Padma India, Delhi V. DCIT, New Delhi

ITA 2338/DEL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53345 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 29-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Keywords: Revised return
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.2338/DEL/2009 ASSESSMENT YEAR : 2004-05 PADMA INDIA, DCIT, 133-VEER NAGAR, CIRCLE-20 (1), GT KARNAL ROAD, NEW DELHI. DELHI. V. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SMT. PRATIMA KAUSHIK, SR.DR. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A)- XXII, NEW DELHI DATED 16.3.2009 FOR ASSESSMEN T YEAR 2004-05 ON AN ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE ACT. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. THAT THE LD CIT(A)-XXII, NEW DELHI HAS GROSSLY ERRED I N LAW AS WELL AS ON FACT OF THE CASE IN CONFIRMING THE PENALTY AS IMPOSED U/S 271(1)( C) OF THE ACT, 1961 ON THE ORDER PASSED BY THE LD ACIT, CIRCLE-20(1), NEW DELHI. 2. THAT PENALTY AS IMPOSED IS ARBITRARY UNJUST, EXCESSIVE AN D UNCALLED FOR. ITA NO.2338/DEL/2009 2 2. THE CASE WAS FIXED FOR HEARING ON 26.9.2011 BUT NO NE APPEARED ON BEHALF OF THE ASSESSEE. WE, THEREFORE, PROCEEDED TO HEAR THE CASE EX PARTE QUA THE APPELLANT. 3. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF EXPORT OF AR TIFICIAL JEWELLERY. IT FILED A RETURN ON 28.10.2004 DECLARIN G TOTAL INCOME OF `.3,38,115/- WHICH WAS PROCESSED U/S 143(1) ON 20.12.20 04. NOTICE U/S 143(2) WAS ISSUED ON 11.8.2005 WHICH WAS SERVED ON THE A SSESSEE ON 22.8.2005. SUBSEQUENTLY THE ASSESSEE FILED A REVISED RET URN DECLARING NET INCOME OF `.11,83,404/- ON 22.11.2006. IN THE REVISED RETURN, IT WAS STATED THAT DUE TO CLERICAL MISTAKE/OVERSIGHT 80HHC DEDUCTION WAS CLAIMED AT 80% OF THE PROFITS INSTEAD OF 30%. THE SAM E WAS CORRECTED WHILE FILING THE REVISED RETURN. HOWEVER, THE ASSESSING OFFICER IN THE ASSESSMENT ORDER STATED THAT PENALTY PROCEEDINGS U/S 271( 1) (C ) HAD BEEN INITIATED SEPARATELY ON THIS ACCOUNT. 4. AFTER THE INITIAL ISSUE OF PENALTY NOTICE, THE ASSESSI NG OFFICER OFFERED ANOTHER OPPORTUNITY TO THE ASSESSEE BY FIXING THE CASE FOR 22.5.2007 VIDE NOTICE DATED 14.5.2007. NONE APPEAR ED ON BEHALF OF THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, HELD THAT T HE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME TO T HE EXTENT OF `.8,45,288/-. PENALTY @ 100% OF TAX SOUGHT TO BE EVA DED I.E. `.3,03,246/- WAS IMPOSED BY THE ASSESSING OFFICER. AGGRI EVED, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT(A). 5. DURING THE APPELLATE PROCEEDINGS, IT WAS CONTENDED BY THE ASSESSEE THAT DEDUCTION U/S 80HHC WAS WRONGLY CLAIMED THR OUGH OVERSIGHT @ 80% INSTEAD OF 30% OF THE PROFIT. IT ALSO FILED AUDITED STATEMENT OF ACCOUNTS WHEREIN ALL FIGURES HAVE DULY BE EN REFLECTED SHOWING NET PROFIT AND DEDUCTION CLAIMED U/S 80HHC. D URING ITA NO.2338/DEL/2009 3 ASSESSMENT PROCEEDINGS, THE ASSESSEE CAME TO KNOW THE ABOVE MISTAKE AND ACCORDINGLY FILED A REVISED RETURN OF INC OME ON 22.11.2006 DECLARING INCOME AT `.11,83,404/- AND PAID THE TAX DUE ON THE SAME. THERE WAS NO WILLFUL INTENTION OF THE ASSESSEE TO CONC EAL ITS INCOME AS THE ASSESSEE FILED ALL RELEVANT FACTS AND FIGURES IN THE RETURN OF INCOME. IT WAS, THEREFORE, CONTENDED THAT THE PENALTY IMPOSED U/S 271(1)( C) BE DELETED. 6. THE LD CIT(A) WAS OF THE OPINION THAT THE TERMS P ARTICULARS OF INCOME REFERRED TO THE FACT WHICH LEAD TO THE CORR ECT COMPUTATION OF INCOME IN ACCORDANCE WITH THE ACT. WHEN ANY FACT M ATERIAL TO THE DETERMINATION OF AN ITEM AS INCOME OR MATERIAL TO TH E CORRECT COMPUTATION WAS EITHER NOT FILED OR WAS NOT ACCURATE, THE ASSESSEE WOULD BE LIABLE TO PENALTY U/S 271(1)( C) OF THE ACT . HE WAS ALSO OF THE OPINION THAT EXPLANATION TO SECTION 271(1)( C) WAS A PART OF SECTION 271 AND ONCE NOTICE WAS ISSUED UNDER THE ABOVE SECTION, TH E BURDEN WAS ON THE ASSESSEE TO PROVE THAT HIS CASE DID NOT FALL WITHI N THE CIRCUMSTANCES STATED IN THE EXPLANATION. 7. THE LD CIT(A) HELD THAT THE ASSESSEE HAD FURNISHED IN ACCURATE PARTICULARS OF HIS INCOME WHEN IT FURNISHED THE ORIGIN AL RETURN. THE EXCESS CLAIM OF DEDUCTION U/S 80HHC WAS WITHDRAWN BY FI LING A REVISED RETURN OF INCOME ON 22.11.2006. THE CONTENTION OF THE ASSESSEE WAS THAT THE REVISED RETURN WAS FILED BEFORE DETECTION BY THE ASSESSING OFFICER AND SUCH EXCESS DEDUCTION WAS CLAIMED THROUGH OVERSIGHT AND CLERICAL ERROR. HOWEVER, THIS EXPLANATION OF THE ASSE SSEE WAS HELD NOT TO BE BONA FIDE ON ACCOUNT OF THE FOLLOWING:- ITA NO.2338/DEL/2009 4 1. IF THE ASSESSING OFFICER DID NOT ENQUIRE ABOUT THE SAME, THE EXCESS CLAIM OF THE ASSESSEE WOULD HAVE BEEN ACCEPTED OR THE SAME WOULD NOT HAVE BEEN DETECTED. 2. THE REVISED RETURN WAS FURNISHED ONLY AFTER NOTICES WER E ISSUED TO THE APPELLANT. 3. IT CANNOT BE PRESUMED THAT THE ASSESSEE WAS UNAWARE ABOUT THE ALLOWABLE DEDUCTION U/S 80HHC DURING THE RELEVANT YE AR. 8. IT WAS HELD BY THE LD CIT(A) THAT THE ASSESSEE HAD FU RNISHED INACCURATE PARTICULARS OF INCOME AND THE EXPLANATION OFFERED BY IT WAS NOT BONA FIDE. HE, THEREFORE, CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. WHILE DOING SO, HE RELIED ON THE FOLL OWING CASE LAWS:- 1. KP MADHUSUDAN V. CIT 251 ITR 99 (SC). 2. CIT V. GURBACHAND LAL 250 ITR 157 (DEL.). 3. UNION OF INDIA & OTHERS V. DHARMENDER TEXTILE LTD. 3 06 ITR 277 (SC). 4. HENRY ISIDORE V. CIT 222 ITR 496 (MAD.). 9. AGGRIEVED, THE ASSESSEE HAS FILED THE APPEAL BEFORE T HE TRIBUNAL. 10. BEFORE US, LD DR IN ADDITION TO RELYING ON THE O RDERS OF THE AUTHORITIES BELOW SUBMITTED THAT THE CASE OF THE REVEN UE WAS FURTHER STRENGTHENED BY THE JUDGMENT OF THE HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF CIT V. ZOOM COMMUNICATION PVT. LTD. 3 27 ITR 510.. WHEN ASKED BY THE BENCH AS TO WHY THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT . LTD. 322 ITR 168 WAS NOT ATTRACTED IN THE FACTS OF THE PRESENT CASE, THE LD DR CONTENDED THAT THE FACTS OF THE PRESENT CASE WAS DISTINGUISHABLE F ROM THE FACTS OF THE RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA). THE B ENCH POINTED OUT ITA NO.2338/DEL/2009 5 THAT THERE IS A FINDING OF MALA FIDE BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LTD. WH EREAS IN THE CASE UNDER CONSIDERATION THE FACTS OBTAINED DO NOT POI NT OUT ANY MALA FIDE INTENTION ON THE PART OF THE ASSESSEE. THE LD DR COULD NOT ENLIGHTEN THE BENCH ON THIS ISSUE. 11. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. AS PER SUB SECTION (1B) OF SECTION 80HHC, AS INSERTED BY THE FINA NCE ACT 2000 FOR ASSESSMENT YEAR 2004-05, DEDUCTION U/S 80HHC WAS TO BE AL LOWED AT 20% OF THE PROFITS OF BUSINESS. THE SAME WAS INCREASED TO 30% OF PROFITS AS PER THE FINANCE ACT, 2001. FROM THE ABOVE , IT COULD BE SEEN THAT THERE WAS FREQUENT CHANGE IN THE PERCENTAGE OF PROFIT TO WHICH THE ASSESSEE WAS ENTITLED TO DEDUCTION AS PER THE PROVISIONS OF SECTION 80HHC. THE ASSESSEE IS ALSO REQUIRED TO FURNISH FORM NO. 10CCAC WHEREIN THE AUDITORS CERTIFIED THE DEDUCTION ADMISSIBL E TO THE ASSESSEE U/S 80HHC OF THE ACT. THE ASSESSEE HAD FURNISHED SUCH FOR M. IT HAS NOT BEEN HELD BY THE AUTHORITIES BELOW THAT THE AMO UNT OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC WAS INCORRECTLY DETE RMINED BY THE AUDITORS IN FORM NO.10CCAC. NO EVIDENCE HAS BEEN BROUGHT ON RECORD ALSO TO THE ABOVE EFFECT. WE, THEREFORE, HOL D THAT THE ADMISSIBLE CLAIM OF THE ASSESSEE U/S 80HHC AS PER FORM NO.1 0CCAC WAS THE CORRECT DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 8 0HHC. WHILE COMPUTING THE INCOME, THE ASSESSEE INSTEAD OF CLAIMING T HIS AMOUNT HAS CLAIMED AN ENHANCED AMOUNT BY WORKING OUT THE SAM E AT 80% OF PROFIT OF THE CONCERN. THE ASSESSEE HAD CLAIMED DURING THE ASSESSMENT PROCEEDINGS THAT SUCH DEDUCTION WAS CLAIMED O N AC COUNT OF CLERICAL ERROR/OVERSIGHT. IN THE FACTS NARRATED AB OVE, WE ARE OF THE CONSIDERED OPINION THAT THE EXPLANATION OF THE ASSESSEE IS BONA FIDE. NO MAN IN HIS SENSES WOULD CLAIM AN EXCESS DEDUCTION WHE N THE SAME DEDUCTION HAS BEEN CORRECTLY COMPUTED BY THE AUDITOR IN FORM ITA NO.2338/DEL/2009 6 NO.10CCAC WHICH WAS FURNISHED ALONG WITH THE RETURN. AS SUCH THIS WOULD BECOME AN APPARENT MISTAKE OF LAW ON THE FACE OF THE RECORD. AS WE HAVE HELD THAT THE EXPLANATION OF THE ASSESSEE IS BON A FIDE, THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH C OURT IN THE CASE OF ZOOM COMMUNICATION LTD. (SUPRA) IS NOT APPLICABLE IN THE FACTS OF THE CASE. WE ARE OF THE CONSIDERED OPINION THAT THE RATI O LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO CHE MICAL PRODUCTS LTD. (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF TH E PRESENT CASE. THUS, WE HOLD THAT PENALTY U/S 271(1) ( C) IS NOT EXIG IBLE IN THE FACTS OF THE PRESENT CASE. ACCORDINGLY, THE ORDERS OF THE AUTHO RITIES BELOW ARE SET ASIDE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. 13. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF NOVEMBER, 2011. SD/- SD/- (U.B.S. BEDI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 30.11.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.2338/DEL/2009 7