The ACIT,(OSD)-1, Range-4, Ahmedabad V. KHS Machinery Pvt.ltd., Ahmedabad

ITA 953/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63275 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 31-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Keywords: Wrong claim
• Section: 143(3); 80IB

Judgement Text

ITA NO 953/ AHD/2010 A.YR.. 2004 -05 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AH MEDABAD (BEFORE SHRI D. K. TYAGI JM & SHRI ANIL CHATURVEDI A.M.) I.T.A. NO. 95 3/AHD/2010. (ASSESSMENT YEAR: 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX (OSD)-1, RANGE-4, PRATYAKSHA KAR BHAVAN, NEAR PANJARA POLE, AMBAWADI, AHMEDABAD. (APPELLANT) VS. KHS MACHINERY PRIVATE LTD.,53,MADHUBAN, NEAR MADALPUR UNDER BRIDGE, ELLISBRIDGE, AHMEDABAD. (RESPONDENT) PAN: AAACK 8850D APPELLANT BY : MR. D.K.SINGH, SR. D.R. RESPONDENT BY : MR. MANISH J. SHAH. ( )/ ORDER DATE OF HEARING : 2-11-201 2 DATE OF PRONOUNCEMENT : 28-12-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF CIT (A)-VIII, AHMEDABAD DATED 20-11-2009 PASSED AGAINST PENALTY L EVIED U/S.271(1) (C) OF RS.67,21,008/- FOR THE ASSESSMENT YEAR 2004-05. 2. THE BRIEF FACTS AS CULLED OUT FROM THE ORDERS AR E AS UNDER. 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF MANUFACTURING BEVERAGE MACHINERIES. IT FILED ITS RETURN OF INCOME ON 31- 10-2004 DECLARING TOTAL INCOME OF RS.4,37,13,874/-. THE ASSESSMENT WAS ITA NO 953/ AHD/2010 A.YR.. 2004 -05 2 COMPLETED U/S 143(3) VIDE ORDER DATED 21-12-2006 AN D THE INCOME WAS COMPUTED AT RS.8,14,45,185/- AFTER MAKING VARIOUS D ISALLOWANCES INCLUDING DISALLOWANCE OF DEDUCTION OF RS.1,87,34,580/- U/S.8 0IB OF THE ACT. ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A) AND THE APPEAL WAS DISMISSED BY CIT (A) VIDE HIS ORDER DATED 2-11-2007 . A.O. AFTER RECEIPT OF APPELLATE ORDER INITIATED PENALTY PROCEEDINGS AND L EVIED PENALTY IN RESPECT OF DISALLOWANCE OF CLAIM OF RS.1,87,54,580/- U/S. 8 0IB WHICH WAS CONFIRMED BY CIT (A). 4. AGAINST THE ORDER OF PENALTY THE ASSESSEE CARRIE D THE MATTER BEFORE THE CIT (A) WHEREIN INTERALIA IT WAS SUBMITTED THAT THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB WAS REJECTED BY A.O. UNDER SIMI LAR CIRCUMSTANCES IN A.Y. 2003-04.A.O. WHILE PASSING THE ASSESSMENT ORDE R IN A.Y. 2003-04 HAD HELD THAT SINCE THE ASSESSEE WAS HAVING MACHINERY I N EXCESS OF RS.1 CRORES IT WOULD NOT BE TERMED TO BE SMALL SCALE IN DUSTRIAL UNDERTAKING AND THEREFORE THE ASSESSEE WAS NOT ENTITLED FOR DED UCTION U/S. 80IB.ACTION OF THE A.O. WAS CONFIRMED BY CIT (A). AGAINST THE O RDER OF CIT (A) ASSESSEE PREFERRED APPEAL BEFORE THE HONBLE TRIBUN AL. HONBLE TRIBUNAL VIDE ITS ORDER IN ITA NO.2289/AHD/2006 ORDER DATED 12-12-2008 CONSIDERED THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB AND AL LOWED THE CLAIM OF THE ASSESSEE U/S. 80IB. IT WAS POINTED OUT THAT THE AS SESSEES CLAIM FOR 80IB FOR THE YEAR UNDER CONSIDERATION WAS REJECTED KEEPI NG IN VIEW THE FINDING OF A.Y. 2003-04. IT WAS THEREFORE SUBMITTED THAT SINCE THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S. 80IB FOR A.Y. 2003-04, IT WA S ALSO ENTITLED TO DEDUCTION U/S. 80IB IN A.Y. 2004-05. ITA NO 953/ AHD/2010 A.YR.. 2004 -05 3 5. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE HELD THAT IN THE FACTS OF THE CASE, THE EXPLANATION 1 TO SECTION 271(1)(C ) IS NOT ATTRACTED. HE FURTHER HELD THAT THE ASSESSEES CLAIM FOR DEDUCTION WAS NOT FABRICATED OR FALSE. THE ONLY REASON FOR LEVYIN G OF PENALTY WAS ON ACCOUNT OF DISALLOWANCE WHICH WAS CONFIRMED BY THE CIT (A). HE ACCORDINGLY DELETED THE PENALTY LEVIED BY A.O. 6. AGGRIEVED BY THE ORDER OF CIT (A), THE REVENUE I S NOW IN APPEAL BEFORE US. 7. BEFORE US THE LD. D.R. SUBMITTED THAT THE ASSESS EE WAS UNABLE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S. 80IB IN RE SPECT OF CERTAIN ITEMS OF INCOME AND HAD FAILED TO PROVE THAT THE EXPLANATION OFFERED WAS BONAFIDE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE MUST OFF ER AN EXPLANATION TO SHOW THAT THERE WAS NO FRAUD, GROSS OR WILLFUL NEGL IGENCE INVOLVED IN MAKING THE RETURN. IN HIS SUBMISSION THE LD. D.R. RELIED O N THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. SOHAN SINGH 254 I TR 177. HE FURTHER SUBMITTED THAT THE HONBLE SUPREME COURT IN THE CAS E OF DHARMENDRA TEXTILE 306 ITR 277 HAS HELD THAT THE WILLFUL DEFAU LT BY ASSESSEE IS NOT SUFFICIENT FOR LEVY OF PENALTY U/S. 271(1) (C). TH E LD. D.R. FURTHER SUBMITTED THAT IN THE PRESENT CASE THE ASSESSEES CLAIM OF DE DUCTION U/S. 80IB WAS OF RS.1,87,34,580/- BUT PURSUANT TO THE ORDER OF HONB LE ITAT THE ASSESSEE HAS BEEN ALLOWED THE DEDUCTION U/S. 80IB TO THE EXT ENT OF RS.1,35,72,950/- .IN VIEW OF THESE FACTS HE URGED THAT THE PENALTY B E CONFIRMED ON THE BALANCE AMOUNT OF QUANTUM DISALLOWANCE RS.51,60,568 /- WHICH HAS BEEN CONFIRMED BY HONBLE ITAT. ITA NO 953/ AHD/2010 A.YR.. 2004 -05 4 8. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT TH E ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB WAS NOT FOUND TO BE FALSE O R FABRICATED. HE FURTHER SUBMITTED THAT THE REJECTION OF THE ASSESSEES CLAI M WAS BASED ON BONAFIDE RELIANCE ON LEGAL DECISIONS COULD NOT AMOUNT TO CON CEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCOME SO AS T O JUSTIFY THE IMPOSITION OF PENALTY U/S. 271(1)(C ). HE FURTHER SUBMITTED THAT THE DISALLOWANCE MADE BY THE A.O. WAS A DEBATABLE ISSUE AND THERE WAS NO WIL LFUL ACTION ON THE PART OF THE ASSESSEE FOR MAKING WRONG CLAIM OF DEDUCTION U/S. 80IB. HE FURTHER SUBMITTED THAT IT IS A SETTLED LAW THAT MERE DISALL OWANCE OF CLAIM FOR DEDUCTION OF EXPENSES COULD NOT AUTOMATICALLY ATTRA CT THE PENALTY. HE THUS, SUPPORTED THE ORDER OF CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAD CLAIMED DEDUC TION U/S. 80IB AMOUNTING TO RS.1,87,34,580/- WHICH WAS DISALLOWED BY THE A.O. IN THE QUANTUM PROCEEDINGS, HONBLE ITAT ALLOWED THE CLAIM OF THE ASSESSEE AND THE DEDUCTION U/S. 80IB WAS DETERMINED BY A.O. AT R S.1,35,73,950/-. A.O. HAD LEVIED THE PENALTY ON THE ADDITIONS MADE OF RS. 18,73,580/- UNDER SECTION 80IB. IT IS A SETTLED LAW, THAT PENALTY CAN NOT BE LEVIED WHEN THE CLAIM IS GENUINE ONE AND THE ASSESSEE HAS MADE BONA FIDE CLAIM OF DEDUCTION AND DISCLOSED ALL THE NECESSARY FACTS. IN THE PRESENT CASE THE ASSESSEE BROUGHT ALL THE FACTS BEFORE THE A.O. TO S UBSTANTIATE ITS CLAIM FOR DEDUCTION U/S. 80IB AND THEREFORE IT CANNOT BE SAID THAT HE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE P ARTICULARS OF INCOME. CIT (A) HAS ALSO GIVEN A FINDING THAT THE MAKING OF A C LAIM WHICH WAS NOT ADMITTED BY THE A.O. CANNOT BE TREATED AS FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. LD. CIT (A) HAS FURTHER GIVE N A FINDING THAT CIT (A) ITA NO 953/ AHD/2010 A.YR.. 2004 -05 5 WHILE CONFIRMING THE DISALLOWANCE U/S. 80IB HAS NOT HELD THAT THE ASSESSEES CLAIM FOR DEDUCTION WAS FABRICATED AND F ALSE. A.O. HAS LEVIED PENALTY IN RESPECT OF DISALLOWANCE CONFIRMED BY CIT (A). IN VIEW OF THESE FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDE R PASSED BY CIT (A) AND WE THUS UPHOLD HIS ORDER. THUS THE APPEAL OF THE RE VENUE IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 12 - 201 2. SD/- SD/- ( D. K.TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-VIII,AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO 953/ AHD/2010 A.YR.. 2004 -05 6 1.DATE OF DICTATION 2 - 11 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 26,27 /12 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 27 -12 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 28 - 12 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 28 -12 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28 - 12 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..