DCIT, Ludhiana v. M/s SEL Manufacturing Co. Ltd., Ludhiana

ITA 506/CHANDI/2015 | 2008-2009
Pronouncement Date: 28-10-2016 | Result: Dismissed

Appeal Details

RSA Number 50621514 RSA 2015
Assessee PAN AAHCS9189E
Bench Chandigarh
Appeal Number ITA 506/CHANDI/2015
Duration Of Justice 1 year(s) 5 month(s) 20 day(s)
Appellant DCIT, Ludhiana
Respondent M/s SEL Manufacturing Co. Ltd., Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-10-2016
Date Of Final Hearing 17-03-2016
Next Hearing Date 17-03-2016
Assessment Year 2008-2009
Appeal Filed On 08-05-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO. 506/CHD/2015 ASSESSMENT YEAR: 2008-09 THE DCIT VS M/S SEL MANUFACTURING CO. LTD. CENTRAL CIRCLE-III PLOT NO. 273-274 DHANDARI KAL AN LUDHIANA. G.T.ROAD LUDHIANA. PAN: AAHCS9189E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR CIT -DR RESPONDENT BY : SHRI ASHWANI KUMAR & SHRI ADITYA KUMAR CAS DATE OF HEARING : 25.10.2016 DATE OF PRONOUNCEMENT : 28.10.2016 O R D E R PER BHAVNESH SAINI JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 27.01.2015 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFICER LEVIED THE PENALTY IN RESPECT OF ADDITION O F RS. 96 45 276/-. IT IS NOTED IN THE IMPUGNED ORDER THA T ADDITION PERTAINS TO WRONGFUL CLAIM MADE BY ASSESSE E IN ITS RETURN OF INCOME BY NOT ADDING THE SUNDRY BALAN CES WRITTEN OFF AT THE TIME OF COMPUTATION OF TOTAL INC OME. THE SAID MISTAKE WAS POINTED OUT BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ASSESSEE ADMITTED THE SAID MISTAKE AND IT WAS SUBMITTED BEFORE ASSESSING OFFICER THAT AS REGARDS QUERY RELATING TO WHY SUNDRY BALANCES WRITTEN OFF AMOUNT ING TO RS. 96 45 276/- BE NOT ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE COMPANY AS THE SAME IS ALREA DY ADDED BACK IN THE COMPUTATION OF INCOME OF BADDI UN IT ON WHICH DEDUCTION UNDER SECTION 80IC HAS BEEN CLAIMED IT WAS SUBMITTED THAT DUE TO INADVERTENT THE SAME WAS OMITTED TO BE ADDED BACK IN THE COMPUTATIO N OF ASSESSEE'S INCOME FOR THIS YEAR. THE ASSESSING OFFICER THEREFORE NOTED THAT ASSESSEE HAS ADDED B ACK THE ABOVE AMOUNT TO THE ELIGIBLE PROFITS WHILE CLAI MING DEDUCTION BUT HAS NOT ADDED BACK THIS AMOUNT IN THE TOTAL TAXABLE INCOME. THEREFORE IT IS NOT AN ERRO R AND ATTEMPT MADE BY ASSESSEE TO EVADE TAX. THE ASSESSI NG OFFICER INITIATED THE PENALTY PROCEEDINGS ON THE SA ME REASONING. THE ASSESSEE SUBMITTED BEFORE ASSESSING OFFICER THAT IMPUGNED MISTAKE WAS INADVERTENT AND N OT INTENTIONAL AS THE SAME AMOUNT WAS CLEARLY IN THE NATURE OF DISALLOWABLE EXPENSES TO BE ADDED. 3 3(I) THE ASSESSING OFFICER HOWEVER DID NOT ACCEP T THE CONTENTION AND LEVIED THE PENALTY. THE ASSESSEE'S SUBMISSIONS ARE REPRODUCED IN THE IMPUGNED ORDER OF LD. CIT(APPEALS) IN WHICH THE ASSESSEE BRIEFLY EXPLAINE D THAT DEDUCTION WAS CLAIMED BY ASSESSEE ON THE BASIS OF CERTIFICATE OF CHARTERED ACCOUNTANT UNDER SECTION 8 0IB OF THE INCOME TAX ACT. MOREOVER AT THE TIME OF FI LING OF THE RETURN SAID ISSUE WAS NOT FREE FROM DOUBT AND A MATTER OF LEGAL DISPUTE. FURTHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSUE ATTAINED FINALITY AFT ER JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA 317 ITR 218 THEREFORE IT IS NOT A C ASE OF CONCEALMENT OF INCOME. IT WAS SUBMITTED THAT PENALT Y PROCEEDINGS UNDER THE ACT ARE DISTINCT AND INDEPEND ENT AND SEPARATE FROM ASSESSMENT PROCEEDINGS WHEREIN AN ADDITION ON ACCOUNT OF HONEST AND BONAFIDE NON-DISC LOSURE OF AN INCOME CAN SUCCESSFULLY BE MADE IN ASSESSMENT PROCEEDINGS SUCH ADDITION CANNOT BE MADE THE BASIS FOR LEVY OF THE PENALTY. ASSESSEE RELIED UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. 8 3 ITR 26 AND DECISION OF HON'BLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF AJAIB SINGH & CO. 119 TAXMAN 825 IN WHI CH IT WAS HELD THAT MERELY BECAUSE CERTAIN EXPENSES CLAIMED BY ASSESSEE WERE DISALLOWED BY AN AUTHORITY COULD NOT MEAN THAT THE PARTICULARS FURNISHED BY TH E ASSESSEE WERE WRONG. THE ASSESSEE ALSO RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF 4 RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 IN WHI CH IT WAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT. A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FUR NISHING INACCURATE PARTICULARS REGARDING INCOME OF ASSESSEE . SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS THE ASSESSEE ALSO RELIED UPON OTHER DECISIONS IN SUPPORT OF THE CONTE NTION THAT IT WAS A MISTAKE WHICH IS CORRECTED BY THE ASSESSEE THEREFORE NO PENALTY IS LEVIABLE. 4. THE LD. CIT(APPEALS) CONSIDERING EXPLANATION OF THE ASSESSEE CANCELLED THE PENALTY. HIS FINDINGS IN P ARAS 4 AND 5 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE ARGUMENTS DURING THE PENALTY AND APPELLATE PROCEEDINGS. IT IS QUITE CLEAR THAT MISTAKE HAS BEEN POINTED OUT BY THE A.O. DURING THE ASSESSMENT AND THE NATURE OF ITEM IS SUCH THAT IT NORMALLY SHOULD HAVE CAUGHT THE ATTENTION OF PERSON INCHARGE OF FINALIZING THE INCO ME TAX RETURN. THE ALLEGATION OF DELIBERATE AND MALAFIDE INTENTION ON THE PART OF THE APPELLANT TO MAKE A WRONGFUL CLAIM IN RESPECT OF SU CH ITEM OF DEBIT IS TOO FAR FETCHED. THERE ARE NO CIRCUMSTANTIAL FACTORS TO SUGGEST THAT THE SAID CLAIM WAS INTENTIONAL AS THE ASSESSEE COMPANY' S CASE BEING IN THE HIGHER INCOME GROUP GENERALLY GETS SELECTED FOR SCR UTINY YEAR AFTER YEAR. SO IT CANNOT BE SAID THAT THE APPELLANT WAS H OPING TO GET AWAY WITH SUCH A BLATANTLY WRONG CLAIM. THE MERE FACT TH AT THE MISTAKE HAD BEEN POINTED OUT BY THE A.O. DURING THE ASSESSMENT CANNOT MEAN THAT THE CLAIM ITSELF AT THE TIME OF FILING OF RETURN WA S WITH THE INTENTION OF DECEIVING THE REVENUE. SUCH KINDS OF MISTAKES AR E QUITE RARE BUT 5 THEY DO HAPPEN. AND BEFORE IMPOSING THE PENALTY THE SURROUNDING CIRCUMSTANCES HAVE ALSO TO BE SEEN ESPECIALLY IN V IEW OF THE FACT THAT THE CASE OF THE COMPANY GETS SCRUTINIZED YEAR AFTER YEAR FOLLOWED BY INTERNAL AND EXTERNAL AUDIT. THE CASE OF PRICE WATE RHOUSE COOPERS PVT. LIMITED VS. CIT & ANOTHER [(2012 348 ITR 306 ( S)] DECIDED BY THE APEX COURT IS DIRECTLY ON SIMILAR FACTS WHEREIN THE HON'BLE APEX COURT HELD THAT NOTWITHSTANDING THE FACT THAT M/S P RICE WATERHOUSE COOPERS PVT. LIMITED WAS A REPUTED FIRM AND HAS GRE AT EXPERTISE AVAILABLE WITH IT IT WAS POSSIBLE THAT EVEN SUCH A N ASSESSEE COULD MAKE A SILLY MISTAKE. THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CARE IN A CASE SUCH AS THE PRESENT D ID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCU RATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME THE IMPOSITION OF PENALTY WAS THEREFORE HELD NOT TO BE JUSTIFIED IN VIEW OF THE ABOVE DETAILS AND CIRCUMSTANCES OF THE CASE. THE PENALTY IMPOSED IS THEREFORE DIRECTED TO BE DELETED. 5. IN THE RESULT APPEAL IS ALLOWED. 5. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT LD. CIT(APPEALS) RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F PRICE WATERHOUE COOPERS PVT. LTD. 348 ITR 306 WHICH IS DISTINGUISHABLE ON FACTS BECAUSE ASSESSEE DID NOT C OME FORWARD OF HIS OWN FOR ADDING BACK THE SAID AMOUNT FOR THE PURPOSE OF TAXATION. THE ASSESSEE ADDED BACK TH E SAME AMOUNT FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT WHICH WAS BENEFICIAL TO THE ASSESSEE BUT FAILED TO ADD IN THE COMPUTATION O F TAXABLE INCOME. THE LD. DR SUBMITTED THAT LEVY OF PENALTY IS CIVIL LIABILITY AND RELIED UPON DECISION S OF HON'BLE SUPREME COURT IN THE CASES OF DHARMENDRA 6 TEXTILES 166 TAXMAN 65 AND ATUL MOHAN BINDAL 183 TAXMAN 444. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE REITERATED SUBMISSIONS MADE BEFORE AUTHORI TIES BELOW. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE AMOUNT OF SUNDRY BALANCES WRITTEN OFF WAS ALREADY ADDED BACK IN THE COMPUTATION OF INCOME OF BADDI UN IT ON WHICH DEDUCTION UNDER SECTION 80IC OF THE ACT HA VE BEEN CLAIMED. THE ASSESSEE EXPLAINED THAT DUE TO INADVERTENT MISTAKE SAME WAS OMITTED TO BE ADDED B ACK IN THE COMPUTATION OF INCOME OF THE ASSESSEE COMPAN Y. IT IS THEREFORE CLEAR THAT ASSESSEE DISCLOSED COM PLETE FACTS IN THE RETURN OF INCOME AS WELL AS DISCLOSED THE RELEVANT FACTS BEFORE ASSESSING OFFICER AT THE ASSE SSMENT STAGE. THE ASSESSEE ON REALIZING THE MISTAKE THAT SUNDRY DEBTORS WRITTEN OFF HAVE NOT BEEN ADDED IN T HE COMPUTATION OF TOTAL INCOME SUBMITTED BEFORE ASSES SING OFFICER TO MAKE THE ADDITION OF THE SAME AMOUNT IN THE COMPUTATION OF INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS THUS OFFER ED EXPLANATION TO THE SAME ISSUE. THE ABOVE FACTS PROV ED THAT EXPLANATION OF THE ASSESSEE WAS BONAFIDE AND A LL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THE LD. CIT(APPEALS) THEREFORE RIGHTLY NOTED THAT THE CIRCUMSTANCES CLEARLY SUGGEST THAT IT WAS NOT 7 INTENTIONAL MISTAKE BECAUSE ASSESSEE'S COMPANY IS O F HIGHER INCOME GROUP AND GENERALLY SELECTED FOR SCRU TINY ASSESSMENT. THEREFORE THERE WAS NO REASON TO BELI EVE THAT ASSESSEE WOULD EVADE THE TAXES. THIS IS A MIST AKE IN NOT ADDING BACK THE SUNDRY DEBTORS WRITTEN OFF I N COMPUTATION OF INCOME. IT WAS ADDED IN THE COMPUTATION OF INCOME OF BADDI UNIT. THE LD. CIT(APPEALS) THEREFORE CORRECTLY RELIED UPON DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF PRICE WATERHOU E COOPERS PVT. LTD. (SUPRA) FOR THE PURPOSE OF DELETI NG THE ADDITION CONSIDERING IT TO BE A MISTAKE IN NOT ADDI NG BACK THE AMOUNT IN THE COMPUTATION OF INCOME. 7. HON'BLE GUJRAT HIGH COURT IN THE CASE OF CIT VS UNION ELECTRIC CORPORATION 281 ITR 266 CONFIRMED OR DER OF THE TRIBUNAL IN DELETING THE PENALTY IN WHICH TH E ASSESSEE ADMITTED MISTAKE IN ACCOUNTS AND REQUESTED DISALLOWANCE. IT WAS FOUND THAT THERE IS NO CONCEA LMENT OF INCOME AND PENALTY COULD NOT BE LEVIED. HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS NELLAI TRAD ING AUTOMOBILE AGENCY 288 ITR 557 DISMISSED DEPARTMENT AL APPEAL FINDING THAT UNDER VALUATION OF STOCK WAS DU E TO MISTAKE THEREFORE PENALTY COULD NOT BE IMPOSED. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF FINDING OF FACT RECORDED BY TH E LD. CIT(APPEALS) WE ARE OF THE VIEW LD. CIT(APPEALS) R IGHTLY CANCELLED THE PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. 8 WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(AP PEALS) IN CANCELING THE PENALTY. 9. IN THE RESULT DEPARTMENTAL APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SA INI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH OCTOBER 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT DR ASSISTANT REGISTRAR ITAT/CHD