Deputy Commissioner of Income-tax, V. Epitome Components Ltd., Ahmednagar

ITA 25/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7143 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Reassessment proceedings
• Section: 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , ! , '#$ !% , ! & BEFORE SHRI ANIL CHATURVEDI,AM AND SHRI VIKAS AWAST HY,JM #' / ITA NOS. 23, 24 & 25 /PUN/2015 ( )( / ASSESSMENT YEARS : 2003-04, 2004-05 & 2005-06 DEPUTY COMMISSIONER OF INCOME TAX AHMEDNAGAR CIRCLE, AHMEDNAGAR. ....... APPELLANT / V/S. EPITOME COMPONENTS LTD. G-17, M I D C, INDUSTRIAL AREA AHMEDNAGAR, PIN-414111 PAN : AAACE5491L / RESPONDENT REVENUE BY : SHRI HITENDRA NINAWE ASSESSEE BY : NONE / DATE OF HEARING : 30.01.2017 / DATE OF PRONOUNCEMENT : 10.02.2017 * / ORDER PER VIKAS AWASTHY, JM THESE THREE APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-IT/TP, PUNE DATED 20.10.2014 COMMON FOR THE ASSESSMENT YEARS 2003-04, 200 4-05 AND 2005-06. THE REVENUE HAS FILED THESE APPEALS ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DELETING PENALTY LEVIED U/S 2 ITA NO. 23, 24 &25/PUN/2015 271(1) (C ) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERR ED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECOR DS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING PRINTED CIRCUIT BOARDS. THE ASSESSEE COMPANY HAD SET UP PRODUC TION UNIT IN THE YEAR 1996. THE ASSESSEE WAS GRANTED SMALL SCALE IND USTRIAL UNIT (SSI) CERTIFICATE ON 28.05.1998. THE ASSESSEE, IN ITS RETURN O F INCOME FOR THE IMPUGNED ASSESSMENT YEARS, HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT AS SSI. THE ASSESSEE HAD ALSO FILED FORM-10CCB CERTIFYING STATUS OF ASSESSEE AS SSI UNDERTAKING AND ELIGIBLE TO CLAIM DEDUCTION U/S 80IB OF THE ACT. AS PER NOTIFICATION DATED 10.12.1997 BY DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION, MINISTRY OF I NDUSTRY, GOVT. OF INDIA, AN INDUSTRIAL UNDERTAKING TO BE CONSIDERED AS SSI, THE MAXIMUM LIMIT OF INVESTMENT IN PLANT AND MACHINERY WAS RS. 3 CRORES. SUBSEQUENTLY, VIDE NOTIFICATION DATED 24.12.1999, MAX IMUM LIMIT OF INVESTMENT WAS REDUCED TO RS. 1 CRORE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004-05, TH E ASSESSING OFFICER OBSERVED THAT THE INVESTMENT MADE BY THE ASSESS EE IN PLANT AND MACHINERY IS MORE THAN RS. 1 CRORE AND HENCE THE A SSESSEE CEASES TO BE A SSI UNIT. THE REASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB IN THE ASSE SSMENT YEARS 2003-04, 2004-05 AND 2005-06. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDING U/S 271 (1) (C) OF THE ACT AGAINST THE ASSESSEE FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN ALL THE THRE E 3 ITA NO. 23, 24 &25/PUN/2015 ASSESSMENT YEARS UNDER APPEAL. THE ASSESSING OFFICER LEVIED PENALTY IN THE THREE ASSESSMENT YEARS AS UNDER:- ASSESSMENT YEARS DEDUCTION U/S 80IB PENALTY LEVIED U/S 271 (I) (C) OF THE ACT. 2003-04 RS.8,26,539/- RS.3,03,800/- 2004-05 RS.52,79,128/- RS.18,93,888/- 2005-06 RS.61,87,460/- RS.22,64,150/- 3. AGGRIEVED BY THE ORDER LEVYING PENALTY U/S 271 (1) (C ) OF THE ACT IN THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER CO MMON FOR ALL THREE ASSESSMENT YEARS DELETED PENALTY. NOW, THE DEPARTMENT IS IN APPEAL ASSAILING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY LEVIED U/S 271 (1) (C ) OF THE ACT. 4. THE DEPARTMENT HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS IN APPEAL FOR THE ASSESSMENT YEAR 2003-04 : 1. THE CIT(A) HAS ERRED IN DELETING THE PENALTY ME RELY ON THE GROUND THAT THE ONE OF THE THREE CONDITIONS MENTIONED IN E XPLANATION 1 TO SECTION 271 (1)(C ) IS NOT SATISFIED. THE EXPLANATI ON 1 IS APPLICABLE TO THE ISSUES OF FACTS AND NOT TO THE ISSUES OF LAW. WITHO UT APPRECIATING THIS, SUCH A NARROW INTERPRETATION OF EXPLANATION 1 WOULD OPEN THE FLOODGATES FOR ASSESSES TO MAKE ILLEGAL CLAIMS EVEN KNOWING FU LLY WELL THAT THE SAME ARE NOT ADMISSIBLE AND GETTING AWAY FROM CLUTC HES OF PENALTY U/S 271 (1) (C ). 2. THE CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271 (1) (C ) WHICH WAS CONFIRMED BY THE PREDECESSOR OF THIS CIT(A). TH E PREDECESSOR OF THE CIT(A) VIE ORDER DATED 22.09.2008 HAS CONFIRMED THE PENALTY AFTER DUE CONSIDERATION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO SATISFYING HIMSELF THAT THE ASSESSEE HAD FAILED TO REBUT THE PRESUMPTION CONTAINED IN EXPLANATION 1 TO SECTION 271(1) (C ). 3. FOR THESE AND SUCH OTHER GROUND AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF LD. COMMISSIONER OF INCOME TA X (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RE STORED. 4 ITA NO. 23, 24 &25/PUN/2015 4. THE APPELLANT CRAVES TO ADD, AMEND, ALTER OR DEL ETE ANY OF THE ABOVE GROUND OF APPEAL DURING THE COURSE OF APPELLATE PRO CEEDINGS BEFORE THE HONBLE TRIBUNAL. IDENTICAL GROUNDS HAVE BEEN RAISED BY THE DEPARTMENT IN APPEALS FOR THE ASSESSMENT YEARS 2004-05, 2005-06 CHALLE NGING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY. 5. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT SUB MITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING PENALTY LEVIED U/S 271 (1) (C) OF THE ACT. THE ASSESSEE HA D FURNISHED INACCURATE PARTICULARS OF INCOME BY WRONGLY CLAIMING DEDUCT ION U/S 80IB OF THE ACT. THE ASSESSEE CEASED TO BE SSI UNDERT AKING IN TERMS OF NOTIFICATION DATED 24.12.1999. THE VALUE OF PLANT AND MACHINE RY AS PER ASSESSEES OWN ADMISSION IN ASSESSMENT YEAR 1997-9 8 WAS RS. 2,33,37,732/- WHICH WAS INCREASED TO RS. 6,53,02,221/- IN ASSESSMENT YEAR 2004-05. THE ASSESSEE WAS NOT IN STAT US OF SSI, WHEN DEDUCTION U/S 80 IB WAS CLAIMED BY THE ASSESSEE. THE AS SESSEE WRONGLY CLAIMED DEDUCTION U/S 80 IB OF THE ACT. THE LD. D.R FURTHER SUBMITTED THAT IT IS A FIT CASE FOR LEVY OF PENALTY AND PR AYED FOR SETTING ASIDE THE IMPUGNED ORDER. 6. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE. THEREFORE, THE APPEALS ARE DECIDED ON THE BASIS OF SUBMISSIONS MADE BY THE LD. D.R AND MATERIAL AVAILABLE ON RECORD. 7. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IN T HE PRESENT SET OF APPEALS, THE DEPARTMENT HAS ASSAILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING PENALTY LEV IED U/S 271 (1) (C ) OF THE ACT. THE PENALTY HAS BEEN LEVIED ON THE GROUND THAT 5 ITA NO. 23, 24 &25/PUN/2015 THE ASSESSEE HAS WRONGLY CLAIMED DEDUCTION U/S 80IB OF THE ACT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY HAD STAR TED MANUFACTURING IN THE YEAR 1996 AND THE ASSESSEE WAS GR ANTED STATUS OF SSI UNIT IN THE YEAR 1998. SUBSEQUENTLY, VIDE NOTIFICATION DATED 24.12.1999, THE UPPER LIMIT FOR INVESTMENT IN FIXED ASSETS I .E PLANT AND MACHINERY WAS REDUCED FROM RS. 3 CRORES TO RS. 1 CR ORE, WHEREAS THE INVESTMENT OF THE ASSESSEE HAD ALREADY CROSSED THE LIMIT OF RS. 1 CRORE. HOWEVER, THE ASSESSEE CONTINUED TO CLAIM DEDUCTION U/S 80IB OF THE ACT. IT HAS BEEN CONTENDED ON BEHALF OF THE ASSESSE E BEFORE THE FIRST APPELLATE AUTHORITY THAT THE ASSESSEE HAD CLAIMED D EDUCTION U/S 80 IB UNDER BONA-FIDE BELIEF THAT SUBSEQUENT NOTIFICATION DA TED 10.12.1999 VIDE WHICH THE LIMIT FOR INVESTMENT WAS REDUCED FROM RS. 3 CRORES TO RS. 1 CRORE, IS APPLICABLE TO THE INDUSTRIAL UNDER TAKINGS SET UP AFTER THE DATE OF NOTIFICATION. UNDOUBTEDLY, THE ASSESS EE WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IB OF THE ACT. HOWEVER , THE ASSESSEE HAD DISCLOSED TRUE VALUE OF INVESTMENT MADE IN P LANT AND MACHINERY IN ITS BOOKS AND THE RETURN OF INCOME. THE ASSE SSING OFFICER CAME TO KNOW ABOUT THE EXCESS INVESTMENT ONLY FROM TH E RETURN FILED BY THE ASSESSEE. IT SEEMS THAT THE ASSESSEE HAD ERRO NEOUSLY CLAIMED DEDUCTION UNDER THE MISTAKEN BELIEF. UNDER SUCH CIRCUMSTAN CES, WE ARE OF THE OPINION THAT IT IS NOT A CASE WHERE PENALTY CO ULD HAVE BEEN LEVIED. 8. THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S. RE LIANCE PETROPRODUCTS P. LTD(SUPRA) HAS HELD THAT B Y ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE 6 ITA NO. 23, 24 &25/PUN/2015 RETURN, MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NO T ACCORDING TO TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVITING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULA RS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN T HE RETURN CANNOT AMOUNT TO INACCURATE PARTICULARS . 9. IN THE PRESENT CASE, THE ASSESSEE HAD GIVEN REA SON FOR CLAIMING DEDUCTION U/S 80IB. THE ASSESSEE HAD CORRECTLY DISC LOSED THE QUANTUM OF INVESTMENT IN PLANT AND MACHINERY IN THE RETURN OF INCOME. THE CONDUCT OF THE ASSESSEE CLEARLY SHOW THE BONA-FIDE BELIEF T HAT THE ASSESSEE HAD ABOUT ITS ELIGIBILITY FOR CLAIMING DEDUCTION U/S 80 IB OF THE ACT. ALTHOUGH VIDE SUBSEQUENT NOTIFICATION DATED 10.12.1999, THE ASSESSEE CEASED TO BE SSI UNDERTAKING. THE ASSESSEE HAD MADE FULL DISCLOS URE OF INCOME IN RETURN OF INCOME, AS WELL AS BEFORE THE ASSESSING O FFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, IN OUR CONSIDERE D OPINION, IT IS NOT A CASE WHICH WOULD ATTRACT LEVY OF PENALTY. WE CONCUR WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E PENALTY. 10. SO THE IMPUGNED ORDER IS UPHELD AND APPEALS OF THE DEPARTMENT FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 A RE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 10 TH DAY OF FEBRUARY, 2017. SD/- SD/- ( /ANIL CHATURVEDI) ( $ !% /VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 10 TH FEBRUARY, 2017. SB 7 ITA NO. 23, 24 &25/PUN/2015 *+,-$.$) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE. 4. THE PR. CIT-I, PUNE. #$ %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './01 / GUARD FILE. 23456789 *: / BY ORDER, /ASSISTANT REGISTRAR * () , / ITAT, PUNE 8 ITA NO. 23, 24 &25/PUN/2015