Electrotherm (I) Ltd, Ahmedabad V. The Income Tax Officer, Ward-4(1), Ahmedabad

ITA 648/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0791 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-07-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M G PATEL AR SHRI SANJAY KUMAR
• Keywords: Depreciation; Bad and doubtful debts
• Section: 143(3); 80HHC; 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 648/AHD/2011 2002-03 ELECTROTHERM INDIA LTD. A-1, SKYLARK APARTMENT SATELLITE ROAD AHMEDABAD AAACE 2669 L THE INCOME TAX OFFICER WARD-4(1) AHMEDABAD 2. 649/AHD/2011 2004-05 -DO- -DO- 3. 1060/AHD/2011 1995-96 -DO- -DO- ASSESSEE BY : SHRI M.G. PATEL, AR REVENUE BY : SHRI SANJAY KUMAR, SR.DR !' / DATE OF HEARING 21/07/2016 #$%&' / DATE OF PRONOUNCEMENT 11/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THESE THREE APPEALS BY THE SAME ASSESSEE ARE DIRECT ED AGAINST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(A PPEALS)-VIII, AHMEDABAD (CIT(A) IN SHORT) IDENTICALLY DATED 18/01/2011 P ERTAINING TO ASSESSMENT YEARS (AYS) 2002-03, 2004-05 & 1995- 96. ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 2 - 2. AT THE OUTSET, LD.AR SUBMITTED THAT ALL THE THRE E APPEALS ARE WITH RESPECT TO LEVY OF PENALTY U/S.271(1)(C) OF THE ACT . HE SUBMITTED THAT AS FAR AS PENALTY FOR AY 1995-96 IS CONCERNED, THE PEN ALTY U/S.271(1)(C) OF THE ACT HAS BEEN LEVIED ON THE VARIOUS DISALLOWANCE S AND DENIAL OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT. HE FURTHER SUBMI TTED THAT AS FAR AS APPEALS FOR ASSESSMENT YEARS 2002-03 & 2004-05 ARE CONCERNED, PENALTY HAS BEEN LEVIED ON THE DISALLOWANCE OF DEDUCTION MA DE U/S.80HHC AND 80IB OF THE ACT AND THEREFORE THE SUBMISSIONS FOR B OTH THE YEARS WOULD BE COMMON. 3. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA NO.1060/AHD/2011 FOR AY 1995-96. 3.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MAT ERIALS ON RECORD ARE AS UNDER:- 3.2. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELECTRIC FURNACES. ASSESSEE FILE D ITS RETURN OF INCOME FOR AY 1995-96 ON 30/11/1995 DECLARING TOTAL IN COME OF RS.91,98,630/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') VIDE ORDER D ATED 31/03/1998 AND THE TOTAL INCOME WAS DETERMINED AT RS.6,85,76,6 59/- INTER-ALIA BY MAKING DISALLOWANCE/ADDITIONS AGGREGATING TO RS.38, 18,859/- ON THE FOLLOWING COUNTS:- (I) DISALLOWANCE OF BAD DEBTS RS.23,67,090/- ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 3 - (II) DISALLOWANCE U/S.40A(3) RS. 1,91,802/- (III) DISALLOWANCE OF DEPRECIATION RS. 7,30,580/- (IV) DISALLOWANCE OF ENTERTAINMENT EXPENSES RS. 22,418/- (V) DISALLOWANCE OF DEDUCTION U/S.80IA CLAIMED BY ASSESSEE RS.5113756/- LESS: ALLOWED AS PER DIRECTION OF TRIBUNAL RS.4606787/- RS. 5,06,969/- RS.38,18,859/- ========== 3.3 ON THE AFORESAID DISALLOWANCE/ADDITIONS, AO VIDE ORDER DATED 16/4/2008 HELD THAT ASSESSEE HAS FURNISHED INACCURA TE PARTICULARS OF ITS INCOME BY CLAIMING WRONG DEDUCTIONS AND THEREFORE A SSESSEE WAS LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT. HE ACCORDING LY LEVIED PENALTY OF RS.15,37,090/-. AGGRIEVED BY THE ORDER OF THE ASSE SSING OFFICER (AO), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), W HO VIDE ORDER DATED 18/02/2011 (IN APPEAL NO.CIT(A)-VIII/ITO-4(1)/049/0 8-09) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY CONFIRMING THE PE NALTY ON THE DISALLOWANCE OF BAD DEBTS OF RS.17,25,888/-, DISALL OWANCE OF DEPRECIATION OF RS.7,30,580/- AND DISALLOWANCE OF C LAIM OF DEDUCTION U/S.80IA OF THE ACT OF RS.5,06,969/- AND DELETED TH E PENALTY ON OTHER DISALLOWANCES. AGGRIEVED BY THE ORDER OF THE LD.CI T(A) ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND S:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-VIII, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THAT THE ASSESSING OFFICER HAS RIGHTLY LEVIED PENALTY U/ S.271(1)(C) ON DISALLOWANCE OF BAD DEBTS OF RS.17,25,888/-, DISALL OWANCE OF ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 4 - DEPRECIATION OF RS.7,30,580/- AND DISALLOWANCE OF E XCESS CLAIM OF DEDUCTION U/S.80IA OF RS.5,06,969/-. 3.4. BEFORE US, LD.AR REITERATED THE SUBMISSIONS M ADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT AS FAR AS THE ADDITION ON ACCOUNT OF DISALLOWANCE OF BAD DEBTS IS CONCERNED, AGAINST THE QUANTUM ADDITION THE ASSESSEE HAD CARRIED THE MATTER BEFORE THE TRIBUNAL AND THE HONBLE TRIBUNAL RESTORED THE ISSUE TO LD.CIT(A). PURSUANT TO THE DIRECTION OF THE TRIBUNAL, THE LD.CIT(A) PASSED ORDER ON 24/02/2014 U/S.254 OF THE ACT (IN APPEAL NO. CIT(A) VIII/ITO.WD.4(1)/180/254/2010 -11) WHEREIN THE ADDITION OF BAD DEBTS WAS DELETED. HE PLACED ON R ECORD THE COPY OF THE AFORESAID ORDER AND POINTED OUT TO THE RELEVANT FIN DINGS OF THE LD.CIT(A). HE THEREFORE SUBMITTED THAT SINCE THE ADDITION ITSE LF HAS BEEN DELETED, NO PENALTY FOR CONCEALMENT OF INCOME WOULD SURVIVE ON THE DISALLOWANCE OF BAD DEBTS. WITH RESPECT TO THE DISALLOWANCE OF DE PRECIATION AND EXCESS CLAIM OF DEDUCTION U/S.80IA OF THE ACT, HE SUBMITTE D THAT ON IDENTICAL FACTS, AO HAD LEVIED PENALTY U/S.271(1)(C) OF THE A CT IN THE CASE OF ASSESSEE FOR AY 2003-04. THE COORDINATE BENCH OF T RIBUNAL IN ITA NO.972/AHD/2009 HAD DELETED THE PENALTY BY ORDER DA TED 29/07/2011. HE PLACED ON RECORD THE COPY OF THE AFORESAID ORDER. ON THE MERITS, HE SUBMITTED THAT ALONG WITH RETURN OF INCOME, ASSESSE E HAD FILED AUDITED ACCOUNTS, AUDIT REPORT AND OTHER RELEVANT STATEMENT S AND ACCOUNTS IN SUPPORT OF THE CLAIM OF DEDUCTION AND DURING THE CO URSE OF ASSESSMENT PROCEEDINGS ALSO ALL THE INFORMATION AND EXPLANATIO NS WHICH WAS CALLED FOR BY THE AO WERE SUBMITTED. HE FURTHER SUBMITTED THAT THERE IS NO ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 5 - MATERIAL ON RECORD WHICH COULD DEMONSTRATE THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS FALSE OR THAT THE ASSESSEE HAD CO NCEALED THE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT MERE MAKING O F THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW AND WOULD NOT AMOUNT TO FURN ISHING INACCURATE PARTICULARS OF INCOME AND SUCH CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO INACCURATE PARTICULARS. HE THEREFORE SUBMITTED THA T THE PENALTY BE DELETED. LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AO AND LD.CIT(A). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LE VY OF PENALTY U/S.271(1)(C) OF THE ACT. 4.1. THE NECESSARY INGREDIENTS FOR ATTRACTING EXPL ANATION-1 TO SECTION 271(1)(C) ARE THAT: (I) THE PERSON FAILS TO OFFER T HE EXPLANATION, OR (II) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AO OR THE LD.CIT(A) OR THE LD.CIT TO BE FALSE, OR (III) THE PERSON OFFERS EXPL ANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BE EN DISCLOSED BY HIM. IF THE CASE OF ANY ASSESSEE FALLS IN ANY OF THESE THRE E CATEGORIES, THEN ACCORDING TO THE DEEMING PROVISION PROVIDED IN EXPL ANATION-1 TO SECTION 271(1)(C) THE AMOUNT ADDED OR DISALLOWED IN COMPUTI NG THE TOTAL INCOME SHALL BE CONSIDERED AS THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 6 - BEEN CONCEALED, FOR THE PURPOSES OF CLAUSE (C) OF S ECTION 271(1), AND THE PENALTY FOLLOWS. ON THE OTHER HAND, IF THE ASSESSE E IS ABLE TO OFFER AN EXPLANATION, WHICH IS NOT FOUND BY THE AUTHORITIES TO BE FALSE, AND ASSESSEE HAS BEEN ABLE TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN D ISCLOSED BY HIM, THEN IN THAT CASE PENALTY SHALL NOT BE IMPOSED. 4.2. A CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 T O SECTION 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASS ESSMENT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH I S FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS AL SO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOUL D AMOUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM T HE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURA TE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE OF PROBABILITIES AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED TO RED UCE ITS TAX LIABILITY. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 7 - GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE H AS CONCEALED ANY INCOME. BEFORE US, L.DAR HAS GIVEN THE REASONS AND THE FACTS WHICH HAD RESULTED INTO ADDITION. THESE SUBMISSIONS HAVE NOT BEEN CONTROVERTED BY THE REVENUE. FURTHER, THERE IS NOTHING ON RECORD T O DEMONSTRATE THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED THE PARTICULARS OF INCOME. WE FURTHER FIND THAT HONBL E SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC) HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 4.3. CONSIDERING THE AFORESAID FACTS AND RELYING O N THE FORESAID JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)( C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.1060/AHD/2011 FOR AY 1995-96 IS ALLOWED. 6. NOW, WE SHALL TAKE UP THE ASSESSEES APPEAL IN I TA NO.648/AHD/2011 FOR AY 2002-03. ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 8 - 6.1. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILE D ITS RETURN OF INCOME FOR AY 2002-03 ON 31/10/2002 DECLARING TOTAL INCOME OF RS.6,51,323/-. SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUING NOTI CE U/S.148 OF THE ACT AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S.143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 26/12/2006 AND THE TOTAL INCOME WA S DETERMINED AT RS.12,76,610/- INTER-ALIA BY DISALLOWING THE CLAIM OF DEDUCTION MADE U/S.80HHC OF THE ACT OF RS.3,21,619/-, DEDUCTION U/S.80IB OF THE ACT OF RS.2,79,138/- AND ON ACCOUNT OF RECEIPT OF DIVIDEN D OF RS.24,525/-. AO HAD NOTED THAT WHILE CLAIMING THE DEDUCTION U/S.80H HC AND 80IB OF THE ACT, ASSESSEE WAS NOT ENTITLED TO CLAIM OF DEDUCTIO N ON INTEREST INCOME AND MISCELLANEOUS INCOME AGGREGATING TO RS.78,83,72 6/-. AO THEREFORE CONCLUDED THAT ASSESSEE HAS FURNISHED INACCURATE PA RTICULARS OF INCOME BY MAKING INCORRECT CLAIM FOR DEDUCTION AND WAS THEREF ORE LIABLE FOR PENALTY U/S.271(1)(C) OF THE ACT. HE THEREFORE VIDE ORDER DATED 19/03/2009 LEVIED PENALTY OF RS.2,23,424/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE AO WHO VIDE ORDER DAT ED 18/10/2011 (IN APPEAL NO.CIT(A)-VIII/ITO-4(1)/013/09-10) UPHELD TH E PENALTY BY HOLDING AS UNDER:- 2.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LD. COUNSEL AS WELL AS THE FACTS OF THE CAST. THE APPELLANT HAD RA ISED THREE GROUNDS OF APPEAL CHALLENGING THE LEVY OF PENALTY ON VARIOUS G ROUNDS. HOWEVER, THE LD. COUNSEL HAS NOT FURNISHED GROUNDWISE SUBMIS SION THEREFORE, THE GROUNDS OF APPEAL ARE DECIDED SIMULTANEOUSLY, I HAV E CAREFULLY GONE THROUGH THE DECISIONS RELIED UPON BY THE LD. COUNSE L. IT WAS NOTICED ON EXAMINATION THAT EXCEPT A FEW, ALL OTHER DECISIONS ARE NOT RELEVANT TO THE ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 9 - FACTS OF THE CASE. THE LD. COUNSEL HAS NOT ESTABLIS HED AS TO HOW THOSE DECISIONS ARE RELEVANT AND HOW THE SAME ARE APPLICA BLE ON THE FACTS OF THE CASE, THE HON'BLE AMRITSAR TRIBUNAL HAS RIGHTLY OBSERVED IN THE CASE OF SHREE BALAJI ALLOYS VS. ITO [2010] 127 TTJ 129 (ASR ) THAT 'IT IS CRUCIAL TO POINT OUT THAT THE JUDICIAL PRECEDENTS A RE TO TORN APPLIED WITH CARE AND CAUTION AND NOT MECHANICALLY, AS EACH CASE DEPENDS ON ITS OWN FACTS AND A CLOSE SIMILARITY BETWEEN ONE CASE A ND ANOTHER IS NOT ENOUGH BECAUSE EVEN A SINGLE SIGNIFICANT DETAIL MAY ALTER THE ENTIRE ASPECT. IT IS CARDINAL PRINCIPLE IN APPLYING JUDICI AL PRECEDENT THAT ONE SHOULD AVOID THE TEMPTATION TO DECIDE CASES, BY MAT CHING THE COLOUR OF ONE CASE AGAINST THE COLOUR OF ANOTHER. TO DECIDE, THEREFORE, ON WHICH SIDE OF THE LINE A CASE FALLS, THE BROAD RESEMBLANC E TO ANOTHER CASE IS NOT AT ALL DECISIVE. PRECEDENT SHOULD BE FOLLOWED O NLY SO FAR AS IT MARKS THE PATH OF JUSTICE, BUT YOU MUST CUT THE DEAD WOOD AND TRIM OFF THE SIDE BRANCHES ELSE YOU WILL FIND YOURSELF LOST IN THICKE TS AND BRANCHES. THE PATH OF JUSTICE MUST BE CLEAR OF OBSTRUCTION WHICH COULD IMPEDE IT. THE OBSERVATIONS OF THE COURT MUST BE READ IN THE CONTE XT IN WHICH THEY APPEAR TO HAVE BEEN STATED. THE ASSESSEE HAS PLACED RELIANCE ON THE ABOVE DECISIONS WITHOUT DISCUSSING, AS TO HOW, THE FACTUAL SITUATION OF THE PRESENT CASE FITS IN THE FACT-SITUATION OF THE RELIED UPON.' SAME IS THE POSITION HERE IN THIS CASE. THE ID, COUNSEL HAS PLA CED RELIANCE ON THE DECISIONS WITHOUT DISCUSSING, AS TO HOW, THE FACTUA L SITUATION OF THE PRESENT CASE FITS IN THE FACT-SITUATION OF THE RELI ED UPON, THE APPELLANT THEREFORE, CANNOT DERIVE SUPPORT FROM THE DECISIONS UPON BY IT. 2.3 IT IS EVIDENT FROM RECORD THAT THE ASSESSING OF FICER HAD IEVIED THE PENALTY VIDE ORDER DATED 19.03.2009. THE DECISION O F THAT HON'BLE AHMEDABAD TRIBUNAL DATED 11.06.2010 IN APPELLANT'S FOR THE A.Y, 2002- 03 WAS NOT BEFORE THE ASSESSING OFFICER WHILE LEVYI NG PENALTY. THE HON'BLE AHMEDABAD TRIBUNAL VIDE THEIR AFORESAID ORD ER HAD SET ASIDE THE ISSUE OF DEDUCTION U/S 80HHC AND U/S 80-LB ON S CRAP SALES TO THE FILE OF THE ASSESSING OFFICER. THEREFORE, THE LEVY OF PENALTY ON DISALLOWANCE OF AFORESAID DEDUCTIONS ON SCRAP SALES DOES NOT SURVIVE AND REQUIRED TO BE DELETED. HOWEVER, EVEN AFTER THE DECISION OF THE CIT(A) AND THE TRIBUNAL, THE DISALLOWANCE U/S 80HHC AND U/S.80-IB REMAINED THE SAME AS DISALLOWED ORIGINALLY BY THE A SSESSING OFFICER. ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 10 - 2.4 AFTER THE DECISION OF THE TRIBUNAL, THE LEVY OF PENALTY IS TO BE CONSIDERED FOR THE DISALLOWANCE OF AFORESAID DEDUCT IONS U/S 80HHC AND U/S 80-IB ON THE ISSUES OF INTEREST INCOME OF RS. 9 ,87,403/-, OTHER INCOME OF RS.6,67,626/-, LABOUR CHARGES INCOME OF RS.2,38,200/- AND DIVIDEND INCOME OF RS.44,525/-. T HE APPELLANT HAD NOT PRESSED THE GROUNDS OF APPEAL RELATING TO THE D ISALLOWANCE OF AFORESAID DEDUCTIONS ON INTEREST INCOME, OTHER INCO ME, LABOUR CHARGES INCOME AND DIVIDEND INCOME AND THESE GROUNDS WERE D ISMISSED WHICH SHOWS THAT THE FINDING OF THE ASSESSING OFFICER WAS CONFIRMED BY THE HON'BLE TRIBUNAL. 2.5 I DO NOT AGREE WITH THE CONTENTION OF THE ID. COUNSEL THAT THE CLAIMS OF DEDUCTION MADE U/S 80HHC AND 80IB ARE BONAFIDE A ND GENUINE CLAIMS MADE BY THE APPELLANT. IF THE CLAIM OF THE A PPELLANT WAS GENUINE AND BONAFIDE THEN WHAT WAS THE NECESSITY NOT TO PRE SS ALL THE GROUNDS OF APPEAL BEFORE THE HON'BLE AHMEDABAD TRIBUNAL EXCEPT THE GROUNDS RELATING TO SERVICE CHARGES AND SCRAP SALES. EVEN T HE ISSUE OF DISALLOWANCE OF AFORESAID DEDUCTIONS ON SERVICE INC OME WAS HELD AGAINST THE APPELLANT IN EARLIER YEARS AND TO ALSO DENIED FOR THE YEAR UNDER CONSIDERATION. THE APPELLANT CANNOT DERIVE SU PPORT FROM THE DECISION OF THE CIT(A) FOR THE A.Y. 2003-04 WHEREIN PENALTY WAS DELETED. THE CIT(A) VIDE PARA-4.4 OF HIS APPELLATE ORDER DATED 31.12.2008 HAD DELETED THE PENALTY ON THE ISSUES WH ICH HAVE BEEN SET ASIDE BY THE TRIBUNAL. I HAVE ALSO DELETED THE PENA LTY FOR THE A.Y. 2004- 05 ON THE ISSUE OF SCRAP SALES VIDE PARA-2.4 OF THE SAID APPELLATE ORDER FOR THE A.Y. 2004-05 AS SET ASIDE BY THE TRIBUNAL. THE PENALTY ON THE DISALLOWANCE OF DEDUCTION U/S 80HHC AND U/S. 80-I B ON SERVICE INCOME WAS DELETED BY THE CIT(A) FOR THE A.Y. 2003- 04 ON THE GROUND THAT THE CLAIM WAS NOT MADE BY FRAUD AND APPELLANT' S EXPLANATION WAS NOT HELD TO BE LACKING BONAFIDES AND THE APPELLANT HAD DISCLOSED ALL THE RELEVANT FACTS AND MATERIAL BEFORE THE ASSESSING OF FICER. I DO NOT AGREE WITH THE AFORESAID FINDING OF MY PREDECESSOR. THERE IS NO NECESSITY TO PROVE FRAUD IN PENALTY PROCEEDINGS AFTER THE DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEX TILE PROCESSORS CIT 306 1TR 277 (SC). THE PENALTY IN THE YEAR UNDE R CONSIDERATION HAD BEEN LEVIED FOR FURNISHING INACCURATE PARTICULA RS OF INCOME WHEREAS MY PREDECESSOR IN A.Y. 2003-04 HAD DELETED THE PENALTY ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 11 - CONSIDERING THE INAPPLICABILITY OF EXPLANATION-1. T HE DECISIONS RELIED UPON HAVE NO RELEVANCE AS THE PENALTY HAD NOT BEEN IMPOSED BY RESORTING TO THE EXPLANATION-1 TO SEC. 271(1)(C) OF THE ACT. 2.6 THE PENALTY HAD BEEN LEVIED FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. THEREFORE, ONLY THING TO BE CONSIDERED IS A S TO WHETHER THE APPELLANT HAD FURNISHED INACCURATE PARTICULARS OF I NCOME. THE INACCURATE PARTICULARS HAD NOT BEEN DEFINED IN THE ACT. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC), THE WORDS 'INACCURATE' A ND 'PARTICULARS' IN CONJUNCTION MUST MEAN THE DETAILS SUPPLIED IN THE R ETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TR UTH OR ERRONEOUS. THE APPELLANT HAD CLAIMED THE DEDUCTIONS U/S 80HHC AND U/S 80-IB ON INTEREST INCOME, OTHER INCOME, LABOUR CHARGES INCOM E AND DIVIDEND INCOME. WHETHER THE AFORESAID DEDUCTIONS ON SUCH IT EMS OF INCOME WERE AVAILABLE TO THE APPELLANT. IF NO DEDUCTIONS ON AFO RESAID ITEMS OF INCOME WERE AVAILABLE TO THE APPELLANT, THE CLAIM SO MADE IN THE RETURN OF INCOME WAS CERTAINLY NOT ACCURATE OR NOT CORRECT AN D WAS ERRONEOUS AND CERTAINLY AMOUNTED TO INACCURATE PARTICULARS OF INCOME. 2.7 AS PER THE PROVISIONS OF SEC. 80HHC OF THE ACT, THE DEDUCTION IS AVAILABLE TO THE ASSESSEE ENGAGED IN THE BUSINESS O F EXPORT OUT OF INDIA OF ANY GOODS OR MERCHANDISE AND THE SAME IS AVAILAB LE FOR THE PROFITS DERIVED BY THE FROM THE EXPORT OF SUCH GOODS OR MER CHANDISE. THE RESTRICTIVE MEANING OF THE PHRASE 'DERIVED FROM' IS WELL DEFINED BY THE HON'BLE SUPREME COURT IN THE CAST OF CAMBAY ELECTRI C SUPPLY INDUSTRIAL CO. LTD. VS. CIT 113 ITR 84 (SC). THE SA ME IS THE POSITION OF DEDUCTION U/S 80-IB OF THE ACT. THE DEDUCTION IS AV AILABLE ONLY IF THE PROFIT AND GAINS ARE DERIVED FROM THE INDUSTRIAL UN DERTAKING. THE HON'BLE SUPREME COURT BY APPLYING THE RATIO LAID DO WN BY THE HON'BLE SUPREME COURT IN THE CASES OF CAMBAY ELECTRIC SUPP LY INDUSTRIAL CO, LTD, VS. CIT 113 ITR 84 (SC), CIT VS. RAJA BAHADUR KAMAKHAYA NARAYAN SINGH 16 ITR 325 (SC) AND MRS. BACHA F. GUZ DAR VS. CIT 27 ITR 1 (SC) HAD HELD IN THE CASE OF PANDIAN CHEMICAL S LTD. VS. CIT 262 ITR 278 (SC) THAT 'THE WORD 'DERIVED FROM' IN SEC. 80HH MUST BE UNDERSTOOD AS SOMETHING WHICH HAS DIRECT OR IMMEDIA TE NEXUS WITH THE APPELLANT'S INDUSTRIAL UNDERTAKING. ALTHOUGH ELECTR ICITY MAY BE REQUIRED ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 12 - FOR PURPOSES OF THE INDUSTRIAL UNDERTAKING, THE DEP OSIT REQUIRED FOR ITS SUPPLY IS A STEP REMOVED FROM THE BUSINESS OF THE I NDUSTRIAL UNDERTAKING. THE DERIVATION OF PROFITS ON THE DEPOS IT MADE WITH ELECTRICITY BOARD CANNOT BE SAID TO FLOW DIRECTLY F ROM THE INDUSTRIAL UNDERTAKING ITSELF.' THUS, THE LAW WAS WELL SETTLE D AS TO ON WHICH INCOME OR PROFIT AND GAINS, THE DEDUCTION U/S 80HHC AND 80-IB OF THE ACT IS ALLOWABLE. THE APPELLANT WAS WELL AWARE OF T HE FACT AT THE TIME OF FILING ITS RETURN OF INCOME THAT INTEREST INCOME, O THER INCOME, LABOUR CHARGES INCOME AND DIVIDEND INCOME WERE NEITHER DER IVED FROM THE PROFIT OF EXPORT OF GOODS OUT OF INDIA NOR THE INCO ME OF THESE ITEMS DERIVED FROM THE INDUSTRIAL UNDERTAKING. THOUGH THE INCOME WAS NEITHER DERIVED FROM EXPORT NOR WAS DERIVED FROM THE INDUST RIAL UNDERTAKING, THE APPELLANT WAS NOT ENTITLED FOR THE DEDUCTION U/ S 80HHC AND 80-IB OF THE ACT. IF THESE ITEMS OF INCOME ARE REDUCED FROM THE GROSS TOTAL INCOME, THE RESULTANT FIGURES WILL BE IN NEGATIVE A ND NEITHER DEDUCTION U/S 80HHC NOR DEDUCTION U/S 80-IB WAS ALLOWABLE, TH US, THE APPELLANT HAD CLAIMED THE DEDUCTION U/S 80HHC AND 80-IB OF TH E ACT FOR THE SOLE PURPOSE OF REDUCING ITS TAXABLE INCOME AND TRIED TO EVADE THE LEGITIMATE TAXES PAYABLE TO THE EXCHEQUER. HE HAD THUS CLAIMED THE DEDUCTION INADMISSIBLE IN LAW. LIKEWISE, THE APPELLANT HAD CL AIMED THE DIVIDEND INCOME AS EXEMPT THOUGH THE APPELLANT WAS IN SPECIF IC KNOWLEDGE OF THE FACT THAT THE SAID INCOME WAS NOT EXEMPT. THIS INTE NT OF THE APPELLANT CERTAINLY TANTAMOUNT TO FURNISHING INACCURATE PARTI CULARS OF INCOME, THE ASSESSING OFFICER HAD THUS RIGHTLY LEVIED THE P ENALTY ON THE APPELLANT U/S 271(1)(C) OF THE ACT FOR FURNISHING O F INACCURATE PARTICULARS OF INCOME, THE PENALTY SO LEVIED FOR RS .2,23,423/- IS HEREBY CONFIRMED. THE ASSESSING OFFICER IS FURTHER DIRECTE D TO RECOMPUTE THE DEDUCTION U/S 80HHC AND U/S 80IB FOR A PRECAUTIONAR Y MATTER AS THE HONBLE AHMEDABAD TRIBUNAL HAD SET ASIDE THE ISSUE OF SCRAP SALES AFTER PASSING THE IMPUGNED PENALTY ORDER. 6.2. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSES SEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-VIII, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 13 - PENALTY OF RS.2,23,423/- LEVIED U/S.271()(C) OF THE INCOME TAX ACT, 1961 BY ASSESSING OFFICER. 6.3. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MA DE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT CLAIM OF DEDUC TION U/S.80HHC AND 80IB WERE BONAFIDE AND GENUINE CLAIMS AND ALONG WIT H RETURN OF INCOME ASSESSEE HAS FILED THE AUDITED ACCOUNTS, AUDIT REPO RT AND OTHER RELEVANT DETAILS FOR SUPPORTING ITS CLAIM. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS FURNISHED ALL THE DETAILS AND HAD NEITHER CONCEALED ANY INCOME NOR HAS FURNISHED ANY INACCURA TE PARTICULARS OF INCOME. HE FURTHER SUBMITTED THAT MERELY BECAUSE T HE CLAIM OF THE ASSESSEE HAS NOT BEEN ACCEPTED, THE ASSESSEE CANNOT BE PENALIZED. THE LD.SR.DR ON THE OTHER HAND SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 6.4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO LEVY O F PENALTY U/S.271(1)(C) OF THE ACT ON ADDITIONS WITH RESPECT TO DEDUCTION U/S. 80HHC & 80IA OF THE ACT. LD.SR.DR HAS NOT CONTROVERTED THE SUBMISSION S MADE BY THE LD.AR. FURTHER, THERE IS NOTHING ON RECORD TO DEMONSTRATE THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED T HE PARTICULARS OF INCOME. WE ALSO GET SUPPORT FROM THE JUDGEMENT OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 14 - THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANN OT AMOUNT TO THE INACCURATE PARTICULARS. CONSIDERING THE AFORESAID FACTS AND RELYING ON THE FORESAID JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1 )(C) OF THE ACT HAS BEEN MADE OUT. WE THUS DIRECT THE DELETION OF PENALTY U/ S. 271(1)(C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.648/AHD/2011 FOR AY 2002-03 IS ALLOWED. 8. LASTLY, WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.649/AHD/2011 FOR AY 2004-05. THE REVENUE HAS RA ISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-VIII, AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY CONFIRMING THE PENALTY OF RS.11,99,361/- LEVIED U/S.271(1)(C) OF T HE INCOME TAX ACT, 1961 BY ASSESSING OFFICER. 8.1. BEFORE US, AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THE APPEALS OF THE ASSESSEE RELATE TO DIFFERENT ASSESSMENT YEARS B UT THE FACTS IN THE PRESENT ISSUE IS IDENTICAL TO THE FACTS OF AY 2002- 03 AND THE SUBMISSIONS MADE WHILE ARGUING THE APPEAL FOR AY 2002-03 ARE AP PLICABLE TO THE ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 15 - PRESENT APPEAL ALSO. THE FORESAID SUBMISSION OF LD. AR HAS NOT BEEN CONTROVERTED BY LD.DR. 8.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. SINCE BEFORE US BOTH THE PARTIES HAVE ADMI TTED THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDENTICAL TO THAT OF ITA NO.648/AHD/2011 FOR AY 2002-03 IN ASSESSEES OWN CA SE(SUPRA), WHICH WE HAVE DECIDED HEREINABOVE IN ASSESSEES FAVOUR, W E THEREFORE FOR THE SIMILAR REASONS STATED HEREINABOVE WHILE DECIDING T HE ASSESSEES APPEAL FOR A.Y. 2002-03 IN ITA NO.648/AHD/2011 (SUPRA) AND FOR SIMILAR REASONS ALLOW THE GROUND OF ASSESSEES APPEAL IN TH IS YEAR ALSO. THUS, THE APPEAL OF ASSESSEE FOR AY 2004-05 IS ALLOWED. 9. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 11/08/2016 SD/- SD/- () () (RAJPAL YADAV) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11/ 08 /2016 ,..,.../ T.C. NAIR, SR. PS ITA NOS.648,649 AND 1060/AHD/2011 ELECTROTHERM INDIA LTD. VS. ITO AYS 2002-03, 2004-05 & 1995-96 RESPECTIVELY - 16 - ! ' / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. 234 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-VIII, AHMEDABAD 5. 678034 , 34& , 2 / DR, ITAT, AHMEDABAD 6. 8:;! / GUARD FILE. / BY ORDER, 160 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 21.7.16 (DICTATION-PAD 10- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 5.8.16/9.8.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.11.8.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.8.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER