J.H. Kharawala Pvt. Ltd.,, Ahmedabad v. The ACIT.,(OSD)-I,Range-4,, Ahmedabad

CO 167/AHD/2011 | 2003-2004
Pronouncement Date: 21-11-2014 | Result: Allowed

Appeal Details

RSA Number 16720523 RSA 2011
Assessee PAN AAACJ5528P
Bench Ahmedabad
Appeal Number CO 167/AHD/2011
Duration Of Justice 3 year(s) 4 month(s) 8 day(s)
Appellant J.H. Kharawala Pvt. Ltd.,, Ahmedabad
Respondent The ACIT.,(OSD)-I,Range-4,, Ahmedabad
Appeal Type Cross Objection
Pronouncement Date 21-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 21-11-2014
Date Of Final Hearing 20-11-2014
Next Hearing Date 20-11-2014
Assessment Year 2003-2004
Appeal Filed On 13-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER. ITA. NO. 332/AHD/2011 (ASSESSMENT YEAR:2003-04) THE ACIT (OSD)-I RANGE-4 NAVJIVAN TRUST BLDG. OFF. ASHRAM ROAD AHMEDABAD. APPELLANT VS. J. H. KHARAWALA PVT. LTD. JAY HOUSE PANCHWATI CIRCLE AMBAWADI AHMEDABAD RESPONDENT & C. O. NO. 167/AHD/2011 (ASSESSMENT YEAR:2003-04) J. H. KHARAWALA PVT. LTD. JAY HOUSE PANCHWATI CIRCLE AMBAWADI AHMEDABAD APPELLANT VS. THE ACIT (OSD)-I RANGE-4 NAVJIVAN TRUST BLDG. OFF. ASHRAM ROAD AHMEDABAD. RESPONDENT PAN: AAACJ5528P I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 2 / BY REVENUE :SHRI V. K. SINGH SR.D.R. / BY ASSESSEE : SHRI NIMESH VAYAWALA A.R. /DATE OF HEARING :20.11.2014 !' /DATE OF PRONOUNCEMENT : 21.11.2014 ORDER PER BENCH BOTH THESE APPEAL AND CROSS OBJECTION ARE ARISING O UT FROM THE ORDER OF CIT(A)-VIII AHMEDABAD DATED 18. 11. 2010 FOR A.Y. 2003-04. SO THEY ARE BEING DISPOSED OF BY COMMON ORDER FOR SAKE OF CONVENIENCE. 2. IN ITA NO. 332/AHD/2011 REVENUE HAS FILED THE A PPEAL ON THE FOLLOWING GROUNDS: 1. THE LD. CIT (A)-VIII AHMADABAD HAS ERRED IN L AW AND ON FACTS IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) WITH REFERENCE TO THE ADDITION U/S. 80HHC OF RS.43 01 221/- WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECOR D BY THE AO. 1.2 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80HHC OF THE ACT AS SUPPORTING MANUFACTURER WAS NOT BONAFIDE AND THE ASSESSEE COULD NOT SUBSTANTIATE ITS AFORESAID CLAIM FOR DEDUCTION U/S. 80HHC OF THE ACT. 1.3 IN DOING SO THE LD. CIT(A0 HAS ERRED IN LAW AN D ON FACTS IN NOT APPRECIATING THAT THE ASSESSEE COULD N OT I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 3 EVEN FURNISH A PROPER CERTIFICATE FROM THE EXPORT HOUSE IN SUPPORT OF ITS AFORESAID CLAIM FOR DEDUCTI ON U/S. 80HHC AS SUPPORTING MANUFACTURER AND IN THE LIGHT OF THE FACT THAT THE EXPORT HOUSE JAY CHEMICA L INDUSTRIES LTD. HAD SUFFERED A LOSS ON EXPORT OF GO ODS PURCHASED FROM THE ASSESSEE THE ASSESSEE WAS NOT ENTITLED TO ANY DEDUCTION U/S. 80HHC OF THE ACT AS SUPPORTING MANUFACTURER. 3. ASSESSEE COMPANY IS ENGAGED IN BUSINESS OF MANUFACTURING OF DYES CHEMICALS AND INTERMEDIATES. ASSESSEE FILED RETURN OF INCOME ON 29.11.2003 DECLARING TOTA L INCOME OF RS.1 10 31 490/-. ASSESSING OFFICER FINALIZED THE ASSESSMENT DETERMINING TOTAL INCOME OF RS. 1 71 53 819/-. ASS ESSING OFFICER MADE FOLLOWING ADDITION IN RETURN OF INCOME : I. DISALLOWANCE OF DEDUCTION U/S. 80HHC PARA 3.4 RS. 43 01 221 II. DISALLOWANCE U/S. 40A(2)(B) PARA-4.10 RS. 11 01 535 III. INTEREST ON INCOME TAX REFUND PARA-5 RS. 1 93 097 IV. DISALLOWANCE OF PRIOR PERIOD EXPENSES PARA-6 RS. 4 57 293 V. DISALLOWANCE OUT OF ELECTRICITY EXPENSES PARA-7 RS. 69 180 3.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY WHEREIN CIT(A) CONFIRMED THE ADDITION ON ACCOUNT OF 80HHC AND DELETED THE ADDITIONS MADE U/S. 40A(2)(B). AS REGARDS DISALLOWANCES MADE ON ACCOUNT OF INTEREST ON INCOME TAX REFUND OF RS.1 93 097/- AND DISALLOWANCE ON ACCOUNT OF PRELIMINARY EXPENSES OF RS. 69 180/- WERE ALSO CONF IRMED BY I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 4 CIT(A). IN APPEAL BEFORE ITAT DISALLOWANCE MADE U /S. 80HHC WERE CONFIRMED. ASSESSEE HAS NOT FILED APPEAL IN I TAT FOR INTEREST ON INCOME TAX REFUND AT RS.1 93 097/- AND DISALLOWED ON ACCOUNT OF PRELIMINARY EXPENSES OF RS.69 180/-. ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) FOR FOLLOWING THREE ADDITIONS CONFIRMED BY CIT(A). I. 80HHC RS.43 01 221/- II. INTEREST ON I. T REFUND RS.1 93 097/- III. PRELIMINARY EXP. RS. 69 180/- 3.2 PENALTY MATTER WAS CARRIED BEFORE FIRST APPELLA TE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON ALL THESE GROUNDS FOR DELETING PENALTY. CIT(A) HAVING CONSID ERED THE SAME DELETED PENALTY WITH REGARDS TO ADDITION U/S. 80HHC OF RS. 43 01 221/- AND CONFIRMED PENALTY WITH REGARD T O INTEREST ON INCOME TAX REFUND AND PRELIMINARY EXPENSES. 3.3 REVENUE IS AGAINST DELETION OF PENALTY IN QUEST ION WHILE ASSESSEE IS IN CROSS OBJECTION TO OPPOSE THE SUSTAI N OF PENALTY WITH REGARDS TO LEVY OF PENALTY FOR DISALLOWANCE MA DE ON ACCOUNT OF INTEREST ON INCOME TAX REFUND OF RS. 1 9 3 097/- AND DISALLOWANCE MADE ON ACCOUNT OF PRELIMINARY EXPENSE S OF RS.69 180/-. WE FIND THAT AS DISCUSSED ABOVE ASSE SSING OFFICE HAS LEVIED PENALTY UNDER PROVISIONS OF SECTI ON 271(1)(C) ON THREE ISSUES THAT THE ADDITIONS U/S. 80HHC OF RS .43 01 221 CONFIRMED BY CIT(A) AND ITAT AHMEDABAD INTEREST O N INCOME TAX REFUND OF RS. 1 93 097/- AND ADDITION OF PRELIM INARY EXPENSES OF RS.69 180/- CONFIRMED BY CIT(A) BUT NOT AGITATED I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 5 BY ASSESSEE BEFORE ITAT. THE STAND OF ASSESSEE HAS BEEN THAT ADDITIONS U/S. 80HHC IS ON LEGAL ISSUE WHICH WAS D EBATABLE SINCE BEGINNING AND IT WAS CONFIRMED BY ITAT ONLY A FTER IPCA CASE WAS CONFIRMED BY HON'BLE SUPREME COURT. THE DE CISION OF IPCA LABORATORIES WAS NOT AVAILABLE WHEN THE RETURN OF INCOME FOR A.Y 2003-04 WAS FILED. ASSESSEE IS SUPPORTING MANUFACTURER. THE RELEVANT DETAILS WERE DECLARED I N RETURN OF INCOME FILED BY ASSESSEE. ASSESSEE INCLUDED DETAILS AT WHICH THE MAIN EXPORTER M/S JAY CHEMICAL INDUSTRIES LTD P URCHASED GOODS AND MADE EXPORT. SIMILAR DEDUCTION WAS CLAIME D BY ASSESSEE ITSELF IN A.Y. 2002-03 AND IT WAS PARTLY D ISALLOWED BY ASSESSING OFFICER. HOWEVER CIT(A) ALLOWED THE ENTI RE DEDUCTION FOR A.Y. 2002-03 AND CIT(A)'S ORDER WAS CONFIRMED B Y HON'BLE ITAT. THE YEAR UNDER CONSIDERATION IS A.Y. 2003-04 THE DEDUCTION HAS BEEN DENIED BY ASSESSING OFFICER AND CONFIRMED BY CIT(A) AND ITAT RELYING ON HONBLE APEX COURT D ECISION OF IPCA LABORATORIES. ACCORDING TO LD. AUTHORIZED REP RESENTATIVE DEDUCTION U/S 80HHC HAS BEEN DEBATABLE AT RELEVANT POINT OF TIME. SO ANY CLAIM MADE U/S 80HHC BY ASSESSEE WHIC H WAS ALLOWED IN EARLIER YEARS UNDER BONAFIDE BELIEF THAT ASSESSEE IS ENTITLED FOR THE SAME THE REJECTION OF SUCH CLAIM BY THE ASSESSING OFFICER CONFIRMED BY ITAT COULD NOT BE TH E BASIS FOR IMPOSING PENALTY U/S 271(1)(C). ACCORDING TO US A SSESSEES CLAIM U/S 80HHC APPEARS TO BE BONAFIDE AT RELEVANT POINT OF TIME AS SAME WAS ALLOWED IN PRECEDING YEAR I.E. A.Y 2002-03. THE CASE RATIO OF IPCA LABORATERIES LTD (SUPRA) WAS NOT AVAILABLE AT THE TIME OF FILING RETURN OF INCOME BY ASSESSEE. IN I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 6 THIS SITUATION THERE IS NO MENSREA WHEREBY ASSESSE E HAD CONCEALED THE INCOME AND THEREFORE PENALTY U/S 271( 1)(C) SHOULD BE LEVIED. PROVISION OF SECTION 271(1)(C) AP PLIES WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME'. THERE IS NOTHING ON RECORD TO SUGGEST THE CONCEALMENT OF THE INCOME. AS REGARDS FURNISHING OF INACCURATE PARTICULARS NO INFORMATION WAS FOUND TO BE INCORRECT OR INACCURATE. THE WORDS 'INACCURATE PARTICULARS' MEAN THAT THE DETAILS SUPPLIED IN THE RETURN ARE NOT ACCURATE NOT EXACT OR CORRECT NOT ACCORDING T O TRUTH OR ERRONEOUS. IN THE ABSENCE OF A FINDING BY ASSESSING OFFICER THAT ANY DETAILS SUPPLIED BY ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE SHOULD BE NO LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C). SIMILAR VIEWS HAVE BEEN TAKEN BY HONBLE SUPREME COURT IN CASE OF RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 (SC). IN VIEW OF A BOVE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY IN QUESTION. SAME IS UPHELD. 3.4 AS A RESULT REVENUES APPEAL IS DISMISSED. 4. NOW WE TAKE C.O. NO. 167/AHD/2011 FILED BY ASSES SEE. 4.1 ASSESSEE BY CROSS OBJECTION SUBMITTED THAT CIT( A) HAS ERRED IN PARTLY CONFIRMING PENALTY EVEN THOUGH WHOL E ORDER OF PENALTY WAS APPEALED AGAINST BEFORE HIM. IN THIS R EGARD LD AUTHORIZED REPRESENTATIVE HAS FILED APPLICATION FOR CONDONATION OF DELAY IN FILING C.O. NO. 167/AHD/2011 INTER ALIA SUBMITTED I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 7 THE DATE OF RECEIPT OF APPEAL MEMO IS PUT AS 15.06. 2011. HOWEVER ON VERIFICATION IT WAS FOUND THAT APPEAL MEMO OF 332/AHD/2011 WAS RECEIVED ON 24.02.2011. DUE TO TH E MISTAKE OF ONE AUTHORIZED REPRESENTATIVE OF ASSESSE E HANDLING THE MATTER C.O. COULD NOT BE FILE BY 9 TH MARCH 2011. HENCE DELAY OF 125 DAYS HAD OCCURRED. THE SAID AUTHORIZE D REPRESENTATIVE BROUGHT THE MATTER TO THE NOTICE OF MR. NIMISH VAYAWALA AND INFORMED HIM THAT THE MEMO WAS RECEIVE D IN JUNE 2011. THE MAIN EMPHASIS HAS BEEN THAT THERE IS DELAY IN FILING CROSS OBJECTION ON BEHALF OF AUTHORIZED R EPRESENTATIVE FOR ASSESSEE. IT IS SETTLED POSITION THAT ASSESSEE SHOULD NOT SUFFER FOR FAULT ON PART OF AUTHORIZED REPRESENTATI VE. ACCORDINGLY IN THE INTEREST OF JUSTICE WE CONDONE THE DELAY IN FILING CROSS OBJECTION. 4.2 COMING TO THE MERIT OF THE CASE LD. AUTHORIZED REPRESENTATIVE POINTED OUT THAT ASSESSING OFFICER L EVIED PENALTY FOR INTEREST ON INCOME TAX REFUND AMOUNTING TO RS. 1 93 097/- AND PRELIMINARY EXPENSES AMOUNTING TO RS.69 183/- SAME WAS CONFIRMED BY CIT(A) AND PENALTY WAS LEVIED BY A SSESSING OFFICER AND SAME WAS CONFIRMED BY CIT(A). THE MAIN CONTENTION OF CIT(A) HAS BEEN THAT ASSESSEE HAS NEI THER RAISED ANY GROUND NOR FILED ANY WRITTEN SUBMISSION REGARDI NG PENALTY LEVIED FOR INTEREST ON INCOME TAX REFUND AMOUNTING TO RS.1 93 097/- AND PRELIMINARY EXPENSES AMOUNTING TO RS.69 180/-. I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 8 4.3 LD. AUTHORIZED REPRESENTATIVE CONTENDED TOWARDS WRITTEN SUBMISSIONS FILED BEFORE CIT (A) PLACED ON PAGE NOS . 69 TO 71 CERTIFIED TO BE FILED BEFORE CIT(A). WE FIND THAT STAND OF ASSESSEE IN THIS REGARD BEFORE CIT(A) AS PER WRITTE N SUBMISSION IS THAT INTEREST INCOME FROM INCOME TAX DEPARTMENT WAS NOT CREDITED TO INTEREST ACCOUNT DUE TO CLERICAL ERROR COMMITTED BY MR. HITESH DARJI WHILE PASSING THE ENTRY. THE INFO RMATION WAS AVAILABLE WITH THE I.T. DEPARTMENT ITSELF. ASSESSI NG OFFICER HAS NOT FOUND EXPLANATION REGARDING ERROR COMMITTED BY MR. DARJI TO BE FALSE. AS REGARDS THE PRELIMINARY EXPENSES THE STAND OF ASSESSEE HAS BEEN AS AMOUNT WAS IN RESPECT OF ELECT RICITY EXPENSES THE SAME WAS DEBITED TO EXPENSES ACCOUNT. IT WAS ONLY ON THE LEGAL GROUND THAT IT WAS DISALLOWED. W HEN OVERALL TAX PAID BY ASSESSEE IS CONSIDERED THE AMOUNT INVOL VED ARE TOO SMALL TO ATTRIBUTE ANY MALAFIDE INTENTION TO THE AS SESSEE. IN SUM AND SUBSTANCE ASSESSEE CONTENDED THAT CIT(A) W AS NOT JUSTIFIED IN CONFIRMING PENALTY BY OBSERVING THAT A SSESSEE NEITHER RAISED ANY GROUND NOR FILED ANY WRITTEN SUB MISSION REGARDING LEVY OF INTEREST ON INCOME TAX REFUND AND PRELIMINARY EXPENSES ARE NOT JUSTIFIED. 4.4 FINDING FORCE IN THE CONTENTION OF LD. AUTHORIZ ED REPRESENTATIVE WE ARE OF THE VIEW THAT CIT(A) HAS IGNORED THE SUBMISSION FILED BEFORE HIM ON THESE GROUNDS AS FAR AS LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) I S CONCERNED. IN THE INTEREST OF JUSTICE WE RESTORE THIS ISSUE T O CIT(A) WITH DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AF TER PROVIDING I.T.A. NO. 332/AHD/2011 & C. O. NO. 167/AHD/2011 FOR A.Y. 2003-04 (ACIT VS. J. H. KHARAWALA PVT. LTD .) PAGE 9 DUE OPPORTUNITY OF BEING HEARD TO ASSESSEE. SINCE WE ARE RESTORING THE ISSUE RAISED BY ASSESSEE BY WAY OF CR OSS OBJECTION ON PRELIMINARY ISSUE SO WE ARE REFRAININ G TO COMMENT ON THE MERIT OF ISSUE RAISED BY ASSESSEE IN IS CROSS OBJECTION. 5. IN RESULT APPEAL FILED BY REVENUE IS DISMISSED WHEREAS CROSS OBJECTION FILED BY ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES AS DISCUSSED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOV. 2014. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. - / CONCERNED CIT 4. -- / CIT (A) 5. &12 % / DR ITAT AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # 9/ ;