The ACIT, Circle-6, Ahmedabad V. M/s. Parag Dyestuff, Ahmedabad

ITA 1607/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6369 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Assessee Lawyers: S N SOPARKAR
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND D.K. TYAGI, JUDICIAL MEMBER) ITA NO.1607/AHD/2008 [ASSTT. YEAR : 2004-2005] ACIT, CIR.6 AHMEDABAD. VS. M/S.PARAG DYESTUFF 266-3, PHASE-II, GIDC, VATVA AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PRAKASH DUBEY ASSESSEE BY : SHRI S.N. SOPARKAR O R D E R PER G.D. AGARWAL, VICE-PRESIDENT : THIS APPEAL IS BY THE REVENUES AGAINST THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD DATED 20.02.2008 FOR A.Y.20 04-2005. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REVENUE IS AGAINST THE DELETION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 AMOUNTING TO RS.4,36,821/-. 2. THE FACTS OF THE CASE ARE THAT FOR THE YEAR UNDE R CONSIDERATION THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA AMOUN TING TO RS.12,17,622/-. THE AO NOTICED THAT THE ASSESSEE I S CLAIMING THE BENEFIT OF DEDUCTION UNDER SECTION 80IA SINCE ASSESSMENT YE AR 1993-94 AND THEREFORE THE BENEFIT WOULD BE AVAILABLE ONLY FOR T HE PERIOD OF 10 YEARS I.E. UPTO A.Y.2003-2004. THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSEE. HE EXPLAINED THAT FIRST YEAR IN WHICH TH E BENEFIT UNDER SECTION 80IA ACTUALLY ALLOWED WAS A.Y.1995-96 AND THEREFORE 10 YEARS WOULD COMPLETE IN A.Y.2004-2005 I.E. THE YEAR UNDER CONSI DERATION. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION AND DISALL OWED THE DEDUCTION ITA NO.1607/AHD/2008 -2- CLAIMED UNDER SECTION 80IA. THE ASSESSEE ACCEPTED THE ASSESSMENT ORDER AND DID NOT FILE ANY APPEAL THEREFROM. THE AO ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULAR OF INCOME BY CLAIMING THE DED UCTION UNDER SECTION 80IA WHICH HE WAS NOT ENTITLED TO. DURING THE PENA LTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE DEDUCTION WAS CLAIMED A S PER THE ADVICE OF THE ASSESSEES CHARTERED ACCOUNTANT, SHRI SANJAY S. PAN DYA. THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION AND LEVIED PENALT Y UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS.4,36,821/-. O N APPEAL, THE CIT(A) CANCELLED THE PENALTY WITH THE FOLLOWING FINDINGS: 2.2.4. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, I FIND THAT THE CONTROVERSY IS VERY LIMITED, WHETHER THE C LAIM OF DEDUCTION U/S. 801A WAS AN ERROR OR A DELIBERATE ATTEMPT ON T HE PART OF THE APPELLANT. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THERE IS AN ERROR ON THE PART OF THE C. A OF THE APPELLANT IN C LAIMING THE BENEFIT, WHICH WAS NOT DUE TO THE APPELLANT. THE C A. WHO APPEARED BEFORE THE A. 0. HAS ALSO CONFIRMED THAT T HERE WAS AN ERROR ON HIS PART IN CLAIMING DEDUCTION BY BLINDLY COPYING THE STATEMENT OF INCOME FOR THE IMMEDIATE PRECEDING PRE VIOUS YEAR. IN FACT, FOR THIS REASON ONLY HE DID NOT ISSUE ANY AUD IT REPORT ALONG WITH THE TAX AUDIT IN FORM NO. 10CCB BECAUSE, IT WA S APPARENT THAT THE APPELLANT WAS NOT ELIGIBLE. HOWEVER, AT TH E TIME OF FILING RETURN OF INCOME AND WHILE PREPARING THE STATEMENT OF INCOME OF THE YEAR UNDER CONSIDERATION, THE SAID TACT ESCAPED HIS ATTENTION AND AS PER THE LAST YEAR'S COMPUTATION OF INCOME, H E CLAIMED THE DEDUCTION FOR THE YEAR UNDER CONSIDERATION ALSO. HO WEVER, AT THE TIME OF QUANTUM ASSESSMENT PROCEEDINGS, THE MOMENT OF THIS FACT CAME TO THE NOTICE OF THE APPELLANT, THE APPELLANT HAS ACCEPTED THE SAME TO BE AN ERROR AND THE BONA FIDES OF THE ERROR IS PROVED BY THE FACT THAT THE APPELLANT DID NOT PREFER ANY APPEAL A GAINST THE DENIAL OF THE DEDUCTION IN THE QUANTUM PROCEEDINGS. THEREF ORE, IT CAN BE SAID THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE C. A. CONCERNED HAVING CONFIRMED THAT DUE TO ERROR ON HIS PART THE APPELLANT HAS CLAIMED THE ABOVE DEDUCTION ERRONEOUS LY. IT IS WELL SETTLED THAT THE APPELLANT SHOULD NOT SUFFER BECAUS E OF THE MISTAKE ITA NO.1607/AHD/2008 -3- OR IGNORANCE ON THE PART OF HIS AUTHORIZED REPRESEN TATIVE. 2.2.5 THEREFORE, I AM IN AGREEMENT WITH THE CONTENT IONS PUT FORTH BY THE A.. R. OF THE APPELLANT AND HOLD THAT THE AP PELLANT WAS ACTING BONA FIDELY AND HENCE THE PENALTY CANNOT BE LEVIED. ACCORDINGLY, THE ORDER PASSED BY THE ASSESSING OFFICER U/S.271(1 )(C) OF THE ACT LEVYING THE PENALTY IS HEREBY CANCELLED. 3. THE REVENUE AGGRIEVED WITH THE ORDER OF THE CIT( A) IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE, WE AGREE WITH THE FINDINGS OF THE CIT( A) THAT IT WAS A BONA FIDE ERROR ON THE PART OF THE ASSESSEE OR HIS COUNSEL, AND FOR SUCH BONA FIDE ERROR, PENALTY UNDER SECTION 271(1)(C) OF THE ACT C ANNOT BE LEVIED. MOREOVER, THE ISSUE IS ALSO COVERED IN FAVOUR OF TH E ASSESSEE FROM THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF C IT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) WHEREIN T HEIR LORDSHIP HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE 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 T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY O F FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSE SSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. (EMPHASIS ADDED) THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH ITA NO.1607/AHD/2008 -4- THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULAR S ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRAC T PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. FROM THE ABOVE IT IS EVIDENT THAT THEIR LORDSHIPS H AVE CLEARLY LAID DOWN THAT MERELY AN INCORRECT CLAIM WAS MADE BY THE ASSE SSEE, IT WOULD NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS SO AS TO MAKE THE ASSESSEE LIABLE FOR PENALTY UNDER SECTION 271(1)(C) . IN THIS CASE, THE ASSESSEE HAS ACCEPTED THE BONA FIDE MISTAKE, THAT T OO BASED ON THE ADVICE OF THE ASSESSEES COUNSEL. THEREFORE, IN SUCH SITU ATION NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). IN VIEW OF THE ABO VE, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. (SUPRA) UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON 17 TH JUNE, 2011 SD/- SD/- (D.K. TYAGI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 174-06-2011