ACIT, UDAIPUR V. M/s. Harmony Plastics Pvt. Ltd., UDAIPUR

ITA 393/JODH/2014

• Counselvise Citation: 39323314 RSA 2014
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 10B; 6

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO S . 344 & 393 /JODH/201 4 (A.Y S . 200 7 - 08 & 2008 - 09 ) ACIT , CIRCLE - 1, UDAIPUR. VS. M/S. HARMONY PLASTICS PVT. LTD. , F - 335 - 339, BHAMASHAH INDUSTRIAL AREA, KALADWAS, GIRWA, UDAIPUR. (APPELLANT) PAN NO. A ABCH 5399 D (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 1 0 / 0 9 /201 4 . DATE OF PRONOUNCEMENT : 12 /0 9 /201 4 . O R D E R PER N.K. SAINI, A.M TH E S E TWO APPEAL S BY THE D EPARTMENT ARE DIRECTED AGAINST THE SEPARATE ORDER S OF THE LD. CIT(A) , UDAIPUR DATED 14 /03/201 4 & 03/04/2014 FOR THE A.Y. 2007 - 08 & 2008 - 09 RESPECTIVELY . SINCE THE ISSUE INVOLVED IN THESE APPEALS IS COMMON AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 2 FIRST WE WILL DEAL WITH THE I.T.A.NO. 344/JODH/2014 . THE ONLY GROUND RAISED IN THIS APPEAL READS AS UNDER : ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 4,38,596/ - IMPOSED U/S. 271(1)(C) OF THE ACT. 3. FROM THE ABOVE GROUND, IT WOULD BE CLEAR THAT ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL REL A TES TO THE DELETION OF PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . 4. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE DERIVED INCOME FROM BUSINESS OF MANUFACTURING AND TRADING OF P.P. FA BRICKS, P.P. SACKS & HDPE SACKS AND HAD CLAIMED EXEMPTION U/S. 10B OF THE ACT FOR A SUM OF RS. 3,26,33,646/ - . THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FILE THE BASIS OF WORKING OUT THE EXEMPTION AT RS. 3,26,33,646/ - . IN RESPONSE, THE ASSESSEE FURNISHED THE DETAILS, HOWEVER, THE ASSESSING OFFICER WORKED OUT THE EXEMPTION U/S. 10B OF THE ACT AT RS. 3,01 , 13,880 / - AND AS THERE WAS A DIFFERENCE OF RS. 25,19,766/ - , THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE BY OBSERVING AS UNDER: - 3 BASIS OF EXEMPTION CLAIMED U/S. 10B: - AS PER FORM NO.56G THE EXPORT TURNOVER TAKEN IS RS.20,50,08,673 / - WHEREAS IN PROFIT & LOSS ACCOUNT, THE EXPORT TURNOVER IS RS.22,20,72,023/ - . THUS, THERE IS A DIFFERENCE OF RS. 1,70,63,350/ - AND TOTAL TURNOVER IS RS.22,91,83,541/ - . THUS, THERE IS A DIFFERENCE OF RS.1,70,63,350/ - . THE EXPORT TURNOVER TAK EN IN FORM NO.56G HAS BEEN ARRIVED AS UNDER: - EXPORT REALIZATION AS PER ENCLOSED STATEMENT DETAILS OF FOREIGN EARNING EXCHANGE FOB AND C& F BASIS I.E. BANK REALIZATION CERTIFICATE (BRC), THE VALUE COMES AS UNDER: AS PER SUM OF PAGE NO.6 19,50,12,485 AS PER SUM OF PAGE NO.7. 01,88 , 96 , 697 21,39,09,182 LESS: OCEAN FREIGHT CLAIMED IN P&L.A/C. RS.88,55,735 INSURANCE RS.00,44 , 774 00,8 9 ,00,509 20,50,08,683 THE DIFFERENCE BETWEEN EXPORT TURNOVER AS PER PROFIT AND LOSS ACCOUNT AND AS PER FORM NO.56G IS RS.1,70,63,350 ( 22,20,72,023 - 20,50,08,673) AND THE SAME HAS BEEN ALSO REDUCED FROM TOTAL TURNOVER AS PER PROFIT AND LOSS ACCOUNT AND AS FORM NO.56G RS.1,70,63,350 (22,91,83,541 - 21,21,20,191). THE A.O. HAS ALSO RELIED UPON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER AND REPRODUCED THE SAME IN THE PENALTY ORDER AS UNDER: THE SUBMISSION GIVEN BY THE A.R. REGARDING THE CALCULATION OF EXEMPTION CLAIMED IS NOT ACCEPTABLE WITH REGARD TO THE WORKING OF TOTAL TURNOVER. THE REDUCTION OF TOTAL TURNOVER BY RS.1,70,63,350/ - IS NOT ACCEPTABLE AS NO SUCH PROVISION IS LAID DOWN IN SECTION 10B FOR ALLOWING ANY KIND OF REDUCTION WHILE CALCULATING THE TOTAL TURNOVER OF AN UNDERTAKING C LAIMING EXEMPTION U/S.10B . THE SECTION ONLY DEFINES 'EXPORT TURNOVER, IT NOWHERE DEFINES WHAT COMES UNDER TOTAL TURNOVER AND WHAT IS TO BE EXCLUDED WHILE ARRIVING AT TOTAL TURNOVER OF THE UNDERTAKING. SINCE NO SUCH REFERENCE IS GIVEN IN THE I.T. ACT THE TOTAL TURNOVER AS PER THE BOOKS WILL BE TAKEN INTO CONSIDERATION WHICH IN THIS CASE IS RS.22,91,83,541/ - RATHER THAN RS.21,21,20,191 AS CLAIMED BY THE A.R. THE A.R. VIDE ORDER SHEET ENTRY DATED 13.11.2009 WAS ASKED TO SHOW CAUSE AS TO WHY THE TOTAL TURNOVE R BE NOT TAKEN AS RS.22,91,83,541 RATHER THAN RS.21,21,20,191/ - FOR WORKING OUT THE EXEMPT INCOME U/S.10 B . IN REPLY TO THE ABOVE THE A.R. AGREED TO THE CALCULATION OF 4 EXEMPT INCOME ON TOTAL TURNOVER OF RS.22,91,83,541/ - . SIMILARLY, WHILE CALCULATING THE P ROFITS OF THE BUSINESS THE ASSESSEE HAS INCLUDED OTHER INCOME OF RS.1,00,725/ - . THE A.R. VIDE ORDER SHEET ENTRY DATED 13.11.2009 WAS ASKED TO SHOW CAUSE AS TO WHY RS.1,00,725 / - BE NOT REDUCED FROM THE PROFITS OF THE BUSINESS OF RS. 3,37,65,670/ - AS THE SAI D INCOME WAS NOT DERIVED FROM EXPORT NOR WAS ANY KIND OF MANUFACTURING OR PRODUCTION INVOLVED. TO THE ABOVE SHOW CAUSE THE A.R. AGREED TO THE REDUCTION OF RS.100725/ - SHOWN UNDER THE HEAD OTHER INCOME FROM PROFITS OF THE BUSINESS CLAIMED AT RS.3,37,65,670/ - . THUS, THE REVISED PROFITS OF THE BUSINESS COMES TO RS.3,36,64,945/ - (33765670 - 100725/ - .). ON THIS BASIS, THE ALLOWABLE REVISED EXEMPTION U/S.10B WAS WORKED OUT AT RS.3,01,13,880/ - AND THEREFORE, THERE WAS A DIFFERENCE OF RS.25,19,766/ - AND THE SAME IS A DDED TO THE TOTAL INCOME OF THE ASSESSEE. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND THE ONLY ISSUE TAKEN IN THE APPEAL WAS AS TO WHETHER FREIGHT AND INSURANCE OF RS. 89,00,509/ - WILL BE PART OF TOTAL TURNOVER WHILE COMPUTING DEDUCTION U/S. 10B OF THE AC T. THE LD. CIT(A) VIDE ORDER DATED 07/10/2010 DIRECTED THE ASSESSING OFFICER TO RE - COMPUTE THE DEDUCTION U/S. 10B OF THE ACT AFTER EXCLUDING THE FREIGHT AND INSURANCE FOR ELIGIBLE EXPORT FROM THE TURNOVER . THUS, ULTIMATELY T HE ALLOWABLE EXEMPTION U/S. 10B OF THE ACT WAS WORKED OUT TO RS. 3,13,30,627/ - AND DISALLOWANCE OF RS. 13,03,019/ - WAS MADE ON ACCOUNT OF CLAIM OF EXEMPTION U/S. 10B OF THE ACT . THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS IN RESPECT OF THE SAID DISALLOWANCE. THE SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT SUBSTANTIAL RELIEF HAD BEEN ALLOWED BY THE LD. CIT(A) AND THE APPEAL FILED BY THE 5 DEPARTMENT WAS STILL PENDING BEFORE THE ITAT . HOWEVER, THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND LEVIED PENALTY U/S. 271(1)(C) OF THE ACT BY OBSERVING THAT THE DISALLOWANCE TO THE TUNE OF RS. 13,03, 019/ - WAS CONFIRMED BY THE LD. CIT(A). ACCORDINGLY, PENALTY OF RS. 4,38,59 6/ - WAS LEVIED. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) , WHO DELETED THE PENALTY BY OBSERVING IN PARA 2.3 OF THE ORDER WHICH READ AS UNDER: - 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDINGS OF THE A.O. GIVEN IN THE PENALTY ORDER UNDER APPEAL. THE RELEVANT PORTION OF THE FINDINGS OF THE ASSESSMENT ORDER REPRODUCED BY THE A.O. IN THE PENALTY ORDER UNDER APPEAL HAVE ALSO BEEN GONE THROUGH. IT APPEARS THAT HE HAS IMPOSED THE PENALTY ON THE BASIS OF THIS FINDINGS. ON GOING THROUGH THE FINDINGS REPRODUCED BY THE A.O. IT IS SEEN THAT THE APPELLANT HAS CLAIMED EXCESS CLAIM OF EXEMPTION U/S. 10B OF THE ACT DUE TO SOME CALCULATION MISTAKES OCCURRE D IN CALCULATING THE TOTAL TURNOVER AND IT IS A FACT AS SOON AS THE A.O. POINTED OUT THIS MISTAKE, THE APPELLANT AGREED FOR RECOMPUTATION OF ALLOWABLE EXEMPTION U/S. 10B OF THE ACT. SIMILAR IS THE POSITION IN RESPECT OF OTHER INCOME OF RS. 1,00,725/ - . ADMI TTEDLY, THE APPELLANT DID NOT FILE ANY APPEAL AGAINST THE DISALLOWANCE OF DEDUCTION CLAIMED U/S10B OF THE ACT ON ACCOUNT OF WRONG CALCULATION OF TOTAL TURNOVER AND EXCLUSION OF OTHER INCOME. FURTHER, IT IS ALSO SEEN THAT THE A.O. HAS LEVIED THE PENALTY MER ELY PLACING RELIANCE ON THE FINDINGS GIVEN IN THE ASSESSMENT ORDER AS WELL AS IN THE APPELLATE ORDER. IN THIS CONNECTION IT MAY BE MENTIONED HERE THAT IT IS WELL SETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT AND AS H ELD BY THE HONOURABLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VEERASINGHAIAH & CO. VS.CIT 23 ITR 457, THE FINDINGS IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSE OF THE PENALTY PROCEEDINGS. IT IS ALSO WELL SETTLED THAT THE CRITERION AND YARD STICKS FOR THE PURPOSE OF IMPOSING 6 PENALTY U/S.271 (1 )(C) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING I S NOT LIABLE FOR PENALTY UNDER S ECTION 271 (1)( C) OF THE ACT FOR MAKING AN ERRONEO US CLAIM FOR DEDUCTION U/ S.80HH C OF THE ACT. THIS DECISION IS APPLICABLE IN THE CASE OF THE APPELLANT AS THE APPELLANT HAS DISCLOSED ALL THE MATERIAL FACTS IN THE RETURN /AUDIT REPORT FILED IN RESPECT OF THE CLAIM OF EXEMPTION U/S. 10B OF THE ACT. IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFULLY FOLLOWING THE VARIOUS DECISIONS MENTIONED ABOVE AND ALSO CONSIDERING THE TOTALITY OF THE CASE OF THE APPELLANT, IT IS HELD THAT NO PENALTY U/S.271(1)(C ) OF THE ACT IS E L IGIBLE IN THE CASE OF THE APPELLANT AS THERE IS NOTHING ON RECORD TO SUGGEST THAT THERE IS A DELIBERATE AND CONSCIOUS ATTEMPT ON THE PART OF APPELLANT TO CONCEAL OR FURNISH INACCURATE PARTICULARS OF ITS INCOME. THEREFORE, THE PENALTY IMPOSED U/S.271(1)( C) OF THE ACT IS LIABLE TO BE CANCELLED AND I ORDER ACCORDINGLY. THUS, THIS GROUND OF APPEAL IS ALLOWED. NOW THE DEPARTMENT IS IN APPEAL. 6 . LEARNED D.R. SUBMITTED THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S. 10B OF THE ACT WAS WRONG , THEREFORE, THE ASSESSEE CONCEALED THE INCOME AND ALSO FURNISHED INACCURATE PARTICULAR S OF INCOME TO TH AT EXTENT, AS SUCH THE PENALTY U/S. 271(1)(C) OF THE ACT WAS RIGHTY LEVIED BY THE ASSESSING OFFICER AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELET I NG THE SAME. 7 . IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME . IT WAS FURTHER STATED THAT ONLY ON THIS BASIS THAT 7 THE CLAIM FOR EXEMPTION U/S. 10B OF THE ACT WAS REDUCED BY THE ASSESSING OFFICER , THE PENALTY U/S. 271(1)(C) OF THE ACT WAS NOT LEVIABLE . THEREFORE, THE LD. CIT(A) RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSES SING OFFICER U/S. 271(1)(C) OF THE ACT . RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. R ELIANCE PETR O PRODUCT (P) LTD. REPORTED IN (2010) 322 ITR 158 . 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. ON A SIMILAR ISSUE, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT (P) LTD. (SUPRA) HAS HELD AS UNDER: - A GLANC E AT THE PROVISIONS OF SECTION 271(1) (C) OF THE INCOME - TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICUL ARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISH ING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INA CCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCU RATE, THE LIABILITY 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 WHERE THERE IS NO FINDING THAT ANY DETAIL SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN THE PRESENT CASE ALSO, THE CLAIM OF EXEMPTION U/S. 10B OF THE ACT BY THE ASSESSEE WAS REDUCED BY THE ASSESSING OFFICER . SO, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED THE INCOME OR FURNISHED THE INACCURATE PARTICULARS OF ITS INCOME . T HEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE AFORESAID C A SE OF CIT VS. R ELIANCE PETR O PRODUCT (P) LTD , WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 9 . IN I.T.A.NO. 393/JODH/ 2014 , THE ISSUE INVOLVED IS IDENTICAL AS WAS INVOLVED FOR THE A.Y. 2007 - 08 IN I.T.A.NO. 344/JODH/2014, THE ONLY DIFFERENCE IS THERE IN THE AMOUNT OF PENALTY LEVIED. THEREFORE, OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER RELATING TO THE A.Y. 2007 - 08 SHALL APPLY MUTATIS - MUTANDIS FOR THE A.Y. 2008 - 09 . ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT AL S O. 9 10 . IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ( ORDER PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER , 201 4) . S D/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH SEPTEMBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .