TMI Blog2014 (2) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... 43B of the Act on the ground that the assessee has not been able to produce evidence towards remittance of the amount to the government treasury - Decided against Revenue. - ITA No.1725/Hyd/2012 - - - Dated:- 5-2-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Appellant : Shri B. Yadagiri For the Respondent : Shri V. Raghavendra Rao ORDER Per Saktijit Dey, J.M: This appeal filed by the department is directed against the order dated 28-9-2012 of CIT (A)-V, Hyderabad passed in ITA No.0040/ITO- 16(2)/IT(A)-V/2011-12 pertaining to the assessment year 2005-06. 2. The sole grievance of the department in the present appeal is with regard to the CIT (A) deleting the penalty imposed u/s 271(1) (c) of the Act. 3. Briefly the facts are, for the impugned assessment year, the assessee filed its return of income on 28-10-2005 declaring a loss of Rs.6,06,60,790/-. Assessment was competed u/s 143(3) of the Act vide order dated 28-12-2007 determining loss at Rs.6,03,72,161/-. The assessment order passed u/s 143(3) was subjected to proceedings u/s 263 of the Act by the CIT (A) -IV, Hyderabad. The CIT was of the view that the assessment order passed u/s 143(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a correct accounting method and the same is not recognized by any Accounting Standards. The appellant company was allowed to defer the sales tax liability, by the Government of Maharashtra, for the period of 10 years and as per the same . he deferred sales tax liability was to be paid subsequently and the appellant was found to be fulfilling the same, in the manner designed by them, but followed consistently.. The method adopted was shown to be NPV, on the lines of AS-6 (Accounting Standard) and the liability pertaining to the year under reference has been quantified at Rs.1,74,62,084/- and the same was claimed as expenditure. The details pertaining to the same were shown to be the part of the notes to accounting policies as furnished along with return of income. 4.4. As could be seen from the observation of the Assessing Officer in the order appealed against, no finding has been given on the inaccurate nature of particulars, so as to be liable to penalise for the claim. The only ground taken by the Assessing Officer was that the accounting method (NPV) adopted is not recognised by any Accounting Standard and the same is not the appropriate method, for the issue of sales ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he particulars of his income or furnished inaccurate particulars of such income, or As could be observed from the language of the related provisions, the pre-requisites for levying penalty under section 271(1)(c) of the Act are a) concealment of particulars of income or b) furnishing inaccurate particulars of such income. 4.6 Prima facie, there is no concealment of particulars of income or furnishing of inaccurate particulars of income, by the appellant, in the case under reference, since the issue is related to the claim of payment of deferred sales tax and sales tax, which were not acceptable to the Assessing Officer either on account of the adoption of particular method of accounting or the non-furnishing the proof for remittance of sales tax in to Government Account. However, in explaining the fact material to the computation of total income, the explanation of the assessee decides the. issue. In this context, it may be relevant to refer to the explanation 1 to section 271(1)(c) of the Act which is relevant for the facts of the case: The same read as under: "Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that, "the Revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by provision, the penalty provision cannot be invoked. By any stretch imagination, making an incorrect claim in law cannot tantamount furnishing of inaccurate particulars". Further, vide the said decision, the Hon'ble Supreme Court while distinguishing its own decision in the case of Dilip N Shroff, has relied 0 the fact whether the assessee has given any inaccurate particulars, an held that "reading the words, 'particulars 'in conjecture means the details supplied in return, which are not accurate, not exact or correct, accurate to truth or erroneous. Such not being the case, there would b no question of inviting penalty under section 271(l)(c) of the Act an mere making of the claim which is not sustainable in law, by itself, will amount to furnishing inaccurate particulars regarding income of the assessee. Such claims made in return cannot amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer, it cannot be said that there is any withholding of information or furnishing of inaccurate particulars of income by the assessee. Only because the method of accounting was not accepted by the CIT in proceedings u/s 263, it automatically cannot lead to the conclusion that the assessee has either concealed his income or furnished inaccurate particulars of income. More so, when the Assessing Officer while completing the assessment u/s 143(3) of the Act has accepted the method of accounting followed by the assessee for claiming deferment of sales tax. With regard to claim of deduction towards payment of sales of Rs.23,75,134/- also, the assessee cannot be accused of concealing his income or furnishing of inaccurate particulars of income as the disallowance has been made u/s 43B of the Act on the ground that the assessee has not been able to produce evidence towards remittance of the amount to the government treasury. 5. On going through the order of the CIT(A), relevant paragraphs of which have been extracted hereinabove, it is to be noted that the CIT (A) after having judiciously considered all aspects of the matter and correctly applying the ratio laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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