DCIT, New Delhi V. M/s Wrigley India Pvt., New Delhi

ITA 2883/DEL/2013

• Counselvise Citation: 288320114 RSA 2013
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA SENIOR
• Assessee Lawyers: RAVI SHARMA
• Keywords: Business income; Question of law; Initiation of penalty proceedings; Reassessment proceedings
• Section: 147; 148; 143(3); 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) SMT. DIVA SINGH, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.2883 & 2884/DEL./2013 (ASSESSMENT YEARS : 2001-02 & 2002-03) DCIT, CIRCLE 18 (1), VS. M/S. WRIGLEY INDIA PVT. L TD., NEW DELHI. (JAYCO INDIA PVT. LTD. HAS MERGED WI TH WRIGLEY INDIA PVT. LTD.), 206, 2 ND FLOOR, OKHLA INDL.ESTATE, PH.III NEW DELHI. (PAN : AAACJ8944P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAVI SHARMA REVENUE BY : SHRI SAMEER SHARMA, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS EMANATE FROM THE ORDER OF THE CI T (APPEALS)-XXI, NEW DELHI DATED 28.02.2013 FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03. 2. JOYCO INDIA PRIVATE LIMITED IS ENGAGED IN THE MA NUFACTURE AND SALE OF CONFECTIONARY PRODUCTS I.E. BUBBLE GUMS, CHEWING GU MS, LOLLIPOPS AND TO TOFFEES AMALGAMATED WITH THE ASSESSEE WITH THE APPO INTED DATE OF APRIL 01, 2005. WRIGLEY INDIA PRIVATE LIMITED IS ENGAGED IN T HE BUSINESS OF MANUFACTURE AND SALE OF CONFECTIONARY PRODUCTS LIKE BUBBLE GUMS, CHEWING GUM, CANDIES ETC. THE AMALGAMATION WAS DULY APPROVE D BY THE DELHI HIGH ITA NO.2883 & 2884/DEL./2013 2 COURT VIDE ITS ORDER DATED SEPTEMBER 08, 2006 WHICH BECAME EFFECTIVE ON FILING OF THE CERTIFIED COPY OF ORDER WITH REGISTRA R OF COMPANIES, NCT OF DELHI & HARYANA ON OCTOBER 13, 2006. FOR THE YEAR UNDER CONSIDERATION, THE COMPANY HAD FILED ITS RETURN OF INCOME ON OCTOBER 3 1, 2001 DECLARING A TOTAL INCOME OF RS.NIL AFTER CLAIMING DEDUCTION OF RS.54, 633,081 UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961 (LIMITED TO INCOME OF RS.26,453,895 UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS AND PROFESS ION'). FURTHERMORE, TAX OF RS.10,532,214 WAS PAID BY THE APPELLANT ON ITS BOOK PROFITS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JB OF THE ACT. T HE ASSESSING OFFICER COMPLETED THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT AT NORMAL BUSINESS INCOME OF RS.9,479,353 TREATING THE ENTIRE INTEREST INCOME OF RS.9,479,353 AS 'INCOME FROM OTHER SOURCES' AS AGAI NST BUSINESS INCOME OFFERED BY THE ASSESSEE. THERE WAS NO CHANGE IN BOO K PROFITS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 115JB OF THE ACT. THUS. THE TOTAL TAX LIABILITY OF THE APPELLANT FOR THE ASSESSMENT YEAR 2001-02 AMOUNTED TO RS.10,532,214 WHICH WAS DETERMINED IN ACCORDANCE WI TH THE SECTION 115JB OF THE ACT. THEREAFTER, REASSESSMENT PROCEEDINGS UNDER SECTION 147 WERE INITIATED BY A.O. VIDE NOTICE DATED MARCH 07, 2006 ISSUED UNDER SECTION 148 OF THE ACT. AFTER THE REASSESSMENT ALSO, THE ASSESS EE WAS TAXED ON BOOK PROFIT OF RS.12,50,41,964/- U/S 115JB OF THE ACT. ASSESSIN G OFFICER LEVIED PENALTY ITA NO.2883 & 2884/DEL./2013 3 U/S 271(1)(C) OF THE ACT ON THE DISALLOWANCE MADE U /S 115JB OF THE ACT. PENALTY WAS DELETED BY CIT (A) BY HOLDING AS UNDER :- 4.2 GROUND NO.2 HAS BEEN TAKEN AGAINST THE ACTION OF AO BY WHICH HE HAS LEVIED PENALTY ON DISALLOWANCE MADE U/ S. 115JB OF THE IT ACT. IN THIS REGARD, LD. AR OF THE ASSESSEE HAS SUBMITTED VIDE LETTER DATED 9.2.2013 CONTENDING THAT WHERE TA XES HAVE BEEN FINALLY ASSESSED AS PAYABLE U/S.115JB OF THE IT ACT , PENALTY CANNOT BE LEVIED ON DISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE ACT. THE LD. AR HAS RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAL WA SONS INVESTMENT LTD. (327 ITR 543), WHEREIN, IT HAS BEEN HELD THAT PENALTY CANNOT BE LEVIED ON THE DISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE ACT IN CASE THE TAXES HAVE BEEN PAID ON BOOK PROFITS UNDER SECTION 115JB OF THE ACT. HE HAS ALSO PRODUCED COPY OF THE JUDGEMENT WHICH IS AVAILABLE A T PAGE 225 TO 234 OF THE PAPER BOOK AND HAVE BEEN PERUSED BY M E. THE LD. AR OF THE APPELLANT HAS ALSO SUBMITTED THAT HON'BLE SUPREME COURT HAS DISMISSED THE PETITION OF THE DEPARTMENT FILED AGAINST THE ORDER OF THE HON'BLE HIGH COURT WHICH IS ALSO A VAILABLE IN THE PAPER BOOK. APART FROM THE ABOVE, LD. AR OF THE APPELLANT HAS ALSO RELIED ON VARIOUS CASE LAWS. AFTER CONSIDE RING THE SAME, IT IS HELD THAT ISSUED IS SQUARELY COVERED BY THE D ECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LTD AS DISCUSSED ABOVE, WHICH HAS BEEN FINALLY APPR OVED BY THE HON'BLE SUPREME COURT. SO RELIANCE ON THE ABOVE JUD GEMENT OF THE HON'BLE DELHI HIGH COURT IS APPRECIATED. GROUND NO.2 OF THE APPEAL IS ALLOWED. 3. AT THE OUTSET OF THE HEARING, THE LD. AR SUBMITT ED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ASSESSEES OWN CASE IN CI T VS. JOYCO INDIA P. LTD. IN ITA NO.1244 OF 2006 DATED 17.09.2007. THE ASSES SEE SUBMITTED THAT JOYCO INDIA P. LTD. HAS MERGED WITH THE ASSESSEE, M/S. WR IGLEY INDIA PVT. LTD. ITA NO.2883 & 2884/DEL./2013 4 4. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER :- 1. LD. CIT (A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN CANCELLING THE PENALTY OF RS.88,39,068/- IMPOSED BY THE A.O. UNDER SECTION 271(2)(C) OF THE I.T. ACT ON THE ADDI TIONS MADE UNDER THE NORMAL PROVISIONS WHEN THE TAX WAS CHARGE D AS PER THE PROVISIONS OF SECTION 115JB OF THE I.T. ACT. 2. THE APPELLANT CRAVES LEAVE OR RESERVING THE RIGH T TO AMEND, MODIFY, ALTER, ADD, OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS AP PEAL. THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE, CITED SUPRA, HAS HELD AS UNDER :- IN THIS APPEAL UNDER SECTION 260(A) OF THE INCOME TAX ACT, 1961('ACT'), THE REVENUE IS AGGRIEVED BY AN O RDER DATED 9TH SEPTEMBER, 2005 PASSED BY THE INCOME TAX APPEL LATE TRIBUNAL ('TRIBUNAL') DELHI BENCH G, NEW DELHI IN ITA NO.538/DEL/2005 FOR THE ASSESSMENT YEAR 2000-01. BY THE IMPUGNED ORDER, THE TRIBUNAL ALLOWED THE APPEAL FI LED BY THE ASSESSEE CHALLENGING THE LEVY OF PENALTY UNDER SEC TION 271(1)(C) OF THE ACT. THE PENALTY WAS SET ASIDE BY THE TRIBUNAL ON THE GROUND THAT THE ASSESSING OFFICER H AD NOT RECORDED ANY SATISFACTION IN THE ASSESSMENT ORDER THAT THERE WAS EITHER CONCEALMENT OR INACCURATE PARTICULARS FU RNISHED BY THE ASSESSEE. MS. PREM LATA BANSAL, LEARNED SENIOR STANDING COUNS EL FOR THE REVENUE SUBMITS THAT IN COMMISSIONER OF INC OME TAX V. RAM COMMERCIAL ENTERPRISES LIMITED (2000) 246 IT R 568 THIS COURT HAS TAKEN THE VIEW THAT IF THE ASSESSING OFFICER DOES NOT RECORD HIS SATISFACTION IN THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS SHOULD BE INITIATED AGAINST THE ASSESSEE THE SUBSEQUENT ORDER LEVYING PENALTY WOULD BE BAD I N LAW. HOWEVER, SHE SAYS THAT ANOTHER BENCH OF THIS COURT HAS IN COMMISSIONER OF INCOME TAX, DELHI IV V. INDUS VALLE Y PROMOTERS LIMITED (2006) 155 TAXMAN 223 REFERRED TH E ITA NO.2883 & 2884/DEL./2013 5 FOLLOWING SUBSTANTIAL QUESTION OF LAW TO A LARGER B ENCH WHICH ACCORDING TO THE REFERRING BENCH WAS NOT CONSIDERED IN RAM COMMERCIAL ENTERPRISES LIMITED: WHETHER SATISFACTION OF THE OFFICER INITIATING THE PROCEEDINGS UNDER SECTION 271 OF THE INCOME-TAX ACT CAN BE SAID TO HAVE BEEN RECORDED EVEN IN CASES WHERE SATISFACTION IS NOT RECORDED IN SPECIFIC TERMS BUT IS OTHERWISE DISCERNIBLE FROM ORDER PASSED BY THE AUTHORITY?? SHE ACCORDINGLY SUBMITS THAT THIS COURT SHOULD AWAI T THE DECISION OF THE LARGER BENCH. WE FIND THAT THE DECISION OF THIS COURT IN RAM COMMERCIAL ENTERPRISES LIMITED HAS BEEN APPROVED BY THE SUPREME COURT IN DILIP N. SHROFF V. JOINT COMMISSI ONER OF INCOME TAX [2007] 291 ITR 519 (SC) AND T.ASHOK PAI V. COMMISSIONER OF INCOME TAX [2007] 292 ITR 11 (SC ). ASSUMING THE REVENUE WERE TO SUCCEED BEFORE THE LA RGER BENCH, AND THE QUESTION REFERRED TO IT IS ANSWERED IN THE AFFIRMATIVE, IT WOULD MEAN THAT IT IS SUFFICIENT TH AT THE SATISFACTION OF THE ASSESSING OFFICER FOR INITIATIN G PENALTY PROCEEDINGS AGAINST AN ASSESSEE UNDER SECTI ON 271(1)(C) OF THE ACT IS DISCERNIBLE FROM THE ASSESS MENT ORDER ITSELF AND THAT SUCH SATISFACTION NEED NOT BE SEPAR ATELY OR EXPRESSLY INDICATED IN THE ASSESSMENT ORDER. IN THA T EVENT THE ASSESSMENT ORDER IN THE PRESENT CASE WOULD HAVE TO BE EXAMINED TO FIND OUT IF THE SATISFACTION OF THE AS SESSING OFFICER IS DISCERNIBLE. THEREFORE, WITHOUT EXPRESSI NG ANY VIEW ON THE ISSUE PENDING CONSIDERATION BY THE LARGER BE NCH, AND PRESUMING THAT THE QUESTION REFERRED TO IT IS ANSWERED IN THE AFFIRMATIVE, WE PROCEED TO EXAMINE THE ASSESSM ENT ORDER IN THE INSTANT CASE IN ORDER TO FIND OUT WHETHER T HE SATISFACTION OF THE ASSESSING OFFICER THAT PENALTY PROCEEDINGS SHOULD BE INITIATED AGAINST THE ASSESSEE UNDER SECTION 271 (1 ) (C) OF THE ACT IS DISCERNIBLE THEREFROM. ON A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS, IN REGARD TO INITIATION OF PENALTY PROCEEDINGS, OBSERVED AS FOLLOWS: ASSESSED. TAX IS HEREBY CHARGED. ISSUE ITNS ITA NO.2883 & 2884/DEL./2013 6 150, DEMAND NOTICE AND CHALLANS. ALLOW CREDIT FOR PREPAID TAXES. PENALTY PROCEEDINGS U/S 271(1)(C) HAVE BEEN INITIATED SEPARATELY.? THE ABOVE RECORDING DOES NOT SATISFY THE REQUIREMEN T OF SECTION 271(1) (C) OF THE ACT AS EXPLAINED BY THIS COURT IN RAM COMMERCIAL ENTERPRISES LIMITED. FURTHER EVEN ON A DETAILED PERUSAL OF THE ASSESSMENT ORDER NO SATISFA CTION OF THE ASSESSING OFFICER THAT PENALTY PROCEEDINGS ARE REQU IRED TO BE INITIATED AGAINST THE ASSESSEE IS DISCERNIBLE. NONE HAS ALSO BEEN POINTED OUT TO US. NO SUBSTANTIAL QUESTION OF LAW ARISES. DISMISSED. FACTS BEING SIMILAR, RESPECTFULLY FOLLOWING THE ORD ER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ASSESSEES CASE, W E FIND NO MERITS IN THE APPEALS FILED BY THE REVENUE, HENCE, THE SAME ARE D ISMISSED. 5. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF NOVEMBER, 2013. SD/- SD/- (DIVA SINGH) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 21 ST DAY OF NOVEMBER, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXI, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.