DCIT CEN CIR 38, V. FIBRE BOX BOMBAY P. LTD,

MA 519/MUM/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5309 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2003-2004
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Keywords: Wrong claim; Revised return; Reassessment proceedings
• Section: 153A; 80IB; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER MA 519/MUM/2010 (ARISING OUT OF ITA NO. 3074/MUM/2008) (ASSESSMENT YEAR: 2003-04) DCIT, CENTRAL CIRCLE-38 M/S. FIBER BOX BOMBAY PVT. LTD. AAYAKAR BHAVAN, M.K. ROAD MARATHON HOUSE, DEVIDAYAL ROAD MUMBAI 400020 VS. MULUND (W), MUMBAI 400080 PAN - AAACF 2343 J APPELLANT RESPONDENT APPELLANT BY: SHRI SUMEET KUMAR RESPONDENT BY: SHRI HARIOM TULSYAN O R D E R PER B. RAMAKOTAIAH, A.M. THIS MA FILED BY THE REVENUE IS SEEKING IN A WAY RE VIEW OF THE ORDER STATING THAT FINDING WAS WRONGLY GIVEN ON THE FACT THAT THE A.O. HAS CONSIDERED THE PENALTY PROCEEDING INITIATED ON 30.0 3.2006 AND THE PENALTY PROCEEDING INITIATED ON 29.12.2006 IN THE PROCEEDIN GS UNDER SECTION 153A AND A CONSOLIDATED ORDER FOR TWO PENALTY PROCEEDIN GS WAS PASSED BY THE A.O. IT WAS THE CONTENTION THAT THE ITAT HAS NOT CO NSIDERED THESE OBSERVATION OF AO IN THE ORDER AT PARA 5, WHILE HOL DING THAT THE PENALTY WAS INITIATED AT THE TIME OF RE-ASSESSMENT PROCEEDINGS ON THE MATTER DECIDED IN FIRST ASSESSMENT PROCEEDINGS I.E. ON THE ISSUE OF L EVY OF PENALTY ON CLAIM OF DEDUCTION U/S 80IB. 2. THE BACKGROUND FOR THIS MA CAN BE UNDERSTOOD FROM T HE FINDING OF THE ITAT, WHICH IS AS UNDER: - 5. THE ASSESSEE MADE DETAILED SUBMISSIONS AND THE LEARNED D.R. VEHEMENTLY OPPOSED THE CONTENTIONS. WITHOUT GOING T O THE VARIOUS CASE LAWS RELIED UPON BY BOTH THE PARTIES, IT IS NOTICED THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 28.11.2003 AND THE AS SESSMENT PROCEEDINGS WERE COMPLETED ON 30.03.2006. A SEARCH WAS CONDUCTED ON 02.12.2004. IT MEANS THAT AT THE TIME OF PENDENCY O F THE ASSESSMENT PROCEEDINGS THE SEARCH IN THE GROUP COMPANIES WAS C OMPLETED AND THE SEARCH MATERIAL WAS NOT CONSIDERED IN THE ASSESSMEN T COMPLETED ON MA 519/MUM/2010 M/S. FIBER BOX BOMBAY PVT. LTD. 2 30.03.2006, WHICH MEANS THAT THE DECISION TO DENY 8 0IB DEDUCTION WAS NOT BASED ON ANY SEARCH MATERIAL BUT ON THE BASIS O F THE AGREEMENTS AND OTHER STATEMENTS FURNISHED BY THE ASSESSEE IN T HE COURSE OF ASSESSMENT PROCEEDINGS. EVENTHOUGH THE A.O. TRIED T O JUSTIFY THE LEVY OF PENALTY ON AN ISSUE WHICH WAS ALREADY CRYSTALLISED AT THE TIME OF ORIGINAL ASSESSMENT, WE ARE NOT CONVINCED WITH THE ACTION OF THE A.O. IN CONSIDERING THE ABOVE ISSUE FOR LEVY OF PENALTY. FI RST OF ALL THE ISSUE DOES NOT ARISE OUT OF THE REASSESSMENT ORDER, I.E. RE-AS SESSMENT ORDER PASSED UNDER SECTION 153C AFTER COMPLETION OF ORIGINAL ASS ESSMENT. THE A.O. ALSO GIVES A FINDING THAT THIS IS A REASSESSMENT OR DER AND ORIGINAL ASSESSMENT PROCEEDINGS HAVE NOT BEEN ABATED. AS FAR AS CLAIM OF 80IB IS CONCERNED THE ISSUE WAS CONSIDERED AND CONCLUDED AGAINST THE ASSESSEE IN THE FIRST ASSESSMENT ITSELF. AS RIGHTLY CONSIDERED BY THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO CHEMCIALS LTD. 322 ITR 157 DISALLOWANCE OF A CLAIM MADE DOES NOT LEAD TO 271(1)(C) PENALTY AND ACCORDINGLY THE CLAIM OF 80IB DISALLOWED BY THE A.O. WOULD NOT HAVE BEEN AN ISSUE FOR LEVY OF PENALTY. IN ADDITION TO T HAT, IT IS ALSO NOT CORRECT ON THE PART OF THE A.O. TO CONSIDER THE 80IB CLAIM FOR LEVY OF PENALTY INITIATED AT THE TIME OF REASSESSMENT PROCEEDINGS W HEN ASSESSEE HAS NOT MADE THE CLAIM AND FILED THE RETURN IN RESPONSE TO NOTICE UNDER SECTION 153C ON A HIGHER INCOME WITHDRAWING THE CLAIM UNDER SECTION 80IB. IN VIEW OF THIS WE ARE OF THE OPINION THAT PENALTY LEV IED BY THE A.O. ON CLAIM OF 80IB IS NOT SUSTAINABLE AND ACCORDINGLY DIRECTED TO BE DELETED ON THIS ISSUE. 3. AS CAN BE SEEN FROM THE ABOVE, THERE ARE TWO REASON S FOR NOT UPHOLDING THE PENALTY ON THE ISSUE OF 80IB, ONE BEI NG THAT THE DISALLOWANCE OF A CLAIM DOES NOT LEAD TO PENALTY FOLLOWING THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEMICAL S LTD. 322 ITR 157. IN ADDITION THAT THAT THE ISSUE OF INITIATION OF PENAL TY AT THE TIME OF ORIGINAL PROCEEDINGS AND RE-ASSESSMENT PROCEEDINGS WERE ALSO CONSIDERED AND HELD THAT THERE IS NO SCOPE FOR LEVY OF PENALTY INITIATE D AT THE TIME OF REASSESSMENT PROCEEDINGS WHEN THE MATTER WAS CONCLU DED ALREADY IN THE ORIGINAL ASSESSMENT PROCEEDINGS. 4. IT IS REVENUES CONTENTION IN THE MA THAT THERE WAS TIME LIMIT FOR COMPLETION OF PENALTY PROCEEDINGS IN THE ORIGINAL A SSESSMENT CONSEQUENT TO THE DISMISSAL OF THE APPEAL BY THE CIT(A) DATED 15. 11.2006 RECEIVED IN THE OFFICE OF THE CIT ON 04.12.2006 AND ACCORDINGLY THE A.O. VIDE PARA 5 HAS CONSIDERED THAT THESE TWO PENALTY PROCEEDINGS ARE D ISPOSED OFF BY A COMMON ORDER. THE A.O. HAS GIVEN SUCH A NOTE IN THE PENALT Y ORDER, BUT THE TONE AND TENURE OF THE PENALTY ORDER INDICATES THAT IT IS FI NALISATION OF THE SECOND MA 519/MUM/2010 M/S. FIBER BOX BOMBAY PVT. LTD. 3 PENALTY PROCEEDINGS ONLY. VIDE PARA 9 OF THE ORDER THE FOLLOWING FINDINGS WERE GIVEN BY THE A.O. WHILE LEVYING PENALTY: - 9. CERTAIN CONDITIONS WITH REFERENCE TO ELIGIBILIT Y OF A PROJECT FOR DEDUCTION U/S 80IB(10) ARE SPECIFIED IN THE ACT. DE DUCTION U/S 80IB(1) ARE APPLICABLE ONLY IF THESE CONDITIONS ARE FULFILL ED. THE CONDITIONS ARE FACTUAL IN NATURE BEING: - (1) SIZE OF THE FLAT (2) SIZE OF THE PLOT (3) DATE OF COMMENCEMENT & COMPLETION OF PROJECT ETC. THE ABOVE DO NOT INVOLVE ANY LEGAL ISSUE, BUT ARE ISSUES OF FACT. THE CLAIM WAS REJECTED IN THE ORIGINAL ASSESSMENT ORDER DATED 30.03.2006 BECAUSE IT WAS FOUND THAT THE FLATS WERE LARGER THA N THE PRESCRIBED MAXIMUM SIZE AND THE PLOT ON WHICH THE PROJECT WAS BUILT WAS LESS THAN THE PRESCRIBED MINIMUM SIZE. THE ASSESSEE WHO WAS A WARE OF THESE FACTS AND THEREFORE, OF ITS INELIGIBILITY FOR CLAIM OF DEDUCTION U/S 80IB(10), INTENTIONALLY PUT FORTH THE CLAIM OF DEDUCTION WITH THE PURPOSE OF EVASION OF TAXES. FURTHER THE CLAIM OF THE ASSESSEE THAT IT HAS FOREGONE ITS CLAIM OF DEDUCTION 8/S 80IB(10) IN THE RETURN U/S 1 53A DOES NOT ABSOLVE THE ASSESSEE OF ITS ACTS OF INTENTIONAL EVA SION OF TAXES AND THEREFORE, ITS CONSEQUENCES WHICH INCLUDE PENAL TY U/S 271(1)(C). IN ANY CASE, THE SEARCH & SEIZURE ACTION CARRIED OUT BY THE DEPARTMENT AGAINST THE ASSESSEE CANNOT BE USED BY HIM TO COME OUT OF THE PENAL CONSEQUENCES OF HIS WRONG DOI NGS, ESPECIALLY ON AN ISSUE WHICH HAS BEEN DECIDED AGAIN ST HIM IN THE ORIGINAL ASSESSMENT PROCEEDINGS. AGAIN THE ASSESSEE CANNOT TAKE THE BENEFIT OF THE EXPLANATION 5 TO SECTION 271`(1) (C) AS THIS CAN BE APPLICABLE ONLY FOR CURRENT YEAR, I.E. THE YEAR OF SEARCH AND THE YEAR IN WHICH RETURN IS DUE . 5. IN ADDITION IN PARA 11 ALSO THE A.O. GIVES THE FOLL OWING OBSERVATION: - 11. IN RESPECT OF 80IB(10), ASSESSEE RELIED UPON TH E DECISION OF MUMBAI TRIBUNAL IN THE CASE OF TELEBUILD CONSTRUCTION (P) LTD. V. ACIT (2007) 13 SOT 218 (MUM) DATED 12.10.2006. IN THIS CASE, THE A SSESSEE FILED REVISED RETURN OF INCOME PURSUANT TO SURVEY ACTION WITHDRAWING THE CLAIM OF DEDUCTION U/S 80IB(10). HOWEVER, IN THE CASE OF ASSESSEE, THE CLAIM OF DEDUCTION U/S 80(IB)(10) MADE IN THE O RIGINAL RETURN OF INCOME WAS DISALLOWED IN THE ASSESSMENT ORDER DA TED 30.03.2006 WHICH IS MADE BEFORE RETURN FILED U/S 15 3A R.W.S. 153C. THUS, THE DISALLOWANCE OF CLAIM OF DEDUCTION U/A 80IB(10) WAS ESTABLISHED BY THE AO IN THE ORIGINAL ASSESSMEN T ORDER. HENCE, THE WITHDRAWAL OF CLAIM U/S 80IB(10) BY THE ASSESSEE ITSELF MAKES ADMISSION OF WRONG CLAIM . THUS, THE FACTS OF THE CASE CITED ARE NOT SIMILAR TO ASSESSEES CASE. HENCE THE CASE LAW IS NOT APPLICABLE IN ASSESSEES CASE. MA 519/MUM/2010 M/S. FIBER BOX BOMBAY PVT. LTD. 4 6. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THE PEN ALTY PROCEEDINGS CONCLUDED BY THE A.O. WERE WITH REFERENCE TO THE SE COND PENALTY PROCEEDINGS AND SINCE THE ISSUES WERE ALREADY DECIDED IN THE OR IGINAL ASSESSMENT, THE PENALTY CANNOT BE LEVIED. HOWEVER, THIS IS ONLY ONE ASPECT OF THE REASONING GIVEN FOR DELETION OF PENALTY. ON MERITS IT WAS NOT ICED THAT THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED IN THE ORIGINAL ASSESSMEN T, THE PRINCIPLES ESTABLISHED BY THE HON'BLE SUPREME COURT JUDGEMENT IN THE CASE OF RELIANCE PETROCHEMCIALS LTD. 322 ITR 157 WERE INVOKED TO HO LD THAT ON THE FACTS OF THE CASE PENALTY WAS NOT ATTRACTED. THE DECISION T O DELETE THE PENALTY WAS THUS TAKEN BOTH ON TECHNICAL AND LEGAL ASPECTS. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE MISCELLANEOUS APPLICATION RAISED BY THE REVENUE. 7. IN THE RESULT, THE MA IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH NOVEMBER 2010. SD/- SD/- (D.K. AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 19 TH NOVEMBER 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CENTRAL VI, MUMBAI 4. THE CIT CENTRAL III, MUMBAI CITY 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.