The High Court dismissed the Revenue's income-tax appeals challenging the deletion of penalties under Section 271(1)(c). The court held that the Tribunal correctly found the issue debatable and the claim was bona fide, thus penalty was not attracted.
The appeals filed by the Revenue against the order deleting the penalty were dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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Income Tax Appeal No. 793 of 2010
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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
Income Tax Appeal No. 793 of 2010 Date of decision: 12.1.2011
The Commissioner of Income Tax Karnal
--- Appellant
Versus
Sushi! Gupta, Prop. of MIs. Aalishan Exports, Panipat.
--- Respondent
CORAM: HON'BlE MR. JUSTICE ADARSH KUMAR GOEl HON'BlE MR. JUSTICE AJAY KUMAR MITTAl
Pr~sent:i Mr. Yogesh Putney, Senior Standing Counsel for the appellant.
&lAY KUMAR MITTAl, J.
By this order, four appeals, filed under Section 260A of the Intome-Tax Act, 1961 (for short "the Act") by the Revenue, i.e. Income Tax Appeal Nos. 793, 799, 801 and 802 of 2010 are being disposed of as they arise out of a common order, dated 17.3.2010, of the Income Tax Appellate Tribunal, Delhi Bench 'G', New Delhi (in short "the Tribunal"), relating to the assessment year 2000-2001. For facility of -¥disposal, the facts are being taken from Income Tax Appeal No. 793 of 2010.
The Revenue has claimed that the following substantial questions of law arise in these appeals for determination of this Court:
Income Tax Appeal No. 793 of 2010
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"1-Whether on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal was right in law in deleting the penalty imposed under Section 271 (1)(c) on the amount of deduction claimed under Section 80-18 on export incentive, given the fact that the decision of the Hon'ble Supreme Court in the cases of Sterling Foods Vs. CIT dated 15.4.1999 (237 ITR 579) disallowing claim of deduction under Chapter VIA of the Act on export incentives was already available to the assessee at the time of filing the return of income for the assessment year 2000-01 and, therefore, the assessee was evidently filing inaccurate particulars of income in claiming 80-18 on export incentives? 2- Whether the decision of the learned Income Tax Appellate Tribunal to delete the penalty under Section 271 (1)(c) of the Act is justified in the light of the decision of the Hon'ble Supreme Court in Liberty India Vs. CIT (317 ITR 218), whereby following the decision of the Hon'ble Supreme Court in Sterling Foods Vs. CIT dated 15.4.1999 (237 ITR 579), the non-allowability of 80-18 deduction on export incentives has been re-affirmed?
3- Whether the decision of the Ld. Income Tax Appellate Tribunal quashing the penalty order under Section 271(1)(c) on the ground that there is no deliberate concealment is justified in the light of the decision of the Hon'ble Apex Court in Dharmendra Textile Processor and
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Income Tax Appeal No. 793 of 2010
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others, 306 ITR 277 (SC), whereas the assessee had offered an explanation which could not be substantiated in the light of the Apex Court judgment referred in question No.(i) and ought to have been taken as deemed concealment within Explanation - 1(8) of Section 271 (1)(c) of the Income Tax Act, 1961?"
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The facts, in brief, necessary for adjudication, as narrated in the appeal, are that the return of income for the assessment year in question furnished by the respondent-assessee at an income of Rs. 18,7601- was processed under Section 143(1)(a) of the Act. It was detected that since the turnover of the assessee for the financial year 1:999-2000, relevant to the assessment year in question was more !i titian 10 crores, no deduction under Section 80HHC was allowable to it o~ profit on transfer of the Duty Entitlement Pass Book (DEPB) and t~eI same having been wrongly allowed, notice under' Section 148 was , iJsued to the assessee. Consequently, the matter was decided under III . ~ection 143(3) of the Act on 30.10.2006 whereby deduction under II! SectionI 80-IB of Rs. 61, 26,445/out of Rs. 1,10,07,743/on total j business profit of Rs. 5,50,57,472/was disallowed. The assessing officer, in particular, held that the assessee had furnished inaccurate particulars of its income in form of claiming unallowable deduction under Section 80-IB on expqrt incentives. Besides, the assessing officer also initiated proceedings against the assessee for imposition of penalty under Section 271(1)(c) of the Act and, thus, issued the requisite notice. In the appeal carried by the assessee, the Commissioner of Income-tax (Appeals) {in short "the CIT(A)"},
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Income Tax Appeal No. 793 of 2010
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observed in clear terms that on the issue of deduction under Section 80-IB, in the instant case two views were possible and the same were supported by judicial pronouncements. The CIT(A) further observed that in the scenario of the present case it could not be said with a definite view that the assessee had furnished any inaccurate particulars or had concealed any material. The CIT(A) consequently, deleted the penalty imposed under Section 271 (1)(c) of the Act vide order dated 20.8.2009.
The Revenue feeling aggrieved~ approached the Tribunal ~ c?rrying appeal against the order of the CIT(A). The Tribunal put its sal of affirmation on the order of the lower appellate authority and i, dismissed"the Revenue's appeal by order dated 17.3.2011 and it is II hfW the Revenue is once again in appeal before us under Section 2OA of the Act.
I We have heard learned counsel for the parties and have prused the record. II! The only point for consideration by this Court is, whether in i te facts and circumstances, the penalty imposed under Section 2t1(1)(c) of the Act on the amount which was wrongly claimed as deduction under SeCtion 80-18 on account of export incentive, had been rightly deleted by the CIT(A) and affirmed by the Tribunal.
Similar issue came up for consideration before this Court in Income Tax Appeal No. 225 of 2010 (The Commissioner of Income Tax Vs. Mis. Rai Overseas) decided on 28.7.2010 wherein it has been held as under:
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No. 793 of 2010
"4. In view of factual finding of the Tribunal, it cannot be disputed that the issue was debatable and deduction claimed by the Assessee did not lack bonafides. In such a situation, penalty under Section 271(1) (c) of the Act was not attracted. In recent judgment of the Hon'ble Supreme Court in CIT v. Reliance Petroproducts (P) Ltd. [2010] 230 CTR 320, the legal position to this effect has been reiterated. Ifthe Assessee has made full disclosure in the return, claim for deduction cannot be held to be giving of inaccurate particulars. The view taken by the Tribunal is, thus, a possible view."
In the case in hand, the Tribunal while upholding the order of: CIT(A) deleting the penalty, had recorded that the claim of the iI a$sesseeI was a bona fide claim for deduction and as such no penalty I ~ w~s exigible.
In view of the above, there is no illegality in the order i~pugnedI herein and, thus, finding no merit in the appeals, the same ate dismissed.
(AJAYKU~TTAL) JUDGE
January 12, 2011 rkmalik
~ (ADARSH KUMAR GOEl) JUDGE
2 issues framed by the court
Whether the penalty under Section 271(1)(c) was rightly deleted by the CIT(A) given the disputed nature of the deduction.
Whether the claim for deduction lacked bonafides and furnished inaccurate particulars of income.
Colour shows how this judgement treated each authority
Sterling Foods Vs. CITReferred¶22
(237 ITR 579) Sterling Foods Vs. CIT dated 15.4.1999
Liberty India Vs. CITReferred¶22
(317 ITR 218) Liberty India Vs. CIT
Dharmendra Textile Processor and othersReferred¶23
(306 ITR 277) Dharmendra Textile Processor and others
CIT v. Reliance Petroproducts (P) Ltd.Relied on¶38
(230 CTR 320) CIT v. Reliance Petroproducts (P) Ltd.
The Commissioner of Income Tax Vs. Mis. Rai OverseasFollowed¶37
(Income Tax Appeal No. 225 of 2010) The Commissioner of Income Tax Vs. Mis. Rai Overseas decided on 28.7.2010
4 provisions across 1 enactments
The Commissioner of Income Tax Karnal
Sushil Gupta, Prop. of M/s. Aalishan Exports, Panipat
AJAY KUMAR MITTAL
ADARSH KUMAR GOEL
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
