ITO, Hyderabad V. M/s A.G. Bioteds Laboratories (India) Ltd, R.R.Dist

ITA 319/HYD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1387 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2002-2003
• Appeal Filed On: 05-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C SUBRAHGMANYAM
• Assessee Lawyers: E S NAGENDRA PRASAD
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.319 & 320/HYD/09 (ASSESSMENT YEARS - 2002-03 & 2003-04 RESPECTIVELY) INCOME-TAX OFFICER,WARD-1(1), HYDERABAD VS M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD., BACHUPALLI, VILLAGE, RANGA REDDY DIST. (PAN - AAATA 5372 R ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.SUBRAHGMANYAM RESPONDENT BY : SHRI E.S.NAGENDRA PRASAD O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THESE TWO APPEALS, FILED BY THE REVENUE, ARE DIRECTE D AGAINST A COMMON ORDER OF THE CIT(A) II, HYDERABAD DA TED 15.1.2009, CANCELING THE PENALTIES OF RS.12.00,000 FOR ASSESSMENT YEAR 2002-003 AND RS.16,00,000 FOR ASSESSMENT YEAR 2003-04 LEVIED UNDE R S.271(1)(C) OF THE INCOME-TAX ACT, 1961(THE ACT). 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURNS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, CLAIMI NG INCOME FROM TISSUE CULTURE AS INCOME FROM AGRICULTURE. THE ASSESSI NG OFFICER, REJECTING THE ASSESSEE'S CONTENTION THAT INCOME FROM TISSUE CULTURE IS AGRICULTURAL INCOME, RE-COMPUTED THE INCOME CONSIDERING T HE SAME AS BUSINESS INCOME, AND ACCORDINGLY COMPLETED THE ASSESSMENTS FOR BOTH THE YEARS UNDER CONSIDERATION. WHILE THUS COMPLETING T HE ASSESSMENTS, ITA NO.319/HYD/2009 M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD. , BACHUPALLI, VILLAGE . 2 HE ALSO INITIATED PROCEEDINGS FOR LEVY OF PENALTY UNDE R S.271(1)(C) OF THE ACT. NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER ULTIMATELY LEVIED THE IMPUGNED PENALTIES OF R S.12,00,000 FOR ASSESSMENT YEAR 2002-03 AND RS.16,00,000 FOR ASSESSMENT YEAR 2003- 04, VIDE ORDERS OF PENALTY, BOTH DATED 18.3.2008. O N APPEAL, THE CIT(A) DELETED THE SAID PENALTIES. HENCE REVENUE PREFER RED THESE APPEALS BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FO R THE ASSESSMENT YEAR 1998-99, THE ASSESSEE CLAIMED THE INCOME FROM TISSUE CULTURE AS INCOME FROM AGRICULTURE WHICH IS EXEMPT UNDER THE PROVISIONS OF SECTION 10[1] OF THE ACT. THE SAID CLAIM OF AGRICULTU RAL INCOME WAS ACCEPTED BY THE DEPARTMENT, THOUGH THE SAME WAS RESTRICTE D TO 70% , TREATING THE BALANCE OF 30% AS BUSINESS INCOME. THE SAID ASSESSMENT WAS COMPLETED UNDER S.143[3] OF THE ACT. THE ASSESSEE COMPA NY WAS ALSO UNDER BONA FIDE IMPRESSION THAT THE NATURE OF INCO ME IS AGRICULTURAL INCOME, SINCE THE DEPARTMENT HAD TAKEN THE SAME VIEW IN THE EARLIER ASSESSMENT YEAR, AS NOTED ABOVE. HE FURTHER SUBMITTED TH AT FOR VARIOUS REASONS, THE ASSESSEE TREATED THE SAID INCOME AS AGRI CULTURE INCOME, SUCH AS- (I) AGRICULTURE TERM LOAN WAS GRANTE D TO THE ASSESSEE COMPANY; (II) G.O. MS NOS. 43 AND 143 DATED 7.2.1996 AND 27.5.1996 RESPECTIVELY ISSUED BY THE AGRICULTURE AND CO-OPERATION [HORTICULTURE) DEPARTMENT STATED THAT TISSUE CULTURE STANDS ON PAR WITH THE AGRICULTURE, FOR THE PURPOSES OF SUBSIDY GIVEN BY HORTICULTURE DEPARTM ENT; AND (III) THE UNIT IS REFINANCED BY THE NABARD WHICH PRIMARY LEN DS TO AGRICULTURE. HE ALSO INVITED OUR ATTENTION TO ASSESSMENT ORDER PAGE NO. 4, AND SUBMITTED THAT EVEN THE ASSESSING OFFICER IS OF THE VIEW T HAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE COMPANY ARE AGRICULTU RAL IN NATURE. IT IS FURTHER SUBMITTED THAT THE ASSESSING OFFICER DID NOT REBUT THE ITA NO.319/HYD/2009 M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD. , BACHUPALLI, VILLAGE . 3 SUBMISSION OF THE ASSESSEE IN ITS REPLY TO THE SHOW-CAUSE NO TICE ISSUED TO HIM UNDER THE PROVISIONS OF S.271(1)(C) OF THE ACT.. HE PLACED RELIANCE ON THE DECISION OF THE A.P. HIGH COURT IN TH E CASE OF CIT V/S. H.ABDUL BAKSHI (160 ITR 94) FOR THE PROPOSITION THAT O NCE THE ASSESSEE FULFILS THE INITIAL BURDEN, THE ONUS SHIFTS TO THE REV ENUE TO ESTABLISH THAT THE ASSESSEE HAS IN FACTS CONCEALED THE INCOME OR FURNISHED IN ACCURATE PARTICULARS THEREOF. THE ASSESSING OFFICER LEVIED THE PEN ALTY BY SIMPLY OBSERVING THAT THE APPEALS OF THE ASSESSEE IN QUANTUM PRO CEEDINGS HAVE BEEN DISMISSED BY THE CIT(A) AND THE TRIBUNAL. IT SI F URTHER SUBMITTED THAT THE ASSESSING OFFICER, WITHOUT BRINGING ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURAT E PARTICULARS THEREOF, HAS SIMPLY HELD THAT THE EXPLANATI ON OF THE ASSESSEE IS NOT SATISFACTORY AND LEVIED THE IMPUGNED PENALTY FO R BOTH THE YEARS. FOR LEVYING PENALTY UNDER S.271(1)(C), THERE SHOULD B E SOME FINDING AS TO THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF BY THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS NOT HIDDEN ANY INFORMATION. RIGHT FROM THE BEGI NNING, THE ASSESSEE HAS FILED ALL THE FACTS AND FIGURES PERTAINING TO THE CLAIM AND JUSTIFIED THE SAME WITH EVIDENCE. ON ACCOUNT OF MERE CHANGE OF OPIN ION, PENALTY CANNOT BE IMPOSED. IN SUPPORT OF THIS PROPOSITION, REL IANCE IS PLACED ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF C IT V/S. A.H. PARABIA TRANSPORT P.LTD. (284 ITR 361) AND ALSO RELI ED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF HIND USTAN LEVER LTD. V/S. ACIT (4 SOT 785) AND SUBMITTED THAT JUST BECAUSE TH E ASSESSING OFFICER NURTURED A VIEW WHICH WAS DIFFERENT FROM THE O NE ADOPTED BY THE ASSESSEE, THOUGH THE VIEW OF THE ASSESSEE IS NOT MALA FIDE AND WRONG, DID NOT MAKE PENALTY LEVIABLE UNDER S.271(1)(C) OF T HE ACT. HE ALSO PLACED RELIANCE ON THE DECISION OF THE MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF ZYCUS INFOTECH P.LTD. (17 SOT 310) FOR THE PROPOSITION THAT ITA NO.319/HYD/2009 M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD. , BACHUPALLI, VILLAGE . 4 ONCE THE ASSESSEE HAVING MADE FULL AND TRUE DISCLOSURE OF A LL THE MATERIAL FACTS, MERELY BECAUSE THE CLAIM OF EXEMPTION U NDER S.10A BASED ON ITS OWN UNDERSTANDING OF LAW, WAS REJECTED WIL L NOT AUTOMATICALLY ATTRACT PENALTY UNDER S.271(1)(C) OF THE ACT. HE ALSO RELIED ON A CATINA OF DECISIONS AND FURNISHED COPIES OF THE SAME IN THE PAPER BOOK FILED BEFORE US. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE STRONGLY RELYING ON THE ORDERS OF THE ASSESSING OFFICER, SU BMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN CANCELING THE IMPUGNED PENALTIES. HE ALSO RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V/S. COLD COIN HEALTH FOOD P. LTD. (304 ITR 308) 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE POINT OF DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE DURING THE ASSESSMENT PROCEEDINGS WAS WHE THER THE INCOME FROM TISSUE CULTURE IS AGRICULTURAL INCOME EXEMPT F ROM TAX OR NOT. IT IS IN VIEW OF THIS DISPUTE THAT THERE WAS WIDE GAP BETWEEN THE ASSESSED INCOME AND THE RETURNED INCOME. IT IS BROUGHT TO OUR NOTICE THAT THE ASSESSEE'S CLAIM FOR EXEMPTION FOR EARLIER YEAR, VIZ. ASSESSMENT YEAR 1998-99 HAS BEEN PARTLY ACCEPTED BY THE DEPARTMEN T WHILE FRAMING ASSESSMENT UNDER S.143(3) OF THE ACT. IT APPEA RS THEREFORE THAT THE POINT IN DISPUTE IS A CONTROVERSIAL ONE ON WH ICH BOTH VIEWS ARE POSSIBLE, AND THE DEPARTMENT TOO FOUND MERIT IN THE CO NTENTION OF THE ASSESSEE TO SOME EXTENT IN EARLIER YEARS. IT IS FURTHER E VIDENT FROM THE CONTENTION OF THE ASSESSEE IN RESPONSE TO THE PENALTY NOTI CE, THAT ASSESSEE'S APPEAL ON THE SUBJECT MATTER OF DISPUTE WAS ALSO P ENDING BEFORE THE A.P. HIGH COURT AT THE RELEVANT POINT OF TIME. IN THAT CIRCUMSTANCE, IT HAS TO BE ACCEPTED THAT THE ASSESSEE'S ACTION I N ITA NO.319/HYD/2009 M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD. , BACHUPALLI, VILLAGE . 5 RETURNING INCOME FROM TISSUE CULTURE AS AGRICULTURE INCOM E IS A BONA FIDE ACT, CONSISTENT WITH THE STAND TAKEN BY THE ASSESSEE I N EARLIER YEARS AND BEFORE THE HIGHER JUDICIAL FORA, AND AS SUCH IT CAN NOT BE SAID TO BE AN ACT OF CONCEALMENT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CIT(A) WAS VERY MUCH JUSTIFIED IN CANCELING THE IMP UGNED PENALTIES LEVIED BY THE ASSESSING OFFICER. FURTHER, ON CAREFULLY GOING THROUGH THE IMPUGNED ORDERS OF PENALTY, WE FIND THAT THE ASSESSING O FFICER HAS MERELY GOING BY THE OUTCOME IN THE QUANTUM PROCEEDING S, IMPOSED THE IMPUGNED PENALTIES WITHOUT INDEPENDENTLY EXAMINING T HE MATTER IN THESE PENALTY PROCEEDINGS. SINCE PENAL PROCEEDINGS ARE IN DEPENDENT OF ASSESSMENT PROCEEDINGS, IT IS SETTLED POSITION OF LAW THAT THE MATTER HAS TO BE EXAMINED INDEPENDENTLY AND THE GUILT ON THE P ART OF THE ASSESSEE IN CONCEALING THE INCOME OR FURNISHING INACCURATE PARTICUL ARS THEREOF HAS TO BE ESTABLISHED. FOR THAT REASON ALSO, WE ARE OF THE VIEW THAT THE IMPUGNED ORDERS OF PENALTY CANNOT BE SUSTAINED. WE ACCO RDINGLY UPHOLD THE ORDERS OF THE CIT(A), AND REJECT THEY GROUNDS OF THE REVENUE IN THESE TWO APPEALS. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE COURT ON 13.11.2009 SD/- SD/- (N.R.S.GANESAN) (AKBER BASHA) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 13TH NOVEMBER, 2009. COPY FORWARDED TO: 1. M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD., BACHUPAL LI, VILLAGE, 2. DIRECTOR OF INCOME-TAX (EXEMPTION), HYDERABAD. ITA NO.319/HYD/2009 M/S. A.G.BIO-TECH LABORATORIES (INDIA)LTD. , BACHUPALLI, VILLAGE . 6 3. DDIT(E), HYDERABAD 4. THE D.R., ITAT, HYDERABAD. B.V.S.