ACTI C-1(1), Chandigarh V. M/s Quixotic Healthcare, Chandigarh

ITA 812/CHANDI/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9208 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Bonafide belief
• Section: 271(1)(c)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH , ! . .., # $, %& BEFORE: SH. SANJAY GARG, JM & DR. B.R.R. KUMAR, AM ITA NO. 812/CHD/2018 ASSESSMENT YEAR : 2012-13 THE ACIT C-1(1), CHANDIGARH M/S QUIXOTIC HEALTHCARE PLOT NO. 784, INDL. AREA II CHANDIGARH PAN NO: AAAFQ1947N APPELLANT RESPONDENT !' ASSESSEE BY : SHRI. PARIKSHIT AGGARWAL #!' REVENUE BY : SHRI. MANJIT SINGH $ %! & DATE OF HEARING : 25/10/2018 '()*! & DATE OF PRONOUNCEMENT : 18/12/2018 %'/ ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-1, CHANDIGARH DT. 22/03/2018. 2. IN THE PRESENT APPEAL REVENUE HAS RAISED THE FOL LOWING EFFECTIVE GROUNDS: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 27,28,890/- ON THE C ONFIRMED ADDITION ON ACCOUNT OF RESTRICTING THE BENEFIT OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IC OF THE INCOME TAX ACT, 1961 TO 25% AS AGAINST 100% DED UCTION AS THE ASSESSEE HAD FAILED TO DISCHARGE ITS LIABILITY TO FURNISH ITS TR UE AND CORRECT PARTICULAR OF INCOME WHILE FILING THE RETURN OF INCOME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 27,28,890/- ON THE C ONFIRMED ADDITION ON ACCOUNT OF RESTRICTING THE BENEFIT OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IC OF THE INCOME TAX ACT, 1961 TO 25% AS AGAINST 100% DED UCTION WHEN THE EXPLANATION 1 TO SECTION 271(L)(C) SHIFT'S THE ONUS/BURDEN OF P ROOF ON THE ASSESSEE TO ESTABLISH THAT THE EXPLANATION OFFERED WAS BONAFIDE, WHICH TH E ASSESSEE FAILED TO DISCHARGE IN THIS CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 27,28,890/- ON THE C ONFIRMED ADDITION ON ACCOUNT OF RESTRICTING THE BENEFIT OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IC OF THE INCOME TAX ACT, 1961 TO 25% AS AGAINST 100% DED UCTION WITHOUT APPRECIATING THE DECISIONS OF THE HON'BLE APEX COURT IN THE CASE OF UOI VS DHARMENDRA TEXTILE (306 ITR 277) & HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS ZOOM COMMUNICATION (P) LTD (327 ITR 510). 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED 100% DEDUCTION U/S 80IC OF THE ACT FROM THE A.Y. 2007-08 BY MAKING SUBSTANTIAL EXPANSION. AFTER 5 YEARS OF CLAIM THE ASSESSEE ONCE AGAIN MADE SUBST ANTIAL EXPANSION AND STARTED CLAIMING DEDUCTION @100% FROM 6 TH YEAR ONWARDS U/S 80IC OF THE ACT. THE AO DID NOT ALLOW THE ASSESSEE THE 100% CLAIM OF DEDUCTION U/S 80IC AND RESTRICTED THE CLAIM FROM 6 TH YEAR ONWARDS TO 25%. THE STAND TAKEN BY THE AO AS CONFIRMED IN 1 ST AND 2 ND APPEAL. AND THE PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE. THE AO IMPOSED PENALTY BY MAK ING THE FOLLOWING OBSERVATION: 'THE ASSESSEE'S ARGUMENTS ON THE QUANTUM ADDITION M ADE IN THE ASSESSMENT ORDER ARE NOT RELEVANT AT THIS JUNCTURE. THE ISSUE TO BE DECIDED IN THIS PENALTY PROCEEDING IS NOT WHETHER THE AO WAS RIGHT IN MAKIN G THE ADDITION. RATHER THE ISSUE IS WHETHER PENALTY IS LEVIABLE ON THE ASSESSE E FOR AN INCORRECT CLAIM. WITH REGARD TO THE CORRECTNESS OF THE ADDITION, IT IS PE RTINENT TO BRING ON RECORD THAT THE SAID ADDITION HAS BEEN CONFIRMED IN THE FAVOUR OF T HE DEPARTMENT BY THE LD. CIT(APPEALS) AS WELL AS THE HON'BLE TTAT IN THE CAS E OF THE ASSESSEE. 4. THE ASSESSING OFFICER HAS ALSO HELD THAT IT IS A FACT THAT ONLY A SMALL PERCENTAGE OF THE INCOME TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUC H A CLAIM IS NOT FOUND TO BE BONAFIDE, THE ASSESSEE MUST BE LIABLE TO PENALTY U/ S 271(L)(C) OF THE ACT. 5. THE LD. CIT(A) DELETED THE PENALTY ON THE GROUND S THAT ON THIS ISSUE THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT DEDUCTION OF 100% IS ADMISSIBLE BEYOND 5 YEARS U/S 80IC AND THAT WAS THE REASON IT HAS MADE INVESTMENT AND EXPANDED ITS UNIT. LD. CIT(A) HELD THAT THOUGH THE AO MAY BE JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION BUT THIS ISSUE CANNOT BE A S UBJECT FOR IMPOSING PENALTY. 6. WE HAVE HEARD ARGUMENTS OF BOTH THE PARTIES. THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80IC ON SUBSTANTIAL EXPANSI ON HAD A LONG HISTORY OF OSCILLATIONS GONE THROUGH VARIOUS JUDICIAL AUTHORIT IES. THE DEDUCTION WAS ALLOWED AND ALSO DISALLOWED BY THE REVENUE AT DIFFE RENT TIMES AND THE ADDITIONS MADE WERE CONFIRMED AT APPELLATE LEVELS A ND WERE DELETED BY THE ORDERS OF THE HONBLE HIGH COURT OF HIMACHAL PRADES H. THE ORDER OF THE HONBLE HIGH COURT HAS BEEN REVERSED BY THE ORDER OF THE HO NBLE SUPREME COURT. THE ASSESSEE HAS BEEN FOUND TO HAVE DECLARED ALL THE DE TAILS IN HIS RETURN OF INCOME WHILE CLAIMING THE EXEMPTION. HENCE IN ACCORDANCE W ITH EXPLANATION 1(B) TO 3 SECTION 271(1)(C), SINCE THE ACTION OF THE ASSESSEE IN CLAIMING THE EXEMPTION CAN BE CONSIDERED AS A BONAFIDE BELIEF THAT THE ASS ESSEE IS RIGHTLY ELIGIBLE FOR CLAIM OF EXEMPTION AND HENCE NO PENALTY CAN BE LEVI ED UNDER SECTION 271(1)(C). KEEPING IN VIEW THE TOTALITY OF THE FACT S AND CIRCUMSTANCES AND THE PROVISIONS OF THE ACT WE HEREBY DECLINE TO INTERFER E WITH THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY LEVIED BY THE ASSESS ING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT,1961. 7. AS A RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . .., # $, (SANJAY GARG ) ( DR. B.R.R. KUMAR) / JUDICIAL MEMBER %& / ACCOUNTANT MEMBER AG DATE: 18/12/2018 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE