M/s. Krishna Paints & Chemicals (Unit-II), Hoshiarpur V. The Assistant Commissioner of Inocme-tax, Jalandhar

MA 80/ASR/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7673 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 09-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: S S KALRA
• Keywords: Business income
• Section: 80HHC; 133A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER M.A. NO.80(ASR)/2010 (ARISING OUT I.T.A. NO.410(ASR)/2009) ASSESSMENT YEAR:2006-07 PAN;AAFFK0595F M/S. KRISHNA PAINTS & CHEMICALS VS. THE ASSTT. COM MR. OF INCOME-TAX, UNIT-II, JALANDHAR. RANGE-IV, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S.S. KALRA, CA RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING :30/03/2012 DATE OF PRONOUNCEMENT:30/03/2012 ORDER PERBENCH; THIS MISCELLANEOUS APPLICATION ARISES FROM THE ORD ER OF THE ITAT, AMRITSAR BENCH, DATED 22.01.2010 PASSED IN ITA NO.4 10(ASR)/2009. THE ASSESSEE HAS FILED THE MISCELLANEOUS APPLICATION, WHICH FOR THE SAKE OF CONVENIENCE, IS REPRODUCED AS UNDER: THE ABOVE NOTED APPEAL WAS DISPOSED OFF BY YOUR HON OURS VIDE ORDER DATED 22/01/2010 AND WAS DISMISSED. THAT FOR DISMIS SING THE AFORESAID APPEAL YOUR HONOURS HAD OPINED IN PARA 6 AS UNDER: 2 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RELEVANT RECORDS AVAILABLE WITH US. KEEPING IN VIEW THE FAC TS AND THE CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE CO NSIDERED OPINION THAT IN THE PRESENT CASE THE LEARNED FIRST APPELLATE AUT HORITY HAS PASSED THE IMPUGNED ORDER BY FOLLOWING VARIOUS ORDERS RENDERED BY THE HONBLE SUPREME COURT OF INDIA AS WELL AS THE VARIOUS ORDER S RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT. THE LEARNED FIR ST APPELLATE AUTHORITY HAS PASSED A VERY WELL REASONED AND DETAILED ORDER BUT FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE SAME FROM PARAS 5 TO 5.11 (PAGES 18 TO 25) ARE REPRODUCED HEREUNDER:- AND IN CONSEQUENCE THEREOF PARAS 5 TO 5.11 OF CIT(A ) ORDER WERE VERBATIM REPRODUCED IN THE BODY OF YOUR HONOURS ORD ER WHICH TANTAMOUNTS TO IMPLIED FINDINGS OF THIS BENCH. THE ORDER WAS CONCLUDED VIDE PARA 7 BY HOLDING AS U NDER: PARA 7 7. KEEPING IN VIEW THE AFORESAID FINDINGS GIVEN BY THE LEARNED FIRST APPELLATE AUTHORITY, WE ARE OF THE CONSIDERED OPINI ON THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASSED THE IMPUGNED O RDER BY FOLLOWING THE DECISION OF THE JURISDICTIONAL ITAT ON THE SIMILAR FACTS AND THE CIRCUMSTANCES IN THE CASE OF M/S.SADHU SINGH GURDEE P SINGH, AMRITSAR REPORTED IN 97 TTJ (ASR) 1. THE LEARNED FIRST APP ELLATE AUTHORITY HAS ALSO DECLINED TO ALLOW THE CLAIM IN DISPUTE TO THE ASSESSEE ON THE BASIS OF DECISION RENDERED BY THE HONBLE SUPREME COURT OF I NDIA IN THE CASE OF CIT VS. STERLING FOODS, REPORTED IN 238 ITR 579 (SC ). THE LEARNED FIRST APPELLATE AUTHORITY HAS ALSO FOLLOWED THE DECISION RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF NA HAR EXPORTS LTD. VS. CIT, REPORTED IN 288 ITR 494 (P&H). IN THE AFORESA ID CASES, THE HONBLE SUPREME COURT OF INDIA AS WELL AS THE HONBLE JURIS DICTIONAL HIGH COURT HAS CLEARLY HELD THAT FOR CLAIMING THE DEDUCTION, T HE INDUSTRIAL UNDERTAKING MUST BE THE DIRECT SOURCE OF THE INCOME . AS THE LEARNED D.R. STATED THAT THE FACTS AND THE CIRCUMSTANCES OF THE PRESENT CASE ARE EXACTLY SIMILAR TO THE CASE DECIDED BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF NATIONAL LEGGUARD WORKS VS. CIT REPORTE D IN 288 ITR 18 (P&H). IN THAT CASE, THE HONBLE JURISDICTIONAL HI GH COURT HAS DISALLOWED THE INCOME SURRENDERED DURING THE SURVEY . IN THE PRESENT CASE ALSO, THE ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 80IB OF THE ACT ON THE INCOME SURRENDERED DURING THE SURVEY UND ER SECTION 133A OF THE ACT ON 22-2-2006 CONDUCTED AT THE BUSINESS PREM ISES OF THE ASSESSEE. 3 IT IS ALSO ESTABLISHED FROM RECORD THAT NO EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE TO ESTABLISH THAT THE INCOME OF RS.91 LACS HAD BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. K EEPING IN VIEW THE FACTS AND THE CIRCUMSTANCES OF THE PRESENT CASE AND AS DI SCUSSED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS C ALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LEARNED FIRST APPELLAT E AUTHORITY. THEREFORE, WE UPHOLD THE SAME AND DISMISS THE APPEA L FILED BY THE ASSESSEE. FROM THE ABOVE FINDINGS IT CAN SAFELY BE MADE OUT T HAT THE BENCH FOR DISMISSING THE APPEAL HAS RELIED UPON THE FINDINGS OF CIT(A) AND THE FOUR CASE LAWS NAMELY SADHU SINGH GURDIP 97 TTJ (ASR) 1, M/S. NATIONAL LEGGUARD WORKS VS. CIT 288 ITR 18 (P&H). IF A MINU TE APPRAISAL OF THE FINDINGS AS INCORPORATED IN THE BODY OF YOUR HONOU RS ORDER IS MADE IT TRANSPIRES THAT THE CIT(A) HAS ALREADY GIVEN A DEF INITE FINDING THAT THE INCOME HAS BEEN DERIVED FROM THE INDUSTRIAL UNDERTA KING AND HIS GROUSE WAS ONLY TO THE EXTENT THAT THE COMBINED SALES OF T HREE CONCERNS CANNOT BE LINKED SPECIFICALLY TO THE DIFFERENCE CONCERNS. FROM THE ABOVE ASSERTION YOUR ATTENTION IS INVITED TO THE FOLLOWING: 5.6 THE APPELLANT HAS MADE SURRENDER OF RS.91 LACS REPRESENTED BY EXCESS CASH IN HAND, CASH INTRODUCED IN THE ACCOUNT OF M/S. ABC (A FICTITIOUS ACCOUNT) AND SUNDRY DEBTORS. THE SURREN DER LETTER OF THE APPELLANT FIRM CLEARLY STATES THAT THE INCOME BEING SURRENDERED WAS GENERATED/DERIVED FROM THE BUSINESS OF THE ASSESSEE FIRM. THE CONTENTS OF THIS SURRENDER LETTER DO NOT APPEAR TO HAVE BEEN SERIOUSLY CONTESTED BY THE DEPARTMENT AT ANY STAGE. HOWEVER, EVEN THOUGH UNCONTESTED, THE REVENUE HAS TAKEN A STAND THAT THE RE WAS NO EVIDENCE TO SHOW THAT THE INCOME SURRENDERED WAS OUT OF THE BUSINESS OPERATIONS OF THE APPELLANT CONCERN. THE REVENUES STAND, THUS, PRESENT A PICTURE OF DICHOTOMY. ON THE ONE HAND DU RING THE SURVEY OPERATION, IT FOUND EVIDENCE OF THE SALES OF THE TH REE CONCERNS BELONGING TO THE APPELLANT GROUP AND ACCEPTED A SUR RENDER LETTER WHICH CLEARLY CLAIMS THAT THE INCOME WAS GENERATED FROM THE BUSINESS OF THE ASSESSEE FIRM. ON THE OTHER HAND, THE REVEN UE CONTENTS THAT THERE IS NO EVIDENCE TO LINK THE INCOME SURRENDERED WITH THE BUSINESS OF THE APPELLANT. 4 2. PARA 5.7 OF CIT (A) ORDER AS REPRODUCED AT PAGE 13 OF ITAT ORDER :- NONETHELESS, THE QUESTION REMAINS AS TO WHETHER TH ERE IS SUFFICIENT EVIDENCE TO ESTABLISH THAT THE SOURCE OF THE INCOME SURRENDERED BY THE APPELLANT WAS THE INDUSTRIAL UNDERTAKING OF THE APP ELLANT. AS NOTED ABOVE, THE DETAILS OF THE SALES IN THE PEN DRIVE DO NOT DISTINGUISH BETWEEN THE DIFFERENT CONCERNS OF THE APPELLANT GRO UP. HENCE, ANY OF THE ENTRIES IN THE PEN DRIVE CANNOT BE LINKED DIREC TLY TO ANY OF THREE CONCERNS, AND IS NOT CLEAR AS TO WHAT IS THE ACTUAL AMOUNT OF THE UNACCOUNTED SALES OF THE APPELLANT FIRM IN THAT PEN DRIVE. 3. PARA 5.10 OF THE CIT (A) ORDER AS REPRODUCED AT PAGE 16 OF ITAT ORDER :- (FIRST TEN LINES) THE APPELLANT HAS CONTENDED THAT UNACCOUNTED SALE S NOTED IN THE PEN DRIVE COULD ONLY REPRESENT BUSINESS INCOME. THERE SHOULD BE LITTLE DIFFICULTY IN ACCEPTING THIS PROPOSITION, SI NCE IF THERE ARE SALES OF BUSINESS ENTITIES, THE RESULTING INCOME WOULD UNDOU BTEDLY BE BUSINESS INCOME. THE A.O. HAS ALSO ASSESSED IT AS BUSINESS I NCOME. HOWEVER, TO AVAIL OF DEDUCTION U/S 80IB, SUCH BUSINESS INCOM E SHOULD BE DERIVED FORM THE ELIGIBLE INDUSTRIAL UNDERTAKING. A S NOTED ABOVE, THERE IS NO EVIDENCE TO STATE WHICH OF THE SALES IN THE P EN DRIVE IS THAT OF THE APPELLANT FIRM SINCE IT REPRESENTS SALES OF THREE C ONCERNS, TWO OF WHICH ARE NOT ELIGIBLE TO DEDUCTION U/S 80IB. 4. PARA 5.11 OF THE CIT (A) ORDER AS REPRODUCED AT PAGE 17 OF ITAT ORDER:- (FIRST FIVE LINES) CONSIDERING THE FACTS AND THE DISCUSSION ABOVE, I COME TO THE CONCLUSION THAT THE ASSESSEE GROUP INCLUDING THE AP PELLANT FIRM HAVE MADE SALES WHICH WERE NOT RECORDED IN THE REGULAR B OOKS OF ACCOUNTS. HOWEVER, THESE UNACCOUNTED SALES CANNOT BE LINKED S PECIFICALLY TO THE DIFFERENT CONCERNS OF THE APPELLANT GROUP. THUS SEEING THE ABOVE THE TRIBUNAL WAS TO HOLD AND GIVE ITS FINDINGS THAT WHERE THE CIT(A) HAVING ALREADY HELD THAT THER E IS EVIDENCE OF INCOME HAVING BEEN DERIVED FROM THE INDUSTRIAL UNDE RTAKING BUT STILL 5 DENYING THE DEDUCTION U/S 80IB ON THE SOLE CONSIDER ATION THAT THE SALES COULD NOT BE LINKED UP THE THREE UNITS AND CO ULD NOT BE APPORTIONED AND THEREFORE WHETHER THE DEDUCTION COU LD BE DENIED? FOR THIS THE ASSESSEE RELIED UPON CASE LAWS WHICH W ERE ANNEXED AT PAGES 14 TO 20 OF PAPER BOOK CONTAINING CASE LAWS A ND THE NAME OF VERY CASE LAWS FINDS PLACE IN THE BODY OF ORDER. SE E PAGE 6 OF ORDER). FURTHER, THE FOUR CASE LAWS HAVE WRONGLY BEEN APPLI ED WHICH WERE NOT TO FACTS OF THE CASE AS EXPLAINED BELOW:- 1. SADHU SINGH GURDIP SINGH 97 TTJ (ASR) 1 AT PAGE 17 OF YOUR ORDER:- THIS CASE LAW HAS BEEN DISTINGUISHED BY THE CIT (A) HIMSELF AND THEREFORE NEVER APPLIED. SEE PAGE 16 OF YOUR HONOUR S ORDER WHERE THE CIT (A) HOLDS THAT IN THE CASE OF APPELLANT THERE IS CERTAINLY SOME EVIDENCE IN THE FORM OF THE RECORD IN THE PEN DRIVE TO SHOW UNACCOUNTED SALES. THIS MEANS THE STRENGTH OF THIS CASE IS NO MORE APPLICABLE. 2. M/S. NATIONAL LEGGUARD WORKS VS. CIT (288 ITR 18 ) P & H:- THE CIT (A) HAS NEVER RELIED ON THIS CASE. THE D.R. HAVING QUOTED THIS CASE WHICH IS CLEARLY DISTINGUISHABLE BECAUSE IN TH E CASE QUOTED THE DEDUCTION WAS U/S 80HHC AND CLAIM OF DEDUCTION IS O NLY ALLOWED IF THE CONVERTIBLE PROCEEDS ARE BROUGHT TO INDIA WITHI N CERTAIN PERIOD. THIS WAS THE CLEAR FINDING OF THE HIGH COURT WHILE THE CLAIM OF THE ASSESSEE IS U/S 80IB WHERE THERE EXISTS NO SUCH CON DITION EXCEPT THE INCOME SHOULD HAVE BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING. THUS WRONG APPLICATION OF CASE LAW. 3. CIT VS. STERLING FOODS 238 ITR 579 (SC):- THIS CASE LAW IN FACT IS 237 ITR 579 (SC). NO WHERE THE CIT (A) HAS RELIED ON THIS CASE. THE ISSUE IS U/S 80HH AND PERT AINING TO SALE OF IMPORT ENTITLEMENT WHICH ARE NOT THE FACTS OF ASSES SEES CASE. 4. NAHAR EXPORTS VS. CIT 288 ITR 499 (P&H) : NO WHERE THIS CASE HAS BEEN DISCUSSED BY THE CIT(A) NOR HE HAS RELIED ON THIS CASE LAW. STILL THIS CASE PERTAINS TO INTER EST INCOME AND IMPORT LICENCE INCOME WHERE DEDUCTION U/S 80I DENIED WHICH TOO IS NOT THE FACTS OF ASSESSEES CASE. 6 THUS HERE TOO WRONG CASE LAWS NOT RELIED BY THE CIT (A) HAVE WRONGLY BEEN PICKED UP TO DISMISS THE APPEAL. VERY IMPORTANT THE ASSESSEE WHO DURING ARGUMENTS HAD REFERRED TO A N UNPUBLISHED DECISION OF THIS VERY BENCH IN ITA NO. 271(ASR) 200 5 FOR WHICH THE ASSESSEE DID NOT HAVE COPY BUT WHICH WAS EXACTLY ON THE ISSUE TOO HAS NOT BEEN GONE THROUGH WHICH EVEN OTHERWISE WOULD HA VE CLINCHED THE ISSUE. FROM THE ABOVE IT IS SEEN THAT THE ITAT WHILE REJEC TING THE APPEAL OF THE ASSESSEE HAS WRONGLY APPRAISED THE FACTS AND TH E LAW AND A FINDING WHICH WAS REQUIRED TO BE GIVEN ON FACTS HAS ALTOGETHER BEEN MISSED, THE CASE LAWS HAVE WRONGLY BEEN APPLIED AND THE EARLIER DECISION OF ITS OWN BENCH HAS NOT BEEN CONSIDERED A ND ALL FACTS TAKEN TOGETHER HAVE RESULTED INTO MISTAKES APPARENT FROM RECORD WHICH NEED RECTIFICATION US/ 254(2) BY RECALLING THE ORDER DAT ED 22/01/2010 PASSED BY THE BENCH. 2. THE LD. COUNSEL FOR THE ASSESSEE, SH. S.S. KALRA, CA, APPEARING FOR THE ASSESSEE HAD READ THE SAID MISCELLANEOUS APPLICATIO N BEFORE THE BENCH. WHEN QUESTIONED BY THE BENCH TO POINT OUT THE EXACT MISTAKE APPARENT FROM RECORD OUT OF THE ORDER OF THE ITAT, AMRITSAR BENCH , DATED 22.01.2010; SH. S.S. KALRA, CA APPEARING FOR THE ASSESSEE ARGUED TH AT THE DECISIONS REFERRED TO IN THE ORDER OF THE LD. CIT(A) HAVE WRONGLY BEEN APPLIED IN ASSESSEES CASE. SECONDLY, THE BENCH IN THE SAID ORDER HAS NOT GIVEN DEFINITE FINDING THAT THE INCOME WAS NOT GENERATED FROM THE INDUSTRI AL UNDERTAKING AND THE CLAIM U/S 80-IB WAS NOT ADMISSIBLE. 7 3. THE LD. DR, SH. AMRIK CHAND, ON THE OTHER HAND, OPPOSED THE MISCELLANEOUS APPLICATION AND PRAYED TO REJECT THE SAID APPLICATION FILED BY THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE APPLICATION OF THE VARIOUS DECISIONS REFERRED TO IN THE ORDER OF THE CIT(A), WHICH HAVE BEEN CLAIMED TO HAVE BEEN W RONGLY APPLIED BY THE ITAT IN ITS ORDER DATED 22.01.2010, ON PERUSAL OF T HE DECISIONS OF VARIOUS COURTS OF LAW, APPLIED/DISTINGUISHED BY THE LD. CIT (A), THERE IS NO MISTAKE POINTED OUT BY THE COUNSEL FOR THE ASSESSE, WHICH F ALLS IN THE AMBIT OF SECTION 254(2) OF THE ACT. 4.1. AS REGARDS DEFINITE FINDING WITH REGARD TO THE ISSUE, THE LD. COUNSEL FOR THE ASSESSEE ARGUED THAT THE SURRENDERED INCOME OF RS.91 LAKHS HAS BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSE SSEE. AND THE ITAT HAS NOT GIVEN ANY DEFINITE FINDING THAT IT IS NOT DERIV ED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. IN THIS REGARD, WE FIN D THAT THERE WAS NOTHING ON RECORD PLACED BY THE ASSESSEE BEFORE ANY OF THE AUT HORITIES BELOW THAT RS.91 LAKHS WHICH HAVE BEEN SURRENDERED DURING THE COURSE OF SURVEY IS THE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSE SSEE. NOT EVEN AN IOTA OF EVIDENCE HAS BEEN PLACED ON RECORD, WHICH HAS NOT B EEN CONSIDERED BY THE ITAT IN ITS ORDER DATED 22.01.2010 BEFORE ARR IVING AT THE CONCLUSION THAT NO EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE TO ESTABLISH 8 THAT INCOME OF RS.91 LAKHS HAD BEEN DERIVED FROM TH E INDUSTRIAL UNDERTAKING OF THE ASSESSEE. THE TRIBUNAL HAS GIVEN THE DEFINIT E FINDING IN THIS REGARD AT PAGE 18 OF ITS ORDER. THEREFORE THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSESSEE DO NOT HAVE ANY FORCE. ACCORDINGLY, TH E MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE, BASICALLY ON TWO GROUNDS MENTIONED HEREINABOVE, IS REJECTED. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IN MA NO.80(ASR)/2010 IS REJECTED AND IS DISPOSED OFF AC CORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH MARCH, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30TH MARCH , 2012 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:M/S. KRISHNA PAINTS & CHEMICALS (UNIT- II), JALANDHAR. 2. THE ACIT, RANGE-IV, JALANDHAR. 3. THE CIT(A), JLR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, ASR. TRUE COPY BY ORDER