Shri Dharmesh Vinodchandra Desai, Surat V. The Income tax Officer,Ward-3(1), Surat

ITA 1756/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85708 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 04-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: K N BHATT
• Keywords: Salary income; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO . 1 756 /AHD/20 1 1 A. Y. 200 4 - 0 5 SHRI DHARMESH VINODCHANDRA DESAI, A - 704, AHSOKA PAVILLION, NEAR KAPA DIA HEALTH CLUB, BHATTAR ROAD, SURAT. PAN: ACCPD 6316Q VS ITO WARD - 3(1), SURAT. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DINESH SINGH , SR. D.R. ASSESSEE(S) BY : SHRI K.N. BHATT , A.R. / DATE OF HEARING : 1 2 / 0 2 /201 5 / DATE OF PRONOUNCEMENT: 20 / 0 2 /201 5 / O R D E R PER MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN A PPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF THE L EA RNED CIT (A) - I I , SURAT , DATED 29.03. 20 11 . THE APPELLANT IS AGGRIEVED BY THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) AMOUNTING TO RS.1,56,746/ - . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 26.12.2006 AND THE PENALTY ORDER U/S.271(1)(C) DATED 27.03.2009 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY DRAWING INCOME FROM SALARY AND SHARE OF PROFIT FROM A FIRM. THE ASSESSEE WAS ALSO RUNNING A PROPRIETARY CONCERN FOR MANUFACTURING OF TEXTILE MACHINES, NAMELY, TWIST ING AND WINDING MACHINE. THE SAID PROPRIETARY CONCERN WAS SITUATED IN THE UNION TERRITORY OF DADRA AND NAGAR HAVELI. THE PROFIT GENERATED FROM THE SAID CONCERN OF ITA NO. 1756 /AHD/201 1 SHRI DHARMESH VINODCHANDRA DESAI VS. ITO WARD - 3(1), SURAT. FOR A.Y. 200 4 - 0 5 - 2 - RS.6,62,025/ - WAS CLAIMED AS DEDUCTION U/S.80IB OF THE IT ACT. THE OBJECTION OF THE AO WAS TH AT THE PRODUCTION WAS NOT STARTED WITHIN THE PRESCRIBED PERIOD. SINCE, THE PROFIT GENERATED FROM SALES WAS NOT AS PRESCRIBED UNDER LAW ; HENCE, THE AO HAS PROPOSED TO DISALLOW THE DEDUCTION U/S.80IB(5) OF ACT. THE AO HAS COMPUTED DISALLOWANCE AT RS.5,22,487 / - AND TAXED IN THE HANDS OF THE ASSESSEE WITHOUT GRANTING ANY DEDUCTION U/S.80IB. ON THE SAID AMOUNT A PENALTY OF RS.1,56,746/ - WAS LEVIED. 2. THE ASSESSEE HAS CHALLENGED IMPOSITION OF PENALTY ; HOWEVER , HE HAS HELD THAT IN RESPECT OF TEN MACHINERIES THE ALLEGATION WAS NOT COUNTERED BY THE ASSESSEE AND LEARNED CIT(A) HAS GIVEN A FINDING THAT THE APPELLANT WAS NOT ENTITLED FOR THE DEDUCTION U/S.80IB(5). BECAUSE OF THE REASON THAT THE QUANTUM ADDITION WAS CONFIRMED , LEARNED CIT(A) HAS CITED DHARMENDRA TEXTIL E PROCESSORS , 306 ITR 277 AND AFFIRMED THE ACTION OF THE AO. SINCE, THE LEVY OF PENALTY WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY ; THEREFORE, THE ASSESSEE IS NOW FURTHER IN APPEAL. 3. ON QUERY, WE HAVE BEEN INFORMED THAT IN THE QUANTUM PROCEEDINGS IT AT AHMEDABAD (CAMP AT SURAT) IN ITA NO.4104/AHD/2007 VIDE ORDER DATED 19 TH NOVEMBER, 2009 IN ASSESSEE S OWN CASE HAS AFFIRMED THE DISALLOWANCE OF DEDUCTION ON THE GROUND THAT THE MACHINERY WAS NOT MANUFACTURED AT DADRA AND NAGAR HAVELI BUT MANUFACTURED AT SURAT; THEREFORE, THE DEDUCTION U/S.80IB WAS CORRECTLY DENIED BY THE AO. 4. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., MR. DINESH SINGH HAS PLEADED THAT THIS IS A CASE WHEREOF BOGUS CLAIM WAS MADE AND THE ITA NO. 1756 /AHD/201 1 SHRI DHARMESH VINODCHANDRA DESAI VS. ITO WARD - 3(1), SURAT. FOR A.Y. 200 4 - 0 5 - 3 - VIEW TAKEN BY THE REVENUE AUTHORITIES HAS ALS O BEEN CONFIRMED BY THE TRIBUNAL, THEREFORE, THE PENALTY WAS RIGHTLY LEVIED. 5. ON THE OTHER HAND, LEARNED AR, MR. K.N. BHATT HAS PLEADED THAT THE ISSUE REMAINED CONTROVERSIAL AND MERELY BECAUSE THE ASSESSEE HAS NOT SUCCEEDED IN QUANTUM PROCEEDINGS THE P ENALTY SHOULD NOT HAVE BEEN LEVIED. R ELIANCE WAS PLACED ON THE DECIS ION OF HON BLE APEX COURT IN CASE OF RELIANCE PETRO PRODUCT PVT. LTD., REPORTED IN (2010) 322 ITR 158 (SC). LEARNED SR.D.R. HAS PLACE D RELIANCE ON ALL THE CASE LAWS WHICH WERE CITED BY LEA RNED CIT(A). 6 . HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS PRODUCED THE BILLS OF PURCHASE OF MACHINERY, DETAILS OF LABOUR EXPENSES AS WELL AS THE DETAILS OF POWER CONSUMPTION. HIS BOOKS OF ACCOUN T HAVE ALSO BEEN CHECKED. SINCE, THE ASSESSEE HAS PLACED THE BILLS FOR PURCHASE OF THE MACHINERY, THE AO HAS NOTED THAT T HOSE WAS PURCHASED IN THE MONTH OF JANUARY AND FEBRUARY, 2004; THEREFORE, THE ASSESSEE WAS NOT IN A POSITION TO START THE PRODUCTION BE FORE MARCH, 2004. THE ASSESSEE S CONTENTION WAS THAT THE PRODUCTION HAD STARTED IN THE MONTH OF JANUARY, 2004. FACTS OF THE CASE HAVE ALSO REVEALED THAT THE ASSESSEE WAS ABLE TO SUBSTANTIATE BEFORE THE AO THAT THE SALES MADE WERE DULY CONFIRMED BY THE PART Y CALL ED FOR U/S.133(6) OF IT ACT. EVEN WE HAVE NOTED THAT DURING THE APPELLATE PROCEEDINGS BEFORE ITAT AHMEDABAD THE ASSESSEE HAS REITERATED THAT IN THE MONTH OF JANUARY, 2004 THE LABOUR WERE EMPLOYED AND THE MACHINES WERE PURCHASED. THE MANUFACTURING WAS S TARTED IN THE MONTH OF FEBRUARY, 2004. THE PURCHASE OF A GENERATOR HAS ALSO BEEN PROVED BY THE ASSESSEE. IN THESE CIRCUMSTANCES , WHEN THE FACTS RELATING TO THE CLAIM WERE DULY PLACED BEFORE THE REVENUE AUTHORITIES AND THOSE EVIDENCES WERE NOT ITA NO. 1756 /AHD/201 1 SHRI DHARMESH VINODCHANDRA DESAI VS. ITO WARD - 3(1), SURAT. FOR A.Y. 200 4 - 0 5 - 4 - PROVED TO BE FALSE THEN IT WAS NOT JUDICIALLY CORRECT TO HOLD BY THE REVENUE AUTHORITY THAT THE ASSESSEE HAS EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS. THIS IS A CASE WHERE A CLAIM OF DEDUCTION AS PRES CRIBED UNDER THE IT ACT WAS MADE HOWEVER THAT WAS NOT ALLOWED. BEFORE US , A DECISION OF HON BLE APEX COURT IN CASE OF RELIANCE PETRO PRODUCT PVT. LTD., REPORTED IN (2010) 322 ITR 158 (SC) HAS BEEN CITED WHEREIN IT WAS HELD THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL N OT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE. RESPECTFULLY FOLLOWING THIS DECISION AND CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSCIENTIOUS OPINION THAT THIS IS NOT A FIT CASE F OR LEVY OF CONCEALMENT PENALTY AND HEREBY REVERSE THE FINDING OF THE AUTHORITIES BELOW AND DIRECT TO DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - (ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 20 / 0 2 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / 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