I Labs Information Technology & Life Sciences Part P. Ltd., Hyderabad V. Addl. CIT, Range - 15, Hyderabad

MA 5/HYD/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6404 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 18-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Initiation of penalty proceedings; Reasonable cause; Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER MA NOS.05 & 06/HYD/2011 ARISING OUT OF ITA NOS.222 & 223/H/2010) ASSESSMENT YEAR :2001-02 & 2002-03 I LABS INFORMATION TECHNOLOGY & LIFE SCIENCES PARK (P) LTD., HYDERABAD. (PAN: AABCT 3762A) VS THE ADDL. CIT, RANGE 15, HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI V. RAGHAVENDRA RAO RESPONDENT BY : SMT. NIVEDITA BISWAS, DR ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO MISCELLANEOUS APPLICATIONS FILED B Y THE ASSESSEE SEEKING RECTIFICATION OF THE ORDER OF THIS TRIBUNAL DATED 2 3.4.2010 IN ITA NOS.222 & 223/HYD/2010 FOR THE ASSESSMENT YEARS 2001-02 & 200 2-03. 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT THE TRIBUNAL HAS WRONGLY RELIED ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCOA COLA BEVERAGES PRIVA TE LTD. (293 ITR 226) AND NOT CONSIDERED THE ORDER OF THE COORDINATE BENCH IN THE CASE OF WIPRO GE MEDICAL SYSTEMS LTD. VS. ITO (2003) (3 SOT 627) (BA NGALORE) AND ALSO THE JUDGEMENT IN THE CASE OF INDO NISSIN FOODS LTD. VS. JCIT (3 SOT 495) RELIED BY THE ASSESSEES COUNSEL. HE ALSO POINTED OUT THAT T HE TRIBUNAL SHOULD HAVE FOLLOWED THE LATEST JUDGEMENT OF THE HONBLE SUPREM E COURT IN THE CASE OF ELI LILLY & CO. (INDIA) PRIVATE LTD. (312 ITR 225) WHE REIN IT WAS HELD THAT THE PROVISION OF SEC. 271C(1) (C ) IS NOT MANDATORY OR COMPENSATORY OR AUTOMATIC. FURTHER, HE PLACED RELIANCE ON THE DECISION OF THE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (83 ITR 26 ). IN THE CONTEXT THE HONBLE BENCH REFERRED TO THE DECISION OF THE SUPREME COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS COMPANY LTD. VS. STATE OF UTTA R PRADESH (118 ITR 326) 2 M.A. NOS. 05 & 06/2011 I LABS INFORMATION TECHNOLOGY & LIFE SCIENCES PART PVT. LTD. ========================== STATING THAT THE SUPREME COURT HELD THAT IGNORANCE OF LAW IS NO EXCUSE. ACCORDING TO THE DECISION OF THE SC, THERE IS NO PR ESUMPTION THAT EVERYBODY KNOWS LAW. THE SC DID NOT ANYWHERE STATED IN THAT JUDGEMENT THAT IGNORANCE OF LAW IS NO EXCUSE. BASING ON THE RATIO OF THE ABOVE CASE, THE DECISION OF THE SC IN THE CASE OF HINDUSTAN STEEL LIMITED VS. STATE OF OR ISSA (83 ITR 26) WAS HELD TO BE NOT APPLICABLE. 3. HE SUBMITTED THAT AS PER THE SUPREME COURT JUDGEMEN T PENALTY NEED NOT BE LEVIED IF THERE WAS NO CONTUMACIOUS CONDUCT IN S UPPORT OF WHICH THE JUDGEMENT OF SC IN HINDUSTAN STEEL (SUPRA) WAS RELI ED UPON. THERE WOULD BE NO INFERENCE OF CONTUMACIOUS CONDUCT WHERE CORRECTIVE MEASURES ARE TAKEN TO RECTIFY THE MISTAKE IMMEDIATELY. FOR THIS PROPOSIT ION THE DECISIONS OF THE MUMBAI BENCH G OF THE INCOME TAX TRIBUNAL IN THE CASE OF DCIT (TDS) VS. SMS INDIA LIMITED (7 SOT 424) AND OF BANGALORE BENC H B IN THE CASE OF INDO NISSAN FOODS LIMITED VS. JCIT WHERE FACTS ARE SIMIL AR HAVE BEEN INCLUDED IN THE COMPILATION OF CASE LAW. 4. HE FURTHER SUBMITTED THAT A DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF RM DONDE ITO VS. MUKUNDRAI KUBERDAS KATAKIA (176 ITR 381) (BOM.) NOT CITED BY EITHER PARTY WAS ALSO CONSIDERED. IN THAT CASE WHICH WAS ON THE PROVISIONS OF SECTION 285 OF THE IT ACT, THE HIGH C OURT HELD IN FVOUR OF THE ASSESSEE AND DECLINED TO GO INTO THE ISSUE OF REAS ONABLE CAUSE OR EXCUSE. THE HIGH COURT MADE AN OBSERVATION THAT REASONABLE CAUS E OR EXCUSE DOES NOT TAKE IN ITS SWEEP AN ERROR OR MISCONCEPTION OF LAW. HOWEVE R, REASONABLE CAUSE WAS GONE INTO IN DEPTH BY THE DELHI HIGH COURT WHICH WA S RELIED ON BY THE BANGALORE BENCH IN THE CASE OF INDO NISSIN FOODS VS. JCIT (3 SOT 495). HE SUBMITTED THAT THE HONBLE BENCH HAS NOT TAKEN NOTICE OF THI S DECISION ON REASONABLE CAUSE BUT APPLIED THE BOMBAY HIGH COURT JUDGEMENT NOT CIT ED BY EITHER PARTY. 5. HE FURTHER SUBMITTED THAT THE GROUND OF APPEAL NO.7 WHEREIN THE APPLICATION OF PROVISION OF SECTION 292BB BY THE CI T(A), AGAINST THE CONTENTION 3 M.A. NOS. 05 & 06/2011 I LABS INFORMATION TECHNOLOGY & LIFE SCIENCES PART PVT. LTD. ========================== THAT THE INITIATION OF PENALTY PROCEEDINGS IS INVAL ID IN TERMS OF DECISION OF THE BANGALORE BENCH IN THE CASE OF INDO NISSION FOODS ( SUPRA) WAS DISPUTED HAS NOT BEEN DISPOSED OF BY THE TRIBUNAL. 6. HE SUBMITTED THAT WHILE CONSIDERING THE TIME BARRIN G NATURE OF THE ORIGINAL PROCEEDINGS U/S 201(A) CONTESTED IN GROUND OF APPEAL NO.6 THE DECISION OF SPECIAL BENCH IN THE CASE OF MAHINDRA & MAHINDRA LTD. HAS NOT CONSIDERED BY THE HONBLE BENCH. THE EARLIER DECISION OF DELHI D IVISION BENCH IN THE CASE OF THAI AIRWAYS INTERNATIONAL PUBLIC COMPANY LTD. VS. ACIT (2 SOT 389) WAS CONSIDERED AND HELD AGAINST THE ASSESSEE. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESE NTATIVE RELIED ON THE ORDER OF THIS TRIBUNAL. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE JU DGEMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THE TRIBUNAL AFTER CONS IDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE ADJUDICATED THE ISSUE. THE ORDER OF THE TRIBUNAL NEED NOT BE SCRUTINISED SENTENCE BY SENTENCE MERELY TO F IND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN DETAIL BY THE TRIBUNAL OR WHETHER S OME INCIDENTAL FACTS WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTICED BY THE T RIBUNAL IN ITS JUDGEMENT. ON FAIR READING OF THE ORDER OF THE TRIBUNAL IF ONE FI NDS THAT IT HAS TAKEN INTO ACCOUNT ALL RELEVANT MATERIAL AND HAS NOT TAKEN INTO ACCOUN T ANY IRRELEVANT MATERIAL IN BASING ITS CONCLUSIONS, THE DECISION OF THE TRIBUNA L IS NOT LIABLE TO BE INTERFERED WITH, UNLESS, OF COURSE, THE CONCLUSIONS ARRIVED AT BY THE TRIBUNAL ARE PERVERSE. IT IS NOT NECESSARY FOR THE TRIBUNAL TO STATE IN ITS J UDGEMENT SPECIFICALLY OR IN EXPRESS WORDS THAT IT HAS TAKEN INTO ACCOUNT THE CU MULATIVE EFFECT OF THE CIRCUMSTANCES OR HAS CONSIDERED THE TOTALITY OF THE FACTS, AS IF THAT WERE A MAGIC FORMULA, IF THE JUDGEMENT OF THE TRIBUNAL SHOWS THA T IT HAS, IN FACT, DONE SO, THERE IS NO REASON TO INTERFERE WITH THE DECISION OF THE TRIBUNAL. IN ARRIVING AT THE CONCLUSION THE TRIBUNAL HAS CONSIDERED ALL THE FACT S AND CIRCUMSTANCES OF THE CASE AND DELIVERED THE ORDER. THE ORDER NEED NOT BE SHO WN IN FAVOUR OF THE ASSESSEE, 4 M.A. NOS. 05 & 06/2011 I LABS INFORMATION TECHNOLOGY & LIFE SCIENCES PART PVT. LTD. ========================== THAT ITSELF CANNOT BE THE REASON FOR RECTIFICATION OF THE ORDER OF THIS TRIBUNAL. THE ASSESSEE ADMITTEDLY RAISED GROUND NO.7 AND ON T HAT ISSUE THE ASSESSEE HAS RELIED ON THE ORDER OF THE BANGALORE BENCH IN THE C ASE OF INDO NISSIN FOODS LTD. VS. JCIT (3 SOT 495), THE TRIBUNAL CONSIDERED THIS JUDGEMENT AND HELD IN PARA 7 AT PAGE NO. 9 THAT IT IS NOT APPLICABLE TO THE FACT S OF THE PRESENT CASE. BEING SO, THE PRESENT ARGUMENT OF THE ASSESSEES COUNSEL THAT THE TRIBUNAL HAS NOT CONSIDERED THE IN GROUND NO. 7 IS NOT CORRECT. TH E TRIBUNAL HAS CONSIDERED ALL FACTS OF THE CASE AND GIVEN ITS FINDINGS. HENCE ON THIS ISSUE NO INTERFERENCE IS CALLED FOR. 9. FURTHER, GRIEVANCE OF THE ASSESSEE IS WITH REGARD T O NON CONSIDERATION OF THE HONBLE SC IN THE CASE OF CIT VS. ELI LILLY & CO. (INDIA) PRIVATE LTD. NOW WE ARE REQUIRED TO CONSIDER THAT THE TRIBUNAL WAS L EGALLY JUSTIFIED IN NOT APPLYING THE JUDGEMENT RENDERED IN THE CASE OF CIT VS. ELI L ILLY & CO. (INDIA) PRIVATE LTD., CITED SUPRA, OR, THE TRIBUNAL WAS JUSTIFIED IN APPL YING THE JUDGEMENT IN THE CASE OF HINDUSTAN COCOA COLA. THE TRIBUNAL AFTER EXAMINING THE VARIOUS JUDGEMENTS CITED BY THE ASSESSEES COUNSEL AND FOUND THAT THE CASE LAW CITED BY THE ASSESSEES COUNSEL WERE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE AND DECIDED THE ISSUE AGAINST THE ASSESSEE. WHEN THERE ARE DIFFERENT SET S OF JUDGEMENTS, PROCEEDING ON DIFFERENT LINES OF REASONING AND THEY STAND ON THEI R OWN LEGAL FOOTING AND IN THAT EVENT, IF THE TRIBUNAL HAS NOT ACCEPTED THE REASON GIVEN IN THAT JUDGEMENT, IT CANNOT BE SAID THAT THE TRIBUNAL WAS LEGALLY NOT JU STIFIED IN NOT FOLLOWING THE JUDGEMENT CITED BY THE ASSESSEES COUNSEL, SIMPLY B ECAUSE IT MIGHT HAVE BEEN POSSIBLE OR MIGHT BE MORE APPROPRIATE TO FOLLOW OTH ER SET OF JUDGEMENTS BY FOLLOWING THE OTHER LINE OF REASONING. IN THE PRES ENT CASE, THE JUDGEMENT RELIED BY THE ASSESSEE IN THE CASE OF ELI LILLY & CO. (IND IA) PVT. LTD. (SUPRA) WAS DELIVERED ON THE FACTS OF THAT CASE AND THIS JUDG EMENT HAVE NO APPLICATION TO THE FACTS OF THE ASSESSEES CASE. AS SUCH, THE TRIBUNA L NOT FOLLOWED THAT JUDGEMENT, AND IT CANNOT BE SAID THAT THIS ACTION OF THE TRIBU NAL CANNOT BE SAID ERRONEOUS OR MISTAKE APPARENT ON RECORD. 5 M.A. NOS. 05 & 06/2011 I LABS INFORMATION TECHNOLOGY & LIFE SCIENCES PART PVT. LTD. ========================== 10. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.5.2011 SD/- G.C. GUPTA SD/- CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 27 TH MAY, 2011 COPY FORWARDED TO: 1. M/S I LABS INFORMATION TECHNOLOGY & LIFE SCIENCE P ARK P LTD., PLOT NO.18, SOFTWARE UNIT LAYOUT, MADHAPUR, HYDERABAD 2. THE ADDL. CIT, RANGE 15 (TDS), HYDERABAD 3. THE CIT(A) II, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/TPRAO