M/s Duggal Exports, Ludhiana v. ITO, Ludhiana

ITA 1249/CHANDI/2011 | 2003-2004
Pronouncement Date: 23-02-2012 | Result: Allowed

Appeal Details

RSA Number 124921514 RSA 2011
Assessee PAN AACFD5944Q
Bench Chandigarh
Appeal Number ITA 1249/CHANDI/2011
Duration Of Justice 1 month(s) 25 day(s)
Appellant M/s Duggal Exports, Ludhiana
Respondent ITO, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 23-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 23-02-2012
Assessment Year 2003-2004
Appeal Filed On 29-12-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS. SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NOS.1249 TO 1251/CHD/2011 (ASSESSMENT YEARS: 2003-04 TO 2005-06) DUGGAL EXPORTS VS. THE INCOME TAX OFFICER 38-G SARABHA NAGAR WARD VI(1) LUDHIANA. LUDHIANA. PAN: AACFD5944Q (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (WRITTEN ARGUMENTS) RESPONDENT BY : SMT.JAISHREE SHARMA DR DATE OF HEARING : 07.02.2012 DATE OF PRONOUNCEMENT : 23.02.2012 O R D E R PER SUSHMA CHOWLA J.M. : THESE THREE APPEALS BY THE ASSESSEE ARE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II LUDHIANA D ATED 17.10.2011 RELATING TO ASSESSMENT YEARS 2003-04 TO 2005-06 AGA INST THE PENALTY LEVIED U/S 271(1)(C) OF INCOME TAX ACT 1961. 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE IN ALL THE THREE APPEALS READS AS UNDER: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEALS-I LUDHIANA HAS ERRED IN CONFIRMING THE PENALTY OF RS.8030650/- FOR ASSESSMENT YEAR 2003- 04 RS.7107482/- FOR ASSESSMENT YEAR 2004-05 AND RS.2913957/- FOR ASSESSMENT YEAR 2005-06 U/S 271(1)(C) WITHOUT CONSIDERING THE REPLY FILED BY TH E APPELLANT. THEREFORE PENALTY OF RS.8030650/- IS UNCALLED FOR UNWARRANTED AND MAY BE DELETED. 3. THESE THREE APPEALS RELATING TO THE SAME ASSESSE E AGAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WERE HEARD TOGE THER AND ARE 2 BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 4. THE ISSUE ARISING IN ALL THE THREE APPEALS BY TH E ASSESSEE IS AGAINST LEVY OF PENALTY U/S 271(1)(C) OF THE ACT ON ACCOUNT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF THE ACT ON EXPORTS INCENTIVES. FOR THE SAKE OF DISPOSING OFF THE ISSUE WE REFER TO THE FAC TS IN ITA NO.1249/CHD/2011 RELATING TO ASSESSMENT YEAR 2003-0 4 THOUGH ADMITTEDLY THE FACTS IN ALL THE CAPTIONED ASSESSMEN T YEARS BEFORE US ARE IDENTICAL. 5. THE ASSESSEE WAS ENGAGED IN THE EXPORT OF HOSIER Y ITEMS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIM ED DEDUCTION UNDER SECTION 80IB OF THE ACT. IN SUPPORT OF ITS CLAIM THE ASSESSEE HAD FURNISHED THE AUDIT REPORT IN PRESCRIBED FORM NO.10 CCB ALONGWITH RETURN OF INCOME. THE ASSESSEE HAD CLAIMED DEDUCTI ON UNDER SECTION 80IB OF THE ACT ON THE EXPORT INCENTIVES I.E. DUTY DRAW BACK. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT H AD DISALLOWED THE SAME IN VIEW OF THE RATIO LAID DOWN IN LIBERTY INDI A VS. CIT [293 ITR 520 (P&H)]. THE TOTAL ADDITION COMPUTED BY THE ASS ESSING OFFICER WAS RS.2 23 85 087/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME BY CLAIMING EXCESS DEDUCTION UNDER SECTION 80IB OF THE ACT AND PENALTY U/S 271(1)(C) OF THE ACT WAS THUS LEVIED. 6. THE CIT (APPEALS) UPHELD THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE SAID LE VY OF PENALTY U/S 271(1)(C) OF THE ACT. 3 7. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. HOWEVER WRITTEN SUBMISSION DATED 1.2.2012 HAVE BEE N FILED BY THE ASSESSEE AND THE SAME HAVE BEEN TAKEN ON RECORD. 8. THE LEARNED D.R. FOR THE REVENUE HAS PLACED RELI ANCE ON THE ORDER OF THE CIT (APPEALS). 9. ON PERUSAL OF RECORD IT IS APPARENT THAT THE ASS ESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED DEDUCTION UNDER SEC TION 80IB OF THE ACT ON ACCOUNT OF PROFITS ARISING FROM EXPORT OF HOSIER Y ITEMS. THE ASSESSEE HAD ALSO CLAIMED AFORESAID DEDUCTION UNDER SECTION 80IB OF THE ACT ON DUTY DRAW BACK RECEIVED DURING THE YEAR. THE SAID DEDUCTION WAS CLAIMED AS PER THE COMPUTATION OF THE AUDITORS WHI CH IN TURN IS SUPPORTED BY THE AUDIT REPORT FURNISHED IN FORM NO. 10CCAC. THE SAID CLAIM OF THE ASSESSEE WAS FOUND TO BE WANTING IN VI EW OF THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA). THE SAID VIEW OF THE HON'BLE PUNJ AB & HARYANA HIGH COURT HAS BEEN UPHELD BY THE APEX COURT IN LIBERTY INDIA VS. CIT [317 ITR 218 (SC)]. 10. THE ISSUE ARISING IN THE PRESENT APPEAL IS WHET HER THE ASSESSEE IS EXIGIBLE TO LEVY OF PENALTY U/S 271(1)(C) OF THE AC T IN VIEW OF RE- COMPUTATION OF THE DEDUCTION UNDER SECTION 80IB OF THE ACT BY EXCLUDING THE EXPORT INCENTIVES IN THE NATURE OF DUTY DRAW B ACK FROM THE ELIGIBLE PROFITS OF BUSINESS. PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IN ALL SUCH CASES WHERE THE ASSESSEE HAS EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVE R WHERE THE ASSESSEE HAD COMPUTED THE DEDUCTION UNDER SECTION 80IB OF TH E ACT IN VIEW OF THE SETTLED PRINCIPLES PREVAILING AT THE TIME OF FILING RETURN OF INCOME AND ALL THE PARTICULARS IN RESPECT OF THE SAID COMPUTAT ION HAVING BEEN FILED 4 BEFORE THE ASSESSING OFFICER THE LATER DECISIONS O F THE HIGHER COURTS DENYING THE AFORESAID DEDUCTION TO THE ASSESSEE WO ULD NOT MAKE THE CLAIM OF THE ASSESSEE FACTUALLY INCORRECT PRIMA FA CIE WHERE THE ASSESSEE HAD FURNISHED COMPLETE PARTICULARS IN THE RETURN OF INCOME IN RELATION TO THE COMPUTATION OF DEDUCTION UNDER SECTION 80IB OF THE ACT. THE AFORESAID CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WAS REDUCED BY THE ASSESSING OFFICER ON ACCOUNT OF THE RATIO LA ID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COURT (SUPRA). THE I SSUE ARISING IN THE PRESENT APPEAL IS THAT IN SUCH CIRCUMSTANCES WHERE THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB OF THE ACT WAS REDUCED BY THE ASSESSING OFFICER THE ASSESSEE CAN BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME MAKING IT EXIGIBLE TO LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT. 11. WE FIND THAT THE HON'BLE SUPREME COURT IN CIT V S. RELIANCE PETROPRODUCTS PVT. LTD. [322 ITR 158 (SC)] HAD HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANN OT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS . THE HON'BLE APEX COURT HELD AS UNDER: 9. WE ARE NOT CONCERNED IN THE PRESENT CASE WITH TH E MENS REA. HOWEVER WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE AS A MATTER OF FACT THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTERS DICTIONARY TH E WORD 'INACCURATE' HAS BEEN DEFINED AS : 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT COPY OR TRANSCRIPT.' WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION THEY MUST MEAN THE DETAIL S SUPPLIED IN THE RETURN WHICH ARE NOT ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE THERE IS NO F INDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN 5 WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. S UCH NOT BEING THE CASE THERE WOULD BE NO QUESTION OF INVIT ING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY I TSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REG ARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 10. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF T HE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. I T WAS THEREFORE REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING T HAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF I NCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACC OUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN ITEM OF RE CEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDI TURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIME D AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND THEREFORE BOTH TYPES AMOUNT TO CONCEALMENT OF PART ICULARS OF ONES INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE AS THE ASSE SSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS T HE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NO T. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT T HE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RET URN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING O FFICER FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY UN DER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDME NT OF THE LEGISLATURE. 12. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD.[322 ITR 73(P & H)]. HAVE HE LD MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVIN G OF INACCURATE INFORMATION WHICH MAY CALL FOR LEVY OF PENALTY UND ER SECTION 271(1)(C) OF THE ACT. 13. FOLLOWING THE AFORESAID PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT . LTD. (SUPRA) AND 6 THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SHAHABAD CO-OP. SUGAR MILLS LTD. (SUPRA) WE HOLD THAT WHERE THE CL AIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WAS RECOMPUTED BY THE ASSESSING OFFICER ON DUTY DRAW BACK RECEIVED BY IT DURING THE YEAR UN DER CONSIDERATION THE ASSESSEE CANNOT BE HELD TO HAVE FURNISHED INACC URATE PARTICULARS OF INCOME MAKING IT EXIGIBLE TO LEVY OF PENALTY U/S 2 71(1)(C) OF THE ACT. ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 14. THE FACTS AND THE ISSUES ARISING IN ITA NO.1250 & 1251/CHD/2011 ARE SIMILAR TO THE FACTS AND ISSUES IN ITA NO.1249/ CHD/2011. OUR DECISION IN ITA NO.1249/CHD/2011 SHALL APPLY MUTATI S MUTANDIS TO ITA NOS.1250 & 1251/CHD/2011. THE GROUNDS OF APPEAL RA ISED BY THE ASSESSEE ARE ALLOWED. 15. IN THE RESULT ALL THE THREE APPEALS RELATING T O ASSESSMENT YEARS 2003-04 TO 2005-06 FILED BY THE ASSESSEE ARE ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF FEBRUARY 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 23 RD FEBRUARY 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH