The ACIT, 1(1), Bhopal v. M/s. Sanwaria Agro Oils Limited, Bhopal

ITA 373/IND/2010 | 2002-2003
Pronouncement Date: 28-09-2011 | Result: Dismissed

Appeal Details

RSA Number 37322714 RSA 2010
Assessee PAN AACCS1449N
Bench Indore
Appeal Number ITA 373/IND/2010
Duration Of Justice 1 year(s) 3 month(s) 17 day(s)
Appellant The ACIT, 1(1), Bhopal
Respondent M/s. Sanwaria Agro Oils Limited, Bhopal
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 28-09-2011
Assessment Year 2002-2003
Appeal Filed On 11-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH J.M. AND SHRI R.C.SHARM A A.M. PAN NO. : AACCS1449N I.T.A.NO. 373/IND/2010 A.Y. : 2002-03 ACIT M/S. SANWARIA AGRO OILS LIMITED 1(1) VS E-1/1 ARERA COLONY BHOPAL. BHOPAL. APPELLANT RESPONDENT APPELLANT BY : SHRI ARUN DEWAN SR. DR RESPONDENT BY : SHRI ANIL KHABYA C. A. DATE OF HEARING : 22.09.2011 DATE OF PRONOUNCEMENT : .09.2011 O R D E R PER R. C. SHARMA A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 8.3.2010 IN THE MATTER OF IMPOSITIO N OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT 1961. -: 2: - 2 2. THE REVENUE IS BASICALLY AGGRIEVED FOR CANCELLING T HE PENALTY IMPOSED WITH RESPECT TO DISALLOWANCE OF PAR T OF THE CLAIM MADE BY THE ASSESSEE U/S 80HHC & 80IB OF THE INCOME- TAX ACT 1961. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF RUNNING SOYABEAN EX TRACTION PLANT AND DE-OILED CAKE OBTAINED DURING THE COURSE OF MANUFACTURING AND ITS EXPORT IS EXPORTED. THE ASSES SEE ALSO EXPORTED DE-OILED CAKE AS A TRADING ACTIVITY. THE A SSESSEE FURNISHED ITS ORIGINAL RETURN OF INCOME FOR ASSESSM ENT YEAR 2002-03 ON 24.3.2003 CLAIMING DEDUCTION U/S 80HHC O F RS. 62 82 511/- AND U/S 80-IB OF RS. 1 12 27 127/-. THE RETURN WAS ACCOMPANIED BY AUDITED ACCOUNT AND AUDIT REPORT IN FORM NO. 10CCAC. THE RETURN WAS PROCESSED U/S 143(1). SE ARCH AND SEIZURE OPERATIONS U/S 132(1) OF THE ACT WERE C ONDUCTED ON 22.10.2002 AND IN THE BLOCK ASSESSMENT THE CLAI M OF DEDUCTION U/S 80HHC AND 80IB WERE ALLOWED. SUBSEQUE NTLY IN VIEW OF THE SUPREME COURT DECISION IN THE CASE O F M/S. IPCA LABORATORIES 266 ITR 21 ( S. C.) THE ASSESSMENT W AS REOPENED ON THE REASON THAT THE ASSESSEE HAD NOT CO RRECTLY WORKED OUT THE ALLOWABLE DEDUCTIONS U/S 80HHC AND U /S -: 3: - 3 80IB FOR ASSESSMENT YEAR 2002-03 AND THUS EXCESSI VE DEDUCTIONS WERE ALLOWED. THEREFORE THE AO HAD REAS ONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX FOR ASSESSMEN T YEAR 2002-03 HAD ESCAPED ASSESSMENT. IN RESPONSE TO NOTI CE U/S 148 ISSUED ON 30.03.2006 THE ASSESSEE SUBMITTED TH AT THE RETURN FILED ON 24.3.2003 MAY BE TREATED AS RETURN FILED IN PURSUANCE TO NOTICE U/S 148. IN THE REASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAD NOT REDUCED 90 % OF THE MISC. INCOME OF RS. 30 85 420/- TO CALCULATED PROFIT OF THE BUSINESS AND THE INDIREC T COST ATTRIBUTABLE TO TRADING GOODS EXPORTED WERE ALSO NO T CORRECTLY CALCULATED AS THE ASSESSEE HAD NOT INCLUDED ADMINIS TRATION AND SELLING EXPENSES GIVEN IN SCHEDULE Q AND FINANC E CHARGES GIVEN IN SCHEDULE R OF THE FINAL ACCOUNTS. ACCORDIN GLY THE AO HAD WORKED OUT THAT THERE WAS A LOSS IN TRADING OF GOODS EXPORTED AND IN VIEW OF SUPREME COURT DECISION IN T HE CASE OF IPCA LABORATORIES VS. CIT (SUPRA) THE AO WORKED O UT THE ALLOWABLE DEDUCTION U/S 80HHC AT NIL AS AGAINST CLA IM OF RS. 62 87 511/-.SIMILARLY IN THE CASE OF DEDUCTION U/S 80IB THE AO HAD REDUCED THE AMOUNT OF MISC. INCOME AND ALLOW ED THE -: 4: - 4 DEDUCTION U/S 80IB OF RS. 1 03 02 401/- AS AGAINST CLAIM OF RS. 1 12 27 127/-. THE ASSESSMENT U/S 147 R.W.S. 14 3(3) WAS THUS COMPLETED ON 29.12.2006 WERE ALSO INITIATED. THE ASSESSEE CHALLENGED THE ORDER IN APPEAL AND THE LD. CIT(A) VIDE HIS ORDER DATED 9.7.2007 ALLOWED DEDUCTION U/S 80HH C TO THE EXTENT OF RS. 51 16 552/- AFTER REDUCING THE FIGURE OF ATTRIBUTABLE INDIRECT COST TO THE TRADING GOODS EXP ORTED AND ALSO ALLOWED DEDUCTION U/S 80IB OF RS. 1 08 59 322/ -. THUS IN FACT THE CIT(A) MAINTAINED DISALLOWANCE U/S 80HH C OF RS. 11 70 959/- AND U/S 80IB AT RS. 3 67 805/- AGGREGAT ING TO RS. 15 38 764/-.THE AO AFTER ISSUING SHOW CAUSE AND CON SIDERING THE SUBMISSION OF THE ASSESSEE HELD THAT THE ASSESS EE HAD FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIM ING HIGHER DEDUCTION AND THUS WAS LIABLE FOR PENALTY U/S 271 (1)(C). THE MINIMUM PENALTY LEVIABLE WAS WORKED OUT AT RS. 5 49 338/- AND MAXIMUM PENALTY LEVIABLE AT RS. 16 48 014/-. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE THE AO LEVIED PENALTY OF RS. 5 60 000/- U/S 271(1)(C) FOR ASSESSMENT YEAR 2002-03. -: 5: - 5 3. BY THE IMPUGNED ORDER THE LD. CIT(A) CANCELLED TH E PENALTY AFTER OBSERVING AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IN THIS CASE THE APPELLANT MADE CLAIM OF DEDUCTIONS U/S 80HHC AND U/S 80IB BASED ON THE AUDIT REPORTS CERTIFIED BY TH E CHARTERED ACCOUNTANT WHICH WERE FURNISHED ALONGWITH THE RETURN. THE APPELLANT HAD DISCLOSED A LL THE MATERIAL FACTS WHICH WERE NECESSARY FOR COMPUTATION OF DEDUCTIONS U/S 80HHC AND U/S 80IB. IT MAY ALSO BE PERTINENT TO POINT HERE THAT THE ORI GINAL RETURN OF INCOME WAS FURNISHED BY THE APPELLANT ON 24.3.2003 AND THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF IPCA LABORATORIES 266 ITR 21( S. C . ) WAS DELIVERED ON 11.3.2004. THOUGH THERE WAS A DIFFERENCE OF OPINION REGARDING CALCULATION OF INDI RECT COST ATTRIBUTABLE TO TRADING GOODS EXPORTED BETWEE N THE APPELLANT AND AO AS WELL AS REGARDING THE DEDUCTION OF 90 % OF MISC. INCOME WHICH AS PER THE APPELLANT WERE BUSINESS RECEIPTS INEXTRICABLY LINKE D WITH BUSINESS ACTIVITIES WHEREAS AS PER THE AO THE MISC. RECEIPTS WERE NOT INCOME DERIVED FROM EXPORT ACTIVITIES OR FROM THE ELIGIBLE BUSINESS U/S 80IB. THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT IS EVIDENTLY CLEAR THAT THE APPELLANT HAD DISCLOSED ALL THE MATERIAL FACTS AND ON THE BASIS O F THOSE FACTS ONLY THE AO HAD RECALCULATED THE DEDUCTION 80HHC AND U/S 80IB. IT IS NOT A CASE WHERE THE APPELLANT WAS NOT ELIGIBLE FOR DEDUCTIONS U/S 80HHC AND 80 IB. THUS IN MY OPINION IT WAS NOT A FIT CASE FOR LEVYING PENALTY U/S 271(1)(C) ON LY ON THE GROUND THAT CLAIM OF THE APPELLANT OF DEDUCTION S U/S 80HHC AND U/S 80IB WAS REDUCED AS THE APPELLANT HAD DISCLOSED ALL MATERIAL FACTS AND HAD NEITHER CONCEALED THE PARTICULARS OF ITS INCOME NOR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. -: 6: - 6 4. AGAINST THE ABOVE ORDER OF CIT(A) THE REVENUE IS I N FURTHER APPEAL BEFORE US 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. T HE ISSUE WITH REGARD TO LEVY OF PENALTY ON ACCOUNT OF DISALL OWANCE OF LEGAL CLAIM IS SQUARELY COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT S 322 ITR 158 (S.C.) WHEREIN FOLLOWING WAS THE PRECISE OBSER VATIONS :- BY ANY STRETCH OF IMAGINATION MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. ACCORDINGLY IT WAS HELD THAT DECLINE OF ASSESSEES CLAIM OF INTEREST AGAINST THE LOAN UTILIZED FOR MAKING INVESTMENT IN TAX FREE SECURITIES WILL NOT AMOUNT TO FURNISHING OF INACCU RATE PARTICULARS SO AS TO ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. HON'BLE SUPREME COURT IN THIS CASE AFTER CONSIDERING THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF DILIP N.SHROFF 291 ITR 519 (SC) AND DHARMENDER TEXTILE PROCESSORS 306 ITR 277 (SC) HELD AS UNDER:- A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE -: 7: - 7 PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. 3. RECENTLY HON'BLE DELHI HIGH COURT IN THE CASE OF ARETIC INVESTMENT PVT.LTD. VIDE ORDER DATED 18.2.2010 IN ITA 264/2009 OBSERVED THAT WHERE THE LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF TRADING IN SHARES WAS NOT ACCEPTED BY THE AO AND WAS TREATED AS A SPECULATION LOSS IN TERMS OF EXPLANATION TO SECTION 73 OF THE ACT DID NOT AUTOMATICALLY RESULT IN THE INFERENCE OF CONCEALMENT OF INCOME JUSTIFYING IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. -: 8: - 8 SIMILARLY IN THE CASE OF AURIC INVESTMENT & SECURI TIES LTD. 163 TAXMAN 533 IT WAS OBSERVED BY THE HON'BLE DELHI HIGH COURT THAT WHERE ASSESSEE HAS DECLARED HIS INCOME FROM BROKERAGE AND OTHER INCOME AGAINST WHICH IT HAD CLAIMED SHARE TRADING LOSS TH E AO FOUND THAT LOSS WAS SPECULATIVE IN NATURE AND COULD NOT BE ADJUSTED AGAINST ASSESSEES NORMAL INCOME ACCORDINGLY THE AO HELD THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF MAKING A WRONG CLAIM OF SHARE TRADING LOS S AGAINST THE NORMAL INCOME AND IMPOSED PENALTY U/S 271(1)(C) OF THE ACT. THE HONBLE HIGH COURT HELD THAT MERE TREATMENT OF BUSINESS LOSS AS A SPECULATION LO SS BY THE AO DID NOT AUTOMATICALLY WARRANT INFERENCE O F CONCEALMENT OF INCOME ACCORDINGLY PENALTY WAS NOT LEVIABLE. 4. RECENTLY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. THE SHAHABAD COOP.SUGAR MILLS LIMITED (SUPRA) OBSERVED THAT WHERE THE ASSESSEE IS FOUND TO HAVE MADE WRONG CLAIM U/S 80P AND WRONG CLAIM OF DEPRECIATION ON GUEST HOUSE MAKING A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INFORMATION IT WILL NOT CA LL FOR LEVY OF PENALTY U/S 271(1)(C). ACCORDINGLY ORDER OF -: 9: - 9 THE ITAT CHANDIGARH BENCH DELETING PENALTY IMPOSED U/S 271(1)(C) WAS UPHELD BY THE HONBLE COURT. 5. HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. S.P.K.STEELS PVT.LTD. - 270 ITR 156 UPHE LD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY U/S 271(1)(C) BY OBSERVING THAT ASSESSEE BEING ENGAGED IN THE BUSINESS OF COMMISSION AGENCY EXPLANATION T O SECTION 73 WAS APPLICABLE AND THUS LOSS ON ACCOUNT OF TRADING IN SHARES WAS DISALLOWED IT WAS HELD TH AT FOR SUCH DISALLOWANCE PENALTY U/S 271(1)(C) IS NOT LEVIABLE AS THE ASSESSEE HAS FILED PRELIMINARY DETA ILS ALONGWITH THE RETURN. 6. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR CANCEL LING THE PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT 1961. FURTHERMORE THE FINDING RECORDED BY CIT(A) TO THE EFFECT THAT THERE WAS FULL DISCLOSURE OF MATERIAL FACTS BY ASSE SSEE HAS NOT BEEN CONTROVERTED BY DEPARTMENT BY BRINING ANY POSI TIVE MATERIAL ON RECORD. THERE IS NO REASON TO INTERVENE IN SUCH FINDING OF FACT. -: 10: - 10 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER 2011. CPU* 2227