UNITED HOUSING P. LTD, MUMBAI V. ITO 7(3)(2), MUMBAI

ITA 2221/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8954 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2001-2002
• Appeal Filed On: 19-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SONDE
• Assessee Lawyers: R S SRIVASTAVA
• Keywords: Wrong claim; Revised return; Bonafide mistake
• Section: 271(1)(c); 115JB; 80IB

Judgement Text

1 ITA 2221/M/07, AMAR REMEDIES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI R.S. PADVEKA R, JM ITA NO.2221/MUM/07 ASSESSMENT YEAR 2003-04 D.C.I.T. 5(1), ROOM NO. 568/525, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI. 400 020. VS. M/S AMAR REMEDIES LTD., 207, ROOP RAJ BLDG., 2 ND FLOOR, 497, S.V.P. ROAD, OPERA HOUSE, MUMBAI 04. PAN AAACA 3774G APPELLANT RESPONDENT APPELLANT BY SHRI R.S. SRIVASTAV A RESPONDENT BY SHRI ARVIND SONDE ORDER PER P.M. JAGTAP, A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(A) V, MUMBAI DATED 5.1.2007 WHEREBY HE CANCELLED THE PENA LTY OF ` 30 LACS IMPOSED BY THE A.O. U/S 271(1)(C). 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURING OF AYURVEDIC PRODUCTS. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 1.12.03 DECL ARING TOTAL INCOME AT NIL AFTER CLAIMING DEDUCTION OF ` 1,26,79,867/- U/S 80IB. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE AS SESSEE COMPANY HAD ALSO CARRIED ON THE BUSINESS OF TRADING IN CUT AND POLISHED DIAMONDS AN D DEDUCTION U/S 80IB WAS CLAIMED IN RESPECT OF PROFIT OF THE SAID ACTIVITY ALSO. ACCOR DING TO THE A.O., THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S 80IB ON THE PROFIT EARNE D FROM TRADING ACTIVITY OF CUT AND POLISHED DIAMONDS AND ACCORDINGLY THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB WAS 2 ITA 2221/M/07, AMAR REMEDIES LTD. DISALLOWED BY THE A.O. TO THE EXTENT OF ` 45,05,530/- IN THE ASSESSMENT COMPLETED U/S 143(3). PENALTY PROCEEDINGS U/S 271(1)(C) WERE ALSO INITIATED BY THE A.O. AND SINCE THE EXPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED DURING THE COURSE OF THE SAID PROCEEDINGS WAS NOT FOUND ACCEPT ABLE BY HIM, THE A.O. PROCEEDED TO IMPOSE THE PENALTY OF ` 30 LACS U/S 271(1)(C) BY HOLDING THAT BY MAKING PA TENTLY WRONG CLAIM FOR DEDUCTION U/S 80IB TO THE EXTENT OF ` 45,05,530/-, THE ASSESSEE HAD FURNISHED IN- ACCURATE PARTICULARS OF ITS INCOME. 3. THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C) WA S CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LD. CIT(A) WHO CANCELLED THE SAID PENALTY FOR THE FOLLOWING REASONS GIVEN IN PARA NO. 2.3 OF HIS IMPUGNED ORDER . I HAVE PERUSED THE FACTS OF THE CASE, THE REASONS G IVEN BY THE A.O. FOR IMPOSITION OF PENALTY AND CONTENTIONS MADE ON BEHALF OF THE APPEL LANT. I AM TAKING PARTICULAR NOTE OF THE FACT THAT THIS WAS THE FIRST YEAR OF CLAIM O F DEDUCTION BY THE APPELLANT. THE CLAIM MADE BY THE APPELLANT IS BASED UPON THE AUDIT ORS REPORT IN FORM NO. 10CCB OF THE ACT WHEREIN THE FIGURE HAS BEEN SPECIFICALLY MENTIONED IN CLAIM NO. 21. ALSO RELEVANT IS THE FACT THAT IN THIS REPORT ITSELF IN PARA NO. 19 THE AUDITOR HAS GIVEN THE BREAK-UP OF TRADING SALES AND MANUFACTURING SALE. APPARENTLY THEREFORE THIS IS A MISTAKE OF THE AUDITORS. THERE IS NO EVIDENCE TO S UGGEST ANY MALAFIDE INTENTION ON THE PART OF THE APPELLANT. IT IS ALSO A FACT THAT IMMEDIATELY ON RECEIPT OF THE SHOW- CAUSE ISSUED BY THE A.O. IN THE ASSESSMENT PROCEEDI NGS THE CLAIM WAS REVISED BY THE APPELLANT. ALTHOUGH THE REASONS AFTER ISSUE OF SHO W CAUSE, I DO NOT SEE ANY REASON TO ACCEPT THE CONTENTION THAT THERE ARE MALAFIDE INTEN TION OF THE APPELLANT TO MAKE A HIGHER CLAIM OF DEDUCTION. IN THE FACTS OF THE CAS E, THE APPELLANT APPEARS TO HAVE BEEN GUIDED BY THE REPORT OF THE AUDITOR. THEREFOR E, THE EXPLANATION GIVEN BY THE APPELLANT FOR THE INACCURATE CLAIM OF THE DEDUCTION IS BONAFIDE NEEDS TO BE ACCEPTED. IN THIS SITUATION, IMPOSITION OF PENALTY IS NOT CAL LED FOR. ACCORDINGLY, THE PENALTY IMPOSED IS CANCELLED AND THE APPEAL IS ALLOWED. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR PENALTY U/S 271(1)(C) WAS IMPOSED BY THE A.O. IN ASSESSEES CAS E FOR THE IMMEDIATELY SUCCEEDING YEAR I.E A.Y. 2004-05 IN RESPECT OF ADDITION MADE B Y WAY OF DISALLOWANCE OF ASSESSEES 3 ITA 2221/M/07, AMAR REMEDIES LTD. CLAIM FOR DEDUCTION U/S 80IB IN RESPECT OF PROFIT F ROM THE BUSINESS OF TRADING IN CUT AND POLISHED DIAMONDS. AS FURTHER SUBMITTED BY HIM, TH E SAID PENALTY IMPOSED BY THE A.O. HOWEVER, WAS CANCELLED BY THE LD. CIT(A) AND THE TR IBUNAL VIDE ITS ORDER DATED 9 TH MARCH, 2010 PASSED IN ITA NO. 1537/MUM/08 HAS UPHELD THE O RDER OF THE LD. CIT(A) CANCELLING THE PENALTY IMPOSED BY THE A.O. A COPY OF THE SAID ORDER IS PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE AND A PERUSAL OF THE SAME SHOWS THAT THE ORDER OF THE LD. CIT(A) CANCELLING THE PENALTY IMPOSED BY THE A.O. U/S 271( 1)(C) HAS BEEN UPHELD BY THE TRIBUNAL FOR THE FOLLOWING REASONS GIVEN IN PARA NO. 7 OF TH E SAID ORDER: AS FAR AS THE ISSUE OF COMPUTATION OF RELIEF U/S 80 IB IS CONCERNED, THE QUANTIFICATION OF THE RELIEF IS A DEBATABLE ISSUE A ND THE ASSESSEE HAD CLAIMED A DEDUCTION BASED ON A CERTIFICATE ISSUED BY A PROFES SIONAL. EVEN OTHERWISE THE INCOME DETERMINED U/S 115JB REMAINS UNALTERED BOTH IN THE ORIGINAL RETURN OF INCOME AS WELL AS IN THE REVISED RETURN OF INCOME. ON THIS FACTUAL MATRIX, AS THE ASSESSEE BASED ITS CLAIM ON THE AUDITORS REPORT IN FORM NO. 10CCCB OF THE ACT IT APPEARS TO BE A BONAFIDE MISTAKE AND THE EXPLANATIO N GIVEN BY THE ASSESSEE ON THE ISSUE IS A POSSIBLE EXPLANATION AND WE UPHOLD THE O RDER OF THE CIT(APPEALS) DELETING THE PENALTY ON THE ABOVE ISSUE. 5. AS THE ISSUE INVOLVED IN THE YEAR UNDER CO NSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE ADMITTEDLY SIMILAR TO TH AT OF A.Y. 2004-05, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2004-05 ( SUPRA) AND UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) CANCELLING THE PENALTY IMPOSED BY THE A.O. U/S 271(1)(C). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 29 TH OCTOBER, 2010. SD/- SD/- (R.S. PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED 29 TH OCTOBER , 2010. RK 4 ITA 2221/M/07, AMAR REMEDIES LTD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) V - MUMBAI 4. THE CIT- V, MUMBAI 5. THE DR BENCH, H 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 5 ITA 2221/M/07, AMAR REMEDIES LTD. DATE INITIALS 1. DRAFT DICTATED 13.10.10, SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 14.10.10 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.