ASST CIT CC 43, MUMBAI V. ROHA DYECHEM LTD, MUMBAI

ITA 933/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3048 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-11-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Initiation of penalty proceedings
• Section: 143(3); 80HHC; 80IB; 147; 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NOS.933 & 935/MUM/2014 ASSESSMENT YEARS: 1999-2000 & 2000-01 ACIT, CENTRAL CIRCLE-43, ROOM NO.659, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S ROHA DYECHEM LTD. SARVODAYA MILL COMPOUND, TARDEO ROAD, MUMBAI-400034 PAN. NO. AAACR4974P ( / REVENUE ) ( !' # /ASSESSEE) / REVENUE BY SHRI B.S. BIST-DR !' # / ASSESSEE BY SMT. SNEHAL SHAH $ % & # ' / DATE OF HEARING : 21/06/2016 & # ' / DATE OF ORDER: 21/06/2016 ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) BOTH THESE APPEALS ARE BY THE REVENUE, AGGRIEVED B Y THE IMPUGNED ORDERS DATED 05/11/2013 AND 16/03/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. THE ONLY GRO UND RAISED IN THE PRESENT APPEALS IS WITH RESPECT TO DI RECTION TO THE ASSESSING OFFICER TO RE-COMPUTE THE QUANTUM OF DEDUCTION U/S 80HHC OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WITHOUT REDUCING THE DEDUCTIO N U/S 80IB OF THE ACT IGNORING THE PROVISIONS OF SECTION 80IA( 9) OF THE ACT. 2. DURING HEARING OF THESE APPEALS, THE LD. DR, SH RI B.S. BIST, DEFENDED THE ADDITION MADE BY THE ASSESS ING OFFICER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, SMT. SNEHAL SHAH, CLAIMED THAT THE IMPUGNED ISSUE I S COVERED BY THE DECISION OF THE TRIBUNAL, ORDER DATE D 23/10/2013 (ITA NO.3926 & 3927/MUM/2012). THIS FACT UAL ASSERTION WAS NOT CONTROVERTED BY THE LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION F ROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 23/10/2013 (ASSESSMENT YEAR 1999-2000 & 2000-01) FOR READY REF ERENCE AND ANALYSIS:- BOTH THESE APPEALS ARE FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 16/3/2012 PASSED BY LD. C IT, CIR.4, MUMBAI IN RESPECT OF ASSESSMENT YEAR 1999-2000 AND 2000-01 RE SPECTIVELY UNDER THE ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 3 PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT,196 1(THE ACT). GROUNDS OF APPEAL IN BOTH THE APPEALS ARE IDENTICAL AND ARE AS UNDER: I. 1. THE LEARNED COMMISSIONER OF INCOME TAX (CENT RAL)-IV (CIT-(CENTRAL)) ERRED IN INVOKING THE PROVISION OF SECTION 263 WITH OUT HAVING JURISDICTION TO DO SO, THEREBY RENDERING THE ORDER VOID AB INITIO, ILL EGAL AND BAD IN LAW AND AS SUCH THE ORDER PASSED U/S 263 IS LIABLE TO BE QUASHED. W ITHOUT PREJUDICE TO ABOVE GROUND, II. 1. THE CIT-(CENTRAL) ERRED IN PASSING AN ORDER U/S 263 WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD AND WITHOUT APPRECIATING THE FACT THAT THE ORDER PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDIC IAL TO THE INTEREST OF THE REVENUE WITHOUT PREJUDICE TO ABOVE GROUND, III. 1. THE CIT- (CENTRAL) ERRED IN PASSING AN ORDE R U/S 263 SETTING ASIDE THE ASSESSMENT ORDER WITHOUT APPRECIATING THE FACT THAT THE ORDER PASSED BY THE AO WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERE ST OF THE REVENUE. WITHOUT PREJUDICE TO ABOVE GROUND, IV. 1. THE CIT-(CENTRAL) ERRED IN SETTING ASIDE TH E ORDER OF THE ASSESSING OFFICER AND DIRECTING HIM TO REFRAME THE ASSESSMENT IN ACCO RDANCE WITH THE LAW. 2. IT WAS POINTED OUT THAT THE FACTS AND CIRCUMSTAN CES OF BOTH THE CASES ARE SIMILAR, THEREFORE, FOR THE SAKE OF CONVENIENCE THE FACTS REGARDING A.Y 1999-2000 ARE DISCUSSED BELOW. 3. ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS C OMPLETED BY THE AO INITIALLY ON 23/1/2002, WHEREIN TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT RS.2,94,03,980/- BY ALLOWING THE CLAI M OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. LATER ON NOTICE UNDER SEC TION 147 WAS ISSUED ON THE BASIS OF TAXATION LAW (AMENDMENT) ACT 2005 R.W. S. CBDT CIRCULAR NO.2 OF 2006 DATED 27/7/2006. ACCORDINGLY, TOTAL IN COME WAS RECOMPUTED AT RS.7,81,75,917/-. AGGRIEVED, ASSESSEE FILED AN A PPEAL BEFORE LD. CIT(A), WHO UPHELD THE ORDER OF AO. AGAINST THE SAID ORDER OF LD. CIT(A) APPEAL WAS FILED BEFORE ITAT AND ITAT DIRECTED THE AO TO F URNISH THE COPIES OF REASONS RECORDED FOR REOPENING OF THE CASE SO THAT THE ASSESSEE MAY BE ABLE TO RAISE OBJECTION AND THEN TO PROCEED TO ASSE SS THE ASSESSEE AS PER LAW. IN PURSUANCE OF DIRECTIONS OF ITAT THE ASSESSM ENT AGAIN WAS FINALIZED VIDE ORDER DATED 16/12/2010 PASSED UNDER SECTION 14 3(3) R.W.S. 147, WHEREBY INCOME OF THE ASSESSEE WAS AGAIN ASSESSED A T THE SAME FIGURE OF RS.7,81,75,917/- BY DISALLOWING THE CLAIM OF ASSESS EE UNDER SECTION 80 HHC ON DEPB. ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 4 3.1 IT IS FOR THE SAID ASSESSMENT ORDER LD. CIT HAS INVOKED SECTION 263 IN RESPECT OF ASSESSMENT YEARS 1999-2000 AND 2000-01. LD. CIT HAS FOUND FROM THE RECORD THAT IN EARLIER ASSESSMENT ORDER WH ICH WAS DATED 27/7/2006 THE AO HAD INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, IN SUBSEQUENT ASSESSMENT ORDER DATED 16/12/2010 THE AO DID NOT INITIATE PENALTY PROCEEDI NGS UNDER SECTION 271(1)(C). REFERRING TO THE DECISION OF HONBLE ALL AHABAD HIGH COURT IN THE CASE OF SURENDRA P. AGARWAL, 275 ITR 113 IN WHI CH IT IS HELD THAT FAILURE OF THE AO TO INITIATE PENALTY PROCEEDINGS I N THE COURSE OF ASSESSMENT PROCEEDINGS WILL RENDER THE ASSESSMENT O RDER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN RESPONSE TO SHOW CAUSE NOTICE ISSUED IN THIS REGARD THE ASSESSEE RELIED ON CIRCUL AR NO.2 OF 2006 DATE 17/1/2006 IN WHICH IT WAS CLARIFIED THAT NO PENALTY SHOULD BE LEVIED IN RESPECT OF FRESH DEMAND RAISED CONSEQUENT TO ENACTM ENT OF TAXATION LAW (AMENDMENT) ACT 2005 ON ACCOUNT OF FAILURE IN THE R ETURNED/ASSESSED INCOME ATTRIBUTABLE TO PROFITS ON SALE OF DEPB CRED ITS OR DFRC. THE CIRCULAR FURTHER STATES THAT IN SUCH CASES WHERE PE NALTY HAS BEEN INITIATED, THE PENALTY PROCEEDINGS SHALL BE DROPPED. REFERRING TO THE SAID CIRCULAR IT WAS PLEADED THAT THE ASSESSMENT ORDER PASSED BY AO DATED 16/12/2010 CANNOT BE HELD TO BE ERRONEOUS EVEN THOUGH PENALTY PROCEEDINGS WERE INITIATED IN THE ORDER DATED 27/7/2006 ON THE SAME ISSUE. 3.2 HOWEVER, LD. CIT HAS REJECTED SUCH CONTENTION O F THE ASSESSEE ON THE GROUND THAT SECTION 80I/80IB DEDUCTION ALLOWABLE TO ASSESSEE AT RS.4,87,82,254/- HAS BEEN REDUCED FROM DEDUCTION AL LOWABLE UNDER SECTION 80HHC AT RS.12,80,15,828/- AND ACCORDINGLY DEDUCTIO N UNDER SECTION 80HHC WAS ALLOWED AT RS.7,92,33,574/- ONLY INSTEAD OF RS.12,80,15,828/- BY INVOKING SECTION 80 HHC (4B). IT IS FURTHER OBSE RVED BY LD. CIT THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WERE IN ITIATED IN ORIGINAL ORDER AGAINST AFOREMENTIONED DISALLOWANCE. THE FAIL URE OF THE AO TO INITIATE PENALTY UNDER SECTION 271(1)(C) IN THE ORD ER DATED 16/12/2010 WITH REFERENCE TO THE DISALLOWANCE OF DEDUCTION IN VIEW OF SECTION 80HHC(4B) HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. THE CIRCULAR RELIED UPON BY AS SESSEE ONLY RELATES TO NON-LEVIABLITY OF PENALTY UNDER SECTION 271(1)(C) W ITH REGARD TO ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 5 DISALLOWANCE UNDER SECTION 80HHC ON DEPB CREDITS ON LY. SINCE THE AO HAS FAILED TO INITIATE SUCH PENALTY PROCEEDINGS WHI CH COULD BE INITIATED ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSMENT ORDER PASSED BY AO BECOME ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF REVENUE. FOR THESE REASONS HE HAS SET ASIDE THE ASS ESSMENT ORDER FOR BOTH THE YEARS TO THE FILE OF ASSESSING OFFICER WITH A D IRECTION TO REFRAME ASSESSMENT IN ACCORDANCE WITH LAW AFTER PROVIDING S UFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. AFTER NARRATING THE FACTS LD. AR SUBMITTED THAT ACCORDING TO WELL ESTABLISHED LAW PENALTY PROCEEDINGS ARE INDEPENDENT AND SEPARATE FROM THE ASSESSMENT PROCEEDINGS INASMUCH AS ASSESSEE IS ALLOWED TO ADDUCE FRESH EVIDENCE DURING THE PENALTY PROCEEDINGS. THER EFORE, FAILURE ON THE PART OF AO TO INITIATE PROCEEDINGS CANNOT VITIATE T HE ASSESSMENT ORDER PARTICULARLY WHEN ASSESSED INCOME REMAIN UNCHANGED AND CONSEQUENTLY CANNOT BE A MATTER OF REVISION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. HE IN THIS REGARD REFERRED TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF J.K.DCOSTA 133 ITR 7(DEL), WH EREIN CIT INVOKED POWER FOR THE REASONS THAT AO FAILED TO INITIATE PE NALTY PROCEEDINGS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS HELD T HAT PENALTY PROCEEDINGS ARE SEPARATE FROM ASSESSMENT PROCEEDINGS. THERE IS NO IDENTITY BETWEEN THE TWO. THOUGH IT IS USUAL FOR THE AO TO RECORD IN THE ASSESSMENT ORDER THAT PENALTY PROCEEDINGS ARE TO BE INITIATED, THIS IS MERE A MATTER OF CONVENIENCE THAN OF LEGAL REQUIREMENT. ALL THAT THE LAW REQUIRES, SO FAR AS THE PENALTY PROCEEDINGS ARE CONCERNED, IS THAT THEY SHOULD BE INITIATED IN THE COURSE OF PROCEEDINGS FOR ASSESSMENT. FAILURE O F THE ITO TO RECORD IN THE ASSESSMENT ORDER HIS SATISFACTION OR THE MATTER IN REGARD TO THE LEVIABILITY OF PENALTY CANNOT BE SAID TO A FACTOR V ITIATING THE ASSESSMENT ORDER IN ANY RESPECT. AN ASSESSMENT CANNOT BE SAID TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE BECAUSE OF T HE FAILURE OF THE ITO TO RECORD HIS OPINION ABOUT THE LEVIABILITY OF PENALTY IN THE CASE. LD. AR SUBMITTED THAT SPECIAL LEAVE PETITION FILED BY THE DEPARTMENT AGAINST AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT HAS BEEN DISMISSED BY HONBLE SUPREME COURT AND REFERENCE IN THIS REGA RD WAS MADE TO ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 6 (1984) 147 ITR (ST.) 1. HE ALSO RELIED UPON THE FOL LOWING DECISIONS IN WHICH SIMILAR PROPOSITION HAS BEEN LAID DOWN: CIT V. SUDERSHAN TALKIES (201 ITR 289 (DELHI) CIT V. NIHAL CHAND REKYAN (242 ITR 45(DELHI) CIT V. KESHRIMAL PARSMAL (157 ITR 484 (RAJASTHAN) SURENDRA PRASAD SINGH V. CIT (173 ITR 510 (GAUHATI) CIT V. LINOTYPE AND MACHINERY LTD. (192 ITR 337(CAL CUTTA). CIT V. SUBHASH KUMAR JAIN (335 ITR 364(PUNJAB & HAR YANA) 4.1 LD. AR FURTHER REFERRED TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF ADDL. CIT VS. ACHAL KUMAR JAIN, 142 ITR 606, IN WHICH IT WAS OBSERVED THAT THOUGH IT WAS TRUE THAT THE SATISFACT ION OF THE ITO, BEFORE THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS, WAS THE C ONDITION PRECEDENT FOR AN EXERCISE OF THE JURISDICTION TO IMPOSE PENALTY, NON-EXPRESSION OF SUCH A SATISFACTION IN THE ASSESSMENT ORDER COULD NOT INVA LIDATE IT. IT WAS HELD THAT LD. CIT WAS WRONG IN INVOKING THE PROVISIONS OF SEC TION 263. 4.2 LD. AR FURTHER MENTIONED TO THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF PARMANAND M. PATEL, 278 ITR 3, WHEREIN EVEN CONSIDERING THE DECISION RELIED UPON BY LD. CIT [SU RENDRA P. AGARWAL(SUPRA)] IT WAS HELD THAT THE INITIATION OF PENALTY IS UNDER THE EXCLUSIVE DOMAIN OF AO AND LD. CIT IS NOT EMPOWERED TO RECORD SATISFACTION BY INVOKING SECTION 271(1)(C) AND IF H E IS NOT ENTITLED TO DO SO ON HIS OWN, HE CANNOT DO IT BY DIRECTING THE AO TO INITIATE THE PROCEEDINGS AND IN THIS MANNER SECTION 263 PROCEEDINGS WERE HEL D TO BE INVALID. HE SUBMITTED THAT SIMILAR VIEW WAS TAKEN BY HONBLE GU JARAT HIGH COURT IN SUBSEQUENT DECISION IN THE CASE OF DR. SURESH G. SH AH VS. CIT, 289 ITR 110. LD. AR ALSO REFERRED TO THE FOLLOWING DECISION S TO CONTEND THAT NON- INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) IN THE ASSESSMENT ORDER DID NOT RENDER THE ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE: CIT VS. C.R.K SWAMY (2003) (254 ITR 158) (MAD) J.P.CONSTRUCTIONS , (2009) ITAT AHMEDABAD 4.3 LD. AR FURTHER REFERRED TO THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. VS. CIT, 243 ITR 83(SC) TO CONTEND THAT FOR INVOKING POWER UNDER SECTION 263 TWO CONDITIONS ARE REQUIRED TO BE ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 7 FULFILLED SIMULTANEOUSLY, WHICH ARE THAT THE ASSESS MENT ORDER SHOULD BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THUS LD. AR SUBMITTED THAT THE ONLY GROUND ON WHICH LD. CIT HAS DIRECTED THE AO TO INITIATE CONCEALMENT PENALTY IS ON ACCOUNT OF REDUC TION IN 80IA BENEFIT BY INVOKING THE PROVISIONS OF SECTION 80IA(9) WHICH IN THE OPINION OF LD. CIT, HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE SUBMITTED THAT THE AO A FTER PROPER APPLICATION OF MIND HAS ARRIVED AT A CONCLUSION THAT IT IS NOT A FIT CASE WHERE PENALTY SHOULD BE INITIATED HAVING REGARD TO THE FACT THAT THERE WAS A FULL DISCLOSURE IN RESPECT OF CLAIM COUPLED WITH THE FAC T THAT THE ISSUE INVOLVED WAS HIGHLY DEBATABLE IN NATURE. THEREFORE, LD. AR S UBMITTED THAT LD. CIT HAS WRONGLY INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT. 4.4 WITHOUT PREJUDICE TO ABOVE ARGUMENTS IT WAS SUB MITTED THAT AT THE TIME OF PASSING THE ORDER UNDER SECTION 263, THE SOLE IS SUE IS REDUCTION OF BENEFIT UNDER SECTION 80IA ON WHICH LD. CIT HAS DIR ECTED THE AO TO INITIATE PENALTY PROCEEDINGS. HE SUBMITTED THAT THE ISSUE HAS ALREADY BEEN DECIDED BY ITAT IN FAVOUR OF THE ASSESSEE IN ASSESS EES OWN CASE RELYING UPON DECISION OF JURISDICTIONAL HIGH COURT IN THE C ASE OF ASSOCIATED CAPSULES LTD. VS. DCIT (332 ITR 42). HE SUBMITTED T HAT THIS ORDER OF ITAT WAS AVAILABLE WHEN LD. CIT HAS PASSED ORDER UNDER S ECTION 263. THEREFORE, LD. AR PLEADED THAT LD. CIT WAS NOT JUST IFIED IN HOLDING THAT THE ORDER PASSED BY LD. AO WAS ERRONEOUS AND PREJUD ICIAL TO THE INTEREST OF REVENUE. LD. AR IN THIS REGARD ALSO REFERRED TO THE ORDER OF TRIBUNAL DATED 20/05/2011 PASSED IN MA NO.73/MUM/2011 IN RES PECT OF ASSESSMENT YEAR 2001-02, COPY OF WHICH HAS BEEN ANNEXED AS ANN EXURE-H, WHEREIN THE TRIBUNAL FOLLOWING THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES LTD. VS. DCIT(SUPRA) HAS HELD THAT THE DEDUCTION UNDER SECTION 80 IA AND 80 HHC COMBINED TOGETHER SHOULD NOT EXCEED THE TOTAL INCOME SHOWN B Y THE ASSESSEE. THUS IT WAS SUBMITTED BY LD. AR THAT THE ORDERS PASSED BY L D. CIT UNDER SECTION 263 SHOULD BE SET ASIDE AND QUASHED. 5. ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS PASSED BY LD. CIT. ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 8 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WE HAVE ALSO CAREFULLY G ONE THROUGH THE ORDER PASSEDBY LD. CIT. THE POWER UNDER SECTION 263 HAS B EEN INVOKED BY LD. CIT ON THE GROUND THAT CONCEALMENT PENALTY IS LEVIA BLE ON THE ASSESSEE TO THE EXTENT ITS CLAIM UNDER SECTION 80 HHC WAS REDUC ED BY THE DEDUCTION GRANTED UNDER SECTION 80I/80IB OF THE ACT. HE IN TH IS REGARD HAS MENTIONED TO THE PROVISIONS OF SECTION 80 HHC(4B). HE HELD TH AT ACCORDING TO CIRCULAR RELIED UPON BY THE ASSESSEE CONCEALMENT PE NALTY CANNOT BE LEVIED ON DISALLOWANCE OF DEDUCTION UNDER SECTION 80 HHC O N DEPB CREDITS. ACCORDING TO LD. CIT THE FAILURE OF AO TO INITIATE CONCEALMENT PENALTY PROCEEDINGS ON THE AMOUNT WHICH IS CLAIMED AND ALLO WED AS DEDUCTION UNDER SECTION 80I/80IB WHILE COMPUTING THE DEDUCTIO N UNDER SECTION 80HHC HAS RENDERED THE ASSESSMENT ORDER AS ERRONEOU S AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. 7.1 ON THESE FACTS WE HAVE TO CONSIDER THAT WHETHER LD. CIT WAS RIGHT IN INVOKING POWER UNDER SECTION 263 WHICH HAVE BEEN PR ESSED ONLY FOR THE REASON THAT AO HAS FAILED TO INITIATE CONCEALMENT P ENALTY PROCEEDINGS. LD. CIT FOR THIS PURPOSE HAS RELIED UPON THE DECISION I N THE CASE OF SURENDRA P. AGARWAL(SUPRA). ON THE OTHER HAND, THERE ARE SEV ERAL DECISIONS IN WHICH A CLEAR PROPOSITION HAS BEEN LAID DOWN THAT N ON-INITIATION OF PENALTY PROCEEDINGS CANNOT RENDER THE ASSESSMENT ORDER AS E RRONEOUS. THESE DECISIONS HAVE BEEN DISCUSSED IN DETAIL WHILE RECOR DING THE ARGUMENTS OF THE LD. AR. IT IS PERTINENT TO MENTION HERE THAT TH E HONBLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE DEPARTMENT AGAIN ST THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF J.K.D COST A(SUPRA). THIS POINT HAS BEEN TAKEN NOTE IN THE DECISION OF HONBLE GAUH ATI HIGH COURT IN THE CASE OF SURENDRA PRASAD SINGH VS. CIT, 173 ITR 510. HOWEVER, THE AFOREMENTIONED DECISION OF HONBLE ALLAHABAD HIGH C OURT IN THE CASE OF SURENDRA P. AGARWAL (SUPRA) HAS DISSENTED WITH THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT. SEVERAL OTHER HIGH COURTS HAVE ALSO EXPRESSED THE VIEW THAT NON-INITIATION OF PENALTY P ROCEEDINGS DURING THE COURSE OF ASSESSMENT PROCEEDINGS DOES NOT RENDER TH E ASSESSMENT ORDER ERRONEOUS SO AS TO MAKE ENTITLE THE CIT TO INVOKE S ECTION 263. THESE DECISIONS HAVE ALSO BEEN MENTIONED IN THE ABOVE PAR T OF THIS ORDER WHILE ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 9 RECORDING THE ARGUMENTS OF THE ASSESSEE. THEREFORE, THERE IS CATENA OF DECISIONS WHICH FAVOUR THE VIEW THAT NON-INITIATION OF PENALTY PROCEEDINGS DURING THE COURSE OF ASSESSMENT PROCEEDINGS CANNOT RENDER THE ASSESSMENT ORDER AS ERRONEOUS. ACCORDING TO WELL ESTABLISHED L AW IF THERE ARE TWO VIEWS, THE VIEW FAVOURABLE TO ASSESSEE IS TO BE ADO PTED PARTICULARLY WHEN THE OPINION OF JURISDICTIONAL HIGH COURT OR APEX CO URT IS NOT AVAILABLE ON THAT VIEW. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PROD UCTS LTD., 88 ITR 192. IN THIS VIEW OF THE SITUATION IT HAS TO BE HELD THA T LD. CIT HAS WRONGLY INVOKED JURISDICTION UNDER SECTION 263. 7.3 THERE IS ONE MORE ASPECT OF THE MATTER. LD. CIT WHILE HOLDING THAT ASSESSMENT ORDER IS ERRONEOUS HAS OBSERVED THAT CON CEALMENT PENALTY IS LEVIABLE WITH RESPECT TO AMOUNT OF DEDUCTION UNDER SECTION 80 IB BY WHICH DEDUCTION UNDER SECTION 80 HHC HAS BEEN REDUCED. WE FOUND THAT THIS ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL I N THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. FOLLOWING THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULE S VS. DCIT(SUPRA), THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE E AS PER FOLLOWING OBSERVATIONS: 9. GROUND NO.3: AFTER HEARING BOTH THE PARTIES, WE FIND WE FIND THAT THE AO REDUCED DEDUCTION U/S.8OHHC, WHILE COMPUTING DEDUCT ION U/S.801B(10) IN VIEW OF THE PROVISIONS OF SECTION 801B(13) R.W.S. 801A(9 ). THE ACTION OF THE AO HAS BEEN CONFIRMED BY THE ID. CIT[A). 1.0. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMB AY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT IN IT.APPEAL NO.3036 OF 2010, DATED 10TH JANUARY, 2011. 11. ON THE OTHER HAND, ID. DR RELIED ON THE ORDER O F THE CIT[A]. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT [SUPRA], HAS DECIDED THE ISSUE VIDE PARA-39 WHICH READS AS UNDER: IN THE RESULT, WE HOLD THAT SECTION 80-IA(9) DOES NOT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A, BUT IT AFFECTS THE ALLOWABILITY OF DEDUCTIONS COMPUTED UND ER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A, SO THAT THE AGGREGATE DE DUCTION UNDER SECTION 80-IA AND OTHER PROVISIONS UNDER HEADING C OF CHAPTER V I-A DO NOT EXCEED 100 PER CENT. OF THE PROFITS OF THE BUSINESS OF THE ASSESSE E. OUR ABOVE VIEW IS ALSO SUPPORTED BY THE CENTRAL BOARD OF DIRECT TAXES CIRC ULAR NO. 772 DATED ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 10 DECEMBER 23, 1998 ([1999] 235 TR (ST.) 35), WHEREIN IT IS STATED THAT SECTION 80- IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT TH E TAXPAYERS FROM CLAIMING REPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT O F ELIGIBLE INCOME AND THAT TOO IN EXCESS OF THE ELIGIBLE PROFITS. THUS, THE OBJECT OF SECTION 80-IA(9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PRO VISIONS UNDER HEADING C OF CHAPTER VI-A, IT IS REASONABLE TO HOLD THAT SECTION 80-IA(9) AFFECTS ALLOW-ABILITY OF DEDUCTION AND NOT COMPUTATION OF DEDUCTION. TO I LLUSTRATE, IF RS.100 IS THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, RS. 30 IS THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80-IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS. 80/-, THEN, IN VIEW OF SECTION 80-IA(9 ), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO RS. 70/-, SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO COMPUT E THE DEDUCTION AS HELD BY THE HONBLE BOMBAY HIGH COURT IN PARA-39 ABOVE IN THE RESULT, THE MISCELLANEOUS APPLICATION IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 20/5/2011. THEREFORE, IF SIMILAR ISSUE HAS ALREADY BEEN DECIDE D IN FAVOUR OF ASSESSEE BY THE ITAT IN WHICH ADDITION ITSELF HAS BEEN DELET ED THEN HOW THE NON- INITIATION OF CONCEALMENT PENALTY WILL RENDER THE A SSESSMENT ORDER ERRONEOUS. THUS, THERE IS A FORCE IN THE ALTERNATIV E CONTENTION OF LD. AR THAT THE ISSUE ON WHICH LD. CIT HAS INVOKED POWER U NDER SECTION 263 WAS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE. IT MAY B E MENTIONED HERE THAT WHEN LD. CIT INVOKED JURISDICTION UNDER SECTION 263 , THE AFOREMENTIONED ORDER OF TRIBUNAL WAS AVAILABLE ON RECORD. FOR THIS REASON ALSO WE HOLD THAT POWER UNDER SECTION 263 HAS WRONGLY BEEN EXERC ISED. 7.4 KEEPING IN VIEW THE ABOVE DISCUSSIONS THE IMPUG NED ORDERS PASSED BY LD. CIT UNDER SECTION 263 ARE HELD TO BE INVALID AN D ARE QUASHED. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 2.2. WE FIND THAT THE APPEAL OF THE REVENUE IS B ASED UPON INVOKING REVISIONAL JURISDICTION U/S 263 OF TH E ACT AND THAT ORDER HAS BEEN QUASHED BY THE TRIBUNAL IN THE AFORESAID ORDER DATED 23/10/2013. THUS, BOTH THE APPEALS OF T HE REVENUE DO NOT SURVIVE BEING INFRUCTUOUS, THEREFORE , BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ITA NO.933 & 935/MUM/2014 M/S ROHA DYECHEM LTD. 11 FINALLY, BOTH THE APPEALS OF THE REVENUE ARE DISMIS SED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRES ENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLU SION OF THE HEARING ON 21/06/2016. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 21/06/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2# ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2# / CIT(A)- , MUMBAI 5. 34 /# , 1 +,' + 5 , $ % / DR, ITAT, MUMBAI 6. ! 6% / GUARD FILE. / BY ORDER, 03,# /# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI