Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI SANJAY GARG & Ms. ANNAPURNA GUPTA
आदेश/Order
Per Sanjay Garg, Judicial Member: The captioned appeals have been preferred by the assessee against the separate orders dated 19.11.2018 & 16.11.2018 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as ‘CIT(A)’]. ITA No. 120/Chd/2019 : 2. In ITA No. 120/Chd/2019 the assessee has agitated the action of the Ld. CIT(A) in confirming the penalty levied by the Assessing Officer u/s 271 (1)(c) of the Income Tax Act, 1961 (in short 'the Act').
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 2 The assessee in this respect has taken following grounds of appeal:- 1. The order of Ld. Commissioner of Income Tax (Appeals)-1, Chandigarh (Ld. CIT Appeals) upholding demand of penalty under section 271(l)(c) being unlawful, perverse and against facts and law needs to be set aside, annulled and vacated;
Ld. CIT Appeals order upholding demand of penalty under section 271(l)(c), by considering appellant's bonafide claim of 100% deduction u/s 80-IC based on substantial expansion done by it during AY 2011-12 as an act of concealment of income or furnishing inaccurate particulars of income, where the issue of allowing such 100% deduction u/s 80-IC has been debatable for long, being wrong and unlawful, needs to be set aside, annulled and vacated;
Without appreciating facts and circumstances of the case, Ld. CIT Appeals, has erred in upholding penalty under section 271(l)(c) imposed based on addition made (by allowing 25% deduction instead of 100% deduction u/s 80-IC) by holding appellant having claimed 100% deduction without establishing substantial expansion, that too, without considering assessment order dated 31.12.2016 for AY 2011-12 itself and Hon'ble ITAT's order vide ITA No. 586/Chd/2017 dated 15.02.2018 allowing 100% deduction under section 80-IC for AY. 2013-14, in appellant's own case, order so issued, being contrary to the facts and legal position, needs to be set aside, annulled and vacated.
Ld. CIT Appeals has erred in upholding demand of penalty without considering the fact that Ld. Assessing Officer had neither provided opportunity of being heard properly nor considered all documents/submissions and information, as submitted during assessment proceedings, the order so issued,
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 3 against the principles of natural justice, which needs to be set aside, annulled and vacated;
The appellant craves leave to add, amend or delete any of the grounds of appeal and also to furnish additional evidence before or at the time of hearing of appeal/ during the course of the appeal proceedings.
The brief facts relating to the issue are that the assessee had set up
a new Industrial unit after first of January 2003 and had already claimed
100% depreciation u/s 80IC of the Act for the first five assessment years
starting from assessment year 2006-07. As per the provisions of section
80IC of the Act, the assessee was entitled to deduction @ 100% u/s
80IC of the Act for the first five years and thereafter for another five years @ 25%. However, the assessee in the 6th year claimed deduction @ 100% on account of substantial expansion of the unit. This is the 7th
year from the initial assessment year from which the assessee had
started claiming deduction u/s 80IC of the Act. The Assessing Officer
held that the benefit of deduction @ 100% on account of substantial
expansion was not available to the units which had already claimed
deduction @ 100% for first five years after setting up of the unit after
01.01.2003. The Assessing Officer, accordingly, restricted the claim of
deduction @ 25%. The Assessing Officer separately initiated penalty
proceedings u/s 271 (1)(c) of the Act for claiming excess deduction
and thereby levied the impugned penalty for furnishing of inaccurate
particulars of income.
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 4
The Ld. CIT(A) confirmed the penalty so levied by the Assessing
Officer.
At the outset, the Ld. Counsel for the assessee has invited our
attention to the copy of order passed by Hon'ble Supreme Court in the
case of ‘M/s Adley Formulations vs CIT, Chandigarh’ ‘ in Civil Appeal
No. 4587 of 2019 & Ors vide order dated May 03,2019. The contents of
the said order are reproduced as under:-
“IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4586 OF 2019 (Arising out of SLP (C) No. 11616/2019) (@ D.No. 11542/2019)
M/S ADLEY FORMULATIONS Appellants (s)
VERSUS COMMISSIONER OF INCOME TAX, CHANDIGARH Respondent(s) WITH CIVIL APPEAL NO. 4587 OF 2019 (Arising out of SLP (C) No. 11617/2019) (@ D.No. 11953/2019)
CIVIL APPEAL NOS. 4588-4589 OF 2019 (Arising out of SLP (C) No. 11083-11084/2019)
O R D E R Delay condoned.
Leave granted.
The impugned judgments have relied upon a judgment of this Court in Commissioner of Income Tax vs. M/s Classic Binding Industries, [Civil Appeal
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 5 No. 7208 of 2018] which has since been overruled by our judgment in Pr. Commissioner of Income Tax, Shimla vs M/s Aarham Softronics [Civil Appeal No. 1784 of 2019] delivered by a three-Judge Bench on 20.02.2019.
Following the aforesaid judgment, we allow the appeals and set aside the impugned judgments of the High Court.
Sd/- .......................... J. (ROHINTON FALI NARIMAN)
Sd/- .......................... J (VINEET SARAN) New Delhi; May 03, 2019.”
The Ld. Counsel for the assessee has further submitted that
assessee is a proprietor of M/s Adley Formulations. That the appeal
before the Tribunal was filed in the quantum proceedings in the name of
the assessee Shri Vijay Kumar Batra, Prop. of M/s Adley Formulations
bearing ITA No. 241/Chd/2016 for assessment year 2012-13, which was
dismissed by the Tribunal vide order dated 21.11.2016 following the
decision of the Coordinate Chandigarh Bench of the Tribunal in ‘M/s
Hycron Electronics, Baddi, Solan vs ITO’ in ITA No. 798/Chd/2012
dated 27.5.2015. Further, the assessee preferred the appeal against the
said order of the Tribunal before the Hon'ble High Court in the name of
the proprietorship concern of the assessee i.e. M/s Adley Foundations.
The Ld. counsel has invited our attention to the common order of the
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 6 Hon'ble jurisdictional High Court of Punjab & Haryana dated 6.9.2018
including ITA No.303 of 2017 in the name styled as ‘M/s Adley
Formulations PAN No. AEJPB0879B vs Commissioner of Income Tax,
Chandigarh’ which was dismissed by the Hon'ble High Court vide order
dated 6.9.2018 following the decision of the Hon'ble Apex Court in the
case of ‘CIT vs M/s Classic Binding Industries’, Civil Appeal No(s)
7208 of 2018 decided on 20.8.2018, wherein, the Hon'ble Supreme Court
has held that the assessee, who had availed 100% deductions for first
five years on setting up of a manufacturing unit as prescribed under sub
section (2) of section 80IC of the Act, cannot claim deduction @ 100%
again for the next five years on account of substantial expansion.
However, the said decision of the Hon'ble Supreme Court has been
recalled and the issue has been decided in favour of the assessee in the
bunch of appeals with the lead case being ‘Pr. CIT, Shimla vs M/s
Aarham Subtonics’ in Civil No. 1784 of 2019 dated 20.2.2019.
Following the said decision, the Hon'ble Supreme Court vide order dated
03.05.2019 (supra) has allowed the appeal of the assessee.
We find that the Special Leave Petition (Civil) No.11542/2019
before the Hon'ble High Court was filed against the order of the Punjab
& Haryana High Court dated 6.9.2018 passed in ITA No. 303/ 2017. As
observed above, ITA No. 303 of 2017 was filed by the assessee against
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 7 the order of the Tribunal dated 21.11.2016 in ITA No. 241/Chd/2016
for assessment year 2012-13, which belong to the same assessee.
In view of this, the issue in the quantum proceedings has been
decided by the Hon'ble Supreme Court in favour of the assessee.
Since the quantum additions, on the basis of which the impugned
penalty was levied, already stood deleted by the Hon'ble Supreme Court,
hence, the very basis on which the penalty was levied had ceased to
exist. In view of this, the impugned penalty levied by the Assessing
Officer is not sustainable in the eyes of law, the same is accordingly
ordered to the deleted.
So far as the findings of the Ld. CIT(A) that the Assessing Officer
has made a observation that the assessee has not proved that any
substantial expansion has been carried out, in our view, the said
observation of the Ld. CIT(A) is misplaced. We have gone through the
order of the Assessing Officer in quantum proceedings as well as the
order of the Assessing Officer in penalty proceedings and find that the
Assessing Officer has made a general observation by picking up certain
lines as such from the order of the Tribunal in the case of ‘M/s Hycron
Electronics, Baddi, Solan vs ITO’ (supra) and no separate observation
has been made by the Assessing Officer in the case of the assessee that
no substantial expansion has been carried out.
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 8 In view of this, the order of the CIT(A) is not sustainable in the
eyes of law and the same is hereby set aside.
The penalty levied by the Assessing Officer is accordingly ordered
to be deleted.
ITA No.121/Chd/2019 (A.Y. 2015-16)
This appeal is relating to the quantum proceedings in respect of
denial of deduction @ 100% in the assessment year under consideration
which is the fifth year of claiming deduction @ 100% after the initial
assessment year 2011-12 for claiming of deduction on account of
substantial expansion.
As observed above, the issue is already settled by the decision of
the Hon'ble Supreme Court in the case of assessee ‘M/s Adley
Formulations vs CIT, Chandigarh’ ‘ in Civil Appeal No. 4587 of 2019 &
Ors vide order dated May 03, 2019 (supra)
In view of this, the disallowance made by the lower authorities is
set aside and it is directed that the assessee is entitled to deduction @
100% on account of substantial expansion. However, as laid down by
the Hon'ble Supreme Court in the case of ‘Pr. CIT, Shimla vs M/s
Aarham Subtonics’ dated 20.2.2019 (supra), the total deduction period
u/s 80IC of the Act will not exceed 10 years from the initial year of
setting up / commencement of the unit. To be made more clearer, since
ITA Nos. 120 & 121-chd-2019 Shri Vijay Kumar Batra, Chandigarh 9 the assessment year 2015-16 under consideration is the 10th year of claiming deduction u/s 80IC of the Act, thus, the assessee will not be entitled to claim deduction u/s 80IC of the Act for any subsequent year. With the above observations, both the appeals of the assessee stand allowed. Order pronounced in the Open Court on 31.12.2019.
Sd/- Sd/- (अ�नपूणा� गु�ता / ANNAPURNA GUPTA) (संजय गग� / SANJAY GARG) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 31.12..2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar