PRABODH U. POLADIA,MUMBAI vs. ITO WD 21(1)(4), MUMBAI

The fact of the case is that the assessee filed the return of income declaring total income at Rs.5,07,410/- on 31.10.2007. Thereafter, the case was selected for scrutiny. During the course of assessment proceeding notices were issued u/s. 133(6) of the Income Tax Act, 1961( in short “the Act”) to various purchase parties to verify the genuineness of purchases transactions. Notices issued to three parties viz. Gautami Textile, Harshad Textil, Durga Textiles were returned by the postal authorities being unserved. The assessee was asked to furnish the new addresses of these parties with their PAN card, purchase bill, identity proof and books of accounts by virtue of order sheet dated 09.11.2009 but the assessee failed to produce the same. Therefore the Assessing Officer treated the cessation of liabilities to make payments to these sundry creditors u/s. 41(1) of the Act and added the income of the assessee to the tune of Rs.6,86,388/-. Thereafter, the penalty order u/s. 274 r.w.s. 271(1)(c) of the Act dated 26.03.2013 was passed by levying the penalty to the tune of Rs.1,96,307/-. Subsequently, the appeal was filed before the CIT(A) 32, Mumbai but the CIT(A) 32, Mumbai confirmed the order. Aggrieved, the present appeal has been filed.

We have heard the arguments advanced by the learned representative of the parties and have gone through the record carefully. The only issue which has been raised before us is that if the learned CIT(A) was wrong in confirming the penalty to the tune of Rs.1,96,307/- u/s. 271(1)(c) of the Act. The learned representative of the assessee has argued that the assessee firm was dealing with the said three parties namely Gautami Textile, Harshad Textil, Durga Textiles for the period effect from 2006-07 onwards and the transactions has duly been reflected in its Profit and Loss Account but at the time of assessment he was unable to disclosed the where about of the parties and the letter issued by the learned Assessing Officer received back unserved but the assessee did not furnish any inaccurate particulars of his income nor concealed any particulars of income to evade the tax therefore no penalty is leviable in view of the law settled in [2011] 14 Tax Vs. Reliance Petroproducts (Pvt.) Ltd. (SC)[2010] 2010 322 ITR 158(SC). While on the other hand the learned representative of the department refuted the said contention. The assessment order dated 21.12.2009 speaks that the assessee was having the transactions with the said three parties namely Gautami Textile, Harshad Textil, Durga Textiles for the period effect from 2006-07 onwards. The letter sent by the Assessing Officer received back unserved. However, the assessee was also unable to furnish the latest/present address of the said parties. Therefore, in the said circumstances the Assessing Officer treated the cessation of liabilities to make payments to the sundry creditors u/s.41(1) of the Act and added Rs.6,86,388/- towards the income of the assessee. Assessing Officer was of the view that these transactions were not genuine therefore the amount was added to the income of the assessee. The only reason which has been raised by the Assessing Officer is that the letters sent to these parties were received back unserved and the assessee failed to furnish their present addresses. These grounds nowhere lead to this fact that the assessee has furnished the inaccurate particulars of his income and concealed the particulars of any income to evade the tax. Hon’ble Apex Court in Commissioner of Income Tax Vs. Reliance Petroproducts (Pvt.) Ltd. (SC) speaks that “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 income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” 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 furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, 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 liability could 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 erroneous 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 particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”

In view of the said circumstances and by honouring the above said pronouncements passed by the above said different Hon’ble Courts we are of the view that the penalty has wrongly been confirmed by the learned CIT(A) by virtue of order dated 30.07.2013. Therefore, we set aside the said order and deleted the penalty in question.

In the result, appeal of the assessee is allowed.

""यथ" / The Respondent. 3. आयकर आयु"त(अपील) / The CIT(A)- 4. आयकर आयु"त / CIT

"वभागीय ""त"न"ध, आयकर अपील"य अ"धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, स"या"पत ""त //// उप/सहायक पंजीकार (Dy./Asstt.