M/s Eastman Industries, Ludhiana V. ITO, Ludhiana

ITA 398/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68423 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2013
• Assessment Year: 1989-1990
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, JM ITA NO. 398/CHD/2012 ASSESSMENT YEAR : 1989-90 M/S EASTMAN INDUSTRIES V I.T.O. WARD 1(2) F-21, PHASE VII LUDHIANA FOCAL POINT LUDHIANA AAAEF 3411B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ASHWANI KUMAR RESPONDENT BY: SHRI J.S. NAGAR DATE OF HEARING 18.7.2013 DATE OF PRONOUNCEMENT 23.8.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDERS DATED 23.2.2012 OF THE LD. CIT(A)-II, LUDHIA NA. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUND: THAT ORDER PASSED U/S 250(6) BY THE LD. CIT(A)-II, LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE LEVY OF PENAL TY U/S 271(1)(C) OF RS. 1,32,700/- BY THE ASSESSING OFFICE R. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT ADDIT IONS ARE MADE IN THE ASSESSMENT ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 32AB OF THE ACT AND ON ACCOUNT OF DI SALLOWANCE OF EMF RESEARCH AND DEVELOPMENT EXPENSES AND PENALT Y PROCEEDINGS WERE ALSO INITIATED. IN RESPONSE TO SH OW CAUSE NOTICE IN RESPECT OF PENALTY PROCEEDINGS, NONE APP EARED THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY IN RESPECT OF DISALLOWANCE OF EMF RESEARCH AND DEVELOPMENT EXPEN SES @ 100% AMOUNTING TO RS. 1,32,700/-. 2 4 ON APPEAL RELIANCE WAS PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCT PVT LTD. 322 ITR 158. HOWEVER, THE LD. CIT(A) DID NOT FIND FORC E IN THE SUBMISSIONS AND CONFIRMED THE LEVY OF PENALTY. 5 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD INCURRED SOME EXPENSES ON EMF RESE ARCH AND DEVELOPMENT EXPENSES. UNDER THIS SCHEME 50% OF THE EXPENSES IS REFUNDABLE BY THE GOVERNMENT OF INDIA F ROM EMF. IT WAS SUBMITTED THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS. 9,94,044/- OUT OF WHICH A SUM OF RS. 4,68,44 8/- WAS REFUNDED UNDER EMF. IT WAS OBSERVED BY THE ASSESSI NG OFFICER THAT MOST OF THE EXPENSES WERE IN THE FORM OF FOREI GN TRAVEL AND THE ASSESSEE WAS NOT ENGAGED IN MANUFACTURING T HEREFORE, EXPENDITURE WAS NOT ALLOWED. THE LD. COUNSEL OF TH E ASSESSEE SUBMITTED THAT APPROXIMATELY 45% AMOUNT WAS REFUNDE D BY THE GOVERNMENT OF INDIA WOULD SHOW THAT THE EXPENDITURE HAD ACTUALLY BEEN INCURRED BY THE ASSESSEE. IT IS NOT NECESSARY THAT THE ASSESSEE SHOULD ALWAYS BE A MANUFACTURE FO R CARRYING ON THE RESEARCH. IN FACT SOME OF THE EXPENDITURE W AS ORIGINALLY ALLOWED BY THE LD. CIT(A) IN QUANTUM APP EAL, HOWEVER, SAME HAS BEEN REVERSED BY THE TRIBUNAL. H E CONTENDED THAT MERELY AN ITEM OF EXPENDITURE HAS BE EN DISALLOWED AND THEREFORE, IT CANNOT BE SAID THAT S AME WOULD CALL FOR LEVY OF PENALTY. THE ASSESSEE MADE ALL TH E DISCLOSURES AND THEREFORE, IT CANNOT BE SAID THAT INCOME HAS B EEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FILE D. IN THIS REGARD HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PVT LTD. (SUPRA). 3 6 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUP PORTED THE ORDER OF THE LD. CIT(A). 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 5,26,586/- ON ACCOUNT OF EMF RESEARCH AND DEVELOPMENT EXPENSES. IN FACT TOTAL EXPENDITURE INCURRED WAS RS. 9,94,044/- OUT OF WHIC H A SUM OF RS. 4,68,448/- WAS REFUNDED BY EMF. THIS ITSELF SH OWS THAT THE ASSESSEE HIMSELF HAS INCURRED SOME EXPENSES ONLY TH EY COULD HAVE CLAIMED REFUND OF SUCH AMOUNTS. IN ANY CASE M ERE DISALLOWANCE OF EXPENDITURE WOULD NOT CALL FOR PENA L CONSEQUENCES. THIS IS PARTICULARLY SO WHEN THE ASS ESSEE HAS ALREADY MADE DISCLOSURE OF THE EXPENDITURE. THE HO N'BLE SUPREME COURT WHILE DEALING WITH THIS ISSUE IN CASE OF RELIANCE PETROPRODUCTS PVT LTD. (SUPRA) HAS OBSERVED AS UNDE R: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BED COVERE D BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FUR NISHED INACCURATE PARTICULARS IF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GI VEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. IN THE CASE BEFORE US, IT CANNOT BE DENIED THAT THE ASSESSEE HAS MADE ALL THE DISCLOSURES THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS I NCOME OR 4 FILED INACCURATE PARTICULARS . THEREFORE, IN OUR O PINION, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. IN THESE CIRCU MSTANCES WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE T HE PENALTY. 8 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.8.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.8.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR