The ACIT, Central Circle-1(1), Ahmedabad V. Meghmani Organics Ltd., Ahmedabad

ITA 1410/AHD/2012

• Counselvise Citation: 141020514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 27-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Revised return
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S.S. GODARA , JUDICIAL MEMBER ITA NO . 1 4 10 /AHD/20 1 2 A. Y. 2003 - 04 ACIT, CENTRAL CIRCLE - 1(1) AHMEDABAD VS MEGHMANI ORGANICS LTD, PLOT NO. 183 - 18 4, PHASE - II, GIDC INDUSTRIAL ESTATE, VATVA, AHMEDABAD PAN: AABCM0644E (APPELLANT) (RESPONDENT) REVENUE BY : S HRI DINESH SINGH , SR. D.R. , ASSESSEE(S) BY : SMT. URVASHI SODHAN , A.R. / DATE OF HEARING : 1 4 / 0 8 /201 5 / DATE OF PRONOUNCEMENT: 20 / 0 8 /201 5 / O R D E R PER S.S. GODARA , JUDICIAL MEMBER TH IS REVENUE S APPEAL FOR A.Y. 2003 - 04 , ARISES FROM ORDER OF CIT (A) - I , AHMEDABAD DATED 1 8.04 .201 2 IN APPEAL NO. CIT(A) - I /CC.1(1)/104 / 20 10 - 11 , DELETING PENALTY OF RS. 9,28,650/ - IN PROCEEDINGS U/S. 271(1)(C) OF THE INCOME TAX ACT , 1961, IN SHORT THE ACT . ITA NO. 1 4 10 /AHD/201 2 MEGHMANI ORGANICS LTD FOR A.Y. 2003 - 04 - 2 - 2. THE ASESSEE - COMPANY MANUFACTURERS AND TRADES IN PIGMENT DYES AND AGRO CHEMICALS . IT C L AIMED SEC 80HHC DEDUCTION OF RS . 6,12,12,766/ - INCLUSIVE LOSS FROM EXPORT OF TRADING GOODS AMOUNTIN G TO RS . 91,30,776/ - . IT HAD FILED THE RETURN OF INCOME TO THIS EFFECT ON 29 - 10 - 2003. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE SOUGHT FOR REASON S OF THIS LOSS COM PUTATION. THE ASS ESSEE PLEADED TO HAVE OFFERED NIL INCOME IN PLACE OF NEGATIVE PROFITS. IT WOULD FURTHER STATE THAT AS PER HON BLE APEX COURT IN IPCA LABORATORIES VS. DCIT 266 ITR 521 (SC) DECIDED ON 11 - 03 - 2004, IT WAS FILLING A REVISED COMPUTATION OF SEC. 80HH C DEDUCTION. THE ASSESSING OFFICER MADE THE IMPUGNED DISALLOWANCE IN VIEW OF ASSE SSEE S ADMISSION AND IN ASSESSMENT ORDER DATED 30 - 11 - 2005 TO THIS EFFECT . AND INITIATED P ENALTY PROCEEDINGS U/S. 271(1)(C) ALLEGING CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CIT (A) UPHELD THE A SSESSING OFFICER S ACTION. A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1201 /AHD/2007 DECIDED ON 05 - 03 - 2010 PARTLY ACCEPTED ASSESSEE S CONTENTIONS FOR STATISTICAL PURPOSES . THE ASSESSING OFFICER PASSED A CONSEQUENTIAL ORDER ACCORDING LY COMPUTING SEC. 80HH C DEDUCTIO N AS RS. 5,86,85,837/ - INSTEAD OF THAT CLAIMED OF RS. 6,12,12,766/ - RESULTING IN DISALLOWANCE/ADDITION IN QUESTION OF RS. 25,26,929/ - BEING MADE . QUANTUM PROCEEDINGS APPEAR TO HAVE ATTAINED FINALITY UPTO THIS STAGE . 3. IN THE MEANTIME, THE ASSESSING OFFICER TOOK UP PENALTY PROCEEDINGS . THE ASSESSEE JUSTIFIED AFORESAID DISALLOWANCE/ ADDITION OF RS. 25,26,929/ - TO HAVE ARISEN FROM PART OF INTEREST INCOME AND LOSS QUA SECTION 80HH C DEDUCTION A S BASED ON DIFFEREN T LEGAL INTERPRETATION S OF THE AB OVES T ATED STATUTORY PROVISION . THE ASSESSING OFFICER HEAVILY RELIED ON CH R ONOLOGY OF EVENTS IN QUANTUM PROCEEDINGS AND OBSERVED THAT ASSESSEE S COMPUTATION RESULTING IN ABOVESTATED DISALLOWANCE AMOUNTED TO FURNISHING OF INACCURATE PARTICULARS BY CONCEALING ITS ITA NO. 1 4 10 /AHD/201 2 MEGHMANI ORGANICS LTD FOR A.Y. 2003 - 04 - 3 - TAXABLE INCOME. T HIS RESULTED IN THE IMPUGNED PENALTY BEING IMPOSED AMOUNTING TO RS. 9,28,650/ - QUA ADDITION SUM OF RS. 25,26,929/ - (SUPRA). 4. THE COMMISSIONER OF INCOME TAX(A) HAS ACCEPTED ASSE SSEE S CONTENTIONS AS FOLLOWS: - 2. DURING THE COURSE OF APPELLATE PROCEEDINGS, SHRI D K PARIKH, C.A. APPEARED AND 'RELIED UPON VARIOUS COURT DECISIONS STATING THAT THE DIFFERENCE IN DEDUCTION WAS DUE TO ASSESSEE CLAIMING PROFITS OF ONE OF THE UNITS AS NIL , THOUGH THERE WAS LOSS AND THAT THE CLAIM WAS SUPPORTED BY AUDIT REPORT FILED WITH THE RETURN. 3. IT IS SEEN THAT THE LOSS OF ONE OF THE UNITS WAS NOT REDUCED WHILE CALCULATING 80HHC DEDUCTION, BUT IT HAS NOT BEEN SAID BY THE ASSESSING OFFICER THAT ALL F ACTS WERE NOT DISCLOSED. QUANTUM ADDITION EVEN IF CONFIRMED IN APPEAL DOES NOT BY ITSELF JUSTIFY PENALTY U/S 271(1)(C). THE ASSESSING OFFICER HAS LEVIED THE PENALTY MECHANICALLY WITHOUT TAKING PAINS TO ESTABLISH THAT INACCURATE PARTICULARS WERE FURNISHED W ARRANTING PENALTY. AFTER GOING THROUGH RIVAL SUBMISSIONS, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY OF RS. 9,28,650 U/S.271(1)(C), FOR WHICH RELIANCE IS PLACED UPON HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 WHEREIN IT HAS BEEN HELD THAT 'BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS'. 5 . WE HAVE HEARD BOTH THE PARTI E S AND GONE THROUGH THE CASE FILE. THE REVENUE S ARGUMENT S SE EK RESTRICTION OF THE IMPUGNED PENALTY AS PER CA SE LAW (2010) 327 ITR 510 (DELHI) CIT VS. ZOOM COMMUNICATION REVERSING THE TRIBUNALS DECISION DELETING SEC. 271(1) (C) PENALTY IN CASE OF AN EXPENDITURE CLAIM. THE ASSESSEE SUPPORTS TH E CIT(A) S ORDER AS PER DELHI B ENCH DECI SI ON OF THE T RIBUNAL IN DCIT VS. M/S. INDUSTRIAL ASIA LTD ITA 3617/DEL/2010 DECIDED ON 29 - 09 - 2010 DEALING WITH AN IDENTICAL QUESTION OF SEC. 271(1)(C) PENALTY ARISING F R O M A REVISED RETURN FILED POST FACTO IPCA LABORAT ORY DECISION (SUPRA). IT HOLDS THAT THE VERY RE - ITA NO. 1 4 10 /AHD/201 2 MEGHMANI ORGANICS LTD FOR A.Y. 2003 - 04 - 4 - COMPUTATION OF LOSS AFTER THE ABOVESTATED DECISION OF THE HON BLE APEX COURT IN SEC. 80HHC CLAIM DOES NOT AMOUNT TO A CASE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE REITERATE THAT THE ASSESSEE ALS O F ILED ITS REVISED COMPUTATION AFTER THE ABOVESTATED DECISION. THUS, WE HOLD THAT THE CIT(A) HAS RIGHTLY DELETED THE IMPUGNED PENALTY BY QUOTING CASE LAW OF RELIANCE PETRO - PRODUCTS (SUPRA). THIS SPECIFIC JUDICIAL PRONOUNCEMENT OF THE TRIBUNAL DIS TINGUISHE S THE GENERAL ONE QUOTED AT THE REVENUE S BEHEST (SUPRA) . THE REVENUE S SOLE SUBSTANTIVE GROUND FAILS. THIS REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 20 TH AUGUST , 2015 AT AHMEDABAD. SD/ - SD/ - ( G.D. AGRAW AL ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 20 / 0 8 / 20 1 5 A.K. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD