The ITO, Ward-4(4), Ahmedabad V. The Madhu Industries Ltd, Ahmedabad

ITA 1733/AHD/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1891 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MADHUSUDAN
• Assessee Lawyers: SUNIL H TALATI
• Keywords: Wrong claim; Difference of opinion; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) AND SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER DATE OF HEARING : 20/1/2011 DRAFTED ON: 25/1/2 011 ITA NO.1733/AHD/2009 ASSESSMENT YEAR : 2003-04 INCOME TAX OFFICER WARD-4(4) AHMEDABAD VS. MADHU INDUSTRIES LTD. 39, PHASE-I, GIDC ESTATE VATVA AHMEDABAD PAN/GIR NO. : AAABM 0027D ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI K.M. MADHUSUDAN, SR. D.R. RESPONDENT BY: SHRI SUNIL H. TALATI O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VIII, AHMEDA BAD DATED 11/02/2009 PASSED FOR ASSESSMENT YEAR 2003-04 AGAINST THE CANCELLATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT OF RS.11,74,593 /-. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG PENALTY ORDER PASSED U/S.271(1)(C) OF THE I.T.ACT DATED 28/01/2008 AND T HE ASSESSMENT ORDER U/S.143(3) OF THE I.T.ACT DATED 27/03/2006 WERE THA T THE ASSESSEE-COMPANY DURING THE YEAR WAS IN THE BUSINESS OF MANUFACTURIN G OF UPS. THERE WAS AN ADDITION BY DISALLOWANCE OF DEDUCTION U/S.80IA OF T HE I.T.ACT. THE ASSESSEE HAS CLAIMED THE DEDUCTION OF RS.31,96,173/- U/S.80- IA OF THE I.T.ACT. HOWEVER, IT WAS NOTED BY THE ASSESSING OFFICER THAT THERE WAS A LOSS OF RS.2,51,18,916/- FROM THE MANUFACTURING ACTIVITY OF THE ASSESSEE. THE INCOME WAS DECLARED BECAUSE THE ASSESSEE HAS EARNED DEPB I NCOME WHICH WAS ITA NO. 1733/AHD/2009 ITO VS. MADHU INDUSTRIES LTD. ASST.YEAR - 2003-04 - 2 - ALLEGEDLY ADJUSTED AGAINST THE LOSS. AS PER ASSE SSING OFFICER, FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.80-IA OF THE I.T.ACT PROF IT AND GAINS SHOULD BE DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE ASS ESSING OFFICER HAS COMPUTED THE LOSS AFTER EXCLUDING THE DEPB INCOME, ALSO OTHER INCOME AND THEREUPON HE HAS CONCLUDED THAT THE BENEFIT U/S.80I A OF THE I.T.ACT WAS NOT AVAILABLE TO THE ASSESSEE. THE SAID DISALLOWANCE WAS THE BASIS OF LEVY OF THE PENALTY U/S.271(1)(C) OF THE I.T.ACT. DURING THE COURSE OF PENALTY PROCEEDINGS, IT WAS CONTESTED THAT THE CLAIM WAS MA DE BY TREATING THE ASSESSEE AS AN INDUSTRIAL UNIT ENGAGED IN THE MANUFACTURIN G OF A PRODUCT, HENCE, THAT CLAIM WAS A BONA FIDE CLAIM, HOWEVER, DUE TO CHANGE OF OPINION, THE SAID CLAIM WAS DISALLOWED. IT WAS ALSO CONTESTED THAT THE CLAI M WAS NOT DISALLOWED DUE TO FURNISHING OF INACCURATE PARTICULARS. THE AO WAS NOT CONVINCED AND HELD THAT THE ASSESSEES LINE OF BUSINESS WAS NOT ELIGIB LE FOR THE SAID CLAIM AND THE DEDUCTION U/S.80-IA OF THE I.T.ACT WAS NOT AVAILABL E TO THE ASSESSEE, THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS, HENCE, LIABLE FOR CONCEALMENT PENALTY. HE HAS REFERRED A DECISION OF HON'BLE HI GH COURT OF GUJARAT IN THE CASE OF A.M. SHAH & CO. VS. CIT REPORTED AT (1 999) 238 ITR 415 (GUJ.), AND THE PENALTY U/S.271(1)(C) OF THE I.T.ACT WAS IM POSED. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE LEARNED CIT(APPEALS) HAS DISCUSSED THE ASSESSEES N ATURE OF BUSINESS AND SEVERAL CASE LAWS AND, THEREAFTER, MADE AN OBSERVAT ION THAT DUE TO CHANGE IN LAW PERTAINING TO THE APPLICABILITY OF SECTION 80-I A OF THE I.T.ACT AND 80-IB OF THE I.T.ACT W.E.F. 01/04/2000, THE SAID MISTAKE WAS COMMITTED. THE APPELLANT WAS CLAIMING THE DEDUCTION U/S.80-IA FRO M ASSESSMENT YEARS 1995-96 TO 1999-2000, HOWEVER, AFTER THE AMENDMENT IN THE PROVISIONS OF SECTION 80-IA, THE APPELLANT WAS REQUIRED TO MAKE T HE CLAIM U/S.80-IB OF THE I.T.ACT AS CONTESTED BEFORE THE LEARNED CIT(APP EALS) IN QUANTUM APPEAL. IT HAS ALSO BEEN CONTESTED THAT THE EXCLUSION OF DEPB INCOME WAS ITA NO. 1733/AHD/2009 ITO VS. MADHU INDUSTRIES LTD. ASST.YEAR - 2003-04 - 3 - ONLY BY PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. STERLING FOODS REPORTED AT (1999) 237 ITR 579(SC). WHICH IT SELF PROVED THAT IT WAS A CONTENTIOUS ISSUE AND THE QUES TION BEFORE THE APEX COURT WAS ON DIFFERENT CONTEXT, HENCE, THE LEVY OF PENALT Y WAS NOT ON REASONABLE GROUND. FINALLY, THE LEARNED CIT(APPEALS) HAS REF ERRED FEW CASE LAWS AND DELETED THE PENALTY. 4. FROM THE SIDE OF THE REVENUE, MR.MADHUSUDAN, SR. DR APPEARED AND ARGUED THAT ONCE THE ASSESSEE WAS AWARE ABOUT THE D ECISION OF THE HON'BLE SUPREME COURT AND THAT WAS THE LAW OF THE LAND, THE N, THE CLAIM OF DEDUCTION WAS DELIBERATELY MADE WITH THE PURPOSE TO CONCEAL T HE CORRECT INCOME. THE LD.DR HAS ALSO PLEADED THAT THE ASSESSEE WAS AWARE ABOUT HIS BUSINESS ACTIVITY AND ALSO AWARE ABOUT THE LOSS INCURRED THEREIN BUT EVEN THEN CLAIMED THE IMPUGNED DEDUCTION. IN SUCH A CIRCUMSTANCES, THE P ENALTY WAS RIGHTLY LEVIED. 5. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, MR. S UNIL H.TALATI APPEARED AND SUPPORTED THE FINDINGS OF THE LEARNED CIT(APPEALS). 6. ON HEARING BOTH THE SIDES AS ALSO ON APPRECIAT ION OF THE FACTS OF THE CASE AS NARRATED HEREINABOVE, ONE THING IS APPARENT THAT TH E ASSESSEE HAS MADE A CLAIM OF DEDUCTION U/S.80-IA, HOWEVER, THAT CLAIM WAS FOUND NOT ADMISSIBLE AS PE R LAW. IT IS ALSO EVIDENT THAT THERE WAS CHANGE IN T HE PROVISIONS OF THE IT ACT AND THE ASSESSEE WAS UNDER THE IMPRESSION THAT HE WOULD BE ENTITLED FOR THE SAID CLAIM AS HE WAS GRANTED THE DEDUCTION IN THE PAST. FROM THE SIDE OF THE ASSESSEE, CERTAIN EVIDENCES AND THE ASSESSMENT RECO RD HAVE BEEN PLACED IN THE FORM OF A COMPILATION BEFORE US TO DEMONSTRATE THAT THE ASSESSEE HAD BEEN ALLOWED THE DEDUCTION IN THE PAST. NEVERTHELESS, THE ISSUE OF THE SAID DISALLOWANCE HAD ALWAYS BEEN A MATTER OF DISPUTE. I T WAS NOT THE CASE OF THE REVENUE THAT AN ALTOGETHER BOGUS CLAIM WAS MADE. RA THER THE FACTS OF THE CASE HAVE REVEALED THAT THE ASSESSEE HAS OFFERED AN EXPL ANATION WHICH WAS ALSO NOT ITA NO. 1733/AHD/2009 ITO VS. MADHU INDUSTRIES LTD. ASST.YEAR - 2003-04 - 4 - FOUND UNTRUE. WE, THEREFORE, HOLD THAT THE QUESTI ON OF LEVY OF CONCEALMENT PENALTY UNDER THE CIRCUMSTANCES AS NARRATED HEREINA BOVE IS COVERED BY A DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIA NCE PETROPRODUCTS (P) LTD. REPORTED AT (2010) 322 ITR 1 58 (SC ) , WHEREIN THE HON'BLE COURT HAS HELD THAT MERELY MAKING OF A CLA IM WHICH MIGHT NOT BE SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING OF INACCURATE PARTICULARS OF INCOME. RESULTANTLY THE FINDINGS OF THE FIRST APPELLATE AUTHORITY ARE HEREBY AFFIRMED AND THE GROUND OF THE REVENUE I S DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 28/ 02 /2011. SD/- SD/- ( G.D. AGARWAL ) ( MUKUL KR. SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL ME MBER AHMEDABAD; DATED 28/ 02 /2011 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VIII, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD ITA NO. 1733/AHD/2009 ITO VS. MADHU INDUSTRIES LTD. ASST.YEAR - 2003-04 - 5 - 1. DATE OF DICTATION..20/1/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/1/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S28.2.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.2.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER