Shri Suil Prakash, Haryana V. ACIT, Haryana

ITA 2104/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5144 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Earning of tax free income; Difference of opinion
• Section: 271(1)(c); 143(3); 80IB

Judgement Text

ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 2104/DEL/2015 ASSESSMENT YEAR: 2009-10 SHRI SUNIL PRAKASH, HOUSE NO. 901, SECTOR-17, FARIDABAD, HARYANA. (PAN: AFVPP5777K) VS ACIT, CIRCLE-II, FARIDABAD. APPELLANT RESPONDENT ASSESSEE BY : SHRI RAKESH GUPTA, A DV. DEPARTMENT BY: SHRI SURENDER PAL, SR. DR DATE OF HEARING : 20.11.2018 DATE OF PRONOUNCEMENT : 30.01.2019 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER DATED 2.5.2014 PASSED BY THE LD. CIT (APPEALS), FAR IDABAD FOR ASSESSMENT YEAR 2009-10 WHEREIN VIDE THE IMPUGNED O RDER, THE LD. CIT (APPEALS) HAS CONFIRMED THE IMPOSITION OF P ENALTY FOR RS. 23,11,130/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'). 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S RUNNING VARIOUS UNITS IN FARIDABAD, JAMMU, KASHIPUR AND BAD ARPUR AND ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 2 IS ENJOYING EXEMPTION U/S 80IB/80IC OF THE ACT. TH E ASSESSEE IS MAINLY IN THE BUSINESS OF MANUFACTURING OF SHEET ME TAL COMPONENTS, ENGINEERING PARTS AND DIESEL GENERATOR SETS ETC. THE RETURN OF INCOME WAS FILED DECLARING INCOME OF RS. 2,89,97,320/- AND THIS WAS AFTER CLAIMING DEDUCTION U/S 80IB OF THE ACT TO THE TUNE OF RS. 20,88,47,617/- AND U/S 8 0IC OF THE ACT TO THE TUNE OF RS. 12,61,26,152/- IN RESPECT OF UNI TS AT JAMMU AND KASHIPUR RESPECTIVELY. THE CASE WAS SELECTED FO R SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AT AN INCOME OF RS. 36,79,71,080/- BY DISALLOWING DEDUCTI ON CLAIMED U/S 80IB/80IC AND ALSO AFTER MAKING ADDITION OF RS. 68,66,109/- ON ACCOUNT OF EXPENSES OF NON-EXEMPTED UNIT ALLOCAT ED TO EXEMPT UNITS. 2.1 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CIT (APPEALS) AGAINST THE ADDITION OF RS. 68,66,109/- ON ACCOUNT OF EXPENSES OF NON-EXEMPT UNITS HAVING BEEN ALLOCATED TO EXEMPT UN ITS BUT THE ASSESSEES APPEAL WAS DISMISSED BY THE LD. CIT (APP EALS). SUBSEQUENTLY, THE ASSESSING OFFICER IMPOSED PENALTY OF RS. 23,11,130/- BEING 100% OF THE TAX SOUGHT TO BE EVAD ED ON THIS AMOUNT AND ASSESSEES APPEAL AGAINST THE PENALTY AL SO WAS DISMISSED BY THE LD. CIT (APPEALS). NOW, THE ASSES SEE IS BEFORE ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 3 THE ITAT AND IS CHALLENGING THE CONFIRMATION OF THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. 3.0 THE LD. AR SUBMITTED THAT THE ASSESSEE IS HAVIN G SEVERAL UNITS IN FARIDABAD AND DELHI AND ALSO IN TAX EXEMPT AREAS LIKE JAMMU AND KASHIPUR. IT WAS SUBMITTED THAT THE UNIT S IN JAMMU AND KASHIPUR WERE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. HOWEVER, AN ADDITION OF RS. 68,66,109/- WAS M ADE ON THE GROUND THAT EXPENSES ON ACCOUNT OF ADVERTISEMENT, R EPAIR AND MAINTENANCE AND OTHER EXPENSES RELATED TO ALL THE U NITS BEING RUN BY THE ASSESSEE WHEREAS THESE EXPENSES HAD BEE N DEBITED ONLY TO THE NON-EXEMPT UNITS. IT WAS SUBMITTED THA T THE ASSESSING OFFICER PROCEEDED TO APPORTION SUCH EXPEN SES TO THE TAX EXEMPT UNIT AT JAMMU AND AT KASHIPUR TO THE TUN E OF RS. 39,75,116/- AND RS. 28,90,993/- RESPECTIVELY AND, T HEREFORE, THE TAX EXEMPTION OF JAMMU AND KASHIPUR UNITS WERE REDU CED BY THE SAID AMOUNTS WHEREAS THE PROFITS OF THE NON-EXEMPT INCOME GOT A CORRESPONDING INCREASE. IT WAS SUBMITTED THAT PENA LTY WAS IMPOSED ON THIS ADDITION FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT THIS ADDITION WOULD NOT GIVE WAY TO THE CHARGE OF FILING OF INACCURATE PARTICULARS O F INCOME BECAUSE IT IS NOT THE DEPARTMENTS CASE THAT THESE EXPENSES WERE NOT ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 4 INCURRED. IT WAS FURTHER SUBMITTED THAT THERE IS N OT EVEN A WHISPER IN THE ASSESSMENT ORDER THAT THESE EXPENSES WERE NOT INCURRED FOR THE PURPOSES OF BUSINESS. IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT THE RELEVANT DETAILS WER E NOT FURNISHED AND IT WAS EMPHASISED THAT COMPLETE BOOKS OF ACCOUN TS WERE PRODUCED BEFORE THE ASSESSING OFFICER. IT WAS SUBM ITTED THAT THE APPORTIONMENT HAD BEEN MADE ON THE BASIS OF SALE BU T THE VERY CONCEPT OF APPORTIONMENT IS BASED ON ESTIMATE AND T HERE CAN BE A DIFFERENCE OF OPINION ON THE METHODOLOGY OF APPOR TIONMENT. IT WAS SUBMITTED THAT APPORTIONMENT BY ESTIMATE CANNOT JUSTIFY THE CHARGE OF FURNISHING OF INACCURATE PARTICULARS OF I NCOME. IT WAS ALSO SUBMITTED THAT THE PENALTY HAS BEEN IMPOSED WI THOUT GIVING A FINDING OR BRINGING ON RECORD ANY EVIDENCE WHICH WOULD ESTABLISH THE DEPARTMENTS ALLEGATION THAT THERE WA S A DELIBERATE AND WILFUL INTENTION TO EVADE PAYMENT OF TAX. IT W AS PRAYED THAT THE PENALTY IMPOSED MAY BE DELETED. 4.0 IN RESPONSE, THE LD. SR. DR SUBMITTED THAT IT W AS A FACTUAL FINDING RECORDED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD DEBITED SOME EXPENDITURE PERTAINING TO ALL THE UNIT S ONLY TO THE NON-TAX EXEMPT UNITS. IT WAS ALSO SUBMITTED THAT I T IS ALSO A FACT OF THE MATTER THAT THE ASSESSEES APPEAL AGAINST TH E QUANTUM ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 5 ADDITION WAS DISMISSED BY THE ITAT DELHI AND, THERE FORE, IT WAS BEYOND DOUBT THAT THE ASSESSEE HAD FURNISHED INACCU RATE PARTICULARS OF INCOME BY ALLOCATING EXPENSES OF TAX EXEMPT UNIT TO NON-TAX EXEMPT UNIT AND, THEREFORE, IT WAS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE A SSESSEES CASE IS COVERED BY THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MIRC ELE CTRONICS LTD. WHEREIN THE HON'BLE HIGH COURT HAD PLACED RELIANCE ON ITS EARLIER JUDGMENT IN THE CASE OF ZANDU PHARMACEUTICALS VS. COMMISSIONER OF INCOME TAX REPORTED IN 350 ITR 366 (BOMBAY) AND HAD ARRIVED AT A CONCLUSION THAT THE OPINION OF THE RESPONDENT/ASSESSEE IN NOT ALLOCATING ANY PERSONAL EXPENSES OF THE HEAD OFFICE TO THE ELIGIBLE UNITS IS A POSSIBLE VIEW AND THEREFORE IT COULD NOT BE SAID THAT THERE WAS ANY F ILING OF INACCURATE PARTICULARS AND/OR CONCEALMENT OF INCOME ON THE PART OF THE RESPONDENT/ASSESSEE WARRANTING IMPOSITION OF PENALTY. THE HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. VIRGO MARKETING (P) LTD. (2008) 172 TAXMAN 83 HELD THAT IF THE ASSESSING OFFICER TOOK A VIEW CONT RARY TO THAT ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 6 EXPRESSED BY THE ASSESSEE, IT DID NOT PER SE MEAN THAT THE ASSESSEE HAD ADOPTED AN ILLEGAL DEVICE FOR REDUCING ITS TAX LIABILITY. IT IS UNDISPUTED THAT THERE ARE NO NORM S PRESCRIBED UNDER THE INCOME TAX ACT FOR ALLOCATION OF COMMON E XPENSES INCURRED BY THE ASSESSEE AND THE SAME HAS TO BE APP ORTIONED TO VARIOUS MANUFACTURING UNITS ON THE BASIS OF AN ESTI MATE ONLY. IT IS NOT THE DEPARTMENTS CASE THAT RELEVANT FACTS WE RE NOT DISCLOSED IN THE INCOME TAX RETURN OR THE FINANCIAL STATEMENT OF THE ASSESSEE. IT IS UNDISPUTED THAT THE ASSESSEE H AD FURNISHED ALL THE DETAILS OF EXPENDITURE AS WELL AS INCOME AN D NO SUCH DETAILS WERE FOUND TO BE INACCURATE NOR COULD IT BE VIEWED AS CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. THEREFORE, AT THE MOST, IT WAS A CASE OF THE ASSESSEE MAKING AN I NCORRECT CLAIM IN LAW WHICH CANNOT TANTAMOUNT TO FURNISHING OF INA CCURATE PARTICULARS OF INCOME. THE HONBLE APEX COURT HAS HELD IN COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUC TS THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED A DEDUCTION WHICH WAS NOT ACCEPTABLE TO THE REVENUE, THE SAME BY ITSELF W OULD NOT ATTRACT THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT. ACCORDINGLY, WE ARE OF THE CONSIDERED OPINION THAT THIS WAS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT AND WE ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 7 SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX(A) ON THE ISSUE OF LEVY OF PENALTY ON APPORTIONMENT OF EX PENSES OF NON- EXEMPTED UNITS ALLOCATED TO EXEMPTED UNITS AND DIRE CT THE ASSESSING OFFICER TO DELETE THE PENALTY SO IMPOSED. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2019. SD/- SD/- (R.K. PANDA) (SUDHANSHU SRIVASTA VA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JANUARY, 2018 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR TRUE COPY BY ORDER ASSTT. REGISTRAR ITA NO. 2104/D/2015 ASSESSMENT YEAR 2009-10 8 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER