Income Tax Officer, Ward-6(4), Bangalore V. IM/s Kumar Enterprises, Bangalore

MA 121/BANG/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4413 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-06-2016
• Assessment Year: 1993-1994
• Appeal Filed On: 01-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 80HHC

Judgement Text

MP.121/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER MISC. PETITION NO.121/BANG/2015 (IN I.T.A NO.435/BANG/2014) (ASSESSMENT YEAR : 1993-94) INCOME-TAX OFFICER, WARD 6(4), BENGALURU ..APPLICANT V. M/S. KUMAR ENTERPRISES, NO.25, 9 TH CROSS, KUMARA PARK WEST, BENGALURU 560 020 ..RESPONDENT PAN : AAYPJ7648F ASSESSEE BY : SHRI. SURESH MUTHUKRISHNAN, ADVOCATE REVENUE BY : DR. K. SHANKAR PRASAD, JCIT HEARD ON : 24.06.2016 PRONOUNCED ON :28.06.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : REVENUE IN THIS MISCELLANEOUS PETITION IS AGGRIEVE D THAT TRIBUNAL HAD UPHELD THE ORDER OF CIT (A)-II, BENGALURU, DELETING A PENALTY OF RS.12,17,441/-, LEVIED ON THE ASSESSEE. AS PER THE REVENUE, THIS TRIBUNAL MP.121/BANG/2015 PAGE - 2 PASSED THAT ORDER UNDER A WRONG IMPRESSION THAT SUB STRATUM FOR LEVY OF PENALTY WAS MISSING. 02. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT ADDI TIONS MADE UNDER THE HEAD INCOME FROM OTHER SOURCES ON WHICH PENALTY W AS LEVIED WAS NEVER REMITTED BACK TO THE AO BY THE TRIBUNAL. THUS, AS PER THE LD. DR, SUCH ADDITIONS CONTINUED AND HENCE, LEVY OF PENALTY COUL D NOT BE CANCELLED TAKING A VIEW THAT SUBSTRATUM FOR LEVY OF PENALTY H AD DISAPPEARED. 03. PER CONTRA LD. AR SUPPORTED THE ORDER OF THE TR IBUNAL. 04. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. OBSERVATION OF THE TRIBUNAL IN THE IMPUGNED ORDER I S REPRODUCED HEREUNDER: 4. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THE ADDITIONS ON WHICH PENALTY WAS LEVIED WERE THE FOLL OWING: I) PEAK CASH DEFICIT FOUND IN DAY BOOK 14,33,843 II) CASH DIFFERENCE AS ON 31.3.93 43,478 III) EXCESS OF ASSETS OVER LIABILITIES (ASSETS NOT TAKEN INTO ACCOUNTS) 10,91,283 IV) LIABILITIES OVERSTATED 4,75,000 ON THE BUSINESS INCOME, ASSESSEES CLAIM FOR 80HHC WAS ALLOWED BY LD. CIT(A) AND REVENUES APPEAL AGAINST THIS WAS DISMISSED BY THIS TRIBUNAL VIDE ITS ORDER DATED 30/3/2007 IN ITA NOS.635 & 636/BANG/2005. HOWEVER, AN ASSESSEES APPEAL AGAINS T THE ADDITIONS UNDER THE HEAD INCOME FROM OTHER SOURCES AND ITS PLEA THAT NO SEPARATE ADDITION WAS WARRANTED, IN VIEW OF SECTION 80HHC MP.121/BANG/2015 PAGE - 3 BENEFIT BEING GRANTED TO IT, THE DIRECTIONS OF THIS TRIBUNAL IN THE ORDER MENTIONED SUPRA READ AS UNDER: 2. ACCORDING TO THE ASSESSEE, IT IS A 100% EXPORT ORIENTED UNIT AND CLAIM U/S 80HHC WAS MADE FOR THE FIRST TIME BEFORE THE CIT(A). LEARNED CIT(A) ADMITTED THE GROUND AND DIRECTED THE ASSESSING OFFICER TO ALLOW CLAIM U/S 80HHC WITH REFERENCE TO BUSINESS PROFIT. THE SUBMISSION OF THE LEARNED COUNSEL IS THAT IF IT IS FOUND THAT THE ASSESSEE IS A 100% EXPORT ORIENTED UNIT, IN THAT EV ENT, OTHER ADDITIONS MAY NOT BE WARRANTED. HENCE, IT IS SUBMIT TED THAT THE MATTER MAY GO BACK TO THE ASSESSING OFFICER FOR TAK ING PROPER DECISION. RELIANCE WAS PLACED ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. GOD GRANITES A ND OTHERS (262 ITR 567). 3. ON THE OTHER HAND, LEARNED DR SUPPORTED THE ACTI ON OF THE ASSESSING OFFICER AND SUBMITTED THAT NO CLAIM U/S 8 0HHC WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. HE PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF GOETZE (INDIA) LTD., V. CIT (284 ITR 323). 4. AFTER HEARING BOTH THE SIDES, WE FIND FORCE IN T HE SUBMISSION OF THE ASSESSEE. BEFORE THE ASSESSING OFFICER, THE CLA IM U/S 80HHC WAS NOT MADE BY THE ASSESSEE. THEREFORE, THE SUBMIS SION OF THE ASSESSEE THAT NO OTHER ADDITIONS SHOULD BE MADE, WA S NOT CONSIDERED BY THE ASSESSING OFFICER. DEDUCTION U/S 80HHC HAS BEEN CLAIMED BY THE ASSESSEE BEFORE THE CIT(A) AND THAT GROUND THAT HAS BEEN RIGHTLY ADMITTED BY LEARNED CIT(A). 5. BEFORE THE TRIBUNAL, IN ASSESSEES APPEAL, THE A SSESSEE HAS CHALLENGED VARIOUS DISALLOWANCES AND ADDITIONS MADE BY THE ASSESSING OFFICER. IN VIEW OF THE AFORESAID DISCUSS ION AND SINCE CLAIM OF 80HHC WAS NOT MADE BEFORE THE ASSESSING OF FICER EARLIER, IN OUR OPINION, THE MATTER SHOULD GO BACK TO THE AS SESSING OFFICER FOR RECONSIDERATION. ACCORDINGLY, THE IMPUGNED ORDE R IS SET ASIDE AND THE MATTER IS RESTORED TO THE ASSESSING OFFICER FOR DECIDING AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE D ISCUSSION MADE ABOVE. ORDER LEVYING PENALTY ON THE ADDITIONS MADE UNDER T HE HEAD INCOME FROM OTHER SOURCES WAS PASSED ON 31/3/2006 , WELL PRIOR TO THE ABOVE TRIBUNAL ORDER. THUS ON THE DATE WHEN PEN ALTY ORDER WAS MP.121/BANG/2015 PAGE - 4 PASSED, THE ADDITIONS ON WHICH PENALTY WAS LEVIED, STOOD REVERTED BACK TO THE AO FOR FRESH CONSIDERATION. OR IN OTHER WORDS, THE SUBSTRATUM FOR THE LEVY OF THE PENALTY HAD DISAPPEA RED. HONBLE GUJARAT HIGH COURT IN THE CASE OF RANCHCHOBHAI HARI BHAI JADAV (SUPRA), NO DOUBT STATE THAT WHEN THERE IS NO ASSES SMENT OF INCOME IN THE HANDS OF THE ASSESSEE OR THE SAME HAS BEEN S ET ASIDE, PENALTIES TOO ARE TO BE SET ASIDE. HOWEVER, IN OUR OPINION, THIS DOES NOT MEAN THAT THE AO IS PRECLUDED FROM INITIATING P ENALTY PROCEEDINGS AFRESH, IF HE IS SATISFIED THAT INGREDI ENTS REQUIRED TO INVOKE SECTION 271(1)(C) ARE THERE, WHEN COMPLETING THE PROCEEDINGS AFRESH PURSUANT TO THE TRIBUNAL ORDER. WITH THIS OBSERVATION, WE DISMISS THE APPEAL FILED BY THE REV ENUE. 05. IT IS CLEARLY MENTIONED IN THE ORDER THAT ASSES SEE HAD ALSO FILED AN APPEAL AGAINST THE ADDITIONS MADE UNDER THE HEAD I NCOME FROM OTHER SOURCES ON A GROUND THAT NO SEPARATE ADDITION WAS WARRANTED WHEN BENEFIT U/S.80HHC OF THE ACT WAS GRANTED TO IT. TRIBUNAL H AD IN SUCH APPEAL OF THE ASSESSEE, SET ASIDE THE ISSUES RAISED BY THE ASSESS EE ALONG WITH THE CLAIM MADE BY ASSESSEE U/S.80HHC OF THE ACT, TO THE AO FO R CONSIDERATION AFRESH. IT WAS DUE TO THIS REASON THAT TRIBUNAL IN THE REVENUES APPEAL AGAINST CANCELLATION OF PENALTY BY CIT (A) OBSERVED THAT SUBSTRATUM FOR LEVY OF PENALTY HAD DISAPPEARED. WHEN THE ADDITIO NS MADE ON WHICH PENALTY WAS LEVIED WAS SET ASIDE BY THE TRIBUNAL FO R CONSIDERING SUCH ADDITIONS ALONG WITH THE CLAIM OF ASSESSEE U/S.80HH C OF THE ACT, WE CANNOT SAY THAT ORIGINAL ORDER OF ASSESSMENT SURVIV E ANY MORE. WHEN THE ORIGINAL ASSESSMENT ITSELF DOES NOT SURVIVE, THERE CAN BE NO QUESTION OF ANY MP.121/BANG/2015 PAGE - 5 LEVY OF PENALTY BASED ON SUCH ORDER. IN ANY CASE, WE ALSO FIND THAT TRIBUNAL HAD GIVEN FREEDOM TO THE AO TO INITIATE FRESH PENAL TY PROCEEDINGS AFTER COMPLETION OF FRESH ASSESSMENT, IF HE FOUND THAT NE CESSARY INGREDIENTS REQUIRED TO INVOKE SECTION 271(1)(C) WERE SATISFIED . WE THUS DO NOT FIND ANY MERIT IN THE MISCELLANEOUS PETITION FILED BY TH E REVENUE. 06. IN THE RESULT, MISCELLANEOUS PETITION FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF JUNE, 2016. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTA NT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR MP.121/BANG/2015 PAGE - 6