Income Tax Appellate Tribunal - Chandigarh
Duke Fashions (India) Ltd., Ludhiana vs Department Of Income Tax on 19 September, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH "B" BENCH
BEFORE Ms. SUSHMA CHOWLA, JM AND SHRI MEHAR SINGH, AM
ITA No. 766/Chandi/2011
Assessment Year: 2000-01
D.C.I.T. Ludhiana v. Duke Fashions (India) Ltd
G.T. Road (West)
Near Jalandhar Bye Pass
Ludhiana
PAN: AAACD 7642 L
(Appellant) (Respondent)
Appellant by: Smt. Jaishree Sharma
Respondent by: None
Date of hearing: 19.9.2011
Date of pronouncement: 21 .9.2011
ORDER
Per Mehar Singh, A.M
The present appeal filed by the Revenue is directed against the order passed by the ld. CIT(A)-II, Ludhiana dated 20.5.2011 u/s 250(6) of Income-tax Act, 1961 (In short 'the Act').
2. The Revenue has raised the following grounds of appeal:-
"1 The ld. CIT(A) has erred both in law and on facts of the case in deleting the penalty of Rs. 7,01,096/- imposed u/s 271(1)(c) by holding it as non-leviable on the ground that the assessee had made a claim of deduction on the basis of legal position of which there was a difference of opinion by ignoring the fact that the legal preposition had already been settled by the decision of the Hon'ble Apex Court in the case of CIT v. Sterling Foods reported in (1999) 237 ITR 579 (S.C) even before the submission of return of income for the Assessment Year under consideration."
3. Briefly stated the facts of the case are that the AO disallowed the claim of deduction u/s 80IB and 80HHC of the Act. The addition on account of the same were upheld by the ld. CIT(A) and the ITAT, Chandigarh Bench also dismissed assessee's second appeal in this regard. The AO initiated penalty proceedings u/s 271(1)(c) of the Act for furnishing the inaccurate particulars of income. The assessee filed reply against initiation of penalty proceedings. The AO observed that the assessee filed the inaccurate particulars of its income and the AO imposed a penalty of Rs. 7,01,096/- u/s 271(1)(c) of the Act.
2 766/Chandi/2011 DCIT V. Duke Fashions (India) Ltd
4. Aggrieved by the order passed by the AO the assessee carried the matter to the ld. CIT(A) who deleted the penalty by observing as under:-
"I have gone through the written submissions of the ld. counsel for the assessee and also perused the relevant assessment record of the case. Though the AO has levied penalty amounting to Rs. 7,01,096/- on account that the assessee filed inaccurate particulars of its income by claming excess deduction u/s 80IB and 80 Hon'ble High Court. Whereas the appellant's ld. counsel for the assessee contended that the penalty levied on highly disputed and debatable issues is unjustifiable. He also contended that there are many judicial pronouncements in favour of the appellant and against the appellant regarding these deductions and the deductions have been claimed on the basis of the certificates issued by the C.As and the said certificates were filed along with the return. The ld. counsel for the assessee also placed reliance on various case laws in support of his contention viz. the Hon'ble ITAT's order dated 23.4.2010 in the case of M/s Preet Forging Pvt Ltd in which the ld. ITAT upheld the order of the ld. CIT(A) of deleting the penalty with respect to denial of deductions u/s 80IB of the Act. The facts of the case are identical with the case in hand. Considering the facts and circumstances of the case, I am of the view that the AO penalty levied in these circumstances is not justifiable as it is settled position of law that penalty u/s 271(1)(c) is not leviable if an assessee has made a claim of deduction on the basis of a legal position on which there is a difference of opinion. There are number of decisions in this regard. The decision of Hon'ble Rajathan High Court in the case of CIT v. Harshvardhan Chemicals Ltd, 259 ITR 212 (Raj) relied upon by the ld. counsel for the assessee alongwith various other decisions goes in favour of the appellant. Rather similar issue had also come up for discussion before the Hon'ble Jurisdictional Bench of ITAT Chandigarh in the case of ACIT, Circle-V, Ludhiana v. M/s Chirag International, 164 Cycle Shopping Centre, Gill Road, Ludhiana in ITA No. 401/Chandi/2008 - Assessment Year 2003-04. Vide their order dated 15.10.2008 the Hon'ble Bench, under similar circumstances, held that under similar facts and circumstances penalty provisions u/s 271(1)(c) of the Act on account of rejection of an assessee'sclaim which was of debatable nature could not be held to have been attracted. The Hon'ble Jurisdictional Bench, therefore, held that the ld. CIT(A) was justified in deleting penalty imposed by the AO u/s 271(1)(c) of the Act under similar facts and circumstances. In view of the ratio of this decision and various other decisions discussed by the ld. counsel for the assessee including the decision of the Hon'ble Jurisdictional Bench in the case of DCIT v. M/s Preet Forging Pvt. Ltd. in ITA No. 1028/CHD/2009 in which it is held that levy of penalty u/s 271(1)(c) of the Act in the facts and circumstances of appellant's is not justified. Further, both the deductions are claimed upon the certificates issued by the C.A., therefore, the ratio 3 766/Chandi/2011 DCIT V. Duke Fashions (India) Ltd of case law of M/s Reliance Petroproducts Pvt Ltd. reported at 322 ITR 158 (S.C) is fully applicable. Penalty levied at Rs. 7,01,096/- is, therefore, deleted."
5. The 'DR' supported the order of AO.
6. We have carefully perused the facts of the case and the submissions made by the ld 'DR'. We have also perused the relevant record. It is evident that the impugned penalty has been levied in respect of disallowances made u/s 80IB and 80HHC of the Act. It is also evident that the said issues are highly debatable. The assessee has not concealed the particulars of income or furnished the inaccurate particulars of income in respect of such items of claims within the meaning of Section 271(1)(c) of the Act. It can be said that it is wrong claim made by the assessee and certainly not the false claim. Having regard to clear finding given by the ld. CIT(A) after citing case laws it is difficult to find any legal infirmity in such finding. Further the Hon'ble Jurisdictional High Court in the case of CIT v. Shahbad Cooperative Sugar Mills Ltd (2010) 322 ITR 73 (P & H) has deleted the penalty in respect of wrong claim made by the assessee. There is a clear distinction between wrong claim and the false claim. The assessee's claim in the present case is a wrong claim. The Hon'ble Supreme Court, in the case of CIT v. Reliance Petroproducts Pvt Ltd (2010) 322 ITR 158 (S.C), supports the case of the assessee. In the said case Hon'ble Supreme Court has observed as under:-
"Penalty - Concealment of particulars of Income - No information given in return found to be incorrect - Making incorrect claim - Does not amount to concealment of "Particulars" - Income Tax Act, 1961, S. 271(1)(c)."
Respectfully following the decisions of Hon'ble Jurisdictional High Court and Hon'ble Supreme Court, the findings of ld. CIT(A) are upheld. Therefore, appeal of the Revenue is dismissed.
7. In the result, appeal filed by the Revenue is dismissed.
Order pronounced on 21st Sept, 2011
Sd/- Sd/-
( SUSHMA CHOWLA) (MEHAR SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Chandigarh: the 21st Sept, 2011
SURESH
Copy to: The Appellant/The Respondent/The CIT(A)/The ld. CIT/The D.R 4 766/Chandi/2011 DCIT V. Duke Fashions (India) Ltd