DCIT, Faridabad V. M/s. Crew Bos Products Pvt. Ltd., New Delhi

ITA 1948/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81560 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-08-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Reassessment proceedings
• Section: 143(3); 80HHC; 14A; 263

Judgement Text

ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 1948/DEL/2013 ASSESSMENT YEAR : 2003-04 DY.COMMISSIONER OF INCOME TAX, VS CREW BOS PRO DUCTS PVT. LTD., CENTRAL CIRCLE-I, 624C, JAINA TOWER-1, FARIDABAD. DISTRICT CENTRE, JANAKPURI, NEW DELHI-110058 (PAN: AAACC3222F) (APPELLANT) (RESPONDENT) APPELLAN T BY: SMT. PARWINDER KAUR, SR.DR RESPONDENT BY : NONE O R D E R PER CHANDRAMOHAN GARG, JM THESE APPEALS HAVE BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(CENTRAL), GURGAON DATED 08.01.2013 IN AP PEAL NO. 1/3(LDH)/CIT(A) (C)/GGN/2011-12 FOR AY 2003-04. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY OF RS.12,08,047/- IMPOSED BY THE AO U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961 BY IGNORING THE FACT THAT WHIL E DECIDING THE QUANTUM APPEAL, THE ADDITION MADE BY T HE AO HAS BEEN SUSTAINED BY THE LD. CIT(A)? ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 2 (II) WHETHER UNDER THE CIRCUMSTANCES WHEN THE CLAI M OF THE ASSESSEE U/S 80HHC WAS FOUND TO BE NOT ADMISSIB LE, PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE? 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 8 1,04,620/- VIDE ORDER DATED 30.11.2006 PASSED U/S 143(3) OF THE INCOME TA X ACT, 1961 (FOR SHORT THE ACT). SUBSEQUENTLY, THE ABOVE ASSESSMENT ORDER WAS SET ASIDE BY THE CIT, DELHI-I, NEW DELHI U/S 263 OF THE ACT DATED 27 .03.2008 BY OBSERVING THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE AS THE ASSESSEE HAS CLAIMED EXCESSIVE DE DUCTION U/S 80HHC OF THE ACT AND SET ASIDE THE ORDER OF THE AO WITH THE DIRECTION TO FRAME A FRESH ASSESSMENT ORDER IN ACCORDANCE WITH LAW AFTER GIVIN G PROPER OPPORTUNITY OF HEARING FOR THE ASSESSEE. DURING THE REASSESSMENT PROCEEDINGS IN PURSUANCE TO ORDER U/S 263 OF THE ACT, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY IN REFERENCE TO SECTION 80HHC OF THE ACT, THE TOTAL IN COME OF THE BUSINESS INCLUDING BOTH IN RELATION TO EXPORT ORIENTED UNIT AS ALSO THE OTHER EXPORTS BE NOT TAKEN FOR COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT. AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, THE AO DID NOT FIND ANY FORCE IN IT AND HELD THAT THE ACT IS QUITE EXPLICIT ON THE ISSU E AND THE AO MADE RECOMPUTATION OF DEDUCTION ACCORDING TO WHICH THE A SSESSEE WAS FOUND ENTITLED TO CLAIM DEDUCTION U/S 80HHC OF THE ACT TO THE TUNE OF ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 3 RS.25,13,742/- AS AGAINST THE DEDUCTION OF RS. 58,0 0,945 AS CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED WITH THE DEP ARTMENT. 4. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDIN G U/S 271(1)(C) OF THE ACT AND HELD THAT THE ASSESSEE HAS CONCEALED PARTIC ULARS OF ITS TAXABLE INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF ITS INC OME BY WAY OF CLAIMING EXCESS DEDUCTION U/S 80HHC OF THE ACT AS DISCUSSED ABOVE. FINALLY, THE AO PASSED PENALTY ORDER DATED 28.3.2011 AND IMPOSED PE NALTY OF RS.12,08,047. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT(CENTRAL), GURGAON WHICH WAS ALLOWED BY DELETING THE PENALTY. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL IN THE SECOND APPEA L WITH THE GROUNDS AS REPRODUCED HEREINABOVE. 5. WHEN THE CASE WAS CALLED FOR HEARING, NEITHER TH E ASSESSEE NOR HIS REPRESENTATIVE APPEARED AND THERE IS NO APPLICATION FOR ADJOURNMENT BEFORE US. ON CAREFUL PERUSAL OF THE RELEVANT MATERIAL PL ACED ON RECORD AS WELL AS PENALTY AND IMPUGNED ORDER, WE OBSERVE THAT THE APP EAL MAY BE DISPOSED OF AFTER HEARING THE LD. DR AND WE PROCEED TO DECIDE T HE APPEAL IN ABSENCE OF ASSESSEE AND HIS REPRESENTATIVE. 6. WE HAVE HEARD ARGUMENTS OF LD. DR AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD, INTER ALIA ASSESSMENT OR DER, PENALTY ORDER AND IMPUGNED ORDER BY WHICH THE CIT(CENTRAL), GURGAON C ANCELLED AND DELETED ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 4 THE PENALTY. LD. DR SUBMITTED THAT THE CIT WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO BY IGNORING THE FACT THAT WHILE DECIDING THE QUANTUM APPEAL, THE ADDITION MADE BY THE AO HAS BEE N SUSTAINED BY THE CIT AND THEREFORE THE AO RIGHTLY HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND ALSO CONCEALED THE PA RTICULARS OF TAXABLE INCOME AND THE AO RIGHTLY IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. THE DR VEHEMENTLY CONTENDED THAT THE CIT DELETED THE PENAL TY WITHOUT ANY SOUND, COGENT OR JUSTIFIED REASONING. THE DR FINALLY PRAY ED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE PEN ALTY ORDER. 7. FROM BARE READING OF IMPUGNED ORDER, WE OBSERVE THAT THE CIT, GURGAON DELETED THE PENALTY BY FOLLOWING THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158(SC) WHEREIN THEIR LORDSHIPS INTERPRETED THE INTENDMENT OF THE LEGISLATURE AND PROVISIONS OF SECTION 271(1)(C) OF THE ACT. TH E RELEVANT PARA 10 OF THIS ORDER READS AS UNDER:- 10. IT WAS TRIED TO BE SUGGESTED THAT S. 14A OF TH E ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM PART OF THE TOTAL INCOME. IT WA S, THEREFORE, REITERATED BEFORE US THAT THE AD HAD COR RECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORREC T; IT AMOUNTED TO CONCEALMENT OF INCOME; IT WAS TRIED TO BE ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 5 ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITH ER OF THE TWO FORMS; (I) A 17 ITEM OF RECEIPT MAY BE SUPPRESS ED FRAUDULENTLY; (II) AN ITEM OF EXPENDITURE MAY BE FA LSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNIS HED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUN D TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT O F INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSE SSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER S 271 (L) (C). IF WE ACCEPT THE CONTENTION OF THE REV ENUE THEN IN THE CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL IN VITE PENALTY UNDER S. 271 (1) (C ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 8. WE FURTHER OBSERVE THAT THE CIT HAS ALSO RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S HINDUSTAN STEEL LTD. VS STATE OF ORISSA (1972) 83 ITR 26(SC) AND DECISION OF HONBLE HIGH COURT OF DELHI IN ESCORTS FINANCE LTD. (2009) 226 CTR (DEL) 105 WHEREIN IT WAS HELD THAT WHERE FACTS ARE CLEARLY DISCLOSED IN THE RETURN, PENALTY CANNOT BE LEVIED MERELY BECAUSE AN AMOUNT IS NOT ALLOWED OR T AXED AS INCOME. TURNING TO THE FACTS AND CIRCUMSTANCES OF THE PRESE NT CASE, ADMITTEDLY, THE ASSESSEE MADE CLAIM OF DEDUCTION U/S 80HHC OF THE A CT WHICH WAS REDUCED DURING THE REASSESSMENT PROCEEDINGS FINALIZED U/S 2 63/143(3) OF THE ACT AND ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 6 A SUBSTANTIAL PART OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC OF THE ACT WAS REDUCED AND THE AO HELD THAT THE ASSESS EE WAS ENTITLED TO CLAIM DEDUCTION U/S 80HHC OF THE ACT OF RS.25,13,742 OR A GAINST THE DEDUCTION OF RS.58,00,945 AS CLAIMED BY THE ASSESSEE IN ITS RETU RN OF INCOME. IN THIS FACTUAL MATRIX, WHILE THE AO PASSED AN ORDER OF REA SSESSMENT IN PURSUANCE TO ORDER OF CIT U/S 263 OF THE ACT AND ON RECOMPUTATIO N OF DEDUCTION, THE AO ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80HHC ACT AT A LOWER FIGURE BUT EVEN IN THIS SITUATION, IT CANNOT BE INF ERRED THAT THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME OR HAS FURNISHE D INACCURATE PARTICULARS OF ITS INCOME. THUS, WE COME TO A CONCLUSION THAT THE CIT WAS RIGHT IN FOLLOWING DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AND THE CIT DELETED THE PENALTY ON JUST AND COGENT REASON BECAUSE PENALTY CANNOT BE LEVIED MERE LY BECAUSE THE ASSESSEES CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPT ABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)( C) OF THE ACT. ACCORDINGLY, WE ARE UNABLE TO SEE ANY AMBIGUITY, PERVERSITY OR A NY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND APPEAL OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO. 1948/DEL/2013 ASSTT.YEAR: 2003-04 7 ORDER PRONOUNCED IN THE OPEN COURT ON 8.8.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 8 TH AUGUST 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR