Income Tax Appellate Tribunal - Delhi
Fashion Factory (International) Pvt. ... vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B
'B' : NEW DELHI
BEFORE SHRI G.D.AGRAWAL,
G.D.AGRAWAL, VICE PRESIDENT AND
SHRI U.B.S. BEDI,
BEDI, JUDICIAL MEMBER
ITA No.
No.5686/Del/2012
Assessment Year : 2003-
2003-04
Income Tax Officer, Vs. M/s Fashion Factory (International)
Ward-
Ward-11(2), Private Limited,
New Delhi. B-252, Okhla Industrial Area,
Phase-
Phase-I,
New Delhi - 110 020.
PAN : AAACF2660A.
(Appellant) (Respondent)
Appellant by : Ms. Nidhi Srivastava, Sr.DR.
Respondent by : None.
ORDER
PER G.D.AGRAWAL, G.D.AGRAWAL, VP :
This appeal by the Revenue is directed against the order of learned CIT(A)-XIII, New Delhi dated 17th August, 2012 for the AY 2003-
04.
2. At the time of hearing before us, none was present on behalf of the assessee though the notice was duly sent on 5th February, 2014. Therefore, we proceed to decide the appeal ex parte qua the assessee.
3. We have heard the arguments of learned DR and perused the material placed before us. We find that learned CIT(A) discussed the factual as well as legal issue in detail and thereafter cancelled the penalty relying upon the decision of ITAT in assessee's own case and the decisions of Hon'ble Jurisdictional High Court dated 29th January, 2012 in the case of Ultimate Fashion Maker Ltd. in ITA No.69/2010 and Dharampal Premchand Ltd. - 11 Taxman.com 437 (Delhi). For ready reference, we reproduce below the finding of learned CIT(A):-
2 ITA-5686/Del/2012 "5.1 I have considered the submission of the appellant and observation of the Assessing Officer. In the assessment order Assessing Officer disallowed deduction u/s 80-IB on interest and incentives, duty draw back received and DEPB. In the appellate proceedings before CIT(A), the decision of the Assessing Officer was confirmed, however, the Hon'ble ITAT allowed deduction u/s 80-IB on duty draw back and incentives received by the appellant but disallowed the claim of deduction u/s 80-IB on the interest income of Rs.22,92,734/-. It is contended by the appellant that Assessing Officer has added Rs.1,82,353/-
under the head interest income not disclosed by the appellant. However, appellant has contended that this interest income was not pertaining to the appellant and this was pertaining to somebody else. In this regard, the appellant has filed a certificate from Syndicate Bank, Nehru Place Branch, dated 24th April, 2012 wherein the bank has stated that the TDS of Rs.17,542/- deduction u/s 94A in the name of Fashion Factory for F.Y. 2002-03 was deducted by Bank but it has nothing to do with M/s Fashion Factory International Pvt.Ltd. having PAN No.AAACF2660A. Therefore, the contended of the appellant that interest income added by the Assessing Officer of Rs.1,82,353/- was not pertaining to the appellant. Therefore, addition made on the basis of said TDS certificates in the hands of the appellant and subsequently the penalty levied by the Assessing Officer on this amount is not justified. The contention of the appellant to this extents found to be acceptable and no penalty is leviable on the amount of Rs.1,82,353/-.
As regard the balance interest income received from FDR's of Rs.21,10,381/- on which u/s 80-IB deduction has been claimed by the appellant, it is submitted by the appellant that it was a debatable issue and was subject matter of conflicting judgments of various High courts as well as Tribunals. Based on such judgments the appellant had claimed that it has not concealed any particulars of income or furnished inaccurate particulars of income. Therefore, no penalty can be levied on the claim made by the appellant. The appellant has further contended that merely because the appellant had claimed the deduction which was not acceptable to the revenue, that by itself would not attract penalty u/s 271(1)(c). The appellant has also contended that where two opinion are possible on a issue no penalty can be levied. The appellant has also contended that interest earned on banks and interest paid 3 ITA-5686/Del/2012 to the other had a direct nexus to the business activities of the appellant, therefore, no inaccurate particulars have been furnished. The appellant has also contended that it had disclosed all material facts pertaining to the computation of deduction u/s 80-IB of the I.T. Act. There was no deliberate attempt on the part of the appellant to conceal any particulars of its income. In this regard, the appellant has relied upon the judgment of Hon'ble ITAT Delhi Bench in the appellants own case for A.Y. 2001-02 ITA No.588/Del/2009 wherein the penalty levied on account of the 80-IB claim made on interest income was deleted with following observations:-
"10. We have heard the parties and have perused the material on record. The assessee is an export house registered under the Govt. of India Export Manufacturing and Exporting Leather Garments Scheme u/s 80IB. The income was received under the duty drawback, DEPB, and interest on FDRs. The assessee claimed deduction, since the receipts were part of the receipts relating to the assessee's industrial undertaking. Full deduction was disallowed, bus such disallowance of claim cannot be said to be, by any stretch of imagination, concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee.
12. In view of the above, the grievance raised by the assessee is found to be justified and is accepted as such. Accordingly, the penalty levied on the assessee is deleted."
The appellant has also relied upon the Delhi High court judgment in the case of CIT vs. Ultimate Fashion Maker Ltd. (ITA No.69/2010) dated 29th January 2010. The gist of judgment is given hereunder:-
"The Tribunal has come to the conclusion that the appellant had disclosed all the primary and material facts and, therefore, it could not be said that the appellant had concealed his income or had furnished inaccurate particulars of income. The Tribunal also noted that the appellant had filed explanation regarding its claim for deduction under section 80-IB of the said Act which, according to the Tribunal, could not be said to be a false claim. 3. More importantly, the Tribunal has come to the conclusion that the issue of claim of DEPB was a debatable one when the appellant filed its return and that it amounted to a clear case of honest difference of opinion regarding the allowability of certain deductions made by
4 ITA-5686/Del/2012 the appellant. Consequently, the Tribunal held that there was no mistake in the order of the Commissioner of Income Tax (Appeals) in deleting the penalty. 4. We see no reason to interfere with the order passed by the Tribunal."
Reliance is also placed on Delhi High Court judgment in the case of CIT vs. Dharampal Premchand Ltd. 11 Taxman.com 437 Delhi.
"Section 271(1)(c), read with sections 80-IA and 80-IB, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 2001-02 - Assessee was engaged in manufacture of flavoured chewing tobacco and kimam - For relevant assessment year, assessee filed its return wherein deductions under sections 80-IA and 80-IB were claimed - Assessing Officer rejected assessee's claim for deduction - He also levied penalty under section 271(1)(c) on ground that assessee had wrongly claimed deduction in its return of income - On appeal, assessee contended that it had disclosed all material facts pertaining to computation of deduction admissible under sections 80- IA and 80-IB - Assessee further contended that it was of opinion that interest earned on banks and interest paid to others had a direct nexus to business activities and, therefore, deduction of said amount would be admissible - It was also put forth that there was no deliberate attempt on part of assessee to conceal particulars of income - Commissioner (Appeals) accepted assessee's explanation and set aside penalty order - Tribunal upheld order passed by Commissioner (Appeals) - Whether on facts, no substantial question of law arose from Tribunal's order - Held, yes."
The facts of the appellant's case are identical with the facts of the above cited judicial pronouncements. Therefore, the ratio of the said judgments is squarely applicable to the case of appellant. In view of the above the penalty u/s 271(1)(c) of the I.T. Act levied by the Assessing Officer was not justified. Hence, the same is cancelled."
4. After considering the facts of the case and the arguments of both the sides, we do not find any infirmity in the above order of learned CIT(A). He considered the factual details as well as also noted that on the similar facts, the penalty was cancelled by the ITAT in assessee's own case for AY 2001-02 vide ITA No.588/Del/2009. He also recorded 5 ITA-5686/Del/2012 the finding that on similar facts, the order of ITAT canceling the penalty on similar facts has been upheld by the Hon'ble Jurisdictional High Court in the case of Ultimate Fashion Maker Ltd. (supra) and Dharampal Premchand Ltd. (supra). In view of the above, we do not find any justification to interfere with the order of learned CIT(A). The same is sustained.
5. In the result, the appeal of the Revenue is dismissed.
Decision pronounced in the open Court on 7th March, 2014.
Sd/- Sd/-
(U.B.S. BEDI)
BEDI) (G.D.AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
PRESIDENT
Dated : 07.03.2014
VK.
Copy forwarded to: -
1. Appellant : Income Tax Officer,
Ward--11(2), New Delhi.
Ward
2. Respondent : M/s Fashion Factory (International) Private Limited, B-252, Okhla Industrial Area, Phase-
Phase-I, New Delhi - 110 020.
3. CIT
4. CIT(A)
5. DR, ITAT Assistant Registrar