FLOWER VALLEY FOODS FARMS PVT. LTD., Jaipur V. ACIT, Alwar

ITA 655/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99522 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Keywords: Depreciation; Opportunity of being heard; Wrong claim
• Section: 143(3); 115JB; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 655/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 M/S FLOWER VALLEY FOODS FARMS PVT. LTD., BEHIND PHOOL BAGH PETROL PUMP, NEAR CIRCUIT HOUSE, ALWAR. CUKE VS. A.C.I.T., CIRCLE-2, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACF 8583 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/11/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/11/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21/07/2014 OF THE LEARNED CIT(A), ALWAR FOR A.Y. 2010 -11. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN CON FIRMING THE LEVY OF PENALTY OF RS. 3,01,025/- U/S 271(1)(C) 2 ITA NO. 655/JP/2014 M/S FLOWER VALLEY FOODS FARMS P LTD. VS ACIT IMPOSED BY THE A.O. WITH REFERENCE TO THE ADDITION O F RS. 8,85,630/- MADE UNDER THE NORMAL COMPUTATION. 1.1 THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN CON FIRMING THE LEVY OF PENALTY EVEN WHEN THE INCOME IS ASSESSED ON BOOK PROFIT U/S 115JB TAX ON WHICH IS MORE THAN THE TAX ON INCOME DETERMINED IN NORMAL COMPUTATION. 2. THE GROUNDS IN APPEAL IS AGAINST CONFIRMING THE P ENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND INCOME DISCLOSED U/S 115JB OF THE ACT. THE ASSESSEE FILED I TS RETURN AT TOTAL INCOME OF RS. NIL ON 27/09/2010. THE CASE WAS SCRUTINIZED U/ S 143(3) OF THE ACT AND INCOME WAS ASSESSED AT RS. 8,85,626/-. DURING TH E COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE ASSESSING OFFICER THAT INCOME OF RS. 8,85,626/- WAS PERTAINED TO INTEREST ON FDRS AND THIS INCOME HAD BEEN CLAIMED U/S 80IC OF THE ACT, THEREFORE, THE LD ASSESSING OFFICER DISALLOWED THIS INTEREST INCOME AND MADE ADDITION OF THE SAME AMOUNT. PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT WAS INIT IATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. BEFORE IMPOSING P ENALTY U/S 271(1)(C) OF THE ACT, THE LD ASSESSING OFFICER HAD GIVEN REASONA BLE OPPORTUNITY OF BEING HEARD, WHICH WAS REPLIED BY THE ASSESSEE. AFTER CONSI DERING THE ASSESSEES REPLY, IT WAS NOT FOUND SATISFACTORILY TO THE ASSESS ING OFFICER, HE IMPOSED 3 ITA NO. 655/JP/2014 M/S FLOWER VALLEY FOODS FARMS P LTD. VS ACIT 100% PENALTY OF TAX SOUGHT TO BE EVADED AT RS. 3,01 ,025/- U/S 271(1)(C) OF THE ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CON FIRMED THE ORDER BY OBSERVING AS UNDER:- 4.5 I HAVE CONSIDERED THE SUBMISSIONS MADE IN THIS REGARD ALONGWITH THE JUDICIAL CITATIONS ON THIS ISSUE AND F IND THAT THE APPELLANT HAS EARNED INTEREST INCOME ON THE FDRS WHI CH HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOUR CES. THE A.O. HAS MADE A DISALLOWANCE WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IC OF THE INTEREST INCOME ON THE GR OUND THAT THIS INCOME HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND THEREFORE NO CLAIM OF DEDUCTION UNDER THIS SECT ION CAN BE MADE BY THE APPELLANT. THE FACTS OF THE CASE OF THE HONBLE ITAT, CHANDIGARH BENCH WHICH HAS BEEN CITED BY THE AP PELLANT ARE DISTINGUISHABLE AS IN THAT CASE IT WAS ON ACCOUN T OF DEPB INCENTIVES AND THEREFORE IT IS NOT APPLICABLE IN TH E PRESENT CIRCUMSTANCES. ACCORDINGLY, I HOLD THAT PENALTY U/S 271(1)(C) OF THE IT ACT HAS BEEN RIGHTLY IMPOSED BY THE A.O. F URTHER, I PLACE RELIANCE ON THE FOLLOWING JUDGMENTS FOR THIS P ROPOSITION:- 4 ITA NO. 655/JP/2014 M/S FLOWER VALLEY FOODS FARMS P LTD. VS ACIT (I) MAK DATA PVT. LTD. VS. CIT 358 ITR 593 (SC) - PEN ALTY HELD TO BE VALIDLY LEVIED, EVEN IF AMOUNT SURRENDER ED IN SURVEY WAS TO DUE PEACE OF MIND. (II) CIT VS ARCOTECH LTD. (EARLIER KNOWN AS SKS LTD.) - 93 DTR 313 (DEL)- PENALTY HELD TO BE VALID, EVEN IF ASSESS EE MAKES WRONG CLAIM OF DEPRECIATION AND LOSS ON SALE O F INVESTMENT CLAIMED AS BUSINESS LOSS ETC.- HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. EXPLANATION-1 TO SECTION 271(1)(C) WOULD NOT BE SATI SFIED. (III) SHARMA ALLOYS (INDIA) LTD. VS. ITO -357 ITR 3 79 (MAD.)- PENALTY HELD TO BE VALID, IF CLAIM OF DEPRECIATION IS FOUND TO BE NOT SUBSTANTIATED WITH EVIDENCE AND GP ATE ADDITION MADE ON ESTIMATE BASIS AFTER REJECTION OF BOOKS- EXPLANATION 1 TO SECTION 271(1)(C) WOULD COME INTO P LAY. (IV) SANGHVI SWISS REFILLS PVT. LTD. VS. CIT (SC) 8 8 CCH 039 1SCC- ITA NO. 250/2011- INACCURATE PARTICULARS FURN ISHED WITH REGARD TO EXPENSES PAID TO SISTER CONCERN WHICH WERE AIMED AT REDUCING TAX LIABILITY- PENALTY HELD T O BE VALID. (V) UP MATSYA VIKAS NIGAM LTD. VS CIT- 87 CCH 001 ( ALL.)- ASSESSEE WRONGLY CLAIMING SET-OFF OF UNABSORBED LOS SES AND DEPRECIATION OF EARLIER YEARS-HELD GUILTY OF FU RNISHING INACCURATE PARTICULARS OF INCOME-LIABLE FOR PENALTY U/S 271(1)(C) OF THE IT ACT. 5 ITA NO. 655/JP/2014 M/S FLOWER VALLEY FOODS FARMS P LTD. VS ACIT IN VIEW OF THE ABOVE, HE CONFIRMED THE PENALTY OF R S. 3,01,025 IMPOSED BY THE A.O. U/S 271(1)(C) OF THE IT ACT. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS ARGUED THAT EVEN THE ASSESSMENT MADE, THE ASSES SEES INCOME WAS ASSESSED U/S 115JB OF THE ACT AS PER MAT PROVISION, THEREFORE, NO PENALTY CAN BE IMPOSED WHERE ANY ADDITION MADE BY THE ASSESS ING OFFICER EVEN THEN THE ASSESSMENT MADE BY THE ASSESSING OFFICER U /S 115JB OF THE ACT. HE RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS CAPLIN POINT LABORATORIES LTD. 293 ITR 524 (MAD.) (HC) (II) CIT VS LOTUS TRANS TRAVELS (P) LTD. 177 TAXMAN 3 7 (DEL.) (HC). (III) CIT VS. NALVA SONS INVESTMENTS LTD. 327 ITR 543 (DEL.) (HC). (IV) CIT VS JINDAL POLYSTER & STEEL LTD. (2014) 365 ITR 225 (ALL.) (HC). (V) ACIT VS. TORQUE PHARMACEUTICALS PVT. LTD. (2015) 124 DTR 356 (CHD.) (TRIB). (VI) CITI TILES LTD. VS DCIT (2013) 37 CCH 123 (AHD.) (TRIB). (VII) ACIT VS. TUPPERWARE INDIA PVT. LTD. (2012) 34 C CH 59 (DEL) (TRIB). THEREFORE, HE PRAYED TO DELETE THE PENALTY. 5. AT THE OUTSET, THE LD DR VEHEMENTLY SUPPORTED TH E ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS SETTLED LAW THAT IF ANY ADDITION 6 ITA NO. 655/JP/2014 M/S FLOWER VALLEY FOODS FARMS P LTD. VS ACIT MADE IN REGULAR ASSESSMENT EVEN THEN INCOME COMPUTE D UNDER THE MAT PROVISIONS U/S 115JB OF THE ACT, THEN NO PENALTY U/ S 271(1)(C) OF THE ACT IS LEVIABLE. THE CASE LAWS RELIED UPON BY THE LD AR ARE SQUARELY APPLICABLE. ACCORDINGLY WE ALLOW THE ASSESSEES APPEAL. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/11/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH NOVEMBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S FLOWER VALLEY FOODS FARMS PVT. LT D., ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-2, ALWAR 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.655/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR