The DCIT, Circle-10, Ahmedabad V. Shri Devraj R.Agarwal, Ahmedabad

ITA 954/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8356 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-09-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, CIRCLE - 10, AHMEDABAD (APPELLANT) VS SHRI DEVRAJ R. AGRAWAL, P/3 &4, CITY CENTRE, NR. SWASTIK CROSS ROAD, AHMEDABAD PAN: ABHPA2467M (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASS ESSEE BY: NONE DATE OF HEARING : 06 - 09 - 2 017 DATE OF PRONOUNCEMENT : 11 - 10 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2001 - 02 , AR I SES FROM ORDER OF THE CIT(A) - XVI, AHMEDABAD DATED 24 - 01 - 2013 , IN PROCEEDINGS UNDER SECT ION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN HOLDING THAT ASSESSEE WAS NOT GRANTED ADEQUATE OPPORTUNITY BEFORE PASSING THE PENALTY ORDER. I T A NO . 954 / A HD/20 13 A SSESSMENT YEAR 200 1 - 02 I.T.A NO. 954 /AHD/20 13 A.Y. 2001 - 02 PAGE NO DCIT VS. SHRI DEVRAJ R. AGRAWAL 2 (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS. 16,36,510/ - LEVIED U/S.271(1)(C) OF THE ACT ON THE QUANTUM ADDITION OF E XCESS DEDUCTION CLAIMED U/S. 80HHC OF THE ACT, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. (4) IT IS THEREFORE PRAYED TH AT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED TO THE ABOVE EXTENT. 3. IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 30 , 45,696/ - WAS FILED ON 15 TH OCTOBER, 2001. SUBSEQUENTLY, THE CAS E WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 25 TH OCTOBER, 2002. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S. 80HHC OF THE ACT AMOUNTING TO RS. 1 , 15 , 83 , 644/ - ON ACCOUNT OF EXPORT OF READYM ADE GARMENTS FROM AGRAWAL OVERSEAS CORPORATION. ON VERIFICATION, THE ASSESSING OFFICER HAS NOTICED THAT EXPORT PROCEEDS AMOUNTING TO RS. 1 , 21 ,36 5/ - WAS REALIZED AFTER THE DUE DATE PRESCRIBED UNDER THE ACT, THEREFOR E, THE EXPORT TURNOVER WAS REDUCED AT RS. 1 , 21 ,36 5/ - FOR COMPUTING THE DEDUCTION U/S. 80HCC. FURTHER THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS NOT TAKEN INTO CONSIDERATION PROFIT ARISING FROM OTHER CONCERNS AS THE DEDUCTION U/S. 80HHC IS REQ UIRED TO BE PROVIDED ASSESSEE - WISE AND NOT UNIT - WISE. HE FURTHER OBSERVED THAT FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80HHC THE TURNOVER IS TO BE INCLUDE D OF ALL THE BUSINESSES OF THE ASSESSEE. CONSEQUENTLY , THE ASSESSING OFFICER DETERMINED TH E DEDUCTION ALLOWABLE U/S. 80HHC TO THE AMOUNT OF RS. 63 , 16 , 104/ - WHICH RESULTED IN ADDITION OF RS. 52 , 67 , 540/ - .SUBSEQUENTLY, THE PENALTY OF RS. 16 , 36 , 510/ - WAS LEVIED U/S. 271(1)(C) OF THE ACT. I.T.A NO. 954 /AHD/20 13 A.Y. 2001 - 02 PAGE NO DCIT VS. SHRI DEVRAJ R. AGRAWAL 3 4. AGGRIEVED AGAINST THE DECISION OF THE ASSESSING OFFICE R, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 6.7 CONSEQUENTLY, THE FACTS OF THE CASE REQUIRE TO BE ANALYSED IN VIEW OF ABOVE JUDICIAL CITATIONS. THE APPELLANT HAS MADE A CLAIM OF DEDUCTION U/S. 80HHC OF RS. 1,15,83,644/ - . WHILE DOING SO, THE APPELLANT HAD TREATED TURNOVER OF ONLY AOC, ITS EXPORT PROPRIETARY CONCERN AND NOT OF ALL THE PROPRIETARY CONCERNS. THE A O RELYING UPON THE DECISION IN THE CASE OF INTERNATIONAL RESEARCH LABORATORIES, SPECIAL BENCH, DELHI WAS OF THE VIEW THAT TURNOVER OF ALL THE PROPRIETARY BUSINESSES WAS TO BE INCLUDED FOR CALCULATING ADMISSIBLE DEDUCTION U/S. 80HHC AND CONSEQUENTLY MADE AN ADDITION OF RS. 52,67,540/ - AND IMPOSED PENALTY THEREUPON. THE VIEW HELD BY THE A O IN QUANTUM PROCEEDINGS WAS NOT ENDORSED BY MY ID PREDECESSOR, WHO RELYING UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS MADRAS MOTORS 257 ITR 60 DELETED THE ADDITION MAD E BY THE A O. IN APPEAL, HON'BLE JURISDICTIONAL TRIBUNAL REVERSED THE FINDINGS OF MY ID PREDECESSOR, FOLLOWING THEIR OWN DECISION IN APPELLANTS CASE FOR A Y 2000 - 01. WHILE DOING SO, HON'BLE TRIBUNAL IS OF THE VIEW THAT DECISION OF SPECIAL BENCH IN THE CASE OF INTERNATIONAL RESEARCH LABORATORIES LTD AND OF HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS JOSE THOMAS 253 ITR 553 IS APPLICABLE. THUS, IT IS CLEAR THAT THE ISSUE UNDER CONSIDERATION BEING THE CALCULATION OF ADMISSIBLE DEDUCTION U/S. 80HHC IS A DEBATABLE ISSUE ON WHICH HON'BLE COURTS / APPELLATE TRIBUNALS ARE HOLDING DIVERGENT OPINIONS. THUS, SEEN THE CLAIM OF THE APPELLANT, FALLS IN THE CATEGORY OF A DEBATABLE ISSUE AND CANNOT BE EQUATED WITH A CLAIM BEING MADE UPON BASIS OF SUBMISSION OF INA CCURATE PARTICULARS. THERE IS NO MALAFIDE WHICH CAN BE ATTACHED, TO THE CONDUCT OF THE APPELLANT. HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM TELECOM SUPRA HAVE LAID DOWN THAT SO FAR AS THERE IS FULL DISCLOSURE OF MATERIAL ON WHICH OFFERED INCOME IS CAL CULATED, NO FAULT CAN BE ATTACHED TO AN ASSESSEE. IN THIS CASE, THE APPELLANT HAS MADE A CLAIM U/S. 80HHC HOLDING VIEW THAT TURNOVER OF AOC ONLY HAS TO BE INCLUDED. THE ID A O DISAGREES WITH APPELLANTS VIEW, HOLDING THAT TURNOVER OF PROPRIETARY CONCERN I S TO BE INCLUDED AND CONSEQUENTLY LEVIED THE PENALTY U/S. 271 (1)(C). IT IS NOT A CASE WHERE THE APPELLANT CAN BE HELD GUILTY C \ F CONCEALING ANY PARTICULARS PERTAINING TO HIS DISCLOSED INCOME. ALL THE INFORMATION CONCERNING HIS PROPRIETARY CONCERNS WAS DISCLOSED BY THE APPELLANT IN THE RETURN OF INCOME. THUS, IN VIEW OF THE JUDICIAL CITATIONS DISCUSSED ABOVE, IT IS HELD THAT PENALTY U/S. 271 (1)(C) CANNOT BE IMPOSED UPON THE APPELLANT. RESPECTFULLY FOLLOWING THE JUDICIAL RATIOS DISCUSSED IN PRECED ING PARAS, IT IS CONCLUDED THAT THE ACTION OF THE A.O. TO IMPOSE PENALTY U/S. 271 (1)(C) AMOUNTING TO RS. 16,36,510/ - VIDE ORDER DATED 26 - 4 - 2011 IS NOT CORRECT AND IS NOT BASED UPON CORRECT INTERPRETATION OF LAW. IT IS HELD THAT THE PENALTY ORDER CANNOT B E SUSTAINED. ACCORDINGLY, THE PENALTY IMPOSED BY THE ID AO IS DELETED AND THE GROUND OF APPEAL RAISED BY THE APPELLANT IS ALLOWED. 5. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD CAREFULLY. T HE ASSESSING OFFICER HAS ALLOWED THE DEDUCTION U/S. 80HHC OF RS. 63 , 16 , 104 / - AS AGAINST DEDUCTION OF RS. 1 , 15 , 83 ,640 / - CLAIMED IN THE RETURN OF INCOME BY THE ASSESSEE. THE ASSESSING OFFICER HAS COMPUTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80HHC AFTER TAKING INTO CONSIDERATION THE TURNOVER O F ALL THE PROPRIETARY CONCERNS OF THE ASSESSEE . IN THI S CONNECTION , WE FIND THAT THE ASSESSEE HAS MADE FULL DISCLOSURES OF ALL THE MATERIALS ON THE I.T.A NO. 954 /AHD/20 13 A.Y. 2001 - 02 PAGE NO DCIT VS. SHRI DEVRAJ R. AGRAWAL 4 BASIS OF WHICH HE HAS CLAIMED D EDUCT ION U/S. 80HHC OF THE ACT. AFTER CONSIDERING THE FACTS OF T HE CASE, DE TAILED FINDINGS OF T HE LD. CIT(A) AND T HE JUDICIAL PRONOUNCEMENTS MENTIONED IN THE ORDER OF THE LD. CIT(A), WE O BS ERVE THERE WAS NO CO NCEALMENT OF PARTICULAR OF INCOME THEREFORE, WE UPHOLD THE DECISION O F T HE LD. CIT(A) . 6. IN THE RESULT, THE APPEAL OF THE RE VE NUE IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 11 - 10 - 201 7 SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SIN GH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 11 /10 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,