M/s S.S. Foods Industries, Ludhiana V. ACIT, Ludhiana

ITA 925/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81102 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 24-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Wrong claim
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 925/CHD/2013 ASSESSMENT YEAR: 2009-10 S.S. FOODS INDUSTRIES, VS. ACIT 2791-B CENTRAL CIRCLE- VI GURDEV NAGAR LUDHIANA LUDHIANA PAN NO.ABFFS6019M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI. S.K. MITTAL DATE OF HEARING : 08/12/2014 DATE OF PRONOUNCEMENT : 23/12/2014 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER PASSED BY THE LD. CIT(A)-II, LUDHIANA ON 01/0 8/2013. 2. IN THIS APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN DISMISSING THE APPEAL AND UPHOLDING THE AC TION OF THE ASSESSING OFFICER IN LEVYING PENALTY OF RS. 51,01,7 20/- U/S 271(1)(C) OF THE TAX INCOME TAX ACT, 1961. 2. THAT THE WORTHY CIT(A) WHILE CONFIRMING THE LEVY OF PENALTY HAS MISINTERPRETED THE FACT WITH REGARD TO THE BONA FID E CLAIM OF THE ASSESSEE AND ALSO OVER LOOKED THE FACT THAT IT WAS A DEBATABLE ISSUE FOR A LONG TIME AND EVEN THE INSTRUCTIONS REC EIVED FROM THE CHIEF COMMISSIONER OF INCOME TAX (NORTH WEST REGION ), CHANDIGARH REGARDING THE WITHDRAWAL OF APPEAL IN RE SPECT OF PENALTY AND WRONG CLAIM OF DEDUCTION U/S 80IB HAVE BEEN IGNORED ON FLIMSY GROUND. 3. THAT THE WORTHY CIT(A) HAS ALSO ERRED IN APPLYING T HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF UNION OF IN DIA VS. DHARAMENDRA TEXTILE PROCESSORS & OTHERS AS REPORTED IN 306 ITR 277, WHICH JUDGMENT ALSO STANDS DISTINGUISHED AND N OT A GOOD LAW BY THE SUBSEQUENT JUDGMENT. 4. THAT THE PENALTY U/S 271(1) (C) HAS BEEN CONFIRMED BY THE WORTHY CIT(A) AGAINST THE FACTS AND CIRCUMSTANCES O F THE CASE AND SUBMISSIONS MADE DURING THE COURSE OF HEARING H AS NOT BEEN CONSIDERED PROPERTY. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSE SSEE HAD FILED RETURN OF INCOME DECLARING NIL INCOME ON 30/09/2009 AFTER CLAIMING DEDUCTION UNDER SECTION 80-IC AMOUNTING TO RS. 1,97,78,564/-. THROUGH QUESTIONNAIRE DT. 12/07/2011 THE ASSESSEE WAS ASKED TO PROVIDE DE TAILED NOTE ON ADMISSIBILITY OF THIS DEDUCTION. INITIALLY ASSESSEE SOUGHT ADJOURNMENTS AND ULTIMATELY IT WAS SUBMITTED ON 18/10/2011 THAT THE DEDUCTION UNDER SECTION 80-IC WAS CLAIMED AS PER THE PROVISIONS OF THE ACT AND CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT. AFTER FEW MORE ENQUIRIES ULTIMATELY ON 22/11/2011 THE ASSESSEE WAS ASKED TO JUSTIFY THE DEDUCTION PARTICULARLY BECAUSE THE DEDUCTION INCLUDE A SUM OF RS. 1,49,87, 933/- ON ACCOUNT OF EXPORT INCENTIVE. THEREAFTER ON 29/11/2011 ASSESSEE SUBMITTED IN ITS WRITTEN REPLY WHICH IS AS UNDER : REGARDING THE JUSTIFICATION OF CLAIM OF DEDUCTION U/S 80IC ON EXPORT INCENTIVES OF RS. 1,49,87,933/-, IT IS SUBMI TTED THAT IN VIEW OF THE RECENT JUDGMENT OF THE HONBLE SUPREME COURT IN CSE OF M/S LIBERTY INDIA, THE CLAIM OF DEDUCTION U/ S 80-IC TO THE EXTENT OF ABOVE INCOME IS SURRENDERED FOR ADDIT ION SUBJECT TO NO PENALTY. FURTHER, THE APPELLANT ALSO SURRENDERS THE CLAIM OF DEDUCTION U/S 80-IC ON THE INTEREST IN COME OF RS. 21,548/- CREDITED IN THE PROFIT AND LOSS ACCOUNT. T HUS, IT IS SUBMITTED THAT THE BALANCE CLAIM OF DEDUCTION U/S 8 0-IC OF RS. 47,69,083/- MAY KINDLY BE GRANTED TO THE APPELL ANT. 4. ULTIMATELY, ASSESSMENT WAS COMPLETED UNDER SECTI ON 143(3) ON 29/11/2011 MAKING DISALLOWANCE OF PART OF THE DEDUC TION TO THE EXTENT OF RS. 1,49,87,933/- AND AFTER ANOTHER DISALLOWANCE ON ACCOUNT OF INTEREST AMOUNTING TO RS. 21,548/-, PENALTY PROCEEDINGS UNDE R SECTION 271 (1)(C) WERE ALSO INITIATED. IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY IT WAS MAINLY CONTENDED THAT NO INACCURATE PARTICULARS HAVE BEEN FURNISHED. IT WAS ALSO SUBMITTED THAT ADDITION WAS BASICALLY AGREED SUBJECT TO THE CONDITION THAT NO PENALTY WOULD BE L EVIABLE. THE AO DID NOT FIND ANY FORCE IN THESE SUBMISSIONS AND REFER T O VARIOUS DECISIONS PARTICULARLY THE DECISION OF HONBLE DELHI HIGH COU RT IN CASE OF CIT VS. ZOOM COMMUNICATION (P) LTD., 327 ITR 510 AND LEVIED A MINIMUM PENALTY @ 100% AMOUNTING TO RS 51,01,720/-. 5. DURING THE APPEAL PROCEEDINGS IT WAS MAINLY CONT ENDED THAT SINCE ISSUE REGARDING DEDUCTION UNDER SECTION 80-IC WAS D EBATABLE AND THAT IS WHY ASSESSEE HAD MADE A CLAIM FOR DEDUCTION. THE I SSUE GOT FINALLY SETTLED AFTER THE PRONOUNCEMENT OF DECISION BY HON BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT REPORTED IN 317 I TR 218. FURTHER, IT WAS SUBMITTED THAT ASSESSEE IS NOT A TECHNICAL PERSON A ND DEDUCTION WAS CLAIMED ON THE BASIS OF CERTIFICATE ISSUED BY CHART ERED ACCOUNTANT IN THE FORM 10CCB. THERE WAS NO ACT OF DELIBERATE CONCEAL MENT, AND THEREFORE PENAL ACTION WAS NOT ATTRACTED. RELIANCE WAS PLACED ON VARIOUS CASE LAWS PARTICULARLY ON THE FINDINGS OF HONBLE SUPREM E COURT IN CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158. 6. AFTER CONSIDERING THESE SUBMISSIONS LD. CIT NOTE D THE CHRONOLOGY OF EVENTS AT PAGE 19 AND 20 OF HIS ORDER AND OBSERVED THAT ASSESSEE TRIED TO EVADE THE PERSISTENT QUERIES MADE BY THE AO REGARDI NG THE CLAIM OF DEDUCTION UNDER SECTION 80-IC. IT WAS FURTHER OBSER VED THAT EVEN DESPITE QUERIES ON 22/11/2011 REGARDING DEDUCTION TO THE EX TENT OF RS. 1,49,87,933/- ON ACCOUNT OF INCENTIVE, EITHER EVASI VE REPLY WAS GIVEN OR ASSESSEE TRIED TO JUSTIFY THE DEDUCTION. IT WAS ALS O NOTED THAT EXPORT INCENTIVE WERE NOT SEPARATELY MENTIONED IN FORM NO. 10CCB. IT WAS FURTHER OBSERVED THAT ISSUE HAD BECAME FINAL AFTER THE PRONOUNCEMENT OF DECISION IN CASE OF M/S LIBERTY INDIA VS. CIT (SUP RA) BY HONBLE SUPREME COURT ON 31/08/2009 I.E., 30 DAYS BEFORE THE FILING OF RETURN AND THEREFORE ISSUE WAS NO LONGER DEBATABLE. THEREAFTER, THE LD. CIT(A) REFERRED TO VARIOUS CONTENTIONS AND GAVE HIS OBSERVATIONS ON SU CH CONTENTION AND ALSO REFERRED TO VARIOUS CASE LAWS AND ULTIMATELY C ONFIRMED THE LEVY OF PENALTY. 7. BEFORE US LD. COUNSEL FOR THE ASSESSEE ALSO REFE RRED TO THE SPECIFIC EVENTS AND POINTED OUT RETURN WAS FILED ON 30/09/20 09. THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF M/S LIBERTY INDIA VS. CIT (SUPRA) WAS RENDERED ON 31/08/2009 BUT WAS PUBLISHED IN CTR ONL Y ON 17/09/2009. IT IS NOT ALWAYS POSSIBLE FOR EVERYBODY TO NOTE JUDGMENT ON THE VERY FIRST DAY. FURTHER THE RETURN MAY HAVE BEEN FINALIZED BEFORE T HE JUDGMENT CAME TO THE NOTICE OF CONCERNED CHARTERED ACCOUNTANT WHO HA S ISSUED CERTIFICATE IN FORM NO. 10CCB FOR CLAIM OF DEDUCTIO N, THEREFORE, BY THE TIME, THE RETURN WAS FILED, IT WAS A BONAFIDE CLAIM . EVERYTHING WAS DISCLOSED IN THE RETURN AND NOTHING WAS CONCEALED, THEREFORE, PENAL ACTION WAS NOT ATTRACTED. 8. AS FAR AS THE FINDINGS OF THE CIT THAT ISSUE WAS DECIDED AGAINST THE ASSESSEE BY THE HONBLE JURISDICTIONAL HIGH COURT I S CONCERNED, THE PRONOUNCEMENT OF A JUDGMENT WHICH HAS BEEN CHALLENG ED BEFORE SUPREME COURT IS NOT LAW OF THE LAND AND ASSESSEE WAS STILL ENTITLED TO MAKE CLAIM FOR DEDUCTION BECAUSE THERE WERE JUDGMEN TS FROM OTHER HIGH COURTS FAVOURING ASSESSEE ON THE ISSUE AND THEREFOR E ISSUE WAS DEBATABLE UNDER THE RECORDS. HE REFERRED TO THE DECISION OF H ONBLE DELHI HIGH COURT IN CASE OF CIT VS. ELTEK SGS (P) LTD. 300 ITR 6 AND CIT VS. INDIA GELATINE AND CHEMICALS LTD 275 ITR 284. 9. HE FURTHER SUBMITTED THAT ASSESSEE IS NOT A TECH NICAL PERSON AND HE WOULD SIGN A RETURN WHATEVER IS ADVISED TO HIM, HE ALSO CONTENDED THAT IT CANNOT BE SAID THAT ASSESSEE KEPT ON CONCEALING PAR TICULARS BECAUSE ASSESSEE HAS VOLUNTARILY SURRENDERED THE DEDUCTION VIDE REPLY DT. 18/10/2011. HE FURTHER SUBMITTED THAT HE LOOKED THE ISSUE PARTICULARLY FOR CLAIM OF DEDUCTION UNDER CHAPTER IV. THE PENALTY IS GENERALLY NOT LEVIABLE AND IN THIS REGARD HE RELIED ON THE DECISION OF HON BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. RAJ OVERSEAS 336 ITR 261. THE SLP AGAINST THIS DECISION HAVE BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE CC NO. 1943/2011. SIMILAR VIEW WAS TAKEN BY HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. ARISUDANA SPINNING MILLS L TD. 326 ITR 429. HE ALSO REFERRED TO THE FOLLOWING JUDGMENTS: 1. CIT VS. NALWA SONS INVESTMENTS LTD. (2010) 327 IT R 543 (DEL) 2. CIT VS. TEK RAM (HUF) 300 ITR 354 (P&H) 3. CIT VS. INDERSONS LEATHER (P) LTD. (2010) 328 ITR 167 (P&H) 4. CIT VS. AMAR NATH (2008) 16 DTR 326 (P&H) 5. ITO VS. MAHAVIR CYCLE INDUSTRIES- (2010) 36 DTR (CHD-TRIB)398 6. ACIT VS. PERFECT FORGINGS (2011) 143 TTJ (CHD -TRIB)117 10. HE FURTHER SUBMITTED THAT LD. CIT HAS HIMSELF M ENTIONED IN HIS ORDER THAT CHARTERED ACCOUNTANT COULD HAVE REVISED HIS RE PORT AFTER THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S LI BERTY INDIA VS. CIT (SUPRA) WHICH HAS NOT BEEN DONE. THIS MAKES IT CLEA R THAT ASSESSEE MADE THE CLAIM UNDER THE BONAFIDE BELIEVE AND IF ANY BON AFIDE ERROR HAS BEEN COMMITTED THE SAME WOULD NOT ATTRACT PENAL ACTION A ND IN THIS REGARD RELIED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. COMMISSIONER OF IN COME TAX AND ANOTHER 348 ITR 306. IN ANY CASE, THE ASSESSEE CAN NOT BE PENALIZED FOR THE MISTAKE COMMITTED BY THE CONSULTANT. HE FURTHER SUBMITTED THAT SINCE EVERYTHING WAS DISCLOSED, THEREFORE, DECISION OF HO NBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. IS FULLY APPLICABLE. 11. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED TH E ORDER OF LD. CIT(A). HE SUBMITTED THAT ONCE THE ISSUE WAS FINALL Y SETTLED BY THE SUPREME COURT ON 31/08/2009 IN CASE OF M/S LIBERTY INDIA VS. CIT (SUPRA) THEN INITIALLY ASSESSEE SHOULD NOT HAVE MADE THE CL AIM AND EVEN IF THE CLAIM WAS MADE THE SAME SHOULD HAVE BEEN WITHDRAWN AT THE VERY FIRST OPPORTUNITY. SINCE THE CLAIM WAS MADE AGAINST THE D ECISION OF HONBLE SUPREME COURT, PENALTY HAS BEEN RIGHTLY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. NO DOUBT THE HONBLE JURISDICTIONAL HIGH COURT HAD DECIDED THIS ISSUE AG AINST THE ASSESSEE WHICH IS REPORTED IN 293 ITR 520 AND DECISION OF HO NBLE PUNJAB & HARYANA HIGH COURT IN CASE OF LIBERTY INDIA VS. CIT ON 17/0 8/2006. AT THE SAME TIME THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ELTEK SGS (P) LTD. 300 ITR 6 WA S RENDERED ON 19/02/2008 WHICH WA S FAVOURABLE TO THE ASSESSEE, THEREFORE, ASSESSEE HAD THE RIGHT TO MAKE CLAIM OF DEDUCTION. IT IS NOT ALWAYS NECESSARY THAT EVERY BODY WOULD BECAM E AWARE OF THE DECISION. ULTIMATELY WHEN THE SAME ISSUE WAS DECIDE D BY THE HONBLE SUPREME COURT ON 31/08/2009 WHICH IS SAID TO BE PUB LISHED FOR THE FIRST TIME ON 17/09/2009 AND THEREFORE THERE WAS VERY LIT TLE GAP BETWEEN PUBLICATION OF THE DECISION AND FILING OF THE RETUR N. IT IS ALSO POSSIBLE THAT RETURN MAY HAVE BEEN FINALISED BEFORE PUBLICATION O F THE DECISION, THEREFORE AT THE TIME OF MAKING RETURN THE ISSUE WA S DEBATABLE AND PENALTY COULD NOT HAVE BEEN LEVIED. 13. IN ANY CASE ASSESSEE HAS DISCLOSED ALL THE PART ICULARS OF THE INCOME AND IT CANNOT BE STATED THAT ASSESSEE HAS CONCEALED ANY PARTICULAR AND FURNISHED INCORRECT PARTICULARS. ONCE PROPER DISCLO SURES HAVE BEEN MADE THEN PENALTY IS NOT ATTRACTED IN VIEW OF THE DECISI ON OF HONBLE SUPREME COURT IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT . LTD. 322 ITR 158. FURTHER THE RETURN WAS FILED ON THE BASIS OF CERTIF ICATE ISSUED BY CHARTERED ACCOUNTANT AND EVEN IF IT IS A MISTAKE ON THE PART OF CHARTERED ACCOUNTANT, THE ASSESSEE CAN ALWAYS TAKE THE SHELTE R THAT HE WAS UNDER BONAFIDE BELIEVE ON THE BASIS OF SUCH ADVICE THAT D EDUCTION WAS CLAIMED ON THE BASIS OF SUCH BONAFIDE BELIEVE. THEREFORE, I N OUR OPINION THIS IS NOT A FIT CASE FOR LEVY OF PENALTY AND ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELETE THE PENALTY. 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23/12/2014 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR