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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SHRI S. V. MEHROTRA & SMT. BEENA A. PILLAI
PER BEENA A. PILLAI, JM:
The present penalty appeal has been filed by the assessee against the order of Ld. CIT(A)-XVIII, New Delhi dated 16.09.2010, for the Assessment Year 2007-08, on the following grounds of appeal:
1. The assessee is a 100% export oriented unit and running a business for the past 15 years.
2. On the facts and in circumstances of the case, the order of CIT (A) is wrong, perverse, illegal and against the provisions of law which is liable to be quashed.
2 I.T.A.No.5035/Del/2013
3. On the facts and in circumstances of the case, the learned CIT(A) was not justified in upholding the penalty of Rs.5,29,51 0=00 without appreciating the fact that the assessee has relied on the law prevailing on date of filing his return and has followed the decision of the learned Delhi High Court in CIT vs Elteck SGC (P) Ltd.(2008) 3 DTR (Del)241 along with the decisions of her predecessors and this Hon'ble ITAT.
The learned CIT (A) has failed to appreciate that the cause of action for penalty u/s 271 (1) (c) arose on the date of filing of return which was 31/10/2007. On that date the assessee had all previous year decisions in his favor and had been following the decision of CIT vs. Elteck SGC (P) Ltd. (2008) 3 DTR (Del) 241 which was the binding decision of the High Court.
Furthermore the learned CIT(A) while adjudicating on the assessment for A.Y.2003-04 has observed that this very issue has been decided in favor of the assessee for AY 2002-03 and had also observed that the Hon’ble Delhi High Court has also dismissed the second appeal filed by the revenue against the ITAT order in favour of the assessee passed by the Hon'ble ITAT C Bench vide order dated 25/04/2008 in for A Y 2003- 04.
6. The decision of the learned Supreme Court in Liberty India came after the assessee had filed his return which led to the ITAT deciding on 24/01/2012 that deduction u/s 80lB was not allowable to the assessee .
The appellant has respectfully to submit that since the assessee has made full and complete disclosure of all details as required and a mere change in decision by the learned Courts should not be a ·ground for levying penalty.
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In our case the assessee had filed his return on 31/10/2007 on which date the law as up held by Delhi High Court was prevalent and the decision of Supreme Court came nearly two years later. There was no way the assessee can be accused of furnishing inaccurate particulars. Furthermore the assessee had been claiming this deduction since AY 2001-02 and the same was being allowed every year by the Department.
The learned CIT(A) has dwelled upon the meanings of the words conceal and Inaccurate in her order but has at no point crystallized the particulars which are inaccurate. She has also stated that if the assessee is able to offer an explanation which is bonafide and all the facts relating to the same have been disclosed by him, the assessee shall be out of the clutches of explanation 1 of Sec.271 (1)( c) of the Act. Our case fairly and squarely falls within this category as we had claimed the deduction u/s 8018 on the bonafide belief that since the orders of all appellate authorities were in favour of allowing the deduction, there was no reason for there being any other interpretation or inference being drawn. Furthermore we had disclosed all material facts and had also furnished the audit report in Form 10CC8 at the time of filing the return.
The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing."
11. In view of the above facts we would request you to kindly quash the penalty of Rs.5,29,510=00 unfairly imposed by the learned officer and confirmed by the CIT(A).”
The facts of the case are as under:-
4 I.T.A.No.5035/Del/2013 The assessee is a private limited company and engaged in the manufacturing and export of readymade garments. The assessee filed its return of income on 31.10.2007 declaring total income of Rs.40,37,467/-. During the year under consideration, the assessee had claimed deduction u/s 80-IB amounting to Rs.17,30,343/-. The assessment was completed u/s 143(3) of the I.T. Act, 1961 on 18.12.2009 at a total income of Rs.1,09,75,970/- after making various additions in the return of income. On appeal before Ld. CIT(A), he deleted the addition made by the Assessing Officer u/s 80-IB of the Act vide order dated 15.09.2010. Ld. CIT(A) while deleting the addition u/s 80-0IB of the Act, had relied upon the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs Elteck SGC (P) Ltd. (2008) 3 DTR 241 (Del.). Ld. CIT(A) in quantum appeal, which held as under:- “5.1. I have carefully considered the assessment order and the submission made by the Id. AR. This issue has been decided 'in favour of the appellant by the undersigned for A. Y. 2002-03 vide order dated 21.01.2010 in appeal no. 91/07-08 basing on the decision of the Hon'ble Delhi High Court in CIT v. Eltek SGS (P) Ltd. (2008) 300 ITR 6 (Del.) and the decision of the Hon'ble ITAT Delhi 'C' Bench vide order dated 25.04.2008 in ITA No.4797/De1./2007 for A Y 2003- 04 in the case of the appellant company and also the fact that the; Hon'ble Delhi High Court has dismissed the second appeal filed by the Revenue against the above IT AT order vide High Court's order dated 13.04.2009 in by holding, that in view of the decision in the case of CIT vs. Elteck SGS
5 I.T.A.No.5035/Del/2013 (P) Ltd. (supra), no substantial question of law arises for consideration. Considering the same, since the issues are identical this year, the impugned addition of Rs.17,30,343/- is deleted.”
2.1 On appeal against the order of Ld. CIT(A), the Revenue preferred appeal before the Tribunal, which was allowed and the Tribunal allowed the appeal of Revenue by rejecting the claim u/s 80-IB of the Act in view of the decision of Hon'ble Supreme Court in the case of Liberty India Pvt. Ltd. Vs CIT reported in 317 ITR 218. 2.2 The legal position being so, Assessing Officer issued show cause notice and initiated penalty proceedings against the assessee for filing inaccurate particulars thereby concealing the particulars of income of Rs.17,30,343/-.
Ld. CIT(A) confirmed the penalty levied by the Assessing Officer.
4. Aggrieved by the order of Ld. CIT(A), the assessee is in appeal before us now.
5. Ld. A.R. submitted that the assessee filed its return of income on 31.10.2007 claiming deduction of Rs.17,30,343/- u/s 80-IB of the Act. Assessee at the time of filing of return of income was having various orders of previous years in assessee’s own case, wherein the claim of deduction u/s 80-IB have been gsranted. Ld. A.R. submitted that subsequently the decision of M/s. Elteck SGS (P) Ltd. (supra) supported the claim of assessee vide order dated 19.02.2008. Ld. A.R. further submitted that 6 I.T.A.No.5035/Del/2013 at the time when revenue’s appeal was pending before this Tribunal, Hon'ble Supreme Court in the case of Liberty India Ltd. Vs CIT (supra) had denied the claim u/s 80-IB in the present facts as that of assessee. 5.1 Ld. A.R. further submitted that the notice for initiation of concealment penalty was issued on 17.10.2012 i.e. after passing of order by this Tribunal in the quantum appeal. 5.2 Accordingly, Ld. A.R. prayed that there was no concealment of any particulars of income by the assessee as the claim u/s 80-IB by the assessee in its return of income was supported by various orders of previous years in assessee’s own case. 5.3 On the contrary, Ld. D.R. submitted that the decision of Elteck SGS Pvt. Ltd (supra) by the Hon'ble Jurisdictional High Court was not available at the time when the assessee had filed its return of income and, therefore, he submitted that disallowance made by Assessing Officer was correct which leads to initiation of penalty proceedings u/s 271(1)(c) for filing inaccurate particulars of income.
We have perused the orders passed by the authorities below and the submissions made by both the parties. The dates of events which lead to the initiation of penalty proceedings in the present case are as under:
7 I.T.A.No.5035/Del/2013 i) Return filed 31.10.2007 ii) assessment order passed 18.12.2009 iii) Hon'ble High Court passed order in case of Elteck SGS P. Ltd. 19.02.2008 iv) Hon'ble Supreme Court passed order in case of Liberty India Ltd. …………….. v) ITAT decision for the year under consideration in quantum appeal …………….. vi) Penalty proceedings initiated 17.10.2012 6.1 From the above chronological dates of events, it is clear that the assessee had bona-fidely claimed deduction u/s 80-IB at the time of filing its return of income which was covered by previous year orders in assessee’s own case. The claim of assessee so raised was subsequently upheld by Hon'ble Jurisdictional High Court in the case of Elteck SGS P. Ltd. (supra). It is observed that the decision of Elteck SGS P. Ltd. (supra) was reversed by Hon'ble Supreme Court in Liberty India Ltd. Vs CIT (supra). 6.2 We do not find any concealment on behalf of the assessee, as the claim was supported by the relevant orders and the assessee in a bona fide belief had made the claim u/s 80-IB of the Act in the return filed for the year under consideration. It is observed by us that this is not a fit case for initiation of concealment penalty proceedings as the Assessing Officer has initiated the penalty proceedings only after the Tribunal decision and the claim of assessee respectfully following the decision of Hon'ble Supreme Court in the case of Liberty India Ltd. (supra).
8 I.T.A.No.5035/Del/2013 6.3 We, therefore, are of the considered opinion that the penalty proceedings initiated needs to be dropped. Accordingly the grounds raised by the assessee stand allowed.
7. In the result, appeal filed by the assessee stands allowed. Order pronounced in the open court on 09th May, 2016.