DCIT, Jaipur V. TAB INDIA GRANTIES PVT. LTD., Jaipur

ITA 743/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5524 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Keywords: Business income; Opportunity of being heard; Wrong claim
• Section: 143(3); 115JB; 80IB; 10B; 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 VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NOS. 743 & 726/JP/2013 & 2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 & 2008-09 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S TAB INDIA GRANITES PVT. LTD., 502-APEX MALL, TONK ROAD, JAIPUR-302015 LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABCT 7634 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA ( JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/11/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 22/01/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THE PRESENT APPEALS FILED BY THE REVENUE ARE AGAINS T THE TWO SEPARATE ORDERS DATED 18/07/2013 AND 25/08/2014 RES PECTIVELY PASSED BY THE LEARNED CIT(A)-I, JAIPUR FOR A.YS. 2007-08 AND 2008-09. THE COMMON EFFECTIVE GROUND OF BOTH THE APPEALS ARE AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) WAS JUSTIFIED (FOR A.Y. 2007- 08) AND ERRED (FOR A.Y. 2008-09) IN DELETING THE PE NALTY ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 2 IMPOSED U/S 271(1)(C) OF THE IT ACT ON THE GROUNDS T HAT THE ASSESSEE HAS MADE WRONG CLAIM OF DEDUCTION U/S 1 0B ON THE INTEREST INCOME WHICH IS NOT AN ELIGIBLE INCO ME. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F MANUFACTURING AND EXPORTING OF GRANITE AND OTHER NATURAL STONE SL ABS AND TILES. THE ASSESSEE FILED RETURN FOR A.Y. 2007-08 ON 31/10/200 7 DECLARING TOTAL INCOME OF 1,84,80,180/- AND FOR A.Y. 2008-09 IT FIL ED RETURN ON 29/09/2008 DECLARING TOTAL INCOME OF RS. NIL. BOTH THE CASES WERE SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED AS THE ACT). IN A.Y. 2007-08, THE ASSESSEE HAD SHOWN INCOME FROM FDR AND NSC AT RS. 32,94,630/- AND IN A.Y. 2008-09, THE SE RECEIPTS WERE RS. 56,55,228/-. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT ON IT. THE ASSESSING OFFICER IN QUANTUM ADDITION HAD OBSERV ED THAT THESE RECEIPTS WERE NOT BUSINESS INCOME AND CANNOT BE TREA TED AS INCOME DERIVED FROM THE EXPORT BUSINESS. THEREFORE, DEDUCT ION U/S 10B WAS NOT ALLOWED IN BOTH THE YEARS ON THE RECEIPT. THE LD CIT(A ) IN BOTH THE YEARS HAVE CONFIRMED THE ADDITION MADE ON ACCOUNT OF INTE REST NOT CONSIDERED AS DERIVED INCOME FOR COMPUTING DEDUCTION U/S 10B. BEFORE IMPOSING PENALTY U/S 271(1)(C) OF THE ACT, HE GAVE REASONABL E OPPORTUNITY OF BEING HEARD. THE ASSESSEE SUBMITTED REPLY IN BOTH THE YEAR S. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT THERE IS NO DIRECT ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 3 NEXUS BETWEEN THE INTEREST EARNED WITH THE EXPORT BUS INESS. THEREFORE, THE SAME CANNOT BE TREATED AS INCOME FROM EXPORT BU SINESS. THE HONBLE ITAT IN ITS ORDER DATED 31/7/2009 FOR A.Y. 2006-07 H AS DECIDED THE ISSUE IN FAVOUR OF THE DEPARTMENT, THEREFORE, THE ASSESSE E HAD CLAIMED WRONG DEDUCTION U/S 10B BY FURNISHING INACCURATE PARTICUL ARS OF INCOME AND SHOWING LESS BUSINESS PROFIT WHICH LED TO CONCEALMEN T OF INCOME AND PENAL ACTION U/S 271(1)(C) OF THE ACT. THE LD ASSESS ING OFFICER ALSO CONSIDERED THE CASE LAW RELIED UPON BY THE ASSESSEE. HE FURTHER REPRODUCED SECTION 271(1)(C) IN BOTH THE YEARS IN P ENALTY ORDER. AFTER CONSIDERING ALL FACTS AND LEGAL POSITION, THE LD AS SESSING OFFICER HELD THAT IF THE ASSESSING OFFICER IS SATISFIED THAT ANY PERSONS HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME OR WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME OF ANY PERSON UNDER THIS ACT, SUCH PE RSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION, WHICH IS FOUN D BY THE ASSESSING OFFICER TO BE FALSE, OR SUCH PERSON OFFERS AN EXPLA NATION, WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH E XPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAD BEEN DISCLOSED BY HIM, THEN THE CASE OF THE ASSESSEE COMES WITHIN THE PURVIEW OF SECTION 271(1)(C ) OF THE ACT. THE LD ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 4 ASSESSING OFFICER RELIED UPON THE HON'BLE SUPREME C OURT DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS & OTHERS (2008 ) 306 ITR 277 (SC) WHEREIN IT HAS BEEN HELD THAT PENALTY PROCEEDING ARE NO LONGER QUASI CRIMINAL PROCEEDINGS AND HENCE, THE PRESENCE OF MEN S REA IS NOT REQUIRED TO BE ESTABLISHED. THE ADDITION HAS BEEN CONFIRMED BY THE LD CIT(A) AND THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION U/S 10B. THE EXPLANATION FILED BY THE ASSESSEE WAS NOT BONAFIDE. THEREFORE, THE EXP LANATION-1 OF SECTION 271(1)(C) IS SQUARELY APPLICABLE. ACCORDINGLY, THE ASSESSING OFFICER IMPOSED MINIMUM PENALTY @ 100% ON TAX SOUGHT TO BE E VADED AT RS. 10,90,368/- IN A.Y. 2007-08 AND RS. 50,89,705/- IN A.Y. 2008-09. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DELE TED THE PENALTY BY OBSERVING AS UNDER:- 4. I HAVE CONSIDERED SUBMISSIONS MADE BY THE APPEL LANT AND HAVE ALSO GONE THROUGH THE ORDER OF THE AO. IT IS N OTICED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF GRANITE AND OTHER NATUR AL STONES AND TILES. THE ASSESSEE HAD SHOWN INCOME FROM FDRS AND NSES AND HAD CLAIMED DEDUCTION U/S 10B ON THIS INCOME. IT WAS HELD BY THE AO THAT DEDUCTION U/ S 10B CANNOT BE ALLOWED ON THE INCOME FROM FDRS AND NSES. THIS ORDER OF THE AO WAS UPHELD BY THE CIT(A) AS WELL A S ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 5 THE HONBLE ITAT. THE ASSESSING OFFICER CONSIDERED TH IS CLAIM OF WRONG DEDUCTION U/S 10B AS CONCEALMENT OF INCOME IN VIEW OF THE DECISION OF THE HONBLE SUPREM E COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS ( 306 ITR 277) AND LEVIED PENALTY U/S 271(L)(C). IT IS, HO WEVER, ALSO NOTED THAT THERE IS NO DISCUSSION REGARDING AS SESSEES SUBMISSIONS IN THIS REGARD IN THE PENALTY ORDER. 4.1 IT MAY BE MENTIONED HERE THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXT ILE (SUPRA) DOES NOT IMPLY THAT PENALTY HAS TO BE AUTOMATICALLY LEVIED WHENEVER A CLAIM MADE BY THE ASSESSEE IS DENIED. IT IS CORRECT THAT MENS REA NEE D NOT BE ESTABLISHED FOR IMPOSING PENALTY. THE AO STILL HAS T O ESTABLISH THAT THE ASSESSEE HAS FURNISHED INACCURAT E PARTICULARS OF INCOME OR CONCEALED ITS INCOME. IN T HE CASE BEFORE US IT IS SEEN THAT THE APPELLANT HAD MADE A CLAIM OF EXEMPTION U/S 10B ON CERTAIN INCOME WHICH WAS NOT FOUND TO BE IN ACCORDANCE WITH THE PROVISIONS OF THE I.T. ACT AND THE CLAIM OF EXEMPTION ON THIS AMOUNT WAS, ACCORDINGLY, DENIED. THIS DISALLOWANCE OF EXEMPTION WA S UPHELD BY THE HONBLE TRIBUNAL AS WELL. HOWEVER, AS HE LD BY THE APEX COURT IN THE CASE OF RELIANCE PETRO PRO DUCTS PVT. LTD. (322 ITR 158), MERELY MAKING A CLAIM IN RE TURN OF INCOME WHICH IS NOT SUSTAINED UNDER THE LAW DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGA RDING THE ASSESSEES INCOME OR CONCEALMENT OF INCOME. THE ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 6 PENALTY FOR CONCEALMENT IN THIS CASE APPEARS TO HAV E BEEN LEVIED MECHANICALLY. IN VIEW OF THE FACTS OF THE CASE, THE LEVY OF PENAL TY OF 271(L)(C) APPEARS TO BE UNJUSTIFIED AND IS, ACCORDI NGLY, CANCELLED. SIMILAR FINDINGS HAVE BEEN GIVEN IN A.Y. 2008-09 BY THE LD CIT(A). 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND FU RTHER ARGUED THAT INTEREST INCOME IS NOT DERIVED INCOME FROM THE EXPO RT BUSINESS AND DOES NOT HAVE DIRECT NEXUS WITH THE EXPORT BUSINESS. THER EFORE, THE ASSESSEE IS LIABLE TO BE IMPOSED PENALTY U/S 271(1)(C) OF THE A CT. 5. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS VEH EMENTLY SUPPORTED THE ORDER OF THE LD CIT(A) AND ARGUED THAT THE INCOM E OF THE ASSESSEE IS ASSESSED U/S 115JB. THERE IS NO VARIATION IN THE INC OME DECLARED AND ASSESSED U/S 115JB. THEREFORE, NO PENALTY CAN BE LEV IED WITH REFERENCE TO THE DISALLOWANCE OF CLAIM UNDER THE NORMAL PROVISION S OF THE ACT. FOR THIS PROPOSITION, RELIANCE IS PLACED ON THE FOLLOWING CAS ES:- (I) CIT VS. NAHVA SONS INVESTMENTS LTD. 327 ITR 543 (DEL.) (HC). (II) CIT VS. JINDAL POLYSTER & STEEL LTD. (2014) 36 5 ITR 225 (ALL.) (HC) ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 7 (III) CIT VS. TORQUE PHARMACEUTICALS PVT. LTD. (2015) 124 DTR 356 (CHD.) (TRIB.) (IV) ACIT VS. TUPPERWARE INDIA PVT. LTD. (2012) 34 C CH 59 (DEL.) (TRIB.). (V) CITI TILES LTD. VS. DCIT (2013) 37 CCH 123 (AHD.) (TRIB.) HE HAS FURTHER SUBMITTED THAT THERE IS NO DISPUTE A S TO THE FACT THAT THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMPTION U/S 10B OF THE INCOME TAX ACT, 1961. THE ONLY ISSUE IS WHETHER THE ASSESSEE IS ELIGI BLE FOR CLAIM OF SUCH EXEMPTION ON THE INTEREST RECEIPT. THE FACT THAT ASS ESSEE HAS CLAIMED EXEMPTION U/S 80IB ON INTEREST RECEIPT ON FDR/NSC I S EVIDENT FROM THE COPY OF THE PROFIT & LOSS ACCOUNT, AUDIT REPORT IN FORM NO. 56G AND THE RETURN OF INCOME. THUS NO FACTS ARE CONCEALED AND T HEREFORE ON THE REDUCTION IN THE CLAIM OF EXEMPTION U/S 10B, NO PEN ALTY IS LEVIABLE. FOR THIS RELIANCE IS PLACED ON THE FOLLOWING CASES:- (I) RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) (II) CIT VS. CAPLIN POINT LABORATORIES LTD. 293 ITR 524 (MAD.) (HC) (III) CIT V S . LOTUS TRANS TRAVELS (P) LTD. 177 TAXMAN 37 (DEL.) (HC) THE LD AR HAS FURTHER SUBMITTED THAT THE ASSESSEE FI LED THE RETURN ON 29.09.2008. ON THIS DATE THERE WERE JUDGMENTS IN FAV OR OF THE ASSESSEE ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 8 ALLOWING THE CLAIM OF EXEMPTION U/S 10B BY CONSIDERI NG THAT AFTER CONSIDERING THE INTEREST EXPENDITURE, THERE IS NO I NTEREST INCOME. IN ASSESSEES OWN CASE, THE CIT(A) IN A.Y. 2005-06 VIDE ITS ORDER DATED 30- 07-2008 IN ITA NO.736/07-08 HAS ALLOWED THE CLAIM OF EXEMPTION U/S 10B AS CLAIMED BY THE ASSESSEE BY HOLDING THAT AFTER SE TTING OFF THE INTEREST RECEIPT AGAINST THE INTEREST EXPENDITURE, THERE IS NO INTEREST INCOME AND THEREFORE THERE IS NO REASON TO REDUCE THE CLAIM OF EXEMPTION U/S 10B. AGAINST THIS ORDER DEPARTMENT FILED AN APPEAL BEFOR E THE HONBLE ITAT WHO VIDE ORDER DATED 31-07-2009 IN ITA NO. L437/JP/2 008 ALLOWED THE APPEAL OF THE DEPARTMENT. FROM THESE FACT IT IS CLE AR THAT AS ON THE DATE WHEN THE ASSESSEE FILED THE RETURN THE ISSUE WAS DECI DED IN FAVOR OF THE ASSESSEE. FURTHER THE AO HIMSELF HAS NOT LEVIED ANY PENALTY IN A.Y. 2005- 06 & 2006-07 ON THE SAME FACTS. HENCE ONLY BECAUSE THE CLAIM OF EXEMPTION U/S 10B IS REDUCED, CANT BE HELD TO BE C ONCEALMENT OF INCOME OR FURNISHING OF THE INACCURATE PARTICULARS OF INCO ME. IT IS A SETTLED LAW THAT MERE DISALLOWANCE OR REJECTION OF LEGAL CLAIM D OES NOT TANTAMOUNT TO CONCEALMENT OF INCOME. FOR THIS RELIANCE IS PLACED ON THE FOLLOWING CASES:- CIT V. HARSHVARDHAN CHEMICALS & MINERALS LTD. (2003 ) 259 ITR 212 (RAJ): (I) CIT VS. HARYANA EDUCATION SOCIETY (2001) 251 ITR 846 (P & H) ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 9 (II) ACIT VS. CONCEPT CREATIONS (2010) 40 DTR 147(D EL) (TRIB) (III) CIT VS. RAJ OVERSEAS 336 ITR 261 (P&H) (HC) (IV) CIT VS. ORIENTAL POWER CABLE LTD. 303 ITR 49 (R AJ):- OTHERWISE ALSO, EVEN AFTER NOT ALLOWING THE CLAIM OF EXEMPTION U/S 10B ON INTEREST INCOME, THE EFFECT IN THE REDUCTION OF SUCH CLAIM IS ONLY RS.523 AS PER THE TABLE GIVEN AT PAPER BOOK PG 1A. IN VIEW OF THE ABOVE, CIT(A) HAS RIGHTLY CANCELLED THE PENALTY AND THEREFORE HIS ORDER BE UPHELD BY DISMISSING THE GROUND OF THE DEPARTMENT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE HAD FURNISHED DETAILS OF INTEREST IN RETURN AND IN AUDIT REPORT, THEREFORE, NO PARTICULARS OF INCOME HAVE BEEN CONCEALED. THE MATTER IS DEBATABLE ON THE DEDUCTION U/S 10B IS ALLOWABLE ON INTEREST INCOME OR NOT, AS S UCH, THE ASSESSEE HAD CLAIMED THAT THESE RECEIPTS ARE DIRECTLY LINKED WITH THE EXPORT BUSINESS. HOWEVER, THE EXPLANATION OF THE ASSESSEE WAS NOT FOUN D BONAFIDE TO THE ASSESSING OFFICER BUT THE FACT IS THAT ALL PARTICUL ARS OF INCOME HAS BEEN DISCLOSED AND ASSESSEES EXPLANATION IS BONAFIDE ON FACTS AND CIRCUMSTANCES OF THE CASE. THE ISSUE IS ALSO DEBATAB LE ISSUE, NO PENALTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED. THE CASE LA WS RELIED ON BY THE ASSESSEE IS SQUARELY APPLICABLE IN THE ASSESSEES C ASE. IN A.Y. 2008-09, ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 10 THE ASSESSEES INCOME ASSESSED U/S 115JB OF THE ACT AND THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS I NVESTMENTS LTD. (SUPRA) HAS HELD THAT ANY ADDITION IN REGULAR ASSES SMENT AND THEREAFTER THE CASE IS ASSESSED U/S 115JB AND FINALLY TAX PAID BY THE ASSESSEE ON THE BASIS OF SECTION 115JB OF THE ACT. THE CONCEALMENT ON ACCOUNT OF ANY REGULAR ASSESSMENT, DOES NOT LEAD TO EVADE THE TAX AT ALL. THEREFORE, PENALTY U/S 271(1)(C) IS NOT JUSTIFIED. IN THIS YEA R ALSO, THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS OF INCOME IN RETURN A LONGWITH AUDIT REPORT. THE MATTER IS WHETHER INTEREST INCOME HAS DIRECT NEX US WITH THE EXPORT BUSINESS OR NOT. THEREFORE, WE UPHOLD THE ORDER OF TH E LD CIT(A) IN BOTH THE ASSESSMENT YEARS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/01/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 22 ND JANUARY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT-THE DCIT, CIRCLE-2, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- M/S TAB INDIA GRANITES PVT. LTD., JAI PUR. ITA 743 & 726/JP/2013_ DCIT VS. M/S TAB INDIA GRANITES P LTD. 11 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. 743 & 726/JP/2013 & 2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR