Income Tax Appellate Tribunal - Ahmedabad
Madhu Industries Ltd, Ahmedabad vs Department Of Income Tax on 25 January, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH " B "
Before Shri G.D. AGARWAL, VICE-PRESIDENT (AZ) and
Shri MUKUL Kr. SHRAWAT, JUDICIAL MEMBER
Date of Hearing : 20/1/2011 Drafted on: 25/1/2011
ITA No.1733/AHD/2009
Assessment Year : 2003-04
Income Tax Officer Vs. Madhu Industries ltd.
Ward-4(4) 39, Phase-I,
Ahmedabad GIDC Estate Vatva
Ahmedabad
PAN/GIR No. : AAABM 0027D
(APPELLANT) .. (RESPONDENT)
Appellant by : Shri K.M. Madhusudan, Sr. D.R.
Respondent by: Shri Sunil H. Talati
ORDER
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
This is an appeal at the behest of the Revenue which has emanated from the order of Learned CIT(Appeals)-VIII, Ahmedabad dated 11/02/2009 passed for Assessment Year 2003-04 against the cancellation of penalty levied u/s.271(1)(c) of the I.T.Act of Rs.11,74,593/-.
2. Facts in brief as emerged from the corresponding penalty order passed u/s.271(1)(c) of the I.T.Act dated 28/01/2008 and the assessment order u/s.143(3) of the I.T.Act dated 27/03/2006 were that the assessee-company during the year was in the business of manufacturing of UPS. There was an addition by disallowance of deduction u/s.80IA of the I.T.Act. The assessee has claimed the deduction of Rs.31,96,173/- u/s.80-IA of the I.T.Act. However, it was noted by the Assessing Officer that there was a loss of Rs.2,51,18,916/- from the manufacturing activity of the assessee. The income was declared because the assessee has earned DEPB income which was ITA No.1733/Ahd/2009 ITO vs. Madhu Industries Ltd.
Asst.Year - 2003-04 -2- allegedly adjusted against the loss. As per Assessing Officer, for the purpose of claim of deduction u/s.80-IA of the I.T.Act profit and gains should be derived from the "Industrial Undertaking". The Assessing Officer has computed the loss after excluding the DEPB income, also other income and thereupon he has concluded that the benefit u/s.80IA of the I.T.Act was not available to the assessee. The said disallowance was the basis of levy of the penalty u/s.271(1)(c) of the I.T.Act. During the course of penalty proceedings, it was contested that the claim was made by treating the assessee as an "Industrial Unit" engaged in the manufacturing of a product, hence, that claim was a bona fide claim, however, due to change of opinion, the said claim was disallowed. It was also contested that the claim was not disallowed due to furnishing of "inaccurate particulars". The AO was not convinced and held that the assessee's line of business was not eligible for the said claim and the deduction u/s.80-IA of the I.T.Act was not available to the assessee, therefore, the assessee has furnished inaccurate particulars, hence, liable for concealment penalty. He has referred a decision of Hon'ble High Court of Gujarat in the case of A.M. Shah & Co. vs. CIT reported at (1999) 238 ITR 415 (Guj.), and the penalty u/s.271(1)(c) of the I.T.Act was imposed.
3. When the matter was carried before the first appellate authority, the Learned CIT(Appeals) has discussed the assessee's nature of business and several case laws and, thereafter, made an observation that due to change in law pertaining to the applicability of section 80-IA of the I.T.Act and 80-IB of the I.T.Act w.e.f. 01/04/2000, the said mistake was committed. The appellant was claiming the deduction u/s.80-IA from Assessment Years 1995-96 to 1999-2000, however, after the amendment in the provisions of section 80-IA, the appellant was required to make the claim u/s.80-IB of the I.T.Act as contested before the Learned CIT(Appeals) in quantum appeal. It has also been contested that the exclusion of DEPB income was ITA No.1733/Ahd/2009 ITO vs. Madhu Industries Ltd.
Asst.Year - 2003-04 -3- only by placing reliance on the decision of Hon'ble Supreme Court in the case of CIT vs. Sterling Foods reported at (1999) 237 ITR 579(SC). Which it self proved that it was a contentious issue and the question before the Apex Court was on different context, hence, the levy of penalty was not on reasonable ground. Finally, the Learned CIT(Appeals) has referred few case laws and deleted the penalty.
4. From the side of the Revenue, Mr.Madhusudan, Sr.DR appeared and argued that once the assessee was aware about the decision of the Hon'ble Supreme Court and that was the law of the land, then, the claim of deduction was deliberately made with the purpose to conceal the correct income. The ld.DR has also pleaded that the assessee was aware about his business activity and also aware about the loss incurred therein but even then claimed the impugned deduction. In such a circumstances, the penalty was rightly levied.
5. From the side of the respondent-assessee, Mr. Sunil H.Talati appeared and supported the findings of the Learned CIT(Appeals).
6. On hearing both the sides as also on appreciation of the facts of the case as narrated hereinabove, one thing is apparent that the assessee has made a claim of deduction u/s.80-IA, however, that claim was found not admissible as per law. It is also evident that there was change in the provisions of the IT Act and the assessee was under the impression that he would be entitled for the said claim as he was granted the deduction in the past. From the side of the assessee, certain evidences and the assessment record have been placed in the form of a compilation before us to demonstrate that the assessee had been allowed the deduction in the past. Nevertheless, the issue of the said disallowance had always been a matter of dispute. It was not the case of the Revenue that an altogether bogus claim was made. Rather the facts of the case have revealed that the assessee has offered an explanation which was also not ITA No.1733/Ahd/2009 ITO vs. Madhu Industries Ltd.
Asst.Year - 2003-04 -4- found untrue. We, therefore, hold that the question of levy of concealment penalty under the circumstances as narrated hereinabove is covered by a decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P) Ltd. reported at (2010) 322 ITR 158 (SC ), wherein the Hon'ble Court has held that merely making of a claim which might not be sustainable in law, by itself, will not amount to furnishing of inaccurate particulars of income. Resultantly the findings of the first appellate authority are hereby affirmed and the ground of the Revenue is dismissed.
6. In the result, Revenue's appeal is dismissed.
Order signed, dated and pronounced in the Court on 28/ 02 /2011.
Sd/- Sd/-
( G.D. AGARWAL ) ( MUKUL Kr. SHRAWAT )
VICE PRESIDENT (AZ) JUDICIAL MEMBER
Ahmedabad; Dated 28/ 02 /2011
T.C. NAIR, Sr. PS
Copy of the Order forwarded to :
1. The Assessee.
2. The Department.
3. The CIT Concerned
4. The ld. CIT(Appeals)-VIII, Ahmedabad
5. The DR, Ahmedabad Bench
6. The Guard File.
BY ORDER,
स×याǒपत ूित //True Copy//
(Dy./Asstt.Registrar), ITAT, Ahmedabad
ITA No.1733/Ahd/2009
ITO vs. Madhu Industries Ltd.
Asst.Year - 2003-04
-5-
1. Date of dictation.......................20/1/2011
2. Date on which the typed draft is placed before the Dictating Member 25/1/2011.................. Other Member.....................
3. Date on which the approved draft comes to the Sr.P.S./P.S.................
4. Date on which the fair order is placed before the Dictating Member for pronouncement......
5. Date on which the fair order comes back to the Sr.P.S./P.S...28.2.11
6. Date on which the file goes to the Bench Clerk............... 28.2.11
7. Date on which the file goes to the Head Clerk..................................
8. The date on which the file goes to the Assistant Registrar for signature on the order..........................
9. Date of Despatch of the Order..................