Dy.CIT, Circle-1(2), Hyderabad V. M/s Celestial Bio Labs Ltd, Hyderabad

ITA 632/HYD/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6177 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Revised return; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.MADHAVI DEVI, JUDICIAL MEMEBR AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.632/HYD/14 : ASSESSMENT YEAR 2007- 08 ITA NO.633/HYD/14 : ASSESSMENT YEAR 2008- 09 DY. COMMISSIONER OF INCOME - TAX CIRCLE 1(2), HYDERABAD. V/S. M/S. CELESTIAL BIO - LABS LTD., HYDERABAD ( PAN - AABCC 4698 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI B.KURMI NAIDU DR RESPONDENT BY : SHRI S.RAMA RAO DATE OF HEARING 9.12.2015 DATE OF PRONOUNCEMENT 8.1.2016 O R D E R PER B.RAMAKOTAIAH, ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE AND ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TA X(APPEALS) II, HYDERABAD DATED 3.1.2014, DELETING THE PENALTIES LE VIED UNDER S.271(1)(C) OF RS.1,64,80,838 FOR ASSESSMENT YEAR 2007-08 AND O F RS.1,66,42,414 FOR ASSESSMENT YEAR 2008-09. 2. FACTS OF THE CASE IN BRIEF, AS TAKEN FROM THE A PPEAL FILE FOR THE ASSESSMENT YEAR 2007-08, ARE THAT THE ASSESSEE COMP ANY IS IN THE BUSINESS OF BIO-TECHNOLOGY. IT FILED ITS RETURN DE CLARING NIL INCOME FOR THE ASSESSMENT YEAR 2007-08 AFTER CLAIMING DEDUCTION UN DER S.10A OF RS.4,89,62,681 AND UNABSORBED DEPRECIATION OF RS.12 ,70,402. THOUGH CASE WAS INITIALLY PROCESSED UNDER S.143(1) OF THE ACT, SUBSEQUENTLY, ASSESSMENT WAS REOPENED BY ISSUANCE OF NOTICE UNDE R S.148, AND DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, ASSESSEE S CLAIM FOR DEDUCTION UNDER S.10A OF RS.4,89,62,681 WAS EXAMINED, AND ASS ESSEE WAS CALLED UPON TO PRODUCE SPECIFICALLY THE FOLLOWING- ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 2 A) REGISTRATION WITH SOFTWARE TECHNOLOGY PARKS OF INDI A (STPI) B) ANNUAL RETURN SUBMITTED BEFORE THE STPI C) INVOICE COPIES OF EXPORTS D) FIRCS FROM BANKS ETC. ASSESSEE FAILED TO PRODUCE THE REQUISITE DETAILS CA LLED FOR, AND INSTEAD FILED REVISED COMPUTATION OF INCOME WITHDRAWING DEDUCTION CLAIMED UNDER S.10A STATING THAT THE EXPORT SALES WERE NOT REALIZ ED AND INSTEAD CLAIMED RELIEF UNDER S.35(2AB) OF THE ACT. THE CHARTERED AC COUNTANT FOR THE ASSESSEE ALSO FILED A LETTER DATED 15.12.2010 STATI NG THAT DUE TO TYPOGRAPHICAL ERROR, CLAIM UNDER S.10A WAS MADE FOR BOTH ASSESSMENT YEARS 2007-08 AN 2008-09 AND REQUESTED TO ALLOW THE ASSESSEE TO WITHDRAW THE SAID CLAM. ASSESSMENT WAS ACCORDINGLY COMPLETED BY DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 5,71,44,133 BY TREATING THE DEDUCTION UNDER S.10A AT NIL AND ALS O REJECTING THE CLAIM FOR RELIEF UNDER S.32(2AB) AND SET OFF OF UNABSORBED DE PRECIATION OF RS.12,70,402, VIDE ORDER OF ASSESSMENT DATED 31.12 .2010. 3. WHILE THUS COMPLETING THE ASSESSMENT, PENALTY PROCEEDINGS WERE ALSO INITIATED UNDER S.271(1)(C) OF THE ACT. IN RESPONSE TO THE PENALTY NOTICE, ASSESSEE EXPLAINED THAT THE CLAIM F OR DEDUCTION UNDER S.10A WAS CLAIMED AS PER THE ADVICE OF ITS TAX COUN SEL, AND A SOON AS IT WAS REALISED DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THAT DUE TO NON-REASLIATION OF THE EXPORT SALE CONSIDERATION, S UCH ADVICE OF THE COUNSEL WAS NOT CORRECT, AND IT WAS NOT ADVISED OF THE FACT THAT IT SHOULD OBTAIN RBI APPROVAL FOR NON-REALIZATION OF THE EXPORT PROCEEDS AS STIPULATED IN THE ACT. THUS, AS IT WAS UNABLE TO SUBSTANTIATE THE CLA IM MADE, BY ADDUCING THE EVIDENCE AS CALLED FOR BY THE ASSESSING OFFICER , IT CHOSE TO WITHDRAW THE CLAIM FOR DEDUCTION UNDER S.10A OF THE ACT. IN THE CIRCUMSTANCES, IT WAS CONTENDED THAT THERE WAS NO MALA FIDE INTENTION ON THE PART OF THE ASSESSEE, AND IT IMMEDIATELY CORRECTED ITS MISTAKE AS SOON AS IT WAS ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 3 INFORMED OF ITS BONA FIDE MISTAKE, AND PRAYED FOR D ROPPING OF PENALTY PROCEEDINGS. 4. THE ASSESSING OFFICER WAS NOT CONVINCED WITH T HE EXPLANATION OF THE ASSESSEE, AND FOR THE FOLLOWING REASONS, SUM MARIZED BY THE CIT(A) IN THE IMPUGNED ORDER, IMPOSED THE PENALTY OF RS.1, 64,80,838, VIDE ORDER DATED 29.6.2011 PASSED UNDER S.271(1)(C) OF THE ACT . A) THE ASSESSEE DID NOT WITHDRAW THE 10A CLAIM ON HIS OWN. IT IS , ONLY WHEN THE DEPARTMENT CALLED FOR DETAILS OF STPI REGISTRATION, ANNUAL RETURNS SUBMITTED BEFORE THE STPI, INVOICES COPIES OF EXPORTS, ETC., AS THE ASSESSEE COULD NOT PRODUCE TH ESE EVIDENCES HE WITHDREW THE CLAIM OF 10A DEDUCTION. THEREFORE, HE FURNISHED INACCURATE PARTICULARS OF INCOME WHICH RESULTED IN CONCEALMENT. B) THE FACT THAT THE ASSESSEE IS NOT REGISTERED WIT H STPI WAS KNOWN FROM STPI WEBSITE. FURTHER THIS IS ALSO CONFIRMED B Y STPI VIDE ITS LETTER DATED 24.06.2011. C) THE ASSESSEE AND ITS AUDITORS ARE WELL AWARE THA T THE COMPANY IS NOT REGISTERED UNDER STPI WHICH IS A PRIMARY CONDIT ION TO AVAIL 10A DEDUCTION. EVEN THEN THEY HAVE CLAIMED L0A DEDU CTION KNOWING VERY WELL THAT UNIT WAS NOT ELIGIBLE. D) THE ASSESSEE VIDE LETTER DATED 13.06.2011 HAD TR IED TO BLAME ITS AUDITORS BY STATING THAT L0A DEDUCTION WAS CLAIMED AS ADVISED BY THE TAX COUNSEL. E) THAT THE ASSESSEE COULD HAVE FILED REVISED RETUR N BY WITHDRAWING L0A DEDUCTION AFTER COMPLETION OF SUMMARY ASSESSMEN T OR EVEN AFTER ISSUE OF NOTICE UJS.L48. BUT HE HAS NOT DONE SO. F) HAD THE CASE NOT BEEN CONVERTED TO SCRUTINY, THE CLAIM OF THE ASSESSEE MIGHT HAVE BEEN ALLOWED WITHOUT ANY VERIFI CATION. ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 4 G) AS PER EXPLANATION (1) TO SECTION 271(1)(C), THE ASSESSEE IS DEEMED TO HAVE CONCEALED INCOME IF- (A) (I) FAILS TO OFFER AN EXPLANATION; OR (II) OFFERS AN EXPLANATION WHICH IS FOUND BY THE A SSESSING OFFICER TO BE FALSE OR (B) (I) OFFERS AN EXPLANATION WHICH HE IS NOT A BLE TO SUBSTANTIATE; & (II) FAILS TO PROVE THAT SUCH EXPLANATION IS BONA F IDE; AND (III) FAILS TO PROVE THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF INCOME HAVE BEEN DISCLOSED BY HIM. H) THE ASSESSEE FAILED TO DISCHARGE ITS BURDEN TO P ROVE THAT THE ACT OF CLAIM OF EXEMPTION U/S.10A WAS A BONA FIDE ONE. THUS IT IS A CLEAR CASE WHERE ASSESSEE INTENTIONALLY FURNISHED I NACCURATE PARTICULARS OF INCOME. I) THE ASSESSING OFFICER RELIED ON THE FOLLOW ING DECISIONS - A. CIT VS. INDIA SEA FOODS (1976) 105 ITR 708 (KER) W HEREIN IT WAS HELD THAT - 'FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO F ORMS; EITHER EN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY, OR AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN EXA GGERATED AMOUNT) CLAIMED. BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME. BOTH TYPES AMOUNT TO CONCEALMENT OF THE PA RTICULARS OF ONE'S INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. PENALTY MAY BE IMPOSED FOR EITHER OR BOT H SUCH ATTEMPTS. B. CIT VS. RAKESH SURI (2011) 331 ITR 458 (ALL.) WHER EIN IT WAS HELD THAT - '... THE ASSESSEE HAD CONCEALED THE INCOME AND DISCLOSUR E WAS NOT VOLUNTARY BUT UNDER COMPULSION BEING CORNER ED BY THE ASSESSING OFFICER. ' C. LMP PRECISION ENGG. CO. LTD., VS. DCIT(ASSESSMENT) - (2011) ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 5 330 ITR 0093 (GUJ.) WHEREIN IT WAS HELD THAT - 'THE LAW ON THE SUBJECT OF TREATING A REVISED RETUR N OF INCOME AS VOLUNTARY OR OTHERWISE IS WELL SETTLED. M ERELY BECAUSE OF RETURN IS REVISED THAT FACT BY ITSELF CA NNOT LEAD TO ANY PRESUMPTION AS TO CONCEALMENT IN THE.CORTQINET RETURN OF INCOME, BECAUSE THE LEGISLATURE ITSELF HA S PROVIDED FOR FURNISHING A REVISED RETURN IN CASE OF ANY OMISSION IN THE ORIGINAL RETURN. ALBEIT SUCH OMISSI ON HAS TO BE INADVERTENT AND BONA FIDE. - IF THE OMISSION IS INTENTIONAL THE REVISED RETURN CANNOT ABSOLVE AN ASSESSEE. ..........' 5. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) CONCLUDED THAT EVEN THOUGH IT IS A FIT CASE FOR THE IMPOSITION OF PENALTY UNDER S.271(1)(C) IN RELATION TO ITS CLAIM FOR DEDUCTION UNDER S.10A, HE REFERRED TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.35(2AB). IN THAT CONTEXT, HE NOTED THAT AFTER WI THDRAWING THE CLAIM FOR DEDUCTION UNDER S.10A, IN THE REVISED COMPUTATION A SSESSEE CLAIMED DEDUCTION OF RS.5,65,54,922 UNDER S.35(2AB). THE SA ID CLAIM FOR DEDUCTION UNDER S.35(2AB) WAS ORIGINALLY REJECTED B Y THE ASSESSING OFFICER FOR WANT OF FORM NO.3CL. THE CIT(A), IN SEPARATE PR OCEEDINGS U/S154, VIDE HIS ORDER DATED 1.1.2014 HELD THAT THE ASSESS ING OFFICER SHOULD ALLOW DEDUCTION UNDER S.35(2AB) AT 150% OF THE AMOUNT DET ERMINED BY THE PRESCRIBED AUTHORITY. THE ASSESSING OFFICER WAS ALS O DIRECTED TO EXAMINE THE DETAILS OF EXPENSES INCURRED UNDER S.35(1)AND A LLOW THE SAME. REFERRING TO HIS APPELLATE ORDER DATED 1.1.2014 IN THE RECTIFICATION PROCEEDINGS UNDER S.154, THE CIT(A), IN THE IMPUGN ED ORDER, NOTED THAT IF THE ASSESSEES CLAIMS UNDER S.35(2AB) AND S.35(1) A RE ALLOWED, THE RETURNED INCOME AS WELL AS ASSESSED INCOME WOULD BE COME NIL AND IN THAT EVENT, THE AMOUNT OF PENALTY IMPOSABLE WOULD ALSO B E NIL. IN THAT VIEW OF THE MATTER, THE CIT(A) ALLOWED THE APPEAL OF THE AS SESSEE FOR STATISTICAL PURPOSES. 6. EXCEPT FOR THE AMOUNTS OF CLAIMS FOR RELIEF U NDER S.10A ORIGINALLY CLAIMED, AND THE DEDUCTION UNDER S.35(2A B) INVOLVED -SO ALSO ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 6 THE AMOUNTS OF THE INCOMES RETURNED, ASSESSED AND P ENALTY IMPOSED- FACTS ARE IDENTICAL FOR THE ASSESSMENT YEAR 2008-09 AS WELL, AND AS SUCH THE SAME NEED NOT BE NARRATED OVER AGAIN. 7. AGGRIEVED BY THE ORDERS OF THE CIT(A) FOR BOT H THE YEARS, REVENUE HAS PREFERRED THE PRESENT APPEALS BEFORE US . 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIA L AVAILABLE ON RECORD. EVEN THOUGH THE ASSESSING OFFICER HAS MADE SEVERAL DISALLOWANCES IN THE ASSESSMENT ORDERS FOR THE YEARS UNDER APPEAL, IMPUG NED PENALTIES FOR CONCEALMENT HAVE BEEN IMPOSED ONLY WITH REFERENCE T O DISALLOWANCE OF THE CLAIMS OF THE ASSESSEE IN TERMS S.10A. THE CONTENT ION OF THE ASSESSEE RIGHT FROM THE BEGINNING AGAINST THE PENALTIES PROP OSED IS THAT THE SAID CLAIMS UNDER S.10A WERE MADE ON ACCOUNT OF TYPOGRAP HICAL ERRORS AND INCORRECT ADVICE OF THE CHARTERED ACCOUNTANT. EVEN THOUGH THE CIT(A) OBSERVED THAT THIS PASSING ON OF THE BLAME ON TO TH E CHARTERED ACCOUNTANT WAS ONLY TO GET AWAY FROM THE PENALTY, THE CIT(A), TAKING INTO ACCOUNT THE APPELLATE ORDERS PASSED BY HER IN THE QUANTUM PROCE EDINGS EMANATING FROM THE ORDERS OF THE ASSESSING OFFICER UNDER S.15 4, WHEREBY SHE HAS DIRECTED THE ALLOWANCE OF DEDUCTIONS UNDER S.35(2AB ) AND S.35(1), HELD THAT IF THESE DEDUCTIONS WERE ALLOWED, THE ASSESSED INCOME WOULD BECOME NIL, AND HENCE THE QUANTUM OF PENALTY IMPOSABLE FOR THE YEARS UNDER APPEAL WOULD ALSO BECOME NIL. SINCE THE QUANTUM OF PENALTY IMPOSABLE THUS WOULD BE NIL IN EACH OF THESE YEARS, THE CIT (A) ALLOWED THE APPEALS OF THE ASSESSEE FOR STATISTICAL PURPOSES. NO MATER IAL HAS BEEN BROUGHT ON RECORD TO CONTROVERT THE FINDING OF THE CIT(A) THAT IF THE DEDUCTIONS UNDER S.35(2AB) AND S.35(1) ARE ALLOWED FOR THE YEARS UND ER APPEAL, THE ASSESSABLE INCOME WOULD BE NIL, AND CONSEQUENTLY, THE PENALTY IMPOSABLE WOULD ALSO BE NIL. WHEN THERE IS NO VARIATION TO THE TOTAL INCOME DETERMINED, MACHINERY PROVISIONS FOR CALCULATION OF TAX SOUGHT TO BE EVADED WOULD FAIL. IN THAT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ITA NO.632-633/HYD/2014 M/S. CELESTIAL BIO-LABS LTD., HYDERABAD 7 IMPUGNED ORDERS OF THE CIT(A). WE ACCORDINGLY UPHOL D THE SAME AND REJECT THE GROUNDS OF THE REVENUE IN THESE APPEALS. 9. IN THE RESULT, APPEALS OF THE REVENUE ARE DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 08.01.2016 SD/- SD/- ( P.MADHAVI DEVI) ( B.RAMAKOTAIAH ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/- 8TH JANUARY, 2016 COPY FORWARDED TO: 1. M/S. CELESTIAL BIO - LABS LTD., PLOT NO.231A, MLA COLONY, ROAD NO.12, BANJARA HILL, HYDERABAD 2. 3. DY. COMMISSIONER OF INCOME-TAX CIRCLE 1(2), HYDERAB AD COMMISSIONER OF INCOME-TAX(APPEALS) II, HYDERABAD 4. COMMISSIONER OF INCOME - TAX I, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT , HYDERABAD. B.V.S