COMMISSIONER OF INCOME TAX , KARNAL vs. M/S SHIV SHAKTI EXPORTS PANIPAT

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ITA/267/2010HC Punjab & HaryanaPHHC01093183201013 August 2010Bench: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeals filed by the Revenue. The Court noted that the matter was covered by its own order dated 28.7.2010 in I.T.A. No.225 of 2010, CIT v. M/s Raj Overseas, which was against the Revenue. Therefore, the appeals preferred by the Revenue were dismissed. The specific reasoning of the ITAT or the High Court on the merits of the penalty deletion, or the application of the cited Supreme Court judgments to the facts of the case, is not detailed in this judgment. The operative direction was to dismiss the appeals.

What were the facts?

The Revenue, Commissioner of Income Tax, filed appeals under Section 260-A of the Income Tax Act, 1961, against the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had deleted the penalty imposed under Section 271(1)(c) of the Act on the assessee, M/s Shiv Shakti Exports. The penalty was related to a deduction claimed under Section 80-IB on export incentives for Assessment Year 2002-03. The Revenue contended that the assessee had deliberately furnished inaccurate particulars by claiming this deduction, especially in light of Supreme Court decisions like Sterling Foods Vs. CIT and Liberty India Vs. CIT, which disallowed such claims. The Revenue also argued, citing Dharmendra Textile Processors & Ors., that mens rea was not essential for levying penalty under Section 271(1)(c) when there was a loss to the revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in deleting the penalty imposed under Section 271(1)(c) for claiming deduction under Section 80-IB on export incentives, considering the Supreme Court decision in Sterling Foods Vs. CIT which disallowed such claims, and thus the assessee had furnished inaccurate particulars for AY 2002-03? (Question of law) 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 Vs. CIT, which re-affirmed the non-allowability of 80IB deduction on export incentives? (Question of law) 3. Whether the ITAT's decision to quash the penalty order under Section 271(1)(c) on the ground that there was no deliberate concealment is justified, considering the Supreme Court decision in Dharmendra Textile Processors & Ors., which held that mens rea is not an essential ingredient for levying penalty under Section 271(1)(c) and that such levy is mandatory for loss to revenue? Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The assessee deliberately furnished inaccurate particulars by claiming deduction under Section 80-IB on export incentives, relying on the Supreme Court decisions in Sterling Foods Vs. CIT and Liberty India Vs. CIT. The Revenue also argued, citing Dharmendra Textile Processors & Ors., that mens rea is not required for penalty under Section 271(1)(c) and that the penalty is mandatory when there is a loss to revenue due to a wrong claim.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.267 of 2010 (O&M) & connected case being I.T.A. No.268 of 2010 Date of decision: 13.8.2010 The Commissioner of Income Tax. -----Appellant. Vs. M/s Shiv Shakti Exports. -----Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Yogesh Putney, Advocate for the revenue. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. No.267 and 268 of 2010, as common questions of law are involved in both the appeals. 2. I.T.A. No.267 of 2010 has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 20.5.2009 in I.T.A. No.3814/Del/2008 passed by the Income Tax Appellate Tribunal, Chandigarh, proposing to raise following substantial questions of law:- “1. 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 u/s 271(1)(c) on the amount of deduction claimed u/s 80-IB on export incentives by

I.T.A. No.267 of 2010 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 Vs. CIT dated 15.04.1999 (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 A.Y. 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 u/s 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 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 u/s 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 & Ors., 306 ITR 277 (SC), which has held that mens rea is not an essential ingredient for levy of penalty u/s 271(1) (c) of the Act, and that levy of such penalty is mandatory as remedy for loss to revenue, and given the fact that such loss to revenue has occurred in the instant case due to wrong claim by the assessee w.r.t. deduction u/s 80IB?” 2

I.T.A. No.267 of 2010 3. Since the matter is covered by order of this Court dated 28.7.2010 in I.T.A. No.225 of 2010 CIT v. M/s Raj Overseas against the revenue, these appeals are dismissed. 4. A photocopy of this order be placed on the file of other connected case. (ADARSH KUMAR GOEL) JUDGE August 13, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3

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