SHIVAM STEEL & TUBES P.LTD, MUMBAI V. ACIT CIR 5(3),

ITA 4691/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3874 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAPDR
• Keywords: Business income; Depreciation; Earning of tax free income; Reasonable cause; Wrong claim; Revised return; Revenue expenditure
• Section: 14A; 80IB

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/4691/MUM/2014, /ASSESSMENT YEARS: 2009-10 M/S. SHIVAM STEEL & TUBES PVT. LTD. UNIT NO.264, 2 ND FLOOR, A-Z, INDUSTRIAL PREMISES CO.OP. SOC. LOWER PAREL,MUMBAI-400 013. PAN:AADCS 9345 L VS. ACIT, CIRCLE-5(3) AAYAKAR BHAVAN MUMBAI. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI SANJEEV KASHYAP-DR ASSESSEE BY: SHRI JAYESH DADIA / DATE OF HEARING: 26.07.2016 / DATE OF PRONOUNCEMENT: 05.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 03.6.2014 OF CIT(A)-9 M UMBAI, THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED I N THE BUSINESS OF STEEL TUBES AND FURNITURE FILED ITS RETURN OF INCOME ON 2 9.9.2009 ,DECLARING TOTAL INCOME RS.1.24CRORES.THE ASSESSING OFFICER(AO)COMPL ETED THE ASSESSMENT U/S. 143(3),ON 5.12.2012,DETERMINING ITS TOTAL INCOME AT RS.1.35CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMING THE PENALTY AMOUNTING TO RS.3.69 LAKHS LEVIED U/S.271(1)(C) OF THE ACT, BY T HE AO.DURING THE ASSESSMENT PROCEEDINGS THE AO MADE TWO DISALLOWANCES, I.E. DIS ALLOWANCE U/S. 14A (RS. 16,569/-) AND DISALLOWANCE U/S.80IB (RS.10.71LAKHS) .PENALTY PROCEEDINGS U/S. 271(1)(C) WERE ALSO INITIATED AT THE TIME OF ASSESS MENT. IN ITS REPLY TO PENALTY NOTICE,THE ASSESSEE ARGUED THAT IT HAD FURNISHED AL L DETAILS OF EXPENDI -TURE IN ITS RETURN,THAT THE AO DID NOT AGREE WITH THE CONTENTIO N OF THE ASSESSEE AND OBSERVED THAT BY NOT FILING ANY APPEAL AGAINST THE ADDITIONS IT HAD ADMITTED ITS FAULT, THAT THE ASSESSEE HAD RELIED UPON THE CASE OF RELIANCE PETRO PRODUCTS,THAT THE FACTS OF THE CASE UNDER APPEAL WERE DIFFERENT F ROM THE CASE OF RELIANCE PETRO PRODUCTS, THAT IT HAD FURNISHED WRONG CLAIM U/S.80I B, THAT IT HAD ALSO CLAIMED 4691/M/14-SHIVAM STEEL&TUBES P.LTD. 2 EXPENDITURE IN RELATION TO EXEMPT INCOME, THAT THE ASSESSEE HAD WITHOUT ANY REASONABLE CAUSE FURNISHED INACCURATE PARTICULARS O F INCOME AND THEREBY HAD COMMITTED DEFAULT U/S. 271(1)(C).THE AO LEVIED PENA LTY OF RS.3,69,880/-. 3. AGGRIEVED BY THE PENALTY ORDER OF THE AO THE ASSESS EE PREFERRED AN APPEAL BEFORE THE FAA. BEFORE HIM, IT ARGUED THAT IT HAD CLAIMED DEDUCTION U/S. 80IB (3)(II) OF THE ACT, AMOUNTING TO RS.53.38 LAKHS,THA T THE CLAIM WAS COMPUTED BY A CHARTERED ACCOUNTANT (CA), THAT BEFORE THE COMPLE TION OF ASSESSMENT IT FILED A REVISED COMPUTATION WITH REGARD TO DEDUCTION U/S. 8 0IB, THAT THE EXCESS CLAIM WAS SURRENDERED BY IT, THAT IT HAD FILED VOLUNTARY REVISED COMPUTATION, THAT IN THE ORIGINAL COMPUTATION FOR DEDUCTION IT HAD CLAIMED I NTEREST INCOME AS BUSINESS INCOME ATTRIBUTABLE TO INDUSTRIAL UNDERTAKING, THAT THE CA OF THE ASSESSEE HAD ADVISED THAT INTEREST INCOME SHOULD BE CLAIMED FOR THE PURPOSE OF DEDUCTION U/S. 80IB,THAT LATER ON HE ADVISED TO FILE A REVISED CLA IM, THAT THE REVISED COMPUTA - TION WAS FILED AS THE ADVICE OF CA, THAT AO HAD COM PLETED ASSESSMENT BY ACCEPTING THE FIGURE FILED IN THE REVISED CLAIM, TH AT THE EXCESS DEDUCTION CLAIMED IN THE ORIGINAL COMPUTATION WAS VOLUNTARILY WITHDRA WN BEFORE ISSUE OF ANY NOTICE BY THE AO, THAT THE ACT OF WITHDRAWING EXCES S DEDUCTION CLAIMED WAS VOLUNTARY AND WAS NOT INTENTIONAL OR DELIBERATE TO DEFRAUD THE REVENUE BASED ON CERTIFICATE ISSUED BY CA, THAT THE SECTION 80IB CLA IM COULD BE MADE ONLY ON THE BASIS OF THE REPORT IN FORM 10CCCB ISSUED BY A CA, THAT THE ASSESSEE HAD NO OPTION BUT TO FOLLOW CALCULATION MADE BY HIM.IT REL IED UPON THE CASES OF RELIANCE PETRO PRODUCTS (322 ITR158),ADITYA BIRLA N OVA LTD. (14 TH AUGUST, 2012 OF HON'BLE BOMBAY HIGH COURT),DHARMPAL PREMCHA ND (329ITR572), BENNETT COLEMAN & CO.LTD.(33TAXMANN.COM227). 4. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE A ND THE PENALTY ORDER THE FIRST APPELLATE AUTHORITY (FAA) HELD THAT PENALTY U /S.271(1)(C) WAS LEVIABLE FOR BOTH THE ADDITIONS MADE BY THE AO, THAT THE ASSESSE E HAD NOT FURNISHED CORRECT 4691/M/14-SHIVAM STEEL&TUBES P.LTD. 3 PARTICULARS OF INCOME/EXPENDITURE, THAT BEING A COR PORATE ENTITY. IT WAS EXPECTED TO KNOW THE BASIC ASPECT OF TAXATION, THAT IT HAD N OT DISALLOWED ANY EXPENDITURE U/S.14A THOUGH IT HAD EXEMPT INCOME, THAT IT HAD CL AIMED DEDUCTION U/S/80IB ON ITS INCOME, THAT THE REVISED COMPUTATION IN RESPECT OF DEDUCTION U/S. 80IB WAS FILED AFTER THE AO ASKED IT TO FURNISH THE DETAILS OF INTEREST,THAT DISCLOSURE IN REVISED COMPUTATION FILED AFTER DETECTION OF FAULT BY THE DEPARTMENT, COULD NOT BE HELD AS A TRUE OR VOLUNTARY DISCLOSURE, THAT THE CASES RELIED UPON BY THE ASSESSEE WERE NOT APPLICABLE IN THE CASE UNDER CON SIDERATION,THAT THE ASSESSEE HAD ATTEMPTED TO CONCEAL THE INCOME BY FURNISHING E XCESS CLAIM OF EXPENSES AND DEDUCTION. FINALLY, HE UPHELD THE ORDER OF THE AO. 5. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT ASSESSEE HAD FILED REVISED COMPUTATION WITH REGARD TO 80IB CLAIM, THAT THE ORIGINAL CLAIM WAS FILED AS PER CERTIFICAT ION GIVEN BY THE CA.HE RELIED UPON THE CASE OF SOMANY EVERGREE KNITS (352ITR592), DHARAMPAL PREMCHAND (SUPRA),BENNETT COLEMAN & CO. LTD. (SUPRA). THE DEP ARTMENTAL REPRESENTATIVE (DR)SUPPORTED THE ORDER OF THE FAA AND STATED THAT ASSESSEE FILED THE REVISED COMPUTATION AFTER THE AO MADE ENQUIRIES. ASSESSEE I S A CORPORATE ENTITY, THAT IT HAD MADE A PATENTLY WRONG CLAIM. HE RELIED UPON THE CASES OF MAK DATA (350 ITR593) AND ZOOM COMMUNICATIONS(327ITR590). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ASSESSEE HAD FILED A REVISED COMPUTATION REGARDING 80IB(3) DEDUCTION THAT IT HAD REDUCED THE CLAIM DURING THE ASSESSMENT PROCEEDINGS, THAT AO HAD MADE DISALLOWANCE U/S.14A OF THE ACT, THAT THE ASSE SSEE DID NOT CONTEST THE QUANTUM ADDITIONS, THAT THE AO HAD LEVIED PENALTY O N ACCOUNT OF EXCESS CLAIM OF 80I DEDUCTION AND DISALLOWANCE MADE U/S.14A, THA T THE FAA CONFIRMED THE ORDER OF THE AO. 4691/M/14-SHIVAM STEEL&TUBES P.LTD. 4 IN OUR OPINION, PENALTY CANNOT BE LEVIED JUST BECAU SE ADDITIONS ARE MADE DURING ASSESSMENT PROCEEDINGS AND THE ASSESSEE DID NOT AGI TATE THE ADDITIONS BEFORE THE APPELLATE AUTHORITIES.AS PER THE SETTLED PRINCIPLES OF TAXATION JURISPRUDENCE PENALTY PROCEEDING AND ASSESSMENT PROCEEDINGS ARE T OTALLY SEPARATE AND DISTINCT. ADDITION MADE DURING ASSESSMENT CANNOT AND SHOULD N OT RESULT IN AUTOMATIC LEVY OF PENALTY.PENALTY HAS TO BE LEVIED CONSIDERIN G THE EXPLANATION OF ASSESSEE FILED DURING PENALTY PROCEEDINGS.IN OUR OPINION,NO PENALTY COULD BE LEVIED FOR DISALLOWANCE MADE U/S.14A.THE DISALLOWANCE DOES NOT PROVE FILING OF INACCU - RATE PARTICULARS OF INCOME.DISALLOWANCE UNDER THE S AID SECTION COULD BE MADE FOR SO MANY REASONS BUT THAT DOES NOT MEAN THAT THE ASSESSEE HAS TO BE VISITED BY THE PENAL PROVISIONS.AS FAR AS REVISED COMMUTATION OF 80IB(3) IS CONCERNED,WE FIND THAT THE ASSESSEE HAD MADE BOTH THE CLAIM-ORI GINAL AS WELL AS REVISED AS PER THE ADVICE OF PROFESSIONAL I.E., A CA.THUS THERE WA S A REASONABLE CAUSE FOR THE ASSESSEE TO FILE REVISED COMPUTATION. HERE,WE WOUL D LIKE TO REFER TO THE CASE OF SOMANY EVERGREE KNITS LTD.(SUPRA),DECIDED BY THE HO NBLE BOMBAY HIGH COURT.THE HEAD NOTES OF THE MATTER READ AS UNDER: PENALTY EXCESS CLAIM TO DEPRECIATION WRONG CLAI M TO LOSS AS REVENUE EXPENDITURE MISTAKES RECTIFIED DURING ASSESSMENT PROCEEDINGS SINCE TIME TO FILE REVISED RETURN EXPIRED NO DISPUTE THAT MI STAKE BONA FIDE NO PENALTY LEVIABLE. RESPECTFULLY FOLLOWING THE ABOVE CASE AND CONSIDERI NG THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THA T THE ASSESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OF INCOME.THEREFOR E,REVERSING THE ORDER OF THE FAA,EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASS ESSEE STANDS ALLOWED. . ORDER PRONO UNCED IN THE OPEN COURT ON 5 TH AUGUST,2016. 5 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 4691/M/14-SHIVAM STEEL&TUBES P.LTD. 5 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.