M/S. SKI-PLAST, MUMBAI v. I.T.O.-17(3)(4), MUMBAI

ITA 3708/MUM/2009 | 2003-2004
Pronouncement Date: 06-10-2010 | Result: Allowed

Appeal Details

RSA Number 370819914 RSA 2009
Assessee PAN AAOFS3518H
Bench Mumbai
Appeal Number ITA 3708/MUM/2009
Duration Of Justice 1 year(s) 3 month(s) 28 day(s)
Appellant M/S. SKI-PLAST, MUMBAI
Respondent I.T.O.-17(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted J
Tribunal Order Date 06-10-2010
Date Of Final Hearing 20-09-2010
Next Hearing Date 20-09-2010
Assessment Year 2003-2004
Appeal Filed On 08-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI B. RAMAKO TAIAH (AM) ITA NO.3708/MUM/2009 ASSESSMENT YEAR : 2003-04 M/S. SKI-PLAST 418/B SUSEX INDUSTRIAL ESTATE DADOJI KONDEV CROSS ROAD BYCULLA MUMBAI-400 027. ..( APPELLANT ) P.A. NO. (AAOFS 3518 H) VS. INCOME TAX OFFICER-17(3)(4) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI K. GOPAL RESPONDENT BY : SHRI S UMEET KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 30.3.2009 PASSED BY THE LD. CIT(A) FOR THE AS SESSMENT YEAR 2003-04. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF PLASTIC COMPLEMENTARY ARTICLES FILED RETURN DECLARING NIL INCOME AFTER CLAIMING DE DUCTION U/S.80-IB OF THE INCOME TAX ACT 1961(THE ACT) . DURING THE COURSE OF ASSESSMENT THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY DEDUCTIO N U/S.80-IB CLAIMED BE NOT BE DISALLOWED. IN RESPONSE IT WAS INTERALIA SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAD PRODUCED AND SOLD ARTICLES VI Z. PLASTIC FISH STAND PLASTIC TABLE LAMP PLASTIC PAPER CLIP DURING THE Y EAR FOR WHICH CERTAIN PLASTIC ITA NO.3708/M/09 A.Y:03-04 2 PARTS WERE MOULDED SOME WERE GOT MOULDED FROM OUTS OURCE SOME PARTS WERE PURCHASED FROM MARKET AND ALL THESE PARTS WERE ASSEMBLED BY THE WORKERS AT WORKSHOP AND FINAL AND FINISHED ARTICLE WAS THEN PACKED AND SOLD. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSE E'S EXPLANATION ON EXAMINATION OF THE ELECTRICITY BILLS OBSERVED THAT NO ELECTRICITY HAS BEEN CONSUMED EXCEPT FOR THE MONTH OF FEBRUARY AND MARCH 2003. THIS MEANS THAT THE ASSESSEE'S BUSINESS ACTIVITIES ARE CARRIED OUT WITHOUT THE AID OF POWER. FROM THE WAGES REGISTER PRODUCED BEFORE THE ASSESSING OFFICER THE ASSESSING OFFICER NOTED THAT THOUGH 20 WORKERS ARE SAID TO BE EMPLOYED EXCEPT FOR THE MONTH OF APRIL 2002 (16 WORKERS) MO ST OF THEM ARE SHOWN TO BE ABSENT DURING THE YEAR. THIS CLEARLY MEANS THAT THE ASSESSEE HAS NOT EMPLOYED 20 WORKERS. BESIDES THERE IS NO PAYMENT O F ESIS SCHEME FOR THE WORKERS. THIS IS ALSO APPARENT FROM THE SMALLNESS OF ASSESSEE'S BUSINESS THAT MANPOWER OF 20 IS NOT REQUIRED AND THE ASSESSE E JUST TO AVAIL DEDUCTION U/S.80-IB ENTERED NAME OF 20 PERSONS IN THE WAGE RE GISTER AND HENCE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS MAKING HI M ELIGIBLE FOR DEDUCTION U/S.80-IB AND ACCORDINGLY THE ASSESSING OFFICER AFT ER DISALLOWING THE DEDUCTION U/S.80-IB COMPLETED THE ASSESSMENT AT AN INCOME OF RS.5 04 806/- VIDE ORDER DATED 17.2.2006 PASSED U/ S.143(3) OF THE ACT. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEE DING U/S.271(1)(C) OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE AS TO WHY PE NALTY U/S.271(1)(C) SHOULD NOT BE IMPOSED THE ASSESSEE VIDE REPLY DATE D 29.4.2008 STATED AS UNDER[EXTRACTED FROM PAGE-2 OF PENALTY ORDER] : 1. ASSESSEE FIRM HAVING MAIN OFFICE AT MUMBAI ESTABLISHED INDUSTRIAL UNIT FOR MANUFACTURING PLASTICS COMPLIMENTARY ARTICLES AT DAMAN (U T). 2. ASSESSEE IS REGISTERED UNDER SSI. 3. ASSESSEE IS ALSO REGISTERED UNDER LOCAL SALES TAX ACT AND CENTRAL SALES TAS ACT. 4. ASSESSEE HAS ELECTRICITY METER IN OWN NAME. 5. PARTNERS OF THE FIRM ARE RESIDENT OF MUMBAI. ASSESSEE GOT IT REGISTERED UNDER ALL THE ACTS REQUIRED TO RUN AN INDUSTRY AND EFFECTED SALES WITH LARGE PHARMACEUTICALS COMPANY ; IT WAS A GENUINE EFFORT ON THE PART OF THE ASSESSEE TO RUN AN INDUSTRIAL UNIT AT DA MAN AND HAS NOT DELIBERATELY ACTED FOR DEFIANCE OF INCOME TAX LAW. ASSE SSEE NEVER HAD ANY INTENTION TO CONCEAL THE INCOME. WE THEREFORE REQUEST YOU NOT TO CONSIDER THIS DISALLOWA NCE U/S.80-IB AS CONCEALMENT AND DROP THE PENALTY PROCEEDING AND OBLIGE . ITA NO.3708/M/09 A.Y:03-04 3 HOWEVER THE ASSESSING OFFICER DID NOT AGREE WITH TH E SUBMISSION OF THE ASSESSEE. HE WHILE OBSERVING THAT THE ASSESSEE HAS N OT FULFILLED THE CONDITIONS LAID DOWN WHICH MAKES HIM ELIGIBLE FOR D EDUCTION U/S.80-IB OF THE ACT FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND HAS CONCEALED THE INCOME TO THE TUNE OF RS.5 04 810/- AND ACCORDINGLY HE IMPOSED PENALTY OF RS.1 85 517/- VIDE ORDER DATED 3.6.2008 PASSED U/S. 271(1)(C) OF THE ACT. ON APPEAL THE LD. CIT(A) WHILE AGREEING WITH THE FINDI NG OF THE ASSESSING OFFICER RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN U NION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS(2008) 306 ITR 277(SC ) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF T HE ACT. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT THE ASSESSEE IS CARRYING ON MANUFACTURING ACTIVITIE S BY MAKING PLASTIC ARTICLES THEREFORE THE ASSESSEE HAS CLAIMED DEDUC TION U/S.80-IB OF THE ACT AND IN SUPPORT THE ASSESSEE HAS FILED COPY OF BALAN CE SHEET P&L ACCOUNT AND AUDIT REPORT IN FORM NO.10CCB ALONG WITH RETURN OF INCOME. HOWEVER AT THE TIME OF ASSESSMENT ORDER THE ASSESSEE COULD NOT PRO VE FOR THE MONTH OF APRIL 2002 THAT IT HAS EMPLOYED 20 WORKERS THE ASSESSIN G OFFICER DISALLOWED THE ENTIRE CLAIM U/S.80-IB OF THE ASSESSEE. HE FURTHER SUBMITS THAT BASED ON THE ABOVE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003-04 THE ASSESSING OFFICER ALSO RE-OPENED THE ASSESSMENT FOR THE ASSESSMENT YE AR 2002-03 AND HAS DISALLOWED THE CLAIM U/S.80-IB OF THE ACT. HOWEVER ON APPEAL THE LD. CIT(A) HAS ALLOWED THE DEDUCTION U/S.80-IB OF THE ACT VIDE ORDER DATED 3.2.2010 FOR ASSESSMENT YEAR 2002-03. HE FURTHER SUBMITS THAT TH E ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB(2) UNDER THE BONAFIDE BELIEF AS THE ASSESSEE HAS SATISFIED ALL THE CONDITION ENUMERATED U/S.80-IB OF THE ACT. THE DENIAL OF DEDUCTION U/S.80IB ON TECHNICAL GROUND DOES NOT WARRANT THE I NVOCATION OF PENALTY U/S.271(1)(C). THE RELIANCE WAS ALSO PLACED ON THE DECISION IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD.(2010) 322 ITR 158( SC). HE THEREFORE ITA NO.3708/M/09 A.Y:03-04 4 SUBMITS THAT THE PENALTY IMPOSED BY THE ASSESSING O FFICER AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 5. ON THE OTHER HAND THE LD. DR WHILE RELYING ON TH E ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A) SUBMITS THAT S INCE THE CLAIM OF THE ASSESSEE U/S.80-IB WAS FOUND TO BE INADMISSIBLE TH E LD. CIT(A) WAS FULLY JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IMPOSING PENALTY U/S.271(1)(C) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THERE IS NO DISPUTE THAT THE AS SESSEE HAS MADE THE CLAIM U/S.80-IB ON THE BASIS OF AUDIT REPORT IN FOR M NO.10CCB. WE FURTHER FIND THAT THE ASSESSING OFFICER WHILE EXAMINING THE WAGES REGISTER OBSERVED THAT THOUGH 20 WORKERS ARE SAID TO BE EMPLOYED EXCE PT FOR THE MONTH OF APRIL 2002 (16 WORKERS) HAS DISALLOWED THE ENTIRE C LAIM OF THE ASSESSEE U/S. 80IB OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT EMPLOYED 20 OR MORE WORKERS IN THE MANUFACTURING UNIT. IN THE ABS ENCE OF ANY OTHER CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE T O SHOW THAT THE ASSESSEE HAS NOT FULFILLED ALL OTHER CONDITIONS AS LAID DOWN FOR CLAIMING DEDUCTION U/S.80-IB OF THE ACT AND MERELY BECAUSE THE CLAIM O F THE ASSESSEE WAS NOT ALLOWED ON THE GROUND THAT IN THE MONTH OF APRIL 20 02 ONLY 16 WORKERS WERE FOUND TO BE EMPLOYED DOES NOT MEAN THAT THE ASSESS EE HAS MADE WRONG CLAIM OR THERE IS NO MANUFACTURING ACTIVITIES NOT E NTITLED TO THE DEDUCTION US/.80-IB OF THE ACT. FURTHER WE FIND THAT THE CLAI M OF THE ASSESSEE U/S.80-IB WAS ALLOWED BY THE LD. CIT(A) FOR THE ASSESSMENT YE AR 2002-03 VIDE ORDER DATED 3.2.2010 I.E. AFTER THE IMPUGNED ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER. THIS BEING SO AND KEEPING I N VIEW THAT IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C) THERE HA S TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. ITA NO.3708/M/09 A.Y:03-04 5 7. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEI R LORDSHIPS AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SH ROFF VS. JCIT (2007) 291 ITR 519(SC) AND UNION OF INDIA VS. DHARAMENDRA TEXT ILE PROCESSORS (2008) 306 ITR 277(SC) HAVE OBSERVED AND HELD (PAGE 158 HE ADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INC OME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIV EN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS T HE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACC URATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DET AILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRE CT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND KEEP ING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT F ILED THE DETAILS OF THE CLAIM OR THE CLAIM MADE BY THE ASSESSEE WAS FOUND T O BE FALSE BASED ON NO MATERIAL OR BONAFIDE BELIEF WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHICH MAY CALL FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT . ACCORDINGLY THE PENALTY IMPOSED BY TH E ASSESSING OFFICER AND ITA NO.3708/M/09 A.Y:03-04 6 CONFIRMED BY THE LD. CIT(A) IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 8. IN THE RESULT ASSESSEE'S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6.10.2010. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 6.10.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.