M/s Friends Salt Works & Allied Industries, GANDHIDHAM V. The Assistant Commissioner of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 934/RJT/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7337 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PAND
• Assessee Lawyers: K C THAKER

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI T.K. SHARMA (JM) AND SHRI A.L. GEHLOT ( AM) I.T.A. NO.934/RJT/2010. (ASSESSMENT YEAR 2003-04) M/S.FRIENDS SALT WORKS & ALLIED INDUSTRIES, VS THE A.C.I.T., PLOT NO.18, SECTOR-8, GANDHIDHAM CIRCLE, GANDHIDHAM-KUTCH. PLOT NO.32,SECTOR-3, PAN:AAACF2067N. GANDHIDHAM-KUTCH.. (APPELLANT) (RESPONDENT) DATE OF HEARING : 13-12-2011 DATE OF PRONOUNCEMENT : 15-12-2011 REVENUE BY : SHRI YOGESH PAND, D.R. ASSESSEE BY : SHRI K. C. THAKER. O R D E R PER T.K. SHARMA (JM) THIS APPEAL BY THE ASSESSEE A GAINST THE ORDER DATED 26-02-2010 OF CIT (A)-II, RAJKOT CONFIRMING THE PEN ALTY OF RS.54,58,500/- LEVIED BY AO U/SS.271(1)(C) OF I.T.ACT,1961 FOR THE ASSESS MENT YEARS 2003-04. 2. BRIEFLY STATED THEE FACTS ARE THAT ASSESSEE IS A PARTNERSHIP FIRM. FOR THE ASSESSMENT YEAR UNDER APPEAL HAD FILED RETURN OF IN COME ON 30-11-2003 DECLARING TOTAL INCOME OF RS.5,39,86,460/-. THE AO FAMED ASSESSMENT U/.143(3) RESTRICTING THE DEDUCTION CLAIMED U/.80HHC OF THE I .T. ACT TO THE TUNE OF RS.2,97,69,841/- INSTEAD OF RS.4,46,86,614/- AS CLA IMED BY THE ASSESSEE ON THE GROUND THAT WHILE CALCULATING TOTAL TURNOVER OF THE BUSINESS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S.80HHC, THE ASSESSEE HAS NOT TAKEN INTO CONSIDERATION THE TURNOVER OF ITS LIQUID STORAGE TANK DIVISION. IN R ESPECT OF THIS ADDITION, THE AO ALSO INITIATED THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT. ITA NO 934/RJT/2010. 2 3. SUBSEQUENTLY, VIDE ORDER DATED 31-03-2009 AO LEV IED THE PENALTY OF RS.54,58,500/- WHICH IS 100% OF TAX SOUGHT TO BE EV ADED ON INCOME OF RS.1,48,53,068/- I.E. EXCESS CLAIM OF DEDUCTION U/S .80HHC. 4. AGAINST THE PENALTY ORDER, ASSESSEE PREFERRED AN APPEAL. BEFORE THE LD. CIT(A), ASSESSEE PLEADED THAT DEDUCTION U/S.80HHC W AS CLAIMED ON THE BASIS OF CHARTERED ACCOUNTANTS CERTIFICATE IN FORM NO.10CCA C BEING AUDIT REPORT WHICH WAS ENCLOSED WITH THE RETURN OF INCOME. THEREFORE, PENALTY U/S.271(1)(C) IS NOT LEVIABLE. IT WAS ALSO PLEADED THAT AGAINST THE ASS ESSMENT ORDER, ASSESSEE HAD PREFERRED AN APPEAL BEFORE CIT(A)-II, RAJKOT WHO AL LOWED THE DEDUCTION U/S.80HHC OF THE ACT AS CLAIMED IN THE RETURN OF IN COME. ON FURTHER APPEAL BY THE DEPARTMENT, TRIBUNAL FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THEE CASE OF CIT VS. K. RAVINDRA NATHAN NAIR REPORTED IN 295 ITR 228 IN FAVOUR OF THE REVENUE. IT WAS THEREFORE, SUBMITTED THAT ISSUE RE GARDING ALLOWANCE OF DEDUCTION U/S.80HHC WAS HIGHLY DEBATABLE WHEN THE ASSESSEE FI LED RETURN OF INCOME ON 30-11-2003. 5. AFTER CONSIDERING THE AFORESAID SUBMISSION IN TH E IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY OF RS.54,58,500/- LEVI ED BY AO U/S.271(1)(C) ON THE GROUND THAT ASSESSEE HAS FURNISHED INACCURATE PART ICULARS OF INCOME THE FORM OF ITS CHARTERED ACCOUNTANTS CERTIFICATE IN FORM NO.10 CCAC WHICH WAS BASED UPON AN ILLEGAL AND INCORRECT PROPOSITION. AGGRIEVED WI TH THE ORDER OF LD. CIT(A), ASSESSEE IS UNDER APPEAL BEFORE THIS TRIBUNAL. 6. AT THE TIME OF HARING BEFORE US, ON BEHALF OF AS SESSEE SHRI K. C. THAKER APPEARED AND REITERATED THE SUBMISSION MADE BEFORE BOTH THE DEPARTMENTAL AUTHORITIES BELOW. HE PLEADED THAT WHEN THE RETURN OF INCOME WAS FILED, THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. K. RAVINDRA NATHAN NAIR (SUPRA) WAS NOT AVAILABLE. ON THE BASIS OF SAI D DECISION, THE TRIBUNAL DECIDED THE MATTER IN QUANTUM APPEAL IN FAVOUR OF T HE DEPARTMENT. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HONBLE SUPREME COUR T IN THE CASE OF CIT VS. ITA NO 934/RJT/2010. 3 RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158(SC). ON THE OTHER HAND, SHRI YOGESH PANDE, D.R. APPEARED FOR THE REVENUE VEHEMEN TLY SPORTED THE ORDER OF LD. CIT(A). HE POINTED OUT THAT THEE WAS VARIANCE IN THE FIGURES MENTIONED IN THE REPORT AND PROFIT AND LOSS ACCOUNT. THIS CLEARLY I NDICATES THAT ASSESSEE FURNISHED INACCURATE PARTICULARS DELIBERATELY TO EVADE TAX. AS AGAINST THIS, COUNSEL FOR THE ASSESSEE POINTED OUT THAT IN QUANTUM APPEAL, THEE L D. CIT(A) HELD THAT DEDUCTION U/S.80HHC WAS RIGHTLY CLAIMED. THUS, IT IS CONCLUS IVELY PROVED THAT AT THE RELEVANT TIME ISSUE WAS HIGHLY DEBATABLE, THEREFORE ON THESE FACTS, PENALTY U/S.271(1)(C) IS NOT LEVIABLE. 7. RIVAL SUBMISSIONS WERE CONSIDERED. WE HAVE CARE FULLY GONE THROUGH THE ORDERS OF AUTHORITIES OF LAW AND PERSUADE THE CERTI FICATE IN FORM NO.10CCAC FILED ALONG WITH THE RETURN OF INCOME. ADMITTEDLY, ASSES SEE CLAIMED THE DEDUCTION U/S.80HHC AS PER WORKING GIVEN BY M.B. SORATHIA & C O., CHARTERED ACCOUNTANTS, IN CERTIFICATE IN FORM NO.10CCAC WHEREIN THEY HAVE WORKED OUT THE DEDUCTION U/S.80HHC AT RS.4,46,86,614/-. THE LD. CIT(A) IN QU ANTUM APPEAL HAS ALSO ACCEPTED THE SAID CERTIFICATE ISSUED BY CHARTERED ACCOUNTANTS OF THE ASSESSEE ON FORM NO.10CCAC. THE TRIBUNAL IN QUANTUM APPEAL, RESTORED THE WORKING OF DEDUCTION AS WORKED OUT BY AO IN THE ASSESSMENT ORD ER, ON THE BASIS OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. K. RAVINDRA NATHAN NAIR (SUPRA). WHEN THE ASSESSEE FINISHED THE RETURN OF INCOME ON 30-11-2003, THIS JUDGMENT OF HONBLE SUPREME COURT WAS NOT AVAI LABLE. KEEPING IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE TO LEVY PENALTY U/S.271(1)(C) OF THE ACT. WE THEREFORE, CANCEL THE PENALTY OF RS.54,58,500/- LEVIED BY AO U/S.271(1)(C ) OF THE INCOME TAX ACT,1961, 8. IN THIS CONTEXT, WE WERE ALSO MENTIONED THAT VIE W TAKEN BY US HEREINABOVE IS ALSO SUPPORTED BY THE JUDGMENT OF HONBLE SUPREM E COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 ( SC) WHEREIN, IT WAS HELD THAT MERE MAKING OF A CLAIM IN THE RETURN OF INCOME WHI CH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME ITA NO 934/RJT/2010. 4 OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CA NNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN THE OPEN COURT ON 15-12 -2011. SD/- SD/- (A.L. GEHLOT) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 15 TH DECEMBER, 2011 NVA/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-XXI, AHMEDABAD 4. THE CIT-III, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT