M/s Mansrover Forgings Pvt. Ltd., Ludhiana V. ACIT, Ludhiana

ITA 873/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64086 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 22-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Wrong claim; Difference of opinion
• Section: 69C; 80HHC; 133A; 80IB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 873/CHD/2012 (ASSESSMENT YEAR : 2006-07) MANSROVER FORGINGS PVT. LTD., VS. THE A.C.I.T., SUA ROAD, VILLAGE KANGANWAL, CIRCLE V, LUDHIANA. LUDHIANA. PAN: AABCM2174M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 31.10.2012 DATE OF PRONOUNCEMENT : 06.12.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, LUDHIANA D ATED 18.07.2012 RELATING TO ASSESSMENT YEAR 2006-07 AGAINST THE PEN ALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT). 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE READS AS UNDER: 1. THE ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-II. LUDHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD LEVY OF PENALTY U/S 271(1)(C) AT RS.11,00,000/- BY THE LD. ASSESSING OFFICER WHEREAS NO SUCH PENALTY WAS EXIGIBLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AMOUNTING TO RS.11 LACS. 2 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION SURVEY OPERATIONS UNDER SECTION 133A OF THE ACT WERE CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 8.2.2006. THE ASSESSEE DURING THE COURSE OF SURVEY OFFERED AND TH EREAFTER DECLARED ADDITIONAL INCOME OF RS.1 CRORE. THE ASSESSEE IN T HE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION CLAIMED DEDU CTION UNDER SECTION 80IB OF THE ACT AT RS.32,13,847/-. THE SAID DEDUC TION UNDER SECTION 80IB OF THE ACT WAS CLAIMED ON TOTAL BUSINESS INCOM E OF RS.1,07,12,824/-, WHICH INCLUDED THE SUM OF RS.1 CR ORE SURRENDERED DURING THE COURSE OF SURVEY, WHICH IN TURN WAS CRE DITED TO THE PROFIT & LOSS ACCOUNT AS INCOME SURRENDERED. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE SAID SURRENDERED INC OME IN VIEW OF THE RATIO LAID DOWN IN PANDIAN CHEMICALS LTD. VS. CIT [ 262 ITR 278 (SC)] AND NATIONAL LEGGURED WORKS VS. CIT [288 ITR 18 (P& H)]. CONSEQUENTLY, THE INCOME OF THE ASSESSEE WAS RECOMP UTED BY TREATING THE ADDITIONAL INCOME OFFERED AT RS.1 CRORE UNDER THE H EAD INCOME FROM OTHER SOURCES AND ALSO DENYING DEDUCTION UNDER SEC TION 80IB OF THE ACT ON THE SAID ADDITIONAL INCOME SURRENDERED. THE CIT (APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. CONSEQ UENTLY PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE TAKEN UP BY HE ASSESSING OFFICER AND THE ASSESSEE WAS SHOW CAUSED AS TO WHY PENALTY U/S 271(1)(C) OF THE ACT BE NOT IMPOSED ON IT. THE ASS ESSEE HAD VOLUNTARILY SURRENDERED RS.1 CRORE UNDER THE HEAD UNEXPLAINED INVESTMENT IN FACTORY BUILDING, UNEXPLAINED CASH IN HAND AND UNEX PLAINED INVESTMENT MADE IN STOCK. THE PLEA OF THE ASSESSEE THAT NO PE NALTY WAS LEVIABLE IN CASES WHERE THERE WAS DIFFERENCE OF OPINION, WAS NO T ACCEPTED BY HE ASSESSING OFFICER, AS ACCORDING TO HIM, THERE WERE NO TWO VIEWS POSSIBLE ON THIS ISSUE. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD 3 NOWHERE CONTESTED THE HEAD UNDER WHICH THE SURRENDE RED INCOME HAD BEEN ASSESSED AND IN ANY CASE, THE SURRENDER BEING ON ACCOUNT OF UNEXPLAINED CASH AND UNEXPLAINED INVESTMENT, COULD NOT BE TREATED AS BUSINESS INCOME. FURTHER THE CLAIM OF DEDUCTION UN DER SECTION 80IB OF THE ACT ON WHICH SURRENDERED INCOME WAS NOT ALLOWAB LE IN VIEW OF THE RATIO LAID DOWN IN NATIONAL LEGGURED WORKS (SUPRA). THE ASSESSEE WAS HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF IN COME AND THUS LIABLE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER LEVIED PENALTY OF RS.11 LACS BEING 100% OF TAXES SO UGHT TO BE EVADED. THE SAID LEVY OF PENALTY U/S 271(1)(C) OF THE ACT W AS UPHELD BY THE CIT (APPEALS) RELYING ON SERIES OF DECISIONS INCLUDING CIT VS. ZOOM COMMUNICATIONS PVT. LTD. [327 ITR 510 (DEL)]. 5. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDER OF CIT (APPEALS) IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT DEDUCTION UN DER SECTION 80IB OF THE ACT WAS CLAIMED IN VIEW OF THE REPORT OF THE CH ARTERED ACCOUNTANT AND MERE NON ALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT DOES NOT MERIT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT AS THE ASSESSEE HAD FURNISHED COMPLETE DETAILS ALONGWITH R ETURN OF INCOME AND DEDUCTION WAS CLAIMED IN VIEW OF THE ADVICE OF THE CHARTERED ACCOUNTANT. THE LEARNED A.R. FOR THE ASSESSEE FURT HER STATED THAT DISALLOWANCE/ADDITION BECAUSE OF DIFFERENCE OF OPIN ION IN GRANTING DEDUCTION UNDER SECTION 80IB OF THE ACT, DOES NOT M ERIT LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1) THE DCIT VS. M/S KARNA INTERNATIONAL ITA NO.1347/CHD/2010 2) CIT VS. AMAR NATH (2008) 16 DTR (P&H)326 4 3. CIT VS. S.D.RICE MILLS 275 ITR 206 (P&H) 4. CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC) 5. ACIT VS. PERFECT FORGINGS 11 ITR (TRIB) 166 (CHD) 6. THE LEARNED D.R. FOR THE REVENUE PLACING RELIAN CE ON THE ORDER OF THE AUTHORITIES BELOW FURTHER PLACED RELIANCE ON TH E DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CHADHA SUGARS PVT. LTD. VS . ACIT [135 ITD 42 (DEL). 7. THE LEARNED A.R. FOR THE ASSESSEE FURTHER PLACED RELIANCE ON THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN AR ISUDANA SPINNING MILLS LTD. IN ITA NOS.609 TO 611/CHD/2008 RELATING TO ASSESSMENT YEARS 1997-98, 1998-99 AND 2000-01, ORDER DATED 28.11.200 8 REPORTED IN (2009) [129 DTR (CHD)(TRIB)] 1. THE LEARNED A.R. F OR THE ASSESSEE FURTHER POINTED OUT THAT THE SAID DECISION HAS BEEN UPHELD BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. ARISUDANA SP INNING MILLS LTD. [326 ITR 429 (P&H)]. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE, DURING THE COURSE OF SUR VEY OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESSEE UNDER SECTION 1 33A OF THE ACT ON 8.2.2006, THE ASSESSEE MADE A SURRENDER OF RS.1 CRO RE. THE ADDITIONAL INCOME OF RS.1 CRORE WAS OFFERED AND DECLARED BY TH E ASSESSEE UNDER THE FOLLOWING HEADS: (I) UNEXPLAINED INVESTMENT IN CONSTRUCTION RS.11,00 ,000/- OF FACTORY BUILDING. (II) UNEXPLAINED CASH. RS. 9,00,000/- (III) UNEXPLAINED EXPENDITURE INCURRED/ RS. 80,00 ,000/- INVESTMENT MADE IN STOCK. --------------------------------------------------- -------------------- TOTAL RS.1,00,00,000/- --------------------------------------------------- --------------------- 5 9. THE ASSESSEE INCLUDED THE SAID INCOME IN THE PRO FIT & LOSS ACCOUNT AND INCOME WAS DECLARED AT RS.1,07,12,824/- IN THE PROFIT & LOSS ACCOUNT. THE ASSESSEE THEREAFTER CLAIMED DEDU CTION UNDER SECTION 80IB OF THE ACT ON THE SAID SURRENDERED INCOME OF RS.1 CRORE. THE SAID ADDITIONAL INCOME DECLARED BY THE ASSESSEE DURING T HE COURSE OF SURVEY WAS ASSESSED IN THE HANDS OF THE ASSESSEE AS INCOM E FROM OTHER SOURCES UNDER THE PROVISIONS OF SECTION 69A, 69B AND 69C OF THE ACT. THE ASSESSING OFFICER AND THE CIT (APPEALS) DENIED DEDU CTION CLAIMED UNDER SECTION 80IB OF THE ACT ON THE SAID SURRENDERED AMO UNT OF RS.1 CRORE AND CONSEQUENTLY THE DEDUCTION UNDER SECTION 80IB OF TH E ACT WAS RECOMPUTED. THE ASSESSEE WAS HELD TO HAVE FURNISHE D INACCURATE PARTICULARS OF INCOME BECAUSE OF NON ALLOWANCE OF D EDUCTION UNDER SECTION 80IB OF THE ACT ON THE SURRENDERED INCOME A ND CONSEQUENTLY PENALTY U/S 271(1)(C) OF THE ACT AT RS.11 LACS WAS LEVIED. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT IT HAD FURNISHED CO MPLETE PARTICULATES OF ITS INCOME IN THE RETURN OF INCOME FILED FOR THE CA PTIONED ASSESSMENT YEAR AND MERE RECOMPUTATION OF DEDUCTION UNDER SECT ION 80IB OF THE ACT COULD NOT HELD THE ASSESSEE TO HAVE FURNISHED INACC URATE PARTICULARS OF INCOME. 10. FROM THE PERUSAL OF THE RECORD WE FIND THAT THE ASSESSEE HAD DECLARED RS.11 LACS ON ACCOUNT OF UNEXPLAINED INVES TMENT IN THE CONSTRUCTION OF FACTORY BUILDING, RS.9 LACS ON ACCO UNT OF UNEXPLAINED CASH AND RS.80 LACS ON ACCOUNT OF UNEXPLAINED EXPEN DITURE INCURRED/INVESTMENT MADE IN STOCK. THE COPY OF THE SURRENDER LETTER DATED 8.2.2006 IS PLACED AT PAGE 3 OF THE PAPER BOO K. THE SAID SURRENDER WAS MADE BY THE ASSESSEE ON ACCOUNT OF CERTAIN DISC REPANCIES OBSERVED IN STOCK, CASH AND ALSO IN CERTAIN OTHER PAPERS. T HE SAID SURRENDERED INCOME HAS BEEN ASSESSED UNDER THE HEAD INCOME FRO M OTHER SOURCES 6 BEING INCLUDIBLE UNDER SECTION 69A, 69B AND 69C OF THE ACT. THE SAID INCOME SURRENDERED BY THE ASSESSEE WAS HELD TO BE N OT BUSINESS INCOME BUT WAS HELD TO BE INCOME FROM OTHER SOURCES, CHARG EABLE TO TAX UNDER THE PROVISIONS OF SECTION 69A, 69B AND 69C OF THE A CT AND DECLARATION OF SUCH INCOME AS INCOME FROM BUSINESS BY THE ASSESSEE WAS THUS NOT BONAFIDIE. FURTHER THE CLAIM OF DEDUCTION UNDER SE CTION 80IB OF RS.30 LACS WAS DENIED IN THE HANDS OF THE ASSESSEE BEING NOT ELIGIBLE. THE DECLARATION OF THE INCOME IN THE PRESENT CASE BY TH E ASSESSEE WAS NOT BONAFIDE AND ASSESSEE HAD MADE A FALSE CLAIM OF DED UCTION UNDER SECTION 80IB OF THE ACT. MERELY BECAUSE THE CHARTERED ACCO UNTANT HAD CERTIFIED THE AUDIT REPORT COMPUTING THE DEDUCTION ALLOWABLE UNDER SECTION 80IB OF THE ACT ON THE BOOK RESULTS SHOWN BY THE ASSESSE E, WHICH APPARENTLY WERE NOT CORRECTLY SHOWN, DOES NOT EXONERATE THE AS SESSEE FROM THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 11. IT IS AN ADMITTED POSITION THAT PENALTY U/S 271 (1)(C) OF THE ACT IS LEVIABLE IN CASES WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. EITHER OF THE TWO LIMBS OF SECTION 271(1)(C) I.E. CONCEALING THE INCOME OR FUR NISHING OF INACCURATE PARTICULARS ARE TO BE SATISFIED, BEFORE LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT. MERELY BECAUSE IT HAD MADE THE CLAIM OF DEDUC TION UNDER SECTION 80IB OF THE ACT, WHICH IN TURN WAS CERTIFIED BY THE CHARTERED ACCOUNTANT, DOES NOT ABSOLVE THE ASSESSEE AND HENCE THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE AC T. THE DENIAL OF DEDUCTION UNDER SECTION 80IB OF THE ACT ON SUCH SUR RENDERED INCOME HAS BEEN MADE BY THE AUTHORITIES BELOW BY APPLYING THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN NATIONAL LEGGURED WORKS (SUPRA) WHEREIN IT WAS HELD THAT THE ASSESSEE COULD NOT BE HELD TO BE ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 80HHC OF THE ACT O N INCOMES 7 SURRENDERED AS A RESULT OF SURVEY. IN VIEW OF THE SETTLED POSITION OF LAW PROPAGATED BY THE JURISDICTIONAL HIGH COURT IN NATI ONAL LEGGURED WORKS (SUPRA), THE CLAIM OF THE ASSESSEE BY WAY OF DEDUCT ION UNDER SECTION 80IB OF THE ACT WAS INADMISSIBLE AND CONSEQUENTLY W AS A FALSE CLAIM MADE BY THE ASSESSEE, WHICH MAKES IT EXIGIBLE TO LE VY OF PENALTY U/S 271(1)(C) OF THE ACT. 12. WE FURTHER FIND THAT THE HON'BLE DELHI HIGH COU RT IN CIT VS. ZOOM COMMUNICATIONS PVT. LTD. (SUPRA) HELD AS UNDER : 'IT IS TRUE THAT MERE SUBMITTING A CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVING INACCURATE PARTICULARS OF THE INCOME OF THE ASSESSEE, BUT IT CANNOT BE DISPUTED THAT THE CL AIM MADE BY THE ASSESSEE NEEDS TO BE BONAFIDE. IF THE CLAIM BESIDES BEING INCORRECT IN LAW IS MALAFIDE, EXPLANATION 1 TO SECTION 271(1) WO ULD COME INTO PLAY AND WORK TO THE DISADVANTAGE OF THE ASSESSEE. THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMAL L PERCENTAGE OF THE INCOME TAX RETURNS ARE PICKED UP FOR SCRUTINY. IF T HE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY INCORRECT IN LAW BUT IS ALS O WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKI NG SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY UNDER SECTION 271(L)(C) OF THE AC T. IF WE TAKE THE VIEW THAT A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTIN G BONAFIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LI CENSE TO UNSCRUPULOUS ASSESSEES TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABL E CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSMENT UNDER SECTION 143(1) OF TH E ACT AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY ME RELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CO NSEQUENCE WOULD BE THAT THE PERSONS, WHO MAKE CLAIMS OF THIS NATURE , ACTUATED BY A MALAFIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE B Y THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM , IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY TH E DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE. ' 13. THE LEARNED A.R. FOR THE ASSESSEE HAD PLACED RE LIANCE ON THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL I N KARNA INTERNATIONAL (SUPRA) AND PERFECT FORGINGS (SUPRA) WHEREIN THE FACTS OF NON ALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF TH E ACT WERE ON DIFFERENT FOOTINGS AND ARE NOT RELEVANT FOR DECIDIN G THE ISSUE BEFORE US. 8 FURTHER THE RELIANCE PLACED BY THE LEARNED A.R. FOR THE ASSESSEE ON THE RATIO LAID DOWN IN CIT VS. ARISUDANA SPINNING MILLS LTD. (SUPRA) IN RESPECT OF NON ALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80IA OF THE ACT ON ACCOUNT OF DIFFERENT LEGAL PROPOSITIONS VIS- -VIS THE DEDUCTION CLAIMED. THE SAID RATIO IS NOT APPLICABLE TO THE F ACTS OF THE CASE BEFORE US WHERE ADMITTEDLY THE SURRENDERED INCOME WAS OFFE RED BY THE ASSESSEE AS ADDITIONAL INCOME AND THEREOF DEDUCTION UNDER SE CTION 80IB OF THE ACT WAS DENIED TO THE ASSESSEE ON SUCH SURRENDERED INCO ME. THE DEDUCTION UNDER SECTION 80IB OF THE ACT WAS CLAIMED. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE UPHOLD THE LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT. THE GROUND OF APPEAL RAISED BY THE ASSESSEE I S THUS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF DECEMBER, 2012. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH DECEMBER, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH