ITO, New Delhi V. M/s. Fashion Factory (International) Pvt. Ltd., New Delhi

ITA 5686/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74296 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 08-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Question of law; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .5686/DEL/2012 5686/DEL/2012 5686/DEL/2012 5686/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2003 2003 2003 2003- -- -04 0404 04 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -11(2), 11(2), 11(2), 11(2), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S FASHION M/S FASHION M/S FASHION M/S FASHION FACTORY (INTERNATIONAL) FACTORY (INTERNATIONAL) FACTORY (INTERNATIONAL) FACTORY (INTERNATIONAL) PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, PRIVATE LIMITED, B BB B- -- -252, OKHLA INDUSTRIAL AREA, 252, OKHLA INDUSTRIAL AREA, 252, OKHLA INDUSTRIAL AREA, 252, OKHLA INDUSTRIAL AREA, PHASE PHASE PHASE PHASE- -- -I, I, I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 020. 110 020. 110 020. 110 020. PAN : PAN : PAN : PAN : AAACF2660A. AAACF2660A. AAACF2660A. AAACF2660A. (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NIDHI SRIVASTAVA, SR.DR. RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XIII, NEW DELHI DATED 17 TH AUGUST, 2012 FOR THE AY 2003- 04. 2. AT THE TIME OF HEARING BEFORE US, NONE WAS PRESE NT ON BEHALF OF THE ASSESSEE THOUGH THE NOTICE WAS DULY SENT ON 5 TH FEBRUARY, 2014. THEREFORE, WE PROCEED TO DECIDE THE APPEAL EX PARTE QUA THE ASSESSEE. 3. WE HAVE HEARD THE ARGUMENTS OF LEARNED DR AND PE RUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT LEARNED CI T(A) DISCUSSED THE FACTUAL AS WELL AS LEGAL ISSUE IN DETAIL AND THEREA FTER CANCELLED THE PENALTY RELYING UPON THE DECISION OF ITAT IN ASSESS EES OWN CASE AND THE DECISIONS OF HON'BLE JURISDICTIONAL HIGH COURT DATED 29 TH JANUARY, 2012 IN THE CASE OF ULTIMATE FASHION MAKER LTD. IN ITA NO.69/2010 AND DHARAMPAL PREMCHAND LTD. 11 TAXMAN.COM 437 (DELHI ). FOR READY REFERENCE, WE REPRODUCE BELOW THE FINDING OF LEARNE D CIT(A):- ITA-5686/DEL/2012 2 5.1 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND OBSERVATION OF THE ASSESSING OFFICER. IN THE ASSESSMENT ORDER ASSESSING OFFICER DISALLOWED DEDUC TION U/S 80-IB ON INTEREST AND INCENTIVES, DUTY DRAW BAC K RECEIVED AND DEPB. IN THE APPELLATE PROCEEDINGS BE FORE CIT(A), THE DECISION OF THE ASSESSING OFFICER WAS C ONFIRMED, HOWEVER, THE HONBLE ITAT ALLOWED DEDUCTION U/S 80- IB ON DUTY DRAW BACK AND INCENTIVES RECEIVED BY THE APPEL LANT BUT DISALLOWED THE CLAIM OF DEDUCTION U/S 80-IB ON THE INTEREST INCOME OF RS.22,92,734/-. IT IS CONTENDED BY THE APPELLANT THAT ASSESSING OFFICER HAS ADDED RS.1,82, 353/- UNDER THE HEAD INTEREST INCOME NOT DISCLOSED BY THE APPELLANT. HOWEVER, APPELLANT HAS CONTENDED THAT T HIS INTEREST INCOME WAS NOT PERTAINING TO THE APPELLANT AND THIS WAS PERTAINING TO SOMEBODY ELSE. IN THIS REGA RD, THE APPELLANT HAS FILED A CERTIFICATE FROM SYNDICATE BA NK, NEHRU PLACE BRANCH, DATED 24 TH APRIL, 2012 WHEREIN THE BANK HAS STATED THAT THE TDS OF RS.17,542/- DEDUCTION U/S 94 A IN THE NAME OF FASHION FACTORY FOR F.Y. 2002-03 WAS DEDUCT ED BY BANK BUT IT HAS NOTHING TO DO WITH M/S FASHION FACT ORY INTERNATIONAL PVT.LTD. HAVING PAN NO.AAACF2660A. THEREFORE, THE CONTENDED OF THE APPELLANT THAT INTE REST INCOME ADDED BY THE ASSESSING OFFICER OF RS.1,82,35 3/- WAS NOT PERTAINING TO THE APPELLANT. THEREFORE, AD DITION MADE ON THE BASIS OF SAID TDS CERTIFICATES IN THE H ANDS OF THE APPELLANT AND SUBSEQUENTLY THE PENALTY LEVIED B Y THE ASSESSING OFFICER ON THIS AMOUNT IS NOT JUSTIFIED. THE CONTENTION OF THE APPELLANT TO THIS EXTENTS FOUND T O BE ACCEPTABLE AND NO PENALTY IS LEVIABLE ON THE AMOUNT OF RS.1,82,353/-. AS REGARD THE BALANCE INTEREST INCOME RECEIVED FROM FDRS OF RS.21,10,381/- ON WHICH U/S 80-IB DEDUCTION HAS BEEN CLAIMED BY THE APPELLANT, IT IS SUBMITTED BY THE AP PELLANT THAT IT WAS A DEBATABLE ISSUE AND WAS SUBJECT MATTE R OF CONFLICTING JUDGMENTS OF VARIOUS HIGH COURTS AS WEL L AS TRIBUNALS. BASED ON SUCH JUDGMENTS THE APPELLANT H AD CLAIMED THAT IT HAS NOT CONCEALED ANY PARTICULARS O F INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE REFORE, NO PENALTY CAN BE LEVIED ON THE CLAIM MADE BY THE APPELLANT. THE APPELLANT HAS FURTHER CONTENDED THA T MERELY BECAUSE THE APPELLANT HAD CLAIMED THE DEDUCT ION WHICH WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY IT SELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). THE APPEL LANT HAS ALSO CONTENDED THAT WHERE TWO OPINION ARE POSSIBLE ON A ISSUE NO PENALTY CAN BE LEVIED. THE APPELLANT HAS ALSO CONTENDED THAT INTEREST EARNED ON BANKS AND INTERES T PAID ITA-5686/DEL/2012 3 TO THE OTHER HAD A DIRECT NEXUS TO THE BUSINESS ACT IVITIES OF THE APPELLANT, THEREFORE, NO INACCURATE PARTICULARS HAVE BEEN FURNISHED. THE APPELLANT HAS ALSO CONTENDED T HAT IT HAD DISCLOSED ALL MATERIAL FACTS PERTAINING TO THE COMPUTATION OF DEDUCTION U/S 80-IB OF THE I.T. ACT. THERE WAS NO DELIBERATE ATTEMPT ON THE PART OF THE APPELL ANT TO CONCEAL ANY PARTICULARS OF ITS INCOME. IN THIS REG ARD, THE APPELLANT HAS RELIED UPON THE JUDGMENT OF HONBLE I TAT DELHI BENCH IN THE APPELLANTS OWN CASE FOR A.Y. 200 1-02 ITA NO.588/DEL/2009 WHEREIN THE PENALTY LEVIED ON A CCOUNT OF THE 80-IB CLAIM MADE ON INTEREST INCOME WAS DELE TED WITH FOLLOWING OBSERVATIONS:- 10. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS AN EXPORT HOUS E REGISTERED UNDER THE GOVT. OF INDIA EXPORT MANUFACT URING AND EXPORTING LEATHER GARMENTS SCHEME U/S 80IB. TH E INCOME WAS RECEIVED UNDER THE DUTY DRAWBACK, DEPB, AND INTEREST ON FDRS. THE ASSESSEE CLAIMED DEDUCTION, SINCE THE RECEIPTS WERE PART OF THE RECEIPTS RELATING TO THE ASSESSEES INDUSTRIAL UNDERTAKING. FULL DEDUCTION WAS DISALLOWED, BUS SUCH DISALLOWANCE OF CLAIM CANNOT B E SAID TO BE, BY ANY STRETCH OF IMAGINATION, CONCEALMENT O F PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE. 12. IN VIEW OF THE ABOVE, THE GRIEVANCE RAISED BY T HE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED A S SUCH. ACCORDINGLY, THE PENALTY LEVIED ON THE ASSESSEE IS DELETED. THE APPELLANT HAS ALSO RELIED UPON THE DELHI HIGH C OURT JUDGMENT IN THE CASE OF CIT VS. ULTIMATE FASHION MA KER LTD. (ITA NO.69/2010) DATED 29 TH JANUARY 2010. THE GIST OF JUDGMENT IS GIVEN HEREUNDER:- THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE APPELLANT HAD DISCLOSED ALL THE PRIMARY AND MATERIA L FACTS AND, THEREFORE, IT COULD NOT BE SAID THAT THE APPEL LANT HAD CONCEALED HIS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL ALSO NOTED THA T THE APPELLANT HAD FILED EXPLANATION REGARDING ITS CLAIM FOR DEDUCTION UNDER SECTION 80-IB OF THE SAID ACT WHICH , ACCORDING TO THE TRIBUNAL, COULD NOT BE SAID TO BE A FALSE CLAIM. 3. MORE IMPORTANTLY, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE ISSUE OF CLAIM OF DEPB WAS A DE BATABLE ONE WHEN THE APPELLANT FILED ITS RETURN AND THAT IT AMOUNTED TO A CLEAR CASE OF HONEST DIFFERENCE OF OP INION REGARDING THE ALLOWABILITY OF CERTAIN DEDUCTIONS MA DE BY ITA-5686/DEL/2012 4 THE APPELLANT. CONSEQUENTLY, THE TRIBUNAL HELD THA T THERE WAS NO MISTAKE IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE PENALTY. 4. WE SEE NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE TR IBUNAL. RELIANCE IS ALSO PLACED ON DELHI HIGH COURT JUDGMEN T IN THE CASE OF CIT VS. DHARAMPAL PREMCHAND LTD. 11 TAXMAN. COM 437 DELHI. SECTION 271(1)(C), READ WITH SECTIONS 80-IA AND 80 -IB, OF THE INCOME-TAX ACT, 1961 - PENALTY - FOR CONCEALMEN T OF INCOME - ASSESSMENT YEAR 2001-02 - ASSESSEE WAS ENGAGED IN MANUFACTURE OF FLAVOURED CHEWING TOBACCO AND KIMAM - FOR RELEVANT ASSESSMENT YEAR, ASSESSEE FILE D ITS RETURN WHEREIN DEDUCTIONS UNDER SECTIONS 80-IA AND 80-IB WERE CLAIMED - ASSESSING OFFICER REJECTED ASSESSEE' S CLAIM FOR DEDUCTION - HE ALSO LEVIED PENALTY UNDER SECTIO N 271(1)(C) ON GROUND THAT ASSESSEE HAD WRONGLY CLAIM ED DEDUCTION IN ITS RETURN OF INCOME - ON APPEAL, ASSE SSEE CONTENDED THAT IT HAD DISCLOSED ALL MATERIAL FACTS PERTAINING TO COMPUTATION OF DEDUCTION ADMISSIBLE UNDER SECTIO NS 80- IA AND 80-IB - ASSESSEE FURTHER CONTENDED THAT IT W AS OF OPINION THAT INTEREST EARNED ON BANKS AND INTEREST PAID TO OTHERS HAD A DIRECT NEXUS TO BUSINESS ACTIVITIES AN D, THEREFORE, DEDUCTION OF SAID AMOUNT WOULD BE ADMISS IBLE - IT WAS ALSO PUT FORTH THAT THERE WAS NO DELIBERATE ATTEMPT ON PART OF ASSESSEE TO CONCEAL PARTICULARS OF INCOM E - COMMISSIONER (APPEALS) ACCEPTED ASSESSEE'S EXPLANAT ION AND SET ASIDE PENALTY ORDER - TRIBUNAL UPHELD ORDER PASSED BY COMMISSIONER (APPEALS) - WHETHER ON FACTS, NO SUBSTANTIAL QUESTION OF LAW AROSE FROM TRIBUNAL'S O RDER - HELD, YES. THE FACTS OF THE APPELLANTS CASE ARE IDENTICAL WIT H THE FACTS OF THE ABOVE CITED JUDICIAL PRONOUNCEMENTS. THEREFORE, THE RATIO OF THE SAID JUDGMENTS IS SQUAR ELY APPLICABLE TO THE CASE OF APPELLANT. IN VIEW OF TH E ABOVE THE PENALTY U/S 271(1)(C) OF THE I.T. ACT LEVIED BY THE ASSESSING OFFICER WAS NOT JUSTIFIED. HENCE, THE SA ME IS CANCELLED. 4. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ABOV E ORDER OF LEARNED CIT(A). HE CONSIDERED THE FACTUAL DETAILS AS WELL AS ALSO NOTED THAT ON THE SIMILAR FACTS, THE PENALTY WAS CANCELLED BY THE ITAT IN ASSESSEES OWN CASE FOR AY 2001-02 VIDE ITA NO.588/DEL/2009. HE ALSO RECORDED ITA-5686/DEL/2012 5 THE FINDING THAT ON SIMILAR FACTS, THE ORDER OF ITA T CANCELING THE PENALTY ON SIMILAR FACTS HAS BEEN UPHELD BY THE HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF ULTIMATE FASHION MAKER LTD. (S UPRA) AND DHARAMPAL PREMCHAND LTD. (SUPRA). IN VIEW OF THE A BOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). THE SAME IS SUSTAINED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2014. SD/- SD/- ( (( (U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI U.B.S. BEDI) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESID VICE PRESID VICE PRESID VICE PRESIDENT ENT ENT ENT DATED : 07.03.2014 VK. COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -11(2), NEW DELHI. 11(2), NEW DELHI. 11(2), NEW DELHI. 11(2), NEW DELHI. 2. RESPONDENT : M/S FASHION FACTORY (INTERNATIONAL) PRIVATE LIMITED, M/S FASHION FACTORY (INTERNATIONAL) PRIVATE LIMITED , M/S FASHION FACTORY (INTERNATIONAL) PRIVATE LIMITED , M/S FASHION FACTORY (INTERNATIONAL) PRIVATE LIMITED , B BB B- -- -252, OKHLA INDUSTRIAL AREA, PHASE 252, OKHLA INDUSTRIAL AREA, PHASE 252, OKHLA INDUSTRIAL AREA, PHASE 252, OKHLA INDUSTRIAL AREA, PHASE- -- -I, I, I, I, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 020. 110 020. 110 020. 110 020. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR