The Deputy Commissioner of Income Tax, Jammu V. M/s. V.K. Chander Shekhar & Co., Jammu

ITA 83/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60691 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Keywords: Wrong claim; Bonafide mistake
• Section: 271(1)(c); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.83(ASR)/2012 ASSESSMENT YEAR:2007-08 PAN :AAAFP7130J DY. COMMISSIONER OF INCOME-TAX, VS.M/S. V.K. CHANDE R SHEKHAR & CO., CIRCLE, JAMMU. GANDHI NAGAR, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY: NONE DATE OF HEARING:25/06/2012 DATE OF PRONOUNCEMENT:02/07/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER OF THE CIT(A), DATED 23.12.2011 FOR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS : 1 ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S 80IB IN RESPECT OF PROFIT ON DEPB WHEN THE HONBLE SUPREME COURT IN THE CASE OF M/S. LIBERTY INDIA VS. CIT REPORTED IN 317 ITR 218 HAS H ELD THAT PROFIT FROM DEPB DO NOT FORM PART OF THE NET PROF ITS OF 2 ELIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF SECTION 80IB OF THE INCOME-TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE PENALTY IMPOSED U/S 271(1)(C) ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S 80IB IN RESPECT OF PROFIT ON DEPB WHEN THE ASSESSEE HAS FURNISHED INACCURATE PAR TICULARS OF INCOME IN ORDER TO REDUCE TAX LIABILITY. 2. THE NOTICE OF HEARING WAS ISSUED TO THE ASSESSEE BY RPAD FOR 25.06.2012. DESPITE THE FACT, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED TO ARGUE THE MATTER IN DIS PUTE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WILL SERVE IF THE NOTICE IS ISSUED TO THE A SSESSEE TIME AND TIME, THEREFORE, WE DECIDING THE ISSUE EX-PARTE, AFTER HE ARING THE LD. DR. 3. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE FILED ITS RETURN OF INCOME 31.10.2007 DECLARING TOTAL INCOME OF RS.58,05,220/- AFTER CLAIMING DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AT RS.19,35,072/- @ 25%. THE AO DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE TO THE TUNE OF RS .16,79,434/- ON ITEMS OF DEPB ENTITLEMENT SALES, SUBSIDY ON PACKING MATERIAL AND INTEREST ON FDR AT RS.63,61,567/- , RS.2,94,000/- AND RS. 74,168/- @ 25%. THE AO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. AFTER HEARING THE 3 ASSESSEE AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD, THE AO LEVIED PENALTY BY HOLDING AS UNDER: IN RESPONSE TO THE SAID NOTICE THE COUNSEL OF THE ASSESSEE MOVED AN APPLICATION AS PER WHICH HE HAS BEEN CONTENDED THAT THE ASSESSEE HAD SHOWN/DISCLOSED ALL THE FACTS OF THE CASE AT THE TI ME OF ASSESSMENT PROCEEDINGS AND HAD CONCEALED NOTHING. IT WAS MEREL Y THAT THE ASSESSEE HAD CLAIMED CERTAIN DEDUCTIONS WHICH HAVE NOT BEEN ALLOWED. THE COUNSEL OF THE ASSESSEE RELIED UPON THE JUDGMEN T OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF SIR SHADI LAL SUGAR & GENERAL MILLS LTD. AND NR VS. CIT CITED AT 64 CTR (SC) 199. ON GOING THROUGH THE FACTS OF THE CASE SUBMISSION M ADE BY THE COUNSEL OF THE ASSESSEE AT THE TIME OF ASSESSMENT P ROCEEDINGS AND IN RESPONSE TO THE PENALTY PROCEEDINGS AND JUDGMENTS Q UOTED BY THE COUNSEL OF THE ASSESSEE PLEADING THAT NO PENALTY IS LEVIABLE ON ACCOUNT OF WRONG CLAIM OF DEDUCTION/CALCULATION MADE BY THE ASSESSEE. IT IS WORTHWHILE TO MENTION HERE THAT LAW IS CRYSTAL CLEA R IN VIEW OF THE VARIOUS JUDGMENTS OF THE VARIOUS COURTS INCLUDING T HE HONBLE APEX COURT OF INDIA IN THE CASE OF STERLING FOODS PVT. L TD. THAT INCOME DERIVED DIRECTLY FROM INDUSTRIAL UNIT IS ELIGIBLE F OR DEDUCTION U/S 80IB SINCE A LONG. DESPITE THIS THE ASSESSEE HAS CLAIME D WRONG DEDUCTION IN ORDER TO REDUCE THE TAX LIABILITY. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS AND EVEN DURING THE COURSE OF PENALTY P ROCEEDINGS THE ASSESSEE COULD NOT JUSTIFY THE WRONG CLAIM OF DEDUC TION. THE CITATIONS QUOTED BY THE ASSESSEE SPEAK OF THE FACTS THAT THER E SHOULD BE A BONAFIDE MISTAKE COMMITTED BY THE ASSESSEE TO AVOID PENALTY PROCEEDINGS BUT IN THE INSTANT CASE THE ASSESSEE CO ULD NOT JUSTIFY THE WRONG CLAIM OF DEDUCTION U/S 80IB ON THE INCOME WHI CH WERE NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING AS DISCUSS ED ABOVE. THEREFORE, I CONSIDER IT A FIT CASE TO IMPOSE PENAL TY U/S 171(1)(C) OF THE ACT, AS THE ASSESSEE HAS FURNISHED INACCURATE P ARTICULARS OF INCOME IN ORDER TO REDUCE THE TAX LIABILITY WHICH IS HEREB Y IMPOSED TO THE EXTENT OF RS.5,65,297/-. 4. THE LD. FIRST APPELLATE AUTHORITY DELETED THE PE NALTY IN DISPUTE ON THE BASIS OF VARIOUS DECISIONS RENDERED BY THE HONBLE SUPREME COURT AS WELL AS 4 PUNJAB & HARYANA HIGH COURT AND THE JURISDICTIONAL TRIBUNAL, BY HOLDING THAT THE ISSUES OF DEDUCTION CLAIMED BY THE ASSESSE ARE DEBATABLE AND THE LD. FIRST APPELLATE AUTHORITY DELETED THE PENALTY IN DI SPUTE VIDE IMPUGNED ORDER DATED 23.12.2011. NOW, THE REVENUE HAS FILED THE PR ESENT APPEAL BEFORE US BY RAISING GROUND THAT THE LD. CIT(A) HAS ERRED I N DELETING THE PENALTY IN DISPUTE ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U /S 80IB OF THE ACT IN RESPECT OF PROFIT ON DEPB WHEN THE HONBLE SUPREME COURT IN THE CASE OF M/S. LIBERTY INDIA VS. CIT REPORTED IN 317 ITR 218, HAS HELD THAT THE PROFITS FROM DEPB DID NOT FORM PART OF THE NET PROFITS OF E LIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF SECTION 80IB OF TH E ACT. 5. AFTER HEARING THE LD. DR, WE ARE OF THE VIEW THA T THE LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY DELETED THE PENALTY IN DISPUT E BY RELYING UPON THE DECISION RENDERED IN THE CASE OF M/S. RELIANCE PETR OCHEMICALS LTD. REPORTED IN 322 ITR 158 AS WELL AS THE DECISION OF THE ITAT, CANDIGARH BENCH, AS REPORTED IN 60 DTR 41. WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE LD. FIRST APPELLATE AUTHORITY IS SUPPORTED BY THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. RELIANCE PETROCHEMICALS L TD. REPORTED IN 322 ITR 158 AS WELL AS THE DECISION OF THE HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF M/S. MAHARANI PACKAGING 55 DTR (HP) 340 . 5 5.1. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE NARRATED ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS C ALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE A UTHORITY. THEREFORE, THE PRESENT APPEAL FILED BY THE REVENUE IS DISMISSED. 6 IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA N O.83(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2ND JULY, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2ND JULY, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:V.K. CHANDER SHEKHAR & CO. JAMMU. 2. THE DCIT, CC-1, JAMMU. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.