M/S. FATTE GURU GOVINDSINGH & CO., Burhanpur V. THE. ACIT CIRCEL, Khandwa

CO 32/IND/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1002 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V I MEHTA
• Assessee Lawyers: S S DESH
• Keywords: Period of limitation; Wrong claim; Time period of passing order
• Section: 143(3); 80IB; 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.179/IND/2015 A.YS. : 2008-09 ACIT, CO.CIRCLE, M/S FATTE GURU GOVIND SINGH, KHANDWA VS. SANJAY NAGAR, BURHANPUR APPELLANT RESPONDENT PAN NO. AAAFF5721F C.O.NO.32/IND/2015 (ARISING OUT OF I.T.A.NO.179/IND/2015) A.YS. : 2008-09 M/S FATTE GURU GOVIND SINGH, ACIT, CO.CIRCLE, SANJAY NAGAR, VS. KHANDWA BURHANPUR CROSS OBJECTOR RESPONDENT -: 2: - 2 DEPARTMENT BY : SHRI V.I. MEHTA, DR ASSESSEE BY : SHRI S. S. DESHPANDE, C. A. O R D E R PER GARASIA, J.M. APPEAL BY THE DEPARTMENT AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT( A)-II, INDORE, FOR THE ASSESSMENT YEAR 2008-09. 2. THE ONLY GROUND TAKEN BY THE REVENUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE PENALTY OF RS. 11,67,718/-RIG HTLY LEVIED BY THE ASSESSING OFFICER FOR FURNISHING INACCURATE PARTICULARS AMOUNTING TO RS. 26,76,893/- ON ACCOUNT OF WRONG CL AIM OF DEDUCTION U/S 80IB. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER. THE ASSESSEE IS A PARTNERSHIP FIRM DOING THE BUSINE SS OF TRADING OF COTTON, GINNING AND PRESSING AND OIL MIL L. THE BOOKS -: 3: - 3 OF ACCOUNT ARE AUDITED AND THE TAR IS FILED ALONGW ITH THE RETURN. THE RETURN OF INCOME HAS BEEN FILED DECLARI NG THE TOTAL INCOME OF RS. 80,30,680/- CLAIMING THE DEDUCTION OF RS 26,76,893/- U/S 80IB WHICH WAS BEYOND 10 YEARS FROM THE INITIAL YEAR OF STARTING OF THE BUSINESS. THEREFORE , THE ASSESSEE HAS CLAIMED THE EXCESS DEDUCTION U/S 80IB. THEREFOR E, THE PENALTY WAS LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL BY OBSERVING AS UNDER :- 3.3 I HAVE GONE THROUGH THE ORIGINAL ASSESSMENT ORDER, THE ORDER OF CIT(A), THE ASSESSMENT ORDER PASSED IN TERMS OF I.T.A.T. ORDER. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT AND PERUSED THE REASONS BROUGHT OUT BY TH E AO IN THE ASSESSMENT ORDER. THE AO HAS CONSIDERED AND DISALLOWED THE CLAIM U/S 80IB OF THE I.T. ACT, 1961 IN ACCORDANCE WITH THE OBSERVATION OF CIT(A) GIVEN IN THE APPEAL ORDER FOR ASSESSMENT YEAR 2007- 08 ALTHOUGH, IN THE ORIGINAL ASSESSMENT ORDER, THE -: 4: - 4 CLAIM WAS ALLOWED FOR REASONS THAT THE I.T.A.T. HAD ALLOWED THE SAME IN EARLIER YEARS. IN FACT, THE APPELLANT HAS LODGED THE CLAIM U/S 80IB OF THE I.T. ACT, 1961 IN THE RELEVANT ASSESSMENT YEAR FOR THE REASONS THAT IN EARLIER ASSESSMENT YEARS, HONBLE ITAT HAD ALLOWED THE CLAIM OF APPELLANT AND DISMISSED THE APPEAL OF DEPARTMENT. BUT IT APPEARS THAT WHILE LODGING THE CLAIM DURING THE RELEVANT ASSESSMENT YEAR, THE APPELLANT COULD NOT TAKE NOTE OF THE FACT THAT THE LIMITATION PERIOD FOR CLAIM IN TE RMS OF THE RELEVANT SECTION HAD ALREADY EXPIRED. THE AO HA D ALSO COMPLETED THE ASSESSMENT U/S 143(3) OF THE I.T . ACT, 1961, ALLOWING THE CLAIM. THIS FACT DID NOT CO ME EVEN TO THE NOTICE OF AO WHILE COMPLETING THE ASSESSMENT. IT WAS ONLY THE CIT(A), WHO WHILE ADJUDICATING THE APPEAL FOR THE ASSESSMENT YEAR 2007-08, POINTED OUT THE MISTAKE THAT THE CLAIM HAS BEEN INADVERTENTLY LODGED BEYOND THE LIMITATION PERIOD, THOUGH THE APPELLANT WAS ELIGIBLE FOR ONLY 10 YEARS. THEREFORE, IN MY CONSIDERED OPINION, IT WAS AN -: 5: - 5 INADVERTENT MISTAKE ON THE PART OF APPELLANT WHICH WAS DULY RECTIFIED BY WITHDRAWING THE CLAIM DURING THE COURSE OF SET-ASIDE PROCEEDINGS IN TERMS OF I.T .A.T. ORDER FOR THE RELEVANT ASSESSMENT YEAR. I HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE APPELLANT AND OBSERVED THAT THE APPELLANT APPARENTL Y GETS SUPPORT FROM THE ABOVE CASE LAWS PARTICULARLY IN THE CASE OF CIT VS. RELIANCE PETROCHEMICALS 322 ITR 158, HONBLE SUPREME COURT HAS SAID THAT THE PENALT Y CANNOT BE LEVIED ON THE CLAIMS WHICH WERE LEGALLY INADMISSIBLE. 5. THE LD. SENIOR D.R. SUBMITTED THAT THE ASSESSEE HAS MADE WRONG CLAIM OF DEDUCTION U/S 80IB AT RS. 26,76 ,893/-. THAT WAS 12 TH YEAR OF START OF BUSINESS. MOREOVER, THE ASSESSEE HAS WRONGLY CLAIMED THIS DEDUCTION AND IT HAD COME TO THE KNOWLEDGE OF THE DEPARTMENT ONLY DURING THE ASSESSM ENT PROCEEDINGS. THEREFORE, IT IS A FIT CASE FOR LEVY O F PENALTY. THE LD. SENIOR D.R. RELIED UPON THE DECISION OF HON'BLE DELHI HIGH -: 6: - 6 IN THE CASE OF CIT VS. ZOOM COMMUNICATION (P) LIMIT ED, 327 ITR 510 (DEL), WHEREIN THE HON'BLE DELHI HIGH COURT HAS HELD THAT MERE SUBMITTING OF CLAIM WHICH IS INCORRECT LA W WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF INCOME O F THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE. IF THE CLAIM BESIDE S BEING INCORRECT IN LAW IS MALA FIDE, EXPLANATION 1 TO SEC TION 271(1)(C) WOULD COME INTO PLAY AND WERE TO DISADVANTAGE OF TH E ASSESSEE. IF THE ASSESSEE MAKES THE CLAIM WHICH IS NOT CORRECT IN LAW, BUT IS ALSO FULLY WITHOUT ANY BASIS AND EXP LANATION FURNISHED BY HIM OR MAKING SUCH CLAIM IS NOT FOUND TO BE BONA FIDE. IT WOULD BE DIFFICULT TO SAY THAT HE WOU LD STILL NOT BE LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT. THE DEC ISION OF CIT VS. RELIANCE PETROPRODUCTS (P) LIMITED, 322 ITR 158 (S.C.) HAS BEEN DISCUSSED BY HON'BLE DELHI HIGH COURT AND AFTE R CONSIDERING THE DECISION, THE HON'BLE DELHI HIGH CO URT HAS HELD THAT IF ANY PERSON MAKES THE CLAIM OF ANOTHER WITH THE MALA FIDE INTENTION TO PAY THE TAXES LEGALLY PAYABL E BY HIM AND IF THE CLAIM IS DISALLOWED, THE PENALTY IS TO BE IM POSED ON SUCH WRONG CLAIM. THE LD. SENIOR DR SUBMITTED THAT THOUG H THE -: 7: - 7 ASSESSEE HAS MADE A WRONG CLAIM AND ASSESSEE HIMSEL F WAS OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED FOR SUCH CLAIM, STILL HE HAS CLAIMED, THEREFORE, THE LD.CIT(A) IS NOT JU STIFIED IN DELETING THE PENALTY. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE ASSESSEE IS A PARTNERSHIP FIRM DOING THE BUSINE SS OF TRADING IN COTTON, GINNING, PRESSING AND OIL MILL. THE ASSESSMENT WAS COMPLETED BY REJECTING THE CLAIM OF THE ASSESSEE U/S 80IB AND THE MATTER WAS CARRIED TO LD. CIT(A), WHO HAS ALLOWED THE CLAIM OF THE ASSESSEE. THEREAFT ER, THE PENALTY HAS BEEN LEVIED. THE AO HAS LEVIED THE PENA LTY ON 31.7.2013 AND THE APPROVAL OF JCIT HAS BEEN TAKEN O N 31.10.2013. WE FIND THAT AS PER SECTION 275(1)(C) O F THE ACT, WHICH READS AS UNDER :- NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHAL L BE PASSED IN A CASE WHERE THE RELEVANT ASSESSMENT OR O THER ORDER IS THE SUBJECT MATTER OF AN APPEAL TO THE COMMISSIONER (APPEALS) UNDER SECTION 246 ( OR SECTI ON 246A) OR AN APPEAL TO THE APPELLATE TRIBUNAL UNDER -: 8: - 8 SECTION 253, AFTER THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTIO N FOR THE IMPOSITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF COMMISSIONER (APPEALS) OR, AS TH E CASE MAY BE, THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER PERIO D EXPIRES LATER : [PROVIDED THAT IN A CASE WHERE THE RELEVANT ASSESS MENT OR OTHER ORDER IS THE SUBJECT MATTER OF AN APPEAL T O THE COMMISSIONER (APPEALS) U/S 246 OR SECTION 246A, AND THE COMMISSIONER (APPEALS) PASSES THE ORDER ON AFTE R THE FIRST DAY OF JUNE 2003 DISPOSING OF SUCH APPEAL, AN ORDER IMPOSING PENALTY SHALL BE PASSED BEFORE THE EXPIRY OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COU RSE OF WHICH ACTION FOR IMPOSITION OF PENALTY HAS BEEN INI TIATED, ARE COMPLETED, OR WITHIN ONE YEAR FROM THE END OF T HE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSION ER -: 9: - 9 (APPEALS) IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER, WHICHEVER IS LATER]. 7. THE ORIGINAL ASSESSMENT ORDER IN THIS CASE WAS PASS ED U/S 143(3) OF THE INCOME-TAX ACT, 1961, ON 15.10.20 10. THE SAID ASSESSMENT ORDER WAS SET-ASIDE BY I.T.A.T., IN DORE, VIDE ORDER DATED 07.09.2012. IN THE ASSESSMENT ORDER, TH E CLAIM OF ASSESSEE U/S 80IB OF THE ACT WAS ALLOWED FOR THE RE ASONS THAT THE SAME WAS IN CONSONANCE WITH THE DECISION OF THE I.T.A.T. HOWEVER, DURING THE COURSE OF RE-ASSESSMENT PROCEED ING SIN TERMS OF I.T.A.T. ORDER, THE ASSESSEE HAD WITHDRAWN THE CLAIM U/S 80IB FOR THE RELEVANT ASSESSMENT YEAR FOR THE R EASONS THAT IT HAD COME TO THE NOTICE OF ASSESSEE THAT THE CLAI M HAS BEEN LODGED BEYOND THE LIMITATION PERIOD OF 10 YEARS. TH E ASSESSMENT U/S 143(3)/254 OF THE ACT HAS BEEN COMPL ETED ON 15.01.2013 WHEREIN BESIDES ADJUDICATING OTHER ISSUE S, THE ISSUE OF DISALLOWANCE OF CLAIM U/S 80IB OF THE INCO ME-TAX ACT, 1961, HAS BEEN DISCUSSED AND SPECIFICALLY BEEN DISA LLOWED FOR THE REASONS THAT THE SAME WAS CLAIMED BEYOND THE LI MITATION PERIOD AND PENALTY PROCEEDINGS U/S 271(1)(C) ALSO I NITIATED -: 10: - 10 WITH REFERENCE TO THE FINDINGS GIVEN IN THIS ASSESS MENT ORDER. THE ORDER WAS SET ASIDE BY THE I.T.A.T., INDORE VID E ORDER DATED 07.09.2012. THE CLAIM U/S 80IB AMOUNTING TO RS. 26. 76.893/- WAS WITHDRAWN ONLY DURING THE COURSE OF SET-ASIDE P ROCEEDING AND THE ASSESSMENT WAS COMPLETED ON 15.01.2013. THE REFORE, THE LIMITATION OF LEVY THE PENALTY HAS BEEN CONSIDE RED TO HAVE STARTED FROM THE DATE OF PASSING OF THE ORDER BY TH E ASSESSING OFFICER U/S 143(3) READ WITH SECTION 254 OF THE INC OME-TAX ACT, 1961. SINCE, THE DATE OF ASSESSMENT ORDER IS 15.01. 2013, THE LIMITATION PERIOD EXPIRES ONLY AFTER 31.07.2013 AND THE PENALTY HAS BEEN FOUND LEVIED ON 31.07.2013. THE AO HAS LEV IED THE PENALTY ON 31.07.2013. THEREFORE, WE ARE OF THE VIE W THAT PENALTY CANNOT BE LEVIED BEYOND THE TIME. THEREFORE , WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY DELETED TH E PENALTY. 8. ON MERIT ALSO, WE FIND THAT THE LD. CIT(A) HAS DELE TED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS DISCLOS ED ALL THE PARTICULARS OF INCOME BEFORE THE AO AND THE ASSESSE E HAS NOT CONCEALED ANY PARTICULARS OF INCOME AND LD. CIT(A) HAS RELIED UPON THE DECISION OF CIT VS. RELIANCE PETROCHEMICAL S, 322 ITR 158 (S.C.). WE ARE ALSO OF THE VIEW THAT THE ASSESS EE HAS MADE -: 11: - 11 THE CLAIM, WHICH WAS NOT ALLOWABLE, BEING A 12 TH YEAR OF THE CLAIM AND ASSESSEES CLAIM WAS ONLY ALLOWABLE AND E LIGIBLE FOR DEDUCTION U/S 80IB ONLY FOR 10 YEARS. THEREFORE, TH E CLAIM WAS RIGHTLY DISALLOWED, BUT THE PENALTY CANNOT BE IMPOS ED AS PER THE DECISION OF HON'BLE SUPREME COURT. THE LD. CIT( A) IS JUSTIFIED IN HIS ACTION. OUR INTERFERENCE IS NOT RE QUIRED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED AND CROSS OBJECTION NO. 32/IND/2015 IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 30 TH JULY, 2015. CPU* 3.7.15.7