M/S Cotton & Blends 12-13, Ludhiana V. ACIT Cicle V, Ludhiana

ITA 1132/CHANDI/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6193 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWIN S
• Assessee Lawyers: S R CHHABRA
• Keywords: Depreciation
• Section: 143(3); 80HHC; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1132/CHD/2013 ASSESSMENT YEAR : 2004-05 M/S COTTON & BLENDS INC., VS THE A.C.I.T., 12-13, OSWAL AGRO COMPOUND, CIRCLE V, NEAR HERO CHOWK, LUDHIANA. LUDHIANA PAN : AACF0256C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.R.CHHABRA RESPONDENT BY : SHRI ASHWIN.S., DR DATE OF HEARING : 23.06.2014 DATE OF PRONOUNCEMENT : 11.07.2014 O R D E R PER SUSHMA CHOWLA, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, LUDHIANA D ATED 15.10.2013 RELATING TO ASSESSMENT YEAR 2004-05 AGAINST THE ORD ER PASSED UNDER SECTION 271(1)(C)/154 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS OF THE CASE IN UPHOLDING CONCEALMENT PENALTY IN RESPECT OF THE FOLLOWING ADDITIONS : A) ADDITION ON ACCOUNT OF EXCESSIVE CLAIMS/S 80HHC AMOUNTING TO RS. 488,850/- IGNORING THE FOLLOWING FACTS THAT: I) INCOME OF RS. 15,73,442/- ON ACCOUNT OF DEPB RE CEIVABLE SHOWN BY ASSESSEE AS ITS INCOME HELD BY THE ASSESSI NG OFFICER AS NOT RELATING TO A.Y. 2004-05 HAS BEEN TAKEN INTO AP EX COURT FOR DEDUCTION UNDER SECTION 80HHC BUT NOT EXCLUDING THE SAME FROM THE ASSESSED INCOME. II) EXPORT TURN OVER TAKEN WRONGLY AT RS. 14,83,598 /- INSTEAD OF RS. 1,64,59,299/- WHILE WORKING OUT DEDUCTION UNDER SEC TION 80HHC IN RESPECT OF EXPORT QUOTA OF RS. 50,000/-. 2 B) ADDITION ON ACCOUNT OF DEPRECIATION ON BUILDING AT RS. 35,000/-. 2. IN THE ALTERNATIVE WITHOUT PREJUDICE TO THE ABOV E GROUND, THE PENALTY IMPOSED MORE THAN THE MINIMUM IS NOT JUSTIFIED. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FOR THE YEAR UNDER CONSIDERATION, HAD FURNISHED RETURN OF INCOME DECLA RING TOTAL INCOME OF RS. 23,64,474/-. THE ASSESSING OFFICER COMPLETED T HE ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND MADE THE FOLLOWING AD DITIONS : A. ADDITION ON A/C OF CLAIM U/S 80 HHC RS. 488852 .00 (CLAIMED 9371 717- ALLOWED 44831 9/-) B. ADDITION ON A/C OF CLAIM U/S 80 IB RS. 417578 .00 (CLAIMED 1100549/- ALLOWED 682971/-) C. ADDITION ON A/C OF DEPRECIATION ON BUILD ING RS. 35000.00 D. ADDITION ON ACCOUNT OF CAR EXPENSES RS. 10810 .00 E. ADDITION ON ACCOUNT OF CAR DEPRECIATION RS. 9556.00 TOTAL RS.961796.00 5. THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRM ED THE ADDITIONS MADE BY THE ASSESSING OFFICER. THE ASSESSING OFFIC ER, THEREAFTER SHOW CAUSED THE ASSESSEE AS TO WHY PENALTY UNDER SECTIO N 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED. THE PLEA OF THE ASSESSEE BEF ORE THE ASSESSING OFFICER WAS THAT THE DEDUCTIONS WERE CLAIMED ON THE BASIS OF THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT. TH E ASSESSING OFFICER REJECTING THE SAME LEVIED PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) RESTRIC TED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND DELET ED THE PENALTY LEVIED ON ACCOUNT OF ADDITION MADE UNDER SECTION 80IB AT R S. 417,578/-, ADDITION ON ACCOUNT OF CAR EXPENSES AND CAR DEPRECIATION AT RS. 10,810/- AND RS. 9556/-. HOWEVER, THE PENALTY ON ACCOUNT OF ADDITIO N MADE BY RE- COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT RESULTING IN ADDITION OF RS. 488,852/- AND ON ACCOUNT OF DEPRECIATION ON BUILDING AT RS. 3 35,000/- WAS CONFIRMED BY THE COMMISSIONER OF INCOM E TAX (APPEALS). THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7. SHRI S.R.CHHABRA APPEARED FOR THE ASSESSEE AND S HRI ASHWIN S. APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONT ENTIONS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE L EVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST ADDITION M ADE IN THE HANDS OF THE ASSESSEE WAS ON ACCOUNT OF RE-COMPUTATION OF THE DE DUCTION UNDER SECTION 80HHC OF THE ACT. THE ASSESSEE HAD CLAIMED DEDUCTI ON UNDER SECTION 80HHC AT RS.937,171/- WHICH WAS RESTRICTED TO RS. 4 48,319/- RESULTING IN ADDITION OF RS. 488,852/-. THE REASON FOR RE-COMPU TATION OF DEDUCTION UNDER SECTION 80HHC WAS THE DEDUCTION CLAIMED BY TH E ASSESSEE UNDER SECTION 80IB OF THE ACT. THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80HHC ON THE TOTAL PROFITS, WHEREAS THE ASS ESSING OFFICER HAD REWORKED THE PROFITS AFTER EXCLUDING THE PROFITS ON WHICH DEDUCTION UNDER SECTION 80IB HAD BEEN CLAIMED AND RESTRICTED THE DE DUCTION UNDER SECTION 80HHC OF THE ACT IN LINE WITH THE PROVISIONS OF SEC TION 80IA(9) OF THE ACT. THE ASSESSING OFFICER HELD THE ASSESSEE TO HA VE FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF SUCH DEDUCTION UNDER SECTION 80HHC OF THE ACT AND LEVIED PENALTY UNDER SECTION 271(1)( C) OF THE ACT. 9. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE S AID ISSUE WAS DEBATABLE AND AS THERE WERE CONFLICTING DECISIONS O N THE SAID ISSUE AND THE ASSESSEE HAD BONAFIDELY MADE THE CLAIM OF DEDUCTION UNDER SECTION 80HHC OF THE ACT WHICH WAS RE-DETERMINED BY THE ASS ESSING OFFICER. WE FIND MERIT IN THE PLEA OF THE ASSESSEE AS THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80HHC OF THE ACT WHERE THE ASSESSEE H AD ALSO CLAIMED DEDUCTION UNDER SECTION 80IB OF THE ACT WAS A DEBAT ABLE ISSUE AS VARIOUS 4 COURTS HAD GIVEN CONFLICTING DECISIONS IN THIS REGA RD. ULTIMATELY, IT WAS DECIDED FOR COMPUTING THE DEDUCTION UNDER SECTION 8 0HHC OF THE ACT, PROFITS ON WHICH DEDUCTION UNDER SECTION 80IB OF TH E ACT HAD BEEN ALLOWED, HAD TO BE RESTRICTED AND THE DEDUCTION UND ER SECTION 80HHC OF THE ACT WAS ONLY ALLOWABLE ON THE BALANCE PROFITS O F BUSINESS. SUCH RE- WORKING OF THE DEDUCTION UNDER SECTION 80HHC OF THE ACT DOES NOT ATTRACT THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND WE DIRECT ASSESSING OFFICER TO DELETE THE SAME. 10. THE NEXT ISSUE ON WHICH THE PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT WAS LEVIED WAS THE DISALLOWANCE OF DEPRECIATION ON BUILDING. THE ASSESSEE WAS UNABLE TO EXPLAIN THE ADDITION MADE TO THE BUILDING ACCOUNT AND CONSEQUENTLY THE DEPRECIATION ON THE SAID BUILD ING WAS RE-WORKED. THE ASSESSEE HAD FURNISHED COMPLETE PARTICULARS IN THE RETURN OF INCOME BUT COULD NOT FURNISH COMPLETE EVIDENCE IN THIS REG ARD AND CONSEQUENTLY THE DEPRECIATION ON BUILDING WAS RE-WORKED IN THE H ANDS OF THE ASSESSEE. THE ASSESSEE HAD FURNISHED COMPLETE PARTICULARS AND MERELY BECAUSE THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM, DOES NOT WARRANT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE SAME. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH JULY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR/ITAT/CHD