The ITO, Ward-2(1), JAMNAGAR V. Divine Impex, JAMNAGAR

ITA 561/RJT/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0105 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA N SHROTE
• Assessee Lawyers: MJ RANPURA
• Section: 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER. ITA NO. 561/RJT/2014 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER, WARD-2(1), ROOM NO. 06, GROUND FLOOR, TARANJALI BUILDING PANDIT NEHRU MARG, JAMNAGAR- 361 008 APPELLANT VS. DIVINE IMPEX, PLOT NO.440-441, GIDC, PHASE-II, DARED, JAMNAGAR. RESPONDENT PAN: AAEFD8250D /BY REVENUE : SMT. USHA N. SHROTE, SR.D.R. /BY ASSESSEE : SHRI M. J. RANPURA, A.R. / DATE OF HEARING : 04.10.2016 / DATE OF PRONOUNCEMENT : 28.10.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2007-08 A RISES AGAINST THE CIT(A), JAMNAGARS ORDER DATED 23.07.2014 PASSED IN CASE NO. CIT(A)/JAM/137/13-14 DELETING SECTION 271(1)(C) PEN ALTY OF RS.20.65 LAKHS IMPOSED BY THE ASSESSING OFFICER VIDE ORDER DATED 1 1.09.2013. ITA NO.561/RJT/2014 (ITO VS. DIVINE IMPEX) A.Y. 2007-08 - 2 - WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NOTICE AT THE OUTSET THAT THE CORRECT AMOUNT OF PENALTY INVOLVED IN INSTANT APPEAL IS RS.10,39,500/- ONLY SINCE THE SAM E HAS BEEN IMPOSED IN FURTHERANCE TO SECTION 263 DIRECTIONS OF THE CIT, J AMNAGAR AND THE REMAINING COMPONENT OF THE VERY PENALTY ALREADY STANDS DEALT WITH BY A COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.217/RJT/2013 IN AS SESSEES CASE PERTAINING TO SECTION 271(1)(C) PENALTY ARISING FROM THE ORIGINAL ROUND OF ASSESSMENT. 3. WE COME TO THE RELEVANT FACTS NOW QUA THE REMAIN ING AMOUNT OF PENALTY OF RS.10,39,500/- IN THE INSTANT APPEAL. T HIS ASSESSEE IS A PARTNERSHIP FIRM. IT IS A 100% EXPORT ORIENTED UNDERTAKING ENG AGED IN THE BUSINESS OF MANUFACTURE AND EXPORT OF BRASS PARTS. THE ASSESSEE FILED RETURN ON 31.10.2007 STATING INCOME OF RS.1,16,770/-. IT CLA IMED SECTION 10B DEDUCTION OF RS.1,01,32,229/-. THE ASSESSING OFFIC ER FRAMED A REGULAR ASSESSMENT ON 23.12.2009 COMPUTING TOTAL TAXABLE IN COME OF RS.30,48,700/- AFTER ALLOWING SECTION 10B DEDUCTION OF RS.72,00,30 1/- ONLY. THE CIT THEREAFTER NOTICE THAT THE ASSESSEE FIRM HAD NOT PA ID ANY INTEREST TO ITS PARTNER ON THEIR CAPITAL AND THE ASSESSING OFFICER HAD ACCE PTED ITS SECTION 10B DEDUCTION CLAIM WITHOUT ALLOWING THE SAME DESPITE A CLEAR CUT STIPULATION IN PARTNERSHIP DEED DATED 21.04.2005 CONTAINING A SPEC IFIC STIPULATION. HIS VIEW WAS THAT ALL THIS RESULTED IN EXCESS RELIEF OF SECT ION 10B DEDUCTION. THE CIT ACCORDINGLY EXERCISED HIS SECTION 263 REVISIONAL JU RISDICTION VIDE ORDER DATED 04.01.2011 THEREBY DIRECTING THE ASSESSING OFFICER TO RE-FRAME THE IMPUGNED ASSESSMENT AFRESH. THE ASSESSING AUTHORITY FRAMED CONSEQUENTIAL ASSESSMENT ON 28.11.2011 ALLOWING INTEREST AND REMUNERATION TO PARTNERS OF RS.30,88,648/- AND ADDED BACK THE SAME. IT THUS RE -WORKED ASSESSEES DEDUCTION CLAIMED U/S.10B AS RS.39,94,879/- AS AGAI NST THE ORIGINAL CLAIM (SUPRA) RESULTING IN DIFFERENTIAL SUM OF RS.61,37,3 50/-. IT FURTHER INITIATED THE IMPUGNED PENALTY PROCEEDINGS ALLEGING CONCEALMENT A ND FURNISHING OF ITA NO.561/RJT/2014 (ITO VS. DIVINE IMPEX) A.Y. 2007-08 - 3 - INACCURATE PARTICULARS OF INCOME. THE ASSESSEE PREF ERRED APPEAL. THE CIT(A) ACCEPTED THE SAME ON 29.02.2012 DELETING THE ABOVE ADDITIONS OF PARTNERS INTERESTS AND REMUNERATION. THE REVENUE FILED ITA NO.279/RJT/2012. A COORDINATE BENCH OF THIS TRIBUNAL DECIDED THE SAME IN REVENUES FAVOUR ON 24.01.2013. QUANTUM PROCEEDINGS SEEM TO HAVE ATTAIN ED FINALITY AT THIS STAGE. 4. THE ASSESSING OFFICER RESUMED WITH THE IMPUGNED PENALTY PROCEEDINGS. HE FINALIZED THE SAME VIDE ORDER DATE D 11.09.2013 LEVYING THE PENALTY IN QUESTION OF RS.20.65 LACS AFTER TAKING I NTO ACCOUNT ALL QUANTUM DEVELOPMENTS NARRATED HEREINABOVE TO CONCLUDE THAT ASSESSEES ACT AND CONDUCT IN CLAIMING SECTION 10B DEDUCTION WITHOUT E XCLUDING PARTNERS INTERESTS AND REMUNERATION AMOUNTING TO CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. THE CIT(A) DELETES THE IMPUGNED PENALTY BY OBSER VING AS UNDER: 6. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT AND ALSO GONE THROUGH THE PENALTY ORDER. 6.1 FIRSTLY I AM INCLINED TO AGREE WITH THE APPELLA NT'S CONTENTION THAT THE PENALTY LEVIED IS MORE THAN WHAT SHOULD HAVE BEEN LEVIED, B ECAUSE THE ADDITION ON WHICH PENALTY HAS BEEN LEVIED IS RS.30,88,848/- BEING THE REMUNERATION TO THE PARTNERS. THE ACTUAL AMOUNT SHOULD HAVE BEEN RS.10,39,500/- O NLY AS EXPLAINED FACTUALLY IN SUBMISSION OF THE APPELLANT [5 (39) ]. HENCE, THE A O IS DIRECTED TO RECTIFY THE PENALTY ORDER TO ARRIVE AT CORRECT AMOUNT OF PENALT Y. 6.2 SO FAR AS LEGAL POSITION OF LEVIABILITY OF PENA LTY IS CONCERNED, I AM OF THE VIEW THAT IN SUCH CASE I.E. WHERE CLAIM / ALLOWANCE OF P ARTNER'S REMUNERATION HAS BEEN NOTIONALLY FORCED UPON THE APPELLANT, PENALTY PROVI SIONS U/S.271(1)(C) ARE NOT ATTRACTED AT ALL AS THE APPELLANT HAS NEITHER CONCE ALED ANY INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. HENCE, PENALTY LEVIED IS HEREBY CANCELLED. THIS LEAVES THE REVENUE AGGRIEVED. 6. HEARD BOTH THE SIDES REITERATING THEIR RESPECTIV E STANDS. THERE IS HARDLY ANY DISPUTE THAT THE IMPUGNED PENALTY ARISES FROM N OTIONAL DISALLOWANCE/ADDITION OF PARTNERS INTEREST AND REM UNERATION COMPUTED ON ITA NO.561/RJT/2014 (ITO VS. DIVINE IMPEX) A.Y. 2007-08 - 4 - NOTIONAL BASIS FOR THE PURPOSE OF ASCERTAINING THE CORRECT AMOUNT OF SECTION 10B DEDUCTION. THIS IS NOT THE REVENUES CASE THAT THE ASSESSEE HAD ACTUALLY PAID ANY AMOUNT UNDER THESE TWO HEADS AND CHOSE NOT TO RECORD THE SAME IN ITS BOOKS. WE OBSERVE IN THIS PECULIAR MERE FACT T HAT THE ASSESSING OFFICER AND THIS TRIBUNAL HAVE PROCEEDED TO EXCLUDE NOTIONA L INTEREST AND REMUNERATION TO PARTNERS CANNOT BE TAKEN AS A CASE OF EITHER CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WARR ANTING APPLICATION OF THE IMPUGNED PENAL PROVISION U/S.271(1)(C) OF THE ACT. WE THUS UPHOLD CIT(A)S ORDER UNDER CHALLENGE. 7. THIS REVENUES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF OCTOBER, 2016.] SD/- SD/- (AMARJIT SINGH) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 28/10/2016 TRUE COPY S.K.SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT