M/s Om Overseas, Panipat V. ITO, Panipat

ITA 55/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9911 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-10-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 07-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JA KHAN
• Assessee Lawyers: V MOHAN
• Section: 271(1)(c); 207

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT; A ND SRHI R.P. TOLANI : JUDICIAL MEMBER ITA NO. 55 & 56/DEL/09 ASSTT. YRS: 2002-03 & 2003-4 M/S OM OVERSEAS, VS INCOME-TAX OFFICER, SHIV NAGAR, KRISHAN PURA, WARD-4, PANIPAT. PANIPAT. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. RANO JAIN & SHRI V. MOHAN CA RESPONDENT BY : SHRI J.A. KHAN SR. DR O R D E R PER G.E. VEERABHADRAPPA, V.P: THESE APPEALS, BY THE ASSESSEE, ARISE OUT OF IDENT ICAL ORDERS DATED 31- 10-2008 BY THE CIT(A)-KARNAL FOR A.Y. 2002-03 & 200 3-04. IN BOTH THESE APPEALS THE DEPARTMENTAL ACTION IN LEVYING PENALTY U/S 271(1)(C) ARE QUESTIONED. 2. THE ASSESSEE IS A FIRM AND DERIVED INCOME FROM M ANUFACTURE AND EXPORT OF DURRIES, RUGS, WOOLEN CARPETS, MADE UPS ETC. DEDUCTIONS WERE CLAIMED U/S 80-HHC. IT WAS FOUND THAT DURING THESE YEARS THE ASSESSEE RECEIVED EXPORT INCENTIVE ON WHICH DEDUCTIONS U/S 80-IB WERE CLAIMED. THE EXPORT INCENTIVE WAS IN THE FORM OF REFUND OF EXCIS E DUTY, WHICH WAS DIRECTLY RELATED TO THE PURCHASES MADE FOR MANUFACTURE. ACC ORDING TO THE REVENUE, THESE EXPORT INCENTIVES DID NOT FORM PART OF THE BU SINESS PROFIT, DERIVED FROM ANY INDUSTRIAL UNDERTAKING. THE CLAIM FOR DEDUCTION WAS , THEREFORE, TREATED AS INADMISSIBLE AND THE PENALTY IS WITH REFERENCE T O THESE CLAIMS IN BOTH THE YEARS UNDER CONSIDERATION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE PRODUCED BE FORE US COPIES OF ORDERS OF THE ITAT IN THE FOLLOWING CASES AND CONT ENDED THAT THEREIN UNDER IDENTICAL CIRCUMSTANCES PENALTY LEVIED U/S 271(1)(C ) HAVE BEEN DELETED: (1) CONSOLIDATED ORDER OF ITAT DELHI BENCH C DAT ED 2-4- 2009 IN ITA NOS. 3629 & 3630/DEL/08 M/S ORIENTAL RUG CO. VS. ACIT FOR A.Y. 2001-02 & 2002-03 & OTHERS. (2) ITAT DELHI BENCH A IN ITA NO. 28/DEL/09 M/S A NAND INTERNATIONAL VS. ITO DATED 20-7-2009 FOR A.Y. 2002 -03. 4. LEARNED DR, ON THE OTHER HAND, STRONGLY SUPPORTE D THE ORDER OF THE CIT(A). HE, HOWEVER, FAIRLY ADMITTED THAT THERE WAS CLEAVAGE OF OPINION ON THE ASSESSEES CLAIM AS IS CLEAR FROM THE DISCUSSIO NS IN THE ORDERS RELIED UPON BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE RECORDS. THERE IS NO DISPUTE THAT IN BOTH THESE CAS ES THE ASSESSEE HAD DISCLOSED COMPLETE DETAILS IN THE RETURNS OF INCOME FILED FOR THE RESPECTIVE YEARS. THE ASSESSEE HAD MADE ITS CLAIM ON THE BASIS OF PROFESSIONAL ADVICE GIVEN BY EXPERTS ON THE SUBJECT. THE AUDIT REPORTS AND CLAIM IN PRESCRIBED PROFORMA WERE SUBMITTED ALONG WITH THE RETURNS. FRO M A PERUSAL OF ALL THESE CIRCUMSTANCES IT IS CLEARLY ESTABLISHED THAT THE AS SESSEE HAD MADE BONA FIDE CLAIMS. THERE WERE ALSO LARGE NUMBER OF ORDERS OF T HE ITAT IN FAVOUR OF THE ASSESSEE. THERE ARE DIVERGENCE OF OPINION ON THIS I SSUE BY DIFFERENT HIGH COURTS. THE HONBLE DELHI HIGH COURT WAS OF THE VIE W THAT DEDUCTION U/S 80- IB WOULD BE ADMISSIBLE ON DUTY DRAW BACK AND DEPB. FOLLOWING THE DECISIONS OF HONBLE DELHI HIGH COURT, THE ITAT DEL HI BENCHES IN THE CASES OF LAKHVINDER SINGH IN ITA NO. 5169/DEL/04 DATED 2 8-9-2005; ACIT VS. VIPIN SARDHANA IN ITA NO. 5174/DEL/04 DATED 17-6-20 05; AND ITO VS. ESS KAY ENTERPRISES ETC. HAVE ALLOWED DEDUCTION TO THE ASSESSEE U/S 80-IB ON DUTY DRAW BACK. THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF LIBERTY INDIA VS. ACIT 207 CTR 243 HAS HELD THAT DE DUCTION U/S 80-IB WOULD NOT BE ADMISSIBLE TO THE ASSESSEE. SLPS HAV E BEEN FILED BEFORE THE HONBLE SUPREME COURT AGAINST THE ABOVE DECISIONS O F THE HONBLE HIGH COURT OF PUNJAB & HARYANA AS ALSO THE DECISION AGAI NST HONBLE DELHI HIGH COURT, WHICH HAVE BEEN ADMITTED BY THE APEX COURT. THERE WAS DIVERGENCE OF JUDICIAL OPINION ABOUT THE ASSESSEES ENTITLEMEN T FOR DEDUCTION. IN SUCH A SITUATION TO FASTEN PENALTY U/S 271(1)(C) IS CLEARL Y NOT PERMISSIBLE IN THE LIGHT OF THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS 259 ITR 212, WHEREIN THEIR LORDSHIPS OF RAJASTHAN HIGH COURT HAVE HELD THAT WHERE THERE EXI ST DEBATE ON THE ASSESSEES CLAIM FOR CERTAIN DEDUCTION, IT COULD N OT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME WHICH WILL RESULT IN IMPOSITION OF PENALTY U/S 271( 1)(C) OF THE ACT. AGAIN IN THE CASE OF CIT VS. TEK RAM 300 ITR 354 (P&H), THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT WHERE THERE IS DIS PUTE AS TO THE TAXABILITY OF ENHANCED COMPENSATION RECEIVED BY THE ASSESSEE O N ACCOUNT OF ACQUISITION OF LAND AND THERE ARE TWO POSSIBLE VIEW S, NO PENALTY U/S 271(1)(C) CAN BE IMPOSED. IN THE LIGHT OF THE ABOVE GUIDELINES OF THE JURISDICTIONAL HIGH COURT, IT CANNOT BE SAID THAT I N THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE HAS CONCEALE D EITHER THE INCOME OR PARTICULARS THEREOF. IN OUR VIEW, THE PENALTIES IN QUESTION HAVE BEEN WRONGLY SUSTAINED AND THE SAME ARE HEREBY DELETED. 6. IN THE RESULT, ASSESSEES APPEALS STAND ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28-8-2009.. SD/- SD/- (R.P. TOLANI ) ( G.E. VEERABHADRA PPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 28-08-2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR