ACIT, Ludhiana V. M/s Tudor Knitting Works Pvt. Ltd., Ludhiana

ITA 415/CHANDI/2011

• Counselvise Citation: 41521514 RSA 2011
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: HARI OM ARORA
• Keywords: Wrong claim; Set aside
• Section: 271(1)(c); 80IB; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B BEFORE MS SUSHMA CHOWLA, JM AND SHRI MEHAR SINGH, AM ITA NO. 415/CHANDIGARH/2011 ASSESSMENT YEAR 2002-03 A.C.I.T. C-III, LUDHIANA V. TUDOR KNITTING WORKS PVT LTD E-10/7571, NEW VEER NAGAR BAHADUR KE ROAD LUDHIANA PAN: AABCT 2740 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA RESPONDENT BY: SHRI HARI OM ARORA DATE OF HEARING: 20.10.2011 DATE OF PRONOUNCEMENT: 31.10.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE FOR ASSES SMENT YEAR 2002- 03, IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, LUDHIANA DATED 17.2.2011 U/S 250 (6) OF THE INCOME-TAX ACT (IN SH ORT THE ACT). 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL:- 1 THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF INCOME-TAX ACT BY A O ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S 80IB ON SURRENDERED I NCOME IGNORING THE FACT THAT THE ASSESSEE HAD KNOWINGLY CLAIMED DE DUCTION U/S 80IB INSPITE OF DECISION OF HON'BLE SUPREME COURT IN M/S STERLING FOODS, 237 ITR 579 BEING AGAINST THE ASSESSEE. 2 THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF INCOME-TAX ACT BY A PPLYING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/ S RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 AS THE FACTS OF THE CASE ARE DIFFERENT AND THE ASSESSEE KNOWINGLY CLAIMED DEDUCT ION U/S 80IB, DECISION OF HON'BLE SUPREME COURT IN M/S STERLING F OODS, 237 ITR 579 BEING AGAINST THE ASSESSEE. 3. THAT THE ORDER OF THE LD. CIT(A) BET ASSET ASIDE AND THAT OF THE AO BE RESTORED. ITA NO. 415/CHANDI/2011 A.C.I.T. V. TUDOR KNITTING WORKS PVT LTD 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT CLAIMED DEDUCTION U/S 80-IB AMOUNTING TO RS. 36,99,141/-. THE DEDUCTI ON HAD BEEN CLAIMED ON ITEMS INCLUDING RS. 1.20 CRORE SURRENDERED BY TH E APPELLANT DURING THE SURVEY ON ACCOUNT OF CERTAIN DISCREPANCIES. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AO OBSERVED THAT THE DEDUCTION WAS AVAILABLE ONLY ON THE INCOME WHICH HAD A DIRECT NEXUS OR ORIGINATES F ROM THE INDUSTRIAL UNDERTAKING ITSELF BUT SUCH ITEMS WERE NOT ELIGIBLE FOR CLAIMING OF DEDUCTION. THEREFORE, THE AO OBSERVED THAT THE APP ELLANT HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND INITIATED PENA LTY U/S 271(1)(C) OF THE ACT AND ISSUED NOTICE ACCORDINGLY. IN RESPONSE, TH E APPELLANT FIELD ITS REPLY BEFORE THE AO BUT THE SAME WAS REJECTED BY TH E AO AND ULTIMATELY LEVIED PENALTY AMOUNTING TO RS. 12,91,583/-. 4. THE FINDING OF LD. CIT(A) IS GIVEN HEREUNDER:- '5 I HAVE GONE THROUGH THE RIVAL SUBMISSIONS OF THE APPE LLANT; ASSESSMENT ORDER PASSED BY THE AO AND ALSO PERUSED THE RELEVANT RECORD. DISALLOWANCE HAD BEEN MADE IN THIS CASE OU T OF DEDUCTION CLAIMED BY THE APPELLANT U/S 80-0B OF THE ACT. THE AO HAS LEVIED THIS PENALTY ON THE GROUND THAT THE HON'BLE SUPREME COURT IN THE CASE OF STERLING FOODS HAS HELD THAT THE WORD DER IVED FROM IN THE SEC 80IB SEEKS TO COVER ONLY THE RECEIPTS DERIVED F ROM THE ACTUAL CONDUCT OF THE BUSINESS OF INDUSTRIAL UNDERTAKING. THOUGH RATIO OF THIS DECISION WOULD REQUIRE ADDITION MADE IN RESPEC T OF THE DISALLOWANCE TO BE CONFIRMED WITHOUT ANY DOUBT, QUE STION INVOLVED IN THE PRESENT APPEAL IS NOT ON ACCOUNT OF ADDITIO N BUT IN RESPECT OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN RESPECT OF THIS DISALLOWANCE. 6 DURING THE APPELLANT PROCEEDINGS THE APPELLANTS LD. COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF VARIOUS ORDER ON IDENTICAL GROUNDS. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN MAY ATTENTION TO THE RATIO OF HON'BLE SUPREME COURT JUD GMENT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P) LTD., RE PORTED IN 322 ITR 158. HE HAS FURTHER ARGUED THAT DEDUCTION U/S 80-IB HAVING BEEN CLAIMED ON THE BASIS OF CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANTS. NO DEFAULT COULD BE FOUND FOR THE CLAI M OF AN APPELLANT THAT IT HAD NOT CLAIMED THE DEDUCTION IN A BONA FIDE MANNER. THE APPELLANTS LD. COUNSEL FOR THE ASSESS EE ALSO ARGUED THAT EH ISSUE IS DEBATABLE AS THE LD. CIT(A) IN QUA NTUM APPEAL HAS ALLOWED THE RELIEF TO THE APPELLANT, WHEREAS, ITAT ACCEPTED REVENUES APPEAL ON THE SAME GROUND AND SET ASIDE L D. CIT(A)S ITA NO. 415/CHANDI/2011 A.C.I.T. V. TUDOR KNITTING WORKS PVT LTD 3 ORDER. PENALTY U/S 271(1)(C) OF THE ACT IS, THEREF ORE, NOT LEVIABLE IN RESPECT OF SUCH ALLOWANCE AS PER LD. LD. LD. COUNS EL FOR THE ASSESSEE. 7 KEEPING IN VIEW THE ABOVE DISCUSSED FACTUAL AND L EGAL POSITION, LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IN THE CASE OF THE APPELLANT IS HELD TO BE NOT JUSTIFIED DUE TO DEBATA BLE IN NATURE OF ISSUE UNDER CONSIDERED. FURTHER, THE CASE LAWS QUOT ED BY THE LD. COUNSEL FOR THE ASSESSEE ALSO FAVOURS APPELLANTS P LEA. PENALTY OF RS. 12,91,583/- IS, THEREFORE, DELETED AND THE GROU ND OF APPEAL IS ALLOWED. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE THE BENCH, THE LD.DR PLACED RELIANCE ON THE PENALTY ORDER PASSED BY THE AO WHEREAS THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 6. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE AND THE RELEVANT RECORD. IT IS A CASE WHERE PENALTY HAS BEEN LEVIED BY THE AO ON THE DEBATABLE ISSUE AND INCORRECT CLAIM MADE BY THE AO . IT IS NOT A CASE WHERE THE ASSESSEE HAS MADE FALSE CLAIM, THEREFORE, THE FACT SITUATION OF THE CASE ARE FULLY COVERED BY THE DECISIONS OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SHAHBAD CO-OP SUGAR MIL LS LTD. (2010) 322 ITR 73 (P & H) AND CIT V. RELIANCE PETROPRODUCTS PV T LTD REPORTED AT (2010) 322 ITR 158 (S.C). 6.1 IN THE CASE OF CIT V. SHAHBAD CO-OP SUGAR MILLS LTD.,(SUPRA) THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- PENALTY-CONCEALMENT OF INCOME-WRONG CLAIM FORO DED UCTION DOES NOT AMOUNT TO CONCEALMENT OF INCOME PENALTY CANNO T BE IMPOSED INCOME-TAX ACT, 1961, S 271(1)(C) 6.2 IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PV T LTD (SUPRA) THE HON'BLE SUPREME COURT HELD AS UNDER:- PENALTY CONCEALMENT OF PARTICULARS OF INCOME N O INFORMATION GIVEN IN RETURN FOUND TO BE INCORRECT MAKING INCO RRECT CLAIM DOES NOT AMOUNT TO CONCEALMENT OF PARTICULARS INCOME-TAX ACT, 1961., S. 271(1)(C). ITA NO. 415/CHANDI/2011 A.C.I.T. V. TUDOR KNITTING WORKS PVT LTD 4 6.3 THE PROVISION OF SECTION 271(1(C) COVERS THE SI TUATION OF FALSE CLAIM BUT NOT AN INCORRECT CLAIM. IN THE PRESENT CASE, T HE ASSESSEE HAS MADE CLAIM WHICH DOES NOT FALL UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, AS THERE ARE DIVERGENT JUDICIAL OPINIONS, ON S UCH CLAIM MADE BY THE ASSESSEE. HAVING REGARD TO THE ABOVE LEGAL AND FACT UAL DISCUSSIONS AND RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE SUPREME COURT AND THE HON'BLE JURISDICTIONAL HIGH COURT REPRODUCED ABOVE, THE FINDING OF THE LD. CIT(A) IS UPHELD. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON 31 .10.2011 SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNANT MEMBER CHANDIGARH, THE 31.10.2011 SURESH COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR