Shelly Bansal, Chandigarh V. DCIT, C-4(1), Chandigarh

ITA 1665/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7505 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 15-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Reasonable cause; Condonation of delay
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHB, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1665/CHD/2017 ASSESSMENT YEAR: 2013-14 SHELLY BANSAL, VS. THE DCIT, H.NO. 1376, SECTOR 40-B C-4(1), CHANDIGARH CHANDIGARH PAN NO. AENPB4396P (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. TEJ MOHAN SINGH (PROXY FOR SH. K.V JAIN) REVENUE BY : SH. MANJIT SINGH DATE OF HEARING : 26/06/2018 DATE OF PRONOUNCEMENT : 11/07/2018 ORDER PER ANNAPURNA GUPTA, A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-2, GURGAON DT. 01/08/2017. 2. AT THE OUTSET IT IS STATED THAT THE APPEAL WAS T IME BARRED BY 28 DAYS FOR WHICH REQUEST FOR CONDONATION OF DELAY WAS FILED BY THE ASSESSEE. THE EXTRACT OF THE SAID REQUEST LETTER IS REPRODUCED HEREUNDER: 1. THE APPLICANT HAS FILED AN APPEAL BEFORE THE HON 'BLE TRIBUNAL AGAINST THE CIT(A) ORDER DATED 01/08/2017 WHICH WAS RECEIVED ON 18/09/2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THEREFORE, THE LAST DATE OF FILING THE APPEAL BEFOR E YOUR HONOUR WAS 17/11/2017. 3. THE SAID APPEAL IS FILED ON 15/12/2017, THUS LATE B Y 28 DAYS. 4. THE ASSESSEE FILED HER RETURN OF INCOME FOR ASSESSM ENT YEAR 2013-14 ON 28/09/2013 WHILE DECLARING 3,40,140 TAXABLE INCOME AFTER AVAILING DEDUCTION U/S 80 IC TO THE TUNE OF RS. 9447043/-. 5. ASSESSEE IS PROPRIETOR OF HIM SHELL INDUSTRIES LOCA TED AT BADDI IS IN THE BUSINESS OF MANUFACTURING OF CORRUGATED BOXES OFFSET PRINTED MATERIAL, DUPLEX PRINTED BOXES ETC. 6. THE ASSESSEE DURING THE FINANCIAL YEAR 2009-10 UNDE RTOOK SUBSTANTIAL EXPANSION. THE FIRST ASSESSMENT YEAR WHILE CLAIMING DEDUCTION U/S 80 IC IS 2007-08. 2 7. DURING THE ASSESSMENT PROCEEDINGS THE LD.AO. WRONGF ULLY RESTRICTED THE DEDUCTION U/S 80IC AT 25% OF THE PROFITS INSTEAD OF 100% OF THE PROFITS BEING ELIGIBLE FOR DEDUCTION DUE TO SUBSTANTIAL EXPANSION OF THE UNDERTAKING BEING CARRIED OUT DURING THE ASSESSMENT YEAR 2010-11. 8. THE ID. CIT(A) VIDE ITS ORDER UPHELD THE ABOVE SAID DISALLOWANCE MADE BY THE ID. AO. 9. THEREAFTER, ON RECEIVING THE LD. CIT(A) ORDER, A PPLICANT HANDED OVER THE COPY OF THE CIT(A) ORDER TO KARTICK SANTRA ONE OF THE CL ERKS WORKING IN THE OFFICE AS ACCOUNTANT FOR TAKING FURTHER APPROPRIATE ACTION IN THE AFORESAID CASE. 10. HOWEVER, KARTICK SANTRA KEPT THE ABOVE MENTIONED OR DER IN THE DRAWER AND FORGOT TO FILE THE APPEAL IN THE ABOVE MENTIONED CA SE. 11. LATER ON WHEN THE APPLICANT ENQUIRED FROM ITS ACCOU NTANT REGARDING THE STATUS OF THE APPEAL TO BE FILED, IT CAME TO LIGHT AT THAT TIME, THAT THE ACCOUNTANT KARTICK SANTRA TO WHOM THE ORDER WAS HANDED OVER HA S NOT FILED THE APPEAL AGAINST THE CIT(A) ORDER. 12. THEREAFTER, THE APPLICANT IMMEDIATELY TOOK STEPS TO FILE THE APPEAL BEFORE THE HON'BLE ITAT. 13. THAT DUE TO THIS OMISSION ON THE PART OF THE ACCOUN TANT, THERE IS A DELAY IN FILING THE APPEAL BY 28 DAYS. 14. EVEN OTHERWISE, ASSESSEE'S CASE IS SQUARELY COVERED BY THE DECISION OF THE HIMACHAL PRADESH HIGH COURT IN THE CASE ITA NO.20/2 015 M/S STOVEKRAFT INDIA ....ASSESSEE VS COMMISSIONER OF INCOME TAX DATED 28 NOVEMBER, 2017, HON'BLE HIGH COURT HAS QUASHED THE ASSESSMENT MADE BY THE A O, WHEREBY SIMILAR ADDITIONS ON THE DENIAL OF 100% DEDUCTION ON THE QU ESTION OF SUBSTANTIAL EXPANSION U/S 80 I C WERE MADE IN VARIOUS OTHER SIM ILAR MATTERS. 15. THAT AS EXPLAINED ABOVE, IT IS HUMBLY SUBMITTED THA T THE DELAY IN FILING THE APPEAL WAS UNINTENTIONAL AND BY REASON BEYOND THE C ONTROL OF THE APPLICANT. 16. THAT THERE BEING NO MALA FIDE INTENTION OF NOT FILI NG THE APPEAL IN TIME, IT IS PRAYED THAT THE DELAY BE CONDONED. IT IS, THEREFORE, RESPECTFULLY PRAYED THAT THE DELA Y BE CONDONED THERE BEING A REASONABLE CAUSE AND IN THE INTEREST OF SUBSTANTIAL JUSTICE, THE APPEAL BE HEARD ON MERITS. 3. REFERRING TO THE SAME ,LD.COUNSEL FOR THE ASSES SEE STATED THAT THE DELAY WAS ATTRIBUTABLE TO THE ACCOUNTANT OF THE ASSESSEE FIRM, TO WHOM IT HAD BEEN GIVEN FOR FILING APPEAL, BUT WHO AFTER KEEPING THE CIT(A) ORDER IN HIS DRAWER, FORGOT TO DO SO. AN AFFIDAVIT OF THE ACCOUNTANT ,AF FIRMING HIS MISTAKE ON OATH, WAS ALSO FILED BEFORE US. LD.COUNSEL FOR THE ASSESS EE PLEADED THEREFORE THAT CONSIDERING THE SMALL PERIOD OF DELAY AND THE UNINT ENTIONAL CIRCUMSTANCES LEADING TO IT, THE DELAY BE CONDONED. THE LD. DR S TATED THAT HE HAS NO OBJECTION IF A FAIR VIEW IS TAKEN. 4. WE HAVE HEARD BOTH THE PARTIES AND AFTER GOING T HROUGH THE CONTENTS OF THE APPLICATION SUPPORTED BY THE AFFIDAVIT FILED BY THE ASSESSEE, WE FIND THAT THE 3 DELAY OF 28 DAYS HAS OCCURRED FOR REASONS BEYOND TH E CONTROL OF THE ASSESSEE. WE FURTHER NOTE THAT NO BENEFIT IS DRAWN BY THE ASS ESSEE IF THE DELAY IS CONDONED NOR IS ANY LOSS VISITED ON THE REVENUE ON ACCOUNT OF THE SAME. FURTHER IT CANNOT ALSO BE SAID THAT ANY VESTED RIGH T STOOD CREATED IN FAVOUR OF THE REVENUE ON ACCOUNT OF THE LATE FILING OF THE AP PEAL BY THE ASSESSEE, WHICH WOULD BE UPSET BY THE CONDONATION OF DELAY. ACCORDI NGLY BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE WE HOLD THAT THE DE LAY OF 28 DAYS HAS OCCURRED FOR REASONS BEYOND THE CONTROL OF THE ASSESSEE AND THE DELAY IS ACCORDINGLY CONDONED.SAID ORDER WAS PRONOUNCED IN THE PRESENCE OF THE PARTIES IN THE OPEN COURT. THE APPEAL WAS THEREAFTER PROCEEDED TO BE HEARD WITH. 5. THE ASSESEE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS IN ITS APPEAL BEFORE US: 2. THAT THE LD. CIT. HAS ERRED ON LAW WHILE INTERP RETING THE PROVISIONS OF THE SECTION 80IC. 3. THAT THE LD. CIT. ERRED IN LAW AS WELL AS ON FACTS OF THE CASE WHILE RESTRICTING THE DEDUCTION TO THE TUNE OF 25% RATHER THAN 100% D EDUCTION U/S 80IC, FROM THE PROFITS OF THE ELIGIBLE BUSINESS UNDERTAKING. SO TH E DISALLOWANCE OF RS. 70,85,282/- MAY PLEASE BE REVERSED. 4. THAT THE LD. CIT. HAS ERRED IN LAW AS WELL AS ON FA CTS WHILE SUSTAINING AN ADDITION OF RS. 3,81,498.75/- OUT OF PROPOSED ADDIT ION OF RS.6,10,398/- ON ACCOUNT OF INTEREST NOT CHARGED ON LOAN AND ADVANCE. SINCE THE REASONABLE INTEREST ON INCOME OF INTEREST FREE ADVANCES BY LD. CIT IS REST RICTED TO 10%, THE ADDITION MAY KINDLY BE DELETED. 6. GROUND NO. 2 AND 3 PERTAIN TO THE ISSUE OF RESTR ICTION OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IC OF THE I NCOME TAX ACT,1961,(HEREINAFTER REFERRED TO AS ACT) TO THE EXTENT OF 25% OF THE ELIGIBLE PROFITS, AS AGAINST THE 100% CLAIMED BY THE ASSESSE E ON ACCOUNT OF SUBSTANTIAL EXPANSION UNDERTAKEN BY IT. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D CLAIMED DEDUCTION U/S 80IC OF THE ACT AMOUNTING TO RS. 94.47,043/- @ 100% OF THE ELIGIBLE PROFITS. THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE, COMMENCED O PERATION/ACTIVITY ON 06.11.2006 AND THE INITIAL ASSESSMENT YEAR THEREFOR E WAS 2007-08. THE ASSESSEE HAD CLAIMED 100% DEDUCTION FROM THE PROFITS, DURING FIRST FIVE ASSESSMENT YEARS. 4 IN THE RELEVANT YEAR UNDER CONSIDERATION I.E. SEVEN TH YEAR FROM COMMENCEMENT OF THE PRODUCTION, THE ASSESSEE HAD AGAIN CLAIMED D EDUCTION U/S 80IC OF THE ACT, @ 100%, FROM THE ELIGIBLE PROFITS CLAIMING THA T SUBSTANTIAL EXPANSION OF THE UNDERTAKING WAS CARRIED OUT DURING THE ASSESSMENT Y EAR 2011-12. THE ASSESSEE RELIED UPON THE JUDGMENT OF THE HON'BLE ITAT, DELHI IN THE CASE OF TIRUPATI LPG INDUSTRIES LTD. VS. DCIT (45 TAXMANN.COM 326) TO INTERPRET THE TERM' 'SUBSTANTIAL EXPANSION' AND 'INITIAL ASSESSMENT YEAR'. THE ASSES SING OFFICER ELABORATELY DISCUSSED THE ISSUE IN THE ASSESSMENT ORDER AND DIS TINGUISHING THE JUDGMENT IN THE CASE OF TIRUPATI INDUSTRIES LTD., RESTRICTED TH E CLAIM OF DEDUCTION TO THE EXTENT OF 25% IN THE RELEVANT ASSESSMENT YEAR, BEING SEVEN TH ASSESSMENT YEAR FROM THE INITIAL ASSESSMENT YEAR 2007-08. 8. LD. CIT(A) UPHELD THE ORDER OF THE AO FOLLOWING THE DECISION OF THE ITAT IN CASE OF HYCRON ELECTRONIC VS. ITO, BADDI IN ITA NO . 798/CHD/2012,DATED 27-05- 15. 9. DURING THE COURSE OF HEARING BEFORE US IT WAS CO MMON STAND OF BOTH THE PARTIES THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDER OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/ S STOVEKRAFT INDIA VS CIT-V AND OTHERS IN ITA NO.20-24/2015 DATED 28-11-17 . 10. WE NOTE THAT THE JURISDICTIONAL HIGH COURT IN T HE AFORESAID DECISION CONSIDERED THE FACTS OF THE SPECIFIC CASE AND IN P ARA 55 CAME TO THE FOLLOWING CONCLUSION:- 55. THUS, IN VIEW OF THE ABOVE DISCUSSION, THESE AP PEALS ARE ALLOWED AND ORDERS PASSED BY THE ASSESSMENT OFFICER AS WELL AS THE APP ELLATE AUTHORITY AND THE TRIBUNAL IN THE CASE OF EACH ONE OF THE ASSESSEES, ARE QUASHED AND SET ASIDE, HOLDING AS UNDER: (A) SUCH OF THOSE UNDERTAKINGS OR ENTERPRISES WHICH WER E ESTABLISHED, BECAME OPERATIONAL AND FUNCTIONAL PRIOR TO 07/01/2003 AND HAVE UNDERTAKEN SUBSTANTIAL EXPANSION BETWEEN 07/01/2003 UPTO 01/04 /2012, SHOULD BE ENTITLED TO BENEFIT OF SECTION 80-IC OF THE ACT, FOR THE PER IOD FOR WHICH THEY WERE NOT ENTITLED TO THE BENEFIT OF DEDUCTION UNDER SECTION 80-IB. (B) SUCH OF THOSE UNITS WHICH HAVE COMMENCED PRODUCTION AFTER 07/01/2003 AND CARRIED OUT SUBSTANTIAL EXPANSION PRIOR TO 01/0 4/2012, WOULD ALSO BE ENTITLED TO BENEFIT OF DEDUCTION AT DIFFERENT RATES OF PERCENTAGE STIPULATED UNDER SECTION 80-IC. 5 (C) SUBSTANTIAL EXPANSION CANNOT BE CONFINED TO ONE EXP ANSION. AS LONG AS REQUIREMENT OF SECTION 80-IC (8) (IX) IS MET, TH ERE CAN BE NUMBER OF MULTIPLE SUBSTANTIAL EXPANSIONS. (D) CORRESPONDINGLY, THERE CAN BE MORE THAN ONE INITIAL ASSESSMENT YEARS. (E) WITHIN THE WINDOW PERIOD OF 07/01/2013 UPTO 01/04/2 012, AN UNDERTAKING OR AN ENTERPRISE CAN BE ENTITLED TO DEDUCTION @100% FOR A PERIOD OF MORE THAN FIVE YEARS. (F) ALL THIS, OF COURSE, IS SUBJECT TO A CAP OF TEN YEARS. [SECTION 80-IC(6)]. (G) UNITS CLAIMING DEDUCTION UNDER SECTION 80-IC SHALL NOT BE ENTITLED TO DEDUCTION UNDER ANY OTHER SECTION, CONTAINED IN CHAPTER VI-A OR SECTION 10A OR 10B OF THE ACT [SECTION 80-IB(5)]. 11. ACCORDINGLY IN VIEW OF THE ABOVE,THE ISSUE IS R EMANDED TO THE AO TO GRANT NECESSARY RELIEF IN ACCORDANCE WITH LAW AS PE R THE RULING OF THE JURISDICTIONAL HIGH COURT. 12. GROUND OF APPEAL NO.2 &3 ARE ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSES. 13. GROUND NO. 4 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE ON ACCOUNT OF INTEREST NOT CHARGED ON LOAN AND ADVANCE S. 14. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED T HAT THE ASSESSEE ON ONE HAND WAS PAYING INTEREST ON BORROWED FUNDS FROM BA NKS AND ON THE OTHER HAND HAD MADE ADVANCES OF RS. 74,98,748/- TO ONE M/S SAN CHIT INDUSTRIES ,WHICH WAS A RELATED PARTY U/S 40A(2)(B), AND THE INTEREST INC OME EARNED ON THIS ADVANCE ,AMOUNTING TO RS. 5,90,135/- , WORKED OUT TO ONLY @ 7.86%. THE AO MADE AN ADDITION OF RS. 6,10,398/- ,BEING INTEREST INCOME C ALCULATED @16% ON THE AMOUNT OF LOAN ADVANCED TO RELATED PARTIES. 15. THE LD. CIT(A) UPHELD THE ORDER OF THE AO STATI NG THAT NO MATERIAL HAD BEEN BROUGHT ON RECORD TO PROVE THAT INTEREST BEARI NG FUNDS HAD NOT BEEN DIVERTED FOR MAKING THE ADVANCES . 16. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE PLEA DED THAT THE ASSESSEE BEING ENTITLED TO CLAIM DEDUCTION OF ITS ENTIRE BUS INESS PROFITS FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT AND THE S AID ADDITION RESULTING IN ENHANCEMENT OF ITS PROFITS , THE SAID ISSUE BE REST ORED TO THE FILE OF THE AO FOR 6 RECONSIDERATION IN THE LIGHT OF THE DECISION OF THE HIGH COURT. IT WAS ALSO PLEADED THAT THE ASSESSEE ALSO BE AFFORDED AN OPPORTUNITY T O ESTABLISH THAT INTEREST BEARING FUNDS HAD NOT BEEN DIVERTED FOR MAKING THE IMPUGNED ADVANCES SINCE ADEQUATE OPPORTUNITY HAD NOT BEEN GIVEN BY THE AUT HORITIES BELOW. 17. LD. DR DID NOT OBJECT TO THE SAME. 18. ACCORDINGLY THE ABOVE ISSUE IS ALSO RESTORED TO THE FILE OF AO WITH THE DIRECTION TO READJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE ASSESSEES CLAIM OF ELIGIBILITY OF 100% DEDUCTION OF PROFITS U/S 80IC ,RESTORED TO IT IN GROUND NO.1 ABOVE. THE ASSESSEE IS FREE TO TAKE UP ITS ALTERNAT E PLEA ALSO OF THERE BEING NO NEXUS BETWEEN THE BORROWED FUNDS AND THE IMPUGNED A DVANCES ,AND IS FREE TO FURNISH ALL EVIDENCES IN SUPPORT.THE AO IS DIRECTED TO GIVE DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.4 RAISED BY THE ASSESSEE IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES 19. AS A RESULT APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11/07/2018 AG COPY TO: THE ASSESSEE, THE RESPONDENT, THE CIT, THE CIT(A), THE DR