ACIT, Panchkula V. M/s GMH Organics, Panchkula

ITA 928/CHANDI/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0536 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDER KANTA
• Assessee Lawyers: B M MONGA; ROHIT KANRA
• Keywords: Difference of opinion
• Section: 271(1)(c)

Judgement Text

, BEFORE: SMT. DIVA SINGH, JM ./ ITA NO. 928/CHD/2018 / ASSESSMENT YEAR : 2013-14 THE ACIT, PANCHKULA CIRCLE, PANCHKULA. VS M/S GMH ORGANICS, # 118, MDC SECTOR-5, PANCHKULA. ./PAN NO: AAGFG9690N /APPELLANT /RESPONDENT / REVENUE BY : SMT. CHANDER KANTA, SR.DR /ASSESSEE BY : SHRI B.M. MONGA & SHRI ROHIT KANRA ! ' # /DATE OF HEARING : 26.11.2018 $%&' # /DATE OF PRONOUNCEMENT : 31.11.2018 /ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 08.05.2018 OF LD. CIT(APPEALS) PANCHKUL A PERTAINING TO 2013-14 ASSESSMENT YEARS ON THE FOLLOWING GROUNDS : 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER O F INCOME TAX (APPEALS) IS BAD IN LAW AS WELL AS ON FACTS OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN BAD IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DISALLOWANCE IN R ESPECT OF CARS AND TELEPHONES USED BY THE STAFF MEMBERS OF THE ASSESSEE FIRM UNDER SEC TION 38 (2) OF THE INCOME TAX ACT, 1961 BY THE LEARNED ASSESSING OFFICER (AO) 3. THAT THE ASSESSEE CRAVES THE RIGHT TO ADD, ALTER, A MEND OR WITHDRAW ANY GROUND(S) OF APPEAL. 2. BOTH THE PARTIES HAVE BEEN HEARD. THE LD. SR.DR MS. ZENIA HANDA RELIES UPON THE PENALTY ORDER WHEREIN PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN IMPOSED ON THE GROUNDS THAT THE 80IC DEDUCTION WAS DISALLOWED. THE ASSESSEE'S CLAIM OF 100% DEDUCTION IN THE CASES OF CARRYING OUT SUBSTANTIAL EXPANSION WAS NOT ALLOWED BY THE AO WHO RESTRICTED IT TO 25% OF THE ELIGIBLE PROFITS AS THE DEDUCTION CLAIMED @ 100 % STOOD ALLOWED FOR THE FIRST FIVE YEARS WHICH STOOD EXHAUSTED FROM 2008-09 TO 2011-12. THE LD. AR RELIED UPON THE IMPUGNED ORDER WHICH IN TURN HAD RELIED UPON THE ORDER OF TH E ITAT IN SIMILAR SET OF FACTS AND CIRCUMSTANCES. 3. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE C IT(A) RELYING UPON THE ORDER OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS V ITO DA TED 08.10.2015 IN ITA 326/CHD/2015 DELETED THE PENALTY HOLDING AS UNDER : I HAVE GONE THROUGH THE FACTS OF THE CASE AND WRIT TEN SUBMISSION FILED BY THE APPELLANT . IT IS NOTED THAT ON IDENTICAL FACTS, THE JURISDICTIONA L HON'BLE ITAT CHANDIGARH BENCH IN THE CASE OF M/S HYCRON ELECTRONICS VS. ITO IN ITA NO. 3 26/CHD/2015 DATED 08.10.2015 HAS CANCELLED THE PENALTY U/S 271(L)(C) WITH FOLLOWING OBSERVATION :- ITA-928/CHD/2018 A.Y. 2013-14 PAGE 2 OF 3 '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED ABOVE IN THE IMPUGNED OR DERS ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT ASSESSEE WAS ELIGIBLE FOR DEDUC TION U/S SOIC OF THE ACT AND HAS BEEN CLAIMING THE SAME DEDUCTION FROM ASSESSMENT YE AR 2004-05 TILL 2008-09. THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL I.E 2009-1 0 CONTENDED THAT SINCE IT HAS UNDERTOOK SUBSTANTIAL EXPANSION, THEREFORE, ASSESSM ENT YEAR UNDER APPEAL I.E 2009-10 BEING INITIAL YEAR, ASSESSEE WOULD BE ENTIT LED FOR DEDUCTION UNDER SECTION SOIC OF THE ACT @100%. HOWEVER, THE AUTHORITIES BEL OW CONSIDERED THAT THE ASSESSMENT YEAR UNDER APPEAL I.E 2009-10 IS THE 6 TH YEAR OF THE MANUFACTURING ACTIVITY OF THE INDUSTRIAL UNDERTAKING, THEREFORE, INSTEAD OF CLAIM OF 100% DEDUCTION UNDER SECTION SOIC, ASSESSEE WOULD BE ENT ITLED FOR DEDUCTION UNDER SECTION SOIC @25% ONLY. THE CLAIM OF ASSESSEE WAS S UPPORTED BY AUDIT REPORT AND THE PAST HISTORY SUBMITTED BY ASSESSEE AND CONS IDERED BY THE AUTHORITIES BELOW. THUS, THE CLAIM OF ASSESSEE WAS RAISED FOR T HE FIRST TIME IN THE 6 TH YEAR ON UNDERTAKING SUBSTANTIAL EXPANSION AND IT WAS CLAIME D TO BE FIRST YEAR/INITIAL YEAR FOR CLAIMING 100% DEDUCTION UNDER SECTION SOIC OF T HE ACT. THUS, THE CLAIM OF THE ASSESSEE WAS NOT FALSE AND WAS ALSO NOT WRONG. THE ASSESSEE MADE CLAIM OF 100% DEDUCTION UNDER SECTION SOIC OF THE ACT ON THE BASI S OF SUBSTANTIAL EXPANSION CARRIED OUT IN FINANCIAL YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER APPEAL. THE ASSESSEE, THEREFORE, FURNISHED ALL PARTICULARS OF I NCOME IN THE RETURN OF INCOME AS WELL AS BEFORE ASSESSING OFFICER AT THE ASSESSMENT STAGE. NOTHING WAS CONCEALED TO THE REVENUE DEPARTMENT. WHOLE ISSUE WAS THUS, BA SED UPON INTERPRETATION OF PROVISIONS OF SECTION 8OIC OF THE ACT FOR CLAIM OF DEDUCTION UNDER SECTION 8OIC @100% ON UNDERTAKING SUBSTANTIAL EXPANSION IN THE A SSESSMENT YEAR UNDER APPEAL BY CLAIMING IT TO BE INITIAL YEAR. PRIOR TO THAT, THERE MAY BE NO HISTORY AGAINST THE ASSESSEE FOR MAKING SUCH A CLAIM. THE I SSUE IS WHOLLY DEBATABLE AND THE APPEAL OF THE ASSESSEE IS PENDING BEFORE THE HI GH COURT FOR CONSIDERATION OF THE SIMILAR ISSUE. THOUGH, THIS BENCH HAS NOT FOLLO WED THE DECISION OF DELHI BENCH IN THE CASE OFTIRUPATI LPG LTD. (SUPRA) ON QUANTUM AND DECIDED THE ISSUE AGAINST THE ASSESSEE ON QUANTUM, BUT THERE WAS FAVOURABLE ORDER FOR MAKING SUCH A CLAIM UNDER SECTION 80IC OF THE ACT. THEREFORE, IT IS A C ASE WHERE THERE MAY BE A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE FIRM AND THE ASSESSING OFFICER FOR CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN 6 TH YEAR @ 100%. 8. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IC IN ASSESSMENT YEAR UNDER APPEAL IN A BONAFIDE MANNER AND MERE FACT THAT CLAIM OF ASSESSEE HAS BEEN DISALLOWE D, WOULD NOT PROVE IT TO BE A FIT CASE OF LEVY OF PENALTY FOR FILING INACCURATE PARTI CULARS OF INCOME. THE ISSUE OF CLAIM OF DEDUCTION WAS DEBATABLE AND BONAFIDE. HOWE VER, THERE WAS CONFLICT FOR DETERMINATION OF PROVISION OF LAW. MERELY MAKING A CLAIM OF 100% DEDUCTION AGAINST 25% AS PER OPINION OF THE ASSESSING OFFICER UNDER SECTION 80IC OF THE ACT WOULD NOT BE AT PAR WITH CONCEALMENT OF INCOME OR F URNISHING INACCURATE PARTICULARS OF INCOME. THE DECISIONS RELIED UPON BY ID COUNSEL FOR THE ASSESSEE SUPPORT THE CONTENTION OF ID. COUNSEL FOR THE ASSES SEE THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271(L)(C) OF THE ACT. HON 'BL E SUPREME COURT IN THE CASE OF CIT VRELIANCE PETROPRODUCTS LTD. 322ITR 158 HELD AS UNDER: 'A GLANCE AT THE PROVISIONS OF SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY I T, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURA TE PARTICULARS IN HIS INCOME. THE MEANING OF THE WORD 'PARTICULARS ' USED IN SECTION 271(L)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE I NCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF F URNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHE RE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NO T BE ACCURATE, NOR ITA-928/CHD/2018 A.Y. 2013-14 PAGE 3 OF 3 EXACT OR CORRECT, NO ACCORDING TO THE TRUTH OR ERRO NEOUS. ' WHETHER THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(L)(C). A M ERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING INACCURATE PARTICULARS. 9. CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY UNDER SECTION 271 (L)(C) OF THE ACT BECAUSE IT IS WELL SETTLED THAT LEVY OF PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AS IT DEPENDS UPON FACTS AND CI RCUMSTANCES OF THE CASE. SINCE THE ASSESSEE'S CLAIM OF DEDUCTIO N UNDER SECTION 80IC HAVE BEEN ALLOWED IN EARLIER YEAR @ 100% AND A DMITTEDLY ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION IN ASSESSM ENT YEAR UNDER APPEAL, THEREFORE, ASSESSEE MADE BONAFIDE CLA IM OF DEDUCTION UNDER SECTION 80IC OF THE ACT AND THERE W ERE NO JUDICIAL PRONOUNCEMENTS AGAINST THE ASSESSEE ON THE DATE OF MAKING SUCH A CLAIM. THEREFORE, IT COULD NOT BE CONSTRUED THAT ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME SO AS TO LEVY OF PENALTY UNDER SECTION 271(L)(C) OF THE ACT. WE, ACC ORDINGLY, SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCEL TH E PENALTY. 9. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. ' 5.1 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, LEGAL PROVISIONS AND JUDICIAL PRONOUNCEMENTS, I HOLD THAT THE RATIO LAID BY HON'BLE ITAT CHANDIGARH IN HYCRON ELECTRONICS (SUPRA) IS APPLIC ABLE TO THE APPELLANT'S CASE AND RESPECTFULLY FOLLOWING THIS JUDGMENT OF HO N'BLE ITAT, THE PENALTY LEVIED BY THE AO ON DISALLOWANCE/ADDITION OF RS. 60 ,93,125/- IS CANCELLED. THE GROUND OF APPEAL IS ALLOWED. 4. IT IS SEEN THAT THE ISSUE ON THE ALLOWABILITY OF DEDUCTION U/S 80IC @ 100% ON THE GROUNDS OF SUBSTANTIAL EXPANSION AS CLAIMED BY THE ASSESSEE IS WELL SETTLED AGAINST THE ASSESSEE I.E. IN FAVOUR OF THE REVENUE BY THE DECIS ION OF THE APEX COURT IN THE CASE OF CIT VS CLASSIC BINDING INDUSTRIES (2018) 96 TAXMANN.COM 405 (S.C). IT IS SEEN THAT THE APEX COURT HAS OVER TURNED THE DECISION OF THE JURISDICT IONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT INDIA VERSUS CIT-V AND OTHERS IN ITA 20 TO 24 /2015 WHEREIN THE ORDER OF THE ITAT DENYING THE CLAIM ON MERITS HAD BEEN OVERTURNED BY THE JURISDICTIONAL HIGH COURT. THUS, ADMITTEDLY THE ISSUE WAS DEBATABLE. IN VIEW THEREO F, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THE DEPARTMENTAL GROUND IS D ISMISSED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 31.11.2018. SD/- ( ) (DIVA SINGH) /JUDICIAL MEMBER %( )* +* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT -3. ! , / CIT4. ! , ( )/ THE CIT(A) 5. *-. / , # / , 012.3 / DR, ITAT, CHANDIGARH6. .2 4' / GUARD FILE %( ! / BY ORDER, 5 / ASSISTANT REGISTRAR