DCIT 15(3)(6), MUMBAI V. SYSTEMATIC INDUSTRIES P.LTD, MUMBAI

ITA 1314/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5726 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Assessee Lawyers: D C JAIN
• Keywords: Wrong claim
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1314/MUM/2017 ASSESSMENT YEAR: 2010 - 11 THE DY. COMMISSIONER OF INCOME TAX - 15(3)2, ROOM NO. 451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI - 400020. VS. M/S SYSTEMATIC INDUSTRIES PVT. LTD. 418, NARIMAN CORPORATE CENTRE, LBS MARG, MULUND (W), MUMBAI - 400080. PAN NO. AAHCS2314K APPELLANT RESPONDENT REVENUE BY : MS. AARJU GARODIA, DR ASSESSEE BY : MR. D.C. JAIN, AR DATE OF HEARING : 03/07/2018 DATE OF PRONOUNCEMENT : 11/07/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE R EVENUE . THE RELEVANT ASSESSMENT YEAR IS 201 0 - 1 1 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) - 2 4 [IN SHORT CIT(A) ], MUMBAI AND ARISES OUT OF THE PENALTY IMPOSED U/S 271 (1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND OF APPEAL READ S AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN A LAW, THE LD. CIT(A) HAS ERRED IN DELETING U/S 271(1)(C) OF THE I.T. ACT WHEN THE M/S SYSTEMATIC INDUSTRIES ITA NO. 1314/MUM/2017 2 QUANTUM ADDITION HAS BEEN CONFIRMED BY THE ITAT IN FAVOUR OF THE REVENUE WHICH ITSELF PROVES THAT A CLAIM MA DE BY THE ASSESSEE IS NOT ONLY INCORRECT IN LAW, BUT IS ALSO UNSUBSTANTIATED AND THE EXPLANATION FURNISHED BY THE ASSESSEE FOR MAKING SUCH A CLAIM IS NOT SATISFACTORY LEADING TO INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE AND HENCE ATTRACTING PENALTY U/S 271(1)(C) OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE AR E THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 12.10.2010 DECLARING INCOME OF RS.2,15,21,249/ - . THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143(3) ON 25.01.2013 DETERMININ G TOTAL INCOME AT RS.2,65,13,986/ - . WHILE ARRIVING AT THE ABOVE ASSESSED INCOME, THE AO EXCLUDED INTEREST INCOME OF RS.38,40,567/ - FROM THE ELIGIBLE PROFITS AND GAINS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB OF THE ACT. THE AO TREATED THE INTEREST I NCOME AS INCOME FROM OTHER SOURCES. SUBSEQUENTLY, THE AO IMPOSED PENALTY OF RS.13,05,408/ - U/S 271(1)(C) ON INCOME OF RS.38,40,567/ - HOLDING THAT THE ASSESSEE HAD DELIBERATELY MADE WRONG CLAIM U/S 80IB BY INCLUDING THE INTEREST INCOME IN THE ELIGIBLE PRO FITS. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) , FOLLOWING THE DECISION IN RELIANCE PETROPRODUCTS (P.) LTD. 322 ITR 158 (SC) HELD THAT MAKING AN INCORRECT CLAIM CANNOT TANTAMOUNT TO FURNISHING O F INACCURATE PARTICULARS OF INCOME AND THEREFORE, DIRECTED THE AO TO DELETE THE PENALTY OF RS.13,05,408/ - . M/S SYSTEMATIC INDUSTRIES ITA NO. 1314/MUM/2017 3 5. BEFORE US, THE LD. DR RELIES ON THE ORDER OF THE AO, WHEREAS THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE DECISION IN RELIANCE PETROPRODUCTS (P. ) LTD. (SUPRA) AND SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE SOLE DISPUTE IS WHETHER PENALTY U/S 271(1)(C) IS LEVIABLE IN A CASE WHERE THE INTEREST INCOME IS EXCLUDED BY THE AO FROM THE ELIGIBLE PROFITS AND GAINS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB OF THE ACT? IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVE NUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). WE ARE OF THE CONSIDERED VIEW THAT THE RATIO LAID DOWN IN THE ABOVE DECISION SQUARELY APPLIES TO THE PRESENT CASE. FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/2018 . SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 11/07/2018 RAHUL SHARMA, SR. P.S. M/S SYSTEMATIC INDUSTRIES ITA NO. 1314/MUM/2017 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI