Sai Enterprise, Ahmedabad V. The Income Tax Officer, Ward-3(1)(5), Baroda

ITA 1623/AHD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9030 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL R SHAH
• Section: 271(1)(c); 143(3); 5(2); 80IA

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.1013, 1623 AND 1624/AHD/2016 / ASSTT. YEAR: 2008-09, 2009-10 AND 2010-11 M/S.SAI ENTERPRISES FF-1, SHREEJI COMPLEX OPP: WATER TANK KARELIBAUG VADODARA 390 018. PAN : ABJFS 6241 F VS. ITO, WARD-5(2) VADODARA. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH, AND KINJAL SHAH, AR REVENUE BY : SHRI VINOD TANWANI, SR.DR ! '#$ % &' / DATE OF HEARING : 09/07/2019 ()* % &' / DATE OF PRONOUNCEMENT: 09/07/2019 ,- / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: PRESENT THREE APPEALS ARE DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST ORDERS OF THE LD.CIT(A) DATED 27.2 .2014, 12.4.2016 AND 12.4.2016 PASSED IN THE ASSTT.YEAR 20 08-09, 2009- 10 AND 2010-11 RESPECTIVELY. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.4,25,030/-, R S.18,30,060/- AND RS.12,74,580/- IN THE ASSTT.YEARS 2008-09 TO 20 10-11 ITA NO.1013/AHD/2016 2 RESPECTIVELY, WHICH WERE IMPOSED BY THE AO UNDER SE CTION 271(1)(C) OF THE INCOME TAX ACT. 3. FACTS ON ALL VITAL POINTS ARE COMMON IN ALL THES E ASSESSMENT YEARS. FOR THE FACILITY OF REFERENCE, WE TAKE UP T HE FACTS FROM THE ASSTT.YEAR 2009-10, BECAUSE ON THE BASIS OF FINDING OF THE ASSTT.YEAR 2009-10, ASSESSMENT WAS REOPENED IN THE ASSTT.YEAR 2008-09, AND THE ASSESSMENT ORDER WAS PASSED ON 30. 8.2013 UNDER SECTION 143(3) R.W.S. 147 OF THE ACT, WHEREAS ASSESSMENT IN THE ASSTT.YEAR 2009-10 WAS FRAMED UNDER SECTION 143 (3) ON 19.12.2011. 4. BEFORE ADVERTING TO THE FACTS LEADING TO IMPOSITI ON OF PENALTY IN ALL THESE THREE YEARS, IT HAS BEEN BROUGHT TO OU R NOTICE THAT THE APPEAL IN THE ASSTT.YEAR 2008-09 IS TIME BARRED BY 10 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. IT HAS ALSO FILED AFFIDA VIT OF SHRI ALPESH GUNVANTRAI SHAH WHO IS PARTNER OF M/S.SAI ENTERPRIS ES. ACCORDING TO THE ASSESSEE, THE LD.CIT(A) HAS DECIDED THE APPE AL ON 25.1.2016 AND ORDER WAS RECEIVED ON 12.2.2016. THE APPEAL WAS TO BE FILED BY 22.4.2016, BUT SOMEHOW THE CHIEF ACC OUNTANT OF THE ASSESSEE-FIRM WAS OUT OF TOWN ON SOCIAL-CUM-RELIGIO US FUNCTION, AND HE HAS PUT THE RELEVANT PAPERS IN DRAWER. THER EAFTER, THERE WERE 5 DAYS VACATION AND THE OFFICE WAS CLOSED. ON ACCOUNT OF THIS, APPEAL BECAME TIME BARRED BY 10 DAYS. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, WITH THE ASSISTANC E OF THE LD.REPRESENTATIVES, WE ARE THE OPINION THAT THE ASS ESSEE HAS BEEN PREVENTED BY SUFFICIENT REASONS FOR NOT PRESENTING THE APPEAL BEFORE THE TRIBUNAL. THEREFORE, WE CONDONE THE MIN OR DELAY OF 10 DAYS IN FILING THE APPEAL. NOW, WE TAKE THE APPEAL ON MERIT. ITA NO.1013/AHD/2016 3 5. BRIEF FACTS OF THE CASE ARE THAT ACCORDING TO THE ASSESSEE IT WAS ENGAGED IN DEVELOPMENT OF INDUSTRIAL PARK AND C LAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF INCOME FROM DEVELOPMENT OF INDUSTRIAL PARK SCHEME 2008 NOTIFIED UNDER SECTION 80IA(4)(III) BY THE DEPARTMENT OF REVENUE, CBDT VIDE NOTIFICATION NO.SO.50(E) DATED 8.1.2008. SUBSEQUEN TLY, AMENDED VIDE NOTIFICATION NO.S.O.1605(E) DATED 2.7.2008. A CCORDING TO THE AO, THE ASSESSEE HAS ONLY MADE AN APPLICATION TO TH E CBDT, BUT ITS PROPOSAL FOR DEVELOPMENT OF INDUSTRIAL PARK WAS NOT ACCEPTED AND NOTIFIED BY THE CBDT. HENCE, THE ASSESSEE WAS N OT ENTITLED FOR CLAIMING DEDUCTION UNDER SECTION 80IA(4). IT H AS CLAIMED DEDUCTION OF RS.16,99,120/- IN THE ASSTT.YEAR 2008- 09, RS.59,22,530/- IN THE ASSTT.YEAR 2009-10 AND RS.41, 25,775/- IN THE ASSTT.YEAR 2010-11. THE LD.COUNSEL FOR THE ASS ESSEE DURING THE COURSE OF HEARING SUBMITTED A LIST OF EVENTS WH ICH READ AS UNDER: 1) INDUSTRIAL PARK SCHEME STARTED ON 16 -8-2007 2) APPL. TO C B D T FOR NOTIFICATION OF SCHE ME 27-12-2007 BY C B D T. 3) I.T. RETURN FILED STATING CLAIM AND OTHER BASIC DETAILS FOR 27-9-2009 ORDER U/S. 143( 1) WAS PASSED 4) NOTICE U/S. 143(2) WAS ISSUED DATED 18-8- 2010 & FURTHER DETAILS FURNISHED FOR CLAIM OF EXEMPTION U/S.80IA (4)(III) & FURTHER DETAILS WERE SUBMITTED 9-11-2011 5) ASSESSMENT ORDER DATED U/S. 143(3) PASSED DATED 19-12-2011 COMPUTING TOTAL INCOME OF RS.59,22,530 6) SHOW CAUSE NOTICE OF PENALTY U/S.271(L)(C ) FOR BOTH OFFENCE IE. 19-12-2011 'HAVE FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME. 18-3-2014 7) PENALTY U/S.271(L)(C) PASSED ON 20 -3-2015 PENALTY LEVIED FOR 'FURNISHING INACCURATE PARTICUL ARS OF INCOME' RS. 18,30,062 8) APPEAL TO CIT(A)-3, BARODA 7-4-2015 9) PROCEEDING WITH C B D T CONTINUED & FINAL 13-5-2014 REJECTION ORDER OF C B D T IS OF 10) ORDER OF CIT(A) CONFIRMING PENALTY DATED 12 -4-2016 11) ORDER OF CIT(A) RECEIVED ON 13-5-2016 12) APPEAL TO HON.TRIBUNAL AGAINST PENALTY FILED O N 17-6-2016 ITA NO.1013/AHD/2016 4 13) ORDER OF HON. TRIBUNAL IN QUANTUM APPEAL 6-9-2016 IN THE CASE OF SAI ENTERPRISE VS. ITO; WARD 5(2) B ARODA ITA NO. 1482/AHD/2013 FOR A.Y.2009-10 'D' BENCH, AHMEDABAD 14) COPY OF ORDER OF HON.HIGH COURT IN THE CAS E OF 11-9-2017 SAI ENTERPRISE VS. UNION OF INDIA & 4 IN SP.CIVIL APPLICATION NO. 18098 OF 2016 IS DATED SETTING ASIDE REJECTION ORDER OF CBDT OF 13-5-2014 6. ACCORDING TO THE ASSESSEE THE SCHEME WAS STARTED IN AUGUST,2008. THE ASSESSEE FILED AN APPLICATION ON 27.12.2007. IT HAS FILED RETURN ON 27.9.2008 IN THE ASSTT.YEAR 200 9-10. ACCORDING TO THE ASSESSEE, WHEN RETURN UNDER SECTIO N 139(1) WAS FILED FOR THE ASSTT.YEAR 008-09, I.E. 12.9.2008 ITS APPLICATION FOR SANCTION OF CLAIM FOR DEVELOPMENT OF INDUSTRIAL PAR K WAS PENDING WITH CBDT AND IT WAS HOPEFUL OF GETTING APPROVAL. THEREFORE, IT HAS CLAIMED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. IT HAS NOT FURNISHED INACCURATE PARTICULARS, RATHER IT HAS DISCLOSED ALL THE DETAILS. THE DEDUCTION COULD NOT BE GRANTED TO THE ASSESSEE BECAUSE ULTIMATELY ITS PROPOSAL WAS NOT APPROVED BY THE CBDT. HAD THE ASSESSEE NOT MADE CLAIM AND ITS SCHEME WAS GOT APPROVED, THEN IT WOULD BE PROHIBITED TO MAKE SUCH CLAIM. HE ALSO POINTED OUT THAT ORDER OF THE CBDT WAS SET ASI DE BY THE HONBLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICA TION NO.18098 OF 2016. THE BOARD HAS ULTIMATELY REJECTED ITS APPLICA TION ON 13.5.2014. IT IS A SUBSEQUENT DEVELOPMENT I.E. AFT ER ASSESSMENT ORDER PASSED IN THESE ASSESSMENT YEARS. ON THE STR ENGTH OF THE ABOVE, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE TO FU RNISH ANY INACCURATE PARTICULARS OF INCOME OR CONCEAL THE INC OME. 7. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.CIT(A). HE SUBMITTED THAT THE ASSESSEE WAS WELL AWARE ABOUT ITS ILLEGIBILITY FOR MAKING SUCH CLAIM. IT WAS VER Y SPECIFIC THAT ITA NO.1013/AHD/2016 5 UNLESS CBDT APPROVES ITS CLAIM IT CANNOT MAKE A CLA IM UNDER SECTION 80IA(4)(III) OF THE ACT. HE ALSO EMPHASISE D THAT IN THE RETURN OF INCOME THE ASSESSEE HAS NOT MADE DISCLOSU RE TO THIS EFFECT THAT ITS APPLICATION FOR APPROVAL OF THE SCH EME IS PENDING WITH THE CBDT. 8. SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 HAS D IRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTINENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THE N, THE AMOUNT ITA NO.1013/AHD/2016 6 ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 9. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UN DER THIS SECTION CAN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FE ATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCO ME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HA S CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUT ORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEE MING FICTION, BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATE S TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO T HE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE A SSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE AS SESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEA L); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS, TO PROVE THAT S UCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL T HE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOT AL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD COME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT ITA NO.1013/AHD/2016 7 EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THESE T WO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWAN CE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SEC TION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 10. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE F ACTS OF THE PRESENT CASE. COMPUTATION OF INCOME FOR THE ASSTT. YEAR 2009-10 HAS BEEN PLACED ON PAGE NO.2 OF THE PAPER BOOK. IN THIS COMPUTATION, THE ASSESSEE HAS CLAIMED DEDUCTION UND ER CHAPTER VIA BY OBSERVING THAT INDUSTRIAL UNDERTAKING STARTE D ON 16.8.2007. NOW THIS DEDUCTION WAS DISALLOWED TO THE ASSESSEE O N THE GROUND THAT ITS INDUSTRIAL UNDERTAKING WAS NOT APPROVED BY THE CBDT. THIS PROPOSAL APPEARS TO HAVE BEEN STILL PENDING BE CAUSE THE ASSESSEE PURSUED THE MATTER WITH THE CBDT. ITS PRO POSAL WAS REJECTED ON 13.5.2014, BUT THE ASSESSEE HAS CHALLEN GED SUCH REJECTION BEFORE THE HONBLE GUJARAT HIGH COURT BY WAY OF SCA. ITS APPLICATION WAS ALLOWED ON 11.9.2017. THE LD.C OUNSEL FOR THE ASSESSEE WAS UNABLE TO POINT OUT THE STATUS OF THE ASSESSEES PROPOSAL BEFORE THE CBDT AFTER THE DECISION OF THE HONBLE GUJARAT HIGH COURT. IT APPEARS THAT THE ASSESSEE WAS PRIMA FACIE OF THE VIEW THAT ITS SCHEME WOULD BE APPROVED AND IT WILL BE ENTITLED FOR DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. WHEN T HE ASSESSMENT ITA NO.1013/AHD/2016 8 PROCEEDINGS WERE GOING ON, ITS PROPOSAL WAS PENDING BEFORE THE CBDT. THIS FACT WAS IN THE KNOWLEDGE OF THE DEPART MENT. AS FAR AS DISALLOWANCE OF THE DEDUCTION CLAIMED BY THE ASS ESSEE IN THE QUANTUM PROCEEDING IS CONCERNED, SINCE THE ASSESSEE FAILED TO FULFILL THE REQUISITE CONDITION THAT DEDUCTION HAS TO BE DISALLOWED, BUT FOR THE PURPOSE OF PENALTY, WE HAVE TO ASCERTAI N WHETHER A DELIBERATE EFFORT WAS MADE BY THE ASSESSEE FOR WITH HOLDING SUCH INFORMATION OR FURNISHING INACCURATE PARTICULARS, W HICH WOULD LEAD TO CONCEALMENT OF INCOME. TO OUR MIND, THE ASSESSE E HAS MADE A CLAIM ANTICIPATING SANCTION OF SCHEME BY THE CBDT AN D IT HAS DISCLOSED THIS FACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT DOES NOT DESERVE TO BE VISITED WITH PENALTY IN T HE ABOVE FACTS AND CIRCUMSTANCES. THEREFORE, WE ALLOW ALL THREE A PPEALS OF THE ASSESSEE AND DELETE THE IMPUGNED PENALTY. 11. IN THE RESULT, ALL THREE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 9 TH JULY, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER