THE ACIT 9(2), MUMBAI V. M/S. JAY PRECISION PRODUCTS P. LTD, MUMBAI

ITA 4810/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7904 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 03-02-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 04-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L K AGRAWAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI N.V.VASUDEVAN, JM ITA NOS.4809 & 4810/MUM/2007: ASST.YEARS 2000-2001 & 2001-2002 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 9(2) MUMBAI. VS. M/S.JAY PRECISION PRODUCTS PVT. LTD. A-10, JAI BONANZA INDUSTRIAL ESTATE CHAKRAVARTHY ASHOK ROAD KANDIVALI (EAST) MUMBAI 400 101. PA NO.AAACJ6340B. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI L.K.AGRAWAL RESPONDENT BY : SHRI DHARMESH SHAH O R D E R PER R.S.SYAL, AM : THESE TWO APPEALS BY THE REVENUE RELATE TO THE ASSE SSMENT YEARS 2000-2001 AND 2001-2002 DELETING THE PENALTY IMPOSED BY THE A SSESSING OFFICER U/S.271(1)(C) OF THE ACT. SINCE BOTH THE APPEALS ARE BASED ON SIM ILAR FACTS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2000-2001 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE, APART FROM INCOME FROM INDUSTRIAL UNDERTAKING, ALSO CLAIMED DEDUCTION U/S.80-IA ON THE FOLLOWING ITEMS OF INCOME:- 1. INTEREST FROM FDR RS. 17,002 2. INTEREST ON INCOME TAX REFUND RS. 1,41,327 3. COMPENSATION RS.17,23,000 4. MISCELLANEOUS INCOME RS.10,20,641 ---------------- RS.29,01,971 ========== ITA NOS.4809 & 4810/MUM/2007 SHRI JAYANTILAL W.JAIN 2 3. THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION ON THE ABOVE ITEMS. IN THE PENALTY PROCEEDINGS THE ASSESSEE TENDERED A DETAILE D REPLY CONTENDING THAT NO PENALTY WAS EXIGIBLE. NOT CONVINCED THE ASSESSING O FFICER IMPOSED PENALTY AT THE RATE OF 100% OF THE TAX SOUGHT TO BE EVADED ON THE ABOVE FOUR ITEMS. THE LEARNED CIT(A) DELETED THE PENALTY, AGAINST WHICH THE REVE NUE HAS COME UP IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. INSOFAR AS THE MISCELLANEOUS INCOME OF RS.1 0,20,641 IS CONCERNED, IT IS NOTICED THAT THE ASSESSEE CHALLENGED THE ACTION OF THE A.O. IN NOT GRANTING DEDUCTION ON THIS AMOUNT AND THE TRIBUNAL VIDE ITS ORDER DATED 12.05.2008 IN ITA NOS. 3587-88/M/05 IN QUANTUM PROCEEDINGS, DECIDED THIS ISSUE IN ASSESSEES FAVOUR. A COPY OF THE SAID ORDER IS ON RECORD. THE THIRD ITEM IS COMPENSATION AMOUNTING TO RS.17,23,000 ON WHICH THE TRIBUNAL HEL D THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION IN QUANTUM PROCEEDINGS. THE L EARNED A.R. HAS BROUGHT ON RECORD A COPY OF THE TRIBUNAL ORDER IN ITS OWN CASE IN ITA NO 5889/M/2005 FOR THE A.Y. 1999-2000, IN WHICH PENALTY IMPOSED ON COMPENS ATION INCOME, UNDER SIMILAR CIRCUMSTANCES, WAS HELD TO BE NOT SUSTAINAB LE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED THAT THE FACTUAL POS ITION IN THIS REGARD. WE, THEREFORE, APPROVE THE ACTION OF THE LEARNED CIT(A) IN DELETING THE PENALTY ON THESE TWO ITEMS. THE FIRST ITEM IS INTEREST FROM FDRS AND THE SECOND ITEM IS INTEREST ON INCOME-TAX REFUND. IT IS NOTED THAT THE ASSESSEE DI D NOT AGITATE THE DISALLOWANCE OF DEDUCTION U/S.80-IA ON THESE TWO ITEMS IN QUANTUM P ROCEEDINGS. HOWEVER IT NEEDS TO BE DECIDED AS TO WHETHER IT IS A FIT CASE FOR IM POSITION OF PENALTY U/S.271(1)(C). IT IS A SETTLED LEGAL POSITION THAT WHERE THE ASSESSEE FOLLOWS A PARTICULAR VIEW WHICH HAS THE SANCTION OF LAW, PENALTY CANNOT BE IMPOSED IF SOME CONTRARY VIEW ALSO EXISTS. MEANING THEREBY THE DEBATABLE QUESTION ARE OUTSIDE THE PURVIEW OF PENALTY U/S.271(1)(C). THE ASSESSEE RELIED ON CERTAIN DECIS IONS IN ITS FAVOUR BY CONTENDING ITA NOS.4809 & 4810/MUM/2007 SHRI JAYANTILAL W.JAIN 3 THAT DEDUCTION WAS AVAILABLE IN RESPECT OF THESE TW O ITEMS BUT THE LEARNED A.O. DID NOT ACCEPT THE SAME. SIMPLY BECAUSE THE ASSESSING O FFICER FOLLOWED A MORE PLAUSIBLE VIEW IGNORING SOME OTHER PREVALENT VIEW A LSO, THAT CANNOT BE A CASE FOR IMPOSITION OF PENALTY. IN OUR CONSIDERED OPINION TH E LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PENALTY WAS NOT IMPOSABLE. WE, THEREFORE, APPROVE THE VIEW TAKEN BY HIM. 5. THERE IS ANOTHER GROUND ON WHICH THE PENA LTY CANNOT BE LEVIED. THE PENALTY WAS IMPOSED WITH REFERENCE TO CERTAIN ITEMS OF INCO ME, WHICH THE ASSESSEE CLAIMED AS ELIGIBLE FOR DEDUCTION BUT THE VIEW POIN T OF THE ASSESSEE WAS NOT ACCEPTED. IT IS EVIDENT FROM THE PROVISIONS OF SEC TION 80-IA(7) THAT NO DEDUCTION SHALL BE ALLOWED UNLESS THE ACCOUNTS OF THE UNDERTA KING ARE AUDITED BY A CHARTERED ACCOUNTANT AND THE AUDIT REPORT IN THE PRESCRIBED FORM IS FURNISHED ALONG WITH THE RETURN OF INCOME. IT SHOWS THAT THE CALCULATION OF DEDUCTION IS THE WORK OF A C.A., WHO IS EXPERT IN THIS FIELD. IT IS ONLY ON THE STR ENGTH OF THE AUDIT REPORT THAT THE DEDUCTION IS CLAIMED BY THE ASSESSEE. SO WHEN THE AUDITOR COMPUTED THE AMOUNT OF ELIGIBLE DEDUCTION UNDER THIS SECTION ON THE ITEMS OF INCOME, ON WHICH THE AO REFUSED TO GRANT, IT BECOMES CLEAR THAT NO FAULT C AN BE FOUND ON THE PART OF THE ASSESSEE WHICH COULD BRING THE CASE WITH IN THE MIS CHIEF OF SECTION 271(1)(C). THE ACT OF CLAIMING DEDUCTION, BASED ON THE AUDIT REP ORT IN THE PRESCRIBED FORM, CONSTITUTES A BONA FIDE VIEW OF THE ASSESSEE THAT THE DEDUCTION IS RIGHTLY ADMISSIBLE ON THE ITEMS OF INCOME AS CERTIFIED BY THE C.A. IF LATER ON IT TURNS OUT THAT ON CERTAIN ITEMS OF INCOME THE DEDUCTION WAS NOT AVAIL ABLE, NO MALA FIDE CAN BE ATTRIBUTED ON THE PART OF THE ASSESSEE. IT MAY BE TRUE THAT THE AMOUNT OF DEDUCTION IS REDUCED BY THE A.O. OR APPELLATE AUTHORITIES IN FURTHER APPEALS, BUT UNDER NO CIRCUMSTANCES CAN IT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN ANY MANNER. ITA NOS.4809 & 4810/MUM/2007 SHRI JAYANTILAL W.JAIN 4 ASSESSMENT YEAR 2001-2002 6. IN THIS YEAR THE ASSESSEE WAS NOT ALLOWED DEDUCT ION U/S.80-IA IN RESPECT OF THE FOLLOWING ITEMS:- 1. INTEREST ON BANK FDR RS. 1,761 2. COMPENSATION RS.17,23,000 3. MISCELLANEOUS INCOME RS. 1,347 4. MATERIAL PROCESSING RS.23,18,583 ---------------- RS.40,44,691 ========== 7. INSOFAR AS THE MATERIAL PROCESSING INCOME OF RS. 23.18 LAKHS IS CONCERNED, IT IS SEEN THAT THE TRIBUNAL VIDE ITS AFORE NOTED COMM ON ORDER FOR BOTH THE YEARS, IN QUANTUM PROCEEDINGS, HAS ACCEPTED THE ASSESSEES C ASE AND GRANTED DEDUCTION ON THIS AMOUNT. SIMILAR IS THE POSITION REGARDING MISC ELLANEOUS INCOME OF RS.1,347. IN VIEW OF THE FACT THAT THE ASSESSEES CONTENTION HAS BEEN ACCEPTED IN THE QUANTUM PROCEEDINGS WE FIND THAT THERE REMAINS NO BASIS FOR CONSIDERING THE IMPOSITION OF PENALTY ON THESE TWO ITEMS. THE THIRD ITEM IS COMPE NSATION INCOME OF RS.17.23 LAKHS AND THE LAST ITEM IS INTEREST ON BANK FDRS. T HE FACTS AND CIRCUMSTANCES OF THESE TWO ITEMS ARE MUTATIS MUTANDIS SIMILAR TO ASSESSMENT YEAR 2000-2001 DISCUSSED ABOVE. FOLLOWING THE VIEW TAKEN BY US IN THE IMMEDIATELY PRECEDING YEAR, WE HOLD THAT THE PENALTY WAS RIGHTLY DELETED. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 8. IN THE RESULT, BOTH THE APPEALS STAND DISMISSED. ORDER PRONOUNCED ON THIS 5 TH DAY OF FEBRUARY, 2010. SD/- SD/- (N.V.VASUDEVAN) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 5 TH FEBRUARY, 2010. DEVDAS* ITA NOS.4809 & 4810/MUM/2007 SHRI JAYANTILAL W.JAIN 5 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A)-XXIV, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI. ITA NOS.4809 & 4810/MUM/2007 SHRI JAYANTILAL W.JAIN 6 DATE INITIAL 1. DRAFT DICTATED ON 03.02.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03.02.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *