BENNETT COLEMA & CO.LTD, MUMBAI v. DCI 1(1), MUMBAI

ITA 3710/MUM/2011 | 1999-2000
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 371019914 RSA 2011
Assessee PAN AAACB4373Q
Bench Mumbai
Appeal Number ITA 3710/MUM/2011
Duration Of Justice 1 year(s) 2 month(s) 18 day(s)
Appellant BENNETT COLEMA & CO.LTD, MUMBAI
Respondent DCI 1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-07-2012
Assessment Year 1999-2000
Appeal Filed On 09-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.3710/MUM/2011 ASSESSMENT YEAR: 1999 -2000 BENNETT COLEMAN & CO.LTD. THE TIMES OF INDIA BUILDING DR. D.N.ROAD FORT MUMBAI. PA NO.AAACB 4373 Q ACIT 1(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI. (APPELLANT) VS. (RESPONDENT) ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 ACIT 1(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI. BENNETT COLEMAN & CO.LTD. THE TIMES OF INDIA BUILDING DR. D.N.ROAD FORT MUMBAI. PA NO.AAACB 4373 Q (APPELLANT) VS. (RESPONDENT) ASSESSEE BY : SHRI S. VENKATRAMAN REVENUE BY: SHRI M. MURALI DATE OF HEARING: 20.6.2012 DATE OF PRONOUNCEMENT: 27 .7.2012 ORDER PER BENCH: THESE ARE CROSS APPEALS FILED BY ASSESSEE AND DEPA RTMENT AGAINST ORDER DATED 25.2.2011 OF LD CIT(A)-I MUMBAI FOR THE ASSESSMENT YEAR 1999-2000 DISPUTING CONFIRMATION/DELETION OF PENALTY LEVIED BY THE AO U ./S.271(1)(C) OF THE ACT. ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 2 2. THE ASSESSEE IS A LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF PRINTING & PUBLISHING OF NEWSPAPERS AND PERIODIC ALS GUARANTEEING AND EXPORTS. 3. FIRSTLY WE TAKE UP APPEAL OF ASSESSEE BEING I.T .A. NO.3710/M/2011. 4. IN GROUND NOS.1 TO 3 OF APPEAL ASSESSEE HAS DIS PUTED THE ORDER OF LD CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S.271(1)( C) OF THE ACT IN RESPECT OF INTEREST OF RS.75 00 000 RECEIVED ON 6% GOVERNMENT OF INDIA-CAP ITAL INDEX BONDS. 5. THE RELEVANT FACTS ARE THAT ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR PURCHASED 6% GOVERNMENT OF INDIA-CAPITAL INDEX BOND S. THE ASSESSEE RECEIVED INTEREST OF RS.75 00 000 DURING THE YEAR THEREON. ASSESSEE CLAIMED DEDUCTION OF INTEREST ON TAX FREE BONDS OF RS.5 60 11 644 IN ITS RETURN FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO GIVE DETAILS OF INTEREST ON TAX FREE BONDS. WHILE PREPARING THE SAID DETAILS IT WAS N OTICED BY ASSESSEE THAT 6% GOVERNMENT OF INDIA-CAPITAL INDEX BONDS PURCHASED D URING THE YEAR HAD INADVERTENTLY BEEN CATEGORIZED AS TAX FREE BONDS AND THEREFORE INTEREST OF RS.75 00 000 EARNED ON SUCH BONDS HAD ALSO INADVERTENTLY ESCAPED TAX. THE ASSESSEE REQUESTED THE AO TO INCLUDE RS.75 LAKHS AS TAXABLE INTEREST AND CORRECT ED THE FIGURE OF INTEREST OF TAX FREE BONDS AMOUNTING TO RS.4 85 11 644. IN VIEW OF ABOV E AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. 6. ON BEHALF OF ASSESSEE IT WAS CONTENDED THAT SAI D INTEREST INCOME WAS VOLUNTARILY OFFERED TO TAX AND THE CLAIM HAD NOT BEEN DETECTED OR UNEARTHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO SAY THAT THERE HAD BEEN C ONCEALMENT OR NON DISCLOSURE OF INFORMATION SINCE MISTAKE WAS NOT DISCOVERED BY THE AO BUT THE ASSESSEE ON BECOMING AWARE OF THE MISTAKE HIMSELF OFFERED THE SAME FOR T AX. THERE WAS NO INTENTION OF THE ASSESSEE TO CONCEAL THE FACTS OR FURNISH INACCURATE PARTICULARS OF INCOME FOR AVOIDANCE OF TAX AND THE MISTAKE WAS DUE TO ONLY CLERICAL ERROR. THE AO DID NOT ACCEPT THE SAID CONTENTION OF THE ASSESSEE AND STATED THAT ASSESSEE HAD DELIBERATELY CLAIMED INTEREST OF RS.75 LAKHS AS TAX FREE INTEREST AND NOT OFFERED TH E SAME FOR TAXATION BY HIDING THE MERITS AND THE BONAFIDES OF THE CASE. THE AO STATE D THAT HAD THE AO NOT ASKED THE ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 3 DETAILS OF INTEREST ON TAX FREE BONDS THE ASSESSEE WOULD NOT HAVE COME FORWARD TO OFFER THE SUM OF RS.75 LAKHS FOR TAXATION. THE AO STATED THAT THE CLAIM OF THE ASSESSEE WAS NON-BONAFIDE IN THE RETURN OF INCOME IN ORDER T O REDUCE ITS TAXABLE INCOME AND THEREBY FILING INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED PARTICULARS OF INCOME. ACCORDINGLY AO LEVIED PENALTY UNDER SECTION 271(1) (C) @ 100% OF TAX SOUGHT TO BE EVADED ON THE ABOVE AMOUNT. BEING AGGRIEVED ASSES SEE FILED APPEAL BEFORE LD CIT(A). 7. LD CIT(A)CONFIRMED THE ACTION OF AO. HENCE ASS ESSEE IS IN APPEAL BEFORE US. 8. DURING THE COURSE OF HEARING LD A.R. REFERRED P AGE 12 OF PB WHICH IS COPY OF COMPUTATION OF INCOME FOR THE FINANCIAL YEAR ENDING ON 31.3.1999 RELATING TO ASSESSMENT YEAR 1999-2000 AND SUBMITTED THAT ASSESSEE STATED I NTEREST ON TAX FREE BONDS OF RS.5 60 11 644 INCLUDING INTEREST OF RS.75 LAKHS ON 6% GOVERNMENT OF INDIA-CAPITAL INDEX BONDS. HE SUBMITTED THAT IT WAS NOTICED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THAT INTEREST ON SAID BONDS WERE NOT TA X FREE AND OFFERED VOLUNTARILY SAID INTEREST FOR TAXATION. HE FURTHER SUBMITTED THAT I N THE BALANCE SHEET INVESTMENT WAS DISCLOSED CORRECTLY AND THE MISTAKE HAD OCCURRED IN ADVERTENTLY IN THE COMPUTATION OF INCOME. LD A.R. SUBMITTED THAT NO PENALTY CAN BE I MPOSED IF THERE IS INADVERTENT MISTAKE AND AMOUNT IS OFFERED VOLUNTARILY FOR TAXAT ION DURING THE COURSE OF ASSESSMENT PROCEEDINGS BECAUSE IT DOES NOT AMOUNT TO CONCEALME NT OF INCOME OR FURNISHING WRONG PARTICULARS OF INCOME. HE SUBMITTED THAT PENALTY L EVIED IS NOT JUSTIFIED. 9. ON THE OTHER HAND LD D.R. SUPPORTED THE ORDER O F AUTHORITIES BELOW AND SUBMITTED THAT SAID INTEREST INCOME WAS DISCLOSED BY THE ASSESSEE ONLY AFTER A QUERY WAS MADE BY THE AO DURING ASSESSMENT PROCEEDINGS. HE SUBMITTED THAT ASSESSEE ACCEPTED THE MISTAKE AND OFFERED INTEREST FOR TAXAT ION. THEREFORE ASSESSEE FILED WRONG PARTICULARS OF INCOME. HE SUBMITTED THAT INVESTMEN T MADE BY THE ASSESSEE ON 6% GOVERNMENT OF INDIA-CAPITAL INDEX BONDS IS NOT DISP UTED AND ONLY THE INCOME GENERATED WAS CLAIMED AS TAX FREE WHICH IS INACCURATE AND T HEREFORE LEVY OF PENALTY IS IN ORDER. 10. WE HAVE CAREFULLY CONSIDERED ORDERS OF AUTHORIT IES BELOW AND SUBMISSIONS OF LD REPRESENTATIVES OF PARTIES. WE OBSERVE THAT ASSESS EE HAS DISCLOSED IN THE BALANCE SHEET PURCHASE OF 6% GOVERNMENT OF INDIA-CAPITAL INDEX BO NDS IN THE ASSESSMENT YEAR UNDER ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 4 CONSIDERATION. THERE IS NO DISPUTE THAT ASSESSEE RE CEIVED INTEREST OF RS.75 LAKHS INCLUDED THE SAID INTEREST UNDER THE HEADING INTER EST ON TAX FREE BONDS IN COMPUTATION OF INCOME. WE OBSERVE ON PERUSAL OF COMPUTATION OF INCOME PLACED AT PAGE 12 OF PB THAT ASSESSEE HAS STATED INTEREST ON TAX FREE BONDS RS.5 60 11 644 AND BREAKUP OF IS GIVEN BY WAY OF A NOTE AT SL.NO.-15 FORMING PART OF COMPUTATION OF INCOME ALONGWITH ANNEXURE-P AT PAGE 15 OF PB. IN THE SAID ANNEXUR E-P ASSESSEE AT SL.NO.34 THEREOF MENTIONED 6% GOVERNMENT OF INDIA-CAPITAL INDEX BOND -2002 INTEREST OF RS.75 LAKHS. IN ANNEXURE-P ASSESSEE HAS GIVEN HEA DING STATEMENT OF INTEREST ON TAX FREE BONDS. DURING THE COURSE OF ASSESSMENT PROCEE DINGS WHEN AO RAISED A QUERY ASSESSEE STATED THAT IN THE SAID STATEMENT OF INTER EST ON TAX FREE BONDS IT INCLUDED INTEREST OF RS.75 LAKHS INADVERTENTLY AND INTEREST WAS NOT ON TAX FREE BONDS AND OFFERED THE SAID AMOUNT TO TAX. ACCORDINGLY ASSESSMENT WAS COMPLETED BY THE AO. 10.1 THE PENALTY U/S.271(1)(C) IS ONLY A CIVIL LIA BILITY TO COMPENSATE FOR LOSS OF REVENUE AS HELD BY HONBLE SUPREME COURT IN THE CAS E OF DHARMENDRA TEXTILES PROCESSORS & ORS VS UNION OF INDIA 306 ITR 277( SC). HONBLE APEX COURT IN THE SAID CASE HAVE HELD THAT NEXUS OF WILLFUL CONCEALMENT IS NOT REQUIRED TO BE PROVED BY THE REVENUE. THUS THE CASE OF PENALTY IS TO BE EVALUA TED UNDER THE PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT AS P ER WHICH IN CASE IN RESPECT OF ADDITIONS THE ASSESSEE OFFERS EXPLANATION WHICH H E IS ABLE TO SUBSTANTIATE AND IS ALSO ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE AND ALL NECESSARY DETAILS IN RELATION TO THE CLAIM HAVE BEEN GIVEN PENALTY IS NOT LEVIABLE. IN THE CASE BEFORE US WE OBSERVE THAT ASSESSEE HAS NOT CONCEALED ANY FACTS OF MAKING THE INVESTMENT IN PURCHASE OF 6% GOVT. OF INDIA-CAPITAL INDEX BONDS NOR THERE IS ANY CONCE ALMENT OF RECEIPT OF INTEREST THEREON OF RS.75 LAKHS. THERE IS ALSO NO DISPUTE TO THE FAC T THAT ASSESSEE IS HOLDING TAX FREE BONDS AND RECEIVED INTEREST IN THE ASSESSMENT YEAR UNDER CONSIDERATION THEREON WHICH ARE NOT CHARGEABLE TO TAX. WE FIND JUSTIFIABLY EXP LANATION ON THE PART OF THE ASSESSEE THAT WHILE COMPUTING THE TOTAL INCOME ON THE BONDS RECEIVED THE ASSESSEE INCLUDED THE INTEREST RECEIVED OF 6% GOVT. OF INDIA-CAPITAL INDE X BONDS IN THE STATEMENT OF THE INTEREST RECEIVED ON TAX FREE BONDS. WE FIND THAT WHEN A QUERY WAS RAISED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS EE OFFERED THE SAID AMOUNT OF RS.75 LAKHS TO TAX AND STATED THAT THERE WAS AN INA DVERTENT MISTAKE WHILE CONSIDERING THE INTEREST ON BONDS AND THE SAID INTEREST WAS INC LUDED IN THE STATEMENT OF TAX FREE ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 5 BONDS. WE AGREE THAT THERE WERE NO FACTS WHICH TH E ASSESSEE HIDE OR OMITTED TO MENTION IN RESPECT OF INVESTMENT AS WELL AS RECEIPT OF INTEREST. THEREFORE ON CONSIDERATION OF THE FACTS OF THE CASE WE ARE OF T HE CONSIDERED VIEW THAT IT COULD NOT BE SAID THAT THERE WAS A DESIRE ON THE PART OF THE ASS ESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID TO PAY TAX OF INTEREST ON THE BONDS AND CONSIDERING THE DECISION OF HONBLE APEX COURT IN THE CASE OF K.C. BUILDERS VS. ACIT 265 ITR562 WE CANCEL PENALTY LEVIED BY AUTHORITIES BELOW ON THE SAID AMOUNT OF R S.75 LAKHS BY ALLOWING GROUND NO.1 TO 3 OF APPEAL TAKEN BY ASSESEE. 11. IN GROUND NOS.4 TO 8 ASSESSEE HAS DISPUTED THE ORDER OF LD CIT(A) IN CONFIRMING PENALTY ELVIED U/S.271(1)(C) ON RECEIPT OF PREMIUM ON REDEMPTION OF DEBENTURES OF RS.2 37 60 000. 12. THE RELEVANT FACTS IN THIS REGARD ARE THAT ASSE SSEE CLAIMED PREMIUM ON REDEMPTION OF DEBENTURES OF RS.2 37 60 000 AS INCOM E FROM CAPITAL GAIN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO HELD THAT THE PREMIUM RECEIVED BY THE ASSESSEE ON REDEMPTION OF DEBENTURES IS NOTHING BUT AN ADDIT ION TO THE RATE OF INTEREST OR IS A PAYMENT IN LIEU OF THE RATE OF INTEREST BEING RECEI VED ON THE INVESTMENT MADE IN THE DEBENTURES. ACCORDINGLY SAID PREMIUM WAS HELD TO BE REVENUE RECEIPT AND ASSESSED TO TAX UNDER THE HEAD INCOME FROM OTHER SOURCES. TH E ASSESSEE AGITATED THE SAID ASSESSMENT ORDER BEFORE LD CIT(A)AND ACTION OF AO W AS CONFIRMED. NO FURTHER APPEAL WAS FILED BEFORE THE TRIBUNAL ON SAID ISSUE. IN VI EW THEREOF THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THE AO STATE D THAT ASSESSEE HAS MADE THE CLAIM OF PREMIUM ON REDEMPTION OF DEBENTURES AS INCOME F ROM CAPITAL GAIN BY HIDING THE MERITS AND THE BONAFIDES OF THE CASE. THE CLAIM OF THE ASSESSEE WAS NON-BONAFIDE IN ORDER TO REDUCE ITS TAXABLE INCOME THEREBY ASSESSEE FILED INACCURATE PARTICULARS OF INCOME AND ALSO CONCEALED THE PARTICULARS OF ITS IN COME. THE AO LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED THEREON WHICH WORKS OUT TO RS.35 64 000. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE LD CIT(A). 13. LD CIT(A) CONFIRMED THE ACTION OF AO. HE HAS S TATED THAT THE TAX RATE CHARGEABLE UNDER THE HEAD LTCG IS LOWER THAN THE TA X RATE APPLICABLE IN THE CASE OF INCOME TAX UNDER THE HEAD INCOME FROM OTHER SOURCE S. THEREFORE AO WAS JUSTIFIED IN ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 6 HIS ACTION TO LEVY PENALTY U/S.271(1)(C) OF THE ACT . HENCE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 14. DURING THE COURSE OF HEARING LD A.R. REFERRED PAGES 11 & 12 OF PB WHICH IS COPY OF COMPUTATION OF INCOME AND SUBMITTED THAT ASSESSE E REDUCED THE PREMIUM RECEIVED ON DEBENTURES FROM BUSINESS INCOME AND INCLUDED IT AS CAPITAL GAIN WITH A NOTE IN THE COMPUTATION OF INCOME WHICH IS PLACED AT PAGE 16 O F PB. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS BONAFIDE AND ALL THE RELEVANT FACTS WERE DISCLOSED BY THE ASSESSEE IN ITS COMPUTATION. HOWEVER AO TOOK A VIEW THAT THE SAID RECEIPT OF PREMIUM ON REDEMPTION OF DEBENTURES IS NOT CAPITAL GAIN BUT TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. HE SUBMITTED THAT IT IS ONLY A LEGAL CON TENTION AS TO WHETHER THE SAID AMOUNT IS TAXABLE AS CAPITAL GAIN OR INCOME FROM OTHER SOU RCES. LD A.R. RELYING ON THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AURIC INVESTMENT AND SECURITIES LTD 310 ITR 121 AND CIT VS. COMMISSIONER OF INCOME-TAX V. BHARTESH JAIN 323 ITR 358 SUBMITTED THAT IF THE ADDITION IS MADE BY CHANG E OF HEAD IT DOES NOT AMOUNT TO CONCEALMENT OF INCOME AND ACCORDINGLY IT COULD NO T BE THE BASIS FOR IMPOSITION OF PENALTY U/S.271(1) OF THE ACT. 15. ON THE OTHER HAND LD D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE WRONGLY CLAIMED THAT PREMIU M RECEIVED ON REDEMPTION OF DEBENTURES IS CAPITAL GAIN. HE SUBMITTED THAT THE RATE OF TAX PAYABLE ON CAPITAL GAIN IS LESS AS COMPARED TO RATE OF TAX IF THE INCOME IS AS SESSED AS INCOME FROM OTHER SOURCES. THEREFORE ASSESSEE HAS FURNISHED WRONG PARTICULARS OF FACTS WITH AN INTENTION TO PAY LOWER TAX. HENCE LEVY OF PENALTY IS JUSTIFIED. 16. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTA TIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE RELEVA NT PAGES I.E. PAGES 11 & 12 OF PB WHICH IS COMPUTATION OF INCOME OF THE ASSESSEE ALON GWITH NOTE-11 AT PAGE 16 FORMING PART OF COMPUTATION OF INCOME AND ALSO CONSIDERED T HE CASES CITED BEFORE US (SUPRA). THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE HAS D ULY DISCLOSED THE AMOUNT OF PREMIUM RECEIVED ON REDEMPTION OF DEBENTURES IN THE COMPUTA TION OF INCOME. THE ASSESSEE HAS REDUCED PREMIUM FROM THE BUSINESS INCOME IN THE COM PUTATION OF INCOME AND ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 7 CONSIDERED IT AS CAPITAL GAIN ALONGWITH NOTE WHICH IS FORMING PART OF COMPUTATION OF INCOME. THE SAID NOTE NO.11 AT PAGE 16 READS AS UN DER: THE COMPANY RECEIVED PREMIUM OF RS.2 37 60 000 ON REDEMPTION OF DEBENTURES OF TIMES GUARANTEE LTD DURING THE YEAR. THIS HAS BEEN SHOWN AS LONG TERM CAPITAL GAINS BECAUSE THESE WERE RECEIVED FOR THE TRANSFER OF THE ASSET. IT IS THEREFORE THE COMPANY S CLAIM THAT THIS IS TAXABLE AS CAPITAL GAIN. 17. HOWEVER THE AUTHORITIES BELOW IN THE ASSESSMEN T PROCEEDINGS HELD THAT THE RECEIPT IS INCOME FROM OTHER SOURCES. THEREFORE T HE DISPUTE WAS ONLY IN RESPECT OF HEAD UNDER WHICH THE SAID AMOUNT IS TO BE ASSESSED. IT IS NOT THE CASE WHERE THE ASSESSEE HAS OMITTED TO STATE THE RELEVANT FACTS OR FURNISHED WRONG PARTICULARS OF FACTS. NO FACTS HAVE ALSO BEEN BROUGHT ON RECORD BY THE DE PARTMENT THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE. SIMILAR ISSUE HAS BEEN CONSIDERED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AURIC INVESTMENT AND SECURITIES LTD (SUPRA) WHEREIN ASSESSEE FILED RETURN AND ADJUSTED LOSS OF SHARE TR ADING AGAINST NORMAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE LOSS CLAIMED BY THE ASSESSEE WAS SPECULATIVE IN NATURE TO BE ADJ USTED AGAINST SPECULATIVE INCOME ONLY AND AS THE INCOME WAS ASSESSED AT A LOSS THE LOSS SHOWN BY THE ASSESSEE COULD NOT BE ADJUSTED. IN VIEW OF ABOVE AO INITIATED PE NALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. LD CIT(A) CANCELED THE PENALTY WHICH WAS UPHE LD BY THE TRIBUNAL. THE DEPARTMENT FILED APPEAL BEFORE HONBLE DELHI HIGH COURT. THE HONBLE HIGH COURT DISMISSED THE APPEAL OF THE DEPARTMENT AND HELD THAT THERE WAS NO THING ON RECORD TO SHOW THAT IN FURNISHING RETURN OF INCOME ASSESSEE HAS CONCEALED ITS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE MERE TREATMEN T OF THE BUSINESS LOSS AS SPECULATION LOSS BY THE ASSESSING OFFICER DID NOT AUTOMATICALLY WARRANT THE INFERENCE OF CONCEALMENT OF INCOME. IT WAS HELD THAT THE CANCELLATION OF PEN ALTY WAS VALID. SIMILARLY IN THE CASE OF BHARTESH JAIN (SUPRA) IT WAS ALSO HELD THAT DELETION OF THE PEN ALTY BY THE TRIBUNAL ON THE GROUND OF MERE CHANGE OF TREATMENT OF LOSS DOES NOT AMOUNT TO CONCEALMENT OF INCOME AND PENALTY U/S. 271(1)(C) IS NOT WARRANTED. IN THE CASE BEFORE US ALSO IT IS NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE HAS CONCEA LED ANY PARTICULARS OF INCOME OR FURNISHED WRONG PARTICULARS OF INCOME BY STATING IN CORRECT FACT. THE AO ON THE BASIS OF FACTS ONLY CHANGED THE HEAD OF INCOME UNDER WHICH T HE RECEIPT OF PREMIUM ON REDEMPTION OF DEBENTURES IS TO BE ASSESSED. THE AS SESSEE CONSIDERED THE SAID PREMIUM ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 8 AS CAPITAL GAIN. THE DEPARTMENT ASSESSED THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. IN VIEW OF THE FACT THAT THERE IS ONLY A CHANGE OF HEAD OF INCOME AND IN THE ABSENCE OF ANY FACTS THAT THE CLAIM OF THE ASSE SSEE WAS NOT BONAFIDE WE HOLD THAT LEVY OF PENALTY U/S.271(1)(C) IS NOT JUSTIFIED. HE NCE WE ALLOW GROUND NOS.4 TO 8 OF APPEAL OF THE ASSESSEE. 18. NOW WE TAKE UP APPEAL BY DEPARTMENT BEING I.T.A . NO.4979/M/2011. 19. GROUND RAISED BY DEPARTMENT READS AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S.271 (1)(C) IN RESPECT OF DISALLOWANCE OF REPAIR EXPENSES TREATED AS CAPITAL EXPENDITURE AMOUNTING TO RS.15 80 169 IN THE LIGHT OF DECISION OF CIT(A) & ITAT IN QUANTUM APPEAL SUSTAINING THE ADDITIONS. 20. THE RELEVANT FACTS ARE THAT DURING THE COURSE O F ASSESSMENT PROCEEDINGS AO DISALLOWED A SUM OF RS.33 25 336 OUT OF BUILDING RE PAIRS AND FURNITURE AND FIXTURE REPAIRS ON THE GROUND THAT THESE ARE CAPITAL EXPEND ITURE. THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) AND LD CIT(A) CONFIRMED THE ADDITI ON TO THE EXTENT OF RS.15 80 169. THE TRIBUNAL ALSO CONFIRMED THE ACTION OF AO. IN V IEW THEREOF AO INITIATED PENALTY PROCEEDINGS ON ACCOUNT OF ADDITION OF RS.15 80 169 SUSTAINED FINALLY IN THE ASSESSMENT PROCEEDINGS AND STATED THAT ASSESSEE FURNISHED INAC CURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME ON THIS ISSUE. THE AO HAS STATED THAT ASSESSEE MADE A NON- BOANFIDE CLAIM IN ORDER TO REDUCE ITS TAXABLE INCOM E AND ACCORDINGLY LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED THEREON. BEING AGG RIEVED ASSESSEE FILED APPEAL BEFORE LD CIT(A). LD CIT(A) AFTER CONSIDERING SUBM ISSIONS OF ASSESSEE AS WELL AS ASSESSMENT ORDER HELD THAT THERE IS A THIN LINE OF DIFFERENCE BETWEEN REVENUE AND THE CAPITAL EXPENDITURE. HE HAS FURTHER STATED THAT AF TER CONSIDERING NATURE OF EXPENDITURE DETAILED IN THE ASSESSMENT ORDER TWO VIEWS ARE POS SIBLE. HE HAS STATED THAT ON GOING THROUGH THE NATURE OF EXPENDITURE INCURRED IT WOUL D ALSO BE REVENUE EXPENDITURE. LD CIT(A) RELYING ON THE DECISION OF HONBLE APEX COUR T IN THE CASE OF CIT VS.RELIANCE ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 9 PETROPRODUCTS PVT LTD. 322 ITR 158 (SC) HELD THAT A BONAFIDE CLAIM EVEN IF DISALLOWED CANNOT FORM THE BASIS FOR LEVY OF PENALTY AND ACCO RDINGLY CANCELLED THE PENALTY LEVIED BY AO U/S.271(1)(C) OF THE ACT ON THE DISALLOWANCE OF REPAIR EXPENDITURE OF RS.15 80 169 AS CAPITAL EXPENDITURE. HENCE DEPART MENT IS IN APPEAL BEFORE THE TRIBUNAL. 21. DURING THE COURSE OF HEARING LD D.R. RELIED ON THE ORDER OF AO AND WHEREAS LD A.R. RELIED ON THE ORDER OF LD CIT(A). 22. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTA TIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. WE AGREE WITH LD CIT(A) THAT ME RE DISALLOWANCE OF CLAIM OF THE ASSESSEE DOES NOT GIVE A BASIS FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. IT IS NOT THE CASE OF THE DEPARTMENT THAT ASSESSEE HAS CLAIMED TH E SAID EXPENDITURE ONLY TO AVOID TAX. WE OBSERVE THAT ASSESSEE PLACED ALL RELEVANT FACTS IN THE RETURN FILED AND MADE ITS CLAIM BONAFIDE AS REVENUE EXPENDITURE. NOTHING IS AVAILABLE ON RECORD TO SHOW THAT BELIEF OF THE ASSESSEE AND THE EXPLANATIONS OF THE ASSESSEE WERE FALSE AND INHERENTLY IMPOSSIBLE. EVEN AN ERRONEOUS CLAIM FOR DEDUCTION CANNOT WARRANT PENALTY UNLESS AND UNTIL IT IS PROVED THAT CLAIM IS MADE WITH DISHONES T INTENTION AS OBSERVED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1993-94 VIDE ORDER DATED 30.4.2010 IN I.T.A. NO.1189/M/2009 AND ALSO BY THE HOBBLE APEX COURT I N THE CASE OF RELIANCE PETROPRODUCTS PVT LTD. (SUPRA). THEREFORE WE HOLD THAT LD CIT(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY AO U/S.271(1)(C) OF THE ACT ON TH E SAID AMOUNT OF RS.15 80 169 WHICH WAS CLAIMED BY THE ASSESSEE AS REVENUE EXPENDITURE BUT HELD IT TO BE A CAPITAL EXPENDITURE. IN THIS REGARD WE ARE ALSO SUPPORTED BY THE ORDERS OF HONBLE DELHI HIGH COURT IN THE CASE OF AURIC INVESTMENT AND SECURITIE S LTD AND BHARTESH JAIN (SUPRA) THAT MERE CHANGE OF HEAD OF INCOME DOES NOT WARRANT LEVY OF PENALTY U/S.271(1)(C) OF THE ACT AS DISCUSSED HEREINABOVE IN PARA 17. HENCE W E UPHOLD THE ORDER OF LD CIT(A) BY REJECTING GROUND OF APPEAL TAKEN BY DEPARTMENT. ITA NO.3710/MUM/2011 ITA NO.4979/MUM/2011 ASSESSMENT YEAR:1999-2000 10 23. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLO WED AND WHEREAS APPEAL FILED BY REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2012 SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI DATED 27 TH JULY 2012 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS) 1 MUMBAI 4. COMMISSIONER OF INCOME TAX 1 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH B MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI