ITO, Baddi V. M/s Mahavir Industries, Baddi

ITA 234/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5137 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: PARVEEN KAPOOR
• Keywords: Bonafide belief
• Section: 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 234/CHD/2017 ASSESSMENT YEAR: 2008-09 THE ITO, VS. M/S MAHAVIR INDUSTRIES, WARD BADDI (H.P.) BADDI PAN NO. AACFM3117G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. PARVEEN KAPOOR DATE OF HEARING : 26.04.2017 DATE OF PRONOUNCEMENT : 19.05.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEAL HAS BEEN PREFERRED BY TH E REVENUE AGAINST THE ORDER DATED 30.11.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)], SHIM LA. 2. THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CI T(A) IN DELETING THE PENALTY WHICH WAS LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2 3. THE BRIEF FACTS RELATING TO THE ISSUE UNDER CONS IDERATION ARE THAT THE ASSESSEE FIRM STARTED ITS OPERATION ON 18.5.1997 AN D CLAIMED DEDUCTION U/S 80IB FROM ASSESSMENT YEARS 1998-99 TO 2005-06. THE ASSESSEE CARRIED OUT SUBSTANTIAL EXPANSION IN FINANCIAL YEAR 2005-06 REL ATING TO ASSESSMENT YEAR 2006-07 AND STARTED CLAIMING DEDUCTION @ 100% U/S 8 0IC OF THE ACT. THE ASSESSING OFFICER (HEREIN REFERRED TO AO') OBSERVE D THAT THE ASSESSEE HAD BEEN CLAIMING DEDUCTION U/S 80IB FROM ASSESSMENT YE ARS 1998-99 TO 2005- 06 (8 YEARS ) AND FURTHER DEDUCTION U/S 80IC OF THE ACT WAS ALSO CLAIMED FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. HE OB SERVED THAT SINCE ASSESSEE HAD ALREADY AVAILED DEDUCTION U/S 80IB / 8 0IC OF THE ACT FOR CONSEQUENT 10 ASSESSMENT YEARS AND AS SUCH NO DEDUC TION WAS AVAILABLE TO THE ASSESSEE BEYOND 10 YEARS. THE ASSESSING OFFICER , THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IC FOR TH E YEAR UNDER CONSIDERATION TREATING IT AS THE 11 TH YEAR BY INVOKING THE PROVISIONS OF SECTION 80IC (6) OF THE I.T. ACT. 4. THE MATTER WAS CARRIED OVER TO THE CIT(A) WHO DI SMISSED THE APPEAL OF THE ASSESSEE, AGAINST WHICH THE ASSESSEE PREFERR ED APPEAL BEFORE THIS TRIBUNAL. THE TRIBUNAL, HOWEVER, UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IN VIEW OF THE CONFIRMATION OF THE DISALLOWANCE OF DEDUCTION U/S 80IC MADE BY THE ASSESSING OFFICER, THE ASSESSING O FFICER PROCEEDED WITH THE PENALTY PROCEEDINGS AND LEVIED IMPUGNED PENALTY U/S 271(1)(C) OF THE 3 ACT AT RS. 18,33,080/- VIDE HIS ORDER DATED 23.8.20 12 ON THE GROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 6. BEING AGGRIEVED BY THE ABOVE LEVY OF PENALTY, TH E ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE LD. CIT(A) WHILE RELY ING UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S HYCRON ELECTRONI CS VS ITO IN ITA NO. 326/CHD/2015 HELD THAT THE ASSESSEE WAS UNDER BONAF IDE BELIEF THAT IT WAS ENTITLED TO CLAIM DEDUCTION U/S 80IC OF THE ACT. H E, THEREFORE, HELD THAT IT COULD NOT BE CONSTRUED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. HE, ACCORDINGLY, DELETED THE PENALTY SO LEV IED BY THE ASSESSING OFFICER. NOW THE REVENUE HAS COME IN APPEAL BEFORE US AGAINST THE ABOVE ACTION OF THE LD. CIT(A) 7. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LD. AR OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO PROVISIONS OF SECTION 80I C(6) OF THE ACT AND HAS STATED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB FOR 8 YEARS AND THEREAFTER THE ASSESSEE HAD MADE SUBSTANTIAL EXPANS ION AND THE ASSESSEE ACCORDINGLY STARTED CLAIMING DEDUCTION U/S 80IC OF THE ACT AS PER THE PROVISIONS OF THE ACT. HE HAS FURTHER STATED THAT A S PER THE CLAUSE (6) OF SECTION 80IC, THERE ISNT ANY EXPRESS BAR IN CLEAR TERM FOR CLAIMING THE DEDUCTION FOR MORE THAN 10 YEARS EVEN WHEN THE ASSE SSEE HAS ALREADY CLAIMED DEDUCTION U/S 80IB, EXCEPT WHERE THE ASSES SEE HAS ALREADY CLAIMED ANY DEDUCTION UNDER THE SECOND PROVISO TO S UB SECTION (4) OF SECTION 80IB OR U/S 80IC, AS THE CASE MAY BE, EXCEE DS 10 ASSESSMENT YEARS. 4 THE LD. COUNSEL OF THE ASSESSEE, THEREFORE, HAS STA TED THAT IN THE CASE OF THE ASSESSEE, SECOND PROVISO OF SUB SECTION (4) TO SECTION 80IB WAS NOT APPLICABLE AS THE SAME PERTAINS TO THE INDUSTRIES I N THE NORTH EASTERN REGION. THE LD. COUNSEL, THEREFORE, HAS CONTENDED T HAT THOUGHT THE ASSESSEES CLAIM HAS BEEN REJECTED, UP TO THE LEVEL OF THE TRIBUNAL BUT, IT DOES NOT MEAN THAT THERE WAS ANY ACT ON THE PART OF THE ASSESSEE TO CONCEAL ITS INCOME OR TO FURNISH INACCURATE PARTICULARS OF INCOME. HE FURTHER RELYING UPON THE DECISION OF THE CIT(A) HAS SUBMITT ED THAT IT WAS NOT THE FIT CASE FOR THE LEVY OF PENALTY U/S 271(1)(C) OF T HE ACT. 8. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE PENALTY ORDER OF THE ASSESSING OFFICER. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND HAV E ALSO PERUSED THE RELEVANT PROVISIONS OF THE ACT. AS SUBMITTED BY THE ASSESSEE, WE ARE CONVINCED THAT IT WAS NOT A CASE OF FURNISHING OF I NACCURATE PARTICULARS OF INCOME. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT PURSUANT TO SUBSTANTIAL EXPANSION, IT WAS FURTHER ENTITLED TO CLAIM DEDUCTI ON FOR ANOTHER 10 YEARS AS PER THE PROVISIONS OF SECTION 80IC OF THE I.T. A CT. MERELY BECAUSE THAT THE CLAIM OF THE ASSESSEE HAS NOT BEEN FOUND TENABL E BY THE AUTHORITIES, THAT ITSELF CANNOT BE A GROUND FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COUR T IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD [2010] 322 ITR 158 (SC) ARE SQUARELY APPLICABLE TO THE FACTS OF THIS CASE. WE, THEREFORE , DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHILE DELETING THE IMPUG NED PENALTY. THERE IS 5 NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.05.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH MAY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR