Automag India Private Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 253/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7473 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 12-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained expenditure; Deemed to accrue or arise in india; Revised return; Reassessment proceedings
• Section: 69C; 143(3); 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 253 /P U N/201 5 / ASSESSMENT YEAR : 20 0 9 - 10 AUTOMAG INDIA PRIVATE LIMITED, 5/3, JAYDEEP, BEHIND TELEPHONE EXCHANGE, KARVE ROAD, PUNE 411004 PAN : AABCA4649P ....... / APPELLANT / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), PUNE / RESPONDENT ASSESSEE BY : S HRI C.H. NANIWADEKAR REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 24 - 07 - 2017 / DATE OF PRONOUNCEMENT : 11 - 0 9 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - I , PUNE DATED 31 - 10 - 2014 FOR THE ASSESSMENT YEAR 200 9 - 10. 2 ITA NO . 253/PUN/2015, A.Y. 2009 - 10 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SUPPLY OF CONVEYORS, CONVEYOR PARTS, MATERIAL HANDLING SYSTEMS AND SPECIAL PURPOSE MACHINES ETC. THE ASSESSEE FILED ORIGINAL RETURN OF INCOME ON 29 - 09 - 2009 DECLARING TOTAL INCOME OF RS .56,82,420/ - . THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 20 - 09 - 2010 DECLARING TOTAL INCOME OF RS.37,45,010/ - AFTER CLAIMING DEDUCTION OF RS.15,13,755/ - U/S. 80IB O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). THE ASSE SSMENT ORDER U/S. 143(3) OF THE ACT WAS PASSED ON 21 - 11 - 2011 ACCEPTING THE INCOME FILED IN REVISED RETURN. THEREAFTER, INFORMATION WAS RECEIVED FROM MAHARASHTRA SALES TAX DEPARTMENT THAT THE ASSESSEE HAS PURPORTEDLY MADE BOGUS PURCHASES TO THE TUNE OF R S.38,85,278/ - DURING FINANCIAL YEAR 2008 - 09 FROM H AWALA DEALERS. NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 28 - 03 - 2013. THE ASSESSEE FI LED LETTER DATED 06 - 05 - 2013 ADMITTING THAT THE ASSESSEE HAS MADE PURCHASES FROM ONE OF THE PART Y APPEARING IN THE L IST OF SUSPICIOUS DEALERS AVAILABLE ON THE WEBSITE OF SALES TAX DEPARTMENT. THE PURCHASES MADE FROM HAWALA DEALERS DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL AMOUNT ED TO RS.37,35,845/ - EXCLUDING VAT. THE ASSESSEE FILED REVISED RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT WITHDRAWING THE CLAIM OF EXPENDITURE TO THE TUNE OF RS.37,35,845/ - AND OFFERED THE SAID AMOUNT AS ADDITIONAL INCOME. HOWEVER, IN THE R ETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 148 , THE ASSESSEE CLAIMED ADDITIONAL DEDUCTION OF RS.11,20,753/ - U/S. 80IB I.E. 30% OF THE ENHANCED INCOME. THE ASSESSING OFFICER DISALLOWED ENHANCED CLAIM OF DEDUCTION U/S. 80IB TO THE ASSESSEE ON TWO COUN TS : (I) IT IS DEEMED INCOME U/S. 69C; AND 3 ITA NO . 253/PUN/2015, A.Y. 2009 - 10 (II) T HE CLAIM OF ENHANCED DEDUCTION U/S. 80IB WAS MADE IN RETURN OF INCOME FILED IN PROCEEDING U/S. 148. AGGRIEVED BY THE ASSESS MENT ORDER DATED 10 - 12 - 2013 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT, THE ASSES SEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF THE ASSESSEE AND CONFIRMS THE DISALLOWANCE OF DEDUCTION FOR THE REASON THAT BY VIRTUE OF PROVISIONS OF SECTION 80AC THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S. 80IB IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 148. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING THE CLAIM OF ASSESSEE. 3. SHRI C.H. NANIWADEKAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELOW WHILE DISALLOWING THE CLAIM OF DEDUCTION U/S. 80IB HAS FAILED TO APPRECIATE THE FACT THAT, THE ASSESSEE IN ORIGINAL RETURN OF INCOME HAS MADE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT AND THE SAME HAS BEEN ALLOWED TO THE ASSESSEE. IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 148, THE ASSESSEE HAS MERELY ENHANCED CLAIM OF DEDUCTION U/S. 80IB TO THE EXTENT OF 30% OF ENHANCED INCOME. IT IS NOT THE CASE OF DEPARTMENT THAT THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80IB OR THE ASSESSEE HAS NOT CLAIMED DEDUCTION U/S. 80IB IN THE ORIGINAL RETURN. THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE WITHIN THE TIME PRESCRIBED U /S. 139(1) OF THE ACT. THE LD. AR SUBMITTED THAT IN THE FIRST INSTANCE THE PROVISIONS OF SECTION 69C HAVE BEEN WRONGLY INVOKED. EVEN IF IT ASSUMED THAT DISALLOWANCE IS MADE U/S. 69C, THE SAID SECTION DOES NOT DEBAR THE ASSESSEE FOR CLAIMING DEDUCTION U/S . 80IB . THE 4 ITA NO . 253/PUN/2015, A.Y. 2009 - 10 LD. AR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE FOLLOWING DECISIONS: I . COMMISSIONER OF INCOME TAX VS. SHETH DEVELOPERS (P) LTD., 254 CTR 127 (BOM); II . PARMESHWAR COLD STORAGE (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, 8 ITR 172 (AHD. - TRIB.); AND III . VISHAL PAPER INDUSTRIES VS. JOINT COMMISSIONER OF INCOME TAX, 21 ITR 220 (CHANDIGARH - TRIB.). 4. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING THE CLAIM OF ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE CANNOT CLAIM FRESH BENEFIT OF DEDUCTION U/S. 80IB IN RE TURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THE LD. DR SUBMITTED THAT PROVISO TO SECTION 69C CLEARLY STATES THAT ANY UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE INCOME OF ASSESSEE SHALL NOT BE ALLOWED AS DEDUCTION UNDER ANY HEAD OF I NCOME. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUN ENGINEERING WORKS (P) LTD. REPORTED AS 198 ITR 297. 5 . W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . AS FAR AS FACTS ARE CONCERNED THERE IS NO DISPUTE THAT IN ORIGINAL RETURN OF INCOME THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB OF THE ACT AND THE SAME WAS ALLOWE D DURING REGULAR ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT. THE DISPUTE IS ONLY WITH REGARD TO ADDITIONAL CLAIM OF DEDUCTION U/S. 80IB MADE 5 ITA NO . 253/PUN/2015, A.Y. 2009 - 10 BY ASSESSEE . THE AUTHORITIES BELOW HAVE REJECTED ADDITIONAL DEDUCTION CLAIMED BY ASSESSEE U/S. 80IB ON THE GROUND THAT PROVISIONS OF SECTION 80AC DEBARS THE ASSESSEE FOR MAKING ANY CLAIM U/S. 80IB IN RETURN OF INCOME OTHER THAN FILED U/S. 139(1) OF THE ACT. AS HAS BEEN POINTED EARLIER THE ASSESSEE IN ITS RETURN OF INCOME FILED U/S. 139(1) HA S CLAIMED DEDUCTION U/S. 80IB . THE ASSESSEE WAS HELD ELIGIBLE FOR CLAIMING SUCH DEDUCTION AND HENCE, THE ASSESSING OFFICER ALLOWED THE SAME. THE ASSESSEE IN RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S. 148 HAS CLAIM ED ADDITIONAL DEDUCTION IN RESPECT OF ENHANCED PROFIT S RESULTING FROM DISALLOWANCE OF EXPENDITURE. IT IS NOT A CASE WHERE THE ASSESSEE HAS MADE FRESH CLAIM OF DEDUCTION U/S. 80IB OF THE ACT IN REASSESSMENT PROCEEDINGS. THE ADDITIONAL CLAIM OF ASSESSEE IS ONLY CONSEQUENTIAL TO DISALLOWANCE OF ASSESSEES CLA IM OF EXPENDITURE. 6. THE LD. DR HAS RAISED OBJECTION THAT PROVISO TO SECTION 69C PROHIBITS THAT ANY UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE INCOME OF ASSESSEE SHALL NOT BE ALLOWED AS DEDUCTION. WE DO NOT FIND MERIT IN THE SUBMISSIONS OF LD. DR IN LIGHT OF THE FACTS OF PRESENT CASE. IN THE FIRST INSTANCE , WHETHER DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE CAN BE MADE U/S. 69C IS ITSELF QUESTIONABLE. DE HORS SUCH DISALLOWANCE , THE PROVISO TO SECTION 69C RESTRICTS THAT UNEXPLAINED EXPENDITURE WHICH I S DEEMED TO BE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS DEDUCTION UNDER ANY HEAD OF INCOME. THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IB FALLS UNDER CHAPTER VI - A. TH US, DEDUCTION U/S. 80IB IS NOT A DEDUCTION UNDER ANY HEAD OF INCOME . THEREF ORE, PROVISO TO SECTION 69C WOULD NOT GET ATTRACTED IN THE PRESENT CASE. 6 ITA NO . 253/PUN/2015, A.Y. 2009 - 10 IN VIEW OF OUR ABOVE OBSERVATIONS, WE FIND MERIT IN THE CLAIM OF ASSESSEE. ACCORDINGLY, THE SAME IS ACCEPTED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOU NCED ON MONDAY, THE 11 TH DAY OF SEPTEMBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 11 TH SEPTEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - I, PUNE 4. / THE CIT - I , PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE