Kothari Products Ltd., Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 861/LKW/2014

• Counselvise Citation: 86123714 RSA 2014
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2015
• Assessment Year: 1990-1991
• Appeal Filed On: 26-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Question of law; Difference of opinion
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.861 & 862/LKW/2014 ASSESSMENT YEAR:1990-91 & 1991-92 KOTHARI PRODUCTS LTD. KANPUR V. ACIT CENTRAL CIRCLE I KANPUR TAN/PAN:AAACK5571F (APPELLANT) (RESPONDENT) ITA NO.863 TO 868/LKW/2014 ASSESSMENT YEAR:1990-91 TO 1995-96 KOTHARI POUCHES LTD. (MERGED WITH KOTHARI PRODUCTS LTD.) KANPUR V. ACIT CENTRAL CIRCLE I KANPUR TAN/PAN:AAACK5571F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY: SHRI. A. K. SINGH, CIT (DR) DATE OF HEARING: 09 08 2015 DATE OF PRONOUNCEMENT: 11 09 2015 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEES AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A) CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 2. THE FACTS IN ALL THESE APPEALS ARE ALMOST SIMILAR, AS PENALTY WAS LEVIED ON DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80I OF THE :- 2 -: ACT. WE, HOWEVER, FOR THE SAKE OF REFERENCE EXTRACT THE GROUNDS RAISED IN I.T.A. NO. 861/LKW/2014 AS UNDER:- 1. THAT THE LD. CIT(A)-I, KANPUR ERRED IN LAW AS WELL AS ON FACTS IN REJECTING THE APPELLANT'S APPEAL AND UPHOLDING PENALTY OF RS.60 LACS IMPOSED IN ITS CASE U/S 271(1)(C), WITHOUT APPRECIATING THAT FACT THAT NO PENALTY U/S 271(1)(C) WAS INITIATED BY THE A.O. IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT TAKING COGNIZANCE OF THE ORDER PASSED U/S 143(3) BY THE AO, PLACED ON RECORD WITH THE WRITTEN SUBMISSIONS FILED BEFORE HIM, WHEREFROM IT WAS CLEAR THAT NO PROCEEDINGS U/S 271(1)(C) HAD BEEN INITIATED BY THE AO IN THE ASSESSMENT U/S 143(3) AND RELYING SOLELY ON THE ORDER OF PENALTY PASSED U/S 271(1)(C). 3. THAT THE LD. CIT(A)-I, KANPUR HAS FAILED TO EXAMINE THE FACTS AND RECORDS PLACED ON RECORDS AND INSTEAD OF EXAMINING THE TECHNICAL OBJECTIONS RAISED BY THE APPELLANT, HAS RESORTED TO USE OF CURSORY AND DEROGATORY REMARKS IN THE APPELLATE ORDER, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT THE LD. CIT(A)-I, KANPUR ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT THE PROCEEDINGS U/S 271(1)(C) WERE BARRED BY LIMITATION. 5. THAT THE LD. CIT(A)-I, KANPUR ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT EVEN ON MERITS, THE PROVISIONS OF SECTION 271(1)(C) WERE NOT APPLICABLE TO THE APPELLANT'S CASE AS THERE WAS NEITHER ANY CONCEALMENT OF PARTICULARS OF INCOME NOR THERE WAS FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME BY THE APPELLANT AT THE TIME OF FILING :- 3 -: THE RETURN AND EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. THAT EVEN ON MERITS THE REASON FOR LEVY OF PENALTY WAS ON ACCOUNT OF DISALLOWANCE RELATING TO CLAIM OF DEDUCTION U/S 80-I BY THE APPELLANT THE FULL DETAILS OF WHICH WERE ON RECORD AND HAD BEEN DULY FILED ALONG WITH THE RETURN OF INCOME AND ALSO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. 7. THAT THE LD.CIT(A)-I, KANPUR ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT APPELLANT'S CLAIM U/S 80-I WAS SUPPORTED BY THE FACT THAT THE SAME CLAIM WAS ALLOWED IN ITS CASE FOR A.Y. 1987-88 BY THE HON'BLE ITAT IN THE APPELLANT'S OWN CASE. 8. THAT THE LD. CIT(A)-I, KANPUR FAILED TO APPRECIATE THAT THE CLAIM U/S 80-I OF THE ACT WAS IN FACT SUBJECT MATTER OF A SLP WHICH HAS ALREADY BEEN ADMITTED BY THE HON'BLE SUPREME COURT AND IS THUS A SUBJECT MATTER OF LITIGATION AND IMPLYING THEREOF THAT THE SAME AMOUNTS TO A DIFFERENCE OF OPINION ON A QUESTION OF LAW. THEREFORE THE CLAIM OF THE APPELLANT WAS BONAFIDE AND GENUINE AND WAS MADE CORRECTLY. 9. THAT THE ORDER OF THE LD CIT(A) IS BAD ON FACTS AND IN LAW AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AS HE IGNORED AND DID NOT CONSIDER SEVERAL JUDGMENTS CITED BY THE APPELLANT IN THE WRITTEN SUBMISSIONS FILED BEFORE HIM. 10. THAT THE LD.CIT(A)-I, KANPUR ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THAT THE CLAIM OF THE APPELLANT WAS ALSO SUPPORTED BY A CERTIFICATE FROM AN INDEPENDENT CHARTERED ACCOUNTANT. 11. THAT THE LD CIT(A) HAS FAILED TO APPRECIATE THAT AT THE TIME :- 4 -: OF FILING THE RETURN FOR THE ABOVE SAID YEAR, THERE WAS ALREADY AN ORDER OF THE HON'BLE ITAT IN FAVOUR OF ALLOWANCE OF CLAIM U/S 80-I OF THE APPELLANT AND THERE WAS NO ORDER AGAINST THE APPELLANT. THE ORDER OF THE HON'BLE HIGH COURT CAME AS LATE AS 16.10.2012, MUCH AFTER FILING OF THE RETURN WHICH AGAIN IS SUBJECT MATTER OF SLP AT THE HON'BLE SUPREME COURT. THUS THE CLAIM U/S 80-I WAS GENUINE AND BONAFIDE. 12. THAT FURTHER MERELY BECAUSE A CLAIM OF THE APPLICANT U/S 801 WAS NOT ACCEPTED BY THE HIGH COURT THERE IS NO CAUSE OF LEVY OF PENALTY U/S 271(1)(C) AS HAS BEEN HELD BY THE HON'BLE SUPREME COURT SO LONG AS THE CLAIM IS MADE IN A BONAFIDE MANNER. 13. THAT EVEN OTHERWISE ONCE THE QUANTUM APPEAL HAS BEEN ACCEPTED FOR ADJUDICATION BY THE HON'BLE HIGH COURT AND SUPREME COURT THERE CAN BE NO LEVY OF PENALTY U/S 271(1)(C). 3. DURING THE COURSE OF HEARING OF THE APPEALS, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO CERTAIN FACTS. IN THE ASSESSEES CASE WAY BACK IN 1991, VIDE ORDER DATED 21.2.2991 IN THE CASE OF KOTHARI PRODUCTS LTD., KANPUR VS. ACIT, KANPUR IN I.T.A. NO. 1509/ALLD/1990 FOR ASSESSMENT YEAR 1988-89, THE TRIBUNAL HAS HELD THAT THE ASSESSEE, ENGAGED IN MANUFACTURING OF SADA PAN MASALA, IS ENTITLED FOR DEDUCTION UNDER SECTION 32AB AND 80I OF THE ACT. A REFERENCE AGAINST THIS ORDER OF THE TRIBUNAL WAS FILED UNDER SECTION 256(2) OF THE ACT BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD AND VIDE ORDER DATED 18.7.1995, THE HON'BLE HIGH COURT OF ALLAHABAD HAS DECLINED TO ANSWER THE QUESTION AND ACCORDINGLY THE TRIBUNALS ORDER ATTAINED FINALITY. THE RETURNS IN THE IMPUGNED ASSESSMENT YEARS WERE FILED ALMOST IN AUGUST, :- 5 -: 1991 RELYING UPON THE ORDER OF THE TRIBUNAL AND DEDUCTION UNDER SECTION 80I OF THE ACT WAS CLAIMED. THE CLAIM OF THE ASSESSEES WAS DISALLOWED, AS THE REVENUE HAS NOT ACCEPTED THE ORDER OF THE TRIBUNAL. LATER ON VIDE ORDER DATED 16.10.2012, THE HON'BLE HIGH COURT OF ALLAHABAD HAS TAKEN A CONTRARY VIEW IN THE CASE OF CIT VS. M/S KOTHARI POUCHES LTD. HOLDING THEREIN THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80I OF THE ACT. COPY OF THE SAME IS AVAILABLE AT PAGES 113 TO 122 OF THE COMPILATION OF THE ASSESSEE. THIS ORDER WAS FOLLOWED IN THE CASE OF CIT VS. KOTHARI PRODUCTS LTD., KANPUR IN INCOME TAX REFERENCE NO.94 OF 1995. COPY OF THE SAME IS PLACED AT PAGES 124 TO 128 OF THE COMPILATION OF THE ASSESSEE. AGAINST THIS JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD, AN SLP WAS FILED BEFORE THE HON'BLE APEX COURT. 4. AFTER THE JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD CONFIRMING THE DENIAL OF DEDUCTION UNDER SECTION 80I OF THE ACT, THE REVENUE HAS INITIATED PENALTY PROCEEDINGS IN THE IMPUGNED ASSESSMENT YEARS UNDER SECTION 271(1)(C) OF THE ACT. THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS ALSO CONFIRMED BY THE LD. CIT(A) FOLLOWING THE AFORESAID JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT SINCE THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80I OF THE ACT ON THE BASIS OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 1988-89, IN WHICH THE CLAIM OF THE ASSESSEE WAS ALLOWED, THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. MOREOVER, WHEN THE HON'BLE HIGH COURT OF ALLAHABAD HAS TAKEN A CONTRARY VIEW IN DIFFERENT ASSESSMENT YEARS, THE ISSUE ITSELF HAS BECOME DEBATABLE, FOR WHICH PENALTY UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE LEVIED. IN SUPPORT OF THIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS:- :- 6 -: 1. CIT VS. NATH BROTHERS EXIM INTERNATIONAL LTD., 288 ITR 670. 2. CIT VS. RAHULJEE AND CO., 250 ITR 225 (DEL). 3. CIT VS. CHANDRAKANT M. TOLLA, 218 ITR 438 (MAD.). 4. KIKANI GORDHAN DASS & CO. VS. CIT, 200 ITR 678. 5. CIT VS. AJAIB SINGH AND CO, 253 ITR 630 (P&H). 6. CIT VS. CALCUTTA CREDIT CORPORATION, 166 ITR 29 (CAL.). 7. CIT VS. HARSHVARDHAN CHEMICAL AND MINERALS LTD., 259 ITR 212 (RAJ.) 8. CIT VS. INDIAN METALS AND FERRO ALLOYS LTD., 211 ITR 35 (ORI.) 6. THE LD. D.R. HAS SIMPLY PLACED RELIANCE UPON THE ORDERS OF THE LD. CIT(A). 7. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT UNDISPUTEDLY FOR ASSESSMENT YEAR 1988-89 THE TRIBUNAL HAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80I OF THE ACT. AGAINST THIS ORDER OF THE TRIBUNAL, A REFERENCE WAS FILED BEFORE THE HON'BLE HIGH COURT OF ALLAHABAD, AND THE HON'BLE HIGH COURT OF ALLAHABAD HAS DECLINED TO ANSWER THE QUESTION AND ACCORDINGLY THE ORDER OF THE TRIBUNAL WAS CONFIRMED. IT IS ALSO EVIDENT FROM THE RECORD THAT THE ASSESSEE HAS FILED RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS CLAIMING DEDUCTION UNDER SECTION 80I OF THE ACT AFTER THE ORDER OF THE TRIBUNAL. THEREFORE, THE ASSESSEE HAS A REASONABLE BELIEF THAT IT IS ENTITLED FOR DEDUCTION UNDER SECTION 80I OF THE ACT. THE LEGAL POSITION HAS BEEN CHANGED AFTER THE JUDGMENT OF THE HON'BLE HIGH COURT OF ALLAHABAD IN THE ASSESSEES CASE IN THE YEAR 2012 WHEN A CONTRARY VIEW WAS TAKEN AND IT WAS HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80I OF THE ACT. RELYING UPON THE VERDICT OF THE HON'BLE HIGH COURT OF ALLAHABAD, THE REVENUE HAS LEVIED PENALTY UNDER SECTION :- 7 -: 271(1)(C) OF THE ACT WITHOUT REALIZING THE FACT THAT WHEN RETURN WAS FILED, THERE WAS THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, IN WHICH IT WAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80-I OF THE ACT. THEREFORE, THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE. 8. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE HAS WRONGLY LEVIED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE IMPUGNED ASSESSMENT YEARS WHEREAS THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80I OF THE ACT ON THE BASIS OF THE ORDER OF THE TRIBUNAL. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LD. CIT(A) AND DELETE THE PENALTY LEVIED BY THE ASSESSING OFFICER IN ALL THE ASSESSMENT YEARS. 9. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH SEPTEMBER, 2015 JJ:0909 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR