ACIT, CHENNAI v. M/s. Shriram Investments Ltd., CHENNAI

ITA 998/CHNY/2010 | 2003-2004
Pronouncement Date: 20-01-2010 | Result: Dismissed

Appeal Details

RSA Number 99821714 RSA 2010
Assessee PAN AAECS4041G
Bench Chennai
Appeal Number ITA 998/CHNY/2010
Appellant ACIT, CHENNAI
Respondent M/s. Shriram Investments Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-01-2010
Date Of Final Hearing 12-01-2011
Next Hearing Date 12-01-2011
Assessment Year 2003-2004
Appeal Filed On 18-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE DR. O.K. NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER] I.T.A NO. 998/MDS/2010 ASSESSMENT YEAR : 2003-04 THE ACIT COMPANY CIRCLE VI(2) CHENNAI VS M/S SHRIRAM INVESTMENTS LTD NO.4 MOOKAMBIGA COMPLEX LADY DESIKA CHARRY ROAD MYLAPORE CHENNAI 600 004 [PAN AAECS4041G] (APPELLANT) (RESPONDENT) I.T.A NO. 1000/MDS/2010 ASSESSMENT YEAR : 2003-04 THE ACIT COMPANY CIRCLE VI(2) CHENNAI VS M/S SHRIRAM TRANSPORT FINANCE CO. LTD NO.4 MOOKAMBIGA COMPLEX LADY DESIKA ROAD MYLAPORE CHENNAI 600 004 [PAN AAACS7018R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI V.D. GOPAL O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: IN THESE APPEALS OF THE REVENUE FILED AGAI NST DIFFERENT ASSESSEES OF THE SAME GROUP FOR ASSESSMENT YEAR 20 03-04 IDENTICAL ITA 998 & 1000/10 :- 2 -: ISSUES ARE INVOLVED THEREFORE FOR THE SAKE OF CON VENIENCE AND BREVITY WE PROCEED TO DECIDE THEM BY A COMMON ORDER. I.T.A.NO. 998/MDS/2010 2. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE LD. CIT(A)-V CHENNAI DATED 25.3.2010 AND EMANATES FROM A PENALTY ORDER DATED 16.9.2009 PASSED U/S 271(1)(C) OF THE I NCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T). 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF CONDUCTING HI RE PURCHASE FINANCE LEASING AND INVESTMENT. THE ASSESSEE FILE D RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04 ADMITTING TOTAL INCOME OF ` 14 34 72 481/-. THE ASSESSEE ALSO DECLARED BOOK P ROFIT U/S 115JB OF THE ACT OF ` 38 47 41 000/-. IN THE ASSESSMENT COMPLETED U/S 143(3) ON 13.3.2006 SOME ADDITIONS WERE MADE AND THE TOTA L INCOME WAS COMPUTED AT ` 57 82 84 080/-. THE ASSESSEE HAD MADE A CLAIM FOR DEDUCTION OF ` 4 75 00 000/- WHICH STOOD TRANSFERRED TO STATUTORY RESERVE IN THE INCOME-TAX ADJUSTMENT STATEMENT ALO NGWITH A NOTE AMOUNT TRANSFERRED TO STATUTORY RESERVE AS PER SECT ION 45 IC OF THE RBI ACT. IT IS CLAIMED AS DEDUCTION SINCE IT IS A STATUTORY DIVERSION AND IN VIEW OF THE OVERRIDING PROVISION OF SECTION 45Q OF THE RBI ACT. IN QUANTUM THIS ADDITION STOOD CONFIRMED UPTO THE STAGE OF ITAT. IN THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) OF THE ACT THE ITA 998 & 1000/10 :- 3 -: ASSESSING OFFICER AFTER GIVING DUE NOTICE TO ASSES SEE U/S 274 OF THE ACT AND AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE LEVIED THE IMPUGNED PENALTY PRESUMABLY ON ACCOUNT OF FURNISHIN G INACCURATE PARTICULARS OF INCOME. IN FIRST APPEAL HOWEVER T HE ASSESSEE WAS SUCCESSFUL IN GETTING THE IMPUGNED PENALTY CANCELLE D AND THE LD. CIT(A) HAS HELD THAT THIS IS NEITHER A CASE OF CONC EALMENT OF INCOME NOR A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. NOW THE REVENUE IS AGGRIEVED AND HAS RAISED THE FOLLOWING G ROUNDS: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) FAILED TO NOTE THAT THE FACTS OF THIS CASE IS DISTINGUISHABLE FORM THE CASE OF M/S RELIANCE PETROPRODUCTS( 322 ITR158) 2.3 THE ISSUE UNDER CONSIDERATION IN THE CASE OF M /S PETROPODUCTS WAS THAT ANY DEDUCTION CLAIMED WHICH I S NOT SUSTAINED DOES NOT LEAD TO CONCEALMENT. THE CIT (A) FAILED TO OBSERVE THAT IN THE ASSESSEE'S CASE THE DEDUCTION CLAIMED WAS NOT UNDER THE IT ACT. 2.4 HAVING REGARD THE DECISION OF THE MADRAS HC IN THE CASE OF ARIES ADVERTISING(255 ITR 510) THE CIT(A) SHOULD HAVE APPRECIATED THAT BY WHATEVER NAME A RESERVE IS CALL ED IT IS THE INCOME OF THE ASSESSEE. 2.5. THE LEARNED CIT(A) FAILED TO APPRE CIATE THAT THE DEDUCTION CLAIMED IS UNDER RBI ACT AND IT IS WELL SETTLED THA T THE PROVISIONS OF THE IT ACT PREVAILS OVER OTHER ACTS. (T.N POWER FINANCE AND INFRASTRUCTURE DEVELOPMENT CORPORATION(280ITR491) . 2.6 HAVING REGARD TO THE DECISION IN THE CASE OF D HARMENDRA TEXTILE PROCESSORS (306 ITR 277) WHICH DECISION HAS NOT BEEN OVERRULED THE CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE A.O. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING ITA 998 & 1000/10 :- 4 -: OFFICER RESTORED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E CAREFULLY PERUSED THE ENTIRE RECORDS. BEFORE WE CONSIDER THE FACTUAL MATRIX OF THIS CASE TO ASCERTAIN AS TO WHETHER IN THE EYES OF THE PROVISIONS OF THE ACT AS EXPLAINED BY NUMEROUS JUDICIAL PRONOUNCEMENT S PENALTY CAN BE LEVIED IN THIS CASE OR NOT WE WOULD LIKE TO DISCUS S IN NUT SHELL THE RELEVANT LEGAL POSITION REGARDING LEVY OF PENALTY U /S 271(1)(C) OF THE ACT AND AS TO HOW AND WHEN SUCH PENALTY CAN BE LEV IED UNDER THIS SECTION. THERE ARE NO TWO OPINIONS ABOUT THE SETTL ED POSITION OF LAW THAT REGULAR ASSESSMENT PROCEEDINGS AND PENALTY PRO CEEDINGS ARE TWO ENTIRELY DIFFERENT SUBJECTS WHICH OPERATE IN DIST INCT AND SEPARATE SPHERES SO MUCH SO THAT ENTIRELY DIFFERENT PARAMETE RS ARE APPLICABLE FOR MAKING QUANTUM ADDITION AND FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THERE CAN BE NO DISPUTE WITH REGARD TO THE POSITION OF LAW THAT UNDER SECTION 271(1)(C) PENALT Y CAN BE LEVIED ONLY IF EITHER THE ACT OF 'CONCEALMENT OF PARTICULARS O F INCOME' OR 'FURNISHING OF INACCURATE PARTICULARS OF INCOME' IS FOUND TO HAVE BEEN COMMITTED BY THE ASSESSEE. THESE ARE TWO DIFFERENT OMISSIONS OR DEFAULTS ALBEIT THEY REFER TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF EITHER SUPPRESSIO VERI OR SUGGESTIO FALSY. BY THE MERE REASON OF SUCH ITA 998 & 1000/10 :- 5 -: CONCEALMENT OR OF FURNISHING OF INACCURATE PARTICUL ARS ALONE THE ASSESSEE DOES NOT IPSO FACTO BECOME LIABLE TO A P ENALTY. IMPOSITION OF PENALTY IS NOT AT ALL AUTOMATIC. MEANING THEREB Y ANY ADDITION IN QUANTUM WOULD NOT LEAD TO AUTOMATIC LEVY OF PENALTY AND THIS IS ALSO TRUE IN RESPECT OF FURNISHING OF INACCURATE PARTICU LARS OF INCOME. NOT ONLY IS THE LEVY OF PENALTY DISCRETIONARY IN NATURE BUT THE DISCRETION HAS TO BE EXERCISED KEEPING THE RELEVANT FACTORS IN MIN D AND THE APPROACH OF THE TAXMAN MUST BE FAIR AND OBJECTIVE. THIS SUB JECT HAS BEEN A MATTER OF GREAT CONTROVERSY. FINALLY AFTER REFERR ING TO THE DECISIONS IN THE CASE OF DILIP N. SHROFF VS JCIT & ANOTHER 291 ITR 519 UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS [2008] 13 S CC 369 AS WELL AS UNION OF INDIA VS RAJASTHAN SPG. & WVG. MILLS [2009 ] 13 SCC 448 THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETROPRODUCTS PVT. LTD 322 ITR 158 HAS RECENTLY HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE 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 'PARTICULARS ' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING IN ACCURATE PARTI- CULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY P ROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM ITA 998 & 1000/10 :- 6 -: TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH ERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETUR N FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT 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 ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (1)(C). 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. 5. ADVERTING TO THE FACTS OF THIS CASE WE FIND THA T THE ASSESSEE HAS NEITHER CONCEALED THE PARTICULARS OF INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME WARRANTING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THIS AMOUNT OF ` 4 75 00 000/- BECAUSE IN THE PROFIT & LOSS ACCOUNT FILED ALONGWIT H THE RETURN FOR ASSESSMENT YEAR 2003-04 THE PROFIT SHOWN AT ` 80 CRORES PLUS ALSO INCLUDES THE SUM OF ` 4 75 00 000/- TRANSFERRED TO STATUTORY RESERVES AS PER THE PROVISIONS OF RBI ACT. THIS TRANSFER HA S BEEN DISCLOSED UNDER THE HEAD APPORTIONED IN THE PROFIT & LOSS A CCOUNT. IN THE ADJUSTMENT STATEMENT FOR INCOME-TAX TAXABLE INCOME HAS BEEN COMPUTED FROM THE PROFIT & LOSS ACCOUNT. THE ASSES SEE HAS CLEARLY ITA 998 & 1000/10 :- 7 -: MADE A CLAIM FOR DEDUCTION OF THE AMOUNT OF ` 4 75 00 000/- IN THE ADJUSTMENT STATEMENT WITH A NOTE EXTRACTED ABOVE. IT IS TRUE THAT THIS CLAIM HAS NOT BEEN ACCEPTED EVEN UPTO THE TRIBUNAL LEVEL AND THE ASSESSEE IS IN APPEAL AGAINST THE SUSTAINED QUANTUM ADDITIONS BUT WHATEVER IS THE CASE THE PENALTY PROCEEDINGS OPERA TE IN A DIFFERENT SPHERE BECAUSE DIFFERENT PARAMETERS APPLY FOR LEVY OR NON-LEVY OF PENALTY IN CONTRAST TO THE QUANTUM ADDITIONS WHICH OPERATE IN AN ENTIRELY DIFFERENT SPHERE. IN CASE ANY LEGAL OR VA LID CLAIM IS MADE WHICH IS NOT FOUND TO BE CORRECT BY THE AUTHORITIES IT WOULD NOT AUTOMATICALLY LEAD TO LEVY OF PENALTY AS DISCUSSED ABOVE. IT IS NOT A CASE WHERE THE ASSESSEE HAS NOT DISCLOSED FULL AND FINAL FACTS RATHER IT IS THE ASSESSEE WHO HAS DISCLOSED THIS IMPUGNED AMO UNT BUT HAS CLAIMED DEDUCTION THEREOF IN THE ADJUSTMENT STATEME NT WITH THE ABOVE NOTE. THE LD.AR HAS RELIED ON NUMEROUS DECISIONS IN SUPPORT OF HIS CONTENTION. THE CASE OF THE REVENUE IS THAT THIS I S A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME WHICH THE ASSESSEE HAS DONE WITH THE AIM TO EVADE PAYMENT OF TAX. BEFORE WE DISCUSS THE CASES RELIED ON BY THE PARTIES WE WOULD LIKE TO ME NTION THAT THE ASSESSEE HAS MADE A FULL AND TRUE DISCLOSURE OF INC OME AND HAS MADE A CLAIM FOR DEDUCTION OF ` 4 75 00 000/- TRANSFERRED TO STATUTORY RESERVES AS PER THE STATUTORY REQUIREMENT OF RBI AC T. HENCE THE ASSESSEE HAS MADE A BONAFIDE LEGAL CLAIM WHICH CANN OT BE SAID TO BE ITA 998 & 1000/10 :- 8 -: FALLACIOUS OR FLIPPANT AND MALAFIDE. THE IMPUGNED AMOUNT WAS TRANSFERRED TO THE RESERVE FUND AS PER THE STATUTOR Y REQUIREMENT OF RBI ACT. THIS FACT HAS NOT BEEN DISPUTED BY THE REVE NUE. THE APPEAL AGAINST QUANTUM SUSTAINED ADDITION HAS BEEN ADMITTE D BY THE HON'BLE JURISDICTIONAL HIGH COURT BY TREATING A SUBSTANTIA L LEGAL ISSUE HAVING BEEN INVOLVED IN THE APPEAL. THIS FACTUM IN ITSELF MAY NOT BE A GOOD GUIDANCE FOR COMING TO A CONCLUSION BUT DEFINITELY THIS MAY BE A ARGUABLE POINT FROM THE SIDE OF THE ASSESSEE. BE T HAT AS IT MAY WE ARE OF THE CONSIDERED OPINION THAT IN CASE A VALID CLAIM BASED ON LAW IS MADE BY THE ASSESSEE AFTER DISCLOSING FULL AND TRUE FACTS AND THE SAME IS REJECTED AND ADDITION IS MADE QUA THAT AMOUNT I T WOULD NOT TANTAMOUNT TO EITHER CONCEALMENT OF INCOME OR FURNI SHING OF INACCURATE PARTICULARS OF INCOME AUTOMATICALLY. TH E REVENUE IS BOUND TO ESTABLISH ITS CASE WHICH FALLS UNDER EITHER OF T HE TWO CONDITIONS LAID IN SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS R ELIED ON THE FOLLOWING DECISIONS: THE FIRST DECISION OF THE HON'BLE SUPREME COURT RE LIED ON BY THE LD.DR IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS HAS A LREADY BEEN DISCUSSED BY US WHICH IN OUR OPINION SUPPORTS THE CASE OF THE ASSESSEE BECAUSE IT HAS BEEN HELD THEREIN THAT MAKI NG AN INCORRECT CLAIM CANNOT BY ANY STRETCH OF IMAGINATION TANTAMOU NT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THERE IS NO FIND ING BY THE REVENUE ITA 998 & 1000/10 :- 9 -: THAT THE DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN ARE INCORRECT OR ERRONEOUS OR FALSE. THE ASSESSEE HAS MADE A CLAIM WHICH WAS NOT FOUND TO BE SUSTAINABLE IN LAW AND QUANTUM ADDITION HAS BEEN MADE. SO IT WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE COURT SPECIFICALLY REJECTED THE REVEN UES CONTENTION THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEND ITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SU CH INCOME. THE OTHER DECISION RELIED ON BY THE LD.DR IS OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF ARIES ADVERTISING 255 ITR 510. IN FACT THIS CASE DOES NOT RELATE TO PENALTY PROCEEDINGS AND THE RATIO OF THE DECISION IS THAT UNCLAIMED BALANCES WRITTEN OFF AND TRANSFERRED TO GENERAL RESERVES ARE ASSESSABLE AS INCOME OF THE A SSESSEE CHARGEABLE TO INCOME-TAX. THEREFORE THIS CASE DOES NOT HELP THE CASE OF THE REVENUE IN SO FAR AS PENALTY PROCEEDINGS ARE CONCER NED. THE OTHER DECISION RELIED ON IS IN THE CASE OF UNION OF INDIA & OTHERS VS DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277(SC). THIS CASE IS ALSO NOT RELEVANT FOR THE PRESENT APPEAL BE CAUSE THERE IS NO ISSUE REGARDING PROOF OF MENS REA. MOREOVER THIS CASE WAS RENDERED IN THE CASE OF CENTRAL EXCISE ACT 1944 AND THEREAF TER MANY OTHER DECISIONS HAVE COME WHEREBY THIS DECISION HAS BEEN DILUTED [UOI VS RAJASTHAN SPINNING & WEAVING MILLS 13 SCC 448 CIT VS ATUL MOHAN BINDAL 317 ITR 1 (SC)]. THE DECISION OF HON'BLE M ADRAS HIGH COURT IN ITA 998 & 1000/10 :- 10 - : THE CASE OF T.N. POWER FINANCE & INFRASTRUCTURE DEV ELOPMENT CORPORATION VS JCIT 280 ITR 491 RELIED ON BY THE LD.DR IS ALSO ON QUANTUM ADDITIONS WHEREBY IT HAS BEEN HELD THAT MER ELY BECAUSE THE RBI HAD DIRECTED THE ASSESSEE TO PROVIDE FOR NON-PE RFORMING ASSETS THAT DIRECTION COULD NOT OVERRIDE THE MANDATORY PRO VISIONS OF INCOME- TAX ACT CONTAINED IN SECTION 36(1)(VIIA) OF THE ACT WHICH STIPULATE A DEDUCTION NOT EXCEEDING 5% OF THE TOTAL INCOME ONLY IN RESPECT OF THE PROVISION FOR BAD AND DOUBTFUL DEBTS WHICH ARE PRED OMINATELY REVENUE IN NATURE OR TRADE RELATED AND NOT FOR PROVISION FO R NON-PERFORMING ASSETS WHICH ARE OF PREDOMINATELY CAPITAL NATURE. IN SUCH CASES THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION AND AS A MAT TER OF FACT THE QUANTUM ADDITION HAS BEEN CONFIRMED EVEN UPTO THE T RIBUNAL. BUT HERE WE ARE CONCERNED WITH DIFFERENT PROVISION I.E SECTION 271(1)(C) OF THE ACT WHICH OPERATES IN AN ENTIRELY DIFFERENT SP HERE AND THEREFORE ENTIRELY DIFFERENT PARAMETERS ARE APPLICABLE TO THI S PENALTY PROVISION AS DISCUSSED IN THE EARLIER PART OF THE ORDER. 6. IN THIS CASE THE FACTS ARE SIMPLE. WHILE COMPUTIN G THE TOTAL INCOME THE ASSESSEE BEING A NON-BANKING FINANCE CO MPANY REGISTERED WITH THE RBI AND THEREFORE BOUND BY CHA PTER III OF THE RBI ACT IT MADE A CLAIM FOR DEDUCTION OF THE AMOUNT WH ICH IT TRANSFERRED OUT OF ITS PROFITS CHARGEABLE TO TAX TO A RESERVE FUND AS MANDATED BY SECTION 45IC OF THE RBI ACT AND WHICH COULD BE UTIL IZED ONLY FOR THE ITA 998 & 1000/10 :- 11 - : PURPOSES WHICH THE RBI MAY SPECIFY. DENIAL OF CLAI M FOR SUCH A DEDUCTION CAN NOT IPSO FACTO LEAD TO LEVY OF PENALT Y. THE ASSESSING OFFICER HAS SUMMARILY REJECTED THE DETAILED SUBMISS IONS MADE BY THE ASSESSEE IN REPLY TO THE PENALTY NOTICE AND PROCEED ED TO LEVY PENALTY STATING THAT BY CLAIMING DEDUCTION OF THE AMOUNT TRANSFERRED TO STATUTORY RESERVE THOUGH NOT DEDUCTIBLE THE ASSESS EE FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS DELIBERATE LY REDUCED ITS TAX LIABILITY . THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR HAS FURNISHED ANY INACCURATE/FALSE PARTICULARS FOR THE PURPOSE OF CLAIMING THE DEDUCTION. THERE WAS NO FALSE STATEMENT OF FAC TS. THE CLAIM WAS NOT EVEN DISGUISED SUCH AS WITH A WRONG DESCRIPTION OR A MISLEADING OR FALSE LABEL WHICH THE ASSESSING OFFICER HAD TO UNRA VEL FOR MAKING DISALLOWANCE. AS HELD BY THE HON'BLE ORISSA HIGH COURT IN THE CASE OF CIT VS INDIAN METALS & FERRO ALLOYS LTD 211 ITR 35 THE WORD CONCEAL IS DERIVED FROM THE LATIN CONCELARE WHICH I MPLIES TO HIDE. WEBSTER IN HIS NEW INTERNATIONAL DICTIONARY EQUATES ITS MEANING TO HIDE OR WITHDRAW FROM OBSERVATION TO COVER 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 INC OME OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHOR ITIES. IN FURNISHING ITS RETURN OF INCOME AN ASSESSEE IS REQ UIRED TO FURNISH PARTICULARS AND ACCOUNTS ON WHICH SUCH RETURN INCOM E HAS BEEN ARRIVED ITA 998 & 1000/10 :- 12 - : AT. THESE MAY BE PARTICULARS AS PER ITS BOOKS OF A CCOUNT IF IT HAS MAINTAINED THEM OR ANY OTHER BASIS UPON WHICH IT H AD ARRIVED AT THE RETURNED FIGURE OF INCOME. ANY INACCURACY MADE IN SUCH BOOKS OF ACCOUNT OR OTHERWISE WHICH RESULTED IN KEEPING OFF OR HIDING A PORTION OF ITS INCOME IS PUNISHABLE AS FURNISHING INACCURAT E PARTICULARS OF ITS INCOME. IN THIS CASE THE ASSESSEE HAS DISCLOSED ALL T HE FACTS AND THEY ARE NEITHER FALSE NOR INACCURATE. THE AMOUNT TRANSFERRED U/S 45IC TO RESERVE FUND APPEARS IN THE ACCOUNTS FILED. THE ASSESSEE HAS GIVEN REASONS FOR CLAIMING THE DEDUCTION. THE CLAI M MADE IS ON A PARTICULAR UNDERSTANDING AND INTERPRETATION OF THE RELEVANT STATUTORY PROVISIONS AND TRIBUNAL AND COURT DECISIONS. WHETH ER THE DEDUCTION CLAIMED IS ALLOWABLE OR NOT IS A PURE QUESTION OF L AW AND IN FACT THE HIGH COURT HAS ENTERTAINED THE ASSESSEES APPEAL U/ S 260A OF THE ACT ON THE GROUND THAT SUBSTANTIAL QUESTIONS OF LAW ARE INVOLVED FOR ITS DECISION. SUCH A CLAIM MADE IN THE CASE BEFORE US CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. AFTER COGITATING THE ENTIRE FACTS OF THE CASE AND BASING THEM ON THE TEXT OF TH E PENALTY PROVISIONS WITH REFERENCE TO THE RELEVANT PRECEDENTS RELIED ON BY BOTH THE PARTIES WE CANNOT ALLOW REVENUES APPEAL. 7. FOR THE FOREGOING REASONS WE DISMISS THE APPEAL OF THE REVENUE AND CONFIRM THE CANCELLATION OF THE IMPUGNED PENALT Y LEVIED U/S 271(1)(C) OF THE ACT . ITA 998 & 1000/10 :- 13 - : 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE IN T HE CASE OF M/S SHRIRAM INVESTMENTS LTD STANDS DISMISSED. I.T.A.NO. 1000/MDS/2010 9. THE POSITION OF FACTS IN THIS CASE IS EXACTLY IDEN TICAL TO THE CASE IN I.T.A.NO. 998/MDS/2010 EXCEPT FOR THE FIGURE OF PENALTY AND ALLEGED CONCEALED INCOME. IN THIS CASE THE AMOUNT TRANSFE RRED TO STATUTORY RESERVE IS STATED TO BE ` 4 77 00 000/- AND PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS ` 1 75 29 750/- FOR THE SAME ASSESSMENT YEAR 2003-04 . IN THIS APPEAL FOLLOWING GROUNDS HAVE BEEN RAISED B Y THE REVENUE: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C). 2.2 THE LEARNED CIT(A) FAILED TO NOTE THAT THE FACTS OF THIS CASE IS DISTINGUISHABLE FORM THE CASE OF M/S RELIANCE PETROPRODUCTS( 322 ITR158) 2.3 THE ISSUE UNDER CONSIDERATION IN THE CASE OF M /S RELIANCE PETROPODUCTS WAS THAT ANY DEDUCTION CLAIMED WHICH IS NOT SUSTAINED DOES NOT LEAD TO CONCEALMENT. THE CIT(A) FAILED TO OBSERVE THAT IN T HE ASSESSEE'S CASE THE DEDUCTION CLAIMED WAS NOT UNDER THE IT ACT. 2.4 HAVING REGARD THE DECISION OF THE MADRAS HC IN THE CASE OF ARIES ADVERTISING(255 ITR 510) THE CIT(A) SHOULD HAVE APPRECIATED THAT BY WHATEVER NAME A RESERVE IS CALLED IT IS THE INCOME OF THE ASSESSEE . 2.5. THE LEARNED CIT(A) FAILED TO APPRE CIATE THAT THE DEDUCTION CLAIMED IS UNDER RBI ACT AND IT IS WELL SETTLED THAT THE PROVISIONS OF THE IT ACT PREVAILS OVER OTHER ACTS. (T.N POWER FINANCE AND INFRASTRUCTURE DEVELOPMENT CORPORATION(280ITR491) . ITA 998 & 1000/10 :- 14 - : 2.6 HAVING REGARD TO THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS (306 ITR 277) WHICH DECISION HAS NOT BEEN OVERRULED THE CIT(A) OUGHT T O HAVE UPHELD THE ACTION OF THE A.O. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSI NG OFFICER RESTORED. 10. A PERUSAL OF THE ABOVE GROUNDS SHOWS THAT THEY ARE IN SUBSTANCE IDENTICAL TO THE GROUNDS RAISED IN EARLIER APPEAL E XCEPT THE AMOUNT INVOLVED THEREIN. 11. AFTER HEARING BOTH SIDES AND ON THE BASIS OF SIMILA R REASONING AS WE HAVE GIVEN IN THE ABOVE APPEAL WE CANNOT ALLOW THIS APPEAL OF THE REVENUE AS WELL. 12. TO SUMMARIZE THE RESULT BOTH THE APPEALS OF THE RE VENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 .1.2011 SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 20 TH JANUARY 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR