M/s Rashi Wears Pvt. Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 5035/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8031 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESANG Y SHERPA
• Assessee Lawyers: RAHUL KAMPANI
• Keywords: Bonafide belief; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F, NEW DELHI BEFORE SHRI S. V. MEHROTRA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER I.T.A. NO.5035/DEL/2013 (ASSESSMENT YEAR 2007-08) RASHI WEARS PVT. LTD., VS. ACIT, RANGE 15, D-972, NEW FRIENDS COLONY, NEW DELHI NEW DELHI GIR / PAN : AAACR4887R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAHUL KAMPANI, CA RESPONDENT BY : MS. KESANG Y SHERPA, SR. DR DATE OF HEARING: 02.05.2016 DATE OF PRONOUNCEMENT: 09.05.2016 ORDER PER BEENA A. PILLAI, JM: THE PRESENT PENALTY APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-XVIII, NEW DELHI DATED 16.09.2010, FOR THE ASSESSMENT YEAR 2007-08, ON THE FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT AND RUNNING A BUSINESS FOR THE PAST 15 YEARS. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE ORDER OF CIT (A) IS WRONG, PERVERSE, ILLEGAL AN D AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE QUASHED. 2 I.T.A.NO.5035/DEL/2013 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY OF RS.5,29,51 0=00 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS RELIED ON THE LAW PREVAI LING ON DATE OF FILING HIS RETURN AND HAS FOLLOWED THE DECISION OF THE LEARNED DELHI HIGH COURT IN CIT VS ELTECK SGC (P) LTD.(2008) 3 DTR (DEL)241 ALONG WITH THE DECISIONS OF HER PREDECESSORS AND THIS HON'BLE ITAT. 4. THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THA T THE CAUSE OF ACTION FOR PENALTY U/S 271 (1) (C) ARO SE ON THE DATE OF FILING OF RETURN WHICH WAS 31/10/2007. ON THAT DATE THE ASSESSEE HAD ALL PREVIOUS YEAR DECISIONS IN HIS FAVOR AND HAD BEEN FOLLOWING THE DECISION OF CIT VS. ELTECK SGC (P) LTD. (2008) 3 DT R (DEL) 241 WHICH WAS THE BINDING DECISION OF THE HIG H COURT. 5. FURTHERMORE THE LEARNED CIT(A) WHILE ADJUDICATING ON THE ASSESSMENT FOR A.Y.2003-04 HAS OBSERVED THAT THIS VERY ISSUE HAS BEEN DECIDED IN FAVOR OF THE ASSESSEE FOR AY 2002-03 AND HAD ALSO OBSERVED THAT THE HONBLE DELHI HIGH COURT HAS ALSO DISMISSED THE SECOND APPEAL FILED BY THE REVENUE AGAINST THE ITAT ORDER IN FAVOUR OF THE ASSESSEE PASSED BY THE HON'BLE ITAT C BENCH VIDE ORDER DATED 25/04/2008 IN ITA NO.4797/DEL/2007 FOR A Y 2003- 04. 6. THE DECISION OF THE LEARNED SUPREME COURT IN LIBERTY INDIA CAME AFTER THE ASSESSEE HAD FILED HIS RETURN WHICH LED TO THE ITAT DECIDING ON 24/01/2012 THAT DEDUCTION U/S 80LB WAS NOT ALLOWABLE TO THE ASSESSEE . 7. THE APPELLANT HAS RESPECTFULLY TO SUBMIT THAT SI NCE THE ASSESSEE HAS MADE FULL AND COMPLETE DISCLOSURE OF ALL DETAILS AS REQUIRED AND A MERE CHANGE IN DECISI ON BY THE LEARNED COURTS SHOULD NOT BE A GROUND FOR LEVYING PENALTY. 3 I.T.A.NO.5035/DEL/2013 8. IN OUR CASE THE ASSESSEE HAD FILED HIS RETURN ON 31/10/2007 ON WHICH DATE THE LAW AS UP HELD BY DELHI HIGH COURT WAS PREVALENT AND THE DECISION OF SUPREME COURT CAME NEARLY TWO YEARS LATER. THERE WAS NO WAY THE ASSESSEE CAN BE ACCUSED OF FURNISHING INACCURATE PARTICULARS. FURTHERMORE THE ASSESSEE HAD BEEN CLAIMING THIS DEDUCTION SINCE AY 2001-02 AND THE SAME WAS BEING ALLOWED EVERY YEAR BY THE DEPARTMENT. 9. THE LEARNED CIT(A) HAS DWELLED UPON THE MEANINGS OF THE WORDS CONCEAL AND INACCURATE IN HER ORDER BU T HAS AT NO POINT CRYSTALLIZED THE PARTICULARS WHICH ARE INACCURATE. SHE HAS ALSO STATED THAT IF THE ASSESSE E IS ABLE TO OFFER AN EXPLANATION WHICH IS BONAFIDE AND ALL THE FACTS RELATING TO THE SAME HAVE BEEN DISCLOSED BY HIM, THE ASSESSEE SHALL BE OUT OF THE CLUTCHES OF EXPLANATION 1 OF SEC.271 (1)( C) OF THE ACT. OUR CA SE FAIRLY AND SQUARELY FALLS WITHIN THIS CATEGORY AS W E HAD CLAIMED THE DEDUCTION U/S 8018 ON THE BONAFIDE BELIEF THAT SINCE THE ORDERS OF ALL APPELLATE AUTHO RITIES WERE IN FAVOUR OF ALLOWING THE DEDUCTION, THERE WAS NO REASON FOR THERE BEING ANY OTHER INTERPRETATION OR INFERENCE BEING DRAWN. FURTHERMORE WE HAD DISCLOSED ALL MATERIAL FACTS AND HAD ALSO FURNISHED THE AUDIT REPORT IN FORM 10CC8 AT THE TIME OF FILING THE RETU RN. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING.' 11. IN VIEW OF THE ABOVE FACTS WE WOULD REQUEST YOU TO KINDLY QUASH THE PENALTY OF RS.5,29,510=00 UNFAIRLY IMPOSED BY THE LEARNED OFFICER AND CONFIRMED BY THE CIT(A). 2. THE FACTS OF THE CASE ARE AS UNDER:- 4 I.T.A.NO.5035/DEL/2013 THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE MANUFACTURING AND EXPORT OF READYMAD E GARMENTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCOME OF RS.40,37,467/- . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD CLAIMED DEDUCTION U/S 80-IB AMOUNTING TO RS.17,30,343/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 18.12.2009 AT A TOT AL INCOME OF RS.1,09,75,970/- AFTER MAKING VARIOUS ADDITIONS IN THE RETURN OF INCOME. ON APPEAL BEFOR E LD. CIT(A), HE DELETED THE ADDITION MADE BY THE ASSESSI NG OFFICER U/S 80-IB OF THE ACT VIDE ORDER DATED 15.09 .2010. LD. CIT(A) WHILE DELETING THE ADDITION U/S 80-0IB O F THE ACT, HAD RELIED UPON THE DECISION OF HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS ELTECK SGC (P) LTD . (2008) 3 DTR 241 (DEL.). LD. CIT(A) IN QUANTUM APP EAL, WHICH HELD AS UNDER:- 5.1. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER AND THE SUBMISSION MADE BY THE ID. AR. THIS ISSUE HAS BEEN DECIDED 'IN FAVOUR OF THE APPELLANT BY THE UNDERSIGNED FOR A. Y. 2002-03 VIDE ORDER DATED 21.01.2010 IN APPEAL NO. 91/07-08 BASING ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CIT V. ELTEK SGS (P) LTD. (2008) 300 ITR 6 (DEL.) AND THE DECISI ON OF THE HON'BLE ITAT DELHI 'C' BENCH VIDE ORDER DATED 25.04.2008 IN ITA NO.4797/DE1./2007 FOR A Y 2003- 04 IN THE CASE OF THE APPELLANT COMPANY AND ALSO TH E FACT THAT THE; HON'BLE DELHI HIGH COURT HAS DISMISS ED THE SECOND APPEAL FILED BY THE REVENUE AGAINST THE ABOVE IT AT ORDER VIDE HIGH COURT'S ORDER DATED 13.04.2009 IN ITA NO. 189/2009 BY HOLDING, THAT IN VIEW OF THE DECISION IN THE CASE OF CIT VS. ELTECK SGS 5 I.T.A.NO.5035/DEL/2013 (P) LTD. (SUPRA), NO SUBSTANTIAL QUESTION OF LAW AR ISES FOR CONSIDERATION. CONSIDERING THE SAME, SINCE THE ISSUES ARE IDENTICAL THIS YEAR, THE IMPUGNED ADDITI ON OF RS.17,30,343/- IS DELETED. 2.1 ON APPEAL AGAINST THE ORDER OF LD. CIT(A), THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL, WHICH WAS ALLOWED AND THE TRIBUNAL ALLOWED THE APPEAL OF REVE NUE BY REJECTING THE CLAIM U/S 80-IB OF THE ACT IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LI BERTY INDIA PVT. LTD. VS CIT REPORTED IN 317 ITR 218. 2.2 THE LEGAL POSITION BEING SO, ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AND INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE FOR FILING INACCURATE PARTICUL ARS THEREBY CONCEALING THE PARTICULARS OF INCOME OF RS.17,30,343/-. 3. LD. CIT(A) CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US NOW. 5. LD. A.R. SUBMITTED THAT THE ASSESSEE FILED ITS R ETURN OF INCOME ON 31.10.2007 CLAIMING DEDUCTION OF RS.17,30,343/- U/S 80-IB OF THE ACT. ASSESSEE AT T HE TIME OF FILING OF RETURN OF INCOME WAS HAVING VARIOUS OR DERS OF PREVIOUS YEARS IN ASSESSEES OWN CASE, WHEREIN THE CLAIM OF DEDUCTION U/S 80-IB HAVE BEEN GSRANTED. LD. A.R . SUBMITTED THAT SUBSEQUENTLY THE DECISION OF M/S. EL TECK SGS (P) LTD. (SUPRA) SUPPORTED THE CLAIM OF ASSESSE E VIDE ORDER DATED 19.02.2008. LD. A.R. FURTHER SUBMITTED THAT 6 I.T.A.NO.5035/DEL/2013 AT THE TIME WHEN REVENUES APPEAL WAS PENDING BEFOR E THIS TRIBUNAL, HON'BLE SUPREME COURT IN THE CASE OF LIBE RTY INDIA LTD. VS CIT (SUPRA) HAD DENIED THE CLAIM U/S 80-IB IN THE PRESENT FACTS AS THAT OF ASSESSEE. 5.1 LD. A.R. FURTHER SUBMITTED THAT THE NOTICE FOR INITIATION OF CONCEALMENT PENALTY WAS ISSUED ON 17.10.2012 I.E. AFTER PASSING OF ORDER BY THIS TRIB UNAL IN THE QUANTUM APPEAL. 5.2 ACCORDINGLY, LD. A.R. PRAYED THAT THERE WAS NO CONCEALMENT OF ANY PARTICULARS OF INCOME BY THE ASS ESSEE AS THE CLAIM U/S 80-IB BY THE ASSESSEE IN ITS RETUR N OF INCOME WAS SUPPORTED BY VARIOUS ORDERS OF PREVIOUS YEARS IN ASSESSEES OWN CASE. 5.3 ON THE CONTRARY, LD. D.R. SUBMITTED THAT THE DECISION OF ELTECK SGS PVT. LTD (SUPRA) BY THE HON' BLE JURISDICTIONAL HIGH COURT WAS NOT AVAILABLE AT THE TIME WHEN THE ASSESSEE HAD FILED ITS RETURN OF INCOME AN D, THEREFORE, HE SUBMITTED THAT DISALLOWANCE MADE BY ASSESSING OFFICER WAS CORRECT WHICH LEADS TO INITIA TION OF PENALTY PROCEEDINGS U/S 271(1)(C) FOR FILING INACCU RATE PARTICULARS OF INCOME. 6. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND THE SUBMISSIONS MADE BY BOTH THE PARTIES. THE DATES OF EVENTS WHICH LEAD TO THE INI TIATION OF PENALTY PROCEEDINGS IN THE PRESENT CASE ARE AS UNDE R: 7 I.T.A.NO.5035/DEL/2013 I) RETURN FILED 31.10.2007 II) ASSESSMENT ORDER PASSED 18.12.2009 III) HON'BLE HIGH COURT PASSED ORDER IN CASE OF ELTECK SGS P. LTD. 19.02.2008 IV) HON'BLE SUPREME COURT PASSED ORDER IN CASE OF LIBERTY INDIA LTD. .. V) ITAT DECISION FOR THE YEAR UNDER CONSIDERATION IN QUANTUM APPEAL .. VI) PENALTY PROCEEDINGS INITIATED 17.10.2012 6.1 FROM THE ABOVE CHRONOLOGICAL DATES OF EVENTS, I T IS CLEAR THAT THE ASSESSEE HAD BONA-FIDELY CLAIMED DED UCTION U/S 80-IB AT THE TIME OF FILING ITS RETURN OF INCOM E WHICH WAS COVERED BY PREVIOUS YEAR ORDERS IN ASSESSEES O WN CASE. THE CLAIM OF ASSESSEE SO RAISED WAS SUBSEQUE NTLY UPHELD BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ELTECK SGS P. LTD. (SUPRA). IT IS OBSERVED THAT TH E DECISION OF ELTECK SGS P. LTD. (SUPRA) WAS REVERSED BY HON'BLE SUPREME COURT IN LIBERTY INDIA LTD. VS CIT (SUPRA). 6.2 WE DO NOT FIND ANY CONCEALMENT ON BEHALF OF THE ASSESSEE, AS THE CLAIM WAS SUPPORTED BY THE RELEVAN T ORDERS AND THE ASSESSEE IN A BONA FIDE BELIEF HAD M ADE THE CLAIM U/S 80-IB OF THE ACT IN THE RETURN FILED FOR THE YEAR UNDER CONSIDERATION. IT IS OBSERVED BY US THAT THI S IS NOT A FIT CASE FOR INITIATION OF CONCEALMENT PENALTY PR OCEEDINGS AS THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS ONLY AFTER THE TRIBUNAL DECISION AND TH E CLAIM OF ASSESSEE RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA LTD. (SU PRA). 8 I.T.A.NO.5035/DEL/2013 6.3 WE, THEREFORE, ARE OF THE CONSIDERED OPINION TH AT THE PENALTY PROCEEDINGS INITIATED NEEDS TO BE DROPPED. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE STAN D ALLOWED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH MAY, 2016. SD./- SD./- (S. V. MEHROTRA) (BEENA A. PIL LAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 09.05.2016 SP. COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)-, NEW DELHI. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) 9 I.T.A.NO.5035/DEL/2013 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 3/5 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 4/5/16 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 9/5/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 9/5 SR. PS/PS 7 FILE SENT TO BENCH CLERK 9/5 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER