Deputy Commissioner of Income-tax,, v. M/s. Suttati Enterprises Pvt. Ltd.,,

ITA 1947/PUN/2014 | 2007-2008
Pronouncement Date: 27-10-2016 | Result: Dismissed

Appeal Details

RSA Number 194724514 RSA 2014
Assessee PAN AACCS4191H
Bench Pune
Appeal Number ITA 1947/PUN/2014
Duration Of Justice 1 year(s) 11 month(s) 27 day(s)
Appellant Deputy Commissioner of Income-tax,,
Respondent M/s. Suttati Enterprises Pvt. Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-10-2016
Date Of Final Hearing 06-10-2016
Next Hearing Date 06-10-2016
Assessment Year 2007-2008
Appeal Filed On 31-10-2014
Judgment Text
] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE ! ' $ % BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURV EDI AM ITA NO.1947/PN/2014 ASSESSMENT YEAR : 2007-08 THE DY. COMMISSIONER OF INCOME TAX CIRCLE-6 PUNE. . APPELLANT VS. M/S SUTTATTI ENTERPRISES PVT. LTD. 109/4 RAMTEKDI INDUSTRIAL ESTATE PUNE 411 013. PAN : AACCS4191H . RESPONDENT ITA NO.1997/PN/2014 ASSESSMENT YEAR : 2007-08 M/S SUTTATTI ENTERPRISES PVT. LTD. 109/4 RAMTEKDI INDUSTRIAL ESTATE HADAPSAR PUNE 411 013. PAN : AACCS4191H . APPELLANT VS. THE ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-6 PUNE. . RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 06.10.2016 / DATE OF PRONOUNCEMENT: 27.10.2016 & / ORDER PER ANIL CHATURVEDI AM : THE AFORESAID CAPTIONED CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSI ONER OF INCOME TAX (APPEALS)-III PUNE DATED 26.08.2014 FOR THE ASSESS MENT YEAR 2007-08. 2 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 2. THE CROSS APPEALS FILED BY THE REVENUE AND THE A SSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER :- 3.1 ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN T HE BUSINESS OF SHEET METAL FABRICATION AND MANUFACTURING OF AUTO COMPONENTS. ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON 31.10.2007 DE CLARING TOTAL INCOME OF RS.6 61 11 661/-. ASSESSEE THEREAFTER ON 21.08. 2008 FILED A REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.7 53 20 940/-. ON 25.03.2009 ASSESSEE AGAIN REVISED ITS RETURN OF INCOME WHEREIN THE TOTA L INCOME WAS DECLARED AT RS.6 50 89 881/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) VIDE ORDER DATED 23.12.2009 AND THE TOTAL INCOME WA S DETERMINED AT RS.8 20 80 281/- INTER-ALIA BY DENYING THE CLAIM OF DEDUCTION OF RS.65 66 129/ - UNDER SECTION 80IA(4) ADDITION OF SUBSIDY OF RS.20 00 000/- RECEIVED FROM MEDA ADDITION ON ACCOUNT OF DISALLOWANCE OF FREIGHT AND INSURANCE OF RS.17 93 288/- AND DISALLOWANCE OF DEPRECIATION OF RS.38 45 843/- ON A DDITION OF FIXED ASSETS IN CASE OF EOU UNIT. ON THE AFORESAID AGGREGATE ADDITION OF R S.1 42 05 260/- ASSESSING OFFICER VIDE ORDER DATED 22.03.2013 PASSED UNDER SE CTION 271(1)(C) CONCLUDED THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF IN COME AND THEREFORE ASSESSEE WAS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) R.W. EXPLANATION 1 OF THE ACT. HE ACCORDINGLY LEVIED PENALTY OF RS.42 61 578/-. AGGR IEVED BY THE PENALTY ORDER OF ASSESSING OFFICER ASSESSEE CARRIED THE MATTER BEFO RE CIT(A) WHO VIDE ORDER DATED 26.08.2014 (IN APPEAL NO.PN/CIT(A)-III/ACIT C IRCLE-6/154/2013-14/294) GRANTED PARTIAL RELIEF TO THE ASSESSEE INTER-ALIA BY DELETING THE PENALTY UNDER SECTION 271(1)(C) ON THE DENIAL OF DEDUCTION UNDER SECTION 80IA ADDITION ON ACCOUNT OF 3 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 DISALLOWANCE OF FREIGHT & INSURANCE AND ON DISALLOW ANCE OF ADDITIONAL CLAIM OF DEPRECIATION BUT HOWEVER UPHELD THE PENALTY ON THE ADDITION MADE ON ACCOUNT OF ADDITION TO SUBSIDY. AGGRIEVED BY THE ORDER OF CIT (A) ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. ASSESSEE IS AGGRIEVED BY THE PENALTY THAT IS CONFIRMED AND REVENUE IS AGGRIEVED BY THE PENALTY T HAT HAS BEEN DELETED BY CIT(A). THE GROUNDS RAISED BY ASSESSEE IN ITA NO.1 997/PN/2014 READS AS UNDER :- THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE TO EACH OTHER - ON FACTS AND IN LAW 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF SUBSIDY OF RS. 20 LACS RECEIVED FROM MEDA ON THE GROUND THAT THE SAID SUBSIDY WAS A REVENUE RECEIPT AND NOT CAPITAL RECEIPT AND THEREFORE THE ASSESSEE HAD CONCEALED ITS INCOME AN D HENCE THE LEVY OF PENALTY WAS JUSTIFIED. 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE CLAIM OF THE ASSESSEE WAS A LEGAL CLAIM AND DULY SUPPORTED BY VARIOUS DECISIONS AND HENCE THE ASSESSEE HAD NOT CONCEALED ANY INCOME AND THERE WAS NO REASON TO LEVY THE PENALTY. 3] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE CLAIM MADE BY THE ASSESSEE WAS A DEBATABLE ONE AND SINCE TWO OPINIONS WERE AVAILABLE THE LEVY OF PENALTY IS NOT JUSTIFIED AND THE SAME OUGHT TO HAVE BEEN DELETED. 4] THE LEARNED A.O. OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAD DULY FURNISHED ALL THE RELEVANT DETAILS IN RESPECT OF RE CEIPT OF SUBSIDY FROM MEDA IN THE RETURN FILED FOR THIS YEAR AND HENCE MERELY BECAUS E THE CLAIM WAS NOT ACCEPTED IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND THEREFORE THE LEVY OF PENALTY WAS NOT JUSTIFIED. 5] THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. ON THE OTHER HAND THE GROUNDS RAISED BY THE REV ENUE IN ITA NO.1947/PN/2014 READS AS UNDER :- 1 THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS)-III HAS ERRED IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER WHEN THE ASSESSEE IS NOT E NTITLED TO THE CLAIM OF DEDUCTION U/S 80LA OF THE I.T. ACT. 4 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS)-III HAS ERRED IN DIRECTING THE PENALTY LEVIED BY THE ASSESSING OFFICER WHEN THE ASSESSEE WRONGLY INCLUDED THE FREIGHT INSURANCE AND TELECOMMUNICATION CHARGES IN THE EXPORT TURNOVE R TO CLAIM HIGHER DEDUCTIONS U/S 10B OF THE I.T. ACT 1961. 4 FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED A T THE TIME OF HEARING THE ORDER OF THE ID. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5 THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PR OCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 5. SINCE BOTH THE APPEALS EMANATE OUT OF THE SAME O RDER OF LD. CIT(A) WE PROCEED TO DISPOSE OF BOTH THE APPEALS TOGETHER. 6. BEFORE US LD AR REITERATED THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER AND CIT(A). HE FURTHER SUBMITTED THAT AGAINST THE QUANTUM ADDITIONS MADE BY ASSESSING OFFICER THE MATTER WAS CARRIED IN APPEAL . HE SUBMITTED THAT AS FAR AS THE QUANTUM ADDITION ON ACCOUNT OF DEDUCTION UNDER SECT ION 80IA ON WHICH PENALTY LEVIED BY ASSESSING OFFICER WAS DELETED BY CIT(A) I S CONCERNED THE CO-ORDINATE BENCH OF TRIBUNAL IN ITA NO.1039 & 1111/PN/2011 ORD ER DATED 30.05.2014 HAS DECIDED THE ISSUE IN QUANTUM APPEAL IN FAVOUR OF TH E ASSESSEE AND THEREFORE ON THAT ADDITION THERE CANNOT BE ANY QUESTION OF LEVY OF PENALTY. HE POINTED TO THE RELEVANT FINDINGS OF THE TRIBUNAL ORDER AND ALSO PL ACED ON RECORD THE COPY OF THE SAME. HE FURTHER SUBMITTED THAT QUANTUM ORDER ON T HAT ISSUE IS NOT AGITATED BY REVENUE. REVENUE HAS NOT PREFERRED ANY APPEAL AGAI NST THE ORDER OF LD. CIT(A) MEANING THEREBY THAT THE ORDER HAS BEEN ACCEPTED BY REVENUE AND THEREFORE ON SUCH ADDITION THERE CANNOT BE LEVY OF PENALTY ON A CCOUNT OF CONCEALMENT OF INCOME. AS FAR AS ASSESSEES APPEAL ON THE LEVY OF PENALTY ON THE ADDITION OF SUBSIDY IS CONCERNED HE REITERATED THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT IN THE CASE OF ASSESSEE THE SUBSIDY HAD BEEN HELD TO BE A REVENUE RECEIPT WHEREAS ON SIMILAR ISSUE THE HON BLE MUMBAI TRIBUNAL IN THE CASE OF UNIDERITEND LTD VS. ADDL. CIT ((ITA NO.3473 /MUM/2013) ORDER DATED 5 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 26.11.2015 HAS HELD THAT THE SUBSIDY TO BE CAPITAL RECEIPTS AND THEREFORE NOT TAXABLE. HE PLACED ON RECORD THE COPY OF THE AFORE SAID ORDER. HE THEREFORE SUBMITTED THAT SINCE THE QUESTION OF TAXABILITY OF SUBSIDY BEING A DEBATABLE ISSUE NO PENALTY IS LEVIABLE ON SUCH ADDITION AND FOR THI S PROPOSITION HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIA NCE PETROPRODUCTS REPORTED IN 322 ITR 158. AS FAR AS OTHER ADDITIONS ARE CONCERN ED ON WHICH PENALTY WAS LEVIED BY ASSESSING OFFICER HE SUPPORTED THE ORDER OF LD. CIT(A). THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT IN THE PRESENT CASE PENALTY UNDER SECT ION 271(1)(C) HAS BEEN LEVIED BY ASSESSING OFFICER ON DENIAL OF CLAIM OF DEDUCTION O F RS.65 66 129/- UNDER SECTION 80IA(4) ADDITION OF SUBSIDY OF RS.20 00 000/- RECE IVED FROM MEDA ADDITION ON ACCOUNT OF DISALLOWANCE OF FREIGHT AND INSURANCE OF RS.17 93 288/- AND DISALLOWANCE OF DEPRECIATION OF RS.38 45 843/- ON A DDITION OF FIXED ASSETS IN CASE OF EOU UNIT. THE LD. CIT(A) HAS CONFIRMED THE LEVY OF PENALTY ONLY ON THE ADDITION OF SUBSIDY RECEIVED FROM MEDA AND DELETED THE PENALTY ON OTHER ADDITIONS. WHILE DELETING THE PENALTY ON DENIAL OF CLAIM OF DEDUCTIO N UNDER SECTION 80IA LD. CIT(A) HAS INTER-ALIA GIVEN A FINDING THAT THE CO-ORDINATE BENCH OF TRIB UNAL HAS DECIDED THE QUANTUM ISSUE IN FAVOUR OF ASSESSEE AND THEREFORE O N SUCH ADDITION PENALTY DOES NOT SURVIVE. ON THE DELETION OF PENALTY OF ADDITIO N ON ACCOUNT OF FREIGHT AND INSURANCE IS CONCERNED LD. CIT(A) HAS NOTED THAT E VEN AFTER THE ADDITIONS ON ACCOUNT OF ASSESSEES CLAIM OF DEDUCTION UNDER SECT ION 10B THERE IS NO TAX PAYABLE ON ACCOUNT OF DISALLOWANCE AND THEREFORE TH E AMOUNT OF TAX EVADED WORKS OUT TO RUPEES NIL AND THEREFORE THERE CANNOT BE LEV Y OF PENALTY ON SUCH ADDITION. AS FAR AS DELETION OF PENALTY ON DISALLOWANCE OF DE PRECIATION OF EOU UNIT IS CONCERNED LD. CIT(A) WHILE DELETING THE PENALTY HA S GIVEN A FINDING THAT THERE IS NO 6 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 IMPACT ON THE TAX AND NO ADDITIONAL TAX LIABILITY R ESULTS FROM THE SAME. THE AFORESAID FINDINGS OF LD. CIT(A) HAS NOT BEEN CONTR OVERTED BY REVENUE. AS FAR AS PENALTY ON THE ADDITION ON ACCOUNT OF SUBSIDY IS CO NCERNED WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT THE ISSUE IS DEBATA BLE. WE FIND THAT IN THE CASE OF ASSESSEE THE SUBSIDY AMOUNT HAS BEEN HELD TO BE A R EVENUE RECEIPT AND ON IDENTICAL FACTS THE CO-ORDINATE BENCH OF MUMBAI TR IBUNAL IN THE CASE OF UNIDERITEND LTD VS. ADDL. CIT (SUPRA) HAS HELD THE SUBSIDY RECEIVED BY THE ASSESSEE TO BE CAPITAL RECEIPT. IN SUCH A SITUATIO N WE ARE OF THE VIEW THAT THE ISSUE OF TAXABILITY OF SUBSIDY BEING A DEBATABLE ISSUE AN D THEREFORE PENALTY FOR CONCEALMENT OF INCOME IS NOT LEVIABLE AND FOR THE A FORESAID VIEW WE FIND SUPPORT BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF R ELIANCE PETROPRODUCTS (SUPRA) WHEREIN THE HONBLE APEX COURT HAS OBSERVED THAT ME RE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER BEFORE US REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO SHOW AS TO WHICH INFORMATION GIVEN IN THE RETURN OF INCOME WAS FOUND TO BE INCORRECT OR INACCURATE. FURTHER IT IS WELL SE TTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT A ND THE FINDING IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLU SIVE FOR THE PURPOSES OF THE PENALTY PROCEEDINGS. IN THE PRESENT CASE THE ASSES SEE HAD DISCLOSED THE MATERIAL FACTS BEFORE THE ASSESSING O FFICER. WHEN THE ASSESSEE HAS MADE A PARTICULAR CLAIM IN THE RETURN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEVANT THERETO THE DISALLOWANCE O F SUCH CLAIM CANNOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT THERE WAS CONCEALMENT O F PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FURNISHING INACCURATE PARTICULARS T HEREOF. WHAT IS TO BE SEEN IS WHETHER THE SAID CLAIM MADE BY THE ASSESSEE WAS BON A FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVANT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY UNDER SECTION 271(1) 7 ITA NO.1947/PN/2014 ITA NO.1997/PN/2014 (C) OF THE ACT. CONSIDERING THE AFORESAID FACTS W E ARE OF THE VIEW THAT IN THE PRESENT CASE NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE. WE THEREFORE DISMISS THE APPEAL OF REVENUE AND ALLOW THE APPEAL OF ASSES SEE. 8. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED AND THAT OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF OCTOBER 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER PUNE ; DATED : 27 TH OCTOBER 2016. & ' (!)* +*! / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III PUNE; 4) THE CIT-III PUNE; 5) THE DR B BENCH I.T.A.T. PUNE; 6) GUARD FILE. & / BY ORDER //TRUE COPY// ! '# / SR. PRIVATE SECRETARY $ %& %'' / ITAT PUNE