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TMI Blog2016 (10) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... Jhaveri, C.A. For The Respondent : Ms. Mahna Sarkar, Sr.D.R. ORDER PER RAJESH KUMAR, A.M: The present appeal has been filed by the assessee against the order of CIT(A)-25, Mumbai for the Assessment Year 2008-09. 2. The only issue raised in various grounds of appeal by the assessee is against the confirmation of penalty of ₹ 5,19,811/- as imposed by the AO u/s.271(1)(c) of the IT Act on account of provision for detention charges amounting to ₹ 16,82,238/- and demurrage charges amounting to ₹ 4,73,100/-. 3. The facts in brief are that the assessee is a partnership firm engaged in the business of manufacturing and trading of marble products. The assessee was following the mercantile system of accounting. During the year, assessee has incurred detention and demurrage charges to the tune of ₹ 18,52,624/- by making full disclosure of facts regarding claim of provision of demurrage and detention charges in the return of income. The Assessing Officer disallowed the said detention and demurrage charges to the extent of ₹ 16,82,238/- being the provision for expenses for demurrage and detention charges which was payable to Jawaharlal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till 22.09.2011, there was no payment of said liability. In these circumstances, the impugned liability claimed by the assessee was not considered allowable either as a crystallized liability or genuine liability. I find that the appellant along with its written submission during present appeal has submitted copies of various documents such as order of Appeal of Commissioner of Customs (Appeal) dated 18.01.2007, Bombay High Court Order dated 18.04.2007 (Writ Petition No. 1347/07), Order of Dy. Commission of Custom dated 17.09.2007, Letter to Commission of Customs (Imports) for clearing of consignment etc. On going through the same, I concur with the findings of my predecessor CIT(A) in quantum appeal, and note that there is nothing apparent in said correspondence/orders to show that the appellant was liable to pay the expenditure claimed of ₹ 16,82,238/-. The confirmation of the disallowance by CIT(A), and further the fact that the appellant did not appeal further against the order of CIT(A), proves that the impugned claim of expenditure by the appellant was not bonafide. I further find that the appellant has relied upon various case laws, including the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer their taxable income in the return of income. In my opinion, the levy of penalty u/s.271(1)(c) in such situations is the only remedy to deter the assessee to make true disclosure of his income in the return, and thereby to keep a check on the leakage of revenue. Reliance is placed on the decision of Hon'ble Supreme Court in the case of CIT vs. Dharmendra Textile Processors [2008] 306 ITR 277 (SC), wherein it has been held that The explanations appended to section 271(1)(c) of the Income-tax Act entirely indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. Hence, the levy of penalty u/s.271 (1)(c) in the present case is justified. In view of the above, I confirm the penalty levied of ₹ 5,19,811/-. Therefore, the grounds of appeal are dismissed. 5. Learned AR vehemently submitted before us that assessee has provided the detention and demurrage charges payable to Jawaharlal Nehru Port Trust in respect of slabs of marble imported by the assessee and accordingly calculated the said charges by applying the rate charged by the said port authority and provided the same in the bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs dated 17th September, 2007. The appeal against the said order of Commissioner of Customs (Appeal) was filed by the Revenue in CESTAT which is pending till date. 5.1 Learned AR in view of the above facts submitted that since the assessee was following mercantile system of accounting and calculated the detention and demurrage charges as per the rate list of port trust authority and rightly provided ₹ 16,82,236/- in its books of account which was disallowed by the Assessing Officer on the ground of being contingent liability and also that the assessee failed to furnish the bill of said amount. Learned CIT(A) also dismissed the appeal vide order dated 22nd September, 2011 on the ground that no credible evidence was filed in the form of any communication/letter from Port Board Trust Authority. Thereafter, the assessee instead of going into further litigation decided to write back the provision already created at ₹ 16,82,236/- and offered the same for taxation which was accepted by the Income Tax Authorities in A.Y. 2011-12. 5.2 Learned AR vehemently submitted and argued that since the assessee has fully disclosed the particulars of claim of expenses for deten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods actually imported from Sri Lanka, and therefore, we do not doubt and dispute the genuineness of the claim made by the assessee. We also find that the provisions were written back when the assessee lost the quantum appeal before CIT(A) and due taxes were paid in A.Y.2011-12. In our opinion, the penalty confirmed by the CIT(A) is wrong and cannot be sustained on the ground that the assessee made genuine claim for the expenses payable to Jawahar Lal Nehru Port Trust in respect of the goods actually imported and lying at the port which in no way can be described as filing of inaccurate particulars of income or concealment of income. The case of the assessee also find support from the decision of Apex Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. (supra) wherein it has been held that merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the revenue by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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