M/s. Shree Ram Food Industries, Bhavnagar v. The ACIT., Circle-2,, Bhavnagar

ITA 2395/AHD/2009 | 1998-1999
Pronouncement Date: 22-01-2010 | Result: Allowed

Appeal Details

RSA Number 239520514 RSA 2009
Assessee PAN AACFR5176J
Bench Ahmedabad
Appeal Number ITA 2395/AHD/2009
Duration Of Justice 5 month(s) 9 day(s)
Appellant M/s. Shree Ram Food Industries, Bhavnagar
Respondent The ACIT., Circle-2,, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 22-01-2010
Date Of Final Hearing 19-01-2010
Next Hearing Date 19-01-2010
Assessment Year 1998-1999
Appeal Filed On 12-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI A.N. PAHUJA ACCOUNTANT MEMBER DADATE OF HEARING : 19/01/2010 DRAFTED ON: 19/ 01/2010 ITA NOS.2395 2396 & 2397/AHD/2009 ASSESSMENT YEARS : 1998-99 1999- 2000 & 2000-01 RESPECTIVELY M/S.SHREE RAM FOOD INDUSTRIES VICTOR BY PASS ROAD MAHUVA 364 290 VS. THE ASST.CIT CIRCLE-2 BHAVNAGAR PAN/GIR NO. : AACFR 5176 J (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI MEHUL K.PATEL A.R. RESPONDENT BY: SHRI C.K. MISHRA SR.D.R. O R D E R PER BENCH: ALL THE APPEALS BY ASSESSEE ARE DIRECTED AGAINST T HE COMMON ORDER OF THE LEARNED CIT(APPEALS)-XX AHMEDABAD DATED 29/ 06/2009 PASSED FOR ASSESSMENT YEARS 1998-99 1999-2000 & 2000-01 CHALLENGING THE LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961 . 2. BRIEFLY THE FACTS OF THE CASE NOTED IN THE IMPU GNED ORDER ARE THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80-IA OF THE I.T. ACT 1961 AT THE RATE OF 25% ON GROSS TOTAL INCOME I.E. BEFORE ALLO WING DEDUCTION U/S.80-HHC OF THE I.T. ACT 1961. HOWEVER THE ASS ESSING OFFICER ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 2 - WORKED OUT DEDUCTION U/S.80-IA OF THE I.T. ACT 196 1 AFTER ALLOWING THE DEDUCTION U/S.80-HHC OF THE I.T. ACT 1961. THUS THE ADMISSIBLE DEDUCTION U/S.80-IA OF THE I.T. ACT 1961 WAS WORKE D OUT AS AGAINST THAT CLAIM BY THE ASSESSEE. THE ASSESSING OFFICER TOOK THE VIEW THAT DEDUCTION U/S.80-IA OF THE I.T. ACT 1961 SHOULD BE RESTRICTED TO 25% OF THE BALANCE AMOUNT OF THE PROFIT AS REDUCED BY DEDU CTION U/S.80-HHC OF THE I.T. ACT 1961. THE ASSESSEE CHALLENGED THE OR DER OF THE ASSESSING OFFICER BEFORE THE LEARNED CIT(APPEALS) WHO DIRECT ED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S.80-IA OF THE I.T. AC T 1961 ON THE GROSS TOTAL INCOME. THE DEPARTMENT PREFERRED APPEAL BEF ORE THE TRIBUNAL AND IT WAS CONTENDED ON BEHALF OF THE DEPARTMENT THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE B Y THE DECISION OF ITAT CHENNAI BENCH (SPECIAL BENCH) IN THE CASE OF ACIT V S. ROGINI GARMENTS (2007) 108 ITD 49 (CHENNAI)[SB] WHEREIN THE TRIBUN AL WHILE CONSIDERING DEDUCTION U/S.80-IA AND DEDUCTION U/S.80-HHC OF TH E I.T. ACT 1961 HAS HELD THAT IN VIEW OF THE RESTRICTION PLACED ON CLA IM OF REPETITIVE REDUCTION IN SECTION 80-IA(9) OF THE I.T. ACT 1961 WHICH IS MADE APPLICABLE IN RESPECT OF ALL DEDUCTIONS UNDER CHAPTER VI-A RELIE F U/S.80-IA OF THE I.T. ACT 1961 SHOULD BE DEDUCTED FROM THE PROFITS AND GAINS OF THE ASSESSEES ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 3 - BUSINESS BEFORE COMPUTING RELIEF U/S.80-HHC OF THE I.T. ACT 1961. FOLLOWING THIS ORDER THE TRIBUNAL VIDE ORDER DATED 31/01/2008 HAD DIRECTED TO FIRST ALLOW THE DEDUCTION U/S.80-IA OF THE I.T. ACT 1961 OUT OF THE GROSS TOTAL INCOME AND THEREAFTER THE DEDUCTION U/S.80-HHC OF THE I.T. ACT 1961 IS TO BE ALLOWED OUT OF THE BALANCE INCOM E. THE ITAT SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECTED TH E ASSESSING OFFICER TO GRANT DEDUCTION AS PER DECISION OF SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS(SUPRA). THE ASSESSING OFFICER CONSIDERIN G THE ORDER OF THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS(SUPRA) CAME TO THE CONCLUSION THAT THE ASSESSEE HAD FURNISHED INACCURA TE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME AND LEVIED THE PEN ALTY U/S.271(1)(C) OF THE I.T. ACT 1961. 3. THE PENALTY ORDERS WERE CHALLENGED BEFORE THE LE ARNED CIT(APPEALS) AND THE SUBMISSIONS OF THE ASSESSEE RE AD AS UNDER:- '(1) THAT THE ABOVE APPEALS ARE FILED AGAINST L EVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR A.YS 1998-99 TO 200-01 FOR RS.1 53 678/- RS.10 13 952/- AND RS.4 84 727/- RESPECTIVELY. IT IS RESPECTFULLY SUBMITTED THAT THE RETURNS FOR THE ABOVE ASSESSMENT YEARS WERE FURNISHED ON 09.10.1998 30.11.1999 AND 25.10.2000 RESPECTIVELY WHEREIN THE ASSESSEE CLAIMED DEDUCTIONS UNDER SECTIONS 80HHC AND 80IA OF THE ACT ON THE GROSS TOTAL INCOME WITHOUT REDUCING THE CLAIM MADE UNDER ONE SECTION FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER OTHER SECTION. HOWEVER THE ASSESSING OFFICER ALLOWED THE DEDUCTION UNDER SECTION 80 HHC OF THE ACT FROM THE GROSS TOTAL INCOME AS CLAIM ED BY THE ASSESSES BUT FOR COMPUTING THE DEDUCTION UNDER SECTION 801 A OF THE ACT HE ALLOWED THE DEDUCTION ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 4 - AT 25% OF THE GROSS TOTAL INCOME AS REDUCED BY THE DEDUCTION UNDER SECTION 80HHC OF THE ACT AND THEREBY ASSESSEE'S CLAIM FOR D EDUCTION UNDER SECTION 80IA OF THE ACT WAS REDUCED TO THAT EXTENT. THE ASSESSEE 'S APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS FULLY ALLO WED AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELETED BY THE CIT (APPEA LS) BY FOLLOWING A NUMBER OF DECISIONS OF INCOMETAX APPELLATE TRIBUNAL WHICH WE RE AT THE RELEVANT POINT OF TIME IN FAVOUR OF THE ASSESSEE. (2) HOWEVER THE DEPARTMENT'S SECOND APPEAL B EFORE INCOME-TAX APPELLATE TRIBUNAL WERE ALLOWED AND DECIDED IN FAVOUR OF THE DEPARTMENT BY VIRTUE OF DECISION OF INCOME-TAX APPELLATE TRIBUNAL CHENNAI SPECIAL BENCH IN THE CASE OF ACIT VS ROGINI GARMENTS REPORTED IN 108 ITD 49 (CHE NNAI SPECIAL BENCH) WHICH IS DATED 27.04.2007. (3) IT IS RESPECTFULLY SUBMITTED THAT AT THE TIME O F FILING OF RETURNS FOR THE ABOVE ASSESSMENT YEARS THERE WERE A NUMBER OF JUDGMENTS I N FAVOUR OF THE ASSESSEE INCLUDING INCOME-TAX APPELLATE TRIBUNAL AHMEDABAD BENCH IN THE CASE OF M/S. ATUL INTERMEDIATES AND OTHER TRIBUNALS OF SANG/ORE AND JAIPUR BENCH WHICH SUPPORTS THE CASES OF THE ASSESSEE. COPIES OF SAID ORDERS ARE PLACED AT PAGES 8 TO 49 OF THE PAPER BOOK. MOREOVER THE DEDUCTIONS W ERE CLAIMED IN THE STATEMENT OF INCOME ITSELF AND ALSO SUPPORTED BY AUDITOR'S CE RTIFICATE AND REPORTS ATTACHED WITH THE RETURNS AS IS EVIDENT FROM THE STATEMENTS OF INCOME PLACED AT PAGES 1 TO 7 OF THE PAPER BOOK. FURTHER THE INCOME-TAX APPELLAT E TRIBUNAL AHMEDABAD BENCH IN ASSESSEE'S OWN CASE FOR THE AY 2000-01 HAS QUASH ED THE ORDER UNDER SECTION 263 OF THE ACT WHICH WAS SOUGHT TO BE REVISED FOR S IMILAR CLAIMS MADE BY THE ASSESSEE (PAGES 50 TO 58 OF PAPER BOOK). HENCE IT IS HUMBLY SUBMITTED THAT ALL THE FACTS RELATING TO THE SAID DEDUCTIONS WERE ALRE ADY FULLY DISCLOSED BY THE ASSESSEE AND ALSO FULLY SUPPORTED BY THE CASE LAW I N FAVOUR OF THE ASSESSEE AT THE RELEVANT POINT OF TIME AND HENCE THE DEDUCTIONS WER E CLAIMED UNDER A BONAFIDE BELIEF AS PER THE POSITION OF LAW PREVAILING AT THE FFILEY&NT .TIME WHICH DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME OR FURNISHING O F INACCURATE PARTICULARS OF INCOME. ' THE ASSESSEE RELIED ON THE FOLLOWING JUDGMENTS:- (1) KANBAY SOFTWARE INDIA PVT LTD VS DCIT -ITAT PU NE (2009) 22 DTR (PUNE)(TRIB) 481 (2) ACIT VS VIP INDUSTRIES LTD- ITAT MUMBAI (2 009) 21 DTR (MUM) (TRIB) 153 (3) GEM GRANITES (KARNATAKA ) VS DCIT ITAT CH ENNAI (2009) 18 DTR 358 (4) UNION OF INDIA VS RAJASTHAN SPINNING & WEA VING MILLS (SC) 23 DTR 158 FURTHER THE APPELLANT SUBMITTED AS UNDER:- (5) MOREOVER IT IS RESPECTFULLY SUBMITTED THA T AS FAR AS AY 2000-01 IS CONCERNED THE PENALTY IS INITIATED AND LEVIED FROM THE ORDER UNDER SECTION 143(3) NVS 263 OF THE ACT. HOWEVER THE ORDER UNDER SECTIO N 263 OF THE ACT ITSELF WAS CHALLENGED BEFORE THE INCOME-TAX APPELLATE TRIBUNAL AND THE ITAT HAS QUASHED THE PROCEEDINGS UNDER SECTION 263 OF THE ACT ITSELF . COPY OF THE SAID ORDER IS ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 5 - PLACED AT PAGES 50 TO 58 OF THE PAPER BOOK. HENCE THE ORDER PASSED UNDER SECTION 143(3) RWS 263 OF THE ACT ITSELF. COPY OF T HE SAID ORDER IS PLACED AT PAGES 50 TO 58 OF THE PAPER BOOK. HENCE THE ORDER PASSED UNDER SE CTION 143(3) RWS 263 OF THE ACT BECOMES A NULLITY AND VOID AB-INITIO . THE ASSESSEE HAD PREFERRED A MISC. APPLICATION BEFORE THE INCOME-TAX APPELLATE T RIBUNAL WHICH HAS BEEN ALLOWED AND THE DEPARTMENT'S QUANTUM APPEAL FOR THE AY 2000-01 HAS ALREADY BEEN DISMISSED IN VIEW OF THE FACT THAT THE ORDER U NDER SECTION 263 ITSELF IS QUASHED BY THE ITAT. COPY OF THE ORDER IN MISC. APP LICATION NO. 59/2009 AND QUANTUM APPEAL IN ITA NO. 2872/2006 ARE ALSO ENCLOS ED. IN VIEW OF THE ABOVE FACTS IT IS RESPECTFULLY SUBMI TTED THAT THE PENALTIES LEVIED FOR ALL THE THREE ASSESSMENT YEARS DESERVES TO BE QUASHED A ND THE APPEALS OF THE ASSESSEE BE ALLOWED IN FULL AS PRAYED FOR AND OBLIG E.' 4. THE LEARNED CIT(APPEALS) CONSIDERING THE SUBMISS IONS OF THE ASSESSEE CONFIRMED THE PENALTY AND DISMISSED THE A PPEALS OF THE ASSESSEE. FINDINGS OF THE LEARNED CIT(APPEALS) ARE REPRODUCED AS UNDER:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE T HE SUBMISSION MADE BY THE LD. A.R. AND ALSO THE CASE LAWS RELIED UPON. HOWEVER I AM NOT INCLINED TO AGREE WITH THE VIEWS SUBMITTED BY THE APPELLANT IN VIEW OF THE DECISION OF THE ITAT CHENNAI BENCH 'D (SB) IN THE CASE OF ACIT VS ROGINI GARMEN TS REPORTED AT (2007) 108 ITD 49 WHEREIN THE TRIBUNAL WHILE CONSIDERING THE DED UCTION U/S. 80IA AND DEDUCTION U/S. 80HHC HAS HELD THAT IN VIEW OF RESTRICTION PLA CED ON CLAIM OF REPETITIVE DEDUCTION IN SECTION 80IA(9) WHICH IS MADE APPLICA BLE IN RESPECT OF ALL DEDUCTIONS UNDER CHAPTER VIA RELIEF U/S.80IA OF THE ACT SHOUL D BE DEDUCTED FROM THE PROFITS AND GAINS OF ASSESSEE'S BUSINESS BEFORE COMPUTING T HE RELIEF U/S. 80HHC OF THE ACT. THE TRIBUNAL HAS HELD THAT DEDUCTION CANNOT BE ALLOWED IGNORING THE RESTRICTIVE CLAUSE CONTAINED IN SECTION 80IA (9) OF THE ACT. THEREFORE THE RESTRICTIVE CLAUSE IN SECTION 801A MAKES IT CLEAR THAT WHEREVER DEDUCTION UNDER ANY OTHER SECTION OF CHAPTER VI-A(C) IS CLAIMED THE COMPUTAT ION WILL BE SUBJECT TO THE RESTRICTIONS LAID DOWN IN SECTION 80LA(9) OF THE AC T. THE PROVISIONS CONTAINED IN SECTION 80IA(9) ARE VERY SPECIFIC AND CLEAR SO FAR AS RESTRICTION ON ALLOWABILITY OF DEDUCTION IS CONCERNED. THE READING OF THE PROVISIO NS REVEALS WELL THAT BY NO STRETCH OF IMAGINATION CLAIM OF EXCESS DEDUCTION I S JUSTIFIED. IN VIEW OF CLEAR PROVISIONS AS PER DIRECTIONS GIVEN BY THE HON'BLE I TAT THE EXCESS DEDUCTION CLAIMED BY THE APPELLANT IN DIFFERENT ASSESSMENT YE ARS U/S. 80HHC IS AS UNDER: A.Y. -1998-99 RS. 4 39 979/- A.Y.-1999-2000 RS.28 97 005/- A.Y.-2000-01 RS.12.59.032/- ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 6 - THUS AS AGAINST THE CLEAR SCHEME ENVISAGED IN THE ACT U/S. 8Q1A(9) THE APPELLANT HAS CLAIMED EXCESS DEDUCTION WHICH CONFIR MS THAT THE DEDUCTION HAS BEEN CLAIMED WILLINGLY ONLY TO REDUCE TAX LIABILITY . THE CONCEALMENT COMES BY TWO WAYS EITHER BY WAY OF SUPPRESSION OF INCOME OR BY W AY OF EXCESS DEDUCTION OF EXPENDITURE CLAIMED. IN THIS CASE A VERY CONSIDERA BLE AMOUNT HAS BEEN CLAIMED IN EXCESS OF WHAT IS DUE AS DEDUCTION BY THE APPELLANT . BESIDES IN THE CASE OF THE APPELLANT IN THE LIGHT OF THESE FACTS THE ASSESSI NG OFFICER HAS IMPOSED THE PENALTY ONLY AT 100% OF TAX SOUGHT TO BE EVADED AND NOT 300 % AND WHICH I HOLD TO BE JUSTIFIED CONSIDERING THE FULL FACTS OF THE CASE. I N VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF THE AO IN L EVYING PENALTY U/S. 271(1)(C) OF THE ACT FOR ALL THE 3 YEARS UNDER CONSIDERATION IS HEREBY CONFIRMED. THE APPEALS OF THE APPELLANT FOR ALL THE ABOVE THREE YEARS ARE THE REFORE REJECTED. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BELOW. HE HAS SUBMITTE D THAT ASSESSEE MADE A BONA FIDE CLAIM FOR DEDUCTIONS UNDER SECTIONS 80-IB AND 80-HHC OF THE I.T. ACT 1961 ON THE GROSS TOTAL INCOME AS PER SEV ERAL DECISIONS OF DIFFERENT BENCHES OF INCOME TAX APPELLATE TRIBUNAL. COPIES OF THE SAME ARE FILED IN THE PAPER-BOOK FROM PAGES 8 TO 49. HE HAS FURTHER SUBMITTED THAT ITAT AHMEDABAD BENCH IN THE CASE OF ASSESSEE I TSELF FOR ASSESSMENT YEAR 2000-01 WHILE CONSIDERING THE SIMILAR ISSUE U/ S.263 OF THE I.T. ACT 1961 BY FOLLOWING THE SAME ORDERS OF THE TRIBUNAL SET ASIDE THE ORDER U/S.263 OF THE I.T. ACT 1961 AND RESTORED THE ORDE R OF THE ASSESSING OFFICER VIDE ORDER DATED 11/11/2006. THE LD. COUN SEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THIS CASE EVEN THE CIT(A PPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION BY FOLLOWING TH E ORDERS OF DIFFERENT ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 7 - BENCHES OF THE TRIBUNAL. THE LD. COUNSEL FOR THE A SSESSEE FURTHER SUBMITTED THAT THE DECISION IN THE CASE OF ROGINI G ARMENTS(SUPRA) WAS DELIVERED ON 27/04/2007 THEREFORE THERE WAS NO QU ESTION OF MAKING ANY WRONG CLAIM OF DEDUCTION U/S.80-IB OR 80-HHC OF THE I.T. ACT 1961. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIN CE THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ROGINI GARMENTS(SUPRA) WAS DELIVERED LATER ON AFTER FILING OF THE RETURN OF THE ASSESSEE THER EFORE DIFFERENCE OF OPINION ARRIVED AT THE LATER STAGE OF THE PENALTY PROCEEDIN GS PENALTY WOULD NOT BE JUSTIFIABLE IN THE MATTER. HE HAS FURTHER SUBMITT ED THAT EVEN THE CASE OF ROGINI GARMENTS(SUPRA) WAS RE-CONSIDERED BY LARGER SPECIAL BENCH OF THE ITAT DELHI BENCH IN THE CASE OF ACIT VS. HINDUSTAN MINT & AGRO PRODUCTS VIDE ORDER DATED 23/06/2009 REPORTED IN 31 5 /(AT) PAGE 401 (DELHI). THE LD. COUNSEL FOR THE ASSESSEE THEREF ORE SUBMITTED THAT THESE ARE NOT FIT CASES FOR LEVY OF PENALTY U/S.271(1)( C) OF THE I.T. ACT 1961. 6. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESEN TATIVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT ASSESSEE HAS MADE EXCESS CLAIM OF DEDUCTION U/S.80-IB OF THE I.T . ACT 1961 IN THE RETURN OF INCOME WHICH IS ULTIMATELY REJECTED BY TH E TRIBUNAL BY ALLOWING ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 8 - THE DEPARTMENTAL APPEAL THEREFORE AUTHORITIES BEL OW WERE JUSTIFIED IN LEVYING THE PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION FILED RETURN( S) OF INCOME FOR ALL THE RESPECTIVE ASSESSMENT YEARS PRIOR TO THE DELIVERY OF THE JUDGEMENT IN THE CASE OF ROGINI GARMENTS(SUPRA). THE ASSESSEE MADE CLAIM OF DEDUCTION U/S.80-IB OF THE I.T. ACT 1961 ON THE GROSS TOTAL INCOME ON THE BASIS OF SEVERAL DECISIONS DELIVERED BY DIFFERENT BENCHES OF THE TRIBUNAL INCLUDING ITAT AHMEDABAD BENCH. COPIES OF THE DECISIONS OF THE TRIBUNAL ARE FILED IN THE PAPER-BOOK FROM PAGES 8 TO 49. THESE DECISIONS ARE DELIVERED PRIOR TO DELIVERY OF THE JUDGMENT IN THE CASE OF RO GINI GARMENTS(SUPRA). THE ASSESSEE ALSO FILED COPY OF ORDER OF THE TRIBUN AL (IN ASSESSEES OWN CASE) DATED 10/11/2006 FOR ASSESSMENT YEAR 2000-01 IN ITA NO.705/RJT/2005 IN WHICH THE SUBJECT MATTER WAS THE ORDER PASSED U/S.263 OF THE I.T. ACT 1961 IN WHICH THE LD.COMMISSIONER DIRECTED THE ASSESSING OFFICER TO WITHDRAW THE CLAIM U/S.80-IB OF THE I.T . ACT 1961 ON THE SAME PROPOSITION ON WHICH THE PENALTY HAS BEEN IMPOSED. THE TRIBUNAL ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 9 - HOWEVER CONSIDERING OTHER DECISION OF ITAT AHMEDAB AD SET ASIDE THE ORDER U/S.263 OF THE I.T. ACT 1961 AND ALLOWED APP EAL OF THE ASSESSEE. IT WOULD THEREFORE PROVE ON RECORD THAT PRIOR TO DEL IVERY OF THE JUDGEMENT IN THE CASE OF ROGINI GARMENTS(SUPRA) THE DIFFERENT B ENCHES OF THE TRIBUNAL INCLUDING AHMEDABAD BENCH WAS TAKING A CONSISTENT V IEW IN FAVOUR OF THE ASSESSEE ALLOWING DEDUCTION U/S.80-IB OF THE I.T. A CT 1961 ON THE GROSS TOTAL INCOME. 8. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HARSHVARDHAN CHEMICALS AND MINERAL LTD. (2003)259 ITR 212 (RAJ.) HELD AS UNDER: FOR THE ASSESSMENT YEAR 1988-89 THE ASSESSEE HAD FILED AN ORIGINAL RETURN CLAIMING DEDUCTIONS UNDER SECTIONS 80HH AND 80-1 OF THE INCOME-TAX AC: 1961 AND DECLARING A LOSS AS WELL AS A REVISED RE TURN DECLARING TOTAL INCOME AT NIL AS THERE WAS ADDITION IN THE ORIGINAL RETURN ON ACCOUNT OF WRONG CLAIM TO DEDUCTIONS. A PENALTY WAS IMPOSED ON THE ASSESSEE U NDER SECTION 271(1)(C). WHICH THE APPELLATE TRIBUNAL DELETED HOLDING THAT : (I) WHERE AN ARGUABLE CONTROVERSIAL OR DEBATABLE DEDUCTION IS CLAIMED TH E CLAIM COULD NOT BE SAID TO BE FALSE OTHERWISE IT WOULD BECOME IMPOSSIBLE FOR ANY ASSESSEE TO RAISE ANY CLAIMS OR DEDUCTIONS WHICH MIGHT BE DEBATABLE AND IT WAS NOT THE INTENTION OF THE LEGISLATURE TO MAKE PUNISHABLE-SUCH CLAIMS IF THEY WERE NOT ACCEPTED; (II) THE TOTAL INCOME ACCORDING TO THE ORIGINAL AND REVI SED COMPUTATIONS OF THE ASSESSEE REMAINED THE SAME VIZ. RS. 13 07 646 AND THE INCOME AS COMPUTED ON FINAL ASSESSMENT WAS RS. 6 86 519; (III) NO FURTHER TAX WAS PAYABLE AND SINCE THE ASSESSEE HAD PAID TAX AMOUNTING TO RS. 6 90 000 A REFUND BECAME PAYABLE TO IT AS A RESULT OF THE FINAL ASSESSMENT; (IV) AS AGAINST DEDUCTION OF RS. 6 73 298 CLAIMED BY THE ASSESSEE THE TOTAL DEDUCTIO N ALLOWED IN THE FINAL ASSESSMENT WAS MORE VIZ. RS. 10 17 306; AND THER EFORE THE ASSESSEE COULD BE SAID TO HAVE DISCHARGED ITS BURDEN UNDER THE EXPLANATION TO SECTION 271(L)(C). ON A REFERENCE: ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 10 - HELD AFFIRMING THE DECISION OF THE APPELLATE TRIBUNAL T HAT NO PENALTY WAS LEVIABLE IN VIEW OF THE FINDING OF THE TRIBUNAL THA T WHEN THE ASSESSEE HAD CLAIMED DEDUCTION OF AN AMOUNT THAT WAS DEBATABLE I T COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED ANY INCOME OR FURNISHED INAC CURATE PARTICULARS FOR EVASION OF TAX AND IN VIEW OF THE FINDINGS OF THE TRIBUNAL NO CASE WAS MADE OUT FOR INTERFERENCE. 8.1. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V S. NATH BROS. EXIM INTERNATIONAL LTD. (2007) 288 ITR 670(DELHI) HELD AS UNDER:- THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS HIS BUSINESS INCOME AND ACCORDING TO THE ASSESSEE IT WAS ENTITLED TO A DEDU CTION UNDER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC(4C) OF THE INCOME-TAX ACT 1961. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND IMPOSED PENALTY. T HE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCLO SED ALL THE FACTS AND THEREFOR E EVEN THOUGH IT HAD MADE AN ERRONEOUS CLAIM WHICH CO ULD NOT BE JUSTIFIED IN LAW THAT BY ITSELF DID NOT ATTRACT THE PENAL PROVI SIONS OF THE ACT. ON APPEAL TO THE HIGH COURT : HELD DISMISSING THE APPEAL THAT THERE WAS FULL DISCLOSURE OF ALL R ELEVANT MATERIAL. IT COULD NOT BE SAID THAT THE CONDUCT OF THE ASSESSEE ATTRACTED THE PROVISIONS OF SECTION 271(L)(C). THE CANCELLATION OF PENALTY WAS JUSTIFIED. 8.2. HON'BLE ITAT CHENNAI BENCH B IN THE CASE OF SOUTHERN GAS FITTINGS (P.) LTD. VS. DY. CIT (2002) 80 ITD 202 (C HENNAI) IN PARAGRAPH NO.20 HELD AS UNDER:- 20. AT THE COST OF REPETITION WE MAY MENTION HER E THAT FORM ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IT SEEMS THAT IT IS A CA SE OF DIFFERENCE OF OPINION AS THE CLAIM FOR DEPRECIATION ETC. WAS MADE BY THE A SSESSEE ON THE BASIS OF TRIAL PRODUCTION WHICH WAS SUPPORTED BY RECORD BUT THE S TAND OF THE DEPARTMENT WAS THAT SINCE NO COMMERCIAL PRODUCTION WAS THERE THE ASSESSEE IS NOT ENTITLED FOR SUCH CLAIM. ALL THE FACTS OF THE CASE WERE BEF ORE THE ASSESSING OFFICER AND AS SUCH IT CANNOT BE SAID TO BE A CASE OF FILING I NACCURATE PARTICULARS OR MAKING ANY CONCEALMENT BEFORE THE ASSESSING OFFICER . EVEN IF THE ASSESSEE ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 11 - WOULD CLAIM THIS DEPRECIATION ETC. ON MERITS AND REJECTED BY THE ASSESSING OFFICER STILL LAW IS CLEAR THAT EVEN IF THE EXPLAN ATION OF THE ASSESSEE IS REJECTED NO CASE FOR IMPOSITION OF PENALTY WOULD BE MADE OUT . 9. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PREMDAS 248 ITR 237(P&H) DISMISSED THE DEPARTMENTAL APPEAL IN WHICH THE TRIBUNAL CANCELLED THE PENALTY ON THE GROUND TH AT DIFFERENCE BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME WAS DUE TO DIFFERENCE OF OPINION ABOUT ESTIMATED RATES OF INCOME AND EXPENDI TURE. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS VS. CIT 265 ITR 25 (CAL.) HELD THAT WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN IN A PENALTY PR OCEEDINGS PENALTY CANNOT BE IMPOSED. 10. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MU NIM REPORTED IN 313/(STATUTE) 30 (SC) CONFIRMED THE VIEW OF THE HIG H COURT IN WHICH IT WAS HELD THAT WHEN ASSESSEE DOES NOT INCLUDE PARTIC ULAR ITEM IN THE TURNOVER UNDER BONA FIDE BELIEF THAT HE IS NOT LIAB LE TO DO SO IT WOULD NOT BE RIGHT TO TREAT THE RETURN AS A FALSE RETURN INV ITING THE IMPOSITION OF PENALTY. ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 12 - 11. HON'BLE SUPREME COURT IN THE RECENT DECISION IN THE CASE OF M/S.RAJASTHAN SPINNING AND WEAVING MILLS 2009-TIOL- 63 HELD THAT ON EVERY DEMAND PENALTY IS NOT AUTOMATIC. THE EXPLANA TION-1 TO SECTION 271(1)(C) OF THE I.T. ACT 1961 PROVIDES FOR DEEMED CONCEALMENT OF INCOME IF THE ASSESSEE FAILS TO OFFER AN EXPLANATIO N OR ASSESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE. HOWEVER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS CLEAR THAT TH E ASSESSEE DISCLOSED ALL THE RELEVANT FACTS IN THE RETURN(S) OF INCOME AND MADE A CLAIM OF DEDUCTION U/S.80-IB OF THE I.T. ACT 1961 ON THE GROSS TOTAL INCOME ON THE BASIS OF SEVERAL DECISIONS IN FAVOUR OF THE ASSESSEE DELIVER ED BY VARIOUS BENCHES OF THE TRIBUNAL. EVEN ITAT AHMEDABAD BENCH CONSIDERI NG THE IDENTICAL ISSUE IN ONE OF THE ASSESSMENT YEARS UNDER APPEAL A GAINST THE ORDER U/S.263 OF THE I.T. ACT 1961 SET ASIDE THE ORDER OF THE L D.COMMISSIONER AND RESTORED THE ORDER OF THE ASSESSING OFFICER CONFIRM ING THE DEDUCTION CLAIMED BY THE ASSESSEE PRIOR TO THE DECISION IN T HE CASE OF ROGINI GARMENT(SUPRA). THE ABOVE FACTS THEREFORE PROVE D ON RECORD THAT THE ASSESSEE OFFERED EXPLANATION BEFORE THE ASSESSING O FFICER AND ALSO PROVED ON RECORD THAT EXPLANATION OF THE ASSESSEE WAS BONA FIDE IN MAKING A CLAIM ITA NOS.2395 2396 & 2397/AHD/ 2009 M/S.SHREE RAM FOOD INDUSTRIES VS. ACIT ASST.YEARS 1998-99 1999-2000 & 2000-01 - 13 - U/S.80-IB OF THE I.T. ACT 1961 ON THE GROSS TOTAL INCOME AS PER PREVALENT DECISION AVAILABLE ON THE ISSUE. THEREFORE IT COU LD NOT BE HELD THAT ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION AT THE PENALTY STAGE AND ALSO FAILED TO PROVE THAT THE CLAIM OF THE ASSESSEE WAS BONA FIDE. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE IN THE LIG HT OF THE DECISIONS REFERRED TO ABOVE WE ARE OF THE VIEW THAT THESE AR E NOT FIT CASES FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT 1961. WE AC CORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCELLED THE P ENALTY U/S.271(1)(C) OF THE I.T. ACT 1961. 12. IN THE RESULT ALL THE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 22 /01 /2010 SD/- SD/- ( A.N. PAHUJA ) ( BHAVNESH SAINI ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 22/ 01 /2010 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2 . THE RESPONDENT 3. THE CIT CONCERNED. 4 . THE LD. CIT(APPEALS)-XX AHMEDABAD 5. THE DR AHMEDABAD BENCH . 6 . THE GUARD FILE. BY ORDER //RUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD