ITO, New Delhi V. M/s Brunswick Investments Pvt. Ltd., New Delhi

ITA 292/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3676 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-06-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 18-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI
• Assessee Lawyers: A K NAIR
• Keywords: Reasonable cause; Wrong claim
• Section: 143(3); 80HHC; 115JB; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.292/DEL/2011 ASSESSMENT YEAR : 2001-02 ITO, M/S BRUNSWICK INVESTMENTS WARD-3 (1), PVT. C-192, SARVODAYA ENCLAVE, NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACB AAACB AAACB AAACB- -- -5514 5514 5514 5514- -- -F FF F APPELLANT BY : MS. BANITA DEVI, SR. DR. RESPONDENT BY : SHRI A.K. NAIR, C.A. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A)-VI, NEW DELHI DATED 9.11,2010 FOR ASSESSMENT YEA R 2001-02 ON AN ORDER PASSED BY THE ASSESSING OFFICER U/S 271(1)(C ) O F THE ACT. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEALS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING PENA LTY OF `.21,30,042/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 IGNORING THAT THE ASSESSEE COMPANY HAD SUBMITTED INACCUR ATE PARTICULARS OF ITS INCOME BY MAKING EXCESS CLAIM U/S 80H HC OF THE INCOME TAX ACT, 1961 AND THEREFORE LIABLE FOR P ENALTY U/S 271(1)(C) OF THE I.T.. PAGE 2 OF 7 ITA NO292/DEL/2011 2.THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY. ALTER AND/OR FORGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. IN THIS CASE ORIGINAL RETURN OF INCOME WAS FURNISHED BY THE ASSESSEE DECLARING NIL INCOME ON 30.10.2001. BOOK PROFI T WAS DISCLOSED U/S 115JB AT RS.1,28,950/-. THE SAME WAS ASSESSED U/S 143(3 ) OF THE ACT VIDE ORDER DATED 30.12.2003 WHEREIN ASSESSEES CLAIM U/S 80HHC AND 80IB WERE ADJUDICATED BY THE ASSESSING OFFICER AND TOTAL INCOME WAS DETERMINED AT RS.1,30,590/-. THE SAME BEING MORE THAN BOOK PROFIT, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.1,30,590/-. 3. SUBSEQUENTLY, THE CASE WAS REOPENED U/S 147 OF THE A CT BY ISSUE OF NOTICE U/S 148 DATED 23.2.2006.THE ASSESSEE WAS ASKED A S TO WHY PROFITS OF BUSINESS FOR COMPUTING THE DEDUCTION UNDER SE CTION 80 HHC SHOULD NOT BE COMPUTED AS PER SUB SECTION (2) OF SECTI ON 80HHC READ WITH EXPLANATION (BAA) BY REDUCING AMONGST OTHER AMO UNTS MENTIONED IN THE EXPLANATION, THE AMOUNT OF DEDUCTION ALLOWED U/S 80IB AS PER PROVISIONS OF LAW. ACCORDING TO THE ASSESSING OFFICER A S THIS VIEW WAS NOT FOLLOWED IN THE ORIGINAL ASSESSMENT, INCOME OF RS,3 1,98,941/- CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. IT WAS CONTEND ED BY THE ASSESSEE THAT THE ORIGINAL CLAIM MADE BY IT ON ACCOUNT OF DEDUCTION U/S 80HHC WAS CORRECT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT REPORTED IN 253 ITR (ST.) 77-78 IN THE CASE OF CIT V . SHIRKE CONSTRUCTION EQUIPMENTS LTD. THE ASSESSING OFFICER DID NOT ACCEPT TH E CONTENTION OF THE ASSESSEE IN VIEW OF THE APEX COURTS JUDGMENT IN THE CASE OF IPCA LABORATORY LTD. V. CIT REPORTED IN 266 ITR 531. HE, THEREFORE, COMPUTED THE ALLOWABLE DEDUCTION U/S 80HHC AFTER RED UCING THE PROFIT PAGE 3 OF 7 ITA NO292/DEL/2011 OF BUSINESS BY THE AMOUNT OF DEDUCTION ALREADY ALLOWED U/S 80IB OF THE ACT. THUS, THE ORIGINAL DEDUCTION U/S 80HHC AMOUNTING TO RS.1,55,91,659/- WAS REDUCED TO RS.1,23,92,718/- THERE BY MAKING AN ADDITION OF RS.31,98,941/-. THE ASSESSING OFFICER ALSO IN ITIATED PENALTY PROCEEDINGS U/S 271(1) (C ) BY CONSIDERING THAT THE ASSE SSEE HAS FURNISHED IN-ACCURATE PARTICULARS OF INCOME IN SO FAR AS ALLOWABLE DEDUCTION U/S 80HHC & 80IB ARE CONCERNED. DURING THE PENALTY PROCEEDINGS BEFORE THE ASSESSING OFFICER, NO REPLY WAS F URNISHED BY THE ASSESSEE IN RESPONSE TO ASSESSING OFFICERS LETTER DATED 20.3.2009. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSEE CO MPANY HAD NO REASONABLE CAUSE FOR FURNISHING INACCURATE PARTICU LARS OF INCOME TO THE TUNE OF RS.40,15,265/- AND LEVIED THE MAXIMUM PE NALTY BEING 300% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS .63,90,26/-. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD CIT( A). 4. BEFORE THE LD CIT(A), IT WAS CONTENDED BY THE ASSESSE E THAT THE CLAIM FOR DEDUCTION U/S 80HHC WAS MADE UNDER A BONA F IDE BELIEF THAT THE SAME WAS ALLOWABLE TO THE ASSESSEE AND ON THE BASIS OF LEGAL OPINION. NO INCORRECT DETAILS REGARDING THE CLAIM M ADE WERE EVER FURNISHED BY THE ASSESSEE AT THAT POINT OF TIME. WHEN SU CH CLAIM WAS MADE THERE WERE TWO POSSIBLE OPINIONS ON THE ISSUE. ACC EPTANCE OR REJECTION OF THE CLAIM MADE BY THE ASSESSEE IS NOT RELEV ANT TO DETERMINE AS TO WHETHER THE ASSESSEE HAS FURNISHED INACCUR ATE PARTICULARS OF INCOME OR NOT. MERELY MAKING A LEGAL CLAIM WHICH IS REJECTED BY THE ASSESSING OFFICER WOULD NOT LEAD TO TH E CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOM E. RELIANCE WAS PLACED ON THE CASE OF RELIANCE PETROPRODUCTS LTD. REPORTED IN 322 ITR 158. PAGE 4 OF 7 ITA NO292/DEL/2011 5. THE LD CIT(A) AFTER CONSIDERING THE FACTS AND CIRC UMSTANCES OF THE CASE OPINED THAT THE IMPUGNED PENALTY WAS LEVIED ON ACCOUNT OF ASSESSEES CLAIM THAT ELIGIBLE PROFIT FOR THE PURPOSE OF SECTION 80HHC SHOULD BE COMPUTED BEFORE ALLOWING DEDUCTION U/S 80IA OF THE ACT. THIS ISSUE WAS REFERRED TO HONBLE SPECIAL BENCH OF ITA T IN THE CASE OF ACIT V. ROGINI GARMENTS REPORTED IN 108 ITD 49 AND A GAIN IN THE CASE OF ACIT V. HINDUSTAN MINT & AGRO PRODUCTS LTD. REPOR TED IN 111 ITD 107. EVEN OTHERWISE, THE INITIAL CLAIM OF THE ASSESSEE WAS ACC EPTED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT. IT WAS, THEREFOR E, HELD BY HIM THAT THE PENALTY WAS LEVIED ON ACCOUNT OF AN ISSUE WH ICH WAS DEBATABLE AT THAT POINT OF TIME. THIS BEING THE CASE, HE HELD THAT SUCH ACTION OF THE ASSESSEE COULD NOT BE CONSIDERED AS FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. THUS, HE HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 271(1)( C) OF THE ACT AND DELETED THE IMPUGNED PENALTY. 6. AGGRIEVED, THE REVENUE HAS FILED APPEAL BEFORE TH E TRIBUNAL. 7. BEFORE US LD DR CONTENDED THAT THE WRONG CLAIM MA DE BY THE ASSESSEE SHOULD BE CONSIDERED AS FURNISHING OF INACCURATE P ARTICULARS OF INCOME. HOWEVER, SHE WAS UNABLE TO DEMONSTRATE THA T THE ISSUE ON ACCOUNT OF WHICH ADDITION WAS MADE BY THE ASSESSING OFF ICER WAS NOT DEBATABLE AT THE POINT OF TIME WHEN THE ASSESSEE HAD FI LED THE ORIGINAL RETURN OF INCOME. 8. LD AR FOR THE ASSESSEE, ON THE OTHER HAND, RELIED O N THE ORDER OF LD CIT(A). IT WAS CONTENDED BY HIM THAT IF THE ADD ITION WAS MADE ON THE BASIS OF DEBATABLE ISSUE, NO PENALTY U/S 271(1)( C) COULD BE LEVIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. DCIT V. ELTEK SGS (P) LTD. 10 SOT 178 (DEL.). 2. TOSHICA CREATION V. ITO 150 TAXMAN 48 (JAIPUR). PAGE 5 OF 7 ITA NO292/DEL/2011 IT WAS, THEREFORE, CONTENDED BY HIM THAT THE ORDER O F LD CIT(A) BE CONFIRMED. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD O F THE TRIBUNAL. IT IS EVIDENT THAT THE ASSESSEE DID NOT FURNI SH ANY DETAIL MATERIAL TO THE COMPUTATION OF INCOME WHICH WERE IN CORRECT. IT MERELY MADE A CLAIM FOR DEDUCTION U/S 80HHC OF THE ACT. SUC H A CLAIM OF THE ASSESSEE WAS ALSO ORIGINALLY ACCEPTED BY THE ASSESSING OFFICE R. THE CLAIM WAS SUBSEQUENTLY REDUCED IN VIEW OF THE APEX COU RTS DECISION IN IPC LABORATORY LTD. (SUPRA). READING OF THE ABOVE D ECISION OF HONBLE APEX COURT WOULD SHOW THAT THE ISSUE ON ACCOUNT OF WH ICH THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFFICER AND SUBSEQUENTLY PENALTY U/S 271(1)( C) WAS LEVIED, WAS A DE BATABLE ONE. THUS, THE CLAIM OF THE ASSESSEE MADE IN THE ORIGINAL RET URN CANNOT BE SAID TO BE SUCH A PATENTLY WRONG CLAIM WHICH WOULD AM OUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WA S A BONA FIDE CLAIM WHICH WAS MADE BY THE ASSESSEE WHICH WAS ALLOWED BY THE A SSESSING OFFICER DURING THE ORIGINAL ASSESSMENT MADE U/S 143(3) O F THE ACT. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ORDER OF LD CIT(A) IN CANCELING THE IMPUGNED PENALTY AND CONFIRM THE SAME. THUS, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE 24TH DAY OF JUNE, 2011. SD/- SD/- (I.P. BANSAL) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 24.6.2011. HMS PAGE 6 OF 7 ITA NO292/DEL/2011 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 21.6.2011 DATE OF DICTATION 22.6.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. DATE OF ORDER SENT TO THE CONCERNED BENCH PAGE 7 OF 7 ITA NO292/DEL/2011