DCIT, Parwanoo V. M/s Super LPG Appliances, Solan

ITA 85/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5104 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 09-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGHDR
• Assessee Lawyers: S KRISHNAN
• Keywords: Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 85/CHD/2017 ASSESSMENT YEAR : 2011-1 2 THE DCIT, VS. M/S SUPER LPG APPLIANCES, CIRCLE, PARWANOO. VILLAGE-JHARMAJRI, EPIP, PHASE-1, BAROTIWALA, DISTT.SOLAN. PAN-ABDFS7491K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH,DR RESPONDENT BY : SHRI S.KRISHNAN DATE OF HEARING : 30.03.2017 DATE OF PRONOUNCEMENT : 08.06.2017 ORDER PER MS. DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILI NG THE CORRECTNESS OF THE ORDER DATED 28.10.2016 OF LD. CIT(A) SHIM LA PERTAINING TO 2011-12 ASSESSMENT YEAR ON THE FOLLOWING GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. CIT( A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S 271(L)(C) IGNORING THE FACTS TH AT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION @ 100% AND ESCAPED HIS INCOME FROM TA X WILLFULLY. 2. THOUGH THE APPEAL HAS BEEN FILED BY THE REVENUE, H OWEVER, THE LD. AR INVITING ATTENTION TO THE IMPUGNED ORDER SUBMITTED THAT IN THE FAC TS OF THE PRESENT CASE, THE RELIANCE HAS BEEN PLACED UPON THE DECISION OF THE ITAT WHEREIN ON SIMILAR FACTS AND CIRCUMSTANCES, THE PENA LTY WAS QUASHED. THUS, IT WAS HIS SUBMISSION THAT THE DEPARTMENTA L APPEAL MAY BE DISMISSED AS NOT MAINTAINABLE. 3. THE LD. SR. DR THOUGH PLACED RELIANCE UPON THE PENALTY ORDER, HOWEVER, NO INFIRMITY IN THE ORDER COULD BE POINTED OUT BY HIM APART FROM THE FACTS THAT THE DEDUCTION CLAIMED AT 100% WAS RESTRIC TED TO 25% BY THE AO WHICH STOOD CONFIRMED RIGHT UPTO THE ITAT. ACCOR DINGLY, THE ASSESSEE HAS BEEN HELD LIABLE FOR PENALTY ON THE GROUNDS THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS OF ITS INCOME. ACCORDINGLY, RELIANCE WAS PLACED ON THE SAME. 2 4. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF LPG GAS STOVES. THE DEDUCTION U/S 80IC OF THE ACT @ 100% WAS CLAIMED IN THE YEAR UNDER CONSIDERATION. THE RECORD SHOWS THAT CONSIDERING THE REQUISITE DETAILS , THE AO IN PARA 2.1 HELD THAT THE FIRM FULFILLS ALL THE REQUISITE CONDITIONS AND IS HELD TO BE GENUINE. HOWEVER, IN VIEW OF THE FACT THAT THE ASSESSEE FIRM HAD ALREADY CLAIMED DEDUCTION U/S 80IC @ 100% FOR FIVE YEARS UPTO 201 0-11 ASSESSMENT YEAR, THE CLAIM OF DEDUCTION WAS REDUCED TO 25% OF ELIGIBLE BUSINESS PROFITS. THE ASSESSEE IN SUPPORT OF ITS CLAIM IS FOU ND TO HAVE ADVANCED VARIOUS ARGUMENTS. HOWEVER, FOR THE PURPOSE O F THE PRESENT APPEAL, IT IS APPROPRIATE TO REFER TO THE FOLLOWING ARGUMENT S EXTRACTED IN THE ASSESSMENT ORDER: III) THE FACTS OF THE CASE ARE THAT THE ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION WHICH IS PROVED FROM THE FACT THAT THE ASSESSEE MADE VARI OUS INVESTMENTS IN THE PLANT AND MACHINERY WITHIN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2011-12. COMPLETE DETAILS WITH REGARD TO THE EXPANSION MADE AND MACHI NERY DEPLOYED ARE ENCLOSED HEREWITH. PHOTOCOPIES OF BILLS WITH REGARD TO THE P URCHASE OF THE MACHINERY ARE ALSO ENCLOSED AND ORIGINAL BILLS ARE PRODUCED HEREWITH. IV. THE ASSESSEE INFORMED THE INDUSTRIES DEPARTMEN T ABOUT THE SUBSTANTIAL EXPANSION BEING UNDERTAKEN BY THE ASSESSEE FIRM VIDE LETTER D ATED AND A COPY THEREOF IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE AND RECORD. V. SINCE THE BASIC REQUIREMENT OF SUBSTANTIAL EXPA NSION HAS BEEN COMPLIED WITH BY THE ASSESSEE, IT IS REQUESTED THAT DEDUCTION @ HUNDRED PERCENT IS AVOWED TO THE ASSESSEE FOR A FURTHER PERIOD OF FIVE YEARS IN TERMS OF SECTION 80IC OF THE ACT. 4.1 THE RECORD SHOWS THAT THE DEDUCTION WAS RESTRICT ED TO 25% WHICH WAS CONFIRMED IN APPEAL RIGHT UPTO THE ITAT. IN VIEW OF TH IS FACT, PENALTY @ 100% OF TAX SOUGHT TO BE EVADED WAS IMPOSED HOLDING T HAT THE ASSESSEE HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS OF ITS INCOME. WE FIND FROM THE ABOVE EXTRACT OF THE SUBMISSIONS ADVANCE D BEFORE THE AO THAT IT WAS NOT AN ACT OF FILING INACCURATE PARTICULARS. THE RECORD SHOWS THAT BEFORE THE CIT(A), RELIANCE WAS PLACED UPON IT A NO. 326/CHD/2015 IN THE CASE OF M/S HYCRON ELECTRONICS VS I TO FOR A.Y. 2009-10 WHEREIN THE CO-ORDINATE BENCH HAS CONSIDERED N EAR IDENTICAL FACTS AS UNDER : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND M ATERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED ABOVE IN THE IMPUGNED O RDERS ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT ASSESSEE WAS EL IGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT AND HAS BEEN CLAIMING THE S AME DEDUCTION FROM ASSESSMENT YEAR 2004-05 TILL 2008-09. THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10 CONTENDED THAT SINCE IT H AS UNDERTOOK SUBSTANTIAL EXPANSION, THEREFORE, ASSESSMENT YEAR U NDER APPEAL I.E. 2009- 10 BEING INITIAL YEAR, ASSESSEE WOULD BE ENTITLED F OR DEDUCTION UNDER SECTION 80IC OF THE ACT @ 100%. HOWEVER, THE AUTHO RITIES BELOW 3 CONSIDERED THAT THE ASSESSMENT YEAR UNDER APPEAL I. E. 2009-10 IS THE 6 TH YEAR OF THE MANUFACTURING ACTIVITY OF THE INDUSTRIA L UNDERTAKING, THEREFORE, INSTEAD OF CLAIM OF 100% DEDUCTION UNDER SECTION 80IC, ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDER SECT ION 80IC @ 25% ONLY. THE CLAIM OF ASSESSEE WAS SUPPORTED BY AUDIT REPORT AND THE PAST HISTORY SUBMITTED BY ASSESSEE AND CONSIDERED BY THE AUTHORI TIES BELOW. THUS, THE CLAIM OF ASSESSEE WAS RAISED FOR THE FIRST TIME IN THE 6 TH YEAR ON UNDERTAKING SUBSTANTIAL EXPANSION AND IT WAS CLAIME D TO BE FIRST YEAR/INITIAL YEAR FOR CLAIMING 100% DEDUCTION UNDER SECTION 80IC OF THE ACT. THUS, THE CLAIM OF THE ASSESSEE WAS NOT FALSE AND WAS ALSO NOT WRONG. THE ASSESSEE MADE CLAIM OF 100% DEDUCTION UNDER SEC TION 80IC OF THE ACT ON THE BASIS OF SUBSTANTIAL EXPANSION CARRIED OUT I N FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ASSESSEE, THEREFORE, FURNISHED ALL PARTICULARS OF INCOME IN THE RETURN OF INCOME A S WELL AS BEFORE ASSESSING OFFICER AT THE ASSESSMENT STAGE. NOTHING WAS CONCEALED TO THE REVENUE DEPARTMENT. WHOLE ISSUE WAS THUS, BASED UPO N INTERPRETATION OF PROVISIONS OF SECTION 80IC OF THE ACT FOR CLAIM OF DEDUCTION UNDER SECTION 80IC @ 100% ON UNDERTAKING SUBSTANTIAL EXPANSION IN THE ASSESSMENT YEAR UNDER APPEAL BY CLAIMING IT TO BE INITIAL YEAR . PRIOR TO THAT, THERE MAY BE NO HISTORY AGAINST THE ASSESSEE FOR MAKING S UCH A CLAIM. THE ISSUE IS WHOLLY DEBATABLE AND THE APPEAL OF THE ASSESSEE IS PENDING BEFORE HON'BLE HIGH COURT FOR CONSIDERATION OF THE SIMILAR ISSUE. THOUGH, THIS BENCH HAS NOT FOLLOWED THE DECISION OF DELHI BENCH IN THE CASE OF TIRUPATI LPG LTD.(SUPRA) ON QUANTUM AND DECIDED THE ISSUE AG AINST THE ASSESSEE ON QUANTUM, BUT THERE WAS FAVOURABLE ORDER FOR MAKI NG SUCH A CLAIM UNDER SECTION 80IC OF THE ACT. THEREFORE, IT IS A C ASE WHERE THERE MAY BE A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE FIRM AND THE ASSESSING OFFICER FOR CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE AC T IN 6 TH YEAR @ 100%. 7. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IC IN ASSESSMENT YEAR UND ER APPEAL IN A BONAFIDE MANNER AND MERE FACT THAT CLAIM OF ASSESSEE HAS BEE N DISALLOWED, WOULD NOT PROVE IT TO BE A FIT CASE OF LEVY OF PENALTY FOR FI LING INACCURATE PARTICULARS OF INCOME. THE ISSUE OF CLAIM OF DEDUCTION WAS DEBATA BLE AND BONAFIDE. HOWEVER, THERE WAS CONFLICT FOR DETERMINATION OF PR OVISION OF LAW. MERELY MAKING A CLAIM OF 100% DEDUCTION AGAINST 25% AS PER OPINION OF THE ASSESSING OFFICER UNDER SECTION 80IC OF THE ACT WOU LD NOT BE AT PAR WITH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESS EE SUPPORT THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT IT IS NOT A FIT C ASE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HON'BLE SUPREME COUR T IN THE CASE OF CIT V RELIANCE PETROPRODUCTS LTD. 322 ITR 158 HELD AS UND ER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY I T, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. I N ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISIONS, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRE TCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO 4 ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). A M ERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHIN G INACCURATE PARTICULARS. 8. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT BECAUSE IT IS WELL SETTLED THAT LEVY OF PENALTY IS NOT AUTOMATIC IN EA CH AND EVERY CASE AS IT DEPENDS UPON FACTS AND CIRCUMSTANCES OF THE CASE. SINCE THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IC HAVE BEEN ALLOWED I N EARLIER YEARS @ 100% AND ADMITTEDLY ASSESSEE UNDERTOOK SUBSTANTIAL EXPAN SION IN ASSESSMENT YEAR UNDER APPEAL, THEREFORE, ASSESSEE MADE BONAFIDE CLA IM OF DEDUCTION UNDER SECTION 80IC OF THE ACT AND THERE WERE NO JUDICIAL PRONOUNCEMENTS AGAINST THE ASSESSEE ON THE DATE OF MAKING SUCH A CLAIM. T HEREFORE, IT COULD NOT BE CONSTRUED THAT ASSESSEE FURNISHED INACCURATE PARTIC ULARS OF INCOME SO AS TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT . WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL TH E PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 4.2 THE ABOVE EXTRACTED ORDER SHOWS THAT THE PEN ALTY HAS BEEN QUASHED RELYING UPON THE ORDER OF THE ITAT. IN THE FAC TS AS THEY STAND, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN. BEING SATISFIED B Y THE REASONING AND FINDINGS, THE DEPARTMENTAL GROUND IS DISMISSED. 5. THE APPEAL OF THE REVENUE IS, ACCORDINGLY, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE,2017. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH.