INDO THERM ENGINEERS P. LTD, MUMBAI v. ITO WD 10(3)(2), MUMBAI

ITA 4770/MUM/2010 | 2002-2003
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 477019914 RSA 2010
Assessee PAN AAACI4763M
Bench Mumbai
Appeal Number ITA 4770/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant INDO THERM ENGINEERS P. LTD, MUMBAI
Respondent ITO WD 10(3)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 28-09-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2002-2003
Appeal Filed On 09-06-2010
Judgment Text
1 ITA NOS. 4769 & 4770/MUM/2010 (ASST YEARS 2001-02 & 2002-03 ) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI J SUDHAKAR REDDY AM & SHRI VIJAY PA L RAO JM ITA NOS. 4769 & 4770/MUM/2010 (ASST YEARS 2001-02 & 2002-03 ) M/S INDO THERM ENGRS P LTD PLOT NO.A374 ROAD NO.9 WAGLE INDL ESTATE THANE (EAST) 400 604 VS THE INCOME TAX OFFICER WARD 10(3)(2) MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACI4763M ASSESSEE BY SHRI K GOPAL REVENUE BY SHRI SUNIL KUMAR SINGH DT.OF HEARING 19 TH SEPT 2011 DT OF PRONOUNCEMENT 28 TH SEPT 2011 PER VIJAY PAL RAO JM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS DATED 22.3.2010 OF THE CIT(A) ARISING FROM THE PENA LTY ORDER PASSED U/S 271(1)(C) OF THE I T ACT FOR THE AYS 2001-02 AND 2002-03. 3 THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THESE APPEALS; HOWEVER THE ONLY COMMON ISSUE ARISES FOR OUR CONSIDERATION AND ADJUD ICATION IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFI ED IN CONFIRMING THE ORDER OF LEVY OF PENALTY U/S 271(1)( C). 3.1 THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAG ED IN THE BUSINESS OF CONTRACTING PROJECTS OUTSIDE INDIA. FOR THE AY UND ER CONSIDERATION THE ASSESSEE FILED ITS RETURN OF INCOME CLAIMING DEDUCTION U/S 8 0HHC AND THE ASSESSING OFFICER; INTER-ALIA DISALLOWED THE CLAIM OF DEDUCTION U/S 80 HHC. THE CLAIM WAS DENIED ON THE 2 ITA NOS. 4769 & 4770/MUM/2010 (ASST YEARS 2001-02 & 2002-03 ) GROUND THAT THE ASSESSEE DOES NOT FULFIL THE REQU IRED CONDITIONS FOR CLAIMING DEDUCTION U/S 80HHC. THE AO WAS OF THE VIEW THAT T HE PROVISIONS OF SEC. 80HHC ARE APPLICABLE TO THE EXPORT OF GOODS OR MERCANTILE ONL Y AND NOT APPLICABLE TO THE WORK CONTRACTS. ACCORDINGLY THE AO DISALLOWED THE CLAI M OF DEDUCTION AND INITIATED PENALTY PROCEEDINGS U/S 271(1)( C). SINCE THE OTHE R DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFICER WERE DELETED BY THE CIT(A ) AND DISALLOWANCE OF DEDUCTION U/S 80HHC CONFIRMED BY THE CIT(A) WAS ACCEPTED BY T HE ASSESSEE; THEREFORE THE PENALTY WAS IMPOSED ONLY AGAINST THE DISALLOWANCE O F DEDUCTION/S 80HHC IN BOTH THESE YEARS. 3.2 THE ASSESSEE CHALLENGED THE ACTION OF THE ASSES SING OFFICER IMPOSING THE PENALTY LEVIED U/S 271(1)( C). THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND SUSTAINED THE PENALTY ORDER VIDE THE IMPUGNED ORDER. 4 BEFORE US THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE CLAIMED THE DEDUCTION U/S 80HHC ON THE BASIS OF THE ADVICE OF THE AUDITORS AND THE ASSESSEE FILED THE AUDIT REPORT IN FORM 10CCAC FOR CLAIMING THE DEDUCTION/S 80HHC. THUS THE LD AR HAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS BONAFIDE AND NOT A BOGUS CLAIM. HE HAS FURTHER SUBMITTED THAT IN CARRYING OUT THE WORK PROJECT OUTSIDE INDIA THE ASSESSEE HAS ALSO SUPPLIED THE CONSUMABLES AND TO THAT EXTENT THE CLAIM OF THE ASSESSEE IS OTHERWISE ALLOWABLE. THE LD AR HAS FUR THER SUBMITTED THAT THIS IS A CASE OF WRONG ADVICE. INSTEAD OF CLAIM OF DEDUCTION U/S 80H HB THE ASSESSEE HAS MISTAKENLY CLAIMED DEDUCTION U/S 80HHC; THEREFORE THE SAME CA NNOT BE HELD AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RELIANCE PETROPRODUCTS P LTD REPORTED IN 322 ITR 158(SC) AND SUBMITTED THAT MER E DISALLOWANCE OF THE CLAIM OF 3 ITA NOS. 4769 & 4770/MUM/2010 (ASST YEARS 2001-02 & 2002-03 ) THE ASSESSEE AS THE SAME WAS NOT FOUND AS ALLOWABL E UNDER THE PROVISIONS DOES NOT WARRANT THE LEVY OF PENALTY. 4.1 ON THE OTHER HAND THE LD DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT EXPORTED THE GOODS OR MERCANTILE; THEREFORE THE CL AIM OF THE ASSESSEE IS ABSOLUTELY WRONG AND BOGUS AND NOT ALLOWABLE UNDER THE PROVISI ONS OF THE ACT. THE ASSESSEE HAS DELIBERATELY MADE A WRONG CLAIM WHICH IS NOT AL LOWABLE. HE HAS RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT V. ZOOM COMMUNICATION P. LTD. REPORTED IN 327 ITR 510. 5 WE HAVE CONSIDERED THE RIVAL CONTENTION AND CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD. UNDISPUTEDLY THE ASSESSEE HAS FILED THE RETURN OF INCOME CLAIMING DEDUCTION U/S 80HHC ALONG WITH THE AUDIT R EPORT IN FORM 10CCAC. THE ASSESSING OFFICER HAS RECORDED THE FACTS THAT THE A SSESSEE FILED THE AUDIT REPORT IN SUPPORT OF THE CLAIM OF DEDUCTION U/S 80HHC AND ALS O FILED ALL DETAILS OF PURCHASE SALARY PRODUCTION INCENTIVES OFFICE EXPENSES TRA NSPORTATION CHARGES AND SALES PROMOTION EXPENSES. THUS THERE IS NO DENIAL OF TH E FACT THAT THE ASSESSEE HAS DISCLOSED ALL THE PRIMARY FACTS ABOUT THE REALIZATI ON ON ACCOUNT OF EXECUTION OF THE PROJECT. THOUGH CLAIM OF THE ASSESSEE U/S 80HHC IS NOT ALLOWABLE BECAUSE OF RECEIPTS FROM THE EXECUTION OF OUTSIDE INDIA PROJEC T HOWEVER THE FACT REMAINS THAT THE SALE RECEIPTS ARE IN THE FOREIGN EXCHANGE AND T HE CLAIM OF THE ASSESSEE HAS BEEN SUPPORTED BY THE AUDIT REPORT IN THE FORM 10CC AC. THUS THE ASSESSEE HAS ACTED ON THE BASIS OF THE ADVICE OF THE AUDITOR AND DISCLOSED ALL THE PRIMARY FACTS. EVEN THE CLAIM OF DEDUCTION U/S 80HHC IS NOT ALLO WABLE IN VIEW OF THE FACT THAT SALE RECEIPTS IN FOREIGN EXCHANGE IS NOT AGAINST ANY EX PORT OF GOODS OR MERCANTILE BUT EXECUTION OF THE PROJECT OUTSIDE INDIA IT WOULD LE AD T THE CONCLUSION THAT THE 4 ITA NOS. 4769 & 4770/MUM/2010 (ASST YEARS 2001-02 & 2002-03 ) ASSESSEE HAS CONCEALED THE INCOME OR FURNISHING IN ACCURATE PARTICULARS OF INCOME. FURTHER IT WAS NOT A BOGUS OR INHERENTLY ABSOLUTE W RONG CLAIM. 6 THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P LTD (SUPRA) HAS BEEN HELD THAT A MERE MAKING OF A CLAI M WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. ACCORDINGLY FOL LOWING THE DECISION OF THE HONBLE SUPREME COURT (SUPRA) WE DELETE THE PENALTY LEVIE D BY THE LOWER AUTHORITIES. 7 IN THE RESULT THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THE 28 TH DAY OF SEPT 2011. SD/- SD /- ( J SUDHAKAR REDDY ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:28 TH SEPT 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI