DCIT, Coimbatore V. Core Carbons P Ltd., Coimbatore

ITA 1378/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4878 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND MADHUKAR BHUSARI
• Assessee Lawyers: S SRIDHAR
• Keywords: Wrong claim; Revised return
• Section: 14A; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , .. ' #$, & '( BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.1378/MDS/2015 * +* / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2, 63-A, RACE COURSE ROAD, COIMBATORE. V. M/S CORE CARBONS PVT. LTD., 91, KRISHNA COLONY, SINGANALLUR, COIMBATORE 641 005. PAN : AABCC 2663 B (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : DR. MILIND MADHUKAR BHUSARI, CIT /0-. 1 2 / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE ' 1 3& / DATE OF HEARING : 15.03.2017 45+ 1 3& / DATE OF PRONOUNCEMENT : 20.04.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, COIMBA TORE, DATED 20.03.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-12, DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOM E-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.1378/MDS/15 2. DR. MILIND MADHUKAR BHUSARI, THE LD. DEPARTMENTA L REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF MANUFACTURING AND SALE OF ACTIVATED CAR BON, WHICH IS USED IN INDUSTRIAL APPLICATIONS. DURING THE YEAR U NDER CONSIDERATION, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT. THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S, FOUND THAT THE ASSESSEE COMMENCED PRODUCTION FROM 25.11.1999 A ND THE QUALIFYING TEN YEARS PERIOD COMMENCES FROM THE ASSE SSMENT YEAR 2000-01 AND ENDS WITH ASSESSMENT YEAR 2009-10. THE REFORE, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE I S NOT ELIGIBLE FOR ANY DEDUCTION UNDER SECTION 10B OF THE ACT. MOREOV ER, THE ASSESSEE WAS APPROVED AS 100% EXPORT ORIENTED UNIT ON 16.03.2005. THEREFORE, THE ASSESSEE IS ELIGIBLE F OR DEDUCTION UNDER SECTION 10B OF THE ACT FROM THE ASSESSMENT YEAR 200 5-06 TILL 2009- 10. THEREFORE, THE CLAIM MADE BY THE ASSESSEE FROM ASSESSMENT YEAR 2010-11 IS A WRONG CLAIM. THIS WAS ALSO ACCEP TED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S THAT THE CLAIM WAS MADE DUE TO MISINTERPRETATION OF AMENDMEN T MADE TO SECTION 10B OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 10B OF THE ACT 3 I.T.A. NO.1378/MDS/15 TO THE EXTENT OF ` 14,31,84,730/-. SINCE THE WRONG CLAIM WAS MADE, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) F OUND THAT THE ASSESSEE HAS NOT FILED ANY INACCURATE PARTICULARS. WHEN THE MISTAKE POINTED OUT TO THE ASSESSEE DURING THE ASSE SSMENT PROCEEDINGS, THE ASSESSEE ACCEPTED THE MISTAKE AND FILED REVISED RETURN WITHDRAWING THE CLAIM UNDER SECTION 10B OF T HE ACT. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN DEL ETING THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE LD. D.R. PLAC ED RELIANCE ON THE JUDGMENT OF APEX COURT IN MAK DATA P. LTD. V. C IT IN CIVIL APPEAL NO.9772 OF 2013 AND ALSO JUDGMENT OF DELHI H IGH COURT IN CIT V. ZOOM COMMUNICATION (P.) LTD. (2010) 327 ITR 510. 3. ON THE CONTRARY, SHRI S. SRIDHAR, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS 100% EXPOR T ORIENTED UNIT AND THE SAME WAS APPROVED AS SUCH BY THE JOINT DEVELOPMENT COMMISSIONER ON 16.03.2005. ACCORDING TO THE LD. C OUNSEL, THE ASSESSEE WAS UNDER THE IMPRESSION THAT IT WAS ELIGI BLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT FOR A PERIOD OF TEN CO NSECUTIVE YEARS FROM THE YEAR IN WHICH THE ASSESSEE COMMENCED THE P RODUCTION. REFERRING TO FINANCE ACT, 2009, THE LD.COUNSEL SUBM ITTED THAT THE 4 I.T.A. NO.1378/MDS/15 SUNSET CLAUSE FOR UNITS IN FREE TRADE ZONES WAS EXT ENDED FROM THE ASSESSMENT YEAR 2010-11 TO ASSESSMENT YEAR 2011-12. THEREFORE, ACCORDING TO THE LD. COUNSEL, THERE WAS A MISCONCEP TION OF PROVISIONS OF SECTION 10A AND 10B OF THE ACT IN VIE W OF FINANCE ACT, 2009. AFTER SEEING THE BOARDS CIRCULAR IN CIRCUL AR NO.1 OF 2005, THE ASSESSEE WITHDREW THE CLAIM MADE UNDER SECTION 10B OF THE ACT. THE ASSESSEE WAS INITIALLY ELIGIBLE FOR EXEMP TION UNDER SECTION 10B OF THE ACT. PROVISO TO SECTION 10B(1) OF THE A CT WAS AMENDED TWICE ONCE BY FINANCE ACT, 2008 AND ONCE BY FINANCE ACT, 2009. THE ASSESSEE ALSO MADE THE CLAIM TILL ASSESSMENT YE AR 2011-12 ONLY. 4. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTE D THAT THE UNION FINANCE MINISTER HAS ALSO CLARIFIED ON THE FL OOR OF PARLIAMENT THAT THE SUNSET CLAUSE FOR CLAIMING DEDUCTION UNDER SECTION 10A AND 10B OF THE ACT WOULD BE EXTENDED FOR ONE MORE Y EAR. IN VIEW OF THE CLARIFICATION MADE BY THE UNION FINANCE MINISTE R ON THE FLOOR OF PARLIAMENT, THE ASSESSEE WAS UNDER THE BONA FIDE IMPRESSION THAT IT IS ELIGIBLE FOR EXEMPTION UNDER SECTION 10B OF THE ACT TILL 31.03.2015. HOWEVER, IN VIEW OF THE SUNSET CLAUSE, THE ASSESSEE RESTRICTED THE CLAIM UPTO THE YEAR 2011-12. THE LD .COUNSEL FURTHER 5 I.T.A. NO.1378/MDS/15 SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE D ETAILS OF THE INCOME AND ALSO MADE CLAIM UNDER SECTION 10B OF THE ACT. ACCORDING TO THE LD. COUNSEL, MERELY BECAUSE THE AS SESSEE MADE A CLAIM AS PER THE STATUTORY PROVISION, THAT CANNOT B E A REASON FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 5. REFERRING TO SECTION 271(1)(C) OF THE ACT, THE L D.COUNSEL FOR THE ASSESSEE SUBMITTED THAT PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT CAN BE IMPOSED ONLY WHEN THE ASSESSEE HAS FURNI SHED INACCURATE PARTICULARS OF INCOME OR CONCEAL ANY PAR T OF ITS INCOME. IN THIS CASE, ACCORDING TO THE LD. COUNSEL, IT IS N OBODYS CASE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME. THE ENTIRE DETAILS OF SOURCE OF INCOME WERE ADMITTEDLY FURNISHED BEFORE THE ASSESSING OFFICER. IT IS ALSO NOBODYS CASE TH AT THE ASSESSEE HAS CONCEALED ANY PART OF INCOME. THEREFORE, THE C LAIM MADE BY THE ASSESSEE FOR EXEMPTION UNDER SECTION 10B OF THE ACT CANNOT BE CONSTRUED TO BE FURNISHING INACCURATE PARTICULARS O R CONCEALING ANY PART OF INCOME OF THE ASSESSEE. THEREFORE, ACCORDI NG TO THE LD. COUNSEL, THE CIT(APPEALS) HAS RIGHTLY DELETED THE P ENALTY LEVIED BY THE ASSESSING OFFICER. THE LD.COUNSEL PLACED HIS R ELIANCE ON THE 6 I.T.A. NO.1378/MDS/15 JUDGMENT OF APEX COURT IN CIT V. RELIANCE PETROPROD UCTS (P.) LTD. (2010) 322 ITR 158. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF T HE ACT MAINLY ON THE GROUND THAT THE ASSESSEE HAS FILED INACCURATE P ARTICULARS OF INCOME BY CLAIMING DEDUCTION UNDER SECTION 10B OF T HE ACT, WHICH IS OTHERWISE NOT ALLOWABLE FOR EXEMPTION UNDER SECT ION 10B OF THE ACT. THE ASSESSING OFFICER PLACED RELIANCE ON THE JUDGMENT OF APEX COURT IN MAK DATA P. LTD. (SUPRA). 7. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF A PEX COURT IN MAK DATA P. LTD. (SUPRA). IN THE CASE BEFORE AP EX COURT, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE INVESTED IN SHARES. THE ASSESSEE HAS ALSO OFFERED THE INVESTMENT IN SHARES TO THE EXTENT OF ` 40.74 LAKHS FOR TAXATION. THE ASSESSING OFFICER AS SESSED THE INVESTMENT IN SHARES UNDER THE HEAD INCOME FROM OT HER SOURCES AND ALSO INITIATED PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE ACT. IN THOSE FACTUAL CIRCUMSTANCES, THE APEX COUR T FOUND THAT THE SURRENDER OF INCOME WAS NOT VOLUNTARY AND THE SAME WAS MADE IN VIEW OF DETECTION MADE BY THE ASSESSING OFFICER IN THE COURSE OF 7 I.T.A. NO.1378/MDS/15 SEARCH PROCEEDINGS. THE SURVEY PROCEEDING WAS CON DUCTED MORE THAN TEN MONTHS BEFORE THE ASSESSEE FILED THE RETUR N OF INCOME. THE APEX COURT FOUND THAT HAD IT BEEN INTENTION OF THE ASSESSEE TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOU LD HAVE FILED RETURN OF INCOME DECLARING THE INCOME INCLUDING THE AMOUNT , WHICH WAS SURRENDERED LATER IN THE COURSE OF ASSESSMENT PROCE EDING. THEREFORE, THE APEX COURT FOUND THAT THE PENALTY WA S RIGHTLY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 8. IN THE CASE BEFORE US, IT IS NOT A CASE OF UNEAR THING THE INCOME DURING THE COURSE OF SEARCH OR SURVEY PROCEE DING. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT BY FURNISHING ALL THE PARTICULARS OF INCOME. CLAIM UN DER SECTION 10B OF THE ACT IS A STATUTORY CLAIM UNDER THE SCHEME OF IN COME-TAX ACT. THE ASSESSING OFFICER FOUND THAT THE MANUFACTURING ACTIVITY OF THE ASSESSEE WAS COMMENCED FROM THE ASSESSMENT YEAR 200 0-01. THEREFORE, THE ASSESSEE, AT THE BEST, CAN MAKE CLAI M UNDER SECTION 10B OF THE ACT FROM THE ASSESSMENT YEAR 2000-01 TO 2009-10. THE ASSESSING OFFICER HAS ALSO FOUND THAT THE ASSESSEE OBTAINED APPROVAL AS 100% EXPORT ORIENTED UNIT ON 16.03.2005 . THEREFORE, THE ASSESSEE CAN CLAIM ONLY FROM ASSESSMENT YEAR 20 05-06 TILL 8 I.T.A. NO.1378/MDS/15 2009-10. THE ASSESSEES MAIN CONTENTION IS THAT TH ERE ARE TWO AMENDMENTS TO SECTION 10B OF THE ACT ONE MADE IN TH E YEAR 2008 AND ANOTHER IN THE YEAR 2009. IT IS NOT IN DISPUTE THAT THE SUNSET CLAUSE FOR EXEMPTION WAS EXTENDED. IN VIEW OF THE CONFUSION IN THE MIND OF TAXPAYER AND OFFICERS, THE CBDT ALSO CLARIF IED BY ISSUING CIRCULAR. THEREFORE, IT IS A CASE OF MISUNDERSTAND ING THE STATUTORY PROVISION BY THE ASSESSEE AND THE OFFICERS. THE AS SESSEE UNDERSTOOD THE PROVISION OF EXEMPTION UNDER SECTION 10B OF THE ACT IN A PARTICULAR MANNER AND THE ASSESSING OFFICER HA S UNDERSTOOD THE SAME IN ANOTHER MANNER. 9. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF D ELHI HIGH COURT IN ZOOM COMMUNICATION (P.) LTD. (SUPRA). THE DELHI HIGH COURT AFTER CONSIDERING THE JUDGMENT OF APEX COURT IN RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA), HAS OBSERVED AT PA RA 19, AS FOLLOWS:- 19. IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCUR ATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT C ANNOT BE DISPUTED THAT THE CLAIM MADE BY THE ASSESSEE NEEDS TO BE BONA FIDE . IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALA FIDE , EXPLANATION 1 TO SECTION 271(1) WOULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. 9 I.T.A. NO.1378/MDS/15 10. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF APEX COURT IN RELIANCE PETROPRODUCTS (P) LTD. (SUPRA). IN THE CASE BEFORE APEX COURT, THE ASSESSEE-COMPANY CLAIMED INTEREST EXPEND ITURE AS DEDUCTION. HOWEVER, THE ASSESSING OFFICER DISALLO WED THE CLAIM OF THE ASSESSEE AND MADE ADDITION. THE ASSESSEE CLAIM ED INTEREST EXPENDITURE ON THE LOAN BORROWED BY IT FOR PURCHASI NG SOME IPL SHARES. THE ASSESSEE DID NOT EARN ANY INCOME BY WA Y OF DIVIDEND FROM THOSE SHARES. THE ASSESSEE CLAIMED DISALLOWAN CE OF EXPENDITURE UNDER SECTION 14A OF THE ACT. THE ASSE SSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT ENTIRE DETAILS WE RE GIVEN IN WRITING AND THERE WAS NO CONCEALMENT OF INCOME NOR ANY INAC CURATE PARTICULARS OF SUCH INCOME WERE FURNISHED. IN THOS E FACTUAL CIRCUMSTANCES, THE APEX COURT HELD THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMO UNT TO INACCURATE PARTICULARS. 11. MOREOVER, THERE WAS A REAL CONFUSION AS STATED ABOVE IN VIEW OF EXTENSION OF SUNSET CLAUSE AND AMENDMENT MA DE IN FINANCE ACT, 2008 AND 2009. THEREFORE, THE CLAIM M ADE BY THE 10 I.T.A. NO.1378/MDS/15 ASSESSEE BEING A BONA FIDE ONE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS RIGHTLY DELETED T HE PENALTY LEVIED BY THE ASSESSING OFFICER. AS FOUND BY THE APEX CO URT IN RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA), MERE MAKING A CLAI M UNDER SECTION 10B OF THE ACT AFTER FURNISHING ALL THE PARTICULARS OF INCOME, CANNOT BE A REASON FOR CONCLUDING THAT THE ASSESSEE HAS FU RNISHED INACCURATE PARTICULARS OR CONCEALED ANY PART OF INC OME. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SA ME IS CONFIRMED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 20 TH APRIL, 2017 AT CHENNAI. SD/- SD/- ( . . ' #$ ) ( . . . ) (D.S. SUNDER SINGH) (N.R.S. GANESAN) & / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 20 TH APRIL, 2017. KRI. 1 /3#8 98+3 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. ' :3 () /CIT(A)-1, COIMBATORE 4. ' :3 /CIT-1, COIMBATORE 5. 8; /3 /DR 6. * < /GF.