Atul bioscience Limited, Valsad v. The ACIT.,, Valsad

ITA 166/AHD/2010 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 16620514 RSA 2010
Assessee PAN ABQPB8977J
Bench Ahmedabad
Appeal Number ITA 166/AHD/2010
Duration Of Justice 4 month(s) 11 day(s)
Appellant Atul bioscience Limited, Valsad
Respondent The ACIT.,, Valsad
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2005-2006
Appeal Filed On 19-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER DATE OF HEARING : 13/05/2010 DRAFTED ON: 1 4/05/2010 ITA NO.166/AHD/2010 ASSESSMENT YEAR : 2005-06 ATUL BIOSCIENCE LIMITED D-1 DOWN COLONY ATUL DIST. VALSAD-396 020 VS. ASST.CIT VALSAD PAN/GIR NO. : ABQPB 8977 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI PRAKASH D.SHAH RESPONDENT BY: SHRI SHELLEY JINDAL CIT-D.R. O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WH ICH HAS EMANATED FROM THE ORDER OF THE LEARNED CIT(APPEALS) -VALSAD DATED 24/09/2009. 2. THROUGH SEVERAL GROUNDS OF APPEAL THE APPELLANT HAS CHALLENGED THE CONFIRMATION OF PENALTY LEVIED U/S.271(1)(C) OF THE I.T.ACT 1961 OF RS.6 17 393/-. 3. REASONS FOR THE IMPOSITION OF THE IMPUGNED PENAL TY WERE ASSIGNED VIDE AN ORDER PASSED U/S.271(1)(C) OF THE I.T. ACT 1961 DATED 30/03/2009 WHEREIN IT WAS STATED THAT THE ASSESSEE -COMPANY WAS CARRYING THE BUSINESS OF MANUFACTURING AND SALE OF CHEMICALS ITA NO .166/AHD/2010 ATUL BIOSCIENCE LIMITED VS. ASST.CIT ASST.YEAR 2005-06 - 2 - PHARMACEUTICALS ETC. THE ASSESSEE-COMPANY HAS AC QUIRED AN ANOTHER MANUFACTURING COMPANY VIDE AN AGREEMENT DATED 31/01 /2005. ON ACCOUNT OF THE SAID AGREEMENT THE PLANT AND MACHIN ERY WAS ACQUIRED AND THE ASSESSEE-COMPANY HAS ALSO PURCHASED RAW-MATERIA L WHICH WAS DULY DISCLOSED AS A CLOSING STOCK. SINCE THE ASSESSEE W AS ABOUT TO START THE MANUFACTURING ACTIVITY THEREFORE CERTAIN EXPENSES WERE CLAIMED THOUGH ADMITTEDLY NO PRODUCTION WAS STARTED DURING THE YEA R UNDER CONSIDERATION. THE OBSERVATION OF THE ASSESSING OF FICER WAS THAT THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION HENCE I T WAS IMPLIED THAT THE ASSETS HAVE NOT BEEN PUT TO USE BY THE ASSESSEE. AS PER ASSESSING OFFICER A BUSINESS IS COMMENCED ONLY WITH THE STAR T OF THE MANUFACTURING ACTIVITY. AS PER ASSESSING OFFICER THE PROVISIONS OF SECTIONS 32 TO 37 OF THE I.T. ACT 1961 APPLY WHERE AN EXPENDITURE IS INCURRED FOR THE PURPOSE OF BUSINESS CARRIED OUT BY THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR. HENCE WHILE FRAMIN G THE ASSESSMENT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF EXPEN DITURE ON THE GROUND THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD NOT CARRIED OUT ANY BUSINESS ACTIVITY EXCEPT SETTING UP OF THE PLANT. AFTER NARRATING THE REASONS OF DISALLOWANCE THE ASSESSING OFFICER HAS ALSO MENTIONED THAT THE SAID DISALLOWANCE WAS AFFIRMED BY LEARNED CIT(A PPEALS) WHILE DECIDING THE QUANTUM APPEAL. ON ACCOUNT OF THOSE REASONS HE HAS ARRIVED AT A CONCLUSION THAT THE EXPLANATION OFFERE D BY THE ASSESSEE WAS NOT FOUND BONA FIDE THEREFORE THE ADDITIONS WERE AFFIRMED HENCE FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA & OTHERS VS. DHARMENDRA TEXTILE PROCESSORS AN D OTHERS REPORTED AS (2008) 306 ITR 277 (SC) IT WAS HELD THAT THE ASSES SEE HAS WILLFULLY CONCEALED THE PARTICULARS AND BEING THE LIABILITY O F CIVIL NATURE THEREFORE ITA NO .166/AHD/2010 ATUL BIOSCIENCE LIMITED VS. ASST.CIT ASST.YEAR 2005-06 - 3 - LEVY OF PENALTY WAS MANDATORY. FINALLY A PENALTY OF RS.6 17 393/- WAS IMPOSED WHICH WAS CHALLENGED BEFORE THE FIRST APPEL LATE AUTHORITY. THE LEARNED CIT(APPEALS) HAS GIVEN HIS FINDING THAT BY NOT FILING AN APPEAL BEFORE THE ITAT THE APPELLANT HAS NOT DONE ANY FAV OUR RATHER HE HAS DRAGGED THE ISSUE BEFORE THE FIRST APPELLATE AUTHOR ITY WHO HAS GIVEN HIS FINDING IN FAVOUR OF THE REVENUE. HE HAS REFERRED TO A DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOLD COIN HEAL TH FOODS LTD. REPORTED AS 218 CTR 359 (SC) AND UPHELD THE LEVY OF PENALTY. BEING AGGRIEVED NOW THE ASSESSEE IS FURTHER IN APPEAL. 4. ON HEARING THE SUBMISSIONS OF BOTH THE SIDES AT SOME LENGTH WE ARE OF THE VIEW THAT THE ISSUE OF SET UP OF BUSINE SS HAPPENED TO BE A CONTENTIOUS ISSUE. EVEN IN THE PRESENT SET OF FAC TS IT WAS AN ARGUABLE CASE THAT WHETHER THE ASSESSEE HAS COMMENCED ITS BU SINESS ON ACQUISITION OF THE BUSINESS OF A GOING CONCERN NAMELY; M/S.A GRIMORE LIMITED. THE APPELLANT HAS CLAIMED THE EXPENDITURE SUCH AS PF WELFARE EXPENSE ETC. UNDER A BONA FIDE BELIEF THAT BUSINESS HAS NOT ONLY BEEN SET UP BUT COMMENCED ON ACQUISITION OF THE BUSINESS OF THE SAI D GOING CONCERN. THERE WAS NO CONTROVERSY ABOUT THE GENUINENESS OF THOSE EXPENSES CLAIMED BY THE ASSESSEE. THIS IS NOT THE CASE OF THE REVENUE THAT THOSE EXPENSES WERE NOT BONAFIDELY CLAIMED OR THE NATURE OF THOSE EXPENSES WERE DOUBTED. THE DETAILS OF THOSE EXPENSES WERE VERY MUCH IN THE KNOWLEDGE OF THE REVENUE DEPARTMENT BEING PROPERLY DISCLOSED IN THE PROFIT & LOSS ACCOUNT AND NO PART OF IT COULD BE SA ID TO BE DELIBERATELY CONCEALED BY THE ASSESSEE. RELIANCE HAS ALSO BEEN PLACED ON THE FOLLOWING DECISIONS:- ITA NO .166/AHD/2010 ATUL BIOSCIENCE LIMITED VS. ASST.CIT ASST.YEAR 2005-06 - 4 - SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. CIT VS. RELEINECE PETRO PRODUCTS PVT.LTD. (2010) 322 ITR 158(SC) 2. BTX CHEMICAL P LTD VS. CIT 288 ITR 196 (GUJ.) 3. HINDUSTAN STEEL LIMITED 83 ITR 26 (SC) 4. CIUT VS. HARSHVARDHAN CHEMICAL & MINERAL LTD. 259 ITR 212. 4.1. IN ADDITION TO ABOVE CASE LAWS A DECISION OF ITAT DELHI IN THE CASE OF WHIRLPOOL OF INDIA LTD. VS. JT. CIT REPORT ED AS (2008) 114 TTJ (DEL) 211 HAS ALSO BEEN CITED WHEREIN ON IDENTICAL SITUATION THE HON'BLE BENCH HAS DECIDED THAT THERE WAS NO OCCASION FOR LE VY OF PENALTY. THE RELEVANT PORTION AS REPRODUCED BELOW:- THE QUESTION AS TO WHEN A CAN BE SAID TO HAVE BEEN UP IS ESSENTIALLY ONE OF FACT AND WOULD DEPEND ON THE FACTS OF EACH CASE AND HAVI NG REGARD TO THE NATURE AND TYPE OF THE PARTICULAR BUSINESS. THE ASSESSEE HAS BY PLACING ALL THE FACTS BEFORE THE AO TAKEN THE POSITION THAT THE WAS SET UP ON 1 ST NOV. 1995 WITH WHICH THE AO DID NOT AGREE. THAT DOES NOT AMOUNT TO FURNISHIN G OF ANY INACCURATE PARTICULARS OF INCOME NOR CAN IT BE SAID ' THAT THE ASSESSEE CONCEALED ITS INCOME BY CLAIMING EVEN PRE-SET UP EXPENSES AS DEDUCTION. AT BEST IT CAN ONLY BE A DEBATABLE POINT. WHEN ALL THE FACTS ARE PLACED BY T HE ASSESSEE BEFORE THE AO WHO HAS NOT UNEARTHED ANY FACT NOT DISCLOSED BY THE ASSESSEE BUT HAS MERELY TAKEN- A VIEW DIFFERENT FROM THE VIEW EXPRESSED BY THE ASSESSEE IT CANNOT BE SAID THAT THE ASSESSEE EITHER CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. THEREFORE THE CIT(A) HAS RIGH TLY CANCELLED THE PENALTY. EVEN OTHERWISE THE PENALTY HAS NO LEGS TO STAND IN VIEW OF THE FACT THAT THE WAS SET UP ON 1ST NOV. 1995 AS CLAIMED BY THE ASSESSEE AND AL L EXPENSES INCURRED AFTER THAT DATE ARE ALLOWABLE AS DEDUCTION ADDL. CIT VS . DELHI CLOTH & GENERAL MILLS CO. LTD. (1984) 42 CTR (DEL) 188 : (1986) 157 ITR 8 22 (DEL) AND CIT VS. BACARDI MARTINI INDIA LTD. (2006) 206 CTR (DEL) 250 : (2007 ) 288 ITR 585 (DEL) FOLLOWED. 5. TO ASCERTAIN WHETHER THE ISSUE PERTAINING TO THE SETTING UP OF BUSINESS WAS INDEED A DEBATABLE OR NOT; WE HAVE CO ME ACROSS A DECISION OF RESPECTED THIRD MEMBER PRONOUNCED IN THE CASE OF STYLER INDIA (P) LTD. REPORTED AS 113 ITD 55 (TM)(PUNE); WHICH BY IT SELF PROVES THAT THERE WAS A DIFFERENCE OF OPINION AMONG THE MEMBERS THAT IS WHY A ITA NO .166/AHD/2010 ATUL BIOSCIENCE LIMITED VS. ASST.CIT ASST.YEAR 2005-06 - 5 - THIRD MEMBER WAS APPOINTED U/S.255(4) OF THE I.T. A CT 1961 TO RESOLVE THE SAME. 6. IN THE LIGHT OF ABOVE DISCUSSION AND THE PRECEDE NTS CITED IT IS EVIDENT THAT THE DETAILS OF THE CLAIMED EXPENDITURE WAS VERY MUCH AVAILABLE TO THE ASSESSING OFFICER WHO HAS NOT QUES TIONED THE GENUINENESS BUT DISALLOWED THE SAME FOLLOWING ONE V IEW ON THE ISSUE OF SET UP OF BUSINESS HOWEVER AS SEEN FROM THE ABOVE REFERENCES AN ANOTHER VIEW COULD BE PLAUSIBLE THEREFORE ENTIRET Y OF THE CIRCUMSTANCES LEADS TO A CONCLUSION THAT IF AT ALL THE SAID CLAIM OF EXPENDITURE WAS MADE UNDER AN ERRONEOUS UNDERSTANDING OF LAW BUT IT COUL D NOT LEAD TO THE CONCLUSION OF CONCEALMENT ON THE PART OF ASSESSEE B EING SIMPLISTICALLY A MATTER OF DEBATE. WE THEREFORE HOLD THAT THE IMP UGNED PENALTY WAS NOT LEVIABLE RESULTANTLY WE HEREBY DIRECT TO DELETE T HE PENALTY. 7. IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 31 ST MAY 2010. SD/- SD/- ( D.C. AGRAWAL) ( MUKUL SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/ 05 /2010 T.C. NAIR SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RES PONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT( APPEALS)-VALSAD 5. THE DR AHMEDABAD BENCH. 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD