M/S SEZAL GLASS LTD., MUMBAI V. ACIT-9(3), MUMBAI

ITA 2552/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0826 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK LD
• Assessee Lawyers: DR PRAYAG JHA; PRATEEK JHA LD ARS
• Section: 143(3); 80IB

Judgement Text

ITA NO.2552/M/2013 SEZAL GLASS LIMITED ASSESSMENT YEAR- 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2552/MUM/2013 ( / ASSESSMENT YEAR: 2006-07) SEZAL GLASS LIMITED 201/202, ABHILASHA 2 ND FLOOR, S.V. ROAD, KANDIVAL(W) MUMBAI 400 067 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 9(3) AAYKAR BHAVAN MUMBAI - 400 020 !' ./ ./PAN/GIR NO. AADCS-8659-M ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ / APPELLANT BY : DR. PRAYAG JHA & SHRI PRATEEK JHA, LD. ARS %&'$ / RESPONDENT BY : DR. A.K. NAYAK, LD. DR / DATE OF HEARING : 26/04/2017 / DATE OF PRONOUNCEMENT : 02/05/2017 ITA NO.2552/M/2013 SEZAL GLASS LIMITED ASSESSMENT YEAR- 2006-07 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2006-07 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-20 [CIT(A)], MUMBAI DATED 06/12/2012 QUA CONFIRMATION OF PENALTY U/S 271(1)(C). 2. FACTS LEADING TO THE DISPUTE ARE THAT THE ASSESS EE, BEING RESIDENT CORPORATE ASSESSEE, WAS ASSESSED U/S 143(3) AT RS.1 ,70,69,864/- AFTER CERTAIN ADJUSTMENTS AND DISALLOWANCES VIDE ORDER DA TED 30/12/2008 AGAINST RETURNED INCOME OF RS.1,11,48,990/- E-FILED BY THE ASSESSEE ON 28/11/2006. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DIFFERENT KINDS OF GLASSES FOR WHICH IT HAS AN INDUSTRIAL UNDERTAKING AT DAMAN, AN ELIGIBLE ENTITY TO CLAIM DEDUCTION U/S 80-IB @30%. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE CREDI TED A SUM OF RS.1,07,05,561/- UNDER THE HEAD OTHER INCOME WHICH COMPRISED OF INTEREST, FOREIGN EXCHANGE GAINS, MISC. INCOME, DIVIDEND ON S HARES ETC. AGAINST WHICH DEDUCTION U/S 80-IB WAS CLAIMED, WHICH, IN THE OPIN ION OF LD. AO, WAS NOT INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AND HENC E NOT ELIGIBLE FOR THE SAID DEDUCTION. RESULTANTLY, THE DEDUCTION OF 80-IB WAS DENIED ON OTHER INCOME FOR WHICH PENALTY PROCEEDINGS U/S 271(1)(C) WERE IN ITIATED AND FINALLY, A PENALTY OF RS.36,96,564/- WAS IMPOSED ON THE ASSESS EE BY LD. AO FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME VIDE PENALTY ORDER DATED 23/03/2011 AFTER ISSUANCE OF MANDATORY NOTICE U/S 274. 3. IN THE MEANTIME, THE QUANTUM PROCEEDINGS WERE CA RRIED UP TO THE LEVEL OF ITAT VIDE ITA NO. 1661/MUM/2010 ORDER DATED 23/0 9/2011 WITH PARTIAL SUCCESS WHEREIN THE ASSESSEE WAS FOUND ELIGIBLE TO CLAIM 80-IB AGAINST ITA NO.2552/M/2013 SEZAL GLASS LIMITED ASSESSMENT YEAR- 2006-07 3 RS.75,03,543/- OUT OF AGGREGATE AMOUNT OF RS.1,07,0 5,561/- LEAVING A BALANCE OF RS.32,02,018/- FOR WHICH THE ASSESSEE WAS FOUND NOT ELIGIBLE TO CLAIM 80-IB DEDUCTION. 4. THE ASSESSEE CONTESTED AOS PENALTY ORDER BEFORE LD. CIT(A) WITH PARTIAL SUCCESS VIDE IMPUGNED ORDER WHERE THE LD. C IT(A) AFTER CONSIDERING THE TRIBUNALS QUANTUM ORDER RESTRICTED PENALTY QUA NON-ELIGIBLE AMOUNT OF RS.32,02,018/- AGAINST WHICH THE ASSESSEE IS IN APP EAL BEFORE US. 5. THE LD. COUNSEL FOR ASSESSEE, WHILE DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER BOOK, ASSAILED THE PENALTY ORDER ON LEGAL GROUNDS AS WELL AS ON MERITS AND CONTENDED THAT THE IMPUGNED PENALTY HAS BEEN IMPOSED BY AO WITHOUT DUE APPLICATION OF MIND AS NO PROPER SATISFACTION HAS BEEN RECORDED TO INITIATE THE PENALTY AND FURTH ER, THE NOTICE ISSUED U/S 274 DO NOT CLEARLY SPECIFY THE LIMB FOR WHICH THE PENAL TY WAS BEING LEVIED AS RELEVANT WORDS HAS NOT BEEN STRIKED-OFF AND THEREFORE, THE ASSESSEE HAS LOST A VITAL RIGHT TO CONTEST THE SAME. PER CONTRA , LD. DR ASSERTED THAT THE PENALTY HAS CLEARLY BEEN INITIATED BY LD. AO WITH DUE APPLI CATION OF MIND AND THE ASSESSEE, AT ALL TIME, KNEW THE OFFENCE FOR WHICH T HE PENALTY WAS BEING LEVIED AND HENCE DEBARRED FROM RAISING THE LEGAL GROUND NO W. OUR ATTENTION WAS DRAWN TO THE PROVISIONS OF SECTION 292B TO CONTEND THAT EVEN PRESUMING A DEFECT IN THE NOTICE U/S 274, THE SAME DO NOT INVAL IDATE THE PENALTY PROCEEDINGS. FURTHER, THE ASSESSEE ACTIVELY CONTEST ED THE PENALTY PROCEEDINGS FULLY KNOWING THE GROUNDS FOR WHICH HE WAS BEING PENALIZED. 6. AFTER HEARING RIVAL CONTENTIONS, WE DO NOT SEE M UCH WEIGHT IN THE LEGAL GROUNDS RAISED BY THE LD. AR AS AGAINST THE ARGUMEN TS MADE BY LD. DR. THE AO DULY INITIATED THE PENALTY PROCEEDINGS IN THE QU ANTUM ASSESSMENT AND LEVIED THE PENALTY AFTER ISSUANCE OF THE MANDATORY NOTICE U/S 274. FURTHER, THE DEFECT, IF ANY, FOUND IN THE STANDARD PRINTED PROFO RMA OF NOTICE U/S 274, STOOD ITA NO.2552/M/2013 SEZAL GLASS LIMITED ASSESSMENT YEAR- 2006-07 4 CURED BY THE PROVISIONS OF SECTION 292B AND DO NOT INVALIDATE THE PENALTY PROCEEDINGS. THIS POINT IS FURTHER FORTIFIED BY THE FACT THAT THE ASSESSEE ACTIVELY CONTESTED THE PENALTY PROCEEDINGS WITHOUT AN IOTA OF DOUBT IN HIS MIND AS TO THE GROUND FOR WHICH HE WAS BEING PENALIZED. THEREFORE, THE LEGAL GROUNDS RAISED BY THE LD. AR STANDS REJECTED. 7. THE LD. AR, ON MERITS, CONTENDED THAT THE ASSESS EE EARNED OTHER INCOME WHICH CONSISTED OF CERTAIN MISCELLANEOUS INCOME EA RNED BY THE ASSESSEE DURING THE COURSE OF BUSINESS AND THE SAME WERE INEXTRICABLY LINKED WITH THE ELIGIBLE BUSINESS CARRIED ON BY THE ASSESS EE AND THEREFORE, THE TRIBUNAL PROVIDED A MAJOR RELIEF TO THE ASSESSEE. F URTHER, THE ASSESSEE DID NOT FURNISH ANY INACCURATE PARTICULARS OF INCOME OR CON CEALED ANY INCOME WITHIN THE MEANING OF SECTION 271(1)(C) AS ALL PARTICULARS WERE DULY DISCLOSED AT APPROPRIATE PLACES AND THE ASSESSEE MADE A BONA-FIDE CLAIM AGAINST THE SAME AND HENCE, PENALTY DESERVE TO BE DELETED ON TH E FACTS OF THE CASE. EVEN OTHERWISE, THE LOWER AUTHORITIES ERRED IN APPRECIAT ING THE FACT THAT THE ASSESSEE DERIVED BENEFIT ONLY TO THE EXTENT OF 30% OF IMPUGNED ITEMS BY WAY OF DEDUCTION U/S 80-IB AS AGAINST 100% PRESUMED BY THE LOWER AUTHORITIES, WHICH IN ITSELF IS ERRONEOUS AND REFLECT NON-APPLIC ATION OF MIND. PER CONTRA LD. DR CONTENDED THAT THE TRIBUNAL HAS REJECTED THE 80- IB CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.32,02,018/- WHICH, IN ITSELF, J USTIFIES IMPOSITION OF PENALTY AS THE ASSESSEE MADE A CLAIM FOR WHICH IT WAS NEVER EN TITLED FOR. 8. AFTER PERUSING RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND STRENGTH IN THE ARGUMENTS OF THE LD. AR. IT IS TO BE NOTED T HAT THE ASSESSEE CLAIMED 80IB DEDUCTION TOWARDS CERTAIN ITEMS AND THE TRIBUN AL UPHOLD THE MAJOR CLAIM OF THE ASSESSEE WHICH PROVES THE POINT THAT THE ASS ESSEE MADE A CLAIM WHICH WAS BONA-FIDE AND TENABLE IN LAW. THEREFORE, THE ASSESSEE MADE A LEGALLY VALID CLAIM, WHICH WAS ACCEPTED TO A MAJOR EXTENT. IN VIEW OF THE SAME, WE ITA NO.2552/M/2013 SEZAL GLASS LIMITED ASSESSMENT YEAR- 2006-07 5 ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE DO NOT DESERVES TO BE SADDLED WITH THE IMPUGNED PENALTY PARTICULARLY WHEN IT DERIVED BENEFIT ONLY TO THE EXTENT OF 30%, BEING DEDUCTION U/S 80-IB. THERE FORE, BY DELETING THE SAME, WE ALLOW THE ASSESSEES APPEAL. 9. IN NUTSHELL, THE ASSESSEES APPEAL STANDS ALLOWE D ON MERITS. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND MAY, 2017. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02.05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. %. , . , / DR, ITAT, MUMBAI 6. /0 / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI