M/s Hi-Tech Foods, Solan v. ITO, Solan

ITA 894/CHANDI/2016 | 2006-2007
Pronouncement Date: 27-09-2016 | Result: Allowed

Appeal Details

RSA Number 89421514 RSA 2016
Assessee PAN AACFH7996J
Bench Chandigarh
Appeal Number ITA 894/CHANDI/2016
Duration Of Justice 1 month(s) 17 day(s)
Appellant M/s Hi-Tech Foods, Solan
Respondent ITO, Solan
Appeal Type Income Tax Appeal
Pronouncement Date 27-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 27-09-2016
Assessment Year 2006-2007
Appeal Filed On 09-08-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER ITA NO.894/CHD/2016 ASSESSMENT YEAR : 2006-07 M/S HI-TECH FOODS VS THE ITO UPPER BAZAR WARD 1 SOLAN (HP). SOLAN (HP). PAN: AACFH7996J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY JAIN RESPONDENT BY : SHRI YOGENDRA MITTAL DR DATE OF HEARING : 22.09.2016 DATE OF PRONOUNCEMENT : 27.09.2016 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) SHIMLA DATED 18.05.2 016 FOR ASSESSMENT YEAR 2006-07 CHALLENGING THE LEVY O F PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DED UCTION UNDER SECTION 80IB OF THE INCOME TAX ACT AMOUNTING TO RS. 28 38 883/-. THE ASSESSMENT WAS COMPLETED UNDE R SECTION 143(3) OF THE ACT ON 16.12.2008 AT A TOTAL INCOME OF RS. 21 51 140/- BY MAKING ADDITION OF RS. 21 29 140/- BY RESTRICTING THE DEDUCTION UNDER SECT ION 2 80IB(4) @ 25% AND ADDITION OF RS. 22 000/- ON ACCOU NT OF OTHER DISALLOWANCES. THE ASSESSEE IS PARTNERSHI P FIRM AND IS ENGAGED IN BUSINESS OF MANUFACTURING OF ATTA MAIDA SUJI ETC. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD CLAIMED DEDUCTION @ 100% UNDER SECTION 80IC OF THE ACT AMOUNTING TO RS. 28 38 853/-. THIS DEDUCTION WAS DENIED BECAUSE ACCORDING TO THE ASSESSING OFFICER DEDUCTION UNDER SECTION 80IC OF THE ACT WAS NOT ALLOWABLE TO FLOUR MILL BECAUSE SAME WA S MENTIONED IN NEGATIVE LIST OF SCHEDULE XIII. THE DEDUCTION WAS HOWEVER ALLOWED UNDER SECTION 80IB( 4) @ 25% BEING THE 8 TH YEAR OF CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT. THE PENALTY WAS IMPOSED VI DE SEPARATE ORDER. THE APPEAL OF THE ASSESSEE ON QUAN TUM HAS BEEN DISMISSED BY LD. CIT(APPEALS) AS WELL AS B Y THE TRIBUNAL. 4. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF RUNNING A ROLLER FLOU R MILL MANUFACTURING VARIOUS PRODUCTS I.E. ATTA MAIDA AND SUJI ETC. THE CLAIM OF THE ASSESSEE UNDER SECTION 80IC WAS REJECTED HOLDING THAT THE ASSESSEE FIRM IS BASI CALLY A FLOUR MILL. IN FACT THE ASSESSEE SET UP AN INDU STRIAL UNDERTAKING FOR RUNNING A ROLLER FLOUR MILL FOR MANUFACTURING OF ATTA MAIDA SUJI ETC. THE ASSESS EE HAS BEEN ALLOWED DEDUCTION UNDER SECTION 80IB OF TH E 3 ACT BEING ELIGIBLE TO CLAIM 100% DEDUCTION. THE ASSESSEE UNDERTOOK SUBSTANTIAL EXPANSION AND MADE A CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT. THE CLAIM OF THE ASSESSEE WOULD NOT FALL IN SCHEDULE-XI II. THE ASSESSEE DID NOT FILE INACCURATE PARTICULARS OF INCOME BECAUSE IT HAS DECLARED ALL THE FACTS TRULY AND CORRECTLY AND SAME FACTS WERE ALSO SUPPORTED BY STATUTORY AUDIT REPORT. IN THE SAME CIRCUMSTANCES ITAT CHANDIGARH BENCH DELETED THE PENALTY IN THE CASE OF M/S PUJA INDUSTRIES IN ITA 322/CHD/2015 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE ALSO RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE C ASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 IN WHICH IT WAS HELD THAT MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 5. THE LD. CIT(APPEALS) HOWEVER DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND NOTED THAT ASSESSEE COULD NOT PROVE THAT IT HAS MADE SUBSTANTIAL EXPANS ION AND THAT ASSESSEE COULD NOT PROVE THAT IT IS RUNNIN G ROLLER FLOUR MILL THEREFORE THE CLAIM OF THE ASSE SSEE WOULD TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS AND ACCORDINGLY DISMISSED APPEAL OF TH E ASSESSEE. 6. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE 4 BEFORE AUTHORITIES BELOW AND SUBMITTED THAT ASSESSE E DISCLOSED ALL THE PARTICULARS IN THE RETURN OF INCO ME AS WELL AS DISCLOSED ALL THE PARTICULARS AT ASSESSMENT STAGE FOR CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE AC T AND THE CLAIM OF THE ASSESSEE HAS BEEN SUPPORTED BY STA TUTORY AUDIT REPORT. HE HAS SUBMITTED THAT MERELY BECAUSE ADDITION IS CONFIRMED BY THE TRIBUNAL IS NO GROUND TO LEVY THE PENALTY. HE HAS SUBMITTED THAT THE ASSESSING O FFICER CONSIDERED THE UNIT OF ASSESSEE TO BE FLOUR MILL ON LY AS PER SCHEDULE-XIII BUT ASSESSEE IN-FACT WAS A ROLLE R FLOUR MILL WHICH IS DIFFERENT FROM FLOUR MILL. THIS FACT WAS EXPLAINED BEFORE ASSESSING OFFICER AT THE ASSESSMEN T STAGE. IT WAS ALSO SUBMITTED AT ASSESSMENT STAGE T HAT UNDER THE SALES TAX OF HIMACHAL PRADESH FLOUR MILL S ARE NOT ENTITLED TO SALES TAX INCENTIVE AND SIMILAR QUE STION AROSE WHETHER THE ROLLER FLOUR MILLS WERE DIFFERENT FROM FLOUR MILLS. IT WAS DECIDED BY THE GOVERNMENT THAT ROLLER FLOUR MILLS ARE DIFFERENT FROM FLOUR MILLS. THOUGH FLOUR MILLS WERE NOT ENTITLED TO TAX INCENTIVES BUT ROLLE R FLOUR MILLS ENJOYED EXEMPTION FROM SALES TAX. THE ASSESS EE FILED LETTER FROM DIRECTOR OF INDUSTRIES HIMACHAL PRADESH IN SUPPORT OF THE CONTENTION TO PROVE THAT ASSESSEE UNIT IS A ROLLER FLOUR MILL RATHER THAN FLOUR MILL. HE HAS THEREFORE SUBMITTED THAT IT IS A MERE DIFFERENCE OF OPINION BETWEEN THE INCOME TAX AUTHORITIES AND ASSESSEE THEREFORE IT IS NOT A CASE OF CONC EALMENT 5 OF INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. HE HAS RELIED UPON FOLLOWING DECISIONS : I) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V ARISUDANA SPINNING MILLS 326 ITR 429 IN WHICH IT WAS HELD AS UNDER : PENALTY UNDER S. 271(L)(C) WAS HELD TO BE NOT LEVIA BLE ON THE BASIS OF FINDING OF FACT ARRIVED AT BY THE TRIBUNAL SINCE WHEN THE RETURNS OF INCOME WERE FILED THE ISSUE WITH REGARD TO ENTITLEMENT OF DEDUCTION UNDER S. 80-IA ON THE PROFITS DERIVED FROM TRADING TURNOVER I.E. TRADING IN THE RAW WOOL AND KNITTED C LOTH WAS DEBATABLE AND WAS SETTLED WITH THE JUDGMENT OF COUR T IN LIBERTY INDIA VS. CIT (2007) 207 CTR (P&H) 243 : (2 007) 293 ITR 520 (P&H) WHICH HAS BEEN UPHELD BY THE SUPREME COURT IN LIBERTY INDIA VS. CIT (2009) 225 CTR (SC) 233 : (20 09) 28 DTR (SC) 73 : (2009) 317 ITR 218 (SC) HENCE TRIBUNAL HA S RIGHTLY COME TO THE CONCLUSION THAT THE ASSESSEE DID NOT DE LIBERATELY OR CONSCIOUSLY CONCEALED THE TRUE PARTICULARS OF INCOM E OR FURNISHED INACCURATE PARTICULARS OF INCOME. NO SUBS TANTIAL QUESTION OF LAW ARISES. II) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS BAL KISHAN DHAWAN HUF 86 CCH 65 IN WHICH IT WAS HELD AS UNDER : MERE RAISING OF A CLAIM EVEN IF NOT SUSTAINABLE I N LAW IS NOT BY ITSELF SUFFICIENT TO HOLD THAT IT DENOTES FURNISHI NG OF INACCURATE PARTICULARS WITH AN INTENT AS WOULD INVITE A PENALT Y. III) DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PCIT V S.S.FOOD INDUSTRIES 382 ITR 388 IN WHICH THE AUTHORITIES BELOW DISALLOWED DEDUCTION UNDER SECTION 80IC AND THE PENALTY WAS CANCELLED BY THE TRIBUNAL. HON'BLE HIGH COURT HELD AS UNDER : 6 FURTHER THE TRIBUNAL NOTICED THAT THE ASSESSEE HA D DISCLOSED ALL THE PARTICULARS OF THE INCOME AND HAD NOT CONCE ALED ANYTHING. IN CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LIMITED IT HELD THAT ANY CASE ASSESSEE DISCLOSED A LL THE PARTICULARS OF THE INCOME AND IT CANNOT BE STATED T HAT ASSESSEE HAS CONCEALED ANY PARTICULARS AND FURNISHED INCORRE CT PARTICULARS. ONCE PROPER DISCLOSURES HAVE BEEN MADE THEN PENALTY IS NOT ATTRACTED. IV) THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED U PON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 IN WHICH IT WAS HELD THAT MAKING OF INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THE LD. COUNSEL FOR THE ASSESSEE THEREFORE SUBMITTED THAT PENALTY MAY BE CANCELLED. 6(I) ON THE OTHER HAND LD. DR RELIED UPON ORDERS O F AUTHORITIES BELOW AND SUBMITTED THAT ASSESSEE COULD NOT SUBSTANTIATE THAT IT HAS CARRIED ON SUBSTANTIAL EXP ANSION AND THAT ASSESSEE WAS ONLY FLOUR MILL AND ADDITION HAVE BEEN CONFIRMED BY THE TRIBUNAL THEREFORE PENALTY WAS CORRECTLY LEVIED IN THE MATTER. 7. I HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS WELL SETTLED LAW THAT FINDINGS GIVEN IN THE QUANTUM MATT ERS ARE RELEVANT AND HAVE PROBATIVE VALUE HOWEVER THE SE ALONE ARE NOT CONCLUSIVE TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE. THE QUA NTUM AND PENALTY PROCEEDINGS ARE DISTINCT AND INDEPENDEN T AND EVEN THE ASSESSEE AT THE PENALTY STAGE COULD EXPLAI N THAT 7 IT IS NOT A FIT CASE OF LEVY OF PENALTY. IN THE PR ESENT CASE THE AUTHORITIES BELOW HAVE CONSIDERED THE ISSUE OF DEDUCTION UNDER SECTION 80IC AND HELD THAT ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80IC BECAU SE IT RUNS ONLY FLOUR MILL. THE ADDITION HAS BEEN CONFIR MED BY THE TRIBUNAL . THE ASSESSEE CLAIMED THAT IT IS IN -FACT A ROLLER FLOUR MILL DIFFERENT FROM FLOUR MILL AS IS C ONSIDERED IN SCHEDULE-XIII. THIS CLAIM OF THE ASSESSEE WAS A LSO NOT ACCEPTED BY THE AUTHORITIES BELOW. THE ASSESSEE AL SO EXPLAINED BEFORE ASSESSING OFFICER THAT UNDER THE S ALES TAX LAW OF HIMACHAL PRADESH ROLLER FLOUR MILL WAS ENTITLED FOR EXEMPTION FROM SALES TAX AND IN CASE OF THE ASS ESSEE CERTIFICATE OF THE DIRECTOR OF INDUSTRIES AND SALES TAX WAS FILED BUT THE ASSESSING OFFICER SAYS THAT SALES TAX LAWS ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS. THES E FACTS THEREFORE CLEARLY SHOW THAT ASSESSEE DISCLO SED ALL THE PARTICULARS IN THE RETURN OF INCOME AS WELL AS IN THE ACCOUNTS WHICH ARE SUPPORTED BY THE AUDIT REPORT. THE CLAIM OF THE ASSESSEE WAS THEREFORE JUSTIFIED AND WAS BASED UPON THE LETTER FROM DIRECTOR OF INDUSTRIES & SALES TAX AUTHORITIES. THE CLAIM OF THE ASSESSEE HAS ALS O BEEN APPROVED BY THE STATUTORY AUDITOR. THE EXPLANATION OF THE ASSESSEE IS THEREFORE SUBSTANTIATED THROUGH MATER IAL ON RECORD AND EXPLANATION OF THE ASSESSEE APPEARS TO B E BONAFIDE. IT THEREFORE APPEARS THAT THERE MAY BE A DIFFERENCE OF OPINION BETWEEN THE INCOME TAX AUTHOR ITIES AND THE ASSESSEE WITH REGARD TO STATUS OF THE ASSES SEE WHETHER ROLLER FLOUR MILL OR FLOUR MILL FALLING IN 8 SCHEDULE-XIII OF THE ACT. HON'BLE DELHI IN THE CAS E OF CIT VS NATH BROS EXIM INTERNATIONAL LTD. 288 ITR 670 HE LD AS UNDER : THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS HIS BU SINESS INCOME AND ACCORDING TO THE ASSESSEE IT WAS ENTITLE D TO A DEDUCTION UNDER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC(4C) OF THE INCOME-TAX ACT 1961. THE ASSESSING OFFICER DIS ALLOWED THE CLAIM AND IMPOSED PENALTY. THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS AND THERE-FORE EVEN THOUGH IT HAD MADE AN ERRONEOUS CLAIM WHICH COULD N OT BE JUSTIFIED IN LAW THAT BY ITSELF DID NOT ATTRACT THE PENAL PR OVISIONS OF THE ACT. ON APPEAL : TO THE HIGH COURT: HELD DISMISSING THE APPEAL THAT THERE WAS FULL DISCLOSU RE OF ALL RELEVANT MATERIAL. IT COULD NOT BE SAID THAT THE CO NDUCT OF THE ASSESSEE ATTRACTED THE PRO-VISIONS OF SECTION 271(L)(C). THE CANCELLATION OF PENALTY WAS JUSTIFIED. 8. THE DECISIONS RELIED UPON BY ASSESSEE'S COUNSEL ALSO SUPPORT THE CLAIM OF THE ASSESSEE THAT NO PENA LTY IS LEVIABLE IN THE MATTER. IN THE CASE OF S.S.FOOD S INDUSTRIES (SUPRA) IDENTICAL ISSUE OF DEDUCTION UN DER SECTION 80IC OF THE ACT WAS CONSIDERED IN WHICH TRIBUNAL ALLOWED THE APPEAL CANCELING THE PENALTY. THE TRIBUNAL ALSO NOTICED THAT ASSESSEE HAD DISCLOSED A LL THE PARTICULARS OF INCOME AND HAD NOT CONCEALED ANYTHING. THEREFORE MERE DISALLOWANCE OF CLAIM UN DER SECTION 80IC OF THE ACT WOULD NOT PROVE THAT ASSESS EE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT MAY ALSO BE N OTED HERE THAT ASSESSING OFFICER LEVIED THE PENALTY ON 9 AMOUNT OF RS. 21 51 140/- WHICH IS TOTAL INCOME COMPUTED BY ASSESSING OFFICER INCLUDING DISALLOWANC E UNDER SECTION 80IC OF THE ACT AND ADDITION OF RS. 15 000/- ON ACCOUNT OF FBT EXPENSES AND DISALLOWANC E OF POSTING AND TELEPHONE EXPENSES OF RS. 7 000/-. ON MERE DISALLOWANCE OF EXPENSES WHICH ARE ADHOC IN NATURE NO PENALTY SHOULD BE IMPOSED AGAINST THE ASSESSEE. 9. CONSIDERING THE ABOVE DISCUSSION I AM OF T HE VIEW IT IS NOT A FIT CASE OF LEVY OF PENALTY. I T HEREFORE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND CANCE L THE PENALTY. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED 27 TH SEPTEMBER 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT DR ASSISTANT REGISTRAR ITAT/CHD