ACIT, New Delhi V. M/s. SMC Power Generation Ltd, New Delhi

ITA 4800/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4521 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: SSH SALIL AGGARWAL
• Keywords: Search and seizure; Tax effect
• Section: 132; 11; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E , NEW DELHI BEFORE SH. BHAVNESH SAINI , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO S . 4799 & 4800 /DE L/ 2015 ASSESSMENT YEAR S : 2010 - 11 & 2011 - 12 ACIT, CENTRAL CIRCLE - 04, ROOM NO. 331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI VS. M/S. SMC POWER GENERATION LTD., R/O. E - 13/29, 2 ND FLOOR, HARSHA BHAWAN, MIDDLE CIRCLE, CONNAUGHT PLACE, NEW DELHI PAN : AAGCS3066B (APPELLANT) (RESPONDENT) DEPARTMENT BY MS. SHEFALI SWAROOP, CIT(DR) ASSESSEE BY S/ SH . SALIL AGGARWAL & SHAILESH GUPTA, ADVOCATES DATE OF HEARING 24.08.2017 DATE OF PRONOUNCEMENT 05.09.2017 ORDER PER O.P. KANT , A. M. : THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 12/05/2015 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 23, NEW DELHI [IN SHORT THE CIT - (A) ] IN RELATION TO PENALTY UNDER SECTION 271(1)(C) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) FOR ASSESSMENT YEAR S 2010 - 11 AND 2011 - 12 RESPECTIVELY. AS COMMON ISSUES , EXCEPT DIFFERENCE IN AMOUNT, ARE INVOLVED IN BOTH THE APPEALS, SAME WERE HEARD TOGETHER AND DISPOSED OF F BY WAY OF THIS CONSOLIDATED ORDER. 2. THE G ROUNDS OF APPEAL RAISED BY THE R EVENUE IN ITA NO. 4799 /DEL/2015 FOR ASSESSMENT YEAR 2010 - 11 ARE REPRODUCED AS UNDER: 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN: - 1. THE ORDER OF THE CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY U/S 271(L)(C) AMOUNTING TO RS.19,56,980/ - LEVIED ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT IMPROPER AND DISPRO PORTIONATE ALLOCATION OF EXPENSE DOES NOT AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE FACTS IN BRIEF OF THE CASE A RE THAT IN THE CASE OF ASSESSEE, A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 04/08/2011. PURSUANT TO THE SEARCH ACTION, PROCEEDING S UNDER SECTION 15 3A OF THE ACT WERE INITIATED BY WAY OF A NOTICE DATED 11/01/2013 ASKING ASSESSEE TO THE FILE RETURN OF INCOME. IN RESPONSE , THE ASSESSEE FILED RETURN OF INCOME ON 06/05/201 3 DECLARING INCOME OF RS.383,56, 884/ - . IN ASSESSMENT PROCEEDING , ASSESSING OFFICER OBSERVED THAT ASSESSEE COMPANY HAD SET UP A C APTIVE POWER PLANT AN D CLA IMED DEDUCTION UNDER SECTION 80 IA OF THE ACT. THE ASSESSING OFFICER FURTHER OBSERVED THAT EXPENSES ON DIRECTOR S SALARY/SITTING FEES AND SELLING AND DISTRIBUTION EXPENSES OF THE ASSESSEE WERE NOT ALLOCATED TOWARDS THE UNIT CLAI MING DEDUCTION UNDER SEC TION 80 IA OF THE ACT, WHICH RESULTED INTO EXCESS DEDUCTION CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER ALLOCATED THESE EXPENSES IN THE RATIO OF THE SALES OF ELIGIBLE UNIT AND OTHER SALES AND ACCORDINGLY , IN THE ASSESSMENT COMPLETED, HE REDUCED THE DEDUC TION OF RS.57,57,521 / - (DIRECTORS COST RS.12,91, 055 + SELLING AND DISTORTION COST RS.44,66,466) UNDER SECTION 80 IA OF THE ACT AND ALSO INITIATED PENALTY PRO CEEDING UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSING 3 OFFICER ISSUED SHOW CAUSE NOTICE DATED 07 /05/2014 FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AFTER TAKING INTO ACCOUNT SUBMISSION OF THE ASSESSEE, THE ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAS CONCEALED PARTICULAR OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME TO T HE EXTENT OF RS.57,57, 521/ - AND ACCORDINGLY , IN THE OR DER PASSED UNDER SECTION 271(1)(C) OF THE ACT ON 25/08/2014 , HE LEVIED PENALTY AMOUNTING TO RS.19,56, 980/ - EQUIVALENT TO HUNDRED PERCENT OF THE TAX SOUGHT TO BE EVADED. ON FURTHER APPEAL, THE LD. CIT - (A) CANCELLED THE PENALTY ON THE GROUND THAT ASSESSEE HAD NOT CONCEALED OR FILED INACCURATE PARTICULARS IN RESPECT OF CLAI M OF DEDUCTION UNDER SECTION 80 IA OF THE ACT. THE LEARNE D CT - (A) , ALSO NOTED THAT SIMILAR ADDITIONS ON PROPORTIONATE SALARY OF DIREC TORS TOWARDS ELIGIBLE UNIT IN ASSESSMENT YEAR S 2007 - 08 AND 2009 - 10 WAS DELETED BY HIM BUT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT CONTEST THE ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. THE FINDING OF THE LD. CT - (A) ON THE ISSUE IN DISPUT E IS EXTRACTED AS UNDER: 4. I HAVE CONSIDERED THE ASSESSMENT ORDER, THE PENALTY ORDER AND THE SUBMISSIONS MADE. THE DISALLOWANCE MADE BY THE REVENUE PERTAINING TO DIRECTOR S PROPORTIONATE SALARY OF THE ELIGIBLE UNIT FOR THE PURPOSE COMPUTING PROFIT U/S 80 IA STANDS DELETED BY ME IN THE APPEALS FOR AYS 2007 - 08 & 2009 - 10. THE PRESENT APPEALS FOR AYS 2008 - 09, 2010 - 11 & 2011 - 12 HAVE NOT BEEN CONTESTED IN APPEAL BY THE APPELLANT. IN THE APPEALS FOR AYS 2010 - 11 & 2011 - 12 THERE IS AN ADDITIONAL DISALLOWANCE OF PRO PORTIONATE SELLING AND DISTRIBUTION COST ALLOCATED TO THE ELIGIBLE UNIT. IT IS THE ARGUMENT OF THE REVENUE THAT SINCE THE ASSESSEE HAS NOT PREFERRED APPEAL AGAINST THE DISALLOWANCES, THE MISTAKE STANDS ADMITTED AND HENCE CONCEALMENT PENALTY FOR FILING INAC CURATE PARTICULARS IS ATTRACTED. THIS, IN MY CONSIDERED OPINION, IS NOT THE LEGAL POSITION IN THE MATTER. APPELLANT DID NOT APPEAL AS THERE WAS NO TAX DEMAND, TAX PAYABLE HAVING BEEN DETERMINED U/S 115J AS MINIMUM ALTERNATE TAX. BE THAT AS IT MAY, IT IS WE LL SETTLED THAT A CLAIM DISALLOWED IN LAW DOES NOT AMOUNT TO CONCEALMENT. INDEED, AS THE APPELLANT HAD ACCEPTED THE ASSESSMENT MADE, THE REVENUE SHOULD HAVE NOT ACTED COERCIVELY AND LEVIED THE PENALTY. NO FACT HAS BEEN CONCEALED OR PRESENTLY INCORRECTLY BY THE APPELLANT. CLAIM OF DEDUCTION U/S 80IA HAS BEEN 4 MADE AS PER THE CERTIFICATE UNDER RULE 10CCB. THUS, APPELLANT CANNOT BE CHARGED OF CONCEALING ITS INCOME OR FILING INACCURATE PARTICULARS THEREOF. THIS IS NOT A CASE FOR LEVY OF PENALTY U/S 271 (L)(C) AN D I HOLD ACCORDINGLY. THE PENALTY IMPOSED IS CANCELLED. 3.1 A GGRIEVED , THE R EVENUE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. IN THE GROUNDS OF APPEAL RAISED, THE R EVENUE IS AGGRIEVED WITH THE DELETION OF THE PENALTY AMOUNT ING TO RS.19,56, 980/ - . 4. BEFORE US , THE LD. CIT( DR ) RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECT ION 80 IA WAS NOT BONA FIDE TO THE EXTENT OF IMPROPER AND DISPROPORTIONATE ALLOCATION OF DIRECTORS SALARY AND SALES AND DISTRIBUTION EXPENSES. SHE FURTHER SUBMITTED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS REGARDING CLAIM OF DEDUCTION UNDER SECTION 80 IA OF THE ACT AND , THEREFORE , PENALTY UNDER SECTION 271(1)(C) OF THE ACT NEED TO BE SUSTAINED. 5. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CT - (A) AND SUBMITTED THAT ASSESSEE HAS SUBMITTED ALL THE PARTICULARS IN RESPECT OF T HE DEDUCTION UNDER SECTION 80 IA OF THE ACT ALONGWITH AUDIT REPORT IN PRESCRIBED FORM AND THE ASSESSEE NEITHER CONCEALED ANY FACTS NOR FURNISH ED INACCURATE PARTICULARS REGARDING CLAIM OF DEDUCTION UNDER SECTION 80 IA OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECOR D. WE FIND THAT T HE DEDUCTION UNDER SECTION 80 IA OF THE ACT HAS BEEN REDUCED BY THE ASSESSING OFFICER ON THE GROUND OF ALLOCATION OF EXPENSES OF RS.57,57,521/ - (DIRECTORS COST RS.12,91, 055 / - + SELLING AND DISTRIBUTION COST RS.44, 66,466 / - ) TOWARDS UNIT ELIG IBLE UNDER SECTION 80 IA OF THE ACT. ON CONSIDERATION OF THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE INFORMATION IN RESPECT OF THE DIRECTORS COST AND SELLING AND DISTRIBUTION EXPENSES WAS AVAILABLE ON THE RECORD AND THE ASSESSEE H AS NEITHER CONCEA LED NOR FILED ANY INACCURATE PARTICULARS IN 5 RESPECT OF THESE EXPENSES. WE FIND THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECTION 80IA OF THE ACT. BUT MERELY NOT ACCEPTING THE CLAIM OF THE ASSESSEE, CANNOT MAKE THE ASSESSEE LIABLE FOR PE NALTY UNDER SECTION 271(1)(C) OF THE ACT. FURTHER, THE SIMILAR CLAIM OF THE ASSESSEE HAS ALREADY BEEN ALLOWED BY THE LD. CT - (A) IN ASSESSMENT YEAR S 2007 - 08 AND 2009 - 10. WE HAVE OBSERVED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT CONTEST THE ISSUE OF REDUCTION IN CLAIM OF 80 IA OF THE ACT IN VIEW OF NO TAX EFFECT. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT ORDER OF THE LD. CT - (A) ON THE IS SUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY , WE UPHOLD THE SAME A ND GROUNDS OF THE APPEAL OF THE R EVENUE ARE DISMISSED. 7. FACTS AND CIRCUMSTANCES AND THE GROUNDS OF APPEAL RAISED IN ITA NO. 4800/DEL/2015 IN R ELATION TO ASSESSMENT YEAR 2011 - 12 ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES AND GROUNDS OF THE APPEAL IN ITA NO. 4799/DEL/2015, ACCORDINGLY , FOLLOWING OUR FINDING IN ITA NO. 4799/DEL/2015, WE DISMISS T HE GROUND OF THE APPEAL OF THE R EVENUE IN ITA NO. 4 800/DEL/2015. 8. IN THE RESULT , BOTH THE APPEAL S OF THE R EVENUE ARE DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 5 T H S E P T E M B E R , 201 7 . S D / - S D / - ( BHAVNESH SAINI ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 T H S E P T E M B E R , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI