The DCIT, Mehsana Circle, Mehsana V. M/s. Jyot Overseas Pvt.Ltd., Ahmedabad

ITA 2888/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72812 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: N C AMIN
• Keywords: Search and seizure; Difference of opinion; Onus to prove; Change of opinion
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, A HMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M. ) I.T. A. NO 2888 /AHD/2010 (ASSESSMENT YEAR: 2004-05 DCIT, MEHSANA CIRCLE, MEHSANA. V/S M/S. JYOTI OVERSEAS PVT. LTD. 604/B MAHALAY, OPP. HOTEL PRESIDENT, OFF. C.G. ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACJ4894 L APPELLANT BY : SHRI J.P. JHANGID, SR. D.R . RESPONDENT BY : SHRI N.C. AMIN ( )/ ORDER DATE OF HEARING : 27-12-201 3 DATE OF PRONOUNCEMENT : 03 -01--2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS DIRECTED AGAINST THE PENALTY ORDER D ATED 22.02.2009 PASSED UNDER SECTION 271(1)(C) WHEREIN PENALTY OF RS. 3,90 ,100/- WAS LEVIED BY THE A.O. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A PRIVATE LTD. COMPANY ENGAGED IN THE B USINESS OF ISABGOL AND ALSO ACTING AS COMMISSION AGENT. ASSESSEE FILED ITS RETURN OF INCOME ITA NO 2888/AHD/2010 . A.Y. 2004- 05 2 FOR A.Y. 04-05 ON 29.10.2004 DECLARING TOTAL INCOME OF RS. 4,31,260/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER A SSESSMENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 08.12.2006 AN D THE TOTAL INCOME WAS DETERMINED AT RS. 15,18,440/- BY DISALLOWING TH E CLAIM OF DEDUCTION UNDER SECTION 80IA(RS. 4,55,535/-) AND U/S. 80HHC ( RS. 6,31,655/-). A.O. WAS OF THE VIEW THAT ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER 80IA AND ALSO 80HHC. A.O. WAS OF THE VIEW THAT BY C LAIMING THE AFORESAID DEDUCTIONS THE ASSESSEE HAD FURNISHED INA CCURATE PARTICULARS TO EVADE TAX AND THEREFORE PENALTY UNDER SECTION 271(1 )(C) WAS LEVIABLE. HE ACCORDINGLY LEVIED PENALTY OF RS. 3,90,100/- VIDE O RDER DATED 22.02.2009. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 05.05.2010 DELETED THE PENALTY. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE REV ENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN D:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF T HE IT ACT, AMOUNTING TO RS. 3,90,100/-. 4. AT THE OUTSET THE LD. A.R. SUBMITTED THAT THE ISSUE IN THE YEAR UNDER APPEAL IS IDENTICAL TO THAT OF A.Y. 03-04. HE SUBMITTED TH AT ON IDENTICAL FACTS FOR A.Y. 03-04, THE HONBLE TRIBUNAL VIDE ORDER DATED 1 6.07.2010 HAS DELETED THE PENALTY WHICH WAS LEVIED BY A.O. HE TH EREFORE SUBMITTED THAT SINCE THE FACTS IN THE YEAR UNDER APPEAL ARE I DENTICAL TO THAT OF A.Y. 03-04, THE PENALTY IN THE YEAR UNDER APPEAL BE ALSO DELETED. 5. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT THE F ACTS OF THE CASE YEAR UNDER APPEAL ARE DIFFERENT FROM THAT OF A.Y. 03-04, IN VIEW OF THE FACT THAT IN THE YEAR UNDER APPEAL DEDUCTION UNDER 80HHC WAS ALSO DENIED TO ITA NO 2888/AHD/2010 . A.Y. 2004- 05 3 THE ASSESSEE WHICH WAS NOT THE CASE IN A.Y. 03-04. HE THEREFORE SUPPORTED THE ORDER OF A.O. AND SUBMITTED THAT THE ORDER OF THE A.O. BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING ASSESSMENT PRO CEEDINGS THE CLAIM OF DEDUCTION U/S 80HHC AND 80IA WAS DENIED AND ON IT T HE PENALTY WAS LEVIED BY THE A.O. WE FIND THAT THE PENALTY WHICH WAS LEVIED BY THE A.O. WAS DELETED BY CIT(A) BY ORDER DATED 05.08.20 10 BY HOLDING AS UNDER:- 6. I HAVE CONSIDERED THE PENALTY ORDER AS WELL AS A PPELLANT'S CONTENTION IN THIS REGARD. BASICALLY, APPELLANT HAD CLAIMED DEDUCTION U/S.80IA OF RS.4,55 ,535/- WHICH WAS DISALLOWED BY THE CIT(A) AS WELL AS BY HON'BLE ITAT BASED ON THE DECISION IN THE CAS E OF CIT V/S. STERLING FOODS 237 ITR 579(SC) AND PANDIAN CHEMICALS V/S. CIT 262 ITR 278 (SC), HOLDIN G THAT RECEIPTS ON SALE OF DEPB LICENSE ARE NOT DERIVED FROM INDUSTRIAL UNDERTAKING. WHILE, THE APP ELLANT HAD RELIED ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. I NDIA GELATINE & CHEMICALS LTD (2005) 275 ITR 284 (GUJ). 6.1 SIMILAR ISSUE WAS INVOLVED IN THE EARLIER YEAR VIZ. AY 2003-04 WHICH HAS BEEN DECIDED BY MY PREDECESSOR AS UNDER: 8. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION AND I AM AFRAID THE PENALTY IN QUESTION CANNOT BE. SUSTAINED. I AGREE WITH THE CONTENTION OF THE AUTHO RIZED REPRESENTATIVE THAT THE NON-DEDUCTION U/S.80IA WITH RESPECT TO DEPB LICENSE IS A MATTER O F DIFFERENCE OF OPINION. THERE IS NOTHING WHICH THE APPELLANT HAS CONCEALED FROM 1HE DEPARTMENT. TH E CLAIM AND ITS WORKING, ON A PARTICULAR BASIS, WAS BEFORE THE DEPARTMENT. DURING THE COURSE OF ASSESSMENT, THE CLAIM WAS SCRUTINIZED AND NOT FOUND TO BE AS PER THE THINKING OF THE DEPARTME NT AND HENCE THE DISALLOWANCE WAS MADE. IN CONTEXT OF UNSETTLED JUDICIAL POSITION, CLEARLY IT CANNOT BE A CASE OF PROVIDING INACCURATE PARTICULARS OF INCOME OR FOR COMPUTATION OF INCOME. 9. THE LEGAL POSITION ON THE ISSUE OF EXPLANATION-1 TO SECTION 271(1)(C) AT PRESENT REQUIRES THE DEPARTMENT TO AT LEAST PRIMA-FACIE BRING OUT THAT T HERE HAS BEEN AN ACT OF CONCEALMENT OR HOLDING BACK OF INFORMATION OR PROVIDING INACCURATE PARTICU LARS. ONCE THAT IS DONE, THE BURDEN OF PROOF WILL SHIFT ON THE APPELLANT AND THE ASSESSING OFFIC ER DOES NOT HAVE TO PROVE THE MENS-REA. IN THE INSTANT CASE, AS DISCUSSED IN THE PRECEDING PARA, W E DO NOT HAVE SUCH A SITUATION EITHER IN THE CONTEXT OF CLAIM U/S.80IA OR FOR THE VALUATION OF S TOCK. I HAVE NO REASON TO DIFFER FROM ABOVE, AS THE FACTS OF THE CASE ARE SAME SO PENALTY LEVIED ON THIS ISS UE IS CANCELLED. 6.2 AS REGARDS PENALTY ON ACCOUNT OF DISALLOWANCE OF CLAIM OF RS.6,31,645/- U/S. 80HHC, CIT(A) CONFIRMED THE ORDER OF THE AO. THE FACTS REVEAL THA T APPELLANT CLAIMED THE ABOVE DEDUCTION WITHOUT NETTING OUT THE DEPB INCOME. DURING THE ASSESSMENT PROCEEDINGS, A REVISED WORKING WAS FILED ON THE DIRECTIONS OF THE AO. THEN A0 HELD THAT APPELLANT H AD INCURRED LOSS IN THE EXPORTS AND IS NOT COVERED BY THE SECOND, THIRD OR FOURTH PROVISO OF SECTION 8 0 HHC(3), SO, THE SET OFF UNDER FIFTH PROVISO IS NO T ALLOWABLE. THE APPELLANT HAS GIVEN THE DETAILS OF R EVISED COMPUTATION DURING THE COURSE ASSESSMENT PROCEEDINGS AS PER WHICH LOSS HAS BEEN DETERMINED O N THE EXPORTS. THIS LOSS HAS BEEN SET OFF AGAINST EXPORT INCENTIVES IN THE REVISED COMPUTATION THEREB Y GIVING A PROFIT OF RS.12,02,044/-. THIS COMPUTATION HAS BEEN FILED BEFORE THE AO HIMSELF. ITA NO 2888/AHD/2010 . A.Y. 2004- 05 4 6.3 FURTHER, AS PER NOTES FORMING PART OF 10CCAC CE RTIFICATE FILED WITH THE RETURN, IT IS SPECIFICALLY MENTIONED REGARDING CLAIM OF DEDUCTION U/S.80HHC IN A LOSS CASE AS UNDER: 'THE PROVISO TO SUB SECTION (3) OF SECTION 80 HHC I NDICATE THAT NEGATIVE FIGURE OR LOSS WORKED OUT UNDER CLAUSE (A), (B) AND (C) HAD TO BE COMPLETELY IGNORED AND 90% OF EXPORT INCENTIVE HAD STILL TO BE TAKEN INTO CONSIDERATION FOR WORKING OUT THE CLAIM OF DEDUCTIO N U/S.80HHC. ASSTT. COMMISSIONER CIT V. PRATIBHA SYNTEX LTD (199 9) 10 DTC 330 (AHD-TRIB); (1999) 63 TTJ (AHD-TRIB) 409 [52]; A..M. MOOSA V. ASSTT. CIT (199 6) 54 TTJ (COCH-TRIB) 193 [53); AVON CYCLES LTD V. ACIT (1997) 59 TTJ (CHD-TRIB) 75 [54] ; HINDUSTAN FASHIONS LTD V. ASSTT. CIT (1998) 61 TTJ(AHD-TRIB) 734 [55]' FROM THE ABOVE, IT IS CLEAR THAT ASSESSEE HAD CLAIM ED DEDUCTION U/S.80HHC RELYING UPON THE DECISION OF JURISDICTIONAL TRIBUNAL AND LATER HAD GIVEN THE COMPUTATION DURING THE ASSESSMENT PROCEEDINGS AS DESIRED BY THE AO HIMSELF. THE APPELLANT HAD GIVEN THE EXPLANATION THAT IT HAS CLAIMED THE DEDUCTION SUBSTANTIATED BY THE DECISIONS OF THE VARIOUS JUDIC IAL AUTHORITIES AT THAT TIME AND THIS EXPLANATION W AS NOT FOUND TO BE MALA FIDE, ALL THE FACTS RELATING T O SUCH CLAIM AND COMPUTATION THEREOF WAS DISCLOSED BY THE ASSESSEE. IN VIEW OF THE SAME, IT CANNOT BE SAI D THAT MERELY BY CLAIMING DEDUCTION; THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF INCOME. 6.4 IN THIS REGARD THE HON'BLE SUPREME COURT IN IT' S RECENT LANDMARK DECISION IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD REPORTED AT (2010) 322 ITR 15 8 HAS HELD AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT, 1961. SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE P ARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) W OULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND T O BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS, IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY UNDER SECTION 27L(L)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE I N LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. ' ACCORDINGLY, PENALTY IN RESPECT OF CLAIM OF DEDUCTI ON U/S.80HHC IS CANCELLED. 6.5 FROM THE FACTS OF THE CASE, SUBMISSION OF THE A PPELLANT AND DISCUSSION MADE AS ABOVE, IT IS VERY CLEAR THAT PENALTY IS NOT LEVIABLE IN APPELLANT'S C ASE. THEREFORE, PENALTY LEVIED U/S. 271(L)(C) OF RS.3,90,100/- IS HEREBY CANCELLED. 7. WE FURTHER FIND THAT THE CO-ORDINATE BENCH OF TRIB UNAL IN THE ASSESSEES OWN CASE FOR A.Y. 03-04 IN ITA NO. 605/AHD/2008 AND C.O. NO. 81/AHD/2008 ORDER DATED 16.07.2010 HAS DELETED THE PENALTY BY HOLDING AS UNDER:- 4. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE SIDES. WE ARE OF THE VIEW THAT BOTH ON FACTUAL AS WELL AS ON LEGAL REASONS, THE PENALTY WAS NOT TO BE LEVIED CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , THEREFORE, WE UPHOLD THE CANCELLATION OF THE PENALT Y AS DONE BY THE LEARNED CIT(APPEALS). THE UNDISPUTED FACT IS THAT THE BOOKS OF ACCOUNTS WERE AUDITED BY THE CHARTERED ACCOUNTANT AND IN THOSE ACCOUNTS ALL THE RELEVANT MATERIAL FACT WAS INFORME D TO THE REVENUE DEPARTMENT. IT IS NOT THE CASE OF ITA NO 2888/AHD/2010 . A.Y. 2004- 05 5 THE REVENUE THAT CERTAIN BOGUS OR WRONG INFORMATION WAS FOUND DETECTED IN THE SAID AUDITED BALANCE- SHEET. RATHER, THE CONTENTION BEFORE US IS THAT THE ASSESSMENT WAS MADE ON THAT VERY BASIS ON WHICH TH E INCOME WAS OFFERED AND, LATER ON, EVEN THE PENALTY WAS IMPOSED PERTAINING TO THOSE MATERIAL FACTS WHICH WERE ALREADY EITHER INFORMED BY THE ASSESSEE BY FILING THE RETURN OR DULY FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO THE ASSESSING O FFICER. THEREFORE, THE VEHEMENT ARGUMENT IS THAT THE CORRECT PARTICULARS OF THE INCOME AND THE RELEV ANT INFORMATION WERE VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER. ONCE THE ASSESSEE HAS FURNIS HED THE INCOME-TAX RETURN AND THROUGH WHICH ALL THE RELEVANT MATERIAL FACTS WERE R EVEALED TRULY AND CORRECTLY AS WELL AS SUPPORTED BY THE AUDITED ACCOUNTS, SO THERE WAS NO CONCEALMENT OF FACTS ON T HE PART OF THE ASSESSEE. ON THE OTHER HAND, THIS ARGUMENT OF THE ASSESSEE ALSO APPEARS TO BE REASONA BLE THAT THE IMPUGNED ADDITION WAS CONTENTIOUS IN NATURE. IN THE PAST AS WELL THE ISSUE OF PROFIT ON DEPB LICENCE INCOME WAS A SUBJECT OF CONTROVERSY, THEREFORE, THE PRESENT CASE COULD NOT BE SAID TO BE A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS BECAUSE MERELY DUE TO A CHANGE IN THE DECISIONS OF THE HON'BLE COURTS THIS CLAIM REMAINED A SUBJECT OF CONTROVERSY . AT BEST IT CAN BE SAID TO BE A CHANGE OF OPINION, HENCE, OUGHT TO BE OUT OF THE CLUTCHES OF THE PENAL TY PROVISIONS. 8. SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEA L ARE IDENTICAL TO THAT OF EARLIER YEARS, WE FOLLOWING THE ORDER OF CO-ORDINAT E BENCH OF TRIBUNAL FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A ) AND THUS DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 03 - 01 - 2014. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD