ACIT, New Delhi V. M/s. Bry Air (Asia) (P) Ltd., New Delhi

ITA 4336/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53295 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 29-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y S KAKKAR
• Assessee Lawyers: SHAILENDER KUMAR BAJAJ
• Keywords: Bonafide belief; Difference of opinion
• Section: 143(3); 80HHC; 80IB

Judgement Text

ITA NO. 4336/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4336/DEL/2011 A.Y. : 2003-04 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), NEW DELHI VS. M/S BRY AIR (ASIA) (P) LTD., 20, RAJPUR ROAD, DELHI 110 054 (PAN/GIR NO. : AAACB4050A) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SHAILENDER KUMAR BAJAJ, CA DEPARTMENT BY : MS. Y.S. KAKKAR, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM PER SHAMIM PER SHAMIM PER SHAMIM YAHYA: AM YAHYA: AM YAHYA: AM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 14.7.2 011 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF I NCOME TAX (APPEALS) ERRED IN DELETING THE PENALTY OF ` 897956 /- IMPOSED U/S. 271(1)(C) OF THE IT ACT. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE R ETURN WAS FILED DECLARING INCOME OF ` 2,00,73,900/- AND ASSESSMENT WAS MADE UNDER SECTION 143(3) VIDE ASSESSMENT ORDER DATED 28.2.200 6 ON TOTAL INCOME OF ` 2,32,86,060/-. OUT OF ADDITIONS/ DISALLOWANCE S IN THE ASSESSMENT ORDER, PENALTY HAS BEEN LEVIED ON THE ADDITION OF ` 8,97,956/- BEING THE AMOUNT OF SHORT DEDUCTION ALLOWED U/S 80HHC. DURI NG THE YEAR THE ITA NO. 4336/DEL/2011 2 ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB AND 80HHC. WHILE COMPUTING THE DEDUCTION U/S 80HHC, DEDUCTION CLAIMED U/S 80IB WAS NOT REDUCED FROM THE ELIGIBLE PROFIT U/S 80HHC. T HE CLAIM OF THE ASSESSEE WAS BASED ON THE PRESCRIBED REPORT U/S 80H HC(4) IN PRESCRIBED FORM NO. 10CCAC WHICH WAS FILED ALONG WIT H THE RETURN. THE ASSESSING OFFICER COMPUTED THE DEDUCTION U/S 80HHC B Y REDUCING THE DEDUCTION U/S 80IB FROM THE ELIGIBLE PROFIT U/S 80HH C. THE ASSESSING OFFICER WHILE DOING SO, RELIED UPON SECTION 80IB(1 3) READ WITH SECTION 80IA(9). THE ADDITION MADE WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ON SECOND APPEAL BY THE ASSE SSEE BEFORE THE TRIBUNAL, THE ASSESSEES APPEAL WAS DISMISSED FOLLOW ING THE DECISION OF SPECIAL BENCH IN THE CASE OF ACIT VS. HINDUSTAN MINT AND AGRO PVT. LTD. 119 ITD 107 (DEL) (SPL. BENCH). THEREAFTER, PENALT Y OF ` 897956/- BEING 100% OF THE ALLEGED TAX SOUGHT TO BE EVADED HAS BEE N LEVIED BY THE ASSESSING OFFICER VIDE ORDER DATED 28.9.2010. PEN ALTY WAS LEVIED BY APPLYING EXPL.-1 ON THE GROUND THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS UNSATISFACTORY AND NOT ACCEPTABLE. FU RTHER, THE PENALTY HAS BEEN LEVIED FOR FURNISHING INACCURATE PARTICULA RS. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ISSUE ELABORATELY AND HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF TH E LD. AUTHORISED REPRESENTATIVE AND ALSO HAVE GONE THRO UGH THE PENALTY ORDER. IN THIS CASE, PENALTY HAS BEEN IMP OSED MAINLY BECAUSE THE ASSESSEE HAS CLAIMED DEDUCTIONS U/ S 80HHC AND 80IB OF THE ACT. THE DEDUCTIONS U/S 80H HC HAS BEEN ALLOWED AFTER DEDUCTING THE DEDUCTIONS U/S 80 IB DURING THE QUANTUM PROCEEDING. THE QUESTION WHETHER THE ITA NO. 4336/DEL/2011 3 DEDUCTIONS ALLOWED U/S. 80IA HAS TO BE REDUCE FROM T HE PROFITS FOR COMPUTING DEDUCTIONS U/S 80HHC HAS BEEN DEBATABLE ISSUE. IN CASE OF HINDUSTAN MINT AND AGR O PRODUCTS 119 ITD 107 (DEL) (SB), GREAT EASTERN EXPOR TS (DEL) AND OLAM EXPORTS (INDIA) LTD. 184 TM 373 (KER) THIS I SSUE HAS BEE DECIDED BY THE HONBLE COURT IN THE FAVOUR OF REVENUE WHEREAS THE SAME ISSUE HAS BEEN DECIDED AGAI NST THE REVENUE BY THE HONBLE HIGH COURT OF MUMBAI IN T HE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT (BOMBA Y HIGH COURT). IT IS ALSO HELD BY THE VARIOUS COURT T HAT WERE AN ISSUE IS DEBATABLE, PENALTY U/S 271(1)(C) IS NOT L EVIABLE. SINCE THE ISSUE IS DEBATABLE IN THIS CASE, IN MY CON SIDERED OPINION, PENALTY U/S 271(1)(C) CANNOT BE ATTRACTE D. FURTHER IN CASE, ALL THE MATERIAL FACT WERE FOUND TO BE DISCLOSED BY THE ASSESSEE IN THE AUDITED ACCOUNTS, PRESCRIBED REPORT U/S 80HHC AND 80IB, WHICH INDICA TES THE BONA FIDE CLAIMED OF THE ASSESSEE. THE AUDIT REP ORT IS DULY CERTIFIED BY THE QUALIFIED CHARTERED ACCOUNTANT AND THE ASSESSEE HAS MADE THE CLAIM ON THE BASIS OF THESE CERTIFICATE AND REPORT. ONLY THE CLAIM OF THE AS SESSEE HAS NOT BEEN ALLOWED BY THE ASSESSING OFFICER. THE ASSE SSING OFFICER HAS NOT FOUND ANY COGENT MATERIAL TO INDICA TE THAT INACCURATE PARTICULARS HAS BEEN FURNISHED BY THE AS SESSEE IN THIS CASE. IT HAS BEEN HELD BY THE HONBLE AP EX COURT IN THE CASE OF C.I.T. VS. RELIANCE PETROPRODUCT PVT. LTD . REPORTED IN 322 ITR 158 THAT WHERE THERE IS NO CON CEALMENT OF INCOME OR INACCURATE PARTICULAR AND WHERE THE AD DITIONS AND / OR THIS ALLOWANCES IS BASED ON BONA FIDE CLA IMS, ITA NO. 4336/DEL/2011 4 DEBATABLE CLAIMS AND DIFFERENCE OF OPINION, SUCH C LAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACC URATE PARTICULARS. ON THE BASIS OF ABOVE FACT AND CIRC UMSTANCES OF THE CASE, IN MY CONSIDERED OPINION PENALTY U/S 2 71(1)(C) CANNOT BE LEVIED U/S 271(1)(C). THEREFORE, THE AS SESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSED I N THIS CASE U/S 271(1)(C). 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT SECTION 271(1)(C) POSTULATES THE LEVY OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. IN THIS CASE PENALTY HAS BEEN IMPOSED MAINLY BECAUSE ASSESSEE HAS CLAIMED DEDUCTION U/S 80 HHC AND 80IB OF THE ACT. THE ASSESSING OFFICER HAS ALLOWED DED UCTION U/S 80HHC AFTER DEDUCTING THE DEDUCTIONS U/S 80IB DURING THE QUANTUM PROCEEDING. THE QUESTION WHETHER THE DEDUCTIONS ALL OWED U/S. 80IA HAS TO BE REDUCED FROM THE PROFITS FOR COMPUTING DEDUCTIO NS U/S 80HHC HAS BEEN DEBATABLE ISSUE. IN THE CASE OF HINDUSTAN MIN T AND AGRO PRODUCTS 119 ITD 107 (DEL) (SB)THE ISSUE HAS BEEN DE CIDED IN FAVOUR OF THE REVENUE AND THE SAME ISSUE HAS BEEN DECIDED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ASSOCIATED CAPSU LES PVT. LTD. VS. DCIT IN FAVOUR OF ASSESSEE. THUS, IT IS CLEAR THAT THERE WERE CONFLICTING VIEWS ON THE SAME ISSUE WHICH NECESSITATED THE FORMAT ION OF THE SPECIAL BENCH OF THE TRIBUNAL TO SORT OUT THE CONFL ICT. HENCE, THE ISSUE WAS DEBATABLE AT THE TIME OF FILING OF RETURN AND ASSESSEE HAS ADOPTED ONE OF THE POSSIBLE VIEWS. IN OUR CONSIDERED OPINI ON, PENALTY U/S ITA NO. 4336/DEL/2011 5 271(1)(C) IS NOT EXIGIBLE. ALL THE DETAILS AND FACT S PERTAINING TO THE CLAIM WERE DULY DISCLOSED BY THE ASSESSEE. 7. IN COMING TO THE CONCLUSION, WE PLACE RELIANCE UP ON THE HONBLE APEX COURT DECISION IN THE CASE OF CIT VS. RELIANC E PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010. IN THIS CASE V IDE ORDER DATED 17.3.2010 IT HAS BEEN HELD THAT THE LAW LAID DOWN I N THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CO NCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WH AT WAS OVERRULED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DI LIP SHEROFF CASE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQU IREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVE D THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY R EASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 7.1 WE WOULD ALSO LIKE TO REFER THE DECISION OF TH E HONBLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF T HEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMIN AL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PA RTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAI LURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL T HE RELEVANT ITA NO. 4336/DEL/2011 6 CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBE D, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRI BED BY THE STATUTE. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COM MISSIONER OF INCOME TAX (APPEALS), HENCE, WE UPHOLD THE SAME. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 09/12/2011. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 09/12/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES