Doshion Limited, Ahmedabad V. The Income tax Officer,Ward-1(4), Ahmedabad

ITA 1093/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1694 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: P M MEHTA
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 133A; 234B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL, V.P. AND HON'BLE SHRI T.K. SHARMA, J.M .) I.T.A. NO. 1093/AHD./2009 ASSESSMENT YEAR : 2005-2006 DOSHION LTD., AHMEDABAD VS.- THE I.T.O ., WARD-1(4), AHMEDABAD (PAN : AAACD 8771G) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI P.M. MEHTA, D.R. RESPONDENT BY : SHRI R.K.DHANESTA, A .R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 16-12-2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABAD F OR THE ASSESSMENT YEAR 2005-06. 2. GROUND NO.1 IS AGAINST UPHOLDING DISALLOWANCE OF DEDUCTION OF RS.30,86,972/- UNDER SECTION 80-IB OF THE I.T. ACT, 1961 (OUT OF T OTAL DEDUCTION OF RS.3,10,44,122 CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB) FOR TH E ASSESSMENT YEAR 2005-06. 3. THE BRIEF FACTS RELATING TO THE CONTROVERSY INVO LVED IN THIS GROUND OF APPEAL ARE THAT IN PARA 5.3 OF THE ASSESSMENT ORDER, THE AO OB SERVED THAT THE ASSESSEE EARNED GROSS RECEIPTS OF RS.6,66,44,474/- THROUGH THE WORK CONT RACT EXECUTED IN VARIOUS STATES. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS EARNED TH E AFORESAID GROSS RECEIPTS BY CARRYING OUT CIVIL, ELECTRICAL AND MANUFACTURING AT CLIENTS/ CUSTOMERS SITE AND NO MANUFACTURING ACTIVITY HAS BEEN CARRIED OUT WITHIN THE PREMISES O F KATHWADA UNIT. HENCE, IT IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE A CT. IN VIEW OF THIS, THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80-IB ON PROFIT EARNED ON GROSS RECEIPTS OF RS.6.66 CRORES. THE AO DISALLOWED RS.30,86,972/- ON PROFIT OF RS.1,02,89,907/- EARNED ON GROSS PROFIT OF RS.6.66 CRORES. THE AO FURTHER O BSERVED THAT SIMILAR DISALLOWANCE WAS MADE, WHILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) OF THE I.T. ACT FOR THE ASSESSMENT YEAR 2003-04. 2 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS), UPHELD THE ACTION OF THE ASSESSING OF FICER REGARDING NON-ALLOWANCE OF DEDUCTION UNDER SECTION 80-IB TO THE EXTENT OF RS. 30,86,972/- OBSERVING THAT NO MANUFACTURING ACTIVITY HAS BEEN CARRIED OUT BY THE ASSESSEE WITHIN THE PREMISES AT PLOT NO.110, GIDC ESTATE, KATHWADA, AHMEDABAD FOR WHICH THE ASSESSEE POSSESSED THE FACTORY LICENSE AND EXCISE REGISTRATION. HE FURTHER OBSERVED THAT A SURVEY UNDER SECTION 133A OF THE I.T. ACT WAS CARRIED OUT ON 18.09.2006 AT VATVA AND KATHWADA UNITS FOR THE PURPOSE OF VERIFICATION OF THE FACT THAT WHETHER TH E ASSESSEE IS REALLY ENTITLED FOR CLAIM UNDER SECTION 80-IB OF THE I. T. ACT, 1961. DURING THE COURSE OF SURVEY, SHRI RAKSHIT DOSHI, DIRECTOR OF THE ASSESSEE HAS SPECIFICALLY ST ATED AS UNDER: AS PER MY KNOWLEDGE, BELOW MENTIONED ITEMS MAY BE A ND DETAILED CLARIFICATIONS AND WORKING WILL BE SUBMITTED. IT EMS OF RECEIPTS SUBJECT TO COST THEREOF F.Y. 2002-03 F.Y. 2003-04 F.Y. 2004-05 (A) HIGH SEAS SALES/SALES IN TRANSIT /PROJECT SALE 18,00,000 42,21,000 11 ,83,29,748 (B) CHEMICAL SALE 1,52,27,761 2,02,09,369 2,46,49,319 (C) SALES/SERVICE CHARGES 2,41,91,727 2,47,51,236 3,23,10,529 TOTAL 4,12,19,488 4,91,81,605 1 7,52,59,596 OTHER THAN THESE, WORKING OF SALE OF SPARES WILL A LSO BE FURNISHED WITHIN 15 DAYS AND SALE IN TRANSIT AND HIGH SEA SALES ARE THE ITE MS WHICH ARE MADE AS PER SPECIFICATION AND ORDER AND DIRECTLY DELIVERED FR OM SUPPLIER. ' 4.1 FURTHER, THE ASSESSEE EARNED GROSS RECEIPTS IN QUESTION BY CARRYING OUT CIVIL, ELECTRICAL AND SO-CALLED MANUFACTURING AT CLIENTS/C USTOMERS SITE BUT THE FACT IS THAT THE BIFURCATION OF THE SAME IS NOT AT ALL AVAILABLE FOR VERIFICATION. 4.2 WITH REGARD TO THE CASE LAWS, RELIED ON BY THE ASSESSEE, LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT THE FACTS AND CIR CUMSTANCES OF THE ASSESSEE ARE 3 ENTIRELY DIFFERENT FROM THE CASE LAWS, RELIED ON BY IT. HE ACCORDINGLY TOOK THE VIEW THAT THE ASSESSEE HAD NOT CARRIED OUT IN MANUFACTURING ACTIV ITY AT KATHWADA UNIT. WITH REGARD TO MANUFACTURING ACTIVITY UNDERTAKEN BY THE ASSESSEE A T CUSTOMERS/ CLIENTS SITE, LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT I T IS CRYSTAL CLEAR FROM THE FACTS NARRATED IN THE IMPUGNED ORDER THAT THE ASSESSEE HA S FAILED TO ESTABLISH WITH CORROBORATIVE EVIDENCE, DURING THE COURSE OF ASSESSMENT PROCEEDIN GS AS WELL AS APPELLATE PROCEEDING THAT WHETHER IT HAS REALLY UNDERTAKEN ANY MANUFACTU RING ACTIVITY IN TERMS OF SECTION 80-IB OF THE I.T. ACT, 1961 OR NOT; AS THE FACTS AND CIRC UMSTANCES ABUNDANTLY REVEAL THE FACT THAT THE ASSESSEE; IN FACT, IS ENGAGED IN TRADING; CIVIL AND ELECTRICAL ACTIVITY, AT CLIENTS/CUSTOMERS SITE WHICH DOES NOT ENTITLE IT, A T ALL, FOR DEDUCTION UNDER SECTION 80-IB OF THE I. T. ACT, 1961. HE ACCORDINGLY UPHELD THE ACTI ON OF THE ASSESSING OFFICER, IN THIS REGARD. 5. AGGRIEVED WITH THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, SHRI P. M. MEHTA APPEARE D ON BEHALF OF THE ASSESSEE AND POINTED OUT THAT IN THE ASSESSMENT ORDER, THE ASSES SING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB TO THE TUNE OF RS.30,8 6,972/- ON THE GROUND THAT RELEVANT PROFIT WAS EARNED ON WORK CONTRACT SALES. THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) HAS DEALT WITH THIS ISSUE AT PAGE NOS. 3 TO 12 OF THE IMPUGNED ORDER. AT PAGE 3, HE HAS REPRODUCED THE SUBMISSIONS MADE BEFORE HI M, ON BEHALF OF THE ASSESSEE COMPANY, WHEREIN, IT WAS, INTER ALIA, POINTED OUT A S UNDER: 'THE ASSESSING OFFICER DISALLOWED RS.30,86,972 ON PROFIT OF RS.1,02,89,907 EARNED ON GROSS RECEIPT OF RS.6.66 CRORES. THE ASS ESSING OFFICER HAS FURTHER OBSERVED THAT SIMILAR DISALLOWANCE WAS MADE WHILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEA R 2003-04 AND 2004-05. 6.1 THE COUNSEL OF THE ASSESSEE POINTED OUT THAT FR OM THE ABOVE, IT CAN BE SEEN THAT SIMILAR DISALLOWANCE ON THE SAME BASIS WAS MADE IN THE PRECEDING TWO YEARS. IN THE ASSESSMENT ORDERS 2003-04 AND 2004-05, THE DISALLOW ANCES MADE WERE DELETED BY LEARNED COMMISSIONER OF INCOME TAX(APPEALS), AGAINS T WHICH THE DEPARTMENT FILED THE APPEAL BEFORE THE TRIBUNAL. BOTH THE APPEALS OF THE DEPARTMENT AGAINST THE ORDER OF THE 4 LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 WERE DISMISSED VIDE FOLLOWING ORDERS: (I) ORDER DATED 18 TH JUNE, 2010 FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.2921/AHD/2007; (II) ORDER DATED 13 TH AUGUST, 2010 FOR ASSESSMENT YEAR 2003-04 IN ITA NO.3627/AHD/2007 WITH CO NO.365/AHD/2007- IN THIS ORDER, THE HON'BLE TRIBUNAL HAS FOLLOWED ITS OWN ORDER FOR THE ASSESSMENT YEAR 2004-05 REFERRED TO ABOVE. 6.2 COPIES OF BOTH THE AFORESAID ORDERS WERE PLACED ON RECORD. 6.3 AFTER REFERRING THE RELEVANT PORTION OF THE ORD ERS OF THE TRIBUNAL, THE COUNSEL OF THE ASSESSEE POINTED OUT THAT THIS ISSUE IS SQUAREL Y COVERED BY THE ASSESSEES OWN CASE BY THE AFORESAID TWO ORDERS OF THE TRIBUNAL. HE SUBMIT TED THAT SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL DURING THE ASSESSMENT Y EAR UNDER APPEAL ALSO WITH THAT IN THE EARLIER TWO ASSESSMENT YEARS, FOLLOWING THE DECISIO N OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER TWO ASSESSMENT YEARS ( SUPRA ), THE DISALLOWANCES MADE BY THE ASSESSING OFFICER BE DELETED. 7. SHRI R.K.DHANESTA, D.R., APPEARING ON BEHALF OF THE REVENUE, COULD NOT CONTROVERT THE SUBMISSIONS MADE BY THE LD. COUNSEL OF THE ASSESSEE. INITIALLY, HE POINTED OUT THAT FACTS OF THIS CASE ARE THAN THAT IN EARLIE R TWO ASSESSMENT YEARS BECAUSE IN THOSE TWO YEARS, THERE WAS NO REFERENCE OF SURVEY WHICH T OOK PLACE ON 18.9.2006 AT VATVA AND KATHWADA UNITS FOR THE PURPOSE OF VERIFICATION OF T HE FACT THAT THE ASSESSEE IS REALLY ENTITLED FOR CLAIM UNDER SECTION 80-IB OF THE ACT, 1961. HOWEVER, SUBSEQUENTLY, LD. D.R. ADMITTED THAT THE FACTS RELATING TO SURVEY WERE ALS O CONSIDERED IN EARLIER TWO ASSESSMENT YEARS. 8. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND PERUSED THE MATERIALS PLACED BEFORE US. IT IS PERTINENT TO NOTE THAT IN THE ASSESSMENT YEAR 2004-05, ITAT C BENCH, AHMEDA BAD VIDE ORDER DATED 18.06.2010 IN ITA NO.2921/A/2007 HELD THAT THE ASSESSEE IS ENT ITLED TO RELIEF ON PROFIT EARNED ON WORK CONTRACT SALES, AS VIRTUALLY ADMITTED BY THE L D. D.R. IN THE ASSESSMENT YEAR 2003-04, ITAT C BENCH VIDE ORDER DATED 13.08.2010 IN ITA N O.3627/A/2007, FOLLOWING THE 5 DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05, HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80-IB OF THE I.T.ACT, 1961 AMOUNTING TO RS.7,39,911/- ON PROFIT EARNED ON WORK CONTRACT SALES. THE FACTS, IN THE ASSESSMENT YEAR UNDER APPEAL, ARE IDENTICAL WITH THAT OF EARLIER TW O ASSESSMENT YEARS. WE, THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN EARLIER T WO ASSESSMENT YEARS, DIRECT THE AO TO ALLOW DEDUCTION UNDER SECTION 80-IB AMOUNTING TO RS .30,86,972/- ON WORK CONTRACT SALES. THUS, THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 9. GROUND NO.2 IS AGAINST LEVY OF INTEREST UNDER SE CTION 234B AND 234C OF THE I.T. ACT, 1961. 10. THE LEVY OF INTEREST UNDER BOTH THE SECTIONS IS MANDATORY. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CONSEQUENTIAL RELI EF IN LEVY OF INTEREST UNDER BOTH THESE SECTIONS, IN ACCORDANCE WITH LAW. 11. THE LAST GROUND IS AGAINST REGARDING FINDING TH AT ASSESSEE COMPANY HAS REALLY CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTIC ULARS OF INCOME AND ACCORDINGLY INITIATION OF PENALTY PROCEEDINGS IS CONFIRMED. THE LD. COUNSEL OF THE ASSESSEE OBJECTED TO THE AFORESAID FINDING ON THE GROUND THAT IN THE IM PUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) VIRTUALLY CONFI RMED THE PENALTY WHEREAS THE ASSESSEE IN THE MEMO OF APPEAL MERELY OBJECTED TO I NITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). HE ACCORDINGLY SUGGESTED THAT TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE SUITABLY MODIFIED. 12. SHRI R.K.DHANESTA, D.R., APPEARING ON BEHALF OF THE REVENUE, CONTENDED THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IN THE IMPUGNED ORDER, MERELY UPHELD INITIATION OF PENALTY UNDER SECTION 271(1)(C) OF TH E ACT AND NOT THE LEVY. THEREFORE, NO COMMENT ON THIS OBSERVATION IS REQUIRED. 13. WE HAVE CAREFULLY GONE THROUGH THE RELEVANT OBS ERVATIONS CONTAINED IN LAST PARA OF THE IMPUGNED ORDER. IT IS WELL-SETTLED LAW THAT NO APPEAL LIES AGAINST THE INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). THEREF ORE, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CLEARLY ERRED IN OBSERVING IN THE 6 IMPUGNED ORDER THAT THE ASSESSEE HAS REALLY CONCEAL ED/FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TO SUM UP, WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CLEARLY ERRED IN ADJUDICATING THIS GRO UND OF APPEAL. THEREFORE, IT IS HELD THAT NO APPEAL LIES AGAINST INITIATION OF PENALTY UNDER SECTION 271(1)(C) AND THEREFORE, OBSERVATION OF THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS), IN THIS REGARD, DOES NOT HOLD GOOD. 14. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE COU RT ON 31.03.2011 SD/- SD/- (G.D.AGRAWAL) (T.K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER DATED : 31/03/2011 COPY OF THE ORDER IS FORWARDED TO:- (1) THE ASSESSEE (2) THE DEPARTMENT. (3) CIT (A.) CONCERNED. (4) CIT CONCERNED. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AH MEDABAD. TALUKDAR/ SR. P.S.