M/S. TARA JEWELS EXPORTS PVT. LTD, MUMBAI V. THE DCIT-8(3), MUMBAI

ITA 4274/MUM/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62341 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2012
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 09-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 17-06-2008
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: B V JHAVERI
• Keywords: Wrong claim; Difference of opinion
• Section: 80HHC; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH (AM) AND SHRI S.S. GODAR A (JM) ITA NO.4274/M/2008 ASSESSMENT YEAR: 2002-03 TARA JEWELS EXPORT PVT. LTD., 13, MANIK APARTMENT, B.S. ROAD, DADAR (W), MUMBAI 400 028. PAN: AABCT1161H VS. DEPUTY COMMISSIONER OF INCOME TAX-8(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.V. JHAVERI RESPONDENT BY: SHRI V. KRISHNAMOORTHY (JCIT) DATE OF HEARING: 9.4.2012 DATE OF PRONOUNCEMENT:2.5.2012 O R D E R PER S.S. GODARA, J.M: THE ASSESSEE HAS FILED THE INSTANT APPEAL AGAINST T HE ORDER OF LD. CIT (A)-XXV, MUMBAI DATED 17.03.2008 PARTLY CONFIRMING THE PENAL TY U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2002-03. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED SIX GROU NDS. IN THE COURSE OF HEARING, CONCISE GROUNDS HAVE ALSO BEEN FILED BY THE LEARNED AR. THE SAME ARE TAKEN ON RECORD. IN VIEW OF THE FACT THAT THE EARLIER GROUNDS AS WELL A S CONCISE GROUNDS RAISED IN THE APPEAL CHALLENGE THE VERY IMPOSITION OF PENALTY, THEREFORE , THE SAME ARE BEING DECIDED TOGETHER. 3. BRIEF FACTS OF THE INSTANT CASE ARE THAT THE ASS ESSEE FILED ITS RETURN ON 31.10.2002. ON 28.3.2008 THE ASSESSING OFFICER PASSED ASSESSMEN T ORDER. MADE DISALLOWANCE U/S 10A OF THE INCOME TAX ACT (HEREINAFTER TO BE REFERRED TO A S THE ACT) BY PARTLY ALLOWING ASSESSEES 2 ITA NO.4274/M/2008 CLAIM U/S 10A OF THE ACT TO THE TUNE OF RS. 2,31,19 ,572/- (INSTEAD OF RS. 4,50,34,610/- CLAIMED BY THE ASSESSEE) ON THE FOLLOWING GROUNDS: (A) INTER-UNIT TRANSFER OF RAW MATERIALS AT COST F ORMS PART OF THE TOTAL TURNOVER FOR THE PURPOSE OF CALCULATING DEDUCTION U /S 10A OF THE ACT. (B) INTEREST ON FDRS CANNOT FORM PART OF THE BUSINE SS PROFIT FOR THE PURPOSE OF CALCULATING DEDUCTION U/S 10A OF THE ACT . (C) EXCHANGE RATE DIFFERENCE OF RS. 88,96,911/- IS NOT ENTITLED TO DEDUCTION U/S 10A OF THE ACT. 4. ALONG WITH THE SAID DISALLOWANCE, THE ASSESSING OFFICER ALSO ACCEPTED THE ASSESSEES CLAIM OF REP LICENSE U/S 80HHC TO THE TUNE OF RS. 4 3,72,861/- (INSTEAD OF RS. 65,64,515/- CLAIMED BY THE ASSESSEE). U/S 14A ALSO, THE DISALL OWANCE WAS MADE TO THE TUNE OF RS. 36,94,977/-. 5. THE ASSESSEE PREFERRED APPEAL AGAINST THE ASSESS MENT ORDER DATED 28.03.2005. THE LD. CIT (A) VIDE ORDER DATED 28.10.2005 INCREASED T HE CLAIM OF THE ASSESSEE U/S 10A TO RS. 3,20,79,151/- INSTEAD OF RS. 2,31,19,572/- ACCEPTED BY THE ASSESSING OFFICER. ACCEPTED THE ASSESSEES CLAIM U/S 80HHC IN TOTO. REGARDING SEC. 14A, DISALLOWANCE MADE BY THE ASSESSING OFFICER / LD. CIT (A) REMITTED THE MATTER BACK TO THE ASSESSING OFFICER. 6. THE ASSESSEE AS WELL AS REVENUE FILED APPEAL BEF ORE THE MUMBAI ITAT AGAINST THE ORDER OF LD. CIT (A). HOWEVER, THE LEARNED CO-ORDI NATE BENCH REMITTED THE MATTER BACK TO THE ASSESSING OFFICER REGARDING THE CLAIMS U/S 10A, 14A AS WELL AS SEC.80HHC OF THE ACT. 7. COMING TO THE PENALTY, SINCE THE ASSESSING OFFI CER VIDE ASSESSMENT ORDER HAD ISSUED NOTICE OF PENALTY U/S 271(1)(C) OF THE ACT, THEREFO RE, THE PENALTY PROCEEDINGS COMMENCED. VIDE ORDER DATED 27.3.2007, THE ASSESSING OFFICER H ELD THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME BY CLAIMING EXCESS IVE DEDUCTIONS. IN VIEW OF THE FACT THAT 3 ITA NO.4274/M/2008 CLAIM U/S 10A OF THE ACT WAS NOT MAINTAINABLE. SO, IMPOSED PENALTY OF RS. 55,92,870/- @ 100% OF THE TAX SOUGHT TO BE EVADED. 8. IN APPEAL AGAINST THE PENALTY ORDER, THE LD. CIT (A) HAS PARTLY ACCEPTED THE ASSESSEES CONTENTION REGARDING DEDUCTION U/S 10A O NLY. HENCE, THE INSTANT APPEAL BEFORE US. 9. IN SUPPORT OF THE APPEAL, THE LEARNED AR HAS VEH EMENTLY CONTENDED BEFORE US THAT THE CASE IN HAND IS NOT THAT OF FURNISHING INACCURA TE PARTICULARS OR OF CONCEALMENT OF INCOME. TAKING CUE FROM THE ORDER OF ITAT, MUMBAI FOR THE A Y 2002-03 WHICH IS AVAILABLE BEFORE US AT PAGE NOS. 46-64 DATED 3.6.2011, THE LEARNED AR H AS SUBMITTED THAT ONCE THE ISSUE OF ASSESSMENT ITSELF STANDS REMITTED BACK TO THE ASSES SING OFFICER THEN IT ONLY PROVES DEBATABILITY OF THE CLAIMS RAISED BY THE ASSESSEE. ONLY DIFFERENCE OF OPINION IS THERE BETWEEN THE ASSESSEE AND THE REVENUE. THE SAME CAN NOT BE CALLED A FALSE CLAIM. ALSO RELIED ON THE HONBLE APEX COURT JUDGMENT IN THE CA SE OF CIT VS. RELIANCE PETRO CHEMICALS LTD., 322 ITR 158. THE LEARNED AR HAS DRAWN OUR AT TENTION TO ITAT MUMBAI WHEREIN THE ORDERS OF THIS VERY ASSESSEE QUA AYS 1998-99, 1999- 2000 AND 2000-2001 HAVE BEEN PASSED ALLOWING APPEALS. ALSO RELIED ON 44 SOT 79, ITAT MU MBAI IN THE CASE OF UNI DESIGN JEWELLERY (P.) LTD., VS. DCIT; 40 SOT 398, ITAT MUM BAI IN THE CASE OF STRIDES ARCOLAB LTD. VS. ACIT. PRAYED FOR ACCEPTANCE OF THE APPEAL. 10. ON THE OTHER HAND, THE LEARNED DR APPEARING FOR THE REVENUE HAS SUPPORTED THE IMPUGNED ORDER. RELIED ON CASE LAW UNION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277 DECIDED BY THE HONBLE SUPREME COURT. PRAY ED FOR REJECTION OF THE APPEAL. 11. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. WITH THEIR ABLE ASSISTANCE, WE HAVE ALSO PERUSED THE RECORD REFERRED TO AS WELL AS CASE LAWS. UNDISPUTED FACTS OF THE INSTANT CASE ARE THAT QUA ALL THE THREE CLAIMS I.E. , U/S 10A, 14A AND 80-HHC, THE ASSESSING 4 ITA NO.4274/M/2008 OFFICER IS STILL SEIZED OF THE MATTER AFTER REMAND ORDER DATED 3.6.2011 PASSED BY THE LEARNED CO-ORDINATE BENCH (SUPRA). ACCORDINGLY, IT CAN BE SAFELY ASSUMED THAT THE CLAIMS IN QUESTION RAISED BY THE ASSESSEE WERE NOT MALAFIDE T O SAY THE LEAST. THE LAW STANDS VERY WELL SETTLED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD., (SUPRA) THAT MERELY DISALLOWING A CLAIM OF DE DUCTION RAISED BY THE ASSESSEE IS NOT A GROUND TO PROCEED U/S 271(1)(C). FOR PENALTY, IT H AS TO BE EITHER A CASE OF FURNISHING OF INACCURATE PARTICULARS, CONCEALMENT OF INCOME OR AT LEAST THE CLAIM SHOULD HAVE BEEN PROVED TO BE A MALA-FIDE ONE. IN OUR CONSIDERED OPINION, THE SAID EVENTUALITIES DO NOT EXIST IN INSTANT CASE. THEREFORE, THE PENALTY IN QUESTION DO ES NOT HOLD GROUND. ACCORDINGLY, WE ALLOW THIS APPEAL BY SETTING ASIDE THE PENALTY IMPO SED. 12. HENCE, THE INSTANT APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF MAY, 2012. SD/- SD/- (B. RAMAKOTAIAH) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER DATE : 2.5.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR H BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.