Ideal Carpets Limited, New Delhi V. DCIT, New Delhi

ITA 208/DEL/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0001 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 14-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: K R MANJANI
• Keywords: Opportunity of being heard; Bonafide belief
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH C DELHI ] BEFORE SHRI C. L. SETHI, JM AND SHRI K. D . RANJAN, AM I. T. APPEAL NO. 208 (DEL) OF 2011 ASSESSMENT YEAR : 2002-03. M/S. IDEAL CARPETS LIMITED, DY. COMMISSIONER OF INCOME-TAX, C 4 / 118, SAFDARJUNG ENCLAVE, VS. C I R C L E : 11 (1), N E W D E L H I 110 029. N E W D E L H I. PAN / GIR NO. AAA CI 0157 K. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI K. R. MANJANI, ADV.; DEPARTMENT BY : MS. MONA MOHANTY, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 20 02-03 ARISES OUT OF THE ORDER OF THE LD. CIT (APPEALS)-XI, NEW DELHI. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER :- 1. THAT THE LD. CIT IS ERRED UNDER THE LAW WHILE CONFIRMING THE IMPUGNED ORDER WITHOUT AFFORDING ANY OPPORTUNITY OF BEING HEARD TO THE APPELLANT; 2. THAT THE LD. CIT (APPEALS) IS NOT JU STIFIED IN CONFIRMING THE ORDER OF INCOME-TAX OFFICER IMPOSING PENALTY UNDER SECTION 2 71(1)(C) AMOUNTING TO RS.4,55,939/-. HOWEVER, WITHOUT PREJUDICE, IF THE PENALTY IS TO BE IMPOSED, IT HAS TO BE ON THE QUANTUM AS DETERMINED AFTER GIVING ITAT APPELLATE ORDER DATED 9/05/2008. 3. THE ONLY ISSUE FOR OUR CONSIDERATION RELATES TO IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT] AMOUNTING TO RS.4,55,939/-. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER 2 I. T. APPEAL NO. 208 (DEL) OF 2011 CONSIDERATION EXPORTED GOODS OF RS.8,59,78,023/-. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-HHC OF THE ACT IGNORING THE NEGATIVE PROFIT WORK ED OUT UNDER SECTION 80-HHC(3). HOWEVER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE A SSESSEE RELYING ON DECISION OF HONBLE SUPREME COURT IN THE CASE OF IPCA LABORATORIES LTD. VS. DCIT 266 ITR 521 (SC). THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UND ER SECTION 271(1)(C) OF THE ACT. 4. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASS ESSING OFFICER HELD THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTIONS UNDER SECTION 80-HHC DELIBERATELY WHICH WAS NOT ALLOWABLE TO IT WITH THE INTENTION TO SUPPRESS ITS INCOME UND ER IMPRESSION THAT THE ACTION OF THE ASSESSEE SHALL GO UN-NOTICED BY THE DEPARTMENT. THEREFORE, PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIABLE. 5. ON APPEAL NONE APPEARED ON BEHALF OF THE ASSESSE E. THE LD. CIT (APPEALS) RELYING ON VARIOUS DECISIONS UPHELD THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. BEFORE US THE LD. AR OF THE ASSESSEE SUBMITTED T HAT AT THE TIME OF FILING OF THE RETURN OF INCOME, THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF IPCA LABORATORIES LTD. VS. DCIT (SUPRA) WAS NOT AVAILABLE. THEREFORE, AT THAT POIN T OF TIME WHEN THE RETURN WAS FILED, THERE WERE DECISIONS OF VARIOUS BENCHES OF THE ITAT WHEREIN LO SS DETERMINED UNDER SECTION 80-HHC (3) OF THE ACT WAS TO BE IGNORED. THEREFORE, THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE LOSS COMPUTED UNDER SECTION 80-HHC (3) WAS TO BE IGNORED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 80-HHC OF THE ACT. ON THE OTHER HAND, THE LD. SR. DR SUPPORTED THE ORDER OF THE LD. CIT (APPEALS). 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAD NOT APPEARED BE FORE THE LD. CIT (APPEALS). WE ALSO FIND THAT NOTICE ISSUED BY CIT(A) FIXING THE CASE FOR HEARING ON 23 RD AUGUST, 2010 WAS RETURNED UN-SERVED. THE LD. CIT (A) HAD GIVEN ANOTHER OPPORTUNITY TO TH E ASSESSEE ON 2/11/2010. BUT THERE IS NO FINDING AS TO WHETHER THIS NOTICE WAS SERVED ON THE ASSESSEE OR NOT. THE LD. CIT (APPEALS) HAS CONFIRMED THE PENALTY EX-PARTE AFTER RELYING ON VAR IOUS DECISIONS ON THE ISSUE. SINCE THE LD. CIT (A) HAS DECIDED THE APPEAL EX-PARTE, WE FEEL IT PRO PER TO SET ASIDE THE MATTER TO THE FILE OF THE LD. 3 I. T. APPEAL NO. 208 (DEL) OF 2011 CIT (A) WITH THE DIRECTIONS TO PROVIDE THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. WE, ORDER ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON : 31 ST MARCH, 2011. SD/- SD/- [ C. L. SETHI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : _31 ST MARCH, 2011 . *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.