The ACIT, Central Circle-2, Baroda V. Shri Nilesh J.Patel, Baroda

ITA 898/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9406 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDEY
• Assessee Lawyers: M J SHAHAR
• Keywords: Bonafide belief; Wrong claim; Bonafide mistake
• Section: 143(3); 153A; 80IB; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.898/AHD/2013 2. ./ I.T.A. NO.899/AHD/2013 ( / ASSESSMENT YEARS : 2006-07 & 2007-08) THE ACIT CENTRAL CIRCLE-2 BARODA / VS. SHRI NILESH J.PATEL 25AB, ZAVERCHAND PARK OLD PADRA ROAD BARODA-390 020 ./ ./ PAN/GIR NO. : ACQPP 6432 M ( ' / APPELLANT ) .. ( #' / RESPONDENT ) ' $ / APPELLANT BY : SHRI A.K. PANDEY, SR.DR #' % $ / RESPONDENT BY : SHRI M.J. SHAH, AR &'( % ) / DATE OF HEARING 23/02/2016 *+, % ) / DATE OF PRONOUNCEMENT 29/02/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAI NST THE COMMON ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS) -IV, AHMEDABAD [CIT(A) IN SHORT] DATED 24/01/2013 PERTAINING TO ASSESSMENT YEARS (AYS) 2006-07 & 2007-08. SINCE THE IDENTICAL FACTS AND GROUNDS ARE ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 2 - INVOLVED IN BOTH THE APPEALS, THESE WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .898/AHD/2013 FOR AY 2006-07 AS A LEAD CASE. THE REVENUE HAS RA ISED THE FOLLOWING COMMON GROUND OF APPEAL:- THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CANC ELLING THE PENALTY ORDER, PASSED U/S.271(1)(C) OF THE I T ACT, WHEREBY CONCEALMENT PENALTY OF RS.26,31,500/- (FOR AY 2007-08 PENALTY OF RS.6 9,42,000/-) WAS IMPOSED. 21.. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HA D FURNISHED HIS RETURN OF INCOME U/S.139(1) OF THE INCOME TAX ACT,1961 (HERE INAFTER REFERRED TO AS THE ACT) ON 16/12/2007 DECLARING TOTAL INCOME OF RS.6,32,79,403/-. A SEARCH U/S.132 OF THE ACT WAS CONDUCTED AT THE RESI DENCE OF THE ASSESSEE; THE PROVISIONS OF SECTION 153A WERE ATTRACTED. THE ASSESSMENT U/S.153A R.W.S.143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 29/10/2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) ALSO INITIATED PENALTY PROCEEDINGS IN RESPECT OF MAKING WRONG CLAIM OF DEDUCTION U/S.80IB OF THE ACT. SUBSEQUENTLY, THE AO IMPOSED A PENALTY OF RS.26,31, 500/-. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, P REFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL AND ALSO DIRECTE D THE AO TO DELETE THE ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 3 - PENALTY. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) , NOW THE REVENUE IS IN APPEAL BEFORE US. 3. THE SR.DR SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY . 3.1. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE CLAIM OF DEDUCTION U/S.80IB OF THE ACT WAS WITH DRAWN BY THE ASSESSEE ON TECHNICAL GROUND AND THAT CANNOT BE THE GROUND F OR LEVY OF PENALTY. HE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITT ED THAT THE LD.CIT(A) HAS RIGHTLY DELETED THE PENALTY. HE RELIED UPON TH E JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 0158 (SC). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THIS ISSUE I N PARAGRAPH NOS.7.4 TO 7.7 OF HIS BY OBSERVING AS UNDER:- 7.4 IT IS A PROVEN FACT THAT DISCLOSURE MADE SUBSE QUENT TO SEIZURE OF INCRIMINATING MATERIAL CANNOT BE SAID TO BE VOLUNTA RY. IF IN PURSUANCE TO SEARCH, INCRIMINATING MATERIAL IS FOUND AND DISC LOSURE IS MADE ON THE BASIS OF SCRUTINY OF SUCH SEIZED INCRIMINATING MATE RIALS, SUCH DISCLOSURE CANNOT BE SAID TO BE VOLUNTARY. FURTHER, IF NO INCR IMINATING MATERIAL IS FOUND AND STILL DISCLOSURE OF INCOME IS MADE SO AS TO COVER UP ANY ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 4 - BONAFIDE MISTAKE, THE SAME HAS TO BE TREATED AS VOL UNTARY. IN THE PRESENT CASE, DURING THE COURSE OF SEARCH, SALARY REGISTER HAS BEEN SEIZED WHICH CONTAINS THE DETAILS OF NUMBER OF EMPLOYEES WORKING AT SILVASSA UNIT. SO FAR AS AY 2006-07 IS CONCERNED, IT IS NOTED THAT DURING THE MONTHS OF- APRIL, MAY, AUGUST, SEPTEMBER, OCTOBER, NOVEMBER & DECEMBER 2005 AND JANUARY 2006, ONLY 9 EMPLOYEES WERE WORKING. HO WEVER, DURING THE MONTHS OF JUNE & JULY 2005, 10 EMPLOYEES WERE W ORKING AND DURING THE MONTHS OF FEBRUARY AND MARCH, 2006, 11 EMPLOYEE S WERE WORKING. SIMILARLY FOR AY 2007-08, DURING THE MONTHS OF APRI L, 2006, JANUARY TO MARCH 2007, 9 EMPLOYEES WERE WORKING WHEREAS DURING THE MONTHS FROM JUNE TO NOVEMBER 2006, 11 EMPLOYEES WERE EMPLO YED AS WELL AS DURING THE MONTH OF DECEMBER 2006, 10 EMPLOYEES WER E WORKING. THEREFORE, ON THE BASIS OF ABOVE DETAILS AS AVAILAB LE ON THE BASIS OF SALARY REGISTER SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS, IT IS A MATTER OF FACT THAT IT IS NOT THE CASE THAT DURING ALL THE MONTHS OF THE YEAR, LESS THAN 10 EMPLOYEES WERE WORKING. DURING A NUMBER OF MONTHS 10 & 11 EMPLOYEES WERE WORKING IN THE UNIT. THE APP ELLANT HAS MADE THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT ON THE B ASIS OF AUDIT CERTIFICATE IN THE PRESCRIBED FORM. IT WAS THE BELI EF OF THE APPELLANT THAT HE WAS ELIGIBLE FOR SUCH DEDUCTION U/S 80IB OF THE ACT IN VIEW OF THE ABOVE CIRCUMSTANCES. DURING THE COURSE OF SEARCH PR OCEEDINGS IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT, IT IS DUL Y STATED BY THE APPELLANT THAT THE CLAIM OF 80IB DEDUCTION HAS BEEN MADE IN THE RETURN OF INCOME FILED FOR AY 2006-07 AND AY 2007-08 AS PE R HIS PERSONAL KNOWLEDGE AND LEGAL ADVICE GIVEN TO HIM IN THIS REG ARD SINCE NECESSARY CONDITIONS ARE DULY SATISFIED. THIS HAS BEEN STATED BY THE APPELLANT IN RESPONSE IN QUESTION NO. 17 OF THE STATEMENT RECORD ED U/S 132(4) OF THE ACT ON 04-06-2008. IT IS THE CONTENTION OF THE APPE LLANT THAT BASED ON THE BONAFIDE BELIEF DULY SUPPORTED BY AUDITOR'S REP ORT IN THIS REGARD AND THE FACT THAT SUCH CLAIM HAS ALREADY BEEN ALLOWED I N EARLIER ASSESSMENT YEAR 2005-06, HE HAS MADE THE CLAIM FOR DEDUCTION U /S 80IB OF THE ACT IN THE ORIGINAL RETURN OF INCOME FILED FOR THE PRE SENT ASSESSMENT YEARS UNDER CONSIDERATION. THE APPELLANT HAS RELIED UPON A NUMBER OF CONFLICTING JUDICIAL DECISIONS RELATING TO THE MEAN ING OF WORKER INCLUDING CONTRACTUAL WORKER, METHOD OF COUNTING OF NUMBER OF EMPLOYEES, ETC. AS WELL AS THE FACT THAT SUBSTANTIA L COMPLIANCE AND DISCLOSURE HAS BEEN MADE SO FAR AS THE CLAIM OF DED UCTION U/S 80IB IS ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 5 - CONCERNED. THE SALARY REGISTER SEIZED DURING THE C OURSE OF SEARCH PROCEEDINGS CANNOT BE SAID TO BE INCRIMINATING MATE RIAL SINCE IT IS PART OF REGULAR BOOKS OF ACCOUNTS. THE ENHANCEMENT OF IN COME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF T HE ACT IS ONLY ON ACCOUNT OF VOLUNTARY WITHDRAWAL OF BONAFIDE CLAIM M ADE U/S 80!B OF THE ACT. IT CANNOT BE TREATED AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 7.5 THERE ARE A NUMBER OF JUDICIAL DECISIONS SUPPOR TING THE VIEW THAT THERE CANNOT BE ANY HARD AND FAST RULE BY WHICH ONE CAN DETERMINE WHETHER THERE HAS BEEN SUBSTANTIAL COMPLIANCE WITH THE PRESCRIBED LIMIT OF TEN WORKERS FOR THE PURPOSE OF CLAIMING OF DEDUC TION U/S 80IB OF THE ACT. IT WOULD SUFFICE IF, ON AN AVERAGE, THERE HAD BEEN 10 WORKERS EMPLOYED IN THE UNDERTAKING, EVEN THOUGH THE NUMBER OF WORKERS EMPLOYED DURING SOME PART OF THE PREVIOUS YEAR WAS LESS THAN 10. THERE IS A JUDICIAL OPINION EXISTING ON THE ISSUE SUBSTAN TIATING THAT IN ORDER TO QUALIFY FOR RELIEF U/S 80IB OF THE ACT THE UNDERTAK ING MUST HAVE EMPLOYED 10 OR MORE WORKERS SUBSTANTIALLY FOR THE P ERIOD FOR WHICH THE RELIEF IS CLAIMED. CONSIDERING ALL THE JUDICIAL DEC ISIONS ON THE ISSUE, IT IS QUITE OBVIOUS THAT THE ISSUE IS DEBATABLE AND THERE IS A REMOTE BUT DISTINCT POSSIBILITY THAT HAD THE APPELLANT NOT WIT HDRAWN THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT, SUCH CLAIM WOULD HAV E BEEN ALLOWED. THIS IS NOT A CASE WHERE FALSE OR BOGUS CLAIM OF DE DUCTION U/S 80IB HAS BEEN MADE BY THE APPELLANT. THE APPELLANT HAS MADE THE CLAIM IN THE ORIGINAL RETURN OF INCOME FILED BASED ON HIS BONAFI DE BELIEF WHICH IS WELL SUBSTANTIATED. 7.6 CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE, IT CAN BE SAFELY CONCLUDED THAT THERE IS NO MERIT IN HOLDING THE ASSESSEE TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPE CT OF CLAIM MADE U/S 80LB OF THE ACT IN THE ORIGINAL RETURNS FILED U/S 1 39 OF THE ACT. IT IS A CASE WHERE NO FALSE OR BOGUS CLAIM FOR DEDUCTION U/ S 80IB HAS BEEN MADE. THE APPELLANT HAS DISCLOSED ALL THE MATERIAL FACTS RELEVANT FOR COMPUTATION OF INCOME IN THE ORIGINAL RETURN OF INC OME FILED AS WELL AS FURNISHED THE AUDITOR'S REPORT. THEREFORE, THERE IS NO JUSTIFICATION FOR LEVY OF PENALTY WHEN THE CLAIM OF THE APPELLANT WAS ON AN ISSUE WHICH ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 6 - WAS CLEARLY DEBATABLE AT THE TIME OF MAKING SUCH CL AIM IN THE RETURNS OF INCOME. THERE ARE A NUMBER OF JUDICIAL DECISIONS WH ICH SUPPORT SUCH BONAFIDE CLAIM OF THE APPELLANT SO FAR AS THE DEDUC TION U/S 80IB OF THE ACT IS CONCERNED. THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT IS DULY SUPPORTED BY THE AUDITOR'S REPORT WHICH HAS CLEARLY CERTIFIED THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB IN EACH OF THE ABOVE ASSESSMENT YEARS. SUCH CLAIM OF DEDUCTION WAS ALSO ALLOWED IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT FOR A Y 2005-06. IT HAS BEEN DULY STATED BY THE APPELLANT IN THE STATEMENT RECORDED, U/S 132(4) OF THE ACT THAT HE WAS UNDER THE BONAFIDE BELIEF BA SED ON THE LEGAL ADVICE TO CLAIM DEDUCTION. HOWEVER, SUCH CLAIM OF D EDUCTION WAS WITHDRAWN IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT. SUCH BONAFIDE ACTION ON THE PART OF THE APPELLANT CANNOT BE VISITED WITH PENALTY U/S 271(1)(C) OF THE ACT SINCE THE APPELLANT HAS DISCLOSED ALL THE NECESSARY PARTICULARS FOR COMPUTA TION OF HIS INCOME. AN ASSESSEE WHO MAKES THE BONAFIDE CLAIM FOR PARTIC ULAR DEDUCTION IN THE RETURN OF INCOME FILED U/S 139 OF THE ACT BY DI SCLOSING NECESSARY FACTS RELATING TO THE SAME, SUBSEQUENTLY WITHDRAWS SUCH DEDUCTION, EVEN IF SUBSEQUENT TO THE SEARCH, BASED ON THE LEGAL ADV ICE HAS NEITHER CONCEALED HIS PARTICULARS OF INCOME NOR FURNISHED I NACCURATE PARTICULARS OF INCOME. THEREFORE, THERE IS NO CASE FOR PENALTY U/S 271(1)(C) OF THE ACT. EVEN IF THE APPELLANT HAD NOT WITHDRAWN THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT AND SUCH BONAFIDE CLAIM MADE FOR DEDUCTION BY DISCLOSING ALL THE NECESSARY PARTICULA RS IN THE ORIGINAL RETURN OF INCOME WOULD NOT HAVE BEEN ACCEPTED BY TH E REVENUE, EVEN : IN SUCH CIRCUMSTANCES, IT COULD NOT BE SAID BY ANY STR ETCH OF IMAGINATION THAT THE APPELLANT HAS CONCEALED HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE CLAIM OF DE DUCTION EVEN IF REJECTED. 7.7 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS BEEN ABLE TO ESTABLISH HIS BONAFIDE FOR CLAIMING DEDUCTION U/S 80IB OF THE ACT IN THE ORIGINAL RETURN OF INCOME FILED U/S 139 OF THE ACT. THEREFOR E, PENALTY LEVIED BY THE AO U/S 271 (1)(C) OF THE ACT IS NOT JUSTIFIED. ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 7 - 4.1. THE AFORESAID FINDING OF THE LD.CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD.SR.DR BY PLACING ANY MATERIAL ON RECORD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE L D.CIT(A), SAME IS HEREBY UPHELD. THE LD.COUNSEL FOR THE ASSESSEE HA S RIGHTLY PLACED RELIANCE ON THE JUDGEMENT OF HONBLE APEX COURT REN DERED IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 0158 (SC). THEREFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD., THE GROUND RAISED BY THE REVENUE IS HEREB Y REJECTED. 5. IN THE RESULT, REVENUES APPEAL FOR AY 2006 -07 IS DISMISSED. 6. NOW, WE TAKE UP THE REVENUES APPEAL IN ITA NO.899/AHD/2013 FOR AY 2007-08. 6.1. SINCE THERE IS NO CHANGE INTO THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL OF THE REVENUE, THEREFORE TAKING A C ONSISTENT VIEW, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF T HE LD.CIT(A). THUS, THE GROUND RAISED IN REVENUES APPEAL FOR AY 2007-08 IS ALSO REJECTED. AS A RESULT, REVENUES APPEAL IN ITA NO.899/AHD/2013 F OR 2007-08 IS DISMISSED. ITA NOS.898 & 899/AHD/2013 ACIT VS. NILESH J.PATEL ASST.YEARS 2006-07 & 2007-08 RESPECTIVELY - 8 - 7. IN THE RESULT, THE APPEALS OF THE REVENUE FOR AY S 2006-07 & 2007-08 BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 29 TH DAY OF FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( PRAMOD KUMAR ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/ 02 /2016 0)..& , '.&../ T.C. NAIR, SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)-IV, AHMEDABAD 5. 5'6 &23 , ) 23 , , 1 / DR, ITAT, AHMEDABAD 6. 689 :( / GUARD FILE. / BY ORDER, #5 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 23.2.16 (DICTATION-PAD 6+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..29.2.16 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.29.2.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29.2.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER