IT CAN BE SEEN THAT IT IS NOT EVEN THE LOSS OF CU RRENT FINANCIAL YEAR BUT IT IS A LOSS PERTAINING TO ASSESSMENT YEARS 2002- 03 AND 2003- 04. FOR THE CURRENT FINANCIAL YEAR THE ASSESSEE HAS EAR NED PROFIT FROM THE SAID FIRM. THEREFORE THE LOSS CONSISTS OF EARLIER Y EARS WHICH HAS BEEN CARRIED FORWARD IN THE HANDS OF THE FIRM AND AG AIN ARE CLAIMED BY THE ASSESSEE IN THE HANDS OF THE PARTNER WHICH CLAIM IS W HOLLY UNSUBSTANTIABLE IN LAW. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION AS THIS FACT H AS BEEN ASCERTAINED FROM THE ASSESSMENT RECORD. DURING THE COUR SE OF PENALTY PROCEEDINGS ALSO THE ASSESSEE DID NOT GIVE ANY REPLY. TH EREFORE NO EXPLANATION WHATSOEVER HAS BEEN SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER IN RESPONSE TO SHOW CAUSE NOTICE AGAI NST LEVY OF PENALTY. THEREFORE IT IS FOUND THAT THE ASSESSEE HAS NO T SUBMITTED ANY EXPLANATION REGARDING THIS CLAIM EITHER IN THE ASSESSMEN T PROCEEDINGS OR IN THE PENALTY PROCEEDINGS. THEREFORE THE FACTS OF THE PRESENT CASE ARE ENTIRELY DIFFERENT FROM THE FACTS IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA). IN THE SAID CASE THE ASSESSEE HAD MADE A CLAIM OF INTEREST EXPENDITURE AGAINST THE EXEM PTED INCOME OF DIVIDEND. THUS THE DISALLOWANCE WAS MADE U/S 14A. IT IS FOUND THAT THE RETURN IN THAT CASE WAS FILED BY THE ASSESSEE ON 31 ST JANUARY 2001 I.E. PRIOR TO THE INTRODUCTION OF FINANCE ACT 200 1 VIDE WHICH SECTION 14A WAS INTRODUCED WITH RETROSPECTIVE EFFECT FROM 01. 04.1962. THEREFORE IN THAT CASE IT WAS ACCORDING TO THE BONA FIDE BELIEF OF THE ITA NO.3537/DEL/2010 8 ASSESSEE THE DEDUCTION OF INTEREST EXPENDITURE WAS CLAIME D AGAINST EXEMPTED INCOME AND THE ISSUE AT THE TIME OF FILING T HE RETURN WAS DEBATABLE ONE. AS PER THE WELL SETTLED LAW THE CRUCI AL DATE TO SEE THE CONDUCT OF THE ASSESSEE IS THE DATE OF FILING OF THE RET URN ON WHICH IMPUGNED CLAIMED HAS BEEN MADE AND IT IS CLEAR FROM T HE FOLLOWING OBSERVATIONS OF THEIR LORDSHIPS OF HONBLE SUPREME COUR T IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P) LTD.(SUPRA):- THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME . WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE THE LIABIL ITY WOULD ARISE. IN DILIP N. SHROFF V. JOINT CIT (2007) 6 SCC 329 THIS COURT EXPLAINED THE TERMS CONCEALMENT OF INCOME AND FURNI SHING INACCURATE PARTICULARS. 13. THE ASSESSEE IN THE PRESENT CASE HAS NOT BEEN ABLE TO SHOW THAT ON THE DATE ON WHICH HE HAS FILED THE RETURN IT WAS THE BONA FIDE BELIEF OF THE ASSESSEE ACCORDING TO WHICH SUCH CLAIM COULD BE M ADE. THE COMPUTATION OF INCOME IN THE CASE OF GEE MARKETING N ETWORK ITSELF WILL SHOW THAT EARLIER THOSE LOSS WERE NEVER CARRIED FORWARD IN THE HANDS OF THE PARTNERS BUT WERE CARRIED ON IN THE HANDS OF THE FIRM ITSELF. THAT FACT ITSELF SHOWS THAT THE CLAIM OF THE ASSESSEE IS NOT BON A FIDE AND THE ASSESSEE IS AWARE OF THE FACT THAT CLAIM OF LOSSES IN RESPEC T OF THE FIRM CANNOT BE CLAIMED IN THE HANDS OF ITS PARTNERS. 14. THE DECISION IN THE CASE OF RELIANCE PETROPRODUCT S (P) LTD. (SUPRA) WILL NOT BE APPLICABLE TO THE FACTS OF THE PR ESENT CASE AND IT HAS ALSO BEEN DISTINGUISHED IN THE AFOREMENTIONED DECISION OF CIT VS. ZOOM COMMUNICATION PVT. LTD. (SUPRA) BY THE HONBLE JURISD ICTIONAL HIGH COURT IN THE FOLLOWING WORDS:- IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. [201 0] 322 ITR 158 (SC) THE ADDITION MADE BY THE AO IN RESPECT OF THE INTEREST CLAIMED AS A DEDUCTION U/S 36(1)(III) OF THE ACT WAS DELETE D BY THE CIT(A) ITA NO.3537/DEL/2010 9 THOUGH IT WAS LATER RESTORED BY THE TRIBUNAL TO T HE AO. THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE TRIB UNAL WAS ADMITTED BY THE HIGH COURT. IT WAS IN THESE CIRCUMSTANCES THAT THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NEITHE R CONCEALED THE INCOME NOR FILED INACCURATE PARTICULARS THEREOF . IN RECORDING THIS FINDING THE TRIBUNAL FELT THAT IF TWO VIEWS OF THE CLAIM OF THE ASSESSEE WERE POSSIBLE THE EXPLANATION OFFERED BY IT COULD NOT BE SAID TO BE FALSE. THIS HOWEVER IS NOT THE FACTUA L POSITION IN THE CASE BEFORE US. THE FACTS OF THE PRESENT CASE THUS ARE CLEARLY DISTINGUISHABLE. 15. THE HONBLE DELHI HIGH COURT HAS FURTHER OBSERVED THAT IT IS TRUE THAT MERE MAKING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF TH E ASSESSEE BUT IT CANNOT BE DISPUTED THAT A CLAIM MADE BY THE ASSESSEE NEE DS TO BE BONA FIDE. IF THE CLAIM BESIDES BEING INCORRECT IN L AW IS MALA FIDE EXPLANATION (1) TO SECTION 271(1)(C) WOULD COME INT O PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. THEIR LORDSHIPS OF HON BLE DELHI HIGH COURT HAVE FURTHER OBSERVED THAT COURT SHOULD NO T OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY AND IF THE ASSESSEE MAKES SUCH A CLAIM WHI CH IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY THE ASSESSEE FOR MAKING SUCH A C LAIM IS NOT FOUND TO BE BONA FIDE THEN IT WOULD BE DIFFICULT TO SAY THAT THE ASSESSEE STILL IS NOT LIABLE TO PENALTY. REFERENCE CAN BE MADE TO THE FOLLOWING OBSERVATIONS OF THEIR LORDSHIPS. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULA RS OF THE INCOME OF THE ASSESSEE BUT IT CANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM B ESIDES BEING INCORRECT IN LAW IS MALA FIDE EXPLANATION 1 TO SEC . 271(1)(C) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMA LL PERCENTAGE OF THE INCOME-TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORR ECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION F URNISHED BY HIM ITA NO.3537/DEL/2010 10 FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FID E IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT. IF WE TAKE THE VIEW THAT A C LAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION O N WHICH IT COULD BE MADE THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSI TION OF PENALTY EVEN IF HE WAS NOT ACTING BONA FIDE WHILE MAKING A CLAIM OF THIS NATURE THAT WOULD GIVE A LICENCE TO UNSCRUPULOUS A SSESSEE TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT T HERE BEING ANY BASIS FOR MAKING THEM IN THE HOPE THAT THEIR RETUR N WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED O N THE BASIS OF SELF-ASSESSMENT U/S 143(1) OF THE ACT AND EVEN IF T HEIR CASE IS SELECTED FOR SCRUTINY THEY CAN GET AWAY MERELY BY PAYING THE TAX WHICH IN ANY CASE WAS PAYABLE BY THEM. THE CONSEQ UENCE WOULD BE THAT THE PERSONS WHO MAKE CLAIMS OF THIS NATURE ACTUATED BY A MALA FIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD T AKE AWAY THE DETERRENT EFFECT WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. WE FIND THAT THE ASSESSEE BEFORE US DID NOT EXPLAI N EITHER TO THE INCOME TAX AUTHORITIES OR TO THE INCOME TAX APP ELLANT TRIBUNAL AS TO IN WHAT CIRCUMSTANCES AND ON ACCOUNT OF WHOSE MISTAKE THE AMOUNTS CLAIMED AS DEDUCTIONS IN THIS CASE WERE NOT ADDED WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY. WE C ANNOT LOSE SIGHT OF THE FACT THAT THE ASSESSEE IS A COMPANY WH ICH MUST BE HAVING PROFESSIONAL ASSISTANCE IN COMPUTATION OF IT S INCOME AND ITS ACCOUNTS ARE COMPULSORILY SUBJECTED TO AUDIT. IN T HE ABSENCE OF ANY DETAILS FROM THE ASSESSEE WE FAIL TO APPRECIAT E HOW SUCH DEDUCTIONS COULD HAVE BEEN LEFT OUT WHILE COMPUTING THE INCOME OF THE ASSESSEE COMPANY AND HOW IT COULD ALSO HAVE ES CAPED THE ATTENTION OF THE AUDITORS OF THE COMPANY. 16. IT HAS ALSO HAS ALSO BEEN MENTIONED THAT THE ASSESSEE H AS NOT EXPLAINED EITHER BEFORE THE ASSESSING OFFICER OR CIT (A ) OR BEFORE THE TRIBUNAL THAT IN WHAT CIRCUMSTANCES SUCH CLAIM WHICH WAS WHOLLY UNSUBSTANTIABLE IN LAW WAS MADE BY THE ASSESSEE. IN ABSEN CE OF ANY EXPLANATION SUBMITTED BY THE ASSESSEE IN THIS REGARD IT IS HELD THAT THE EXPLANATION (1) TO SECTION 271 IS ATTRACTED AS THE ASSE SSEE DID NOT FURNISH ANY EXPLANATION WITH REGARD TO SUCH CLAIM. T HEREFORE KEEPING IN VIEW THE AFOREMENTIONED DISCUSSION WE ARE OF THE O PINION THAT LEARNED CIT (A) HAS WRONGLY DELETED THE PENALTY AND HIS ORDER IS TO BE ITA NO.3537/DEL/2010 11 SET ASIDE AND THAT OF ASSESSING OFFICER IS TO BE RESTORED. WE DIRECT ACCORDINGLY. THE APPEAL FILED BY THE REVENUE IS ALL OWED. 17. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.02.20 11. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED 25.02.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES