ACIT, Chandigarh V. M/s Bnal Prefabs (P) Ltd., Chandigarh

ITA 788/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68513 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMARVEER SINGH
• Keywords: Non-deduction of tax
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 788/CHD/2013 ASSESSMENT YEAR:2006-07 THE ACIT, VS M/S BNAL PREFABS (P) LTD., CIRCLE 1(1), S.R. NO. 19, CHANDIGARH. SECTOR 7, CHANDIGARH. PAN NO. AAACB-7859D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AKHILESH GUPTA RESPONDENT BY : SHRI AMARVEER SINGH DATE OF HEARING : 24.09.2013 DATE OF PRONOUNCEMENT : 30.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(APPEALS), CHANDIGARH DATED 26.04.2013 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) IN APPEAL IN APPEAL NO. 17/12-13 H AS ERRED IN DELETING THE FOLLOWING PENALTY : 1. THE LD. CIT(APPEALS) HAS ERRED IN FACTS AS WELL AS LAW IN DELETING PENALTY UNDER SECTION 271(1)(C) BECAUSE THE ASSESSEE CAN BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME WHERE THE ASSESSEE MAKES A CL AIM OF DEDUCTION, WHICH IS INCORRECT AS PER LAW AND IS NOT AS PER PROVISIONS OF THE ACT. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 2 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND A LSO MANUFACTURE OF PRE-FABRICATED SHELTERS OF DIFFERENT SPECIFICATIONS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD CARRIED ON ITS BUSINESS AT CHANDIGARH AND AT BADDI UNIT. THE ASSESSEE WAS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR BOTH THE UNITS. HOWEVER, THE ASSESSING OFFICER NOTED THAT MAJORITY OF ADMINISTRATIVE AND FINANCIAL EXPENSES WERE DEBITED IN THE BOOKS OF CHANDIGARH UNIT, WHERE THE HEAD OFFICE OF THE AS SESSEE WAS SITUATED. THE ASSESSEE HAD ON ITS OWN MOTION, APPO RTIONED SOME OF THE EXPENSES IN CERTAIN RATIO BETWEEN CHANDIGARH AND THE BADDI UNITS. THE ASSESSING OFFICER, HOWEVER RECOMP UTED THE EXPENSES ALLOCABLE TO THE BADDI UNIT AND CONSEQUENT LY, THE DEDUCTION UNDER SECTION 80IC OF THE ACT WAS RE-COMP UTED IN THE HANDS OF THE ASSESSEE TO THE EXTENT OF RS. 605,658/ -. FURTHER ADDITIONS WERE MADE BY THE ASSESSING OFFICER IN VIE W OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AMOUNTIN G TO RS. 47,308/- AND ANOTHER ADDITION FOR NON-DEDUCTION OF TAX AT SOURCE OUT OF PAYMENT MADE TO CONTRACTORS AT RS. 50,642/-. FURTHER, THE ASSESSING OFFICER HELD THAT ON TOTAL TRADING SALES TURNOVER OF RS. 1.12 CR PROFIT @ 20.27% WORKS OUT TO RS. 22,79,170/ -, ON WHICH DEDUCTION UNDER SECTION 80IC OF THE ACT WAS HELD TO BE NOT ALLOWABLE RESULTING IN ADDITION OF RS. 22,79,170/-. 5. THE CIT(APPEALS) CONFIRMED THE ABOVESAID ADDITIO NS AND THE TRIBUNAL IN ITA NO. 1273/CHD/2010 VIDE ORDER DA TED 27.05.2012 DELETED THE ADDITION OF RS. 22,79,170/-. FURTHER, THE DISALLOWANCE UNDER SECTION 40(A)(IA) ON PAYMENT OF RS. 50,642/- WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER AND THE BALANCE TWO ADDITIONS WERE UPHELD BY THE TRIBUNAL. THE ASSESSI NG OFFICER 3 BEFORE PASSING OF THE ORDER OF THE TRIBUNAL HELD TH E ASSESSEE LIABLE TO LEVY OF PENALTY UNDER SECTION 271(1)(C) O F THE ACT AT RS. 10,04,003/-. 6. THE CIT(APPEALS), AFTER TAKING NOTE OF THE ORDER OF THE TRIBUNAL HELD THAT PENALTY FOR CONCEALMENT WAS REST RICTED TO ONLY ADDITION OF RS. 605,658/- AND ADDITION OF RS. 47,30 8/-. THE CIT(APPEALS) ON CONSIDERATION OF THE TOTALITY OF FA CTS AND CIRCUMSTANCES REGARDING ADDITION OF RS. 47,308/- HE LD THAT THE ASSESSEE COULD NOT BE SAID TO HAVE FURNISHED INACCU RATE PARTICULARS OF INCOME IN VIEW OF THE RATIO LAID DOW N BY THE DELHI BENCH OF TRIBUNAL IN AT & T COMMUNICATIONS SERVICES INDIA PVT. LTD. [42 DTR 22 (DEL)]. THE CIT(APPEALS) IN RESPEC T OF THE CONSEQUENT ADDITION OF RE-COMPUTATION OF DEDUCTION UNDER SECTION 80IC OF THE ACT HELD THAT ALL THE PARTICULARS WERE AVAILABLE ON RECORD, FROM WHERE THE ASSESSING OFFICER WAS ABLE T O DEDUCE THAT THE ASSESSEE HAD MADE WRONG SELECTION OF EXPENSES B ETWEEN EXEMPT AND NON-EXEMPT UNITS, THE SAID COULD NOT BE HELD TO BE FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS DELET ED. 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TH E CIT(APPEALS). 8. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDER OF THE ASSESSING OFFICER AND THE LD. AR FOR THE ASSESS EE PLACED RELIANCE ON THE ORDER OF THE CIT(APPEALS). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATI ON TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. PENALTY FOR CO NCEALMENT IS 4 LEVIABLE ON SUCH CASES WHERE THE ASSESSEE HAS EITHE R CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E. THE PROVISIONS OF THE ACT ENVISAGES AN OPPORTUNITY OF HEARING TO B E AFFORDED TO THE ASSESSEE TO PROVE ITS BONAFIDES AND WHERE THE ASSES SEE IS ABLE TO PROVE THE BONAFIDES OF HIS CLAIM, WITH REGARD TO T HE PARTICULARS OF INCOME FURNISHED IN THE RETURN OF INCOME, IN SUCH C IRCUMSTANCES NO PENALTY IS LEVIABLE FOR CONCEALMENT OF INCOME OR FO R FURNISHING INACCURATE PARTICULARS OF INCOME U/S 271 (1)(C) OF THE ACT. WHERE ANY ADDITION TO, OR DISALLOWANCE FROM, HAD BEEN MADE TO THE RETURNED INCOME, IT PER SE CANNOT BE THE FOUNDATION OF PENALTY U/S 271 (1)(C) OF THE ACT AS FINDINGS IN THE ASSESSMENT ORDER CANNOT BE TAKEN A CONCLUSIVE PROOF OF CONCEALMENT FOR THE PURPOSE OF LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. UNDER THE EXPLANATION 1 TO SECTION 271 (1)(C) OF TH E ACT, THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THE BONAFIDES OF HIS CLAI M AND WHERE THE ASSESSEE DISCHARGES ITS ONUS OF PROVING HIS CLAIM TO BE BONA FIDELY MADE, THE COURTS HAVE HELD THAT THERE IS NO MERIT IN LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10. THE HON'BLE SUPREME COURT IN CIT, AHEMDABAD VS. RELIANCE PETROPRODUCTS PVT LTD. [322 ITR 158 (SC)] FURTHER N OTED THAT IN THE FACTS OF THE CASE BEFORE IT, THERE WERE NO FINDINGS THAT AN Y DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME WERE NOT INCORRECT OR ERRONEOUS OR FALSE NOR ANY STATEMENT MADE OR ANY DETAILS SUPPLIED WAS FOUN D TO BE FACTUALLY INCORRECT. THE COURT THUS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, ATTRACT PENA LTY UNDER SECTION 271 (1)(C) OF THE ACT. IT WAS ALSO LAID DOWN BY THE COURT THAT THE INTENDMENT OF THE LEGISLATURE IS NOT TO LEVY PENALTY U/S 271 ( 1)(C) OF THE ACT IN CASE OF EVERY NON ACCEPTANCE OF CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME. 5 11. SIMILAR RATIO HAS BEEN LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHBAD COOPERATIVE SUGAR MI LLS LTD [322 ITR 73 (P&H)], WHEREIN IT HAS BEEN OBSERVED THAT MAKING WR ONG CLAIM FOR DEDUCTION, DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SECTION 271 (1)(C ) OF THE ACT. 12. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) HAD HELD THAT WHERE THE IS SUE IS HIGHLY DEBATABLE IN AS MUCH AS TWO VIEWS WERE POSSIBLE ON THE SAID ISSUE AND WHERE THE CLAIM OF THE ASSESSEE ON THE ISSUE WAS BA SED ON ONE POSSIBLE VIEW, THE MAKING OF SUCH BONAFIDE CLAIM ON THE BASI S OF A POSSIBLE VIEW COULD NOT BE TREATED AS CONCEALMENT OF ITS INCOME B Y THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF INCOME SO A S TO ATTRACT THE PENAL PROVISIONS OF SECTION 271 (1)(C) OF THE INCOME TAX ACT. 13. IN THE FACTS OF THE PRESENT CASE BEFORE US, FOL LOWING ADDITIONS WERE MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, WHICH WERE UPHELD BY THE CIT(APPEALS) : I) ADDITION U/S 40(A)(IA) RS. 47,308/- II) ADDITION ON ACCOUNT OF EXCESS CLAIM RS.6,05,6 58/- OF DEDUCTION U/S 80IC III) ADDITION BY DISALLOWING DEDUCTION RS.22, 79,170/- U/S 80IC IV) ADDITION U/S 40(A)(IA)ON PAYMENT RS. 50,642/- MADE TO CONTRACTORS TOTAL RS.29,82,778/- 14. THE TRIBUNAL (SUPRA) IN APPEAL FILED BY THE ASS ESSEE HAD DELETED ADDITION ON ACCOUNT OF ITEM NO. (III) I.E. ADDITION DISALLOWING DEDUCTION UNDER SECTION 80IC AT RS.22,7 9,170/- AND IN RESPECT OF ITEM NO. (IV) I.E. ADDITION ON PAYMEN T MADE TO CONTRACTORS AT RS. 50,642/- WAS SET ASIDE TO ASSESS ING OFFICER. 6 THE OTHER TWO ADDITIONS I.E. AT ITEM NO. (I) UNDER SECTION 40(A)(IA) AND ITEM NO. (II) ON ACCOUNT OF EXCESS CL AIM OF DEDUCTION UNDER SECTION 80IC AT RS. 6,05,658/- WERE CONFIRMED BY THE TRIBUNAL. 15. THE ISSUE ARISING BEFORE US IS TWOFOLD I.E. ONE IN RESPECT OF ADDITIONS WHICH HAVE BEEN DELETED BY THE TRIBUNAL A ND THE SECOND WHICH HAVE BEEN CONFIRMED BY THE TRIBUNAL. IN RESP ECT OF THE ADDITIONS WHICH HAVE BEEN DELETED BY THE TRIBUNAL O R SET ASIDE BY THE ORDER OF THE TRIBUNAL, THERE IS NO MERIT IN LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS THE ADDITION ITSELF DOES NOT STAND. IN VIEW THEREOF, WE ARE IN CONFORMITY WITH THE FINDING S OF CIT(APPEALS) THAT NO PENALTY UNDER SECTION 2711)(C) OF THE ACT I S LEVIABLE IN RESPECT OF THE ADDITION MADE BY DISALLOWING THE DED UCTION UNDER SECTION 80IC OF THE ACT AT RS. 22,79,170/- AND ALSO FURTHER, THE ADDITION MADE UNDER SECTION 40(A)(IA) OF THE ACT AT RS. 50,642/-. 16. THE TRIBUNAL, HOWEVER HAS UPHELD ANOTHER ADDITI ON MADE UNDER SECTION 40(A)(IA) OF THE ACT AT RS. 47,308/-. THE SAID ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE IN VIEW OF NON DE DUCTION OF TAX AT SOURCE OUT OF CERTAIN PAYMENTS WHICH WERE HELD TO B E NOT ALLOWABLE IN VIEW OF THE DEEMING PROVISIONS OF THE ACT. THE INCIDENCE OF INCURRENCE OF EXPENDITURE IS NOT DOUBTED AND THE AD DITION WAS MADE ON ACCOUNT OF THE PROVISIONS OF THE ACT, DOES NOT E STABLISH THE CASE OF THE ASSESSEE HAVING FURNISHED INACCURATE PARTICU LARS OF INCOME. ACCORDINGLY, WE HOLD THAT THERE IS NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF TH E AFORESAID ADDITION OF RS. 47,308/-. 17. THE SECOND ADDITION MADE IN THE HANDS OF THE AS SESSEE WAS ON ACCOUNT OF RE-WORKING OF THE DEDUCTION CLAIMED UNDE R SECTION 80IC OF 7 THE ACT BY ALLOCATING CERTAIN EXPENDITURE BOOKED TO THE HEAD OFFICE BEING ALLOCABLE TO THE EXEMPT UNIT. THE INCURRENCE OF THE EXPENDITURE HAS BEEN ACCEPTED BY THE DEPARTMENT. O NLY ADJUSTMENT WAS MADE ON ACCOUNT OF ALLOCATING THE SAME TO THE E XEMPT UNIT AND CONSEQUENTLY, THE DEDUCTION CLAIMED UNDER SECTION 8 0IC OF THE ACT WAS RE-WORKED. THE COMPLETE DETAILS IN RESPECT OF THE EXPENDITURE INCURRED WERE FURNISHED BY THE ASSESSEE AND NO DISC REPANCY HAS BEEN FOUND IN THE SAME EXCEPT THE EXTENT OF THE SAME BEI NG RELATABLE TO THE EXEMPT UNIT. IN THE TOTALITY OF THE ABOVESAID FACT S AND CIRCUMSTANCES, IT CANNOT BE HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME MAKING IT LIABLE T O LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE ARE IN CONF ORMITY WITH THE ORDER OF THE CIT(APPEALS) IN THIS REGARD AND UPHOLD ING THE SAME, WE DISMISS GROUND OF APPEAL RAISED BY THE REVENUE. 18. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30 TH SEPTEMBER,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH