Hycron Electronics, Solan V. ITO, Baddi

ITA 326/CHANDI/2015

• Counselvise Citation: 32621514 RSA 2015
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL VERMAN
• Assessee Lawyers: D C AGGARWAL
• Keywords: Wrong claim; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 326/CHD/2015 ASSESSMENT YEAR: 2009-10 M/S HYCRON ELECTRONICS, VS THE ITO, PLOT NO. 35, EPIP-II, BADDI. VILLAGE THANA, BADDI SOLAN. PAN: AADFH1249K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.C.AGGARWAL RESPONDENT BY : SHRI SUSHIL VERMAN DATE OF HEARING : 05.10.2015 DATE OF PRONOUNCEMENT : 08.10.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. CIT(APPEALS) SHIMLA DATED 13.02.2015 FOR ASS ESSMENT YEAR 2009-10 CHALLENGING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FIRM FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER C LAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT AMOUNTING T O RS.5.44 CR. THE ASSESSEE DERIVED INCOME FROM MANUFACTURING OF ASSEMBLIES AND SUB-ASSEMBLIES FOR ELECTRONICS ENERG Y METERS AND ALLIED PRODUCTS. THE CASE WAS SELECTED FOR SCR UTINY ASSESSMENT AND ASSESSING OFFICER COMPLETED THE ASSE SSMENT VIDE ORDER DATED 23.12.2011 UNDER SECTION 143(3) OF THE ACT AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 4.09 CR. 2 DURING THE COURSE OF ASSESSMENT, IT WAS NOTICED THA T THE ASSESSEE STARTED ITS MANUFACTURING ACTIVITIES W. E. F. 17.01.2004 I. E. DURING THE FINANCIAL YEAR 2003-04 AND HAD BEEN CLAIMING DEDUCTION UNDER SECTION 80-IC OF THE ACT FROM ASSESSMENT YEAR 2004-05. THE ASSESSEE FIRM UNDERTOO K SUBSTANTIAL EXPANSION DURING A.Y. 2009-10 UNDER APP EAL AND STARTED CLAIMING DEDUCTION U/S 80IC @ 100%, TREATIN G A.Y. 2009-10 TO BE INITIAL YEAR. THE DEDUCTION U/S 80IC CLAIMED @100% WAS REDUCED TO 25% OF THE TOTAL PROFIT DECLARED BEING THE 6 TH YEAR OF MANUFACTURING ACTIVITIES OF THE INDUSTRIAL UNDERTAKING. THE ASSESSING OFFIC ER INITIATED PENALTY PROCEEDINGS FOR FURNISHING INACCURATE PART ICULARS OF INCOME. THE APPEAL FILED BY THE ASSESSEE ON QUANTU M WAS DISMISSED. THE ASSESSING OFFICER, THEREFORE, VIDE SEPARATE ORDER LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. THE PENALTY ORDER WAS CHALLENGED BEFORE LD. CIT(APPEALS) AND LD. CIT(APPEALS) ON THE SAME REASO NING THAT IN THE 6 TH YEAR OF THE ASSESSEE'S CLAIM UNDER SECTION 80IC, 100% DEDUCTION IS NOT PERMISSIBLE, CONFIRMED LEVY O F PENALTY AND DISMISSED APPEAL OF THE ASSESSEE. 4. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT ASSESSEE STARTED ITS MANUFA CTURING ACTIVITIES IN DISTRICT SOLAN (HP) AND IT BUSINESS W AS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT WHICH W AS ALSO GRANTED AT 100% FROM ASSESSMENT YEAR 2004-05 TO 200 8-09. 3 IN THE ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10, T HE ASSESSEE MADE SUBSTANTIVE EXPANSION TO THE BUSINESS AND SUPPORTED THE SAME BY THE AUDIT REPORT. HE HAS SUB MITTED THAT THE SUBSTANTIAL EXPANSION UNDERTOOK BY ASSESSE E IS NOT IN DISPUTE AND IT IS ALSO NOT IN DISPUTE THAT ASSES SEE WAS EARLIER GRANTED EXEMPTION UNDER SECTION 80IC OF THE ACT. THE ONLY DISPUTE WAS WHETHER ASSESSEE IS ENTITLED FOR D EDUCTION UNDER SECTION 80IC @ 100% OR 25%. THE ASSESSEE DISC LOSED ALL THE PARTICULARS OF INCOME IN THE RETURN OF INCO ME AND HAS NOT MADE ANY WRONG OR FALSE CLAIM. THE CLAIM UNDER SECTION 80IC HAVE BEEN DENIED ON THE DEBATABLE ISSUE AND TH E WHOLE ISSUE IS REGARDING INTERPRETATION OF PROVISIONS OF SECTION 80IC OF THE ACT ON WHICH TRIBUNAL ALSO DISMISSED APPEAL OF THE ASSESSEE BUT APPEAL OF THE ASSESSEE IS PENDING BEFO RE HIGH COURT FOR CONSIDERATION. HE HAS SUBMITTED THAT ITA T DELHI BENCH IN THE CASE OF TIRUPATI LPG LTD. IN ITA 991/2 013 DATED 29.01.2014 ALLOWED THE SIMILAR CLAIM OF ASSESSEE. THEREFORE, THE ISSUE IS HIGHLY DEBATABLE AND DEPENDANT UPON TH E INTERPRETATION OF PROVISIONS OF SECTION 80IC OF THE ACT. HE HAS SUBMITTED THAT IT IS ALSO NOT IN DISPUTE THAT A SSESSEE WAS ENTITLED FOR DEDUCTION UNDER SECTION 80IC. THE ISS UE WAS OF WHETHER 100% DEDUCTION OR 25%, THEREFORE, ASSESSEE HAS NOT MADE ANY WRONG CLAIM DELIBERATELY AND CLAIM OF ASSE SSEE WAS NOT FALSE. THE ASSESSEE MADE BONAFIDE CLAIM OF DED UCTION UNDER SECTION 80IC. THEREFORE, IT IS NOT A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. MAKING AN INCORR ECT CLAIM WAS NOT TANTAMOUNT TO FURNISHING OF INACCURATE PART ICULARS OF INCOME. HE HAS ALSO RELIED UPON DECISION OF THE SU PREME COURT IN THE CASE OF RELIANCE PETROPRODUCSTS PVT. L TD. 322 4 ITR 158 AND ALSO RELIED UPON FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTIONS : 1. CIT VS. BAL KISHAN DHAWAN (HUF) [20131 40 TAXMA NN.COM 208 2. CIT VS. HAIYANA WAREHOUSING CORPORATION [20091 1 82 TAXMAN 107 3. CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. J2010] 322 ITR 73 4. CIT VS. DHARAMPAL PREMCHAND LTD. [20111 11 TAXMA NN.COM 437 5. CIT VS. INDERSONS LEATHER (P.) LTD. [2011] 196 T AXMAN 103 6. CIT VS. RUBBER UDYOG VIKAS (P.) LTD. J2012] 20 T AXMANN.COM 610 7. CIT VS. EASTMAN INTERNATIONAL [2014] 41 TAXMANN. COM 239 5. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE MADE INCORRECT CLAIM OF EXEMPTION BY CLAIMING HIGHER DEDUCTION UND ER SECTION 80IC. THEREFORE, PENALTY WAS CORRECTLY IMPO SED ON ASSESSEE AND RELIED UPON DECISION OF DELHI HIGH COU RT IN THE CASE OF ZOOM COMMUNICATIONS PVT. LTD. 327 ITR 510 A ND ORDER OF ITAT DELHI BENCH IN THE CASE OF SUNDER LAL CHOPRA 2 ITR (TR) 790. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED A BOVE IN THE IMPUGNED ORDERS ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT ASSESSEE WAS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IC OF THE ACT AND HAS BEEN CLAIMING THE S AME DEDUCTION FROM ASSESSMENT YEAR 2004-05 TILL 2008-09 . THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2009- 10 CONTENDED THAT SINCE IT HAS UNDERTOOK SUBSTANTIAL EXPANSION, THEREFORE, ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10 BEING INITIAL YEAR, ASSESSEE WOULD BE ENTIT LED FOR 5 DEDUCTION UNDER SECTION 80IC OF THE ACT @ 100%. HO WEVER, THE AUTHORITIES BELOW CONSIDERED THAT THE ASSESSMEN T YEAR UNDER APPEAL I.E. 2009-10 IS THE 6 TH YEAR OF THE MANUFACTURING ACTIVITY OF THE INDUSTRIAL UNDERTAKIN G, THEREFORE, INSTEAD OF CLAIM OF 100% DEDUCTION UNDER SECTION 80IC, ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDE R SECTION 80IC @ 25% ONLY. THE CLAIM OF ASSESSEE WAS SUPPORTED BY AUDIT REPORT AND THE PAST HISTORY SUBM ITTED BY ASSESSEE AND CONSIDERED BY THE AUTHORITIES BELOW . THUS, THE CLAIM OF ASSESSEE WAS RAISED FOR THE FIRS T TIME IN THE 6 TH YEAR ON UNDERTAKING SUBSTANTIAL EXPANSION AND IT WAS CLAIMED TO BE FIRST YEAR/INITIAL YEAR FOR CLAIM ING 100% DEDUCTION UNDER SECTION 80IC OF THE ACT. THUS, THE CLAIM OF THE ASSESSEE WAS NOT FALSE AND WAS ALSO NOT WRON G. THE ASSESSEE MADE CLAIM OF 100% DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE BASIS OF SUBSTANTIAL EXPANSION CA RRIED OUT IN FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER APPEAL. THE ASSESSEE, THEREFORE, FURNISHED ALL PAR TICULARS OF INCOME IN THE RETURN OF INCOME AS WELL AS BEFORE ASSESSING OFFICER AT THE ASSESSMENT STAGE. NOTHING WAS CONCEALED TO THE REVENUE DEPARTMENT. WHOLE ISSUE WA S THUS, BASED UPON INTERPRETATION OF PROVISIONS OF SE CTION 80IC OF THE ACT FOR CLAIM OF DEDUCTION UNDER SECTIO N 80IC @ 100% ON UNDERTAKING SUBSTANTIAL EXPANSION IN THE ASSESSMENT YEAR UNDER APPEAL BY CLAIMING IT TO BE I NITIAL YEAR. PRIOR TO THAT, THERE MAY BE NO HISTORY AGAIN ST THE ASSESSEE FOR MAKING SUCH A CLAIM. THE ISSUE IS WHO LLY DEBATABLE AND THE APPEAL OF THE ASSESSEE IS PENDING BEFORE HON'BLE HIGH COURT FOR CONSIDERATION OF THE SIMILAR ISSUE. 6 THOUGH, THIS BENCH HAS NOT FOLLOWED THE DECISION OF DELHI BENCH IN THE CASE OF TIRUPATI LPG LTD.(SUPRA) ON QU ANTUM AND DECIDED THE ISSUE AGAINST THE ASSESSEE ON QUANT UM, BUT THERE WAS FAVOURABLE ORDER FOR MAKING SUCH A CL AIM UNDER SECTION 80IC OF THE ACT. THEREFORE, IT IS A C ASE WHERE THERE MAY BE A DIFFERENCE OF OPINION BETWEEN THE AS SESSEE FIRM AND THE ASSESSING OFFICER FOR CLAIM OF DEDUCTI ON UNDER SECTION 80IC OF THE ACT IN 6 TH YEAR @ 100%. 7. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IC IN ASSESSMENT YEAR UNDER APPEAL IN A BONAFIDE MANNER A ND MERE FACT THAT CLAIM OF ASSESSEE HAS BEEN DISALLOWE D, WOULD NOT PROVE IT TO BE A FIT CASE OF LEVY OF PENA LTY FOR FILING INACCURATE PARTICULARS OF INCOME. THE ISSUE OF CLAIM OF DEDUCTION WAS DEBATABLE AND BONAFIDE. HOWEVER, T HERE WAS CONFLICT FOR DETERMINATION OF PROVISION OF LAW. MERELY MAKING A CLAIM OF 100% DEDUCTION AGAINST 25% AS PER OPINION OF THE ASSESSING OFFICER UNDER SECTION 80IC OF THE ACT WOULD NOT BE AT PAR WITH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE D ECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE SUPPORT THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HON'BLE SUPREME COURT IN THE CASE OF CIT V RELIANCE PETROPRODUCTS LTD. 322 ITR 158 HELD AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE 7 COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS U SED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF T HE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETUR N IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO NS, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH ERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS AR E FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDIN G TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). A MERE MAKING OF A CLAIM WHI CH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOU NT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BECAUSE IT IS WELL SETTLED THA T LEVY OF PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AS IT 8 DEPENDS UPON FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80I C HAVE BEEN ALLOWED IN EARLIER YEARS @ 100% AND ADMITTEDLY ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION IN ASSESSM ENT YEAR UNDER APPEAL, THEREFORE, ASSESSEE MADE BONAFID E CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT AND THER E WERE NO JUDICIAL PRONOUNCEMENTS AGAINST THE ASSESSEE ON THE DATE OF MAKING SUCH A CLAIM. THEREFORE, IT COULD N OT BE CONSTRUED THAT ASSESSEE FURNISHED INACCURATE PARTIC ULARS OF INCOME SO AS TO LEVY THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL THE PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RANO JAIN) (BHAVN ESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH OCT., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD