DCIT, New Delhi V. M/s. Micro Abrasives India Ltd., New Delhi

ITA 925/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3456 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 22-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Section: 271(1)(c); 143(3); 80HHC; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.925/DEL/2010 (ASSESSMENT YEAR : 2003-04) DCIT, CIRCLE 6 (1), VS. M/S. MICRO ABRASIVES INDIA LTD., NEW DELHI. 115, 15, K.G. MARG, NEW DELHI 110 001. (PAN : AAACM0341H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.V.S.R. KRISHNA, CA REVENUE BY : SMT. MONA MOHANTY, DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (APPEALS)-IX, NEW DELHI DATED 16.12.2009 FOR ASSESS MENT YEAR 2003-04. THE FOLLOWING GROUNDS OF APPEAL ARE TAKEN BY THE RE VENUE : 1. THAT ORDER OF LEARNED CIT (APPEALS) IS ERRONEOU S & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE PENA LTY OF RS.2,78,820/- LEVIED BY A.O. U/S 271(1)(C) OF THE I .T. ACT.. 3. THE LD. CIT (A) IGNORED THE FACT THAT THE ASSESS EE HAS CONTESTED THE DISALLOWANCE OF CLAIM MADE BY A.O. U/ S 35DDA IN THE APPEAL BEFORE CIT (A). ITA NO.925/DEL/2010 2 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR A MEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF H EARING. 2. IN THIS APPEAL, THE ISSUE INVOLVED IS RELATING T O DELETION OF PENALTY U/S 271(1)(C) OF RS.2,78,820/- LEVIED ON ACCOUNT OF DIS ALLOWANCES OF CLAIM MADE BY THE ASSESSING OFFICER U/S 35DDA. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED RETURN OF INCOME DECLARING AN INCOME OF RS.3,31,49,780/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) AT AN INCOME OF RS.3,33,47,279 /-. THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) FOR DISALLOWAN CES MADE OF RS.7,77,200/- U/S 35DDA. THIS DEDUCTION U/S 35DDA WAS NOT CLAIME D WITH THE RETURN OF INCOME BUT CLAIM WAS MADE IN THE ASSESSMENT PROCEED INGS BEFORE THE ASSESSING OFFICER. 4. WHILE PLEADING ON BEHALF OF THE REVENUE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER. WHILE PLEADING ON BEHA LF OF THE ASSESSEE THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER INI TIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) ONLY ON ACCOUNT OF PARTIC ULARS FILED REGARDING THE CLAIM OF DEDUCTION U/S 80HHC WHICH IS CLEAR FROM PA RA 7 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : 7. FROM THE ABOVE DISCUSSION, IT IS CLEARLY EVIDEN T THAT THE ASSESSEE FAILED TO FURNISH ACCURATE PARTICULARS OF ITS INCOME WITH REGARD TO CLAIM OF DEDUCTION U/S 80HHC DURING THE Y EAR UNDER CONSIDERATION. THEREFORE, I AM SATISFIED THAT IT I S FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C). PENALTY PROCE EDINGS U/S 271(1)(C) HAVE BEEN INITIATED SEPARATELY. ITA NO.925/DEL/2010 3 HE FURTHER SUBMITTED THAT THE ASSESSEE MADE A CLAIM BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS U/S 35DDA OF RS.7,77,200/- WHICH HE DID NOT ALLOW WHICH IS ALSO CLEAR FROM PARA NO.3.2 OF THE ASSESSMENT ORDER WHICH READS AS UNDER : 3.2 FROM THE ASSESSEES REPLY AND THE RETURN OF IN COME, IT IS EVIDENT THAT OUT OF 150 WORKERS ONLY ONE WORKER OPT ED FOR RETIREMENT SCHEME CLOSURE COMPENSATION PAID BY THE ASSESSEE TO ITS EMPLOYEES IS NOT AN ALLOWABLE DEDUCTION U/S 35D DA. THEREFORE, DEDUCTION U/S 35DDA OF RS.777200/- IS NO T ALLOWED TO THE ASSESSEE. THE CLAIM MADE IN THE REVISED COM PUTATION OF INCOME FILED DURING ASSESSMENT PROCEEDINGS IS REJEC TED. (BUT THERE IS NO EFFECT ON THE RETURNED INCOME ON THIS A CCOUNT AS IT HAS ALREADY BEEN ADDED BACK BY THE ASSESSEE IN ITS COMPUTATION FILED WITH THE RETURN.) HE FURTHER PLEADED THAT IN THE COMPUTATION OF INCOM E FILED ALONG WITH RETURN OF INCOME, THE ASSESSEE ITSELF ADDED BACK THE AMOUN T TO THE TOTAL INCOME. THE CLAIM WAS MADE IN ASSESSMENT PROCEEDING ONLY, T HEREFORE THE ASSESSING OFFICER EVEN HAS NOT MADE ADJUSTMENT IN THE COMPUTA TION OF INCOME. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER LEVIED THE PENALTY BY HOLDING AS UNDER : A PENALTY SHOW CAUSE NOTICE WAS ISSUED ON 07.01.2 008 AND THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY PENALTY U/S 27 1 (1)(C) SHOULD NOT BE IMPOSED UPON THE ASSESSEE. IN RESPONSE TO TH E SAME, THE ASSESSEE FILED THE REPLY VIDE LETTER DATED 25.1.200 8. IT IS WORTH MENTIONING THAT THE A.R. DID NOT DISCUSS THE ISSUE REGARDING DEDUCTION U/S 35 DDA THOUGH HE IS CONTESTING THE DECISION OF LD. CIT(A) IN HON'BLE ITAT. ITA NO.925/DEL/2010 4 IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS NOTHING TO SAY IN THIS REGARD AND PENALTY IS DECIDED ON MERITS . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED MISLEADI NG FACTS AND CLAIMED A WRONG DEDUCTION U/S 35DDA. THOUGH ASSESSE E WAS FULLY AWARE THAT BUSINESS OF MANUFACTURING AND SALE OF AB RASIVE PONDER AND THAT OF SHARES WAS SEPARATE AND DISTINCT, HE HAS CO NSCIOUSLY AND WILLFULLY FILED IN ACCURATE PARTICULARS TO CLAIM DE DUCTION U/S 35DDA WHICH IS NOT IN CONSONANCE WITH PROVISIONS OF THE A CT. HENCE I AM SATISFIED THAT THIS IS A FIT CASE FOR IMPOSITION OF PENALTY FOR FILING INACCURATE PARTICULARS U/S 271(1)(C) AND THEREFORE, IMPOSE A PENALTY ON RS.7,77,200/- AMOUNTING TO RS.2,78,820/- AS PER CAL CULATION GIVEN BELOW. TAX SOUGHT TO BE EVADED ON RS.777200/- @100% R S.278820/- MINIMUM PENALTY @ 100% RS.278820/- MAXIMUM. PENALTY @ 300% RS.836460/-. PENALTY IMPOSED U/S 271(L)(C) OF THE ACT @ 100% IS RS.278820/- FROM THESE FACTS, IT IS VERY CLEAR THAT PENALTY PRO CEEDINGS WERE NOT INITIATED ON THE REJECTION OF THE CLAIM MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER U/S 35DDA. THEREFORE, THE CIT (A) WAS COMP LETELY JUSTIFIED IN DELETING THE PENALTY. LD. AR ALSO RELIED ON THE OR DER OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MS. MADHUS HREE GUPTA VS. UNION OF INDIA 317 ITR 107 (DEL.) AND HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). 5. AFTER HEARING BOTH THE SIDES, WE HOLD THAT THE A SSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY STATING THAT T HE ASSESSEE HAS FAILED TO FURNISH ACCURATE PARTICULARS WITH REGARD TO THE CLA IM OF DEDUCTION U/S 80HHC. THE PLAIN READING OF THE PARAS, WHICH DEAL WITH THE REJECTION OF THE CLAIM MADE BEFORE THE ASSESSING OFFICER U/S 35DDA, SHOWS THAT THERE WAS ITA NO.925/DEL/2010 5 NO FINDINGS OF THE ASSESSING OFFICER, THAT THE ASSE SSEE FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME IN RESPECT OF CLAIM MADE U/S 35DDA. THE ASSESSING OFFICER HAS ON LY MENTIONED ABOUT THE INACCURATE PARTICULARS FILED IN RESPECT OF DEDU CTION CLAIMED U/S 80HHC. THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEED INGS U/S 271(1)(C) ONLY IN THIS REGARD. THEREFORE, LEVY OF PENALTY ON THE REJ ECTION OF THE CLAIM MADE U/S 35DDA, WHICH WAS NOT EVEN CLAIMED IN THE COMPUTATIO N OF INCOME FILED ALONG WITH RETURN OF INCOME, IS NOT JUSTIFIED. CON SIDERING THE RATIO LAID DOWN BY HON'BLE SUPREME COURT AND DELHI HIGH COURT IN TH E CASES RELIED ON BY THE ASSESSEE, WE FIND NO MERITS IN THE APPEAL OF TH E REVENUE, THEREFORE, THE SAME IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE 30 TH DAY OF JULY 2010. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 30 TH DAY OF JULY, 2010/TS COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-IX, NEW DELHI. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.