THE ACIT-4(1), Bhopal V. M/S. R. K. GUPTA CONSTRACTORS & ENGINEERS PVT. LTD., Bhopal

ITA 598/IND/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5673 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 04-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M JAVED
• Assessee Lawyers: N D PATVA
• Keywords: Question of law; Assessment record
• Section: 143(3); 260A; 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCHE, INDORE , .., BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER ITA NO.598/IND/2015 ASSESSMENT YEAR: 2009-10 ACIT 4(1) BHOPAL (MP) / VS. M/S. R.K. GUPTA CONTRACTORS & ENGINEERS PVT. LTD., B-72 BASEMENT MANSAROVAR COLONY, SHAHPURA, BHOPAL, M.P. (REVENUE) (RESPONDENT ) P.A. NO.AACCR9291D REVENUE BY SHRI M. JAVED (CIT-DR) RESPONDENT BY SHRI ASHISH GOYAL & SHRI N.D. PATVA (AR) DATE OF HEARING: 01.03.2017 DATE OF PRONOUNCEMENT : 29.03. 201 7 / O R D E R PER CHANDRAMOHAN GARG, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-2, BHOPAL [IN SHORT CIT(A)], DATED 29.05.2015 FOR A.Y. 200 9-10 BY WHICH PENALTY IMPOSED BY THE ASSESSING OFFICER U/S 271(1) (C) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) HAS BEEN C ANCELLED. R.K. GUPTA CONTRACTORS & ENGINEERS 2 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS FOL LOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(APPEAL) HAS ERRED IN:- DELETING THE PENALTY STATING THAT THERE IS ABSENCES OF ANY ADVERSE MATERIAL BROUGHT ON RECORD WHEN THE ASSESSE E BEING WELL AWARE THAT IT IS NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IA(4) OF THE INCOME TAX ACT HAS BEE N MAKING SUCH CLAIM AND HENCE FURNISHING FALSE AND INACCURATE PARTICULARS OF INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPME NT WORK LIKE CONSTRUCTION OF ROADS ETC. CARRIED THROUGH TEN DERS OBTAINED FROM VARIOUS GOVERNMENT DEPARTMENTS. AS PE R RETURN FILED BY THE ASSESSEE ON 26.09.2009 FOR A.Y. 2009-1 0, THE ASSESSEE DECLARED NIL INCOME AFTER CLAIMING DEDUCTI ON U/S 80IA(4) OF THE ACT, AT RS.1,27,33,201/- FOR THE ASS ESSMENT ORDER DATED 30.11.2011 PASSED U/S 143(3) OF THE ACT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA(4) OF TH E ACT, HAS BEEN DISALLOWED BY THE AO AND THIS DISALLOWANCE HA S BEEN UPHELD BY THE LD. CIT(A)-II, BHOPAL. 4. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, AND PASSED PENALTY ORDER ON 2 7.03.2014 IMPOSING PENALTY OF RS.65,00,000/-. BEING AGGRIEVED , THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND THE FIRST APPELLATE AUTHORITY CANCELLED THE PENALTY BY OBSERV ING THAT THE ASSESSEE IS NOT LIABLE TO PAY PENALTY U/S 271(1)(C) OF THE ACT, FOR CLAIMING DEDUCTION U/S 80IA(4) ON THE PROFIT DE RIVED FROM ITS INFRASTRUCTURE DEVELOPMENT ACTIVITIES DURING TH E A.Y. 2009- 10. NOW, THE AGGRIEVED THE REVENUE IS BEFORE THE TR IBUNAL R.K. GUPTA CONTRACTORS & ENGINEERS 3 CHALLENGING THE CANCELLATION OF PENALTY BY THE LD. CIT(A) WITH THE SOLE GROUND AS REPRODUCED HEREINABOVE. 5. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED TH E RELEVANT MATERIAL PLACED ON THE RECORD OF THE TRIBU NAL, INTER ALIA, ASSESSMENT ORDER, IMPUGNED ORDER OF THE LD. CIT(A) UPHOLDING THE DISALLOWANCE, PENALTY ORDER AND IMPUG NED ORDER OF THE LD. CIT(A) UNDER CHALLENGED, WHICH DELETED T HE PENALTY. THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE (DR), SU PPORTING THE PENALTY ORDER VEHEMENTLY CONTENDED THAT BY WAY OF CLAIMING WRONG DEDUCTION THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME BY FURNISHING INACCURATE PART ICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT, THEREFORE, THE ASSESSEE WAS LIABLE FOR PENALTY UNDE R THE SAID PROVISIONS. HE FURTHER CONTENDED THAT THE AO RIGHTL Y IMPOSED PENALTY BUT THE SAME WAS DELETED BY THE LD. CIT(A) WITHOUT ANY JUSTIFIED REASON AND BASIS, THEREFORE, THE IMPU GNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO . 6. REPLYING TO THE ABOVE, THE LD. COUNSEL OF THE ASSE SSEE DREW OUR ATTENTION TOWARDS VARIOUS JUDICIAL PRONOUNCEMEN TS OF HONBLE HIGH COURT AND THE TRIBUNAL INCLUDING DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT OF MADHYA PRADESH DATED 11.1.2017 PASSED IN ASSESSEES OWN CASES PERTAINING TO A.YS. 2005-06 TO 2008-09 AND SUBMITTED THAT IN THE IDENTICAL FACTS AND CIRCUMSTANCES THE PENALTY LEVIED BY THE A O U/S 271(1)(C) OF THE ACT, ON THE SAME ISSUE, WHICH WAS DELETED BY THE LD. CIT(A) AND FINDINGS OF THE FIRST APPELLATE AUTHORITY R.K. GUPTA CONTRACTORS & ENGINEERS 4 WERE CONFIRMED BY THE TRIBUNAL AND LASTLY APPEAL OF THE REVENUE AGAINST THE ORDER OF THE TRIBUNAL HAS BEEN DISMISSED BY THE HONBLE HIGH COURT UPHOLDING THE CANCELLATIO N OF PENALTY. COPY OF THE ORDER OF HONBLE HIGH COURT WA S ALSO PLACED BEFORE US WHICH WAS KEPT IN THE RECORD. 7. ON CAREFUL CONSIDERATION OF OUR SUBMISSIONS AT THE VERY OUTSET, WE OBSERVE THAT THE LD. CIT(A) HAS DELETED AND CANCELLED THE PENALTY FOR A.Y. 2009-10 WITH FOLLOWI NG OBSERVATIONS AND CONCLUSIONS: 5.7 REFERENCE CAN ALSO BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANC E PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC). IN THIS CASE, THE HONBLE SUPREME COURT OBSERVED AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORK PARTICULARS USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVO KED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT C LAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TH ERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE O NLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO B E INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT P ENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , NO EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERR ONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCURRED OR R.K. GUPTA CONTRACTORS & ENGINEERS 5 ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CA NNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 5.8 IN THE INSTANT CASE ALSO, THERE IS NO FINDING O N RECORD THAT ANY DETAILS SUPPLIED BY THE APPELLANT IN ITS R ETURNS OF INCOME FOR THESE YEARS ARE FOUND TO BE INCORRECT OR FALSE AND THEREFORE, THERE IS NO QUESTION OF LEVYING PENA LTY U/S 271(1)(C). A MERE MAKING OF A CLAIM U/S. 80IA(4), WHI CH WAS NOT ALLOWED BY THE ASSESSING OFFICER, BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF CONCEALING THE INCOME. 5.9 IT IS FURTHER SEEN THAT AO HAS RELIED HEAVILY O N THE DECISION OF HOBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HCIL KALINDEE ARSSPL, ITA 480/2012 DTD. 29.07.2013. THE SAID DECISION ALSO SAYS THAT IT IS TO BE EXAMIN EE AS TO WHETHER A TAXPAYERS CASE FALLS WITHIN SUB-CLAUSE(A ) OR (B) OF EXPLANATION 1 TO SECTION 271(1)(C) AND THE EFFEC T THEREOF. IN THE CASE OF THE APPELLANT, IT IS TO BE SEEN AS T O WHETHER ITS EXPLANATION FOR MAKING CLAIM OF SAID DEDUCTION IS BONA FIDE OR NOT. AFTER PERUSAL OF ASSESSMENT ORDER AND ASSESSMENT RECORDS OF THE AO, IN MY CONSIDERED VIEW, THE APPELLANTS CASE DOES NOT FALL IN ANY OF THE CATEGO RY OF CASES WHEREBY PENALTY U/S 271(1)(C) IS FOUND IMPOSA BLE. IN FACT, WHILE DELETING SAME PENALTY ON SIMILAR FAC TS FOR CLAIM OF DEDUCTION U/S 80IB(7A) OF THE IT ACT, HONB LE ALLAHABAD HIGH COURT IN THE CASE OF RAVE ENTERTAINME NT PVT. LTD. VS. CIT VIDE ORDER DTD. 16.04.2015 PASSED IN ITA NO.65 OF 2015 HAS ALSO DULY CONSIDERED THE CASE OF CIT V. HCIL KALINDEE ARSSPL(2013) 37 TAXMANN 347(DEL) WHICH HAS BEEN RELIED ON BY THE AO. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, APPELLANTS SUBMISSIONS, ABSENCE OF ANY ADVERSE MATERIAL BROUGH T ON RECORD BY THE AO DURING THE COURSE OF PENALTY PROCEE DINGS WHO HAS RELIED SOLELY ON THE FACT OF DISALLOWANCE O F DEDUCTION CLAIM MADE IN THE ASSESSMENT ORDER AND LE GAL POSITION OF THE ISSUE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT IS NOT LIABLE FOR PENALTY U/S 271(1)(C) F OR CLAIMING DEDUCTION U/S 80IA(4) ON THE PROFITS DERIVED FROM I TS INFRASTRUCTURE DEVELOPMENT ACTIVITIES DURING A.Y. 20 09-10. R.K. GUPTA CONTRACTORS & ENGINEERS 6 ACCORDINGLY, PENALTY ORDER U/S. 271(1)(C) FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IMPOSING PENALT Y OF RS.65,00,000/- IS HEREBY, CANCELLED. 8. FROM THE ORDER OF HONBLE JURISDICTIONAL HIGH COUR T OF MADHYA PRADESH DATED 11.01.2017(SUPRA) WE OBSERVE T HAT THE HONBLE HIGH COURT HAS UPHELD FINDINGS OF THE TRIBU NAL IN ASSESSEES OWN CASES WHEREIN THE ORDER OF THE LD. C IT(A) CANCELLING THE PENALTY WHICH WAS IMPOSED BY THE AO ON ACCOUNT OF DISMISSAL OF DEDUCTION CLAIMED U/S 80IA( 4) OF THE ACT, HAS BEEN UPHELD. FOR THE SAKE OF COMPLETENESS IN OUR FINDINGS, WE FIND IT NECESSARY AND APPROPRIATE TO R EPRODUCE THE RELEVANT OPERATIVE PARAS OF JUDGMENT OF HONBLE HIG H COURT OF MADHYA PRADESH WHICH READ AS FOLLOWS: 3. THE ORDER PASSED BY THE ASSESSING OFFICER WAS INTERFERED WITH BY THE COMMISSIONER, APPEALS AND CHALLENGING THE ORDER OF COMMISSIONER, (APPEAL), TH E APPEAL WAS FILED BEFORE THE TRIBUNAL BY THE REVENUE. WITH REFERENCE TO ASSESSMENT YEAR 2005-2006 TO 2008-2009 , VARIOUS ASSESSMENT ORDERS WERE PASSED AND DEDUCTION CLAIMED UNDER SECTION 80(1)(A)(4) OF THE INCOME TAX ACT WAS DISALLOWED BY THE ASSESSING OFFICER, THE APPELL ATE AUTHORITIES AND THE TRIBUNAL. CHALLENGING THE DIS- ALLOWANCE, APPEALS WERE FILED BY RESPONDENT ASSESSE E UNDER SECTION 260-A OF THE INCOME TAX ACT IN THE HIGH COURT. SUBSTANTIAL QUESTIONS OF LAW WERE FRAMED AND THE APPEALS AFTER ADMISSION WERE PENDING CONSIDERATION BEFORE THE APPELLATE FORUM. IN THE MEANWHILE, AS PROCEEDINGS FOR IMPOSING PENALTY WERE INITIATED UND ER THE PROVISIONS OF SECTION 271(1)(C) AND ULTIMATELY WHEN PENALTY WERE IMPOSED BY THE ASSESSING OFFICER AT THE INSTAN CE OF RESPONDENT -ASSESSEE, MATTER TRAVELED TO THE COMMISSIONER, APPEAL AND THE SAME HAVING BEEN ALLOW ED AT THE INSTANCE OF REVENUE, MATTER WAS AGITATED WIT H TRIBUNAL AND THE TRIBUNAL AFTER TAKING NOTE OF VARI OUS ASPECTS OF THE MATTER, CAME TO THE CONCLUSION THAT PENALTY R.K. GUPTA CONTRACTORS & ENGINEERS 7 COULD NOT BE IMPOSED WHEN THE APPEAL UNDER SECTION 260A HAS BEEN ADMITTED IN THE MATTER OF ADDITION MADE O R DEDUCTION PERMISSIBLE UNDER SECTION 80(1)(A)(4) AND AFTER TAKING NOTE OF CERTAIN JUDGMENTS OF THE TRIBUNAL AN D THE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS PVT. LTD. VS. THE TAXING AUTHORITIES, CON CURRENT FINDING S ARE RECORDED BY THE COMMISSIONER (APPEAL) AND THE TRIBUNAL, THEY CAME TO THE CONCLUSION THAT WHEN AN APPEAL INVOLVING A SUBSTANTIAL QUESTION OF LAW WAS PENDING CONSIDERATION BEFORE THE HIGH COURT, THE AD DITION BECAME A DEBATABLE ONE AND WHEN THE ADDITION WAS DEBATABLE AND SUBJUDICE BEFORE THE APPELLATE AUTHOR ITY, PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT COULD NOT BE LEVIED AS THE ADMISSION OF APPEAL AND THE SUBSTANTIAL QUESTION OF LAW FRAMED CREDENCE TO THE BONAFIDE OF THE ASSESSEE TO SAY THAT THERE WAS NO DELIBERATE CONCEALMENT. ACCORDINGLY, FOLLOWING THE JUDGMENT OF THE BOMBAY HIGH COURT AND CONSISTENT OR DERS OF THE APPELLATE TRIBUNAL IN THIS REGARD, THE APPEA LS FILED BY THE REVENUE WERE DISMISSED AND THE ORDERS PASSED BY THE COMMISSIONER, INCOME TAX APPEAL, BHOPAL, WAS UPHELD. 4. THE FINDINGS RECORDED BY THE COMMISSIONER, INCOM E TAX APPEAL WAS TO THE EXTENT THAT AS THE QUESTION OF DE DUCTION WAS PENDING CONSIDERATION IN THE APPELLATE FORUM, THEREFORE, PENALTY IMPOSED SHOULD BE CANCELLED. 5. WE FIND THAT THE AFORESAID VIEW TAKEN BY THE TRI BUNAL, TO SAY THAT TILL DECISION ON THE APPEAL BY THE HIGH COURT THE BONA FIDE OF THE ASSESSEE IN CLAIMING THE DEDUCTION CANNOT BE DISPUTED, THE COMMISSIONER, INCOME TAX APPEALS A ND THE TRIBUNAL HAVE NOT COMMITTED ANY ERROR AND IN DISMISSING THE APPEAL OF REVENUE ON SUCH CONSIDERAT ION, NO ERROR HAS BEEN COMMITTED NOR ANY SUBSTANTIAL QUE STION OF LAW ARISES WARRANTING CONSIDERATION. 9. IN VIEW OF ABOVE, ON SPECIFIC QUERY FROM THE BENCH , THE LD. SENIOR DR COULD NOT SHOW US ANY CONTRARY DECISION O F HONBLE HIGH COURT WHICH COULD LEAD US TO TAKE A DIFFERENT VIEW. WE ALSO POINT OUT THAT THE LD. SENIOR DR HAS FAIRLY AC CEPTED THAT R.K. GUPTA CONTRACTORS & ENGINEERS 8 THE FACTS AND CIRCUMSTANCES OF A.Y. 2009-10 ARE QUI TE SIMILAR AND IDENTICAL AS WERE IN A.YS. 2005-06 TO 2008-09. IT IS A WELL ACCEPTED LEGAL PROPOSITION THAT IN IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, IT IS TO BE EXAMINED AS TO WH ETHER THE CASE FALSE WITHIN SUB-CLAUSE(A) OR (B) OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, AND THE EXPLANATION OF THE AS SESSEE FOR MAKING A CLAIM, WHICH WAS DISMISSED BY THE REVENUE AUTHORITIES, I S BONA FIDE OR NOT. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RAVE ENTERTAINMENT PVT. LTD. VS . CIT VIDE ORDER DTD. 16.04.2015 PASSED IN ITA NO.65 OF 2015 S INCE REPORTED AS (2016) OF 66 TAXMAN.COM 369 (ALD), HAS HELD THAT WHERE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB WAS R EJECTED FOR NOT SATISFYING CONDITION U/S 80IB(7A), PENALTY U/S 271(1)(C) OF THE ACT, WAS NOT LEVIABLE. 10. FROM THE JUDGMENT OF JURISDICTIONAL HIGH COURT OF MADHYA PRADESH IN ASSESSEES OWN APPEALS DTD. 11.01.2017(S UPRA) IT IS AMPLY CLEAR THAT THEIR LORDSHIP SPEAKING FOR HONBL E JURISDICTIONAL HIGH COURT HELD THAT TILL DECISION O N THE APPEAL BY THE HONBLE HIGH COURT BONA FIDE OF THE ASSESSEE IN CLAIMING DEDUCTION U/S 80IA(4) OF THE ACT, CANNOT B E DISPUTED. THEREFORE, THE LD. CIT(A) AND THE TRIBUNAL HAVE NOT COMMITTED ANY ERROR IN DISMISSING THE APPEAL OF THE REVENUE O N SUCH CONSIDERATION. WITH THESE OBSERVATIONS THE HONBLE HIGH COURT HAS CONFIRMED THE ORDER OF THE TRIBUNAL WHICH APPRO VED THE FINDINGS OF THE LD. CIT(A) CANCELLING THE PENALTY O N THE SIMILAR ISSUE. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THERE IS NO VALID REASON BEFORE US TO INTERFERE WIT H THE R.K. GUPTA CONTRACTORS & ENGINEERS 9 IMPUGNED ORDER OF THE LD. CIT(A) AND THUS, WE UPHOL D THE SAME. ACCORDINGLY, SOLE GROUND OF REVENUE IS BEING DEVOID OF MERITS IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29.03.201 7. SD/- (O.P. MEENA) SD/- ( CHANDRA MOHAN GARG ) /ACCOUNTANT MEMBER / JUDICIAL MEMBER INDORE; DATED :29 /03/2017 PATEL, P.S/. ..