SHIVAM STEEL & TUBES P.LTD,MUMBAI vs. ACIT CIR 5(3),

Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order dated 03.6.2014 of CIT(A)-9 Mumbai, the assessee has filed the present appeal.Assessee-company,engaged in the business of steel tubes and furniture filed its return of income on 29.9.2009 ,declaring total income Rs.1.24crores.The Assessing Officer(AO)completed the assessment u/s. 143(3),on 5.12.2012,determining its total income at Rs.1.35crores.

2.Effective Ground of appeal is about confirming the penalty amounting to Rs.3.69 lakhs levied u/s.271(1)(c) of the Act, by the AO.During the assessment proceedings the AO made two disallowances, i.e. disallowance u/s. 14A (Rs. 16,569/-) and disallowance u/s.80IB (Rs.10.71lakhs).Penalty proceedings u/s. 271(1)(c) were also initiated at the time of assessment. In its reply to penalty notice,the assessee argued that it had furnished all details of expendi -ture in its return,that the AO did not agree with the contention of the assessee and observed that by not filing any appeal against the additions it had admitted its fault, that the assessee had relied upon the case of Reliance Petro Products,that the facts of the case under appeal were different from the case of Reliance Petro Products, that it had furnished wrong claim u/s.80IB, that it had also claimed 1

4691/M/14-Shivam Steel&Tubes P.Ltd. expenditure in relation to exempt income, that the assessee had without any reasonable cause furnished inaccurate particulars of income and thereby had committed default u/s. 271(1)(c).The AO levied penalty of Rs.3,69,880/-.

3.Aggrieved by the penalty order of the AO the assessee preferred an appeal before the FAA. Before him, it argued that it had claimed deduction u/s. 80IB (3)(ii) of the Act, amounting to Rs.53.38 lakhs,that the claim was computed by a Chartered Accountant (CA), that before the completion of assessment it filed a revised computation with regard to deduction u/s. 80IB, that the excess claim was surrendered by it, that it had filed voluntary revised computation, that in the original computation for deduction it had claimed interest income as business income attributable to industrial undertaking, that the CA of the assessee had advised that interest income should be claimed for the purpose of deduction u/s. 80IB,that later on he advised to file a revised claim, that the revised computa - tion was filed as the advice of CA, that AO had completed assessment by accepting the figure filed in the revised claim, that the excess deduction claimed in the original computation was voluntarily withdrawn before issue of any notice by the AO, that the act of withdrawing excess deduction claimed was voluntary and was not intentional or deliberate to defraud the Revenue based on certificate issued by CA, that the Section 80IB claim could be made only on the basis of the report in Form 10CCCB issued by a CA, that the assessee had no option but to follow calculation made by him.It relied upon the cases of Reliance Petro Products (322 ITR158),Aditya Birla Nova Ltd. (14th August, 2012 of Hon'ble Bombay High Court),Dharmpal Premchand (329ITR572), Bennett Coleman & Co.Ltd.(33taxmann.com227).

4.After considering the submission of the assessee and the penalty order the First Appellate Authority (FAA) held that penalty u/s.271(1)(c) was leviable for both the additions made by the AO, that the assessee had not furnished correct 2

4691/M/14-Shivam Steel&Tubes P.Ltd. particulars of income/expenditure, that being a corporate entity. it was expected to know the basic aspect of taxation, that it had not disallowed any expenditure u/s.14A though it had exempt income, that it had claimed deduction u/s/80IB on its income, that the revised computation in respect of deduction u/s. 80IB was filed after the AO asked it to furnish the details of interest,that disclosure in revised computation filed after detection of fault by the department, could not be held as a true or voluntary disclosure, that the cases relied upon by the assessee were not applicable in the case under consideration,that the assessee had attempted to conceal the income by furnishing excess claim of expenses and deduction. Finally, he upheld the order of the AO.

5.During the course of hearing before us, the Authorised Representative (AR) stated that assessee had filed revised computation with regard to 80IB claim, that the original claim was filed as per certification given by the CA.He relied upon the case of Somany Evergree Knits (352ITR592),Dharampal Premchand (supra),Bennett Coleman & Co. Ltd. (supra). The Departmental Representative (DR)supported the order of the FAA and stated that assessee filed the revised computation after the AO made enquiries. Assessee is a corporate entity, that it had made a patently wrong claim. He relied upon the cases of Mak Data (350 ITR593) and Zoom Communications(327ITR590).

6.We have heard the rival submissions and perused the material before us.We find that assessee had filed a revised computation regarding 80IB(3) deduction that it had reduced the claim during the assessment proceedings, that AO had made disallowance u/s.14A of the Act, that the assessee did not contest the quantum additions, that the AO had levied penalty on account of excess claim of 80I deduction and disallowance made u/s.14A, that the FAA confirmed the order of the AO.

4691/M/14-Shivam Steel&Tubes P.Ltd.

In our opinion, penalty cannot be levied just because additions are made during assessment proceedings and the assessee did not agitate the additions before the Appellate Authorities.As per the settled principles of taxation jurisprudence penalty proceeding and assessment proceedings are totally separate and distinct. Addition made during assessment cannot and should not result in automatic levy of penalty.Penalty has to be levied considering the explanation of assessee filed during penalty proceedings.In our opinion,no penalty could be levied for disallowance made u/s.14A.The disallowance does not prove filing of inaccu - rate particulars of income.Disallowance under the said section could be made for so many reasons but that does not mean that the assessee has to be visited by the penal provisions.As far as revised commutation of 80IB(3) is concerned,we find that the assessee had made both the claim-original as well as revised as per the advice of professional i.e., a CA.Thus there was a reasonable cause for the assessee to file revised computation. Here,we would like to refer to the case of Somany Evergree Knits Ltd.(supra),decided by the Hon’ble Bombay High Court.The head notes of the matter read as under: “ PENALTY — EXCESS CLAIM TO DEPRECIATION — WRONG CLAIM TO LOSS AS REVENUE EXPENDITURE — MISTAKES RECTIFIED DURING ASSESSMENT PROCEEDINGS SINCE TIME TO FILE REVISED RETURN EXPIRED — NO DISPUTE THAT MISTAKE BONA FIDE — NO PENALTY LEVIABLE.” Respectfully following the above case and considering the peculiar facts and circumstances of the case,we are of the opinion that the assessee had not furnished inaccurate particulars of income.Therefore,reversing the order of the FAA,effective ground of appeal is decided in favour of the assessee. As a result, appeal filed by the assessee stands allowed. फलतः िनधा�रती �ारा दािखल क� गई अपील मंजूर क� जाती है. Order pronounced in the open court on 5th August,2016. आदेश क� घोषणा खुले �यायालय म� दनांक 5 अग!त, 2016 को क� गई । Sd/- Sd/- (सी. एन. �साद / C.N. Prasad ) (राजे�� / Rajendra) �याियक सद�य / JUDICIAL MEMBER लेखा लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य मुंबई Mumbai; दनांकDated : 05.08.2016. Jv.Sr.PS. आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1.Appellant /अपीलाथ#

2. Respondent /$%यथ# 4

4691/M/14-Shivam Steel&Tubes P.Ltd.