ITO, Solan V. Sh.Sunit Kumar Chandok,

ITA 1315/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5135 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Bonafide belief
• Section: 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1315/CHD/2016 ASSESSMENT YEAR: 2010-11 THE ITO, VS. SH. SUNIL KUMAR CHANDOK, WARD, SOLAN VIRAT STEEL, DISTT. SOLAN PAN NO. ABDPC9997Q (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. MANOJ KUMAR DATE OF HEARING : 20.04.2017 DATE OF PRONOUNCEMENT : 19 .05.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEAL HAS BEEN PREFERRED BY TH E REVENUE AGAINST THE ORDER DATED 21.09.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)], SHIM LA. 2. THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CI T(A) IN DELETING THE PENALTY WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE STARTED ITS MANUFACTURING ACTIVITY ON 18.6.2014 AND MADE A CLAI M FOR DEDUCTION U/S 2 80IC OF THE ACT. THE INITIAL ASSESSMENT YEAR FOR C LAIM OF DEDUCTION U/S 80IC OF THE ACT WAS ASSESSMENT YEAR 2005-06. FOR TH E YEAR UNDER CONSIDERATION, THE ASSESSEE FILED HIS RETURN OF INC OME DECLARING NIL INCOME AFTER CLAIMING 100% DEDUCTION U/S 80IC AT RS . 71,90,799/-. THE ASSESSING OFFICER, HOWEVER, NOTED THAT ASSESSEE HAD ALREADY CLAIMED DEDUCTION U/S 80IC TO THE EXTENT OF 100% OF THE ELI GIBLE PROFIT FOR FIVE YEARS PERIOD STARTING FROM ASSESSMENT YEAR 2005-06 TO 2009-10 AND FURTHER THAT THE ASSESSEE HAD AGAIN CLAIMED 100% DEDUCTION AGAINST THE ELIGIBLE PROFITS FOR THE YEAR UNDER CONSIDERATION I.E. ASSES SMENT YEAR 2010-11 CLAIMING THAT SUBSTANTIAL EXPANSION WAS CARRIED OUT DURING THE YEAR UNDER CONSIDERATION. HE REJECTED THE CLAIM OF THE ASSESS EE THAT THIS YEAR OF SUBSTANTIAL EXPANSION BE TREATED AS INITIAL YEAR OF THE ASSESSEE FOR CLAIM OF THE FURTHER DEDUCTION @ 100% OF THE ELIGIBLE PROFIT S. HE RESTRICTED THE CLAIM TO 25% OF THE ELIGIBLE PROFITS BY HOLDING THA T THE YEAR UNDER CONSIDERATION WAS 6 TH YEAR OF CLAIM OF DEDUCTION U/S 80IC. THE MATTER WA S CARRIED OVER BY THE ASSESSEE TO THE CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE. 4. IN VIEW OF THE CONFIRMATION OF THE DISALLOWANCE OF DEDUCTION U/S 80IC MADE BY THE ASSESSING OFFICER, THE ASSESSING O FFICER PROCEEDED WITH THE PENALTY PROCEEDINGS AND LEVIED IMPUGNED PENALTY U/S 271(1)(C) OF THE ACT AT RS. 15,92,510/- VIDE HIS ORDER DATED 30.01.2 015 ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. BEING AGGRIEVED BY THE ABOVE LEVY OF PENALTY, T HE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE LD. CIT(A) WHILE RELY ING UPON THE DECISION 3 OF THE TRIBUNAL IN THE CASE OF M/S HYCRON ELECTRONI CS VS ITO IN ITA NO. 326/CHD/2015 HELD THAT THE ASSESSEE WAS UNDER BONAF IDE BELIEF THAT HE WAS ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT. H E, THEREFORE, HELD THAT IT COULD NOT BE CONSTRUED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HE, ACCORDINGLY, DELETED THE PENALTY SO LEV IED BY THE ASSESSING OFFICER. NOW THE REVENUE HAS COME IN APPEAL BEFORE US AGAINST THE ABOVE ACTION OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAV E ALSO GONE THROUGH THE RECORD. AS SUBMITTED BY THE ASSESSEE, WE ARE C ONVINCED THAT IT WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT PURSUANT TO SUBSTANTIAL EXPANSION, HE WAS FURTHER ENTITLED TO CLAIM DEDUCTION @ 100% OF THE ELIGIBLE PROFITS AS PER THE PROVISIONS OF SECTION 80IC OF THE I.T. ACT TREATING THE YEAR OF EXPANSION AS INITIAL YEAR. MERELY BECAUSE THAT THE CLAIM OF THE ASSESSEE HAS NOT BEEN FOUND TENABLE BY THE AUTHORITIES, THAT ITSELF CANN OT BE A GROUND FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE PRINCIPLE LA ID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETR O PRODUCTS PVT. LTD [2010] 322 ITR 158 (SC) ARE SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE CIT(A) WHILE DELETING THE IMPUGNED PENALTY. THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.05.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH MAY, 2017 RKK 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR