M/s. Sun Art Exporters, Ahmedabad V. The Income tax Officer,Ward-6(4), Ahmedabad

ITA 2558/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1948 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Bonafide belief; Difference of opinion
• Section: 143(3); 10B

Judgement Text

ITA.NO.2558/ AHD/10 A.Y. 2005-06. 1 IN THE INCOME_TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT & SHRI A.N. PAHUJA ) ITA NO. 2558 /AHD/2010 (ASSESSMENT YEAR: 2005-06) M/S. SUN ART EXPORTERS, RAM N. AGARWAL & CO., 48/2, NEW CLOTH MARKET, AHMEDABAD. (APPELLANT) VS. INCOME TAX OFFICER, WARD 6(4), AHMEDABAD. (RESPONDENT) PAN: AAMFS 1900 M APPELLANT BY : NONE RESPONDENT BY : SHRI ANIL KUMAR, SR. D.R. ( (( ( )/ )/)/ )/ ORDER PER: SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-XXI, AHMEDABAD DATED 28-7-2010. 2. THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF PENALTY LEVIED UNDER SECTION 271(1) (C ) OF RS.42,727/-. AS PER TH E GROUNDS THE ASSESSEE HAS RAISED CERTAIN OBJECTIONS WHICH ARE IN THE NATU RE OF ARGUMENT THAT ON IDENTICAL FACTS WHEN THE ADDITION WAS DELETED IN AS SESSMENT YEAR 2004-05, THEN THE LD. C.I.T. (A) SHOULD HAVE CONSIDERED THOS E FACTS WHILE CONFIRMING THE PENALTY FOR THE YEAR UNDER CONSIDERATION. IN TH E GORUNDS IT HAS ALSO BEEN PLEADED THAT MERELY FOR DISALLOWANCE OF CLAIM OF EXPENDITURE A CONCEALMENT PENALTY SHOULD NOT HAVE BEEN LEVIED. 3. THE FACTS IN BRIEF AS EMERGED FROM TH E CORRESPONDING PENALTY ORDER PASSED U/S. 271(1)(C) DATED 16-6-2008 AND THE ASSESSMENT ORDER ITA.NO.2558/ AHD/10 A.Y. 2005-06. 2 PASSED U/S. 143(3) DATED 19-12-2007 WERE THAT THE A SSESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURE, POLISHING, PAINTING, FINISHING OF HANDICRAFTS AND FURNITURES GIFT-WARE ITEMS ETC. T HE BASIS OF LEVY OF PENALTY WAS RE-CALCULATION OF DEDUCTION CLAIMED U/S. 10B OF THE INCOME TAX ACT. WHILE PASSING THE ASSESSMENT ORDER IT WAS NOTICED B Y THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S . 10B OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM FIXED DEPOSITS AM OUNTING TO RS.1,16,770/- . SINCE THE IMPUGNED INTEREST WAS NOT FOUND TO BE FROM THE BUSINESS OF EXPORT OF ARTICLES AS PRESCRIBED U/S. 10B, THEREFOR E, IT WAS HELD AS NOT ELIGIBLE FOR DEDUCTION UNDER THE SAID SECTION. DUR ING THE PENALTY PROCEEDINGS, IT WAS INFORMED THAT FOR ASSESSMENT YE AR 2004-05, LD. C.I.T.(A) HAD ALREADY DELETED THE ADDITION. IT WAS ALSO INFORMED THAT FOR ASSESSMENT YEAR 2003-04 AND 2004-05 THOUGH THE RECA LCULATION OF THE DEDUCTION U/S. 10B WAS MADE, HOWEVER, NO PENALTY PR OCEEDINGS WERE INITIATED. ABOUT THE FATE FOR ASSESSMENT YEAR 2004- 05, THE ASSESSING OFFICER HAS MENTIONED THAT AGAINST THE SAID RELIEF THE REVENUE DEPARTMENT HAD GONE IN APPEAL BEFORE THE HONBLE ITAT AND SINC E THAT RELIEF WAS NOT ACCEPTED BY THE REVENUE DEPARTMENT, THEREFORE, THER E WAS MERIT IN THE SAID DISALLOWANCE OF CLAIM OF INTEREST. FOR THE YEAR UND ER CONSIDERATION IT WAS NOTED BY THE A.O. THAT THE ASSESSEE HAD NOT GONE IN APPEAL. FINALLY, ON THE SAID RECALCULATED AMOUNT A PENALTY OF RS. 42,727/- WAS LEVIED. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY IN BRIEF AND CRYPTIC MANNER LD. C.I.T. (A) HAS CONCLUD ED THAT HE WAS INCLINED TO AGREE WITH THE ASSESSING OFFICER AND THE PENALTY WAS CONFIRMED. 5. ON THE DATE OF HEARING AN ADJOURNMENT APPLICATION WAS MOVE D FROM THE SIDE OF THE APPELLANT, HOWEVER, CONSIDERING THE SMALLNESS OF THE MATTER WE HAVE REJECTED THE ADJOURNMENT APPLICATION AND DE CIDED TO PROCEED WITH THE CASE EX-PARTE QUA THE ASSESSEE AFTER HEARING TH E LD. DEPARTMENTAL REPRESENTATIVE SHRI ANIL KUMAR. ITA.NO.2558/ AHD/10 A.Y. 2005-06. 3 6. ON A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHOR ITIES BELOW WE HAVE FOUND THAT THE DETAILS OF THE IMPUGNED INTEREST WAS VERY MUCH IN THE KNOWLEDGE OF THE REVENUE DEPARTMENT ON ACCOUNT OF T HE FACT THAT THE SAME WAS DISCLOSED WHILE CALCULATING THE DEDUCTION U/S. 10B OF THE ACT. THE ACTION OF THE ASSESSEE FOR THE SAID CLAIM COULD BE SAID TO BE UNDER A BONAFIDE BELIEF BECAUSE IN THE PAST THE FIRST APPEL LATE AUTHORITY HAD ALLOWED THE CLAIM WHICH WAS STATED TO BE AFFIRMED BY THE TR IBUNAL. IT APPEARS THAT MERELY BECAUSE A DIFFERENT VIEW WAS TAKEN BY THE LD . C.I.T. (A), THIS PENALTY WAS IMPOSED. IT IS AN ACCEPTED POSITION OF LAW THAT A PENALTY FOR CONCEALMENT CAN NOT BE LEVIED IN CASE OF DIFFERENCE OF OPINION. FOR THIS LEGAL PROPOSITION THE ASSESSEE HAS PLACED RELIANCE ON GUJARAT MACHINERY MANUFACTURERS 67 TTJ 466 (AHD). THE ASSESSEE HAS AL SO PLACED RELIANCE ON FEW DECISIONS FOR THE LEGAL PROPOSITION THAT MERE D ISALLOWANCE OF EXPENDITURE SHOULD NOT BE THE BASIS FOR LEVY OF PEN ALTY. CASE LAWS CITED BEFORE LD. CIT (A) WERE CIT VS. NEPANI BIRI CO. T RUST (1991) 190 ITR 402 AND CIT VS. UNIVERSITY PRINTERS (1991) 188 ITR 206. IN THIS CONNECTION, A LATEST DECISION OF HONBLE SUPREME COURT WAS PRONOU NCED IN THE CASE OF RELIANCE PETOPRODUCTS PVT. LTD., (2010) 322 ITR- 15 8(SC). IN THE TOTALITY OF THE CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE DE CISIONS CITED HEREINABOVE WE ARE OF THE VIEW THAT THE CLAIM OF DE DUCTION U/S. 10B WAS VERY MUCH FULLY DISCLOSED BY THE ASSESSEE AND NO PA RT OF IT WAS CONCEALED SO AS TO DELIBERATELY FURNISH THE INACCURATE PARTIC ULARS ABOUT THE IMPUGNED INTEREST. THEREFORE, MERELY ON DIFFERENCE OF OPINIO N OR DISALLOWANCE OF CLAIM PENALTY FOR CONCEALMENT SHOULD NOT BE LEVIED. WE HEREBY REVERSE THE FINDINGS OF THE AUTHORITIES BELOW AND ALLOW THE GRO UND. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11-03-2011. SD/- SD/- (A. N. PAHUJA) (MUKUL KUMAR SHRAWA T) ACCOUNTANT MEMBER. JUDICIAL MEMBER. ITA.NO.2558/ AHD/10 A.Y. 2005-06. 4 AHMEDABAD. DATED: 11/03/2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-XXI, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR.,ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD.