Jhaveri Industries, Valsad V. The ACIT., Vapi Circle, Vapi

ITA 3378/AHD/2014

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1922 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 16-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS R KAVITHA
• Assessee Lawyers: SHRIMEHUL C SHAH
• Keywords: Question of law; Difference of opinion
• Section: 271(1)(c)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL,SURAT BENCH,SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.3378/AHD/2014/SRT [ [ / ASSESSMENT YEAR: 2004-05 JHAVERI INDUSTRIES, A-1/179, GIDC, UMBERGAON, DIST: VALSAD 396 171. [PAN: AACFJ 8263E] VS. ASST. COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRIMEHUL C. SHAH, C.A /RESPONDENT BY : MRS. R.KAVITHA, SR. DR /DATE OF HEARING : 05-03-2018 /DATE OF PRONOUNCEMENT : 14-03-2018 / ORDER PERC.M.GARG, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), VALSAD (CIT(A) FOR SHORT) DATED 17.10.2014 FOR THE ASSESSMENT YEAR (AY) 2004-05 PASSED IN THE FIRST APPEALNO.CIT(A)/VLS/40/11-12. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED IN UPHOLDING ACTION OF 2 ITA NO.3378/AHD/2014/SRT (A.Y: 2004-05) SHRIJHAVERI INDUSTRIES THE ASSESSING OFFICER IN LEVYING PENALTY OF RS. 758,485 UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 WITHOUT APPRECIATING THAT THERE WAS FULL DISCLOSURE OF ALL MATERIAL FACTS DURING THE COURSE OF ASSESSMENT, AND THE APPELLANT NEITHER CONCEALED, NOR FILED ANY INACCURATE PARTICULARS OF INCOME TO ATTRACT THE MAIN PROVISIONS OF SECTION 271(1)(C) OR FOR THAT MATTER ANY EXPLANATION THERE UNDER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED IN NOT APPRECIATING THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND FURTHER CONFIRMED BY HON'BLE ITAT WAS OWING TO A DIFFERENCE OF OPINION AND PERCEPTIONS INVOLVING A QUESTION OF LAW THAT WAS ADMITTED BY HON'BLE HIGH COURT, GUJARAT WHICH WAS PENDING FOR HEARING. 3. WE HAVE HEARD THE ARGUMENTS OF THE BOTH SIDES, AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY HAS ERRED IN UPHOLDING THE PENALTY ORDER WITHOUT APPRECIATING THE FACT THAT THERE WAS FULL DISCLOSURE OF MATERIAL FACTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE APPELLANT NEITHER CONCEALED NOR FILED ANY INACCURATE PARTICULARS OF INCOME TO ATTRACT MAIN PROVISION OF S. 271(1)(C) OF THE ACT OR FOR THAT MATTER ANY EXPLANATION THEREUNDER. THE LD. AR VEHEMENTLY POINTED OUT THAT THE LD. CIT(A) WAS NOT JUSTIFIED AND CORRECT IN IGNORING THAT THE ADDITION MADE BY THE ASSESSING OFFICER (AO) AND CONFIRMED BY THE TRIBUNAL WAS OWING TO A DIFFERENCE OF OPINION AND PERCEPTION INVOLVING A QUESTION OF LAW WHICH HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT OF GUJARAT VIDE ORDER DATED 27.02.2013 IN ITA NO.789/2014 WHICH IS PENDING FOR DISPOSAL. 4. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) STRONGLY SUPPORTED THE ACTION OF THE AO AS WELL AS THE FIRST APPELLATE ORDER AND SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION 3 ITA NO.3378/AHD/2014/SRT (A.Y: 2004-05) SHRIJHAVERI INDUSTRIES SUBSTANTIATING THE CIRCUMSTANCES AND REASONS LEADING TO APPLICATION OF INCORRECT FACTS/LAW AS APPLIED BY THE ASSESSEE FOR COMPUTING LESS TOTAL INCOME BY CLAIMING WRONG DEDUCTION. THE LD. DR FURTHER SUBMITTED THAT FROM THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF S. 271(1)(C) OF THE ACT THAT THEREFORE EXPLANATION 1 TO SAID SECTION CLEARLY ATTRACTS IN THE PRESENT CASE. HOWEVER, ON BEING ASKED BY THE BENCH, THE LD. DR HAS NOT CONTROVERT THE FACT THAT THE HON'BLE HIGH COURT OF GUJARAT IN ASSESSEES TAX APPEAL NO. 789/2014 ORDER DATED 27.02.2013 THE QUESTION OF LAW ON THE ISSUE OF INTEREST ON PARTNERS CAPITAL HAS BEEN FRAMED AND TAX APPEAL IS PENDING FOR DISPOSAL. 5. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDITION IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAS BEEN ACCEPTED BY HON'BLE HIGH COURT LEADING TO SUBSTANTIAL QUESTION OF LAW. IN THIS SITUATION, WHEN THE HON'BLE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES, PENALTY CANNOT BE LEVIED U/S. 271(1)(C) OF THE ACT HAS BEEN HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS OF TRIBUNAL INCLUDING ORDERS IN THE CASES OF RUPAM MERCANTILE VS. DCIT [(2004) 91 ITD 237 (AHD)(TM)] AND SMT. RAMILARATILAL SHAH VS. ACIT [(1998) 60 TTJ (AHD) 171] . THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HON'BLE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE IT TURNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERED FOR DEDUCTION AS PER A PERSON 4 ITA NO.3378/AHD/2014/SRT (A.Y: 2004-05) SHRIJHAVERI INDUSTRIES PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLETELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITION OF PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN UPHELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HON'BLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPINION, THE PENALTY IS NOT EXIGIBLE UNDER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 6. IN THE RESULT,THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE AO IS DIRECTED TO DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF14 TH MARCH, 2018. / SURAT ; DATED : 14 TH MARCH, 2018 EDN / COPY OF THE ORDER IS FORWARDED TO : / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) / JUDICIAL MEMBER 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A), VALSAD; 4 . , , / DR, ITAT, SURAT ; 5 [ / GUARD FILE. 5 ITA NO.3378/AHD/2014/SRT (A.Y: 2004-05) SHRIJHAVERI INDUSTRIES , / ITAT, SURAT