DCIT, Panchkula V. M/s ADMAC Formulations, Panchkula

ITA 313/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6963 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 14-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 313/CHD/2017 ASSESSMENT YEAR : 2011-12 THE DCIT, VS. M/S ADMAC FORMULATIONS, PANCHKULA CIRCLE, HOUSE NO. 272, SECTOR 17, PANCHKULA. PANCHKULA. PAN NO. AAAAA5219Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL, SR.DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 08.06.2017 DATE OF PRONOUNCEMENT : 03.08.2017 ORDER PER MS. DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 22.12.2016 OF LD. CIT(APPE ALS) PANCHKULA PERTAINING TO 2011-12 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND CANCELLED T HE PENALTY U/S 271(1 )(C) WHICH IS NOT CORRECT BECAUSE THE ASSESSEE HAS DELIBERATELY FURNI SHED THE INACCURATE PARTICULAR OF ITS INCOME. 2. THE LD. AR INVITING ATTENTION TO THE IMPUGNED ORDERS SU BMITTED THAT IN THE FACTS OF THE PRESENT CASE, THE ORDER OF THE ITAT IN IDENTICAL FACTS AND CIRCUMSTANCES HAS BEEN RELIED UPON BY THE CIT(A) AND THE RE IS NO CHANGE IN FACTS AND CIRCUMSTANCES, ACCORDINGLY, IT WAS HIS PRAYER TH AT THE DEPARTMENTAL APPEAL MAY BE DISMISSED. COPY OF THE ORDER DATED 08.10.2 015 IN ITA 326/CHD/2015 IN M/S HYCRON ELECTRONICS VS ITO WAS FILED. 3. SINCE THE PRESENT APPEAL HAS BEEN FILED BY THE REVENU E, IT IS DEEMED APPROPRIATE TO DIRECT THE LD. SR. DR TO FIRST MAKE OUT HIS CASE. THE LD. SR.DR PLACED RELIANCE UPON THE PENALTY ORDER. HOWEVER, NO CHAN GE IN FACTS, CIRCUMSTANCES OR POSITION OF LAW WAS BROUGHT TO THE NOTICE OF THE BE NCH. 4. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSE E ENGAGED IN MANUFACTURING OF PHARMACEUTICAL PRODUCTS AT THE RELEVANT POINT OF TIME FILED ITA 313/CHD/2017 A.Y. 2011-12 PAGE 2 OF 3 ITS RETURN ON 23.09.2011 AND CLAIMED DEDUCTION U/S 80IC OF THE ACT @ 100%. THE AO RESTRICTED THE SAME TO 25%. AS A RESULT THEREO F, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED. THE RESTRICTION OF THE DEDUCTION TO 25% WAS CONFIRMED IN APPEAL RIGHT UPTO THE ITAT. THE AO TAKING NOTE OF THE FACT THAT THE QUANTUM ADDITION STOOD CONFIRMED IN APPEAL BY TH E CIT(A) REJECTED THE EXPLANATION OF THE ASSESSEE AND LEVIED PENALTY HOLDING THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS OF HIS INCOME. 5. THE ASSESSEE CHALLENGED THE SAID ORDER IN APPEAL BEFOR E THE CIT(A) MAKING THE FOLLOWING ARGUMENTS ON FACTS : 4. DURING THE APPELLATE PROCEEDINGS, THE COUNSEL FOR THE APPELLANT SUBMITTED THAT THE ASSESSEE FIRM M/S ADMAC FORMULATION IS DOING THE BU SINESS OF MANUFACTURING AND SALE OF MEDICINE. THE MANUFACTURING UNIT IS LOCATED AT BADD I (HP) WHICH COMES UNDER SPECIFIED AREA FOR CLAIMING EXEMPTION U/S 801G- THE SAID ASSESSMEN T YEAR I.E. A/Y 2011-12 WAS THE SIXTH YEARS OF PRODUCTION OF THE FIRM IN WHICH THE FIRM M ADE THE SUBSTANTIAL EXPANSION AS PER INCOME TAX ACT & CLAIMED 100% DEDUCTION U/S 80IC. T HE AO ALLOWED 25% DEDUCTION US 80IC INSTEAD OF 100% TO WHICH THE ASSESSEE WAS ENTI TLED. THE AO WAS OF VIEW THAT THE 100% CLAIM WILL BE ALLOWED ONLY TO THOSE ASSESSEES WHO W ERE OPERATIONAL AS ON 07.01.2003. THE SAID ISSUE IS DEBATABLE. ALMOST ALL THE ASSESSEES ACROSS THE COUNTRY WHO HAVE SET THEIR UNIT AFTER 07.01.2003 AT A SPECIFIED AREA WERE DENIED 100% DED UCTION U/S 80IC BEYOND FIVE YEARS AND THUS THE ISSUE BECAME DEBATABLE IN WHOLE OF THE COUNTRY. MOST OF THE CASES ARE LYING PENDING BEFORE THE HON'BLE HIGH COURTS IN INDIA AGAINST THIS DISAL LOWANCE OF 75% OF THE CLAIM. EVEN THE ASSESSEE'S APPEAL IS LYING PENDING BEFORE THE HON'B LE PUNJAB. & HARYANA HIGH COURT. THE ASSESSEE REQUESTED THE A.O. ON THIS ISSUE TO DROP T HE PENALTY OR KEEP THE PROCEEDINGS SENDING TILL THE DECISION OF THE APEX COURT BUT THE AO REJE CTED THE REQUEST & IMPOSED 100% PENALTY ON THE ADDITIONS MADE AMOUNTING TO RS.42,33,598/-. 5.1 APART FROM THAT, IT WAS ALSO SUBMITTED THAT THE LEVY OF PENALTY IS NOT AUTOMATIC AND SINCE ALL RELEVANT FACTS WERE DISCLOSED, THERE WAS NO CONCEALMENT. THE ASSESSEE RELIED ON THE JUDGEMENTS OF A PEX COURT IN THE CASE OF T.ASHOK PAI VS CIT 292 ITR 11, DILIP N. SHROFF VS JCI T & ANR 291 ITR 519 (SC), CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158, CEMENT MARKETING CO. OF INDIA LTD. VS ASSTT. CONSTRUCTION (1980) 1 24 ITR 15 AND CIT VS SSP. P. LTD. 302 ITR 43 (P&H). 5.2. RELIANCE WAS PLACED UPON THE DECISION OF ITAT IN THE CA SE OF HYCRON ELECTRONICS, BADDI VS ITO, BADDI ITA NO. 326/CHD/2015 DATED 08.10.201 5. 6. CONSIDERED WITH THE EXPLANATION, PENALTY WAS QUASHED H OLDING AS UNDER: 6 I HAVE GONE THROUGH THE FACTS OF THE CASE AND W RITTEN SUBMISSION FILED BY HE APPELLANT. IT IS NOTED THAT ON IDENTICAL FACTS, THE JURISDICTIONAL H ON'BLE ITAT CHANDIGARH BENCH VIDE ITS ORDER DATED 08.10.2015 IN ITA NO. 326/CHD/2015' FOR THE A .Y. 2009-10 IN THE CASE OF HYCRON ELECTRONICS, VILLAGE THANA, BADDI. SOLAN HAS CANCEL LED THE PENALTY U/S 271 (1)(C) AS UNDER :- '8. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FN CASE OF LEVY OF PENALTY UNDER SECTION 27 1(1) (C) OF THE AC T BECAUSE IT IS WELL' SETTLED THAT LEVY OF PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AS IT DEPENDS UPON FACTS AND CIRCUMSTANCES OF THE CASE. SINCE, THE ASSESSEE 'S C LAIM OF DEDUCTION UNDER SECTION 80IC ITA 313/CHD/2017 A.Y. 2011-12 PAGE 3 OF 3 HAVE BEEN ALLOWED IN EARLIER YEARS @ 100%: AND ADMI TTEDLY ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION IN ASSESSMENT UNDER APPEAL, T HEREFORE, ASSESSEE MADE BONAFIDE CLAIM OF DEDUCTION UNDER SECTION 80IC OF T HE ACT AND THERE WERE NO JUDICIAL PRONOUNCEMENTS AGAINST THE ASSESSEE ON THE DATE OF MAKING SUCH A CLAIM. THEREFORE, IT COULD NOT BE CONSTRUED THAT ASSESSEE FURNISHED INAC CURATE PARTICULARS OF INCOME SO AS TO LEVY THE PENALTY UNDER SECTION 271(LJ(CJ OF THE ACT . WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. ' 6.1 SINCE, ON THE IDENTICAL FACTS, THE GROUND UNDE R APPEAL IS COVERED BY THE DECISION OF JURISDICTION AL ITAT, CHANDIGARH BENCH, THEREFORE, RESPECTFULLY F OLLOWING THE DECISION, THE PENALTY IMPOSED ON THE TAX SOUGHT TO BE EVADED ON SIMILAR DISALLOWA NCE IS CANCELLED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE FACTS AS THEY STAND, LEVY OF PENALTY ON FACTS HAS BEEN CORRECTLY QUASHED, AS ADMITTEDLY NO CASE OF CONCE ALMENT OF ANY FACT HAS BEEN MADE OUT OR BROUGHT TO OUR NOTICE. MERELY BECAU SE THE CLAIM IS REJECTED IN THE QUANTUM PROCEEDINGS BY ITSELF IS NOT A GOOD ENOUGH REASON TO HOLD THAT PENALTY IS AUTOMATICALLY ATTRACTED. CONSIDERING THE PECULIA R FACTS OF THE PRESENT CASE, AND THE JUDICIAL PRECEDENT RELIED UPON, WE FI ND NO INFIRMITY IN THE ORDER. BEING SATISFIED BY THE REASONING AND FINDING THER EIN, THE DEPARTMENTAL GROUND IS DISMISSED AND THE APPEAL OF THE R EVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUG. 2017. SD/- SD/- (ANNAPURNA GUPTA) (DIVA S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.