Sh. Sarabjit Singh Kalra, New Delhi V. JCIT, New Delhi

ITA 663/DEL/2014

• Counselvise Citation: 66320114 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEHAR RANJAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.663/DEL/2014 ASSESSMENT YEAR : 2008-09 SARABJIT SINGH KALRA, GB-8, SHIVAJI ENCLAVE, NEW DELHI. PAN : AFHPK8643K VS. JCIT, CIRCLE-26(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SHRI NEEHAR RANJAN PANDEY, ADDL.CIT DATE OF HEARING : 18.06.2015 DATE OF PRONOUNCEMENT : 19.06.2015 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 21.11.2013 AFFIRMING THE PENALTY OF R S.70,800/- IMPOSED BY THE ASSESSING OFFICER (AO) U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATIO N TO THE ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, INTER ALIA, CARRIED ON THE BUSINESS OF MANUFACTURE OF ELECTRICA L GOODS SUCH AS ACS, ITA NO.663/DEL/2014 2 CTV, WASHING MACHINE, ETC., IN THE CONCERN CALLED N OBLE INDUSTRIES. INCOME FROM THIS CONCERN WAS ELIGIBLE FOR DEDUCTION U/S 80IC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICE D BY THE AO THAT THE ASSESSEE HAD ALSO DECLARED JOB WORK INCOME OF RS.2, 08,256/- IN THIS CONCERN. IN THE OPINION OF THE AO, SUCH JOB WORK I NCOME WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IC. THAT IS HOW, THE AO REJECTED THE CLAIM OF DEDUCTION U/S 80IC ON JOB CHARGES AMOUNTING TO R S.2,08,256/-. HOWEVER THE DEDUCTION ON THE INCOME FROM MANUFACTUR ING OPERATIONS WAS DULY ALLOWED. THE ASSESSEE DID NOT AGITATE THE DENIAL OF DEDUCTION BEFORE THE APPELLATE AUTHORITIES. THE AO INITIATED PENALTY PROCEEDINGS WITH REFERENCE TO SUCH DENIAL OF DEDUCTION U/S 80IC ON A SUM OF RS.2,08,256/-. THE ASSESSEE CONTENDED BEFORE THE A O THAT THE PENALTY WAS NOT EXIGIBLE. IT WAS SUBMITTED THAT NOTWITHSTA NDING THE ASSESSEE NOT CHALLENGING THE DENIAL OF DEDUCTION U/S 80IC ON JOB WORK, HE WAS ENTITLED TO DEDUCTION ON JOB WORK CHARGES AS PER LA W. NOT CONVINCED, THE AO IMPOSED PENALTY AMOUNTING TO RS.70,800/ ON T HE AMOUNT OF REDUCTION OF THE AMOUNT OF DEDUCTION TO THIS EXTENT . THE ASSESSEES SUBMISSIONS WHICH WAS REITERATION OF THOSE ADVANCED BEFORE THE AO, ITA NO.663/DEL/2014 3 FAILED TO CONVINCE THE LD. CIT(A) FOR DELETING THE PENALTY. THAT IS HOW THE PENALTY CAME TO BE UPHELD. 3. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THERE IS NO APPEARANCE FROM TH E SIDE OF THE ASSESSEE DESPITE NOTICE. AS SUCH, I AM PROCEEDING TO DISPOSE OF THIS APPEAL EX PARTE QUA THE ASSESSEE. IT IS OBSERVED THAT THE ASSESSEE WAS OTHERWISE ELIGIBLE FOR DEDUCTION U/S 80IC IN RESPEC T OF HIS INCOME EARNED FROM MANUFACTURING OPERATIONS IN THE CONCERN , NOBLE INDUSTRIES. THE AO HAS ALSO DULY GRANTED DEDUCTION ON SUCH INCO ME FROM MANUFACTURING. THE ONLY DISPUTE IS ABOUT JOB WORK CHARGES EARNED BY THE ASSESSEE TO THE TUNE OF RS.2,08,256/- ON WHICH THE ASSESSEE CLAIMED DEDUCTION THAT WAS DISALLOWED BY THE AO ON THE GROU ND THAT JOB WORK DOES NOT AMOUNT TO MANUFACTURE OR PRODUCTION. IN M Y CONSIDERED OPINION, THERE CANNOT BE ANY BAR ON THE ADMISSIBILI TY OF DEDUCTION U/S 80IC ON JOB WORK CHARGES EARNED FROM THE MANUFACTUR ING UNIT. WHAT IS ELIGIBLE FOR DEDUCTION IS THE AMOUNT OF INCOME EARN ED FROM THE ELIGIBLE UNIT. SUCH INCOME MAY BE EARNED EITHER BY DOING MA NUFACTURING FOR SELF OR BY RENDERING JOB SERVICE TO OUTSIDERS. IN FACT, THERE IS NO ITA NO.663/DEL/2014 4 QUALITATIVE DIFFERENCE BETWEEN THE INCOME EARNED FR OM MANUFACTURING FOR SELF AND JOB WORK DONE FOR OTHERS. 4. THE MERE FACT THAT THE ASSESSEE DID NOT CHALLE NGE THE DISALLOWANCE FOR DEDUCTION U/S 80IC ON JOB WORK CHARGES, CANNOT BE A CRITERIA FOR AUTOMATIC IMPOSITION OF PENALTY U/S 271(1)(C) OF TH E ACT. IT GOES WITHOUT SAYING THAT PENALTY PROCEEDINGS ARE DISTINC T FROM ASSESSMENT PROCEEDINGS. IN THE LATTER PROCEEDINGS, THE ASSESSE E IS FULLY ENTITLED TO MAKE OUT A CASE FOR NON-IMPOSITION OF PENALTY IN RE SPECT OF ADDITIONS MADE IN THE ASSESSMENT. HERE IS A CASE IN WHICH THE ASSESSEE, EVEN THOUGH ENTITLED TO DEDUCTION U/S 80IC ON JOB WORK C HARGES, FAILED TO OPPOSE SUCH DENIAL BEFORE THE APPELLATE AUTHORITIES . IN NO CASE, SUCH A DENIAL OF DEDUCTION CAN CALL FOR IMPOSITION OR CONF IRMATION OF PENALTY U/S 271(1)(C) OF THE ACT. I, THEREFORE, OVERTURN T HE IMPUGNED ORDER AND DIRECT THE DELETION OF PENALTY. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 9 TH JUNE, 2015. SD/- (R.S. SYAL) ACCOUNTANT MEMBER DATED: 19 TH JUNE, 2015. ITA NO.663/DEL/2014 5 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI