M/s Naturence Cosmetic Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4454/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5732 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 08-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST IMPUGNED DATED PASSED
• Keywords: Wrong claim
• Section: 115JB

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.:- 4454/DEL/2015 ASSESSMENT YEAR: 2009-10 O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE AS SESSEE AGAINST IMPUGNED ORDER DATED 27.5.2015, PASSED BY LD. CIT ( APPEALS)-6, NEW DELHI IN RELATION TO THE PENALTY PROCEEDINGS U/S 271( 1)(C) FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE IS AGGRIEVED B Y LEVY OF PENALTY OF RS. 7,31,244/- ON ACCOUNT OF DISALLOWANCE OF DEDU CTION U/S 80 IC WHILE COMPUTING THE BOOK PROFIT U/S 115JB. NATURENCE COSMETIC PVT. LTD., 7/8, SARVA PRIYA VIHAR, NEW DELHI PAN AAACN7134K VS. ITO WARD 13(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SINGHVI, ADVOCATE RESPONDENT BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING 19/06/2018 DATE OF PRONOUNCEMENT 25/06/2018 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF COSMETIC PR ODUCTS ON WHICH IT HAS CLAIMED DEDUCTION U/S 80IC. THE SAID CLAIM HA S BEEN ALLOWED IN THE ASSESSMENT ORDER DATED 29.12.2011 PASSED U/S 143( 3), EXCEPT DISALLOWING THE INTEREST ON FDS WHILE COMPUTING THE DE DUCTION U/S 80IC. THE AO HOWEVER NOTED THAT THE ASSESSEE HAS SHOWN NIL BOOK PROFIT U/S 115JB AFTER CLAIMING DEDUCTION U/S 80IC. HE HELD THAT THERE IS NO SUCH PROVISION U/S 115JB TO REDUCE THE INC OME EXEMPT U/S 80IC FROM THE BOOK PROFIT. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF HONBLE UTTRAKHAND HIGH COURT IN THE CASE O F SIDCUL INDUSTRIAL ASSOCIATION V. STATE OF UTTRAKHAND (2011) 19 9 TAXMAN 75. ACCORDINGLY, THE TAX WAS DETERMINED ON BOOK PROFIT C OMPUTED U/S 115JB BY DENYING THE DEDUCTION OF RS. 77,45,746/- CLA IMED U/S 80IC. 3. FROM THE STAGE OF FIRST APPEAL THE ADDITION/DISALL OWANCE MADE BY THE AO STANDS CONFIRMED WHICH HAD ATTAINED FINALITY. 4. BASED ON THIS DISALLOWANCE OF CLAIM OF DEDUCTI ON U/S 80IC IN THE COMPUTATION OF BOOK PROFIT, AO HAS LEVIED THE PENALTY OF RS. 7,31,244/- U/S 271(1(C) WHICH WAS THE TAX CALCULATED ON SUCH BOOK PROFIT. THIS PENALTY HAS BEEN CONFIRMED BY THE LD. CIT (A) ALSO O N THE GROUND THAT SAID CLAIM IS NOT ALLOWABLE IN THE COMPUTATION OF INCOM E U/S 115JB AND THEREFORE, IT AMOUNTS TO FURNISHING OF INACCURATE P ARTICULARS OF INCOME. 3 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE CLAIM OF DEDUCTION U/S 80IC IN THE COMPUTATION OF BOOK PROFIT U/S 115JB WAS MADE BY THE ASSESSEE BASED ON THE CERTIFICA TE ISSUED BY THE CHARTERED ACCOUNTANT IN FORM NO. 29B WHICH HAS WOR KED OUT THE TAX PAYABLE U/S 115JB AT NIL. IT WAS BASED ON THIS CER TIFICATE THAT ASSESSEE HAS SHOWN NIL BOOK PROFIT. HERE IN THIS CASE IT IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS ALBEIT CAN BE SAID THAT THERE IS A MISTAKE IN THE COMPUTATION OF BOOK PROFIT, BECAUSE TH E ASSESSEE HAS COMPUTED THE BOOK PROFIT STRICTLY IN ACCORDANCE WITH THE CERTIFICATE GIVEN BY THE AUDITOR. THE SECOND LIMB OF HIS ARGUMEN T WAS THAT AO WHILE ISSUING THE SHOW CAUSE NOTICE U/S 274, HAS NOT SPECIFIED THE CHARGE UNDER WHICH THE LIMB OF SECTION 271(1)(C) HE HAS INITIATED THE PENALTY PROCEEDINGS. SUCH VAGUE NOTICE WITHOUT SPECI FYING THE CHARGE VITIATES THE ENTIRE PENALTY ORDER; AND IT HAS BEEN HELD SO IN VARIOUS JUDGEMENTS OF HONBLE HIGH COURT AND TRIBUNAL. THUS, HE SUBMITTED THAT THE PENALTY LEVIED BY THE AO SUSTAINED BY THE LD. CI T (A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE CANNOT BE SUSTAIN ED. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF LD. CIT (A) AND SUBMITTED THAT THE CLAIM OF DEDUCTION U/S 80I C WHILE COMPUTING THE INCOME U/S 115JB WAS CLEARLY NOT ALLOWA BLE IN LAW AND THEREFORE, IT DOES AMOUNT TO MAKING OF FALSE CLAIM AND CONSEQUENTLY FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER. THE ONLY REASO N FOR LEVY OF PENALTY IS THAT THE ASSESSEE WHILE COMPUTING THE BOOK P ROFIT U/S 115JB, ASSESSEE HAS SHOWN NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IC IN THE SAID COMPUTATION. IT IS AN UNDISPUTED FAC T THAT UNDER THE NORMAL PROVISIONS THE ASSESSEE IS ELIGIBLE FOR BENEF IT U/S 80IC. AT THE TIME OF FILING OF RETURN OF INCOME AND THE ASSESSEE H AS COMPUTED THE BOOK PROFIT ON THE BASIS OF CERTIFICATE ISSUED BY THE C HARTERED ACCOUNTANT IN FORM 29B, A COPY OF WHICH HAS BEEN PLA CED BEFORE US AT PAGE 11 TO 13 OF THE PAPER BOOK. IF ASSESSEE HAS SHOW N THE BOOK PROFIT AND TAX PAYABLE U/S 115JB BASED ON CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT, THEN IT CANNOT BE HELD THAT THE ASS ESSEES CLAIM WAS NOT BONAFIDE OR IT HAS FURNISHED INACCURATE PARTICU LARS OF INCOME. THE ENTIRE PARTICULAR OF THE PROFIT AND LOSS ACCOUNT AS PER THE COMPANIES ACT UNDER SCHEDULE VI HAS BEEN GIVEN WHERE IN THE ENTIRE PARTICULARS HAVE BEEN DISCLOSED. THE JUDGMENT OF HON BLE UTTRAKHAND HIGH COURT AS REFERRED AND RELIED UPON BY THE AO IN T HE COURSE OF THE ASSESSMENT PROCEEDINGS FOR TAKING ADVERSE VIEW ON SU CH COMPUTATION OF BOOK PROFIT WAS RENDERED IN THE YEAR 2011, WHEREAS THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30.9.2009. THUS , IT CANNOT BE HELD THAT ASSESSEES CLAIM BASED ON CERTIFICATE ISSUE D BY THE PROFESSIONAL CHARTERED ACCOUNTANT WAS NOT BONAFIDE AT THE TIME OF COMPUTING THE BOOK PROFIT AND DISCLOSING THE SAME IN THE RETURN OF 5 INCOME. THUS, IT CANNOT BE HELD THAT ASSESSEE HAS FURNI SHED ANY KIND OF INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY, PENALTY LEVIED BY THE AO IS DIRECTED TO BE DELETED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2018. SD/- SD/- (G.D. AGRAWAL) (AMIT SHUKLA) PRESIDENT JUDICIAL MEMBER DATED: 25/06/2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI