The DCIT, Circle-1, Ahmedabad V. ABM Steels Pvt.Ltd., Ahmedabad

ITA 3215/AHD/2011

• Counselvise Citation: 321520514 RSA 2011
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 20-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Section: 80HHC

Judgement Text

ITA NO.3215/AHD/2011 ASSESSMENT YEAR: 2002-03 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S.S. GODARA JM] ITA NO.3215/AHD/2011 ASSESSMENT YEAR: 2002-03 DY. COMMISSIONER OF INCOME TAX, ............. APPELLANT CIRCLE-1, AHMEDABAD. VS. ABM STEELS PVT. LTD., ........................ RESPONDENT 64/A, GIDC, PHASE-I, VATVA, AHMEDABAD. [PAN: AABCA 6004 C] APPEARANCES BY: DINESH SINGH, FOR THE APPELLANT S.N. SOPARKAR, FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : APRIL 30, 2015 DATE OF PRONOUNCING THE ORDER : JULY 21, 2015 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 10 TH OCTOBER, 2011, PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEAR 2002-03, ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED IN LAW AND FACTS IN DEL ETING THE PENALTY U/S. 271(1)(C) AMOUNTING TO RS.17,57,487/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME IN RESP ECT OF DEDUCTION U/S. 80HHC AND 80IA OF THE ACT. ITA NO.3215/AHD/2011 ASSESSMENT YEAR: 2002-03 PAGE 2 OF 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESS ING OFFICER TO THE EXTENT MENTIONED ABOVE, SINCE THE ASSESSEE H AS FAILED TO DISCLOSE HIS TRUE INCOME. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . THE APPELLANT CRAVES LEAVE OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSE HAD FILED ITS RETURN OF INCOME ON 29 TH OCTOBER 2002 DISCLOSING AN INCOME OF RS 7,06,018 WHICH WAS ARRIVED AT BY CLAIMING DEDUCTION UNDER SECTION 80HHC AMOUNTING TO RS 47,75,174 AND DEDUCTION AMOUNTING T O RS 23,17,711. HOWEVER, WHEN THESE CLAIMS WERE PUT TO SCRUTINY DURING THE R EASSESSMENT PROCEEDINGS, THE ASSESSMENT WAS FINALIZED AT RS 49,22,930 AFTER DISALLOWING DEDUCTION OF RS 23,17,771 UNDER SECTION 80IA AND DEDUCTION OF RS 27 ,33,876 UNDER SECTION 80HHC. IT WAS IN THIS CONTEXT THAT THE ASSESSING O FFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) BY HOLDING (A) THAT THE ASSESSE H AD CLAIMED DEDUCTION UNDER SECTION 80IA IN RESPECT OF CERTAIN INCOMES WHICH AR E NOT IN THE NATURE OF PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING AND THE ASSESSE DID NOT EVEN HIGHLIGHT THIS FACT OR REASONS FOR THE CLAIM IN THE RETURN ITSELF; (B) THAT THE ASSESSE HAS INCLUDED VARIOUS OTHER INCOMES NOT EARNED BY WAY OF EXPORTS OF GOODS AND MERCHANDISE AND CLAIMED DEDUCTION UNDER SECTION 80H HC IN RESPECT OF THE SAME, BUT NEITHER THE ASSESSE HIGHLIGHTED THIS FACT NOR SET OUT THE REASONING OF THIS CLAIM IN THE INCOME TAX RETURN; (C) THAT THE ASSESSE HAS CLAIMED DEDUCTION UNDER SECTION 80HHC WITHOUT REDUCING THE PROFITS BY THE DEDUCTION UNDER SECTION 80IA; AND (D) THAT, ON THESE FACTS AND IN T HE LIGHT OF HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT IN THE CASE OF A M SHAH & CO VS CIT (238 ITR 415), IT IS A FIT CASE FOR IMPOSITION OF PENALT Y UNDER SECTION 271(1)(C) ON ACCOUNT OF CONCEALMENT OF PARTICULARS BY THE ASSESS E. THERE WAS, HOWEVER, NO SPECIFIC OBSERVATIONS ABOUT ERRONEOUS CLAIMS OF DED UCTION UNDER SECTION 80IA AND 80HHC BEYOND THESE GENERALITIES AND COMPUTATION OF DEDUCTION UNDER SECTION 80HHC WITHOUT TAKING INTO ACCOUNT 80IA DEDU CTION. A PENALTY OF RS 17,57,487 WAS THUS IMPOSED ON THE ASSESSE UNDER SEC TION 271(1)(C). AGGRIEVED, ITA NO.3215/AHD/2011 ASSESSMENT YEAR: 2002-03 PAGE 3 OF 4 ASSESSE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) WHO DELETED THE PENALTY BY HOLDING THAT WHILE MOST OF THE ISSUES WERE HELD IN FAVOUR OF THE ASSESSE IN EARLIER YEARS, EVEN THE ISSUES DECIDED AGAINST THE ASSESSE, I.E. ADMISSIBILITY OF DEDUCTION UNDER SECTION 80IA IN RESPECT OF DEPB INC OME, THOUGH NOW SETTLED BY HONBLE SUPREME COURT AGAINST THE ASSESSE, WAS HIGH LY CONTENTIOUS AND DEBATABLE. HE WAS THUS OF THE VIEW THAT MERELY MAKI NG THIS CLAIM, EVEN IF UNTENABLE ON MERITS, COULD NOT BE VISITED WITH PENA LTY UNDER SECTION 271(1)(C). THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. 4. WE HAVE NOTED THAT THERE IS NOTHING MORE THAN MA KING OF AN INCORRECT CLAIM WHICH HAS RESULTED IN THE IMPUGNED PENALTY HA VING BEEN LEVIED ON THE ASSESSE. AS FOR THE CLAIM OF DEDUCTION UNDER SECTIO N 80HHC WITHOUT REDUCING 80IA DEDUCTION AMOUNT, THERE WAS A CLEAVAGE OF JUDI CIAL OPINION ON THIS ISSUE BY VARIOUS BENCHES OF THIS TRIBUNAL AND THAT WAS THE R EASON IT WAS REFERRED TO A SPECIAL BENCH IN THE CASE OF ACIT VS HINDUSTAN MINT & AGRO PRODUCTS LTD (119 ITD 107 SB) WHICH DECIDED THE ISSUE AGAINST THE ASS ESSE. SUCH BEING THE POSITION, THE STAND OF THE ASSESSE, WHETHER ACCEPTA BLE OR NOT, COULD NOT SAID TO BE A PATENTLY ERRONEOUS OR OUTLANDISH CLAIM WHICH A LONE COULD BE VISITED WITH CONCEALMENT PENALTY UNDER SECTION 271(1)(C). AS HEL D BY A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF PFIZER PHARMACEUTICAL INDIA PVT LTD VS DCIT (135 TTJ 337), MERELY BECAUSE A LEGAL INTERPRETATION IS REJECTED, AS HAS BEEN DONE IN THIS CASE, IT CANNOT BE INFERRED THAT THERE IS NO R EASONABLE EXPLANATION FOR HAVING RESORTED TO THAT INTERPRETATION, AND AS LONG AS THERE IS A REASONABLE EXPLANATION FOR MAKING A CLAIM, OR RESORTING TO AN INTERPRETATION, PENALTY UNDER S. 271(1)(C) CANNOT BE IMPOSED. AS REGARDS THE ERR ONEOUS CLAIM OF DEDUCTION UNDER SECTION 80IA AND 80 HHC, NO SPECIFIC POINTS H AVE BEEN MENTIONED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE S OME VERY VAGUE OBSERVATIONS IN THIS REGARD. AS REGARDS HIS RELIANCE ON AM SHAH & CO (SUPRA) DECISION, THAT ITA NO.3215/AHD/2011 ASSESSMENT YEAR: 2002-03 PAGE 4 OF 4 DECISION WAS NOT IN THE CONTEXT OF A WRONG LEGAL CL AIM BUT IN THE CONTEXT OF ESTABLISHED SERIOUS DISCREPANCIES IN THE BOOKS OF A CCOUNTS. THOSE TWO SITUATIONS CANNOT EVEN BE COMPARED. THE DEDUCTION CLAIM UNDER SECTION 80IA AND 80HHC MAY HAVE SOME UNACCEPTABLE ELEMENTS BUT THESE WERE PURELY LEGAL ISSUES WHICH WERE HIGHLY CONTENTIOUS IN NATURE. ON SIMILAR FACT S AND IN RESPECT OF INADMISSIBLE DEDUCTION UNDER SECTION 80 HHC, HONBL E JURISDICTIONAL HIGH COURT, IN THE CASE OF CIT VS MADHUSUDAN INDUSTRIES LIMITED [(2014) 47 TAXMANN.COM 241 (GUJ)], HAS HELD THAT PENALTY UNDER SECTION 271 (1)(C) CAN INDEED NOT BE LEVIED IN RESPECT OF A DEBATABLE ISSUE ON WHICH TWO OPINIONS WERE POSSIBLE. THAT PRECISELY IS THE SITUATION IN RESPECT OF THE PORTIO N OF CLAIM WHICH HAS BEEN EVEN REJECTED BY THE TRIBUNAL ON MERITS. IT WAS, THEREFO RE, NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). IN VIEW OF THES E DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIO NS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 21 ST DAY OF JULY, 2015. SD/- SD/ - S. S. GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 21 ST DAY OF JULY, 2015 COPIES TO: (1) THE APPELLANT (2) THE RESPON DENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD