Appeal details
Counselvise Citation
[2024] 140 COUNSELVISE.COM (IT) 10887 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-10-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
26-09-2024
Assessment Year
2012-2013
Appeal Filed On
30-06-2023
Judgement Text
"आयकर अपील\nय अ\u000bधकरण,च\u0010डीगढ़ \u0014यायपीठ, च\u0010डीगढ़ \nIN THE INCOME TAX APPELLATE TRIBUNAL \nDIVISION BENCH, ‘B’ CHANDIGARH \n \nBEFORE SHRI A.D.JAIN, VICE PRESIDENT AND \nSHRI KRINWANT SAHAY, ACCOUNTANT MEMBER \n \nआयकर अपील सं./ITA No. 419/CHD/2023 \n \u000bनधा\u000fरण वष\u000f / Assessment Year : 2012-13 \n \nMahesh T.Prasana, \nB/82-802, Shantivan, \nDevidas Lane, St.Lawrence School, \nBorivali West, Mumbai. \n \nVs \nThe ITO \nWard - 1, \nParwanoo. \n \n\u0013थायी लेखा सं./PAN NO: AAEPP3246R \nअपीलाथ\u0017/Appellant \n \u0019\u001aयथ\u0017/Respondent \n \n\u000bनधा\u000f\u001bरती क\u001d ओर से/Assessee by: Shri Nikhil Goyal, Advocate, & \n \n Shri Ashok Goyal, CA \nराज\u0013व क\u001d ओर से/ Revenue by : Dr. Ranjit Kaur, Addl.CIT, Sr. DR \nसुनवाई क\u001d तार\"ख/Date of Hearing \n \n : \n 26.09.2024 \nउदघोषणा क\u001d तार\"ख/Date of Pronouncement : \n 18.10. 2024 \n \nPHYSICAL HEARING \n \nआदेश/ORDER \n \nPER KRINWANT SAHAY, AM \n \n \nThe appeal in this case has been filed against the \norder dated 12.02.2026 passed by the Commissioner of \nIncome Tax (Appeals), Shimla. \n2. \nThe ground of appeal is as under : \n“Whether Ld. CIT(A), Shimla, H.P. has erred in upholding the order passed \nby Ld. AO in making addition of Rs. 87,45,366/- by restricting the deduction \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n2 \n \nu/s 80IC to the extent of 25% as against 100% claimed by the Assessee by \nundertaking substantial expansion during the AY 2011-12.” \n \n3. \nAt the outset, it is seen from the record that there is a \ndelay of 2614 days in filing of the appeal in the Tribunal. \nThe ld. DR objected the condonation of delay and the \nRevenue has filed a letter in this regard, which is as under : \n“Sub: - Submission in Appeal before the Hon'ble ITAT, Chandigarh in the case \nof Sh. Mahesh T. Prasana C/o Satwik Scale Industries, HIG-24C, Sector-1, \nParwanoo H.P. (PAN-AAEPP3246R) in ITA No. 419/Chd/2023 for A.Y. \n2012-13-Reg. \n \n \nKindly refer to the subject cited above. The above mentioned case was fixed for \nhearing on 26.09.2024 before the Hon'ble ITAT, Bench B, Chandigarh. \n2. \nDuring the course of hearing before Hon'ble ITAT, Bench B, Chandigarh \non 26.09.2024 the clarification regarding the exact date on which the Ld. CIT (A), \nShimla at Solan's order in appeal No. IT/307/14-15/Sml date 12.02.2016 for A.Y. \n2012-13 was served to assessee was raised. \n3. \nWith regards to above contention and on verification of the records, the \nfollowing fact are submitted for your kind consideration. The order in question in \nappeal No. IT/307/14-15/Sml for A.Y. 2012-13 was passed on 12.02.2016 and then \nthrough the common forwarding letter of the CIT(A) bearing No. CIT(A)/15-\n16/SML/290 dated 12.02.2016 dispatched to the DCIT Parwanoo and the assessee. \nThe same information was submitted to Hon'ble bench by the CIT(A) unit-1, \nShimla at Solan vide their letter No. 27 dated 02.05.2024. The copy of the \ncovering letter sent is enclosed as annexure 'A' to this letter. \n4. \nIt is submitted here that the extract of the Dispatch register of the O/o CIT \n(A) Shimla shows that on 12.02.2016, there is entry at Sr. No. 290 for dispatch of \nthe order to Shri Mahesh T Prasanna and to DCIT Parwanoo. The copy of same is \nattached as Annexure-B. It may be noted that the entry shows assessment year to \nbe 2007-08 and not A.Y. 2012-13. This clearly appears to be a clerical mistake as \nthe covering letter No. CIT (A)/15-16/SML/290 dated 12.02.2016, which bears the \nsame dispatch Sr. No. 290 clearly mentions that the order is of A.Y. 2012-13 and \nrelates to the appellate order in appeal No. IT/307/14-15/SML. Further, the said \ndispatch does not appear to be related to any order in the case of the assessee \npertaining to A.Y. 2007-08 as no case was pending for the A.Y.2007-08 of the \nassessee. Furthermore, there is no reference to any order of A.Y. 2007-08 in brief \nsynopsis of facts of the assessee filed before the Hon'ble ITAT. \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n3 \n \n5. \nIn this context, it is submitted that as per the record of Central Dispatch it \nis verified that the letter/order in question was duly sent by Speed Post to Mahesh \nT Prasanna, Sector-1, Parwanoo, PIN-173220 on 26.02.2016 vide ticket No. \nEE749157541 IN. The copy of the same is attached as annexure-C. Further, it is \nsubmitted that Speed Post is considered valid as Registered Post as per the \nJudgement passed by Hon'ble ITAT Mumbai in Appeal No. 5818/Mum/2014 dated \n17.07.2015 in the case of Color Craft Vs ITO. The copy of same is attached as \nAnnexure 'D'. \n6. \nFrom the above details, it is evident that the order for A.Y. 2012-13 was \ndispatched by speed post on 26.02.2016. There is no evidence from the available \nrecord of the same being returned for any reason and hence it can only be \ninferred that the order was duly served on assessee. \n7. \nSubmitted for kind information and record please. \n4. \nOn the other hand, the ld. Counsel of the assessee has \nfiled an affidavit on this issue and it is reproduced as under: \n“I, the above-named deponent do hereby solemnly affirm and declare as \nunder : \n \n1. \nThat an Assessment was initiated against me for the AY 2012-13 and \nseveral notices under section 143(2) and 142(1) along with questionnaires \nwere issued. \n2. \nThat the replies to the notices were duly given and all the returns \nwere duly filed by me. \n3. \nThat after considering the replies, the Deputy Commissioner of \nIncome Tax, Circle, Parwanoo passed an Assessment order u/s 143(3) on \n25.02.2015. \n4. \nThat I filed First Appeal for AY 2012-13 before the Commissioner of \nIncome Tax (Appeals) on 25.03.2015. \n5. \nThat I am a regular taxpayer and have always complied with all the \nrequirements under proceedings of other AYs also which are AY 2011-12, \nAY 2013-14, AY 2014-15, and AY 2015-16. \n6. \nIn AY 2011-12 the same issue was raised by the Income Tax \nDepartment and an Assessment Order was passed. After considering the \nsubmissions made by me, the appeal was rejected and an Order dated \n08.01.2015 under section 250(6) was passed by Hon'ble CIT(A), Shimla, \nH.P. (the same is attached herewith in Paperbook 1 at page no. 1 to 11). \n7. \nAggrieved by the same Order I appealed before Hon'ble ITAT, where \nagain, the appeal was dismissed. Then I approached Hon'ble High Court of \nHimachal Pradesh, where relief was given to (the same forms part of the \nPaperbook 1 at page no. 12 to 46). \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n4 \n \n8. \nIn AY 2013-14 the same scenario happened where the appeal was \nrejected by the Hon'ble CIT(A) and Hon'ble ITAT, but the High Court of \nHimachal Pradesh allowed the appeal. In AY 2014-15,1 again filed an \nappeal before Hon'ble High Court of Himachal Pradesh and the Order was \npassed which was in my favor (the same forms part of the Paperbook 1 at \npage no. 47 to 48). \n \n9. \nWhereas in the case of AY 2015-16, the proceedings are still going \non. The submissions have been given and the case is pending before \nHon'ble CIT(A), Shimla. The submissions and the last hearing notice under \nthe proceedings for AY 2015-16 are attached herewith in Paperbook 1 at \npage no.49 to 66. \n \n10. \nIn the present case of AY 2012-13,1 was participating fully in the \nproceedings. The replies and submissions were duly given in the Penalty \nProceedings under section 271(l)(c). In fact, in the submissions made under \nthe penalty proceedings for AY20~T2-T3, it is captured that I am waiting \nfor the decision of the CIT(A) under the first appeal proceedings. Hon'ble \nCIT(A) also disposed of the penalty proceedings under section 271(l)(c) on \nthis basis. \n11. \nTherefore, I was always under bona fide belief that the quantum \nproceedings are still under process and pending before Hon'ble CIT(A). \n12. \nThen I moved to Mumbai, Maharashtra in July 2020. The Parwanoo \nunit was functional only till 31.03.2021. The process of selling out the \nParwanoo unit was started after that. \n13. \nThat upon a query from potential buyers about outstanding cases \nand litigation, I had inquired about the status of the Appeal from the \nJurisdictional AO through my counsel where it was informed that the First \nAppeal Proceedings for AY 2012-13 against Appeal No. IT/307/14-15/Sml \nwere completed, and an Order was passed under Section 250(6) of the \nIncome Tax Act, 1961 by the Office of Commissioner of Income Tax \n(Appeals), Shimla, H.P. on 12.02.2016 (herein after called \"the order\"). \n14. \nThat no communication regarding the Order by the Office of \nCommissioner of Income Tax (Appeals), Shimla, H.P. was received by me \nand I was completely unaware about the Order. \n15. \nIt is pertinent to mention that the Order was never received by me. \n16. \nAfter the intimation, I approached the Ld. CIT(A) through my \nCounsel for a Certified Copy of the Order, and the Certified Copy of the \nOrder was obtained by me on 02.06.2023. \n17. \nAs per section 268 of the Act, \"In computing the period of limitation \nprescribed for an appeal or an application under this Act, the day on which \nthe order complained of was served and, if the assessee was not furnished \nwith a copy of the order when the notice of the order was served upon him, \nthe time requisite for obtaining a copy of such order, shall be excluded. \" In \nthe present case also the copy of the order was not received by me and \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n5 \n \nhence the delay in filing is on account of delay in receiving the copy of the \norder. The order was received on 02.06.2023 and the appeal was filed \nwithin 60 days of receiving the order i.e., on 30.06.2023. \n18. \nNotwithstanding the pleadings of the para above, the Appeal against \nthe foresaid Order was filed only on 30.06.2023 whereas the same was due \nto be filed on or before 12.04.2016, resulting in a delay of 2635 days. \n19. \nThat the delay in filing the Appeal is inadvertent and bonafide and it \nis humbly prayed that the same may kindly be condoned and the Appeal be \nheard on merits It is, therefore, most respectfully prayed that the delay of \n2635 days in filing the appeal may very kindly be condoned and appeal be \nkindly admitted.” \n \n5. \nThe ld. counsel has argued that the assessee did not \nreceive the order passed by the ld. CIT(A) while it is required \nas per Section 286 of the Act that the period between the \ndate of passing of the order and the date of receiving the \ncertified copy of the order to be excluded. The counsel \nsubmitted that the assessee had got a certified copy of the \norder passed by the ld. CIT(A) on 02.06.2023. Therefore, \ntime between passing of the order and the receiving of \ncertified copy should be excluded for the purpose of \nincluding the delay in filing of the appeal. The appeal order \nwas passed by the ld. CIT(A) on 12.02.2016 and a certified \ncopy \nof \nthe \nsame \nwas \nreceived \nby \nthe \nassessee \non \n02.06.2023. The counsel also claimed that the assessee \ncame to know about the passing of the order by the ld. \nCIT(A) during the course of proceedings initiated by the \nDepartment for penalty under Section 271(1)(c) of the \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n6 \n \nIncome Tax Act. \n6. \nWe have considered the submissions filed by the \nRevenue on this issue as well as the detailed affidavit filed \nby the assessee on this issue of condonation of delay. We \nfind that the Revenue has conceded that the Dispatch \nRegister in the office of the ld. CIT(A) Shimla shows that the \norder was dispatched on 12.02.2016 vide its entry at Sr.No. \n290 for dispatch of this order, however, the Revenue has also \nconceded that by mistake the entry showed assessment year \nto be 2007-2008 instead of the correct assessment year of \n2012-13. The Revenue has argued that it is just a clerical \nmistake committed by the Dispatch Clerk. On the other \nhand, the assessee has claimed that the Section in their \noffice dealing with the assessment and appeal for assessment \nyear 2012-13 did not receive any such letter/order of the ld. \nCIT(A) for assessment year 2012-13. \n7. \nAfter going through the documents filed by the Revenue \nas well as the affidavit filed by the assessee, we are of this \nopinion that there is a mistake on the part of the Revenue \nthat even if the order for 2012-13 was issued, on the cover of \nit the year was mentioned as 2007-08, therefore, there may \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n7 \n \nbe a genuine confusion at the end of the assessee because of \nthis error committed by the Dispatch Clerk in the office of \nthe ld. CIT(A). So, we are of this considered view that the \nbenefit of doubt has to be given to the assessee keeping in \nview the element of natural justice. Accordingly, the delay in \nfiling of the appeal is hereby condoned and now we proceed \nto decide this case on merit. \n8. \nThe only ground of appeal in this case is against the \nsustenance of addition of Rs.87,45,366/- by the ld. CIT(A) \nrestricting the deduction claimed under Section 80IC to the \nextent of 25% as against 100% claimed by the assessee. \n9. \nBrief facts of this case as per the submission filed by \nthe counsel of the assessee are as under : \n \n1. \nBrief Facts \n1.1 This is the case of an Assessee who declared an income of Rs. \n34,85,950/-, after claiming deduction u/s 80IC of Rs. 1,16,60,488/-, \nin his return, e-filed on 28.09.2012. The case was selected for \nscrutiny through CASS and accordingly, statutory notices u/s \n143(2)/142(1) were issued by the Income Tax Officer, Parwanoo and \nsubsequently the case was transferred to the Dy. Commissioner of \nIncome Tax, Circle, Parwanoo. \n1.2. \nThe Assessee firm is engaged in manufacturing electronic weighing \nscale. As per the information provided in Form no. 10CCB filed for \nthe year under assessment, the Assessee started its business \nactivity/operation on 22.04.2005 and initial Assessment year for \nclaiming the deduction under section 80IC of the Act was mentioned \nas AY 2006-07. \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n8 \n \n \n1.3. \nThereafter, during the financial year 2011-12, the Assessee firm had a \nsubstantial expansion, based on which, it claimed 100% deduction \nunder section 80IC taking AY 2011-12 as the initial assessment year. \n1.4. \nAn order was passed against the Assessee on 25.02.2015 wherein, the \nLd. AO held that in the view of the provisions of section 80IC of the \nIncome Tax Act, 1961 Assessee firm had already claimed deduction \nunder section 80IC of the Act at a rate of 100% for five years from AY. \n2006-07 to AY 2010-11 i.e., from the date of setting up of the Industrial \nundertaking and it would be allowed to claim deduction of only @25% \nof its eligible business profits for the remaining five years i.e., from AY \n2011-12 to AY 2015-16. \n1.5. \nThe Ld. AO denied the claim of the substantial expansion and \naccordingly, deduction claimed @100% was restricted to 25% of \neligible profits of the assessment year under consideration and passed \nan order as on 25.02.2015 computing the Total Taxable Income as Rs. \n1,23,22,043/-. \n2. \nOrder under Section 250 of the Income Tax Act, 1961 \n2.1 \nAggrieved by the Assessment order dated 25.02.2015, the Assessee filed an \nappeal before the Hon'ble CIT(A), Shimla, H.P. on 08.02.2016. \n2.2 \nBefore the Hon'ble CIT(A), Shimla the Assessee made ground wise \nsubmissions as how the Ld. AO was wrong in making addition of Rs. \n87.45.366/- by restricting the deduction u/s 80IC to the extent of 25% as \nagainst 100% claimed by Assessee by undertaking substantial expansion during \nthe AY 2011-12. \n2.3 \nThe Ld. CIT(A) Shimla, after considering the submissions, dismissed the \nappeal and upheld the Order of the Ld. AO, under section 250(6) of The \nIncome Tax Act, 1961 by an order dated 12.02.2016. However, copy of the \norder was not served on the Assessee and a Certified Copy of the decision was \nmade available on 02.06.2023. \n \n10. During proceedings before us, the counsel of the \nassessee argued that this issue is squarely covered by the \norder of the jurisdictional High Court of Himachal Pradesh, \nShimla in assessee's own case on the same issue for \nassessment year 2013-14 where the Hon'ble High Court has \ngiven its findings as under : \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n9 \n \n\"Undisputedly, issues involved in the present appeal already \nstand adjudicated by this Court in ITA No. 20 of 2015, titled as \nM/s Stovekraft India V. Commissioner of Income Tax, decided \non 28.11.2011. As such, making the directions in M/s Stovekraft \nIndia (supra) applicable mutatis mutandis, also to the present \nappeal, the same is disposed of. Pending application(s), if any, \nalso stand disposed of accordingly.\" \n11. The Hon'ble High Court had given its finding in the case \nof Stovekraft India Vs Commissioner of Income Tax [2017] 88 \ntaxmann.com 225 (Himachal Pradesh) as under : \n\"(a) Such of those undertakings or enterprises which were established, \nbecame operational and functional prior to 7-1-2003 and have undertaken \nsubstantial expansion between 7- 1-2003 upto 1-4-2012, should be entitled to \nbenefit of section 80-IC, for the period for which they were not entitled to the \nbenefit of deduction under section 80-IB. \n(b) Such of those units which have commenced production after 7-1-2003 and \ncarried out substantial expansion prior to 1-4-2012, would also be entitled to \nbenefit of deduction at different rates of percentage stipulated under section \n80-IC. \n(c) Substantial expansion cannot be confined to one expansion. As long as \nrequirement of section 80-IC(8)(ix) is met, there can be number of multiple \nsubstantial expansions. \n(d) Correspondingly, there can be more than one initial assessment years. \n(e) \nWithin the window period of 7-1-2013 upto 1-4-2012, an undertaking \nor an enterprise can be entitled to deduction at the rate of 100 per cent for a \nperiod of more than five years. \n(f) \nAll this, of course, is subject to a cap of ten years. [Section 80- \nIC(6)J. \n(g) \nUnits claiming deduction under section 80-IC shall not be \nentitled to deduction under any other section, contained in Chapter \nVI-A or section 10A or 1 OB [Section 80-IB (5)]. [Para 55] \nSubstantial questions of law are answered accordingly. [Para 56] \nOn facts, the revenue has not disputed, (a) the units having carried out \nsubstantial expansion within the definition of the section, (b) their entitlement \nand extent of deduction would be dependent upon interpretation of the \nrelevant provisions. [Para 58] \" \n \n \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n10 \n \n12. The counsel of the assessee also brought on record the \norder of the Hon'ble Supreme Court in the case of Pr. \nCommissioner of Income Tax, Shimla Vs Aarham Softronics \n[2019] 102 taxmann.com 343 (S.C.), wherein the Hon'ble \nSupreme Court held as under : \n\"…….there is no reason as to why 100 per cent deduction of the profits and \ngains be not allowed to even those units who had availed this deduction on \nsetting up of a new unit and have now invested huge amount with substantial \nexpansion of those units. [Para 20] The aforesaid discussion leads to the \nfollowing conclusions: \n(a) Judgment in CIT v. Classic Binding Industries [2018] 96 taxmann.com \n405/257 Taxman 324 (SC) omitted to take note of the definition 'initial \nassessment year' contained in section 80-IC itself and instead based its \nconclusion on the definition contained in section 80-IB, which does not apply \nin these cases. The definitions of initial assessment year' in the two sections, \nviz. sections 80-IB and 80-IC are materially different. The definition of \n'initial assessment year' under section 80-IC has made all the difference. \nTherefore, it is opined that the aforesaid judgment does not lay down the \ncorrect law. \n(b) An undertaking or an enterprise which had set up a new unit between \n7-1-2003 and 1-4-2012 in State of Himachal Pradesh of the nature \nmentioned in clause (ii) of sub-section (2) of section 80-IC, would be entitled \nto deduction at the rate of 100 per cent of the profits and gains for five \nassessment years commencing with the 'initial assessment year'. For the next \nfive years, the admissible deduction would be 25 per cent (or 30 per cent \nwhere the assessee is a company) of the profits and gains. \n(c) However, in case substantial expansion is carried out as defined in \nclause (ix) of subsection (8) of section 80-IC by such an undertaking or \nenterprise, within the aforesaid period of 10 years, the said previous year in \nwhich the substantial expansion is undertaken would become 'initial \nassessment year', and from that assessment year the assessee shall been \nentitled to 100 per cent deductions of the profits and gains. \n(d) Such deduction, however, would be for a total period of 10 years, as \nprovided in subsection (6). For example, if the expansion is carried out \nimmediately, on the completion of first five years, the assessee would be \nentitled to 100 per cent deduction again for the next five years. On the other \nhand, if substantial expansion is undertaken, say, in 8th year by an assessee \nsuch an assessee would be entitled to 100 per cent deduction for the first five \nyears, deduction at the rate of 25 per cent of the profits and gains for the next \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n11 \n \ntwo years and at the rate of 100 per cent again from 8th year as this year \nbecomes 'initial assessment year' once again. \n(e) However, this 100 per cent deduction would be for remaining three \nyears, i.e., 8th 9th and 10th assessment years. [Para 24] In view of the \naforesaid, the judgment of the High Court on this issue is affirmed and all \nappeals of the revenue are dismissed. Likewise, appeals filed by the assessees \nare hereby allowed. [Para 25]. \n13. On the other hand, the ld. DR relied on the order of the \nAO as well as that of the ld. CIT(A) on this issue. \n14. We have considered the findings given by the ld. CIT(A) \non this issue and the arguments of the ld. DR during \nproceedings before us. We have also considered the written \nsubmission filed by the counsel of the assessee as well as \nvarious case laws brought on record. We find that this issue \nis clearly covered by the order of the jurisdictional High \nCourt of Himachal Pradesh in the case of assessee itself for \nassessment year 2013-14. Therefore, respectfully following \nthe ratio decided by the Hon'ble High Court in assessee's \nown case on this issue, the assessee's appeal on this issue is \nallowed. \n15. In the result, the appeal of the assessee is allowed. \n \nOrder pronounced on 18.10. 2024. \n \n \nSd/- \n \n \n \n \n \nSd/- \n (A.D.JAIN ) \n \n \n \n \n(KRINWANT SAHAY) \nVICE PRESIDENT \n \n \n ACCOUNTANT MEMBER \n \n \n \n \n \n \n “Poonam” \n\nITA 419/CHD/2023 \nA.Y. 2012-13 \n12 \n \n \nआदेश क\u001d \u0019\u000bत(ल)प अ*े)षत/ Copy of the order forwarded to : \n \n1. \nअपीलाथ\u0017/ The Appellant \n2. \n\u0019\u001aयथ\u0017/ The Respondent \n3. \nआयकरआयु+त/ CIT \n4. \n )वभागीय \u0019\u000bत\u000bन.ध, आयकर अपील\"य आ.धकरण, च0डीगढ़/ DR, ITAT, CHANDIGARH \n5. \n गाड\u000fफाईल/ Guard File \n \n \n \n \nआदेशानुसार/ By order, \nसहायक पंजीकार/ Assistant Registrar \n \n"
Mehul