The DCIT, Baroda Cir.-4(1),, Baroda v. Philips Glass India Ltd., Baroda

ITA 2759/AHD/2006 | 1995-1996
Pronouncement Date: 08-01-2010 | Result: Dismissed

Appeal Details

RSA Number 275920514 RSA 2006
Assessee PAN AACCP4098C
Bench Ahmedabad
Appeal Number ITA 2759/AHD/2006
Duration Of Justice 3 year(s) 28 day(s)
Appellant The DCIT, Baroda Cir.-4(1),, Baroda
Respondent Philips Glass India Ltd., Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-01-2010
Date Of Final Hearing 06-01-2010
Next Hearing Date 06-01-2010
Assessment Year 1995-1996
Appeal Filed On 11-12-2006
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA JUDICIA L MEMBER AND HON'BLE SHRI N.S. SAINI ACCOUNTANT MEMBER ITA NO. 2759/AHD/2006 ASSESSMENT YEAR : 1995-1996 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4(1) BARODA VERSUS PHILIPS GLASS INDIA LTD. BARODA PAN: AACCP 4098 C (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SMT. NEETA SHAH SR. DR FOR THE RESPONDENT : SHRI BHAVIN MARFATIA ORDER PER T K SHARMA JUDICIAL MEMBER :- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 06.09.2006 OF LD. COMMISSIONER OF INCOM E TAX(APPEALS)-III BARODA CANCELLING THE PENALTY OF RS.26 80 631/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 1995-1996. 2. BRIEF FACTS ARE THAT THE ASSESSEE IS A COMPANY I NCORPORATED ON 13.11.1992. IT RECEIVED CERTIFICATE OF COMMENCEMENT OF BUSINESS ON 26.02.1993. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT T HE ASSESSEE-COMPANY IN THE YEAR UNDER CONSIDERATION HAS NOT STARTED THE COMMERCIAL PROJECT. IT IS IN THE PROCESS OF SETTING UP THE PROJECT AND DURING THE YEAR UNDER CO NSIDERATION WENT FOR PUBLIC ISSUE. IT RAISED CAPITAL AMOUNTING TO RS.16 64 00 000/-. DURI NG OPERATION TO COMPLETE THE CAPITAL WORK ETC. THE ASSESSEE-COMPANY INVESTED TH E SURPLUS FUNDS OUT OF CAPITAL RAISED AND EARNED INTEREST INCOME OF RS.58 27 260/- . THIS AMOUNT OF INTEREST RECEIVED WORKED OUT TO RS.58 27 260/-. THE COMPANY HAD SET O FF AGAINST THE PRE-OPERATIVE EXPENSES WHICH ARE PENDING ALLOCATION. ALONGWITH T HE RETURN OF INCOME THE ASSESSEE- COMPANY HAD SUBMITTED THE DECISION OF THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF CIT VS.- MAHARASHTRA ELECTROMELT LIMITED WHEREIN IT WAS HELD THAT INTEREST INCOME RECEIVED IS NOT TAXABLE. AS PER NOTE ANNEXED WITH THE RETURN OF INCOME THE INTEREST INCOME EARNED BY PARKING THE SURPLUS FUNDS WHICH W ERE AVAILABLE WITH THE ASSESSEE- COMPANY DURING THE PRE-OPERATIVE PERIOD IS EXEMPT A S PER THE VARIOUS CASE LAWS CITED IN THE NOTE ANNEXED. THE A.O. FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 05.03.1997 WHEREIN HE BROUGHT TO TAX THE INTEREST INCOME OF RS.58 27 216/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THIS ADDITION WAS CONFIRMED BY THE LEARNED 2 ITA NO.2759/AHD/2006 COMMISSIONER OF INCOME TAX(APPEALS) AS WELL AS TRIB UNAL FOLLOWING THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF TUTOCORIN ALK ALI CHEMICALS & FERTILIZERS LTD. AS A MATTER OF FACT THIS DECISION WAS DELIVERED IN JULY 1997 WHICH IS AFTER THE DATE ON WHICH THE ASSESSEE FILED THE RETURN OF INCOME ON 27.11.1995. SUBSEQUENTLY VIDE ORDER DATED 29.12.2005 THE A.O. LEVIED PENALTY UND ER SECTION 271(1)(C) AMOUNTING TO RS.26 80 631/- FOR NOT DECLARING THE INTEREST INCOM E OF RS.58 27 216/- UNDER THE HEAD INCOME FROM OTHER SOURCES. AGAINST THIS ORDER AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND THIS WAS CA NCELLED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) CANCELLING THE PENALTY OF RS.26 80 631/- THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING ON BEHALF OF REVENUE SMT . NEETA SHAH APPEARED AND CONTENDED THAT BY NOT SHOWING THE INTEREST INCOME O F RS.58 27 216/- UNDER THE HEAD INCOME FROM OTHER SOURCES THE ASSESSEE HAS FURNI SHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS.58 27 216/-. SHE FURTHER EXPLAINED THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING NIL INCOME. THE A.O. ASSESSED THE TOTAL INCOME AT RS.58 27 216/-. THE VIEW TAKEN BY THE A.O. IS UPHEL D BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AS WELL AS TRIBUNAL. THEREFO RE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN CANCELLING THE PENALTY OF RS.26 80 631/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT 1961. 4. ON THE OTHER HAND SHRI BHAVIN MARFATIA APPEARIN G ON BEHALF OF ASSESSEE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCO ME TAX(APPEALS). THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL ON 27.11.1995. IN THIS RETURN OF INCOME COMPLETE FACTS REGARDING INTEREST INCOME WERE FURNISHED. DURING TH E PENDENCY OF QUANTUM APPEAL OF THE ASSESSEE BEFORE THE TRIBUNAL THE HON'BLE SUPR EME COURT IN THE CASE OF TUTOCORIN ALKALI CHEMICALS & FERTILIZERS LTD. REPORTED IN 227 ITR 172 (SC) HELD THAT NO DEDUCTION OR SET OFF WAS PERMISSIBLE AGAINST INTERE ST INCOME. THIS JUDGMENT OF THE HON'BLE SUPREME COURT WAS DELIVERED ON 08.07.1997 I.E. MUCH AFTER THE ASSESSEE FILED THE RETURN OF INCOME ON 27.11.1995. THE LD. C OUNSEL OF THE ASSESSEE FURTHER DREW OUR ATTENTION TO THE DECISION OF ITAT C BENCH A HMEDABAD IN QUANTUM APPEAL IN ITA NO. 3177/AHD/1997 DATED 31.03.2005 WHEREIN THE LD. COUNSEL OF THE ASSESSEE 3 ITA NO.2759/AHD/2006 CONCEDED THAT GROUND RELATING TO TAXING OF INTEREST INCOME UNDER THE HEAD OTHER SOURCES IN THE ASSESSMENT YEAR 1995-96 IS NOW STAN D COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF TUTOCORIN ALKALI CHEMICALS & FERTILIZERS LTD. HE ACCORDINGLY SUBMITTED THAT AT T HE TIME OF FILING THE RETURN OF INCOME THE ASSESSEE WAS OF THE BONAFIDE BELIEF THA T IT CAN DO NETTING OFF AS DONE IN THE RETURN OF INCOME. THIS BONAFIDE BELIEF OF THE ASSES SEE CONSTITUTES REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE INCOME TA X ACT 1961 AND THEREFORE ON THIS GROUND ALONE THE ORDER OF LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) CANCELLING THE PENALTY OF RS.26 80 631/- UNDER SECT ION 271(1)(C) BE UPHELD. WITHOUT PREJUDICE TO ABOVE THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEES CASE IS NOT COVERED BY EXPLANATION 1 TO SECTION 271(1)(C) B ECAUSE THE ASSESSEE HAS NOT ONLY FURNISHED THE EXPLANATION BUT IS ALSO AVAILED TO SU BSTANTIATE ITS EXPLANATION. WHEN THE EXPLANATION OF THE ASSESSEE IS BONAFIDE THERE IS N O CONCEALMENT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE INCOME TAX ACT AND PENALTY IS NOT LEVIABLE. 5. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE COMPANY HAS SET OFF THE INTEREST INCOME OF RS.58 27 216/- WITH PRE-OPERATIVE EXPENSES. THE COM PLETE DETAILS REGARDING THE SET OFF WERE DISCLOSED IN THE RETURN OF INCOME FILED ON 27. 11.1995. THE HON'BLE ITAT DECIDED THIS ISSUE AGAINST THE ASSESSEE-COMPANY REL YING ON THE DECISION BY THE HON'BLE APEX COURT IN THE CASE OF TUTOCORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS.- CIT WHICH WAS DELIVERED BY THE HON'BLE APEX COURT ON 08.07.1997. IT IS WELL SETTLED LAW THAT PENALTY PROCEEDINGS AND ASSESSMENT PROCEED INGS BOTH ARE DIFFERENT. CONFIRMATION OF ADDITION BY TRIBUNAL DOES NOT MEAN CONCEALMENT OF INCOME OR INACCURATE FURNISHING OF PARTICULARS OF INCOME. EXP LANATION 1 TO SECTION 271(1)(C) STATES THAT AN AMOUNT ADDED OR DISALLOWED IN COMPUT ING THE TOTAL INCOME OF AN ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPEC T OF WHICH PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION FOR CONCEALMENT I S NOT ABSOLUTE ONE. EXPLANATION 1 TO SECTION 271(1)(C) PROVIDES THAT AN AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF A PERSON FALLING UNDER CLAUSE (A) O R (B) OF EXPLANATION 1 REFERS TO TWO SITUATIONS IN WHICH PRESUMPTION OF CONCEALMENT CREA TED BY EXPLANATION 1 IS AVAILABLE. THE FIRST SITUATION IS WHERE THE ASSESSEE IN RESPE CT OF ANY FACTS MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE A.O. OR THE COMMISSIONER TO B E FALSE. THE SECOND SITUATION IS 4 ITA NO.2759/AHD/2006 WHERE THE ASSESSEE IN RESPECT OF ANY FACTS MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME OFFERS AN EXPLANATION WHICH HE IS ABLE TO S UBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION WAS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY HIM. THE PRESCR IPTION AVAILABLE UNDER EXPLANATION 1 CANNOT BE DRAWN UNLESS THE CASE OF TH E ASSESSEE FALLS UNDER EITHER OF THE CLAUSES VIZ. CLAUSE (A) OR CLAUSE (B). THE PRESUM PTION UNDER EXPLANATION 1 IS REBUTTABLE AND NOT CONCLUSIVE. THE ASSESSEE CAN SUB MIT THE EXPLANATION AS THE ONUS SHIFTED ON THE ASSESSEE TO PROVE THAT HE HAS NOT CO NCEALED THE PARTICULARS OF THE INCOME. IN THE PRESENT CASE THE ASSESSEE DULY SUBM ITTED AN EXPLANATION. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR KNOWLEDGE WHICH MAY PROVE THAT ASSESSEE HAS DEDUCTED THE CONCEALMENT OR EXPLANATION FURNISH ED BY THE ASSESSEE IS FALSE ONE. AT THE TIME OF FILING THE RETURN OF INCOME THE ASSESS EE WAS OF THE BONAFIDE BELIEF THAT IT CAN DO NETTING OFF AS DONE IN THE RETURN OF INCOME. THIS BONAFIDE BELIEF OF ASSESSEE CONSTITUTES A REASONABLE CAUSE WITHIN THE MEANING O F SECTION 273B OF THE INCOME TAX ACT 1961. THEREFORE ON THIS GROUND ALONE PENALTY IS NOT LEVIABLE. KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGA LLY AND FACTUALLY CORRECT IN CANCELLING THE PENALTY OF RS.26 80 631/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C). APART FROM THIS THE PRESENT CASE INDICATES THAT EX PLANATION OF THE ASSESSEE IS BONAFIDE IT HAS DISCLOSED ALL MATERIAL FACTS AND INFORMATION RELATING TO NETTING OFF IN THE RETURN OF INCOME. ON IDENTICAL FACTS HON'BLE ITAT C BE NCH AHMEDABAD IN ITA NO. 577/AHD/2002 IN THE CASE OF MIDWEST CASTECH LTD. V S.- JCIT VIDE ORDER DATED 30.01.2004 CANCELLED THE PENALTY OF RS.1 24 335/- L EVIED UNDER SECTION 271(1)(C). THIS CASE IS CLEARLY APPLICABLE TO THE FACTS OF ASSESSEE S CASE. WE THEREFORE DECLINE TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 6. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 8 TH JANUARY 2010. SD/- SD/- SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 08/01/2010 5 ITA NO.2759/AHD/2006 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.