Shri Vijay Kumar Batra, Chandigarh V. ACIT, C-3(1), Chandigarh

ITA 120/CHANDI/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 7999 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 04-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Assessee Lawyers: RAKESH K KHANNA
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 80IC; 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS. 120 & 121/CHD/2019 / ASSESSMENT YEARS : 2012-13 & 2015-16 SHRI VIJAY KUMAR BATRA, PROP M/S ADLEY FOUNDATIONS, SCO 184, SECTOR 5,PANCHKULA CHANDIGARH THE ACIT, CIRCLE 3(1), CHANDIGARH ./PAN NO: AEJPB0879B / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI RAKESH K. KHANNA, CA ' ! / REVENUE BY : SHRI G.S. PHANI KISHORE, CIT D R # $ % /DATE OF HEARING : 28.11.2019 &'() % / DATE OF PRONOUNCEMENT : 31.12.2019 (* / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS HAVE BEEN PREFERRED BY THE AS SESSEE AGAINST THE SEPARATE ORDERS DATED 19.11.2018 & 16.1 1.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. ITA NO. 120/CHD/2019 : 2. IN ITA NO. 120/CHD/2019 THE ASSESSEE HAS AGITAT ED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 2 THE ASSESSEE IN THIS RESPECT HAS TAKEN FOLLOWING GR OUNDS OF APPEAL:- 1. THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, CHANDIGARH (LD. CIT APPEALS) UPHOLDING DEMAND OF PENALTY UNDER SECTION 271(L)(C) BEING UNLAWFUL, PERVERSE AND AGAINST FACTS AND LAW NEEDS TO BE SET ASIDE, ANNULLED AND VACATED; 2. LD. CIT APPEALS ORDER UPHOLDING DEMAND OF PENALTY UNDER SECTION 271(L)(C), BY CONSIDERING APPELLANT'S BONAFIDE CLAIM OF 100% DEDUCTION U/S 80-IC BASED ON SUBSTANTIAL EXPANSION DONE BY IT DURING AY 2011-12 AS AN ACT OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, WHERE THE ISSUE O F ALLOWING SUCH 100% DEDUCTION U/S 80-IC HAS BEEN DEBATABLE FOR LONG, BEING WRONG AND UNLAWFUL, NEEDS TO BE SET ASIDE, ANNULLED AND VACATED; 3. WITHOUT APPRECIATING FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT APPEALS, HAS ERRED IN UPHOLDING PENALTY UNDER SECTION 271(L)(C) IMPOSED BASED ON ADDITION MADE (BY ALLOWING 25% DEDUCTION INSTEAD OF 100% DEDUCTION U/S 80-IC) BY HOLDING APPELLANT HAVING CLAIMED 100% DEDUCTION WITHOUT ESTABLISHING SUBSTANTIAL EXPANSION, THAT TOO, WITHOUT CONSIDERIN G ASSESSMENT ORDER DATED 31.12.2016 FOR AY 2011-12 ITSELF AND HON'BLE ITAT'S ORDER VIDE ITA NO. 586/CHD/2017 DATED 15.02.2018 ALLOWING 100% DEDUCTION UNDER SECTION 80-IC FOR AY. 2013-14, IN APPELLANT'S OWN CASE, ORDER SO ISSUED, BEING CONTRA RY TO THE FACTS AND LEGAL POSITION, NEEDS TO BE SET AS IDE, ANNULLED AND VACATED. 4. LD. CIT APPEALS HAS ERRED IN UPHOLDING DEMAND OF PENALTY WITHOUT CONSIDERING THE FACT THAT LD. ASSESSING OFFICER HAD NEITHER PROVIDED OPPORTUNITY OF BEING HEARD PROPERLY NOR CONSIDERED ALL DOCUMENTS/SUBMISSIONS AND INFORMATION, AS SUBMITTED DURING ASSESSMENT PROCEEDINGS, THE ORDER SO ISSUED, ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 3 AGAINST THE PRINCIPLES OF NATURAL JUSTICE, WHICH NE EDS TO BE SET ASIDE, ANNULLED AND VACATED; 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AND ALSO TO FURNISH ADDITIONAL EVIDENCE BEFORE OR AT THE TIME OF HEARIN G OF APPEAL/ DURING THE COURSE OF THE APPEAL PROCEEDINGS. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE HAD SET UP A NEW INDUSTRIAL UNIT AFTER FIRST OF JANUARY 2003 A ND HAD ALREADY CLAIMED 100% DEPRECIATION U/S 80IC OF THE ACT FOR THE FIRST FIVE ASSESSMENT YEARS STARTING FROM ASSESSMENT YEAR 2006-07. AS PER THE P ROVISIONS OF SECTION 80IC OF THE ACT, THE ASSESSEE WAS ENTITLED TO DEDUC TION @ 100% U/S 80IC OF THE ACT FOR THE FIRST FIVE YEARS AND THEREA FTER FOR ANOTHER FIVE YEARS @ 25%. HOWEVER, THE ASSESSEE IN THE 6 TH YEAR CLAIMED DEDUCTION @ 100% ON ACCOUNT OF SUBSTANTIAL EXPANSION OF THE U NIT. THIS IS THE 7 TH YEAR FROM THE INITIAL ASSESSMENT YEAR FROM WHICH TH E ASSESSEE HAD STARTED CLAIMING DEDUCTION U/S 80IC OF THE ACT. TH E ASSESSING OFFICER HELD THAT THE BENEFIT OF DEDUCTION @ 100% ON ACCOU NT OF SUBSTANTIAL EXPANSION WAS NOT AVAILABLE TO THE UNITS WHICH HAD ALREADY CLAIMED DEDUCTION @ 100% FOR FIRST FIVE YEARS AFTER SETTING UP OF THE UNIT AFTER 01.01.2003. THE ASSESSING OFFICER, ACCORDINGLY, RES TRICTED THE CLAIM OF DEDUCTION @ 25%. THE ASSESSING OFFICER SEPARATELY I NITIATED PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT FOR CLAIMING EXCESS DEDUCTION AND THEREBY LEVIED THE IMPUGNED PENALTY FOR FURNIS HING OF INACCURATE PARTICULARS OF INCOME. ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 4 4. THE LD. CIT(A) CONFIRMED THE PENALTY SO LEVIED B Y THE ASSESSING OFFICER. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF ORDER PASSED BY HON'BLE S UPREME COURT IN THE CASE OF M/S ADLEY FORMULATIONS VS CIT, CHANDIGARH IN CIVIL APPEAL NO. 4587 OF 2019 & ORS VIDE ORDER DATED MAY 03,2019 . THE CONTENTS OF THE SAID ORDER ARE REPRODUCED AS UNDER:- IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4586 OF 2019 (ARISING OUT OF SLP (C) NO. 11616/2019) (@ D.NO. 11542/2019) M/S ADLEY FORMULATIONS APPELLANTS (S) VERSUS COMMISSIONER OF INCOME TAX, CHANDIGARH R ESPONDENT(S) WITH CIVIL APPEAL NO. 4587 OF 2019 (ARISING OUT OF SLP (C) NO. 11617/2019) (@ D.NO. 11953/2019) CIVIL APPEAL NOS. 4588-4589 OF 2019 (ARISING OUT OF SLP (C) NO. 11083-11084/2019) O R D E R DELAY CONDONED. LEAVE GRANTED. THE IMPUGNED JUDGMENTS HAVE RELIED UPON A JUDGMENT OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. M/S CLASSIC BINDING INDUSTRIES, [CIVIL APPE AL ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 5 NO. 7208 OF 2018] WHICH HAS SINCE BEEN OVERRULED BY OUR JUDGMENT IN PR. COMMISSIONER OF INCOME TAX, SHIMLA VS M/S AARHAM SOFTRONICS [CIVIL APPEAL NO. 1784 OF 2019] DELIVERED BY A THREE-JUDGE BENCH ON 20.02.2019. FOLLOWING THE AFORESAID JUDGMENT, WE ALLOW THE APPEALS AND SET ASIDE THE IMPUGNED JUDGMENTS OF THE HIGH COURT. SD/- .......................... J. (ROHINTON FALI NARIMAN) SD/- .......................... J (VINEET SARAN) NEW DELHI; MAY 03, 2019. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMIT TED THAT ASSESSEE IS A PROPRIETOR OF M/S ADLEY FORMULATIONS. THAT THE APPEAL BEFORE THE TRIBUNAL WAS FILED IN THE QUANTUM PROCEE DINGS IN THE NAME OF THE ASSESSEE SHRI VIJAY KUMAR BATRA, PROP. OF M/S A DLEY FORMULATIONS BEARING ITA NO. 241/CHD/2016 FOR ASSESSMENT YEAR 20 12-13, WHICH WAS DISMISSED BY THE TRIBUNAL VIDE ORDER DATED 21.11.20 16 FOLLOWING THE DECISION OF THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL IN M/S HYCRON ELECTRONICS, BADDI, SOLAN VS ITO IN ITA NO . 798/CHD/2012 DATED 27.5.2015. FURTHER, THE ASSESSEE PREFERRED T HE APPEAL AGAINST THE SAID ORDER OF THE TRIBUNAL BEFORE THE HON'BLE HIGH COURT IN THE NAME OF THE PROPRIETORSHIP CONCERN OF THE ASSESSEE I.E. M/S ADLEY FOUNDATIONS. THE LD. COUNSEL HAS INVITED OUR ATTENTION TO THE CO MMON ORDER OF THE ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 6 HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYA NA DATED 6.9.2018 INCLUDING ITA NO.303 OF 2017 IN THE NAME STYLED AS M/S ADLEY FORMULATIONS PAN NO. AEJPB0879B VS COMMISSIONER OF INCOME TAX, CHANDIGARH WHICH WAS DISMISSED BY THE HON'BLE HIGH COURT VIDE ORDER DATED 6.9.2018 FOLLOWING THE DECISION OF THE HON'B LE APEX COURT IN THE CASE OF CIT VS M/S CLASSIC BINDING INDUSTRIES, CIVIL APPEAL NO(S) 7208 OF 2018 DECIDED ON 20.8.2018, WHEREIN, THE HON 'BLE SUPREME COURT HAS HELD THAT THE ASSESSEE, WHO HAD AVAILED 100% DE DUCTIONS FOR FIRST FIVE YEARS ON SETTING UP OF A MANUFACTURING UNIT AS PRESCRIBED UNDER SUB SECTION (2) OF SECTION 80IC OF THE ACT, CANNOT CLA IM DEDUCTION @ 100% AGAIN FOR THE NEXT FIVE YEARS ON ACCOUNT OF SUBSTAN TIAL EXPANSION. HOWEVER, THE SAID DECISION OF THE HON'BLE SUPREME C OURT HAS BEEN RECALLED AND THE ISSUE HAS BEEN DECIDED IN FAVOUR O F THE ASSESSEE IN THE BUNCH OF APPEALS WITH THE LEAD CASE BEING PR. CIT, SHIMLA VS M/S AARHAM SUBTONICS IN CIVIL NO. 1784 OF 2019 DATED 2 0.2.2019. FOLLOWING THE SAID DECISION, THE HON'BLE SUPREME CO URT VIDE ORDER DATED 03.05.2019 (SUPRA) HAS ALLOWED THE APPEAL OF THE AS SESSEE. 6. WE FIND THAT THE SPECIAL LEAVE PETITION (CIVIL) NO.11542/2019 BEFORE THE HON'BLE HIGH COURT WAS FILED AGAINST THE ORDER OF THE PUNJAB & HARYANA HIGH COURT DATED 6.9.2018 PASSED IN ITA NO. 303/ 2017. AS OBSERVED ABOVE, ITA NO. 303 OF 2017 WAS FILED BY T HE ASSESSEE AGAINST ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 7 THE ORDER OF THE TRIBUNAL DATED 21.11.2016 IN ITA NO. 241/CHD/2016 FOR ASSESSMENT YEAR 2012-13, WHICH BELONG TO THE SA ME ASSESSEE. IN VIEW OF THIS, THE ISSUE IN THE QUANTUM PROCEEDIN GS HAS BEEN DECIDED BY THE HON'BLE SUPREME COURT IN FAVOUR OF T HE ASSESSEE. 7. SINCE THE QUANTUM ADDITIONS, ON THE BASIS OF WHI CH THE IMPUGNED PENALTY WAS LEVIED, ALREADY STOOD DELETED BY THE HO N'BLE SUPREME COURT, HENCE, THE VERY BASIS ON WHICH THE PENALTY WAS LEVI ED HAD CEASED TO EXIST. IN VIEW OF THIS, THE IMPUGNED PENALTY LEVIED BY THE ASSESSING OFFICER IS NOT SUSTAINABLE IN THE EYES OF LAW, THE SAME IS ACCORDINGLY ORDERED TO THE DELETED. 8. SO FAR AS THE FINDINGS OF THE LD. CIT(A) THAT TH E ASSESSING OFFICER HAS MADE A OBSERVATION THAT THE ASSESSEE HAS NOT PR OVED THAT ANY SUBSTANTIAL EXPANSION HAS BEEN CARRIED OUT, IN OUR VIEW, THE SAID OBSERVATION OF THE LD. CIT(A) IS MISPLACED. WE HAV E GONE THROUGH THE ORDER OF THE ASSESSING OFFICER IN QUANTUM PROCEEDIN GS AS WELL AS THE ORDER OF THE ASSESSING OFFICER IN PENALTY PROCEEDIN GS AND FIND THAT THE ASSESSING OFFICER HAS MADE A GENERAL OBSERVATION BY PICKING UP CERTAIN LINES AS SUCH FROM THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S HYCRON ELECTRONICS, BADDI, SOLAN VS ITO (SUPRA) AND NO SEPARATE OBSERVATION HAS BEEN MADE BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE THAT NO SUBSTANTIAL EXPANSION HAS BEEN CARRIED OUT. ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 8 IN VIEW OF THIS, THE ORDER OF THE CIT(A) IS NOT SUS TAINABLE IN THE EYES OF LAW AND THE SAME IS HEREBY SET ASIDE. THE PENALTY LEVIED BY THE ASSESSING OFFICER IS ACCO RDINGLY ORDERED TO BE DELETED. ITA NO.121/CHD/2019 (A.Y. 2015-16) 9. THIS APPEAL IS RELATING TO THE QUANTUM PROCEEDIN GS IN RESPECT OF DENIAL OF DEDUCTION @ 100% IN THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH IS THE FIFTH YEAR OF CLAIMING DEDUCTION @ 100 % AFTER THE INITIAL ASSESSMENT YEAR 2011-12 FOR CLAIMING OF DEDUCTION O N ACCOUNT OF SUBSTANTIAL EXPANSION. AS OBSERVED ABOVE, THE ISSUE IS ALREADY SETTLED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ASSESSEE M/S ADLEY FORMULATIONS VS CIT, CHANDIGARH IN CIVIL APPEAL NO. 4587 OF 2019 & ORS VIDE ORDER DATED MAY 03, 2019 (SUPRA) 10. IN VIEW OF THIS, THE DISALLOWANCE MADE BY THE L OWER AUTHORITIES IS SET ASIDE AND IT IS DIRECTED THAT THE ASSESSEE IS E NTITLED TO DEDUCTION @ 100% ON ACCOUNT OF SUBSTANTIAL EXPANSION. HOWEVER, AS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF PR. CIT, SHIMLA VS M/S AARHAM SUBTONICS DATED 20.2.2019 (SUPRA), THE TOTA L DEDUCTION PERIOD U/S 80IC OF THE ACT WILL NOT EXCEED 10 YEARS FROM T HE INITIAL YEAR OF SETTING UP / COMMENCEMENT OF THE UNIT. TO BE MADE MORE CLEARER, SINCE ITA NOS. 120 & 121-CHD-2019 SHRI VIJAY KUMAR BATRA, CHANDIGARH 9 THE ASSESSMENT YEAR 2015-16 UNDER CONSIDERATION IS THE 10 TH YEAR OF CLAIMING DEDUCTION U/S 80IC OF THE ACT, THUS, THE A SSESSEE WILL NOT BE ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT FOR ANY SUBSEQUENT YEAR. WITH THE ABOVE OBSERVATIONS, BOTH THE APPEALS OF TH E ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12.2019. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 31.12..2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR