Pooja Industries, Solan V. ITO, Solan

ITA 322/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90159 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Wrong claim; Bonafide mistake
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 322/CHD/2015 (ASSESSMENT YEAR : 2008-09) POOJA INDUSTRIES, VS. THE INCOME TAX OFFICER, PLOT NO.75, SECTOR 1, WARD 1, PARWANOO, DISTT. SOLAN. SOLAN. PAN: AAGFP3843G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURINDER BABBAR RESPONDENT BY : SHRI R.K. GUPTA, DR DATE OF HEARING : 25.05.2015 DATE OF PRONOUNCEMENT : 05.06.2015 O R D E R PER T.R. SOOD, A.M. : IN THIS APPEAL, THE ASSESSEE RAISED FOLLOWING GROUN DS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONCURRENCE WITH THE LD. A.O. IN UPHOLDING THE PENALTY OF RS.34,03,835/- AND THE SAME IS LIABLE TO BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE ASSESS EE HAD MADE INCORRECT CLAIM OF FACT AND NOT INCORRECT CLAIM OF LAW AND TRIED TO CLAIM DEDUCTION FOR WHICH IT WAS NOT ELIGIBLE IN CONCURRENCE WITH THE LD.A.O. TH AT THE ASSESSEE HAS WILLFULLY AND INTENTIONALLY CLAIME D WRONG DEDUCTION U/S 80IC @ 100% ON ACCOUNT OF 2 SUBSTANTIAL EXPANSION TO ITS UNIT INSTEAD OF ELIGIB NLE DEDUCTION U/S 80IB ALLOWABLE @ 25%. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E ASSESSEE WAS DERIVING INCOME FROM RUNNING OF FLOUR MILL MANUFACTURING ATTA, MAIDA AND SUJI, ETC. THE ASS ESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IC OF THE INCOME TAX ACT AMOUNTING TO RS.1,12,94,962/-. THIS DEDUCTION WAS DENIED BECAUSE ACCORDING THE ASSESSING OFFICER, DEDUCTION UNDER SECTION 80IC OF THE ACT WAS NOT ALLOWABLE TO FLOUR MILL BECAUSE THE SAME WAS MENTIONED IN SCHEDULE-XIII. THE DEDU CTION WAS ALLOWED UNDER SECTION 80IB(4) AT 25%. THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE ALSO INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS SUBMITTED THAT THE ASSESSEE HAS CARRIED OUT SUBSTAN TIAL EXPANSION AND WAS UNDER THE BONAFIDE BELIEF THAT TH E ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 80IC OF THE ACT. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE S UBMISSIONS OF THE ASSESSEE AND LEVIED PENALTY AT THE MINIMUM R ATE OF 100% UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING T O RS.34,03,835/-. 3. ON APPEAL, THE ASSESSEE MAINLY SUBMITTED THAT T HE CLAIM OF THE ASSESSEE UNDER SECTION 80IC OF THE ACT WAS REJECTED BY HOLDING THAT THE ASSESSEE WAS RUNNING A FLOUR MILL, WHEREAS THE FACT IS THAT THE ASSESSEE WAS RUNNING R OLLER FLOUR MILL. FURTHER THE DEDUCTION WAS CLAIMED ON THE BA SIS OF EXEMPTION ORDER ISSUED BY THE GOVERNMENT OF HIMACHA L PRADESH IN RESPECT OF SALES TAX EXEMPTION IN THE CA SE OF ROLLER 3 FLOUR MILLS. IN ANY CASE, THE ASSESSEE HAS DISCLO SED ALL THE PARTICULARS. THEREFORE, IT IS NOT A CASE OF CONCEA LMENT OF PARTICULARS. THE PENALTY SHOULD NOT HAVE BEEN LEV IED AND IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETR O PRODUCTS PVT. LTD., 322 ITR 158. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HIMACHAL AGRO FOODS LIMITED, 9 DTR 46 FOR THE PROPOSITION THAT MERELY A WRONG CLAIM OF DEDUCT ION UNDER SECTION 80IB OF THE ACT WOULD NOT LEAD TO PENAL CON SEQUENCES. FURTHER RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA LTD. VS. ACIT OF SALES TAX, 124 ITR 15. THE LEARN ED CIT (APPEALS) DID NOT FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE AND CONFIRMED THE LEVY OF PENALTY VIDE PARA 5.1, WH ICH IS AS UNDER : 5 .1 THE MAIN ISSUE IN THIS CASE IS WHETHER I MPOSITION OF PENALTY U/S 271(1) (C) IS VALID WHEN ASSESSEE HAS TRIED TO CLAIM DEDUCTION UNDER SECTION 80IC TREATING ITS FLOUR MILL AS ROLLER FLOUR MILL A ND CONSIDERING ITS BUSINESS NOT IN THIRTEENTH SCHEDULE OF INCOME TAX ACT FOR THE PURPOSE OF DEDUCTION U/S 80IC OF THE ACT. IN THIS CASE ASSESSE E IS TRYING TO MANIPULATE THE FACTS TO EVADE THE TAXES BY GOING INTO TECHNICALITY O F LANGUAGE AND TRYING TO DISTINGUISH ITS BUSINESS FROM FLOUR MILL BY STATI NG THAT IT IS A 'ROLLER FLOUR MILL' AND NOT A 'FLOUR MILL'. THUS THE ASSESSEE HAS TWIST ED FACTS TO EVADE TAXES BY CLAIMING WRONG DEDUCTION U/S 80IC. FURTHER, CASE LAWS RELIED UPON BY THE ASSESSEE ARE NOT APPLI CABLE TO FACTS AND CIRCUMSTANCES OF ASSESSEE'S CASE. FOR EX AMPLE ASSESSEE PLACED RELIANCE UPON CIT VS RELIANCE PETRO PRODUCTS P LTD. (2010) 322 IT R 158 (SC) WHEREIN HON'BLE APEX COURT HAS HELD THAT INCORRECT CLAIM OF LAW DOES NOT ATTRACT PENALTY. WHEREAS IN THE PRESENT CASE ASSESSEE HAD MADE INCORRECT CLAIM OF FACT AND NOT OF INCORRECT CLAIM OF LAW AND TRIED TO CLAIM 4 DEDUCTION FOR WHICH IT WAS NOT ELIGIBLE. SIMILAR LY, IN CASE OF CIT VS HIMACHAL AGRO FOODS LIMITED (2008) 9 DTR (P&H) 46, THERE WAS A BONAFIDE MISTAKE ON THE PART OF ASSESSEE WHEREIN WRONG YEAR WAS TAKEN FOR CLAIM OF DEDUCTION U/S 80IB OF THE ACT. BUT IN THE PRESENT CASE THERE IS NO INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE AS THE ASSESSEE HAS BEEN CONTESTING THE ISSUE OF DISTINCTION BETWEEN FLOUR MILL AND ROLLER FLOUR MILL UP TO ITAT LEVEL. THUS IN VIEW OF FORGOING DISCUSSION PENALTY IMPOSED BY THE A. O. IS CONFIRMED AND APPEAL OF THE ASSESSEE IS DISMISSED. 4. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT (APPEALS). IT WAS FURTHER EMPHASIZED THAT THE ASSE SSEE WAS UNDER BONAFIDIE CLAIM THAT THE ASSESSEE WAS ELIGIBL E FOR DEDUCTION UNDER SECTION 80IC OF THE ACT PARTICULARL Y IN VIEW OF SALES TAX EXEMPTION ORDER FOR ROLLER FLOUR MILLS IS SUED BY THE JOINT SECRETARY (INDUSTRIES) TO THE GOVERNMENT OF H IMACHAL PRADESH, COPY OF WHICH IS PLACED AT PAGES 10 AND 11 OF THE PAPER BOOK. HE ALSO RELIED UPON THE DECISIONS WHI CH WERE CITED BEFORE THE LEARNED CIT (APPEALS). HE FURTHER PLACED RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. LARSEN & TOUBRO LTD., 366 ITR 502. 5. ON THE OTHER HAND, THE LEARNED D.R FOR THE REVE NUE STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT (AP PEALS). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT IT IS A CASE OF MERE DENIAL OF DEDUCTI ON WHICH THE ASSESSEE HAS CLAIMED ON ROLLER FLOUR MILLS WITH A B ONAFIDE PLEA THAT THE SAME WAS ALSO ELIGIBLE FOR DEDUCTION AFTER SUBSTANTIAL EXPANSION BECAUSE THE GOVERNMENT OF HIMACHAL PRADES H HAD ISSUED THE ORDER EXEMPTING THE SAME FROM SALES TAX. . IN OUR 5 OPINION, THIS IS A SIMPLE CASE OF DENIAL OF DEDUCTI ON WHICH WAS CLAIMED UNDER BONAFIDE BELIEF. 7. IN ANY CASE, THE ASSESSEE HAD MADE FULL DISCLOS URE REGARDING DEDUCTION AND IN FACT, DEDUCTION HAS BEEN ALLOWED UNDER SECTION 80IB(4) AT 25%. THEREFORE, IT IS NO T A CASE OF CONCEALMENT OF PARTICULARS. THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. L TD. (SUPRA) HAS MADE THE FOLLOWING OBSERVATIONS : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE C OVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MU ST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MA DE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY 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. 8. FURTHER THE HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. HIMACHAL AGRO FOODS LIMITED (S UPRA) HELD 6 THAT MERE WRONG CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WHICH WAS CLAIMED UNDER BONAFIDE BELIEF WOULD N OT LEAD TO PENAL CONSEQUENCES . SIMILAR OBSERVATIONS HAVE BEEN MADE BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. LARSEN & TOUBRO LTD. (SUPRA). THEREFORE, IN OUR OPINION IT IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS) AND DELETED THE PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JUNE, 2015. SD/- SD/- (BHAVNESH SAINI) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH JUNE, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH