ACIT, New Delhi V. M/s. Super Cassettes Industries Ltd., Noida

ITA 4421/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81506 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 14A; 80IB

Judgement Text

ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4421/DEL/2012 ASSESSMENT YEAR : 2006-07 I.T.A.NO.4422/DEL/2012 ASSESSMENT YEAR : 2007-08 I.T.A.NO.4423/DEL/2012 ASSESSMENT YEAR : 2008-09 ASSTT.COMMISSIONER OF INCOME TAX, VS SUPER CA SETTES INDUSTRIES LTD., CIRCLE-9(1), ROOM NO. 163, PLOT NO.1, FILM CITY, C.R. BUILDING, NEW DELHI. SECTOR-16A, NOIDA. (PAN: AABCS4712P) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI HIREN MEHTA RESPONDENT BY : SHRI RAKESH KUMAR, SR .DR O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE APPEALS HAVE BEEN PREFERRED AGAINST SEPARATE ORDERS OF THE CIT(A)-XII, NEW DELHI DATED 30.5.2012 IN APPEAL NO. 477/11-12, 479/11- 12 AND 478/11-12 FOR AYS 2006-07, 2007-08 AND 2008- 09 RESPECTIVELY. 2. THE SOLE GROUND RAISED BY THE ASSESSEE IN ITA NO . 4421/D/2012 READS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.39,1 2,100/- ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 2 IMPOSED BY THE AO ON THE QUANTUM AMOUNT WHICH WAS CONFIRMED BY ITAT/CIT(A). 3. THE SOLE GROUND RAISED BY THE ASSESSEE IN ITA NO . 4422/D/2012 READS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.34,97,250/- IMPOSED BY THE AO ON THE QUANTUM AMOUNT WHICH WAS CONFIRMED BY ITAT/CIT(A). 4. THE SOLE GROUND RAISED BY THE ASSESSEE IN ITA NO . 4423/D/2012 READS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 20, 04,460/- IMPOSED BY THE AO ON THE QUANTUM AMOUNT WHICH WAS CONFIRMED BY ITAT/CIT(A). 5. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RECORD AND RELEVANT MATERIAL AND DOCUMENTS PLACED O N RECORD IN THESE APPEALS. 6. LD. DR SUBMITTED THAT THE AO RIGHTLY IMPOSED PEN ALTY ON THE ASSESSEE AS ASSESSEE FURNISHED INACCURATE PARTICULA RS OF ITS INCOME AND ALSO CONCEALED PARTICULARS OF ITS INCOME, THEREFORE, THE AO RIGHTLY INITIATED PENALTY PROCEEDINGS AND IMPOSED THE PENALTY BUT THE CIT(A) DELETED THE ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 3 PENALTY IN ALL THREE YEARS WITHOUT ANY JUSTIFIED AN D COGENT REASON. THEREFORE, THE IMPUGNED ORDERS MAY BE SET ASIDE BY RESTORING T HAT OF THE AO. 7. REPLYING TO THE ABOVE, LD. AR SUBMITTED THAT THE ISSUE OF DISALLOWANCE ON ACCOUNT OF EXCESS CLAIM U/S 80IC OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THEREFORE, PENALTY IS NOT IMPOSABLE O N THIS COUNT AND THE CIT(A) WAS RIGHT IN DELETING THE PENALTY. 8. THE AR SUBMITTED THAT IN AY 2006-07, THE UNDER-V ALUATION OF CLOSING WORK IN PROGRESS (WIP) OF RS.1,38,910 IS ALSO COVER ED BY THE ORDER OF THE TRIBUNAL IN ITA NO. 991/D/2008 FOR AY 2001-02 IN AS SESSEES OWN CASE VIDE ORDER DATED 11.11.2009 WHERE IN PARA 6.3, TH IS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY DELETING THE PENALTY. 9. THE AR FURTHER POINTED OUT THAT THE AO ALSO IMPO SED PENALTY PERTAINING TO THE ALLEGED DISALLOWANCE ON ACCOUNT O F SOFTWARE EXPENSES TREATING THE SAME AS CAPITAL EXPENSES AND THE MAJOR PART OF SOFTWARE EXPENSES WERE ALLOWED AND A MINOR PART OF THE CLAIM OF THE ASSESSEE HAS BEEN DISALLOWED, THEREFORE, PENALTY CANNOT BE LEVIE D ONLY ON THIS GROUND THAT THE PART OF CLAIM HAS BEEN DISALLOWED. THE AR HAS P LACED ITS RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETROPRODUCTS PVT. LTD. 322 ITR 158(SC) WHEREIN IT WAS HELD THAT MERELY ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 4 BECAUSE THE CLAIMED EXPENDITURE OF THE ASSESSEE WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, WOULD NOT ATTRACT PENALT Y U/S 271(1)(C) OF THE ACT. 10. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS A ND CONTENTIONS OF BOTH THE SIDES, WE OBSERVE THAT THE CIT(A) DELETED THE PENALTY PERTAINING TO THE DISALLOWANCE ON ACCOUNT OF SOFTWARE EXPENSES WI TH FOLLOWING OBSERVATIONS AND FINDINGS:- IT HAS BEEN HELD IN THE CASE OF CIT VS RELIANCE PE TRO PRODUCTS PVT. LTD., 322 ITR 158 (SC) THAT WHERE MER ELY BECAUSE THE CLAIMED EXPENDITURE OF THE ASSESSEE WAS NOT ACCEPTED OR NOT ACCEPTABLE TO REVENUE THAT BY ITSEL F WOULD NOT ATTRACT PENALTY U/S 271(L)(C). IN THE INSTANT C ASE INTEREST EXPENDITURE HAD BEEN CLAIMED IN RESPECT OF LOANS INCURRED FOR PURCHASING SHARES. THE AO DISALLOWED T HE EXPENDITURE U/S 14A AND ALSO LEVIED PENALTY ON ACCO UNT OF CONCEALMENT OF INCOME/FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS HELD BY THE APEX COUR T THAT THERE IS A DIFFERENCE BETWEEN A WRONG CLAIM AND A F ALSE CLAIM. IT WAS UP TO THE REVENUE AUTHORITIES TO ACCE PT THE CLAIM IN THE RETURN OR NOT. MERELY HAD CLAIMED EXPENDITURE AND CONSEQUENTLY THE CLAIM WAS NOT ACCE PTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT TOO BY I TSELF, WOULD NOT ATTRACT PENALTY U/S 271(1)(C). IF THE CON TENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM WAS MADE AND NOT ACCEPTED BY THE AO FOR ANY REASON, THE ISSUE WOULD INVITE PENALTY U/S 271(1) (C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGI SLATURE. IN VIEW OF THE ABOVE, THE LEVY OF PENALTY IS NOT AT ALL WARRANTED AND THE SAME MAY THEREFORE BE DELETED. 11. THE CIT(A) HAS DELETED PENALTY IN ALL THREE YEA RS ON THIS ISSUE WITH ABOVE OBSERVATIONS AND CONCLUSION AND WE ARE IN AGR EEMENT WITH THE ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 5 CONCLUSION OF THE CIT(A) THAT ONLY BECAUSE THE ASSE SSEE HAS CLAIMED EXPENDITURE AND THE CLAIM WAS NOT ACCEPTED OR WAS N OT ACCEPTABLE TO THE REVENUE, THAT TOO BY ITSELF, WOULD NOT ATTRACT PENA LTY U/S 271(1)( C) OF THE ACT. IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. L TD. (SUPRA), HONBLE APEX COURT ALSO OBSERVED THAT IF CONTENTION OF THE REVENUE WAS ACCEPTED, THEN IN CASE OF EVERY RETURN WHERE THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO FOR ANY REASON, WOULD INVITE PENALTY U/S 271(1)(C) OF THE ACT WHICH IS NOT THE INTENTION OF THE LEGISLATURE. ACC ORDINGLY, WE UPHOLD THE CONCLUSION OF THE CIT(A) WHICH DELETED PENALTY ON A CCOUNT OF PART DISALLOWANCE PERTAINING TO CLAIM OF SOFTWARE EXPENS ES OF THE ASSESSEE. 12. COMING TO THE ISSUE OF UNDER-VALUATION OF WORK IN PROGRESS (WIP) OF RS.1,38,191, WE OBSERVE THAT THE ITAT DELHI B IN ASSESSEES OWN CASE IN ITA NO. 991/DEL/2008 FOR AY 2001-02 DISMISSED THE A PPEAL OF THE REVENUE VIDE ORDER DATED 11.11.2009 (SUPRA) UPHOLDING THE O RDER OF THE CIT(A) AND CANCELLING THE PENALTY WITH FOLLOWING OBSERVATIONS AND FINDINGS:- 6.3 THERE IS NO DISPUTE TO THE WELL-SETTLED LEGAL PROPOSITION THAT FOR LEVY OF PENALTY, THERE SHOULD BE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THEREOF. IN THE INSTANT CASE, WE FOUND THAT THE METHOD OF STOCK VALUATION HAD BEEN DISCLOSED BY THE ASSESSEE IN THE NOTES TO THE ACCOUNTS FORMING PART OF BALANCE-SHEET AS WELL AS TAX AUDIT REPORT WHEREIN I T WAS STATED THAT THE CLOSING WORK-IN-PROGRESS HAD BEEN V ALUED AT THE COST OF RAW-MATERIAL PLUS CONVERSION COST WH EREVER APPLICABLE, WHEREAS IN THE INSTANT CASE, THE ASSESS ING ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 6 OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL TO S HOW THAT THE, ASSESSEE HAS FURNISHED ANY INACCURATE PAR TICULARS OF INCOME BUT ON THE CONTRARY ON THE BASIS OF ESTIM ATION THE ASSESSING OFFICER HAS WORKED OUT THE VALUE OF W ORK-IN- PROGRESS AT A FIGURE DIFFERENT FROM WHAT IS STATED BY THE ASSESSEE WHICH BY NO STRETCH OF IMAGINATION CAN BE EQUATED WITH CONCEALMENT OF INCOME SO AS TO ATTRACT PENAL PROVISIONS. 13. IN VIEW OF ABOVE, RESPECTFULLY FOLLOWING THE AB OVE DECISION OF COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE, WE ARE INCLINED TO HOLD THAT THE AO HAS NOT BROUGHT ON RECORD ANY MATE RIAL TO SHOW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IT S INCOME AS THE AO WORKED OUT THE VALUE OF CLOSING STOCK OF WORK IN PROGRESS AT A FIGURE WHICH WAS DIFFERENT FROM THE FIGURE STATED BY THE ASSESSEE IN ITS STATEMENT OF ACCOUNT, THEREFORE, BY NO STRETCH OF IMAGINATION, THIS KIND OF DISALLOWANCE CAN BE TERMED AS A CONSCIOUS MALAFIDE ACT OF THE ASSESSEE FOR CONCEALMENT OF PARTICULARS OF INCOME SO AS TO ATTRACT THE PENALTY U/S 271(1)( C) OF THE ACT. THEREFORE, THE CIT(A) WAS RIGHT IN DELETING THE PEN ALTY ON THIS ISSUE IN AY 2006-07 AND WE UPHOLD THE SAME. 14. THE THIRD AND LAST ISSUE IS PERTAINING TO THE P ENALTY ON DISALLOWANCE ON ACCOUNT OF EXCESS CLAIM OF DEDUCTION U/S 80IC OF TH E ACT IN ALL THESE YEARS. LD. DR SUBMITTED THAT DURING THE QUANTUM PROCEEDING S, THE AO DISALLOWED DEDUCTION U/S 80IC OF THE ACT AS THE ASSESSEE MADE EXCESS CLAIM OF DEDUCTION. THE DR FURTHER POINTED OUT THAT THE APP ORTIONMENT OF EXPENSES ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 7 AND DISALLOWANCE OF DEDUCTION U/S 80IC WAS CONFIRME D BY THE CIT(A) AND THE TRIBUNAL HAS RESTORED THE ISSUE RELATING TO THE DISALLOWANCE U/S 80IC OF THE ACT TO THE FILE OF AO FOR RECOMPUTATION OF THE SAME AFTER TAKING INTO CONSIDERATION OTHER INCOME, VIDEO SHOOTING EXPENSES AND AMOUNT RECEIVED FROM PRODUCERS TOWARDS PUBLICITY. THE DR FURTHER POINTED OUT THAT AFTER RECOMPUTATION OF INCOME AS PER DIRECTIONS OF THE TR IBUNAL, THE AO AGAIN DISALLOWED DEDUCTION U/S 80IC OF THE ACT AMOUNTING TO RS.1,14,35,962/- IN AY 2006-07, DISALLOWANCE OF RS.95,7,982/- IN AY 200 7-08 AND DISALLOWANCE OF RS. 58,01,238 IN AY 2008-09, THEREF ORE, THE AO WAS RIGHT IN HOLDING THAT THE ASSESSEE WAS CLAIMING EXCESS DE DUCTION AND THEREFORE, THE ASSESSEE HAS CONCEALED INCOME TO THIS EXTENT BY FUR NISHING INACCURATE PARTICULARS OF ITS INCOME, HENCE, THE AO WAS RIGHT IN IMPOSING PENALTY ON THE ASSESSEE. THE DR SUPPORTED THE PENALTY ORDER AND S UBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE AO. FROM THE IMPUGNED ORDER IN AY 2006-07, WE OBSERVE THAT THE C IT(A) DELETED THE PENALTY BY FOLLOWING DECISION OF HONBLE SUPREME CO URT IN THE CASE OF CIT VS RELIANCE PERTROPRODUCTS PVT. LTD. (SUPRA) AND HE LD THAT IN THE ORDER FOR AY 1998-99 DATED 11.7.2011, SIMILAR ISSUE WAS DISCU SSED BY HIM DELETING THE PENALTY IMPOSED BY THE AO WITH FOLLOWING OBSERV ATIONS AND CONCLUSION:- 13 ... THE REDUCTION IN THE QUANTUM OF DEDUCTIONS CLAIMED BY THE APPELLANT U/S 80IA IS ON ACCOUNT OF ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 8 ADJUSTMENT OF CERTAIN OVERHEAD EXPENSES AS BORNE OU T FROM THE ORDER OF CIT(A) IN QUANTUM PROCEEDINGS. IN THE CASE OF CIT VS DHARAMPAL PREM CHAND LTD. 329ITR 572 (DEL.) THE FACTS WERE SIMILAR TO THAT IN THE PRESEN T APPEAL. IN THAT CASE THE QUANTUM OF DEDUCTIONS CLAIMED U/S 80IA AND 80IB WERE REDUCED, DUE TO ALLOCATION OF CERTAIN OVERHEAD EXPENSES BETWEEN HEAD OFFICE AND UNITS. TH E A. O. LEVIED PENALTY U/S 271(1)(C) ON ACCOUNT OF PA RT DISALLOWANCE OF THE DEDUCTIONS. ON THESE FACTS, THE HIGH COURT UPHELD THE DECISION OF ITAT HOLDING THAT PENA LTY U/S 271(L)(C) IS NOT IMPOSABLE UPON THE ASSESSEE BE CAUSE COMPUTATION OF DEDUCTION ADMISSIBLE WAS A DEBATABLE ISSUE. THE HON'BLE DELHI HIGH COURT WHILE DISMISSIN G DEPARTMENTAL APPEAL AGAINST THE ORDER OF ITAT ALSO REFERRED TO THE DECISION OF APEX COURT IN CIT VS RE LIANCE PETRO PRODUCTS PVT. LTD., 322ITR 158 FOR DISTINGUIS HING BETWEEN A WRONG CLAIM AND A FALSE CLAIM. 14. IN VIEW OF THE ABOVE, THE ISSUE BEING COVERED BY THE PROPOSITION LAID DOWN BY DELHI HIGH COURT IN THE CA SE OF DHARAMPAL PREM CHAND LTD. (SUPRA), PENALTY IMPOSED ON ACCOUNT OF ALLEGED DISALLOWANCE OF DEDUCTIONS TO THE EXTENT OF RS. 10,13,356/- IS HEREBY DELETED AND THE APPEAL ALLOWED ON THIS GROUND. 15. IN VIEW OF ABOVE CONCLUSION OF THE CIT(A), WE H OLD THAT MERELY BECAUSE OF PART DISALLOWANCE ON ACCOUNT OF RECOMPUT ATION OF DEDUCTION U/S 80IC OF THE ACT, IT CANNOT BE SAID THAT THE ASSESSE E CONCEALED OR FURNISHED WRONG PARTICULARS OF ITS INCOME WHICH ATTRACTS PENA LTY U/S 271(1)(C) OF THE ACT BECAUSE PART DISALLOWANCE OF CLAIM OF ASSESSEE CANNOT BE SAID TO BE A CONSCIOUS AND MALA FIDE ACT OF CONCEALMENT OR FURNI SHING OF INACCURATE PARTICULARS OF ITS INCOME BECAUSE THE DISALLOWANCE MADE BY THE AO ON ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 9 DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC OF THE A CT WAS FINALLY MADE ON THE DIRECTION OF THE TRIBUNAL TO THE AO TO RECOMPUT E THE DEDUCTION OF THE ASSESSEE AFTER FURNISHING AND EXAMINING RELEVANT FA CTS AND MATERIAL. 16. WE ARE UNABLE TO SEE ANY INFIRMITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A) IN THIS REGARD. THEREFORE, WE ARE INCLINED TO UPHOLD THE CONCLUSION OF THE CIT (A) ON THIS COUNT FOR ALL THREE ASSESSMENT YEARS. 17. TO SUM UP, IN VIEW OF ABOVE FACTUAL MATRIX AND OUR FOREGOING DISCUSSION, WE COME TO A CONCLUSION THAT THE AO MAD E CERTAIN DISALLOWANCES AND ADDITIONS BY THE REVENUE BEING PART OF CLAIM OF THE ASSESSEE OR BY ESTIMATING VALUE OF CLOSING STOCK OF WORK IN PROGRE SS (WIP) AND THE AO ALSO MADE ADDITIONS ON THE DIRECTION OF THE TRIBUNAL IN RECOMPUTATION OF DEDUCTION U/S 80IC OF THE ACT. SUBSEQUENTLY, THE A O INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY ON THE ASSESSEE ON THESE ISSUES WHICH WAS DELETED BY THE CIT(A) BY PASSING IMPUGNED ORDERS. WE HAVE EXAMINED IMPUGNED ORDER ON ALL GROUNDS WHICH GRANTED RELIEF FOR THE ASSESSEE AND WE ARE UNABLE TO SEE ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH DELETED PENALTY IMPOSED BY THE AO. ACCORDINGLY, WE COME TO A CONCLUSION THAT ALL THREE APPEALS OF THE REVENUE, BEING DEVOID OF MERIT , DESERVE TO BE DISMISSED AND WE DISMISS THE SAME. ITA NO. 4421, 4422, 4423/DEL/2012 ASSTT.YEARS: 2006-07, 2007-08, 2008-09 10 18. IN THE RESULT, THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.8.2014. SD/- SD/- (S. V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 7TH AUGUST, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR