DCIT, New Delhi V. M/s Quadrant EPP Surlon Uttaranchal P Ltd., New Delhi

ITA 2082/DEL/2013

• Counselvise Citation: 208220114 RSA 2013
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAMEER SHARMA
• Keywords: Wrong claim
• Section: 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO.2082/DEL/2013 ASSESSMENT YEAR : 2008-09 DCIT, CIRCLE-14(1), NEW DELHI. VS. QUADRANT EPP SURLON UTTARANCHAL P. LTD., 4, POCKET-1, JASOLA VIHAR, NEW DELHI. PAN : AAACQ0944J (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI SHAMEER SHARMA, SR.DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT FOR ASSESSMENT YEAR 2008-09 AGAINST THE ORDER DATED 31.01.2013 PASSED BY T HE CIT (A)- XVII, NEW DELHI, TAKING THE FOLLOWING GROUNDS OF APP EAL:- 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 AM OUNTING TO RS.2,36,626/- IMPOSED FOR FURNISHING INACCURATE P ARTICULARS OF ITS INCOME. 2. THE LD. CIT (A) HAS ERRED IN LAW AND FACTS IN NOT APP RECIATING THE FACT THAT PROVISIONS OF THE INCOME TAX ACT 1961 ARE APPLICABLE IN THE CASE OF THE ASSESSEE & NOT THE PROVIS IONS OF THE COMPANIES ACT 1956 EVEN IF THE TAX PAID BY THE ASSESSEE AS PER THE BOOK PROFIT WHICH IS CALCULATED AS PER THE PROVISI ONS OF THE COMPANIES ACT 1956. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN IGN ORING THE PROVISIONS OF SECTION 115JB (5) OF THE ACT, WHICH CLE ARLY MENTIONS THAT SAVE AS OTHERWISE PROVIDED IN THIS SECTION, ALL O THER ITA NO.2082/DEL/2013 2 PROVISIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSEE, BEING A COMPANY, MENTIONED IN THIS SECTION. 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTING THE DATE, WHICH WAS GRANTED AT THE ASSESS EES ASKING. HOWEVER, FINDING THAT THE MATTER CAN BE PROCEEDED W ITH IN THE ABSENCE OF THE ASSESSEE, WE ARE DOING SO. 3. THE FACTS ARE THAT THE ASSESSEE COMPANY MANUFACTURES ENGINEERING PLASTICS. FOR THE YEAR UNDER CONSIDERATIO N, RETURN OF INCOME WAS FILED ON 29.09.2008, DECLARING NIL INCOME UNDER THE NORMAL PROVISIONS OF THE IT ACT AND THAT OF ` 99,74,805/- U /S 115JB THEREOF. ASSESSMENT ORDER U/S 143 (3) OF THE ACT WAS PASSED ON 16.1 2.2010, AFTER MAKING DISALLOWANCE OF ` 77,65,776/- U/S 80IC OF THE ACT, AS PER THE NORMAL PROVISIONS THEREOF. NO SUCH ADDITION, HOWE VER, WAS MADE IN THE COMPUTATION OF INCOME U/S 115JB OF THE ACT. T HE ASSESSEE, AS SUCH, PAID TAX ON THE HIGHER INCOME COMPUTED U/S 115J B OF THE ACT. THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE DISALLO WANCE MADE. SUBSEQUENTLY, VIDE ORDER DATED 28.06.2011, PENALTY O F ` 2,36,726/- WAS LEVIED U/S 271(1)(C) OF THE ACT ON THE ASSESSEE. IN THE SAID ORDER, IT WAS OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDUCTION O F ` 96,78,807/- U/S 80IC OF THE ACT; THAT SUCH CLAIM WAS NOT IN CONFORMITY WITH THE PROVISIONS LAID DOWN IN THE SCHEME OF THE ACT ; THAT THE PROFITS OF THE ELIGIBLE UNIT INCLUDED ROYALTY RECEIVED OF ` 4,75,000/-, INTEREST RECEIVED OF ` 60,716/-, MISCELLANEOUS RECEIPT OF ` 58 ,589/- AND REBATE AND DISCOUNT OF ` 1,71,471/-, TOTAL AMOUNTING TO ` 7 ,65,776/-; THAT ON QUERY, THE AR OF THE ASSESSEE COMPANY HAD AGREED TO REM OVE THESE ITEMS FROM THE ELIGIBLE PROFIT AND TREAT IT AS INCOM E FROM OTHER SOURCES, THEREBY ADDING IT TO THE TOTAL TAXABLE INCOME OF TH E ASSESSEE; THAT IN THE PENALTY PROCEEDINGS, NONE HAD APPEARED, NOR ANY REPLY HAD BEEN FILED; THAT THE ASSESSEE COMPANY HAD NOT BEEN ABLE TO EXPLAIN ITS CASE DURING THE ASSESSMENT PROCEEDINGS, FROM WHICH, IT WAS CLE AR THAT IT HAD ITA NO.2082/DEL/2013 3 NOTHING TO OFFER BY WAY OF EXPLANATION; THAT IN THE CASE OF ZOOM COMMUNICATIONS PVT. LTD., IT HAS BEEN HELD BY THE HO NBLE DELHI HIGH COURT THAT IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ON LY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPL ANATION FURNISHED THEREOF IS NOT FOUND TO BE BONA FIDE, THE ASSESSEE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE ACT; THAT IN THE PRESENT CASE, THE ASSESSEE HAD UNDOUBTEDLY FAILED TO OFFER ANY EXPLANATION FOR ITS CLAIM; AND THAT THE ASSESSEE HAD CLEARLY CLAIMED EXCESS DEDUCTION U/S 80I C OF THE ACT, WHICH WOULD HAVE GONE UNNOTICED IF THE CASE WOULD NO T HAVE COME UNDER SCRUTINY AND THE ASSESSING OFFICER HAD NOT DETECTE D THE BOGUS CLAIM OF THE ASSESSEE, WHICH HAD BEEN MADE WITH THE I NTENT TO REDUCE THE TAX LIABILITY. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE PENALTY. 5. THE LD. DR HAS CONTENDED THAT THE LD. CIT (A) HAS ERRED IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 AMOUNTING TO RS.2,36,626/- IMPOSED FOR FURNISHING INA CCURATE PARTICULARS OF ITS INCOME; THAT THE LD. CIT (A) HAS ER RED IN NOT APPRECIATING THE FACT THAT THE PROVISIONS OF THE INCO ME TAX ACT 1961 ARE APPLICABLE IN THE CASE OF THE ASSESSEE AND NOT THE PROVISIONS OF THE COMPANIES ACT 1956, EVEN IF THE TAX WAS PAID BY THE A SSESSEE AS PER THE BOOK PROFIT, WHICH IS CALCULATED AS PER THE PROVI SIONS OF THE COMPANIES ACT 1956; AND THAT THE LD. CIT (A) HAS ERRE D IN IGNORING THE PROVISIONS OF SECTION 115JB (5) OF THE ACT, WHICH CLE ARLY MENTION THAT SAVE AS OTHERWISE PROVIDED IN THIS SECTION, ALL OTHER P ROVISIONS OF THIS ACT SHALL APPLY TO EVERY ASSESSEE, BEING A COMPANY, MENT IONED IN THIS SECTION. ITA NO.2082/DEL/2013 4 6. HAVING HEARD THE LD. DR AND HAVING PERUSED THE MA TERIAL ON RECORD, WE OBSERVE THAT THE LD. CIT (A) IS CORRECT IN DELETING THE PENALTY WRONGLY LEVIED. WHILE DOING SO, THE LD. CIT (A) HAS HELD AS FOLLOWS:- 3.1 AS PER THE ABOVE DECISION OF THE HONBLE DELHI H IGH COURT THERE IS NO EVASION OF TAX IN THIS CASE AS TAX WAS PAID ON THE BASIS OF 115JB CALCULATIONS AS RETURNED BY THE APPELLA NT AT A TOTAL INCOME OF RS.99,74,805/-, WHILE THE ASSESSMENT W AS COMPLETED ON AN INCOME OF RS.7,65,780/- AS PER THE N ORMAL PROVISIONS WHICH IS LOWER THAN THE INCOME DECLARED U/ S 115JB. SINCE THERE IS NO EVASION OF TAX, THE PENALTY LEVIED FO R FURNISHING INACCURATE PARTICULARS OF INCOME IS NOT SUSTAINABLE. BASED ON THE ABOVE DECISION, THE PENALTY U/S 271(1)(C) IS LEVIABLE ONLY IF HIGHER INCOME WAS ASSESSED UNDER THE NORMAL PROVISIO NS AFTER MAKING ANY ADDITIONS IN THE ASSESSMENT ORDER. THEREFOR E, I HAVE NO OPTION BUT TO FOLLOW THE DECISION OF THE JURISDICTIO NAL HIGH COURT AND DELETE THE PENALTY OF RS.2,36,626/-. THUS, TH E APPELLANT SUCCEEDS IN GROUND NO.1 TO 4. 7. THE LD. CIT (A), IT IS SEEN, WHILE DELETING THE PE NALTY, HAS FOLLOWED THE DECISION IN CIT VS. NALWASONS INVESTMENTS LTD., 327 ITR 543 (DEL). THEREIN, IT HAS BEEN HELD THAT NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED WHEN THE INCOME U/S 115JB OF T HE ACT IS HIGHER THAN THE ASSESSED INCOME. IN THE PRESENT CASE, AS RIGHTLY FOUND BY THE LD. CIT (A), THE INCOME OF THE ASSESSEE U/S 115JB OF THE ACT WAS OF ` 99,74,805/-. THE ASSESSED INCOME, ON THE OTHER HAND, W AS AT A LOWER FIGURE OF ` 7,65,776/-. THEREFORE, THE LD. CIT (A) HAS CORRECTLY FOLLOWED THE DECISION IN NALWASONS INVESTMENTS LTD. (SUPRA). NO DECISION TO THE CONTRARY HAS BEEN BROUGHT TO OUR NOTICE. 8. IT IS, THUS, SETTLED THAT PENALTY U/S 271(1)(C) IS LE VIABLE ONLY IF HIGHER INCOME WAS ASSESSED UNDER THE NORMAL PROVISIONS OF THE ACT AFTER MAKING ANY ADDITION IN THE ASSESSMENT ORDER. 9. IN VIEW OF THE ABOVE, FINDING NO ERROR WHATSOEVER THEREIN, THE WELL REASONED ORDER PASSED BY THE LD. CIT (A) FOLLOWIN G NALWASONS ITA NO.2082/DEL/2013 5 INVESTMENTS LTD. (SUPRA), IS HEREBY UPHELD. THE GROUND S RAISED BY THE DEPARTMENT ARE, ACCORDINGLY, REJECTED. 10. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.10.20 13. SD/- SD/- [S.V. MEHROTRA] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 25.10.2013. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES