The ACIT,(OSD)-I,Range-4, Ahmedabad V. Mastek Ltd., Ahmedabad

ITA 1267/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4406 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-10-2013
• Assessment Year: 2000-2001
• Appeal Filed On: 22-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Wrong claim
• Section: 63

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.1267/AHD/2010 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2000-01) THE ACIT (OSD)-I RANGE-4 AHMEDABAD / VS. MASTEK LIMITED 804-805, PRESIDENT HOUSE OPP.C.N.VIDYALAYA NEAR AMBAWADI CIRCLE AMBAWADI AHMEDABAD-380 006 ( !./)* !./ PAN/GIR NO. : AAACM 9908 Q ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI J.P.JHANGID, SR.DR ,-(+ / . / RESPONDENT BY : SHRI S.N.SOPARKAR, AR ' 0 / $1 / / / / DATE OF HEARING : 29/10/2013 23' / $1 / DATE OF PRONOUNCEMENT : 28/11/2013 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-VIII, AHMEDA BAD (CIT(A) FOR SHORT) DATED 04/01/2010 PERTAINING TO ASSESSME NT YEAR (AY) 2000- 01. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.8184043/- LEVIED U/S.271(L)(C) OF THE ACT. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANT IATE ITS WRONG CLAIM OF DEDUCTION U/S.L0A OF THE IT ACT AND FAILED TO PROVE THAT THE EXPLANATION ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 2 - OFFERED IN THIS RESPECT WAS BONA-FIDE AND THEREFORE PENALTY U/S.271(L)(C) WAS CORRECTLY LEVIED BY THE AO AS PER EXPLANATION 1 TO SECTION 271(L)(C) OF THE ACT. (3) THE CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN TAKING COGNIZANCE OF THE DECISION OF HON'BLE SUPREME COURT IN CASE OF DHARMENDRA TEXTILES 306 ITR 277. WHEREIN IT IS CLEA RLY HELD BY THE HON'BLE APEX COURT THAT A WILLFUL DEFAULT BY THE AS SESSEE IS NOT AN ESSENTIAL INGREDIENT FOR LEVY OF PENALTY U/S.271(L) (C) OF THE ACT. (4) THE LD. CIT HAS ERRED IN LAW AND ON FACTS I N CANCELING THE SAID PENALTY, WITHOUT APPRECIATING THE RATIO OF THE DECI SION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V/S SOHAN SINGH REPORTED IN 244 ITR 177, IN WHICH THE HON'BLE COURT HAS HELD THAT T HE ASSESSEE MUST OFFER AN EXPLANATION TO SHOW THAT THERE WAS NO FRAU D, GROSS OR WILLFUL NEGLIGENCE INVOLVED IN NOT RETURNING THE CORRECT IN COME IN HIS RETURN AND IT IS NOT SUFFICIENT IF ANY FANCIFUL OR TOTALLY UNTENABLE EXPLANATION IS OFFERED. (5) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE FACT THAT THE ASSESSEE COMPANY IS A BIG COMPANY HAVING EXCESS TO ADVISE OF WELL INFORMED PROFESSIONALS AND HENCE NOT OFFERING THE ABOVE INCOME FOR TAX WAS A DELIBERATE AND CONSCIOUS ACT O F REDUCTION IN TAX LIABILITIES THROUGH A WRONG CLAIM. (6) ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. (7) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED TO THE ABO VE EXTENT. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 08/07/2002, THEREBY THE ASSESSING OFFICER(AO) MADE VARIOUS ADDITIONS/DISALLOWANCES. IN QUANTUM PROCEEDINGS, T HE MATTER WAS CARRIED UPTO THE STAGE OF TRIBUNAL AND THE FOLLOWING AMOUNT WAS CONFIRMED. THE PENALTY PROCEEDINGS WERE ALSO INITIATED. THE AO LE VIED A PENALTY OF RS.81,84,043/- AGAINST WHICH THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, P ARTLY ALLOWED THE ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 3 - APPEAL. WHILE PARTLY ALLOWING THE APPEAL, THE LD.C IT(A) DELETED THE ENTIRE PENALTY OF RS.81,91,043/- AS LEVIED BY THE A O. AGAINST THIS ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE US. 3. THE LD.SR.DR STRONGLY SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN D ELETING THE ADDITION. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL MATERIAL FACTS AND PARTICULARS RELATING TO CLAIM WE RE DULY DISCLOSED. THE ASSESSEE MADE BONA FIDE CLAIM FOR DEDUCTION U/S.10A OF THE ACT. THE ASSESSEE HAS NOT MADE ANY FALSE CLAIM OR SUPPRESSED THE FACTS RELATING TO THE SAID CLAIM. DISALLOWANCE HAVE BEEN MADE ON THE QUESTION OF INTERPRETATION OF LAW. HE SUBMITTED THAT PRINCIPAL LY THE ISSUES OF AY 2000-01 IS COVERED BY THE DECISION OF ITAT C BEN CH AHMEDABAD IN ASSESSEES OWN CASE FOR AY 2001-02 IN ITA NO.118/AH D/2007 DATED 16/04/2010. THE RELIANCE IS ALSO MADE ON THE DECI SION OF HONBLE COORDINATE BENCH (ITAT ABENCH AHMEDABAD) RENDERE D IN THE CASE OF ITO VS. ANGIPLAST (P)LTD. IN ITA NO.149/AHD/2007 FO R AY 2001-02, DATED 13/11/2009. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS RECORDED THAT IN REG ARD TO THE DIVIDEND INCOME OF SUBSIDIARIES, INTEREST ON LOAN TO EMPLOYE ES, SALE OF SPECIAL IMPORT LICENCE AND DISCOUNT ON PURCHASE OF SOFTWARE WHICH HAVE BEEN ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 4 - MADE SUBJECT MATTER OF PENALTY. THE DETAILS OF SUC H AMOUNTS ARE SHOWN IN THE FOLLOWING MANNER:- SR.NO. DISALLOWANCES OF DEDUCTION U/S.10A UNIT 106 UNIT 107 NEW UNIT TOTAL 1. DIVIDEND INCOME FROM SUBSIDIARIES 103 66 70.3 7 - - 174 03 2. INTEREST ON EMPLOYEE LOAN, MARGIN MONEY AND SECURITY DEPOSIT 2.43 0.08 - 2.51 3. SALE OF SPECIAL IMPORT LICENCES 21.7 - - 21.7 4. DISCOUNT ON PURCHASE OF SOFTWARE - - 1.0 8 1.08 4.1. WHILE DECIDING THE ISSUE, LD.CIT(A) HAS DISCUS SED VARIOUS JUDICIAL PRONOUNCEMENTS AS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS TH AT THE ASSESSEE-COMPANY MADE BONA FIDE CLAIM IN RESPECT OF DEDUCTION U/S.10 A OF THE ACT IN RESPECT OF VARIOUS ITEMS. IT IS SUBMITTED THAT ALL MATERIAL FACTS AND PARTICULARS RELATING TO SUCH CLAIM WERE DULY DISCLO SED. THE CLAIM WAS REJECTED SOLELY ON THE BASIS OF INTERPRETATION OF T HE PROVISIONS OF LAW. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE R IVAL CONTENTIONS. IT IS SETTLED POSITION OF LAW THAT THE ASSESSMENT PROCEED INGS AND PENALTY PROCEEDINGS ARE TWO DISTINCT PROCEEDINGS AND OPERAT E IN A DIFFERENT MANNER. THE CASE OF THE REVENUE IS THAT THE LD.CIT (A) WAS NOT JUSTIFIED IN DELETING THE PENALTY AND THE SUBMISSION OF THE A SSESSEE IS THAT THIS WAS NOT A FIT CASE FOR LEVYING THE PENALTY. THE UNDISP UTED FACT REMAINS THAT THERE IS NO FINDING TO THE EFFECT BY THE AUTHORITIE S BELOW THAT THE PARTICULARS AND COMPUTATION GIVEN BY THE ASSESSEE A RE FALSE OR FABRICATED. WE FIND THAT THE LD.CIT(A) HAS RECORDED THE SUBMISS IONS OF THE ASSESSEE IN DETAIL AND AFTER CONSIDERING THE SUBMISSIONS, DE LETED THE PENALTY. THE ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 5 - HONBLE COORDINATE BENCH IN ASSESSEES OWN CASE FO R AY 2001- 02(SUPRA) HAS HELD AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS ADMITTED FACT THAT ASSESSEE DISCLOSE D ALL THE PARTICULARS OF THE ABOVE DISALLOWANCES IN THE RETURN OF INCOME. THE A O MADE PART OF THE DISALLOWANCES OUT OF THE ABOVE EXPENDITURE WHICH HA S BEEN SUBSTANTIALLY REDUCED BY THE LEARNED CIT(A). IT WOULD, THEREFORE , SHOW THAT THE ASSESSEE DISCLOSED ALL THE RELEVANT FACTS AND MATERIALS IN T HE RETURN OF INCOME AS WELL AS BEFORE THE AUTHORITIES BELOW ON MERIT. IT IS NO T A CASE OF THE AO THAT THE ASSESSEE HAS MADE FALSE CLAIM OR SUPPRESSED THE FAC TS RELATING TO THE ABOVE CLAIMS OF THE EXPENDITURE. THE DISALLOWANCES HAVE B EEN MADE ON THE QUESTION OF INTERPRETATION OF LAW AS TO WHETHER THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION AND WHETHER THE INCOME OF THE ASSESSEE FA LSE UNDER THE CATEGORY OF BUSINESS INCOME. SINCE THE ASSESSEE DISCLOSED ALL THE FACTS BEFORE THE AUTHORITIES BELOW AT PROPER LEVEL, THE PART DISALLO WANCES OF THE EXPENDITURE WOULD NOT PAR-SE LEAD TO AN INFERENCE THAT THE ASS ESSEE CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. ON DISALLOWANCE OF THE EXPENDITURE IMPOSITION OF PENAL TY IS NOT AUTOMATIC. 6. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. 322 ITR 158 (SC) HELD THAT A GLANCE AT THE PROVISIONS OF SECTION 271(1) OF THE INCOME-TAX ACT, 1961, SUGGEST THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE TH AT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE I S NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT S USTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING INACCURATE PARTICULARS. DECISION OF THE GUJARAT HI GH COURT AFFIRMED. ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 6 - 7. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA SES OF CIT VS. DHILLON RICE MILLS (2002) 256 ITR 447 (P&H) AND IN THE CASE OF HARIGOPAL SINGH VS. CIT (2002) 258 ITR 85 (P&H) HELD THAT NO PENALTY FOR CONCEALMENT LEVIABLE WHERE INCOME ASSESSED IS A MAT TER OF ESTIMATE. HONBLE SUPREME COURT IN THE CASE OF M/S.RAJASTHAN SPINNING & WEAVING MILLS 2009 PIOL 63 SC HELD THAT ON EVERY DEM AND PENALTY IS NOT AUTOMATIC. 8. CONSIDERING THE FACTS OF THE CASE AS NOTED ABOVE IN THE LIGHT OF THE ABOVE DECISIONS AND IN THE LIGHT OF THE FINDINGS OF THE LEARNED CIT(A), IT IS CLEAR THAT ADDITIONS HAVE BEEN SUSTAINED PARTLY BY DISALLOWING THE EXPENDITURE ON INTERPRETATION OF THE PROVISIONS OF LAW AND EVEN THE DISALLOWANCE OF RS.2,00,000/- U/S.14A HAS BEEN RESTORED TO THE FILE OF THE AO FOR RE- CONSIDERATION. THEREFORE, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT TH E ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTI CULARS OF INCOME. WE ACCORDINGLY DO NOT FIND ANY JUSTIFICATION TO INTERF ERE WITH THE ORDER OF THE LEARNED CIT(A). WE ACCORDINGLY CONFIRM HIS FINDING S AND DISMISS THE APPEAL OF THE REVENUE. 4.2. IN THIS CASE, THE LD.CIT(A) HAS EXAMINED ALL T HE ASPECTS OF THE MATTER, THEREFORE WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE LD.CIT(A), THE SAME IS HEREBY UPHELD. MOREOVER, THE RE IS NOTHING PLACED ON RECORD SUGGESTING THAT THE ASSESSEE HAS CONCEALE D THE MATERIAL PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF INCOME. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF H ONBLE COORDINATE BENCH IN ASSESSEES OWN CASE FOR AY 2001-02(SUPRA), THIS GROUND OF APPEAL IS HEREBY REJECTED. 5. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/11/2013 71.., .../ T.C. NAIR, SR. PS ITA NO.1267/AHD /2010 ACIT (OSD)-I VS.MASTEK LTD. ASST.YEAR 2000-01 - 7 - 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-VIII, AHMEDABAD 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 26.11.13(DICTATION-PAD 8-SPA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.11.13 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.28.11.13 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.11.13 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER