Hari Dutt Sharma, New Delhi V. ITO, Ward-49(3), New Delhi

ITA 5884/DEL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0276 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 12-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Period of limitation; Question of law; Wrong claim; Revised return; Set aside
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH.K.N.CHARY,JUDICIAL MEMBER ITA NO.5884/DEL/2018 ASSESSMENT YEAR: 2014-15 SH. HARI DUTT SHARMA B-212, CLOCK TOWER, HARI NAGAR, NEW DELHI 110064 C/O. M/S. RRA TAX INDIA D-28, SOUTH EXTENSION, PART-I, NEW DELHI -110049 PAN NO.AAXPS3790A VS INCOME TAX OFFICER WARD 49 (3) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SH. RAKESH GUPTA, RESPONDENT BY SH. AMIT KATOCH, SR. DR DATE OF HEARING: 25/03/2019 DATE OF PRONOUNCEMENT: 29/03/2019 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE ASSESEE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-17, NEW DELHI DATED 27.07.2018 PERTAININ G TO A. Y. 2014-15. 2 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN IMPOSING PENALTY OF RS.43,58,400/- U/S 271 (1) (C) OF THE AC T. 3. THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH. CASE RECORDS CAREFULLY PERUSED AND JUDICIAL DECISIO N RELIED UPON BY BOTH THE SIDES WERE DULY CONSIDERED. 4. THE FACTS ON RECORD SHOW THAT THE APPELLANT IS A PROPRIETOR OF AN UNDER TAKING WHICH IS ELIGIBLE FOR DEDUCTION U/S 80 IC OF THE ACT. 5. THE CLAIM OF DEDUCTION HAS BEEN ALLOWED IN EARLI ER ASSESSMENT YEARS ALSO. AS PER THE AUDIT REPORT EXHI BITED AT PAGES 100-103 OF THE PAPER BOOK, THE AUDITORS HAVE SHOWN INITIAL ASSESSMENT YEARS FROM WHEN DEDUCTION IS BEING CLAIM ED AS A. Y.2009-10 AND DATE OF COMMENCEMENT OF OPERATION / ACTIVITY BY THE UNDER TAKING / ENTERPRISES HAS BEEN SHOWN AS 26.08.2008. THE PROFITS AND GAINS DERIVED BY THE UNDER TAKING / ENTERPRISE FROM THE ELIGIBLE BUSINESS IS SHOWN AT RS.17008476/ - AND THE DEDUCTION U/S 80 IC HAS BEEN SHOWN AT 100% OF THE P ROFITS AND GAINS MENTIONED HERE IN ABOVE. 6. ON THE BASIS OF THIS AUDIT REPORT THE ASSESSEE F ILED ITS RETURN OF INCOME AND COMPUTED ITS TAXABLE INCOME ACCORDING LY. 7. THE STATEMENT OF COMPUTATION OF TAXABLE INCOME A T NORMAL TAX IS PLACED AT PAGE NO.96 OF THE PAPER BOOK AND T HE COMPUTATION OF TAXABLE INCOME U/S 115 JC IS PLACED AT PAGE NO. 97 OF THE PAPER BOOK. 8. HOWEVER, DURING THE COURSE OF THE SCRUTINY ASSES SMENT PROCEEDINGS AND ON GOING THROUGH THE CLAIM OF DEDUC TION THE ASSESSEE REALIZED THAT THE MISTAKE HAS BEEN CREPT I N COUNTING THE ELIGIBLE YEARS OF THE CLAIM OF DEDUCTION U/S 80 IC OF THE ACT. THE 3 ASSESSEE REALIZED THAT FOR THE YEAR UNDER CONSIDERA TION HE IS ELIGIBLE FOR DEDUCTION @ 25% AND NOT 100%. SINCE T HE PERIOD OF LIMITATION FOR FILING THE REVISED RETURN OF INCOME HAD EXPIRED, THEREFORE, THE REVISED COMPUTATION OF INCOME WAS FI LED CLAIMING THE DEDUCTION U/S 80 IC OF THE ACT @ 25%. 9. SINCE EARLIER THE ASSESSEE HAD PAID TAX ON TAXAB LE INCOME AS PER SECTION 115 JC OF THE ACT AND SINCE NOW THE TAX ABLE INCOME UNDER THE NORMAL PROVISION OF THE ACT WAS HIGHER TH E TAX DIFFERENCE ALOGNWITH INTEREST DIFFERENCE WAS IMMEDI ATELY PAID ON 04.08.2016. THE ASSESSMENT ORDER DATED 03.10.2016 FRAMED U/S 143(3) OF THE ACT WAS COMPLETED BY THE ASSESSING OF FICER AS PER THE REVISED COMPUTATION OF INCOME ALLOWING DEDUCTIO N U/S 80 IC OF THE ACT @25%. 10. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT IT WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE CONC EAL INCOME TO THE EXTENT OF RS.12755247/- ACCORDINGLY PENALTY PRO CEEDINGS U/S 271 (1) (C ) OF THE ACT WERE SEPARATELY INITIATED. 11. AFTER ISSUING A SHOW CAUSE NOTICE AND AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER O BSERVED THAT THE ASSESSEE IS TAKING SHELTER BEHIND BONA FIDES AN D INADVERTENT ERROR WHEREAS THE INTENTION WAS TO CONCEAL THE TAXA BLE INCOME AND PROCEEDED BY LEVYING PENALTY OF RS.43,58,400/-. 12. THE ASSESSEE ACCORDINGLY AGITATED THE LEVY OF P ENALTY BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. 13. BEFORE US THE COUNSEL REITERATED THAT DUE TO TH E BONA FIDES MISTAKE OF THE CHARTERED ACCOUNTANT AND DUE TO THE INADVERTENT ERROR THE ASSESSEE HAD CLAIMED DEDUCTION @ 100% AND AS SOON AS THE MISTAKE WAS REALIZED, THE ASSESSEE IMMEDIATELY CORRECTED THE 4 CLAIM AND THE TAXES ALONGWITH INTEREST WAS ALSO PAI D BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. 14. PER CONTRA THE DR STRONGLY SUPPORTED THE FINDIN GS OF THE LOWER AUTHORITIES AND RELIED UPON SEVERAL DECISIONS INCLUDING HONBLE SUPREME COURT DECISION IN THE CASE OF DHARM ENDRA TEXTILES PROCESSORS 295 ITR 244 AND HONBLE DELHI H IGH COURT IN THE CASE OF ZOOM COMMUNICATION PRIVATE LIMITED 327 ITR 510. 15. THE FACTS EXPLAINED ELSEWHERE CLEARLY SHOW THAT ON THE BASIS OF THE AUDIT REPORT THE ASSESSEE CLAIMED THE DEDUCT ION U/S 80 IC OF THE ACT. THERE IS NO DISPUTE THAT THE UNDER TAK ING OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80 IC OF THE ACT AND THEREFORE, IT CAN BE SAFELY CONCLUDED THAT THE CLAI M WAS NOT A FALSE CLAIM. AS MENTIONED ELSEWHERE IN THE AUDIT REPORT I TSELF THE AUDITORS HAVE MENTIONED THE INITIAL ASSESSMENT YEAR AS A.Y. 2009-10 U/S 80 IC OF THE ACT THE ASSESSEE IS ELIGIB LE FOR 100% DEDUCTION FOR FIRST FIVE ASSESSMENT YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR. HOWEVER, THE CHARTERED ACCOUNTANT HAS INCLUDED THE ASSESSMENT YEAR UNDER CONSIDERATION AS THE 5 TH ASSESSMENT YEAR SINCE NO DEDUCTION WAS CLAIMED IN A . Y. 2009-10 AND THEREFORE THE CHARTERED ACCOUNTANT COUNTED THE ELIGIBLE ASSESSMENT YEARS FROM A. Y. 2010-11. IN OUR CONSID ERED OPINION THIS CLEARLY SHOWS THE HUMAN ERROR AND CANNOT PARTA KE THE COLOUR OF INTENTIONAL OR WILLFUL CLAIM. 16. THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATER COOPERS REPORTED IN 348 ITR 306 HAS HELD THAT IMPOS ING OF PENALTY WOULD BE UNWARRANTED IN A CASE WHERE THE AS SESSEE HAD CONSIDERED AN INADVERTENT AND BONAFIDE ERROR AND HA D NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS CLAI M OR FURNISH INACCURATE PARTICULARS. 5 17. THE RELIANCE PLACED BY DR IN THE CASE OF DHARME NDRA TEXTILE (SUPRA) IS MISPLACED SINCE IN THAT CASE THE HONBLE SUPREME COURT HAS HELD THAT PENALTY U/S 271 (1 ) (C ) IS A CIVIL LIABILITY FOR WHICH WILLFUL CONCEALMENT IS NOT AN E SSENTIAL INGREDIENT. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION (SUPRA) IS ALSO MISPLACE D SINCE IN THAT CASE THE ASSESSEE HAD CLAIMED INCOME TAX PAYME NT AS EXPENDITURE WHICH WAS NOT AT ALL ALLOWABLE UNDER TH E ACT. ON SUCH CLAIM THE HONBLE HIGH COURT HAD OBSERVED THAT IF THE RETURN OF INCOME WAS NOT SELECTED FOR SCRUTINY THE ASSESSE E WOULD HAVE BEEN ALLOWED INCOME TAX AS AN EXPENDITURE. 18. HOWEVER, IN THE CASE IN HAND THE ASSESSEE WAS V ERY MUCH ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80 IC OF THE AC T AND DUE TO THE ERROR IN COUNTING THE ELIGIBLE ASSESSMENT YEARS FRO M THE INITIAL ASSESSMENT YEAR THE ERROR HAS CREPT FOR WHICH IT CA NNOT BE SAID THAT THE ASSESSEE HAS WILLFULLY AND INTENTIONALLY C LAIMED THE DEDUCTION. 19. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE DEEP TOOLS PVT. LTD. REPORTED IN 274 ITR 603 HAS HELD :- THERE IS NOTHING TO SHOW THAT MISTAKE BY THE CHART ERED ACCOUNTANT WAS NOT BONA FIDE AND MERE FACT THAT CER TIFICATE ISSUED BY THE CHARTERED ACCOUNTANT WAS NOT IN ACCORDANCE W ITH S. 80HHC (4), WAS NOT ENOUGH TO HOLD THAT THE MISTAKE WAS NO T BONA FIDE. AT ANY RATE, AS FAR AS THE ASSESSEE IS CONCERNED, NO M ALA FIDES CAN BE ATTRIBUTED TO IT AS THE CLAIM FOR DEDUCTION WAS BAS ED ON THE CERTIFICATE OF THE CHARTERED ACCOUNTANT WITH WHOM N O COLLUSION HAS BEEN PROVED. IN VIEW OF FINDINGS RECORDED BY THE T RIBUNAL THAT ERROR OF THE CHARTERED ACCOUNTANT WAS INADVERTENT AND DID NOT LACK FIDES, CANCELLATION OF ORDER OF PENALTY WAS CLEARLY JUSTIF IED. THUS, NO 6 QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUN AL. ACCORDINGLY, THIS APPEAL IS DISMISSED. 20. CONSIDERING THE FACTS OF THE CASE IN TOTALITY WE DO NOT FIND THIS TO BE A FIT CASE FOR THE LEVY OF PENALTY U/S 2 71 (1) (C) OF THE ACT. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY OF RS.4 3,58,400/-. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED . 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.03.2019. SD/- SD/- (K. NARSIMHA CHARY) (N . K. BILLAIYA) JUDICIAL MEMBER ACCOUNT ANT MEMBER *NEHA* DATE:- 29.03.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI DATE OF DICTATION 26.03.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 29.03.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER