CIT, AAYAKAR BHAWAN, KARNAL vs. M/S FLORA EXPORTS SEC-29,HUDA, PANIPAT

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ITA/508/2010HC Punjab & HaryanaPHHC01093449201002 November 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR JUSTICE RAKESH KUMAR JAIN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The court noted that an identical appeal filed by the revenue in the case of CIT v. M/s Raj Overseas (ITA No. 225 of 2010) had already been dismissed by the same court on July 28, 2010. Therefore, following its earlier decision, the present appeal was also dismissed. The judgment does not provide specific reasoning on each of the substantial questions of law raised by the revenue, as the dismissal was based on the precedent of a similar case. The operative direction is the dismissal of the revenue's appeal.

What were the facts?

The revenue, Commissioner of Income Tax, Karnal, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The ITAT had deleted a penalty imposed under Section 271(1)(c) of the Act on M/s Flora Exports, the assessee. The penalty was related to a deduction claimed under Section 80IB on export incentives for the Assessment Year 2002-03. The revenue contended that the assessee had deliberately furnished inaccurate particulars, given existing Supreme Court decisions disallowing such deductions. The High Court noted that an identical appeal filed by the revenue in a similar case (CIT v. M/s Raj Overseas) had been dismissed by the same court on July 28, 2010.

What were the issues?

1. Whether the ITAT was correct in deleting the penalty under Section 271(1)(c) for claiming deduction under Section 80IB on export incentives, by holding there was no deliberate furnishing of inaccurate particulars, considering the Supreme Court decision in Sterling Foods v. CIT was available at the time of filing the return for AY 2002-03? (Question of law turning on Section 271(1)(c) and Section 80IB). 2. Whether the ITAT's decision to delete the penalty under Section 271(1)(c) is justified in light of the Supreme Court decision in Liberty India v. CIT, which re-affirmed the non-allowability of 80IB deduction on export incentives? (Question of law turning on Section 271(1)(c) and Section 80IB). 3. Whether the ITAT's decision to quash the penalty under Section 271(1)(c) on the ground of no deliberate concealment is justified, given the Supreme Court decision in Dharmendra Textile Processors & Others, where an unsubstantiated explanation should be taken as deemed concealment under Explanation 1(B) to Section 271(1)(c)? (Question of law turning on Section 271(1)(c)). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The assessee deliberately furnished inaccurate particulars by claiming deduction under Section 80IB on export incentives, as the Supreme Court decision in Sterling Foods v. CIT was already available. The ITAT's deletion of penalty is unjustified in light of Liberty India v. CIT and Dharmendra Textile Processors & Others, as the assessee's explanation was unsubstantiated and should be considered deemed concealment.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271(1)(c),Section 80IB

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 508 of 2010 Date of decision: 2.11.2010 The Commissioner of Income Tax, Karnal -----Appellant Vs. M/s Flora Exports ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE RAKESH KUMAR JAIN Present:- Mr. Yogesh Putney, Senior Standing Counsel for the revenue. Adarsh Kumar Goel,J. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) against order of the Income Tax Appellate Tribunal, Delhi Bench ‘B’ New Delhi dated 11.9.2009 in ITA No.13/Del/2009, proposing to raise following substantial questions of law:- “i) Whether on the facts and in the circumstances of the case, the 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 80IB on export incentives by holding that there was no deliberate furnishing of inaccurate particulars by the assessee, given the fact that the decision of the Hon’ble Supreme Court in Sterling Foods v. 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 Assessment year 2002-03, and therefore, the assessee was evidently filing inaccurate particulars of income in claiming 80IB on export incentives? ii) Whether the decision of the 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 v. CIT (317 ITR 218) whereby the non-allowability of 80IB deduction on export incentives has been re-affirmed? iii) Whether the decision of the 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 Processors & 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.(1) and ought to have been taken as deemed concealment within Explanation-1(B) of section 271(1) ( c) of the Income Tax Act, 1961?

It is not disputed that identical appeal filed by the revenue has been dismissed by this Court vide order dated 28.7.2010 in The CIT v. M/s Raj Overseas, ITA No.225 of 2010. Accordingly, this appeal is dismissed. (Adarsh Kumar Goel) Judge November 2, 2010

(Rakesh Kumar Jain) ‘gs’ Judge 3

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